Document:

Execution Version

Rule 10b5-1 Stock Purchase Plan 

This Rule 10b5-1 Stock Purchase Plan (this “Purchase Plan”), is entered into on January 14, 2008 by and between Citigroup Global Markets Inc. (“Broker”), BPW Acquisition Corp., a Delaware corporation (the “Company”), and BNYH BPW Holdings LLC, a Delaware limited liability company (the “Sponsor” and collectively with the Broker and the Company, the “Parties”). 

WHEREAS, Sponsor desires to establish a plan that qualifies for the affirmative defense and safe harbor provided by Rule 10b5-1 (“Rule 10b5-1”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) to purchase shares of common stock, par value $0.001 per share (the “Shares”), of the Company, as described in the Company’s Registration Statement on Form S-1 relating to the initial public offering of the Company. 

WHEREAS, Sponsor desires to engage Broker as its exclusive agent to purchase Shares on its behalf in accordance with this Purchase Plan; and

WHEREAS, Sponsor has established or, prior to effecting transactions under this Purchase Plan will establish, an account (the “Account”) with Broker by executing an account agreement and all other necessary ancillary documents with Broker; 

NOW, THEREFORE, the Parties hereby agree as follows: 

1. Engagement of Broker 

During the term of this Purchase Plan, Broker shall act as Sponsor’s exclusive agent to purchase Shares pursuant to this Purchase Plan. Subject to the terms and conditions set forth herein, Broker hereby accepts such appointment and engagement. 

2. Trading Instructions 

(a) Broker is authorized to begin purchasing Shares as agent for Sponsor as set forth herein pursuant to this Purchase Plan on the later of (i) the day after the Company files an initial preliminary proxy statement (the “Preliminary Proxy Statement”) with the Securities and Exchange Commission relating to a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination (the “Business Combination”), with one or more operating businesses (the “Target”) and (ii) 60 calendar days after termination of the “restricted period”
in connection with the Company’s initial public offering under Regulation M (the “Commencement Date”). Broker shall cease purchasing Shares on the Termination Date (as defined below). The period beginning on the Commencement Date and ending on the Termination Date is referred to herein as the “Plan Period”. For the avoidance of doubt, Broker shall not begin purchasing Shares as agent pursuant to this Purchase Plan, until it receives written notification from the Company and Sponsor of the Commencement Date in accordance with Section 5(a) herein. Such notice shall be given to Broker in writing by facsimile at (646) 862-9799 and (212) 723-8019, Attention: Jill Eisenstein, and confirmed by telephone at (212) 723-7838. 

(b) In accordance with Broker’s customary procedures, Broker will deposit Shares purchased hereunder into the Account against payment to Broker of the purchase price therefor and commissions and other fees in respect thereof. 

(c) Broker will notify Sponsor of all transactions executed under this Purchase Plan pursuant to customary trade confirmations, which shall be provided within 24 hours of each transaction to BNYH 

 

 

BPW Holdings LLC, Att: General Counsel, by facsimile at (212) 310-6999 confirmed by telephone at (212) 310-6915, with a copy to Douglas McGovern at dmcgovern@brooklynholdings.com.

(d) (i) On each day on which the American Stock Exchange (the “Exchange”) is open for trading (each, a “Business Day”), Broker shall use commercially reasonable efforts to purchase, as agent and for the account of Sponsor in compliance with Rule 10b-18(b), the lesser of (x) the maximum number of Shares Sponsor is permitted to purchase under Rule 10b-18 on such Business Day and (y) the number of Shares to be purchased pursuant to the Share Repurchase Guidelines set forth on Appendix A hereto, provided, however, that to the extent such purchases would not constitute “Rule 10b-18 purchases” as defined under Rule 10b-18 solely as a result of Rule 10b-18(a)(13)(iv),
Broker may upon the advice of counsel to Broker, disregard any restriction contained in Rule 10b-18(a)(13)(iv)(B) in determining the number of shares that may be purchased pursuant to clause (x) above. 

(ii) The Parties acknowledge that Broker will receive certain underwriting discounts and commissions in connection with the Company’s initial public offering, and the Parties agree that the fees for services provided by Broker pursuant to this Purchase Plan are included in such underwriting discounts and commissions. 

(e) Broker will make, keep and produce promptly upon request a daily time-sequenced schedule of all Share purchases made under this Purchase Plan, on a transaction-by-transaction basis, including (i) size, time of execution and price of purchase; and (ii) the exchange, quotation system, or other facility through which the Share purchase occurred, which obligations are set forth under the heading “Daily Time-Sequenced Schedule Obligations” on Appendix A hereto. 

(f) Sponsor agrees that this Purchase Plan constitutes an irrevocable limit order to purchase Shares pursuant to the terms of this Purchase Plan, including the Share Repurchase Guidelines set forth on Appendix A hereto. 

3. Broker’s Discretion to Deviate from Trading Instructions 

(a) Subject to the Share Repurchase Guidelines and other terms and conditions set forth in this Purchase Plan, Broker shall have full discretion with respect to the execution of all purchases, and Sponsor acknowledges and agrees that Sponsor does not have, and shall not attempt to exercise, any influence over how, when or whether to effect such purchases of Shares pursuant to this Purchase Plan. 

(b) Notwithstanding any provision herein to the contrary, including the provisions of Section 2(d)(i), in the event that, on any Business Day, in the opinion of Broker’s counsel, effecting purchases hereunder would result in a violation of applicable law or a breach of any contract to which Broker or its affiliates are a party or by which it or its affiliates are bound or such purchases would result in a violation of applicable law by Sponsor (collectively, “Restrictions”), Broker may refrain from purchasing Shares or purchase fewer than the otherwise applicable number of Shares to be purchased set forth in the Share Repurchase Guidelines, as determined by Broker, in its discretion with regard to such Restrictions. 

4. Termination Date 

This Purchase Plan shall terminate upon the Termination Date. “Termination Date” means the earliest of: 

(a) the Business Day immediately preceding the record date for the meeting of stockholders at which the Business Combination is to be voted upon by the Company’s stockholders; 

 

 

(b) the Business Day on which the aggregate purchase price for all Shares purchased under this Purchase Plan equals $12,500,000; provided that, for avoidance of doubt, in no event shall the aggregate purchase price for all Shares purchased under this Purchase Plan exceed $12,500,000; 

(c) the date that Broker receives notice that Sponsor has filed a petition for bankruptcy or reorganization, or a petition for bankruptcy has been filed against Sponsor and has not been dismissed within sixty (60) calendar days of its filing; 

(d) the date that Sponsor or any other person publicly announces a tender or exchange offer with respect to the Shares or a merger, acquisition, reorganization, recapitalization or other similar business combination or transaction as a result of the consummation of which the Shares would be exchanged or converted into cash, securities or other property other than, in each case, in connection with the Business Combination; 

(e) the date following the date on which the Company publicly announces that it does not intend to proceed with the Business Combination that was the subject of the Preliminary Proxy Statement; and 

(f) such time as Broker determines, in its sole discretion, that it is prohibited for any reason from engaging in purchasing activity as Sponsor’s agent under this Purchase Plan. 

If Broker determines that any event specified in Paragraphs (b), (c), (d), (e), or (f) of this Section 4 has occurred, Broker shall promptly notify Sponsor that this Purchase Plan has terminated pursuant to the terms of this Section 4 and the date of such termination. 

5.  Representations, Warranties and Covenants 

(a) From the date hereof until the Termination Date, each of the Company and Sponsor agrees not to discuss with Broker the Company’s and/or Target’s business, operations or prospects or any other information likely to be related to the value of the Shares or likely to influence a decision to sell Shares. Notwithstanding the preceding sentence, with the approval of counsel to Broker, Sponsor and the Company may communicate with Broker personnel who are not responsible for, and have no ability to influence, the execution of this Purchase Plan. Notwithstanding the first sentence in this paragraph, the Company and Sponsor shall jointly provide Broker with written notification of (i) the Commencement Date, whether the shareholders of the Target have voted on the Business Combination prior to the Commencement Date, and the Per Share Amount (as defined in Appendix A)
as soon as practicable after the Preliminary Proxy Statement is filed by the Company with the Securities and Exchange Commission and (ii) the mailing of a proxy or other solicitation materials to shareholders of the Target with respect to a vote on the Business Combination or any fact that would make purchases under this Purchase Plan unlawful pursuant to Regulation M or otherwise, as soon as such fact is known to the Company or Sponsor.

(b) Sponsor represents and warrants to Broker that it has duly authorized this Purchase Plan and the transactions contemplated hereby. 

 (c) Sponsor agrees that it will not, and the Company agrees with Broker that neither it nor any “affiliated purchaser” as defined in Rule 10b-18 will, make any purchases of blocks as described in the proviso in Rule 10b-18(b)(4) during the four full calendar weeks immediately preceding the Commencement Date. 

(d) Sponsor represents and warrants to Broker that it is not aware of any material, nonpublic information concerning the Company or its securities (“Material, Nonpublic Information”) and is 

 

 

entering into this Purchase Plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1. 

(e) Broker represents and warrants to the Company and Sponsor that it has implemented reasonable policies and procedures, taking into consideration the nature of Broker’s business, to ensure that individuals making investment decisions will not violate the laws prohibiting trading on the basis of Material, Nonpublic Information. These policies and procedures include those that restrict any purchase or sale, or the causing of any purchase or sale, of any security as to which Broker has Material, Nonpublic Information, as well as those that prevent such individuals from becoming aware of or being in possession of Material, Nonpublic Information. 

(f) From the date hereof until the Termination Date, Sponsor agrees not to enter into any hedging transaction with respect to any Shares. 

(g) Each of the Company and Sponsor agrees that, during the period from the Commencement Date to the date falling that number of days following the Termination Date equal to the “restricted period” applicable to the Company, it will not engage in any “distribution” with respect to which the Shares are a “covered security” (as such terms are defined in Regulation M) or any other activity that would prohibit repurchase of Shares by Broker. 

(h) Each of the Company and Sponsor represents and warrants that as of the time of execution of this Purchase Plan, it has not entered into any similar plan or agreement with respect to Shares or any security or interest convertible into or exchangeable for Shares. Each of the Company and Sponsor agrees that without the prior written consent of Broker, it shall not, during the Plan Period, directly or indirectly (including, without limitation, by means of a cash-settled or other derivative instrument) purchase, offer to purchase, place any bid or limit order that would effect a purchase of, any Shares (or an equivalent interest, including a unit of beneficial interest in a trust or limited partnership or a depository share), or any security convertible into or exchangeable for Shares. 

(i) Each of the Company and Sponsor agrees to inform Broker (i) of any purchases made during the Plan Period by an “affiliated purchaser” as defined in Rule 10b-18 promptly upon becoming aware of such purchases and (ii) if any “affiliated purchaser” intends to make any such purchases, promptly upon being informed of such intention. 

6. Compliance with the Securities Laws 

(a) It is the intent of the parties that this Purchase Plan comply with the requirements of Rule 10b5-1(c)(1)(i)(B), and the parties agree that this Purchase Plan shall be interpreted to comply with the requirements of Rule 10b5-1(c). 

(b) Broker agrees to use its commercially reasonable efforts to satisfy the conditions of Rule 10b-18(b) as contemplated in Section 2(d)(i) in effecting purchases of Shares pursuant to this Purchase Plan. 

7. Indemnification 

(a) Sponsor agrees to indemnify and hold harmless Broker (and its directors, officers, employees and affiliates) from and against all claims, liabilities, losses, damages and expenses (including reasonable attorney’s fees and costs) arising out of or attributable to (i) any material breach by the Company or Sponsor of this Purchase Plan (including the Company’s and Sponsor’s representations and warranties), and (ii) any violation by the Company or Sponsor of applicable laws or regulations with respect to the transactions contemplated by this Purchase Plan. This indemnification will survive the termination of this 

Purchase Plan. Sponsor will have no indemnification obligations hereunder in the case of gross negligence or willful misconduct of Broker or any other indemnified person or if Broker fails to comply with Section 6(b) hereof (unless such failure arises out of or is attributable to a breach by the Company or Sponsor of its representations, warranties or obligations hereunder), as determined by a final, non-appealable judgment of a court of competent jurisdiction.

(b) Notwithstanding any other provision herein, no party hereto will be liable to the other for (i) special, indirect, punitive, exemplary, or consequential damages, or incidental losses or damages of any kind, including but not limited to lost profits, lost savings, loss of use of facility or equipment, regardless of whether arising from breach of contract, warranty, tort, strict liability or otherwise, and even if advised of the possibility of such losses or damages or if such losses or damages could have been reasonably foreseen, or (ii) any failure to perform or for any delay in performance that results from a cause or circumstance that is beyond its reasonable control, including but not limited to failure of electronic or mechanical equipment, strikes, failure of common carrier or utility systems, severe weather, market disruptions or other causes commonly known as
“acts of God.” 

(c) The Company and Sponsor acknowledge and agree that Broker has not provided the Company or Sponsor with any tax, accounting or legal advice with respect to this Purchase Plan, including whether Sponsor would be entitled to any of the affirmative defenses under Rule 10b5-1 or entitled to the safe harbor of Rule 10b-18. 

8. General 

(a) This Purchase Plan (including any Appendices, Annexes or Exhibits) constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any previous or contemporaneous agreements, understandings, proposals or promises with respect thereto, whether written or oral. 

(b) This Purchase Plan will be governed by, and construed in accordance with, the laws of the State of New York, without regard to such State’s conflict of laws rules. 

(c) This Purchase Plan and each party’s rights and obligations hereunder may not be assigned or delegated without the written permission of the other party and shall inure to the benefit of each party’s successors and permitted assigns, whether by merger, consolidation or otherwise. 

(d) This Purchase Plan may be executed in two or more counterparts and by facsimile signature. 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the undersigned have signed this Purchase Plan as of the date first written above. 

 

	
                         
 	
                         
 	
                        Citigroup Global Markets Inc.
 
	
                          
 	
                         
 	
                        By: 
 	
                        
 /s/ JILL M. EISENSTEIN
 
	
                         
 	
                         
 	
                         
 	
                        Name:   Jill M. Eisenstein
 
	
                         
 	
                         
 	
                         
 	
                        Title:     Vice President
 

 

	
                         
 	
                         
 	
                        BPW Acquisition Corp.
 
	
                          
 	
                         
 	
                        By: 
 	
                        
 /s/ MICHAEL E. MARTIN
 
	
                         
 	
                         
 	
                         
 	
                        Name:   Michael E. Martin
 
	
                         
 	
                         
 	
                         
 	
                        Title:     Chief Executive Officer
 

 

	
                         
 	
                         
 	
                        BNYH BPW Holdings LLC
 
	
                          
 	
                         
 	
                        By: 
 	
                        
 /s/ MICHAEL E. MARTIN
 
	
                         
 	
                         
 	
                         
 	
                        Name:   Michael E. Martin
 
	
                         
 	
                         
 	
                         
 	
                        Title:     Authorized Person
 

 

 

APPENDIX A 

Share Repurchase Guidelines 

 

	
                        Purchase Price Range
 	
                         
 	
                        Number of Shares to be Purchased
 
	
                        $___[Per Share Amount] or below1 
 	
                         
 	
                        Broker is to buy $12.5 million of Shares (AMEX: BPW), excluding commissions, subject to the conditions of Rule 10b-18(b) and less the aggregate purchases of any Shares previously purchased.
 

Daily Time-Sequenced Schedule Obligations 

 

	
                        Obligor
 	
                         
 	
                        Obligation
 
	
                        Broker 
 	
                         
 	
                        Broker is to make, keep and produce promptly upon request a daily time-sequenced schedule of all Share purchases made under this Purchase Plan, on a transaction-by-transaction basis, including:
 
	
                         
 	
                         
 	
                        •         size, time of execution, price of purchase; and
 
	
                         
 	
                         
 	
                        •         the exchange, quotation system, or other facility through which the Share purchase occurred.
 

All Share amounts and limit prices listed herein shall be increased or decreased to reflect stock

splits should they occur. 

	
                        1
 	
                        The Per Share Amount shall be the amount per share held in the Company’s trust account, as reported in the Preliminary Proxy Statement.Exhibit 10.1

 

EXHIBIT 10.1

EXECUTION VERSION

VALEANT PHARMACEUTICALS INTERNATIONAL

EXECUTIVE EMPLOYMENT AGREEMENT

               THIS AGREEMENT (the “Agreement”) is hereby entered into as of the 1st day of February, 2008
(the “Effective Date”), by and between Valeant Pharmaceuticals International (the “Company”) and
Michael Pearson, an individual (the “Executive”) (hereinafter collectively referred to as “the
parties”).

               In consideration of the respective agreements of the parties contained herein, it is agreed as
follows:

	1.	 	Term. The initial term of this Agreement shall be for the period commencing on the Effective
Date and ending on the third anniversary of the Effective Date (the “Employment Term”). Not
later than 120 days prior to the expiration of the Employment Term, the parties to this
Agreement shall either commence negotiations in good faith regarding the terms of a new
employment agreement to take effect at the expiration of the Employment Term, or, if either
party does not intend to enter into a new agreement to be effective following the Employment
Term, notify the other party of such intent. For the avoidance of doubt, Executive shall not
be entitled to payments pursuant to Section 8 of this Agreement by reason of the Company
electing to not enter into a new agreement with Executive following the Employment Term.
	 
	2.	 	Employment. During the Employment Term:

	 	(a)	 	Executive shall be employed as Chief Executive Officer of the Company. In
addition, effective as of the Effective Date, Executive shall be elected by the Board
of Directors of the Company (the “Board”) as a director of the Company and as Chairman
of the Board. For as long as the Executive is employed by the Company as the Chief
Executive Officer, the Company shall nominate the Executive for re-election to the
Board. At the time of his termination of employment with the Company for any reason,
the Executive shall resign from the Board if requested to do so by the Company.
Executive shall not receive any compensation in addition to the compensation described
in Sections 3 and 4 of this Agreement for serving as a director of the Company and
Chairman of the Board.
	 
	 	(b)	 	Executive shall report directly to the Board. Executive shall perform the
duties, undertake the responsibilities and exercise the authority customarily
performed, undertaken and exercised by persons situated in a similar executive
capacity.
	 
	 	(c)	 	Excluding periods of vacation and sick leave to which Executive is entitled,
Executive shall devote reasonable attention and time to the business and affairs of

 

 

	 	 	 	the Company to the extent necessary to discharge the responsibilities of Executive
hereunder. Prior to joining or agreeing to serve on corporate, civil or charitable
boards or committees, Executive shall obtain approval of the Board. Executive may
manage personal and family investments, participate in industry organizations and
deliver lectures at educational institutions, so long as such activities do not
interfere with the performance of Executive’s responsibilities hereunder.
	 
	 	(d)	 	Executive shall be subject to and shall abide by each of the Company’s
personnel policies applicable and communicated in writing to senior executives,
including but not limited to any policy the Company adopts restricting hedging
investments in Company equity by Company executives.

	3.	 	Annual Compensation.

	 	(a)	 	Base Salary. The Company agrees to pay or cause to be paid to Executive during
the Employment Term a base salary at the rate of $1,000,000 per annum or such increased
amount as the Board may from time to time determine (hereinafter referred to as the
“Base Salary”). Such Base Salary shall be payable in accordance with the Company’s
customary practices applicable to its executives. Such Base Salary shall be reviewed
at least annually by the Board or by the Compensation Committee of the Board (the
“Committee”), and may be increased at the discretion of the Committee, but not
decreased.
	 
	 	(b)	 	Performance Bonus.

	 	(i)	 	For each fiscal year of the Company ending during the
Employment Term, beginning with the 2009 fiscal year, Executive shall be
eligible to receive a target annual cash bonus of 100% of the Base Salary (such
target bonus, as may hereafter be increased, the “Target Bonus”) with the
opportunity to receive a maximum annual cash bonus of 200% of the Base Salary,
payable in accordance with the Company’s customary practices applicable to
bonuses paid to its executives.
	 
	 	(ii)	 	Executive’s annual bonus for services performed during the 2008
fiscal year shall be delivered to Executive on the Effective Date in the form
of restricted share units under the Company’s 2006 Equity Incentive Plan (the
“2006 Plan”) with a value equal to the quotient obtained by dividing $1,000,000
by the Per Share Price (as defined below) on the Effective Date (the “Annual
Bonus Share Units”). For purposes of this Agreement, Per Share Price shall
mean the average of the closing prices of Shares during the 20 consecutive
trading days ending on the day prior to the specified valuation date. Except
as otherwise specifically provided in Section 8 of this Agreement, the Annual
Bonus Share Units (i) shall be forfeited if Executive is not employed by the
Company on the date that 2008 bonuses are paid to other executive officers of
the Company (or March 15, 2009 , if earlier) and (ii) unless forfeited in
accordance with

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	 	 	 	subclause (i), shall be deliverable in shares of Company common stock
(“Shares”) on the fifth anniversary of the Effective Date. In addition to
the Annual Bonus Share Units, Executive shall be eligible for a cash bonus
for services performed during the 2008 fiscal year up to a maximum of 100%
of Base Salary. The Company shall enter into an award agreement with the
Executive for the above grant of restricted share units, incorporating the
terms set forth in this Agreement and otherwise on the terms and conditions
set forth in the Company’s standard form of restricted share unit award
agreement.
	 
	 	(iii)	 	Any annual cash bonus will be based on performance by
Executive and the Company based on performance targets to be established by the
Board or the Committee on or before March 31 of the applicable calendar year,
except that any cash bonus payable for 2008 shall be paid at the sole
discretion of the Board or the Committee.

	4.	 	Long-Term Compensation

	 	(a)	 	2008 RSU Grant. In connection with the execution of this Agreement, on the
Effective Date, Executive shall be granted that whole number of restricted share units
under the 2006 Plan with a value equal to the quotient obtained by dividing $2,000,000
by the Per Share Price on the Effective Date. (the “2008 RSU Grant”). The 2008 Stock
Grant shall vest on the first anniversary of the Effective Date, provided that, except
as specifically set forth in Section 8 of this Agreement, Executive is employed by the
Company on such vesting date. Except as specifically set forth in Section 8 of this
Agreement, the vested portion of the 2008 Stock Grant shall be paid to Executive in
Shares on the fifth anniversary of the Effective Date. The Company shall enter into an
award agreement with the Executive for the above grant of restricted share units,
incorporating the terms set forth in this Agreement and otherwise on the terms and
conditions set forth in the Company’s standard form of restricted share unit award
agreement.
	 
	 	(b)	 	Time-Based Stock Option.

	 	(i)	 	In connection with the execution of this Agreement, on the
Effective Date, Executive shall be granted a ten-year time-vested non-qualified
stock option (the “Option”) under the 2006 Plan to acquire a whole number of
Shares with a Black-Scholes value equal to $5,000,000 as of the Effective Date.
For purposes of the preceding sentence, the Black-Scholes value shall be
established by the Company in accordance with its prior practices with respect
to the valuation of stock option grants for granting purposes; provided that
the value of the stock shall be determined for this purpose based on the Per
Share Price on the Effective Date.
	 
	 	(ii)	 	The Option shall become vested and exercisable with respect to
twenty-five percent (25%) of the total number of Shares underlying the Option
on each of the first four anniversaries of the Effective Date, provided that,

3

 

	 	 	 	except as specifically set forth in Section 8 of this Agreement, the
Executive remains employed by the Company through the applicable vesting
dates.
	 
	 	(iii)	 	Executive shall not be permitted to sell, assign, transfer, or
otherwise dispose of more than fifty percent (50%) of the Net Shares (as
defined below) acquired upon exercise of the Option until the expiration of the
two-year period following such exercise, or, if sooner, until a Change in
Control (as defined below) or until Executive experiences a termination of
employment. For purposes of this Section, Net Shares shall mean the net number
of Shares acquired by Executive upon exercise of the Option after subtracting
any such Shares surrendered to the Company as payment for the exercise price
and any such Shares withheld in payment of withholding obligations applicable
to the exercise of the Option.
	 
	 	(iv)	 	The Company shall enter into an award agreement with the
Executive for the above grant of Options, incorporating the terms set forth in
this Agreement and otherwise on the terms and conditions set forth in the
Company’s standard form of non-qualified stock option award agreement.

	 	(c)	 	Performance Share Units. In connection with the execution of this Agreement,
on the Effective Date, the Executive shall be granted that whole number of
performance-based restricted share units (the “Performance Share Units”) under the 2006
Plan with a value equal to the quotient obtained by dividing $5,000,000 by the Per
Share Price on the Effective Date. The Performance Share Units shall be subject to the
following terms and conditions:

	 	(i)	 	If the Per Share Price of a Share as of the third anniversary
of the Effective Date ( the “Third Anniversary Average Price”) equals or
exceeds a value which produces a Compound Annual TSR (as defined below) of 15%,
Executive shall vest in and the Company shall deliver to Executive as soon as
practicable (but in any event no later than 45 days) following the third
anniversary of the Effective Date a number of Shares equal to the number of
Performance Share Units granted pursuant to this Section 4(c), provided that,
except as otherwise specifically set forth in Section 8 of this Agreement,
Executive is employed by the Company on such anniversary date. “Compound
Annual TSR” shall mean the compound annual Share price appreciation from the
Effective Date to such third anniversary, plus the value derived from the
reinvestment of any dividends paid on the Company’s common stock during such
period, with reinvestment determined based on the closing price of the common
stock on the dividend payment date, using the Per Share Price as of the
Effective Date as the base value.
	 
	 	(ii)	 	If the Third Anniversary Average Price equals or exceeds a
value which produces a Compound Annual TSR of 30%, Executive shall vest in and
the Company shall deliver to Executive as soon as practicable (but in any

4

 

	 	 	 	event no later than 45 days) following the third anniversary of the
Effective Date, a number of Shares equal to two times the number of
Performance Share Units granted pursuant to this Section 4(c); provided
that, except as otherwise specifically set forth in Section 8 of this
Agreement, Executive is employed by the Company on such anniversary date.
	 
	 	(iii)	 	If the Third Anniversary Average Price equals or exceeds a
value which produces a Compound Annual TSR of 45%, Executive shall vest in and
the Company shall deliver to Executive as soon as practicable (but in any event
no later than 45 days) following the third anniversary of the Effective Date, a
number of Shares equal to three times the number of Performance Share Units
granted pursuant to this Section 4(c); provided that, except as otherwise
specifically set forth in Section 8 of this Agreement, Executive is employed by
the Company on such anniversary date.
	 
	 	(iv)	 	If the Third Anniversary Average Price produces a Compound
Annual TSR between 15% and 30%, or between 30% and 45%, Executive shall vest in
and the Company shall deliver a number of Performance Share Units that is the
mathematical interpolation between the number of shares which would vest at
such two percentages; provided that, except as otherwise specifically set forth
in Section 8 of this Agreement, Executive is employed by the Company on such
anniversary date.
	 
	 	(v)	 	Performance Share Units that could have been earned under any
of subclauses (i), (ii), (iii) or (iv) that are not earned on the third
anniversary of the Effective Date may be earned on the fourth anniversary of
the Effective Date based on the Compound Annual TSR from the Effective Date
through the fourth anniversary of the Effective Date using the same performance
targets described in subsections (i) through (iv) above (net of any Performance
Share Units that were earned on the third anniversary of the Effective Date
based on performance to such date); provided that, except as otherwise
specifically set forth in Section 8 of this Agreement, Executive is employed by
the Company on the fourth anniversary date.
	 
	 	(vi)	 	Any Performance Share Units that vest as of the third
anniversary of the Commencement Date will not be affected if the Compound
Annual TSR on the fourth anniversary is less than that generated by the Third
Anniversary Average Price. Any Performance Share Units that are not vested as
of the fourth anniversary of the Effective Date shall be immediately forfeited.
	 
	 	(vii)	 	Executive shall not be permitted to sell, assign, transfer, or
otherwise dispose of more than fifty percent (50%) of the Net Shares (as
defined below) acquired upon settlement of the Performance Share Units until
the expiration of the two-year period following receipt, or, if sooner until a

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	 	 	 	Change in Control or until Executive experiences a termination of
employment. For purposes of this Section, Net Shares shall mean the net
number of Shares acquired by Executive upon settlement of the Performance
Share Units after subtracting any such Shares withheld by the Company in
payment of withholding obligations applicable to such settlement.
	 
	 	(viii)	 	The Company shall enter into a restricted share unit award agreement with the
Executive for the above grant of Performance- Share Units, incorporating the
terms set forth in this Agreement and otherwise on the terms and conditions set
forth in the Company’s standard form of performance-based restricted share unit
award agreement.

	 	(d)	 	Share Purchase Requirement and Matching Share Units.

	 	(i)	 	Prior to the first anniversary of the Effective Date, Executive
shall purchase, on the market and during periods of open trading in accordance
with applicable law, Shares with an aggregate purchase price of not less than
$3,000,000 (the “Purchased Shares”); provided, however, if Executive is
precluded from completing such purchases in the marketplace due to being
subject to blackout periods or other restrictions on his ability to purchase
such shares due to his possession of material inside information, the Company
shall either extend the period of time to complete such market purchases such
that Executive shall have a reasonable opportunity to complete the purchase of
the Purchased Shares, or sell such shares directly to Executive on or prior to
such first anniversary of the Effective Date.
	 
	 	(ii)	 	Executive shall not be permitted to sell the Purchased Shares
for one year following the Final Purchase Date (as defined below). In
addition, as long as Executive remains employed by the Company, Executive shall
retain ownership of at least seventy-five percent (75%) of the Purchased Shares
until the second anniversary of the Effective Date, fifty percent (50%) of the
Purchase Shares until the third anniversary of the Effective Date, and
twenty-five percent (25%) of the Purchased Shares until the fourth anniversary
of the Effective Date (the “Purchase Obligations”). The “Final Purchase Date”
shall mean the date on which Executive purchases Shares that, together with
other Shares purchased by Executive on or after the Effective Date, have an
aggregate purchase price of $3,000,000.
	 
	 	(iii)	 	As soon as practicable after the end of any month during which
Executive makes a purchase of all or any portion of the Purchased Shares, the
Company shall grant to the Executive a number of restricted share units equal
to the number of Purchased Shares so purchased in such month (up to a maximum
aggregate number of restricted share units equal to the number of Purchased
Shares with an aggregate purchase price of $5,000,000) (the “Matching Share
Units”).

6

 

	 	(iv)	 	The Matching Restricted Share Units shall vest and be settled
in Shares on the following schedule: Twenty-five percent (25%) of the Matching
Share Units shall vest and be settled on the first anniversary of the Final
Purchase Date and an additional 25% of the Matching Share Units shall vest and
be settled each of the second, third, and fourth anniversaries of the Effective
Date, provided Executive is employed on the relevant vesting date and Executive
has not violated the Purchase Obligations prior to such vesting date.
	 
	 	(v)	 	Executive shall not be permitted to sell, assign, transfer, or
otherwise dispose of more than fifty percent (50%) of the Net Shares (as
defined below) acquired upon settlement of the Matching Share Units until the
expiration of the two-year period following such settlement, or, if sooner,
until a Change in Control (as defined below) or until Executive experiences a
termination of employment. For purposes of this Section, Net Shares shall mean
the net number of Shares acquired by Executive upon settlement of the Matching
Share Units after subtracting any such Shares withheld by the Company in
payment of withholding obligations applicable to such settlement.

	 	(e)	 	Ongoing Grants. Executive shall be eligible to receive, solely in the
discretion of the Board or the Committee, additional annual equity grants during the
Employment Term. For the avoidance of doubt, the Committee does not contemplate that
Executive shall receive equity grants other than the grants outlined in this Section 4
of the Agreement during the Employment Term.

	5.	 	Other Benefits.

	 	(a)	 	Employee Benefits. Executive shall be entitled to participate in all employee
benefit plans, practices and programs maintained by the Company and made available to
employees generally, including, without limitation, all pension, retirement, profit
sharing, savings, medical, hospitalization, disability, dental, life or travel accident
insurance benefit plans. Executive’s participation in such plans, practices and
programs shall be on the same basis and terms as are applicable to employees of the
Company generally.
	 
	 	(b)	 	Executive Benefits. Executive shall be entitled to participate in all executive
benefit or incentive compensation plans now maintained or hereafter established by the
Company for the purpose of providing compensation and/or benefits to comparable
executive employees of the Company including, but not limited to, the Company’s
deferred compensation plans and any supplemental retirement, deferred compensation,
supplemental medical or life insurance or other bonus or incentive compensation plans.
Unless otherwise provided herein, Executive’s participation in such plans shall be on
the same basis and terms, as other senior executives of the Company. No additional
compensation provided under any of such plans shall be deemed to modify or otherwise
affect the terms of this Agreement or any of Executive’s entitlements hereunder.

7

 

	 	(c)	 	Fringe Benefits and Perquisites. Executive shall be entitled to all fringe
benefits and perquisites generally made available by the Company to its senior
executives. In addition, during the Employment Term, the Company shall provide
Executive with (or reimburse Executive for the cost of) life insurance in the face
amount of $10,000,000, subject to Executive’s insurability and Executive taking steps
reasonably requested by the Company to obtain such insurance, if required.
	 
	 	(d)	 	Business Expenses. Upon submission of proper invoices in accordance with the
Company’s normal procedures, Executive shall be entitled to receive prompt
reimbursement of all reasonable out-of-pocket business, entertainment and travel
expenses (including travel in first-class) incurred by him in connection with the
performance of his duties hereunder. Such reimbursement shall in no event occur later
than March 15th of the year following the year in which the expenses were
incurred.
	 
	 	(e)	 	Office and Facilities. Executive shall be provided with an appropriate office
at the Company’s headquarters, with such secretarial and other support facilities as
are commensurate with Executive’s status with the Company, which facilities shall be
adequate for the performance of his duties hereunder.
	 
	 	(f)	 	Vacation and Sick Leave. Executive shall be entitled, without loss of pay, to
absent himself voluntarily from the performance of his employment under this Agreement,
pursuant to the following:

	 	(i)	 	Executive shall be entitled to annual vacation in accordance
with the policies as periodically established by the Board for senior
executives of the Company, which shall in no event be less than four weeks per
year;
	 
	 	(ii)	 	in addition to the aforesaid paid vacations, Executive shall be
entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment for such additional periods of time and for such
valid and legitimate reasons as the Board in its discretion may determine.
Further, the Board shall be entitled to grant to Executive a leave or leaves of
absence with or without pay at such time or times and upon such terms and
conditions as the Board in its discretion may determine; and
	 
	 	(iii)	 	Executive shall be entitled to sick leave (without loss of
pay) in accordance with the Company’s policies as in effect from time to time.

	6.	 	Termination. Executive’s employment hereunder may be terminated under the circumstances set
forth below; provided, however, that notwithstanding anything contained herein to the
contrary, Executive shall not be considered to have terminated employment with the Company for
purposes of this Agreement unless he would be considered to have incurred a “separation from
service” from the Company within the meaning of Section 409A of the Internal Revenue Code.

8

 

	 	(a)	 	Death. Executive’s employment shall be terminated as of the date of Executive’s
death and Executive’s beneficiaries shall be entitled to the benefits provided in
Section 8(b) hereof.
	 
	 	(b)	 	Disability. The Company may terminate Executive’s employment, on written notice
to Executive after having established Executive’s Disability and while Executive
remains Disabled, subject to the payment by the Company to Executive of the benefits
provided in Section 8(b) hereof. For purposes of this Agreement, “Disability” shall
mean Executive’s inability to substantially perform his duties and responsibilities
hereunder by reason of any physical or mental incapacity for two or more periods of
ninety (90) consecutive days each in any three hundred and sixty (360) day period, as
determined by a physician with no history of prior dealings with the Company or
Executive, as reasonably agreed upon by the Company and Executive. Executive shall be
entitled to the compensation and benefits provided for under this Agreement for any
period prior to Executive’s termination by reason of Disability during which Executive
is unable to work due to a physical or mental infirmity in accordance with the
Company’s policies for similarly-situated executives.
	 
	 	(c)	 	Cause. The Company may terminate Executive’s employment for “Cause,” effective
as of the date of the Notice of Termination (as defined in Section 7 below) and as
evidenced by a resolution adopted in good faith by a majority of the independent
members of the Board, subject to the payment by the Company to Executive of the
benefits provided in Section 8(a) hereof. “Cause” shall mean, for purposes of this
agreement: (1) conviction of any felony (other than one related to a vehicular offense)
or other criminal act involving fraud; (2) willful misconduct that results in a
material economic detriment to the Company; (3) material violation of Company policies
and directives, which is not cured after written notice and an opportunity for cure,
(4) continued refusal by Executive to perform his duties after written notice
identifying the deficiencies and an opportunity for cure; and (5) a material violation
by Executive of any material covenants to the Company. No action or inaction shall be
deemed willful if not demonstrably willful and if taken or not taken by the Executive
in good faith and with the understanding that such action or inaction was not adverse
to the best interests of the Company. Reference in this paragraph to the Company shall
also include direct and indirect subsidiaries of the Company, and materiality shall be
measured based on the action or inaction and the impact upon the Company taken as a
whole. The Company may suspend, with pay, the Executive upon Executive’s indictment
for the commission of a felony as described under clause (A) above. Such suspension may
remain effective until such time as the indictment is either dismissed or a verdict of
not guilty has been entered.
	 
	 	(d)	 	Without Cause. The Company may terminate Executive’s employment without Cause.
The Company shall deliver to Executive a Notice of Termination (as defined in Section 7
below) not less than thirty (30) days prior to the termination of Executive’s
employment without Cause and the Company shall have the option of terminating
Executive’s duties and responsibilities prior to the expiration of

9

 

	 	 	 	such thirty-day notice period, subject to the payment by the Company of the benefits
provided in either Section 8(e) or Section 8(f) hereof, as may be applicable.
	 
	 	(e)	 	Good Reason. Executive may terminate his employment for Good Reason (as defined
below) by delivering to the Company a Notice of Termination (as defined in Section 7
below) not less than thirty (30) days prior to the termination of Executive’s
employment for Good Reason. The Company shall have the option of terminating
Executive’s duties and responsibilities prior to the expiration of such thirty-day
notice period, subject to the payment by the Company of the benefits provided in either
Section 8(c) or 8(d) hereof, as may be applicable. For purposes of this Agreement, Good
Reason shall mean the occurrence of any of the events or conditions described in
Subsections (i) through (iii) hereof which are not cured by the Company (if susceptible
to cure by the Company) within thirty (30) days after the Company has received written
notice from Executive within ninety (90) days of the initial existence of the event or
condition constituting Good Reason specifying the particular events or conditions which
constitute Good Reason and the specific cure requested by Executive.

	 	(i)	 	Diminution of Responsibility. (A) any material reduction in his
duties or responsibilities as in effect immediately prior thereto, or (B)
removal of Executive from the position of Chief Executive Officer or Chairman
of the Board, except in connection with the termination of his employment for
Disability, Cause, as a result of his death or by Executive other than for Good
Reason;
	 
	 	(ii)	 	Compensation Reduction. Any reduction in Executive’s base
salary or target bonus opportunity; or
	 
	 	(iii)	 	Company Breach. Any other material breach by the Company of
any material provision of this Agreement.

	 	(f)	 	Without Good Reason. Executive may voluntarily terminate his employment without
Good Reason by delivering to the Company a Notice of Termination not less than thirty
(30) days prior to the termination of Executive’s employment and the Company shall have
the option of terminating Executive’s duties and responsibilities prior to the
expiration of such thirty-day notice period, subject to the payment by the Company to
Executive of the benefits provided in Section 8(a) hereof through the last day of such
notice period.

	7.	 	Notice of Termination. Any purported termination by the Company or by Executive shall be
communicated by written Notice of Termination to the other party hereto. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which indicates a termination date,
the specific termination provision in this Agreement relied upon and sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated. For purposes of this Agreement, no such purported
termination of Executive’s employment

10

 

	 	 	hereunder shall be effective without such Notice of Termination (unless waived by the party
entitled to receive such notice).
	 
	8.	 	Compensation Upon Termination. Upon termination of Executive’s employment during the
Employment Term, Executive shall be entitled to the following benefits:

	 	(a)	 	Termination by the Company for Cause or by Executive Without Good Reason. If
Executive’s employment is terminated by the Company for Cause or by Executive without
Good Reason, the Company shall pay Executive all amounts earned or accrued hereunder
through the termination date, including:

	 	(i)	 	any accrued and unpaid Base Salary;
	 
	 	(ii)	 	reimbursement for any and all monies advanced or expenses
incurred in connection with Executive’s employment for reasonable and necessary
expenses incurred by Executive on behalf of the Company for the period ending
on the termination date;
	 
	 	(iii)	 	any accrued and unpaid vacation pay;
	 
	 	(iv)	 	any previous compensation which Executive has previously
deferred (including any interest earned or credited thereon), in accordance
with the terms and conditions of the applicable deferred compensation plans or
arrangements then in effect, including the arrangements provided for in
Sections 3(b)(ii) and 4(a) of this Agreement to the extent vested as of
Executive’s termination date; and
	 
	 	(v)	 	any amount or benefit as provided under any benefit plan or
program (the foregoing items in Sections 8(a)(i) through 8(a)(v) being
collectively referred to as the “Accrued Compensation”).

	 	(b)	 	Termination by the Company for Disability or By Reason of Death. If Executive’s
employment is terminated by the Company for Disability or by reason of Executive’s
death, the Company shall pay Executive (or his beneficiaries, as applicable) the
Accrued Compensation, and, Executive shall be entitled to the following benefits:

	 	(i)	 	The Company shall pay to Executive within sixty (60) days
following the termination date, any bonus earned but unpaid in respect of any
fiscal year preceding the termination date;
	 
	 	(ii)	 	The Company shall deliver to Executive, on the date that is six
months and one day following Executive’s termination date (or, if sooner,
Executive’s death), Shares in respect of the Annual Bonus Share Units and the
2008 RSU Grant;

11

 

	 	(iii)	 	The Company shall deliver to Executive, as soon as practicable
(but in no event more than sixty (60) days) following Executive’s termination
date, Shares in respect of the Matching Share Units;
	 
	 	(iv)	 	The Option shall vest in full and remain exercisable for one
year following Executive’s termination date (but in no event beyond the
expiration of the Option term); and
	 
	 	(v)	 	The performance measures applicable to the Performance Share
Units will be applied as though the termination date were the end of the
measurement period and the units so earned will vest and be payable in a manner
consistent with the vesting schedule described in Section 4(c) of this
Agreement (e.g., 100% at a Compound Annual TSR of 15%, 200% at a
Compound Annual TSR of 30%), but based on the Compound Annual TSR determined
through the termination date. The Company shall deliver Shares in respect of
such vested Performance Share Units, if any, as soon as practicable (but not
later than sixty (60) days) following Executive’s termination date and all
other Performance Share Units will be forfeited.

	 	(c)	 	Termination by the Company Without Cause or by the Executive for Good Reason
Other Than in Connection with a Change in Control. If Executive’s employment by the
Company shall be terminated by the Company without Cause or by the Executive for Good
Reason, either prior to a Change in Control or more than twelve (12) months following a
Change in Control, then, subject to Section 14(f) of the Agreement, Executive shall be
entitled to the benefits provided in this Section 8(c).

	 	(i)	 	The Company shall pay to Executive any Accrued Compensation
through the end of the notice period provided for in Section 6(e) hereof.
	 
	 	(ii)	 	The Company shall pay to Executive any bonus earned but unpaid
in respect of any fiscal year preceding the termination date within sixty (60)
days following the termination date.
	 
	 	(iii)	 	In the event that Executive’s termination of employment occurs
after the end of the Company’s 2008 fiscal year, the Company shall pay to
Executive an amount equal to the bonus or incentive award that Executive would
have been entitled to receive in respect of the fiscal year in which
Executive’s termination date occurs, had he continued in employment until the
end of such fiscal year, which amount shall be payable in a lump sum payment
within sixty (60) days following such termination (subject to Section 10),
calculated as if all performance targets and goals (if applicable) had been
fully met at the “target” level by the Company and by Executive, as applicable,
for such fiscal year, multiplied by a fraction (A) the numerator of which is
the number of days in such fiscal year through termination date and (B) the
denominator of which is 365 (a “Pro Rata Bonus”).

12

 

	 	(iv)	 	The Company shall pay Executive as severance pay, in lieu of
any further compensation for the periods subsequent to the termination date, an
amount in cash, which amount shall be payable in a lump sum payment within
sixty (60) days following such termination (subject to Section 10), equal to
two (2) times the sum of (A) Executive’s Base Salary, and (B) the Target Bonus;
and
	 
	 	(v)	 	The Company shall provide Executive continued coverage under
any health, medical, dental or vision program or policy in which Executive was
eligible to participate as of the time of his employment termination for two
(2) years following such termination on terms no less favorable to Executive
and his dependents (including with respect to payment for the costs thereof)
than those in effect immediately prior to such termination.
	 
	 	(vi)	 	The Company shall deliver to Executive, on the date that is six
months and one day following Executive’s termination date, Shares in respect of
the Annual Bonus Share Units and the 2008 RSU Grant, and Executive shall have
three months following the termination date to exercise vested Options (but in
no event beyond the expiration of the Option Term. Any unvested portion of the
Option), any unvested Performance Share Units, and any unvested Matching Share
Units shall be forfeited.
	 
	 	(vii)	 	The performance measures applicable to the Performance Share
Units will be applied as though the termination date were the end of the
measurement period, with the number of units calculated in a manner consistent
with the vesting schedule described in Section 4(c) of this Agreement (e.g.,
100% at a Compound Annual TSR of 15%, 200% at a Compound Annual TSR of 30%),
but based on the Compound Annual TSR determined through the termination date;
provided, however, that in the event Executive is entitled to benefits pursuant
to this Section, only a pro rata portion of such calculated units will vest
upon termination (based on the number of completed months elapsed from the date
of grant to the date of termination divided by 36 months). The Company shall
deliver Shares in respect of such vested Performance Share Units, if any, as
soon as practicable (but not later than sixty (60) days) following Executive’s
termination date and all other Performance Share Units will be forfeited.

	 	(d)	 	Termination by the Company Without Cause or by Executive for Good Reason
Following a Change in Control. If Executive’s employment by the Company shall be
terminated by the Company without Cause or by Executive for Good Reason within twelve
(12) months following a Change in Control (as defined in Section 9 below), then in lieu
of the amounts due under Section 8(c) above and subject to the requirements of Section
14(f) of the Agreement, Executive shall be entitled to the benefits provided in this
Section 8(d).

	 	(i)	 	The Company shall pay Executive any Accrued Compensation
through the end of the notice period provided for in Section 6(e) hereof.

13

 

	 	(ii)	 	The Company shall pay Executive any bonus earned but unpaid in
respect of any fiscal year preceding the termination date within sixty (60)
days following the termination date;
	 
	 	(iii)	 	In the event such termination occurs after the end of the
Company’s 2008 fiscal year, the Company shall pay Executive the Pro Rata Bonus;
	 
	 	(iv)	 	The Company shall pay Executive as severance pay and in lieu of
any further Base Salary for periods subsequent to the termination date, an
amount in cash, which amount shall be payable in a lump sum payment within
sixty (60) days following such termination (subject to Section 10), equal to
three (3) times the sum of (A) Executive’s Base Salary and (B) the Target
Bonus;
	 
	 	(v)	 	The Company shall provide Executive with continued coverage
under any health, medical, dental or vision program or policy in which
Executive was eligible to participate as of the time of his employment
termination for two (2) years following such termination on terms no less
favorable to Executive and his dependents (including with respect to payment
for the costs thereof) than those in effect immediately prior to such
termination.
	 
	 	(vi)	 	Annual Bonus Share Units and the 2008 RSU Grant shall be
payable, in the Company’s discretion, in either cash or in shares of the
acquiring entity, on the on the date that is six months and one day following
Executive’s termination date. Notwithstanding the above, the Annual Bonus
Share Units and the 2008 RSU Grant shall be payable in shares of the acquiring
entity only if the common stock of the acquiring entity is publicly traded on
an established securities market on the date on which such shares are payable.
	 
	 	(vii)	 	If the Option and the Matching Share Units are not cancelled
in connection with a Change in Control in exchange for a cash payment (as set
forth in Section 9), each outstanding Option and Matching Share Unit will vest,
the Option will remain exercisable for one year following the termination date
(but not beyond the Option term), and each Matching Share Unit will be settled
as soon as practicable (but in no event more than sixty (60) days) following
the termination date.

	 	 	Executive shall not be required to mitigate the amount of any payment provided for under
this Section 8 by seeking other employment or otherwise and no such payment shall be offset
or reduced by the amount of any compensation or benefits provided to Executive in any
subsequent employment.
	 
	9.	 	Change in Control.

	 	(a)	 	For purposes of this Agreement, a “Change in Control” shall mean any of the
following events:

14

 

	 	(i)	 	the acquisition (other than from the Company, by any person (as
such term is defined in Section 13(c) or 14(d) of the Securities Exchange Act
of 1934, as amended (the “1934 Act”)) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of thirty percent (30%)
or more of the combined voting power of the Company’s then outstanding voting
securities;
	 
	 	(ii)	 	the individuals who, as of the date hereof, are members of the
Board (the “Incumbent Board”), cease for any reason to constitute at least a
majority of the Board, unless the election, or nomination for election by the
Company’s stockholders, of any new director was approved by a vote of at least
a majority of the Incumbent Board, and such new director shall, for purposes of
this Agreement, be considered as a member of the Incumbent Board; or
	 
	 	(iii)	 	the closing of:

	 	(1)	 	a merger or consolidation involving the Company
if the stockholders of the Company, immediately before such merger or
consolidation, do not, as a result of such merger or consolidation,
own, directly or indirectly, more than fifty percent (50%) of the
combined voting power of the then outstanding voting securities of the
corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the combined
voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation; or
	 
	 	(2)	 	a complete liquidation or dissolution of the
Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company.

	 	 	 	Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
pursuant to Section 9, solely because thirty percent (30%) or more of the combined
voting power of the Company’s then outstanding securities is acquired by (i) a
trustee or other fiduciary holding securities under one or more employee benefit
plans maintained by the Company or any of its subsidiaries or (ii) any corporation
which, immediately prior to such acquisition, is owned directly or indirectly by the
stockholders of the Company in the same proportion as their ownership of stock in
the Company immediately prior to such acquisition.
	 
	 	(b)	 	Upon the occurrence of a Change in Control, at the election of the Company, the
Options and the Matching Share Units shall either be (i) cancelled in exchange for a
cash payment based in the case of any merger transaction on the price received by
shareholders in the transaction constituting the Change in Control or in the case of
any other event that constitutes a Change in Control, the closing price of a Share on
the date such Change in Control occurs (minus, in the case of Options, the applicable
exercise price per share) or, (ii) converted into options or units, as

15

 

	 	 	 	applicable, in respect of the common stock of the acquiring entity (in a merger or
otherwise) on the basis of the relative values of such stock and the Shares at the
time of the Change in Control; provided that subclause (ii) shall only be applicable
if the common stock of the acquiring entity is publicly traded on an established
securities market on the date on which such Change in Control is effected.
	 
	 	(c)	 	Upon the occurrence of a Change in Control, the performance measures applicable
with respect to the Performance Share Units will be applied as though the Change in
Control were the end of the measurement period and the units so earned will vest and be
payable in a manner consistent with the vesting schedule described in Section 4(c)
(e.g., 100% at a Compound Annual TSR of 15%, 200% at a Compound Annual TSR of 30%, 300%
at a Compound Annual TSR of 45%), but based on the Compound Annual TSR determined
through the date that the Change in Control occurs. Any Performance Shares Units
deemed earned in accordance with the immediately preceding sentence shall be payable,
in the Company’s discretion, in either cash or in shares of the acquiring entity as
soon as practicable (but not later than sixty (60) days) following the occurrence of a
Change of Control. Notwithstanding the above, the Performance Share Units shall be
payable in shares of the acquiring entity only if the common stock of the acquiring
entity is publicly traded on an established securities market on the date on which such
shares are payable.

	10.	 	Section 409A. If any payments or benefits due to Executive hereunder would cause the
application of an accelerated or additional tax under Section 409A of the Internal Revenue
Code of 1986, as amended (“Section 409A”), such payments or benefits shall be restructured in
a manner which does not cause such an accelerated or additional tax. Without limiting the
foregoing and notwithstanding anything contained herein to the contrary, to the extent
required in order to avoid accelerated taxation and/or tax penalties under Section 409A
amounts that would otherwise be payable and benefits that would otherwise be provided pursuant
to this Agreement during the six-month period immediately following Executive’s separation
from service shall instead be paid on the first business day after the date that is six months
following Executive’s termination date (or death, if earlier), with interest from the date
such amounts would otherwise have been paid at the short-term applicable federal rate,
compounded semi-annually, as determined under Section 1274 of the Internal Revenue Code of
1986, as amended, for the month in which .payment would have been made but for the delay in
payment required to avoid the imposition of an additional rate of tax on Executive under
Section 409A.
	 
	11.	 	Records and Confidential Data.

	 	(a)	 	Executive acknowledges that in connection with the performance of his duties
during the Employment Term, the Company will make available to Executive, or Executive
will have access to, certain Confidential Information (as defined below) of the Company
and its affiliates. Executive acknowledges and agrees that any and all Confidential
Information learned or obtained by Executive during the course of his employment by the
Company or otherwise, whether developed by

16

 

	 	 	 	Executive alone or in conjunction with others or otherwise, shall be and is the
property of the Company and its affiliates.
	 
	 	(b)	 	Except to the extent required to be disclosed at law or pursuant to judicial
process or administrative subponea, the Confidential Information will be kept
confidential by Executive, will not be used in any manner which is detrimental to the
Company, will not be used other than in connection with Executive’s discharge of his
duties hereunder, and will be safeguarded by Executive from unauthorized disclosure.
	 
	 	(c)	 	Following the termination of Executive’s employment hereunder, as soon as
possible after the Company’s written request, Executive will return to the Company all
written Confidential Information which has been provided to Executive and Executive
will destroy all copies of any analyses, compilations, studies or other documents
prepared by Executive or for Executive’s use containing or reflecting any Confidential
Information. Within five (5) business days of the receipt of such request by Executive,
he shall, upon written request of the Company, deliver to the Company a document
certifying that such written Confidential Information has been returned or destroyed in
accordance with this Section 11(c).
	 
	 	(d)	 	For the purposes of this Agreement, “Confidential Information” shall mean all
confidential and proprietary information of the Company and its affiliates, including,
without limitation, information derived from reports, investigations, experiments,
research, work in progress, drawing, designs, plans, proposals, codes, marketing and
sales programs, client lists, client mailing lists, supplier lists, financial
projections, cost summaries, pricing formula, marketing studies relating to prospective
business opportunities and all other concepts, ideas, materials, or information
prepared or performed for or by the Company or its affiliates. For purposes of this
Agreement, the Confidential Information shall not include and Executive’s obligation’s
shall not extend to (i) information which is generally available to the public, (ii)
information obtained by Executive other than pursuant to or in connection with this
employment and (iii) information which is required to be disclosed by law or legal
process.
	 
	 	(e)	 	Executive’s obligations under this Section 11 shall survive the termination of
the Employment Term.

	12.	 	Covenant Not to Solicit and Not to Compete.

	 	(a)	 	Covenant Not to Solicit. To protect the Confidential Information and other
trade secrets of the Company, Executive agrees, during the term of this Agreement and
for a period of twelve (12) months after Executive’s cessation of employment with the
Company, not to solicit or participate in or assist in any way in the solicitation of
any employees of the Company. For purposes of this covenant, “solicit” or
“solicitation” means directly or indirectly influencing or attempting to influence
employees of the Company to become employed with any other person,

17

 

	 	 	 	partnership, firm, corporation or other entity. Executive agrees that the covenants
contained in this Section 12(a) are reasonable and desirable to protect the
Confidential Information of the Company, provided, that solicitation through general
advertising or the provision of references shall not constitute a breach of such
obligations.
	 
	 	(b)	 	Covenant Not to Compete. To protect the Confidential Information and other
trade secrets of the Company, Executive agrees, during the term of this Agreement and
for a period of twelve (12) months after Executive’s cessation of employment with the
Company during the Employment Term pursuant to Section 6(c) or 6(f) hereof, not to
engage in Prohibited Activities (as defined below). For the purposes of this
Agreement, the term “Prohibited Activities” means directly or indirectly engaging as an
owner, employee, consultant or agent of any entity that develops, manufactures, markets
and/or distributes (directly or indirectly) prescription or non-prescription
pharmaceuticals or medical devices for treatments in the fields of neurology,
dermatology, oncology or hepatology; provided, that Prohibited Activities shall not
mean Executive’s investment in securities of a publicly-traded company equal to less
than five (5%) percent of such company’s outstanding voting securities. Executive
agrees that the covenants contained in this Section 12(b) are reasonable and desirable
to protect the Confidential Information of the Company.
	 
	 	(c)	 	It is the intent and desire of Executive and the Company that the restrictive
provisions of this Section 12 be enforced to the fullest extent permissible under the
laws and public policies as applied in each jurisdiction in which enforcement is
sought. If any particular provision of this Section 12 shall be determined to be
invalid or unenforceable, such covenant shall be amended, without any action on the
part of either party hereto, to delete therefrom the portion so determined to be
invalid or unenforceable, such deletion to apply only with respect to the operation of
such covenant in the particular jurisdiction in which such adjudication is made.
	 
	 	(d)	 	Executive’s obligations under this Section 12 shall survive the termination of
the Employment Term.

	13.	 	Remedies for Breach of Obligations under Sections 11 or 12 hereof. Executive acknowledges
that the Company will suffer irreparable injury, not readily susceptible of valuation in
monetary damages, if Executive breaches his obligations under Sections 11 or 12 hereof.
Accordingly, Executive agrees that the Company will be entitled, in addition to any other
available remedies, to obtain injunctive relief against any breach or prospective breach by
Executive of his obligations under Sections 11 or 12 hereof in any Federal or state court
sitting in the State of New Jersey, or, at the Company’s election, in any other state in which
Executive maintains his principal residence or his principal place of business as provided for
in Section 14(h) below. Executive hereby submits to the non-exclusive jurisdiction of all
those courts for the purposes of any actions or proceedings instituted by the Company to
obtain that injunctive relief, and Executive agrees that process in any or all of those
actions or proceedings may be served by registered mail,

18

 

	 	 	addressed to the last address provided by Executive to the Company, or in any other manner
authorized by law.
	 
	14.	 	Miscellaneous.

	 	(a)	 	Successors and Assigns.

	 	(i)	 	This Agreement shall be binding upon and shall inure to the
benefit of the Company, its successors and permitted assigns and the Company
shall require any successor or assign to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession or assignment had taken place. The
Company may not assign or delegate any rights or obligations hereunder except
to a successor (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of the
Company. The term “the Company” as used herein shall mean a corporation or
other entity acquiring all or substantially all the assets and business of the
Company (including this Agreement) whether by operation of law or otherwise.
	 
	 	(ii)	 	Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by Executive, his beneficiaries or legal
representatives, except by will or by the, laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by Executive’s
legal personal representatives.

	 	(b)	 	Fees and Expenses. The Company shall pay all reasonable legal and financial
advisory fees and related expenses, up to a maximum amount of $40,000, incurred by
Executive in connection with the negotiation of this Agreement and related employment
arrangements. Executive acknowledges that he has had the opportunity to consult with
legal counsel of his choice in connection with the drafting, negotiation and execution
of this Agreement and related employment arrangements.
	 
	 	(c)	 	Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of Termination)
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by Certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to the other, provided
that all notices to the Company shall be directed to the attention of the General
Counsel of the Company with a copy to the Chairman of the Compensation Committee of the
Board. All notices and communications shall be deemed to have been received on the date
of delivery thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.

19

 

	 	(d)	 	Indemnity Agreement. Executive shall be indemnified by the Company as provided
in Company’s by-laws and Certificate of Incorporation. The obligations under this
paragraph shall survive any termination of the Employment Term.
	 
	 	(e)	 	Withholding. The Company shall be entitled to withhold the amount, if any, of
all taxes of any applicable jurisdiction required to be withheld by an employer with
respect to any amount paid to Executive hereunder. The Company, in its sole and
absolute discretion, shall make all determinations as to whether it is obligated to
withhold any taxes hereunder and the amount hereof.
	 
	 	(f)	 	Release of Claims. The termination benefits described in Sections 8(c) and 8(d)
of this Agreement shall be conditioned on Executive delivering to the Company, and
failing to revoke, a signed release of claims in the form of Exhibit A hereto within
twenty-one days following Executive’s termination date; provided, however, that
Executive shall not be required to release any rights Executive may have to be
indemnified by the Company under Section 14(d) of this Agreement.
	 
	 	(g)	 	Modification. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and
signed by Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreement or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement.
	 
	 	(h)	 	Arbitration. If any legally actionable dispute arises under this Agreement or
otherwise which cannot be resolved by mutual discussion between the parties, then the
Company and Executive each agree to resolve that dispute by binding arbitration before
an arbitrator experienced in employment law. Said arbitration will be conducted in
accordance with the rules applicable to employment disputes of the Judicial Arbitration
and Mediation Services (“JAMS”) and the law applicable to the claim. The parties shall
have 30 calendar days after notice of such arbitration has been given to attempt to
agree on the selection of an arbitrator from JAMS. In the event the parties are unable
to agree in such time, JAMS will provide a list of five (5) available arbitrators and
an arbitrator will be selected from such five-member panel provided by JAMS by the
parties alternately striking out one name of a potential arbitrator until only one name
remains. The party entitled to strike an arbitrator first shall be selected by a toss
of a coin. The parties agree that this agreement to arbitrate includes any such
disputes that the Company may have against Executive, or Executive may have against the
Company and/or its related entities and/or employees, arising out of or relating to
this Agreement, or Executive’s employment or Executive’s termination including, but not
limited to, any claims of discrimination or harassment in violation of applicable law
and any other aspect of Executive’s compensation, employment, or Executive’s
termination. The parties further agree that arbitration as provided for

20

 

	 	 	 	in this Section 14(h) is the exclusive and binding remedy for any such dispute and
will be used instead of any court action, which is hereby expressly waived, except
for any request by either party for temporary or preliminary injunctive relief
pending arbitration in accordance with applicable law or for breaches by Executive
of Executive’s obligations under Sections 11 or 12 above or an administrative claim
with an administrative agency. The parties agree that the arbitration provided
herein shall be conducted in or around Morristown, New Jersey unless otherwise
mutually agreed or unless Executive’s primary place of employment is a different
location. The Company shall pay the cost of any arbitration brought pursuant to this
paragraph, excluding, however, the cost of representation of Executive unless such
cost is awarded in accordance with law or otherwise awarded by the arbitrators.
Except as otherwise provided above, the arbitrator may award legal fees to the
prevailing party in his sole discretion, provided that the percentage of fees so
awarded shall not exceed 1% of the net worth of the paying party (i.e., the Company
or Executive).
	 
	 	(i)	 	Effect of Other Law. Anything herein to the contrary notwithstanding, the terms
of this Agreement shall be modified to the extent required to meet the provisions of
the Sarbanes-Oxley Act of 2002, Section 409A of the Code, or other federal law
applicable to the employment arrangements between the Executive and the Company. Any
delay in providing benefits or payments, any failure to provide a benefit or payment,
or any repayment of compensation that is required under the preceding sentence shall
not in and of itself constitute a breach of this Agreement, provided, however, that the
Company shall provide economically equivalent payments or benefits to Executive to the
extent permitted by law.
	 
	 	(j)	 	Governing Law. This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New Jersey applicable to contracts executed
in and to be performed entirely within such State, without giving effect to the
conflict of law principles thereof.
	 
	 	(k)	 	No Conflicts. Executive represents and warrants to the Company that he is not a
party to or otherwise bound by any agreement or arrangement (including, without
limitation, any license, covenant, or commitment of any nature), or subject to any
judgment, decree, or order of any court or administrative agency, that would conflict
with or will be in conflict with or in any way preclude, limit or inhibit Executive’s
ability to execute this Agreement or to carry out his duties and responsibilities
hereunder.
	 
	 	(l)	 	Severability. The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
	 
	 	(m)	 	Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto and supersedes all prior agreements, if any, understandings and
arrangements, oral or written, between the parties hereto with respect to the subject
matter hereof.

21

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer and Executive has executed this Agreement as of the day and year first above
written.

	 	 	 	 	 
	 	VALEANT PHARMACEUTICALS INTERNATIONAL.

 	 
	 	By:  	/s/
Norma Provencio	 
	 	 	Title: Chair — Compensation
Committee Board of Directors	 
	 	 	 	 
	 

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	By:  	/s/
J. Michael Pearson	 
	 	 	Name: J. Michael Pearson	 
	 	 	 	 

22

 

	 	 	 	 	 

EXHIBIT A

FORM OF RELEASE AGREEMENT

THIS RELEASE AGREEMENT (the “Release”) is made as of this ______day of _________, _________, by
and between [            ] (“Executive”) and Valeant Pharmaceuticals International (the
“Company”).

FOR AND IN CONSIDERATION of the payments and benefits provided in the Employment Agreement between
the Executive and the Company dated February 1, 2008 (the “Employment Agreement”), Executive, for
himself, his successors and assigns, executors and administrators, now and forever hereby releases
and discharges the Company, together with all of its past and present parents, subsidiaries, and
affiliates, together with each of their officers, directors, stockholders, partners, employees,
agents, representatives and attorneys, and each of their subsidiaries, affiliates, estates,
predecessors, successors, and assigns (hereinafter collectively referred to as the
“Releasees”) from any and all rights, claims, charges, actions, causes of action,
complaints, sums of money, suits, debts, covenants, contracts, agreements, promises, obligations,
damages, demands or liabilities of every kind whatsoever, in law or in equity, whether known or
unknown, suspected or unsuspected, which Executive or Executive’s executors, administrators,
successors or assigns ever had, now has or may hereafter claim to have by reason of any matter,
cause or thing whatsoever; arising from the beginning of time up to the date of the Release: (i)
relating in any way to Executive’s employment relationship with the Company or any of the
Releasees, or the termination of Executive’s employment relationship with the Company or any of the
Releasees or relating to his status as a holder of the Capital Interest; (ii) arising under or
relating to the Employment Agreement; (iii) arising under any federal, local or state statute or
regulation, including, without limitation, the Age Discrimination in Employment Act of 1967, as
amended by the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the
Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974,
and/or the New Jersey Law against Discrimination, each as amended; (iv) relating to wrongful
employment termination or breach of contract; or (v) arising under or relating to any policy,
agreement, understanding or promise, written or oral, formal or informal, between the Company and
any of the Releasees and Executive; provided, however, that notwithstanding the
foregoing, nothing contained in the Release shall in any way diminish or impair: (a) any rights
Executive may have, from and after the date the Release is executed, under the Section 8(c)[Section
8(d)] of the Employment Agreement, (b) any rights to indemnification that may exist from time to
time under the Company’s certificate of incorporation or bylaws, or Delaware law; (c) any rights
Executive may have to vested benefits under employee benefit plans or incentive compensation plans
of the Company; (d) Executive’s ability to bring appropriate proceedings to enforce the Release, or
(e) any rights or claims Executive may have that cannot be waived under applicable law
(collectively, the “Excluded Claims”). Executive further acknowledges and agrees that,
except with respect to Excluded Claims, the Company and the Releasees have fully satisfied any and
all obligations whatsoever owed to Executive arising out of his employment with the Company or any
of the Releasees, and that no further payments or benefits are owed to Executive by the Company or
any of the Releasees.

23

 

Executive understands and agrees that, except for the Excluded Claims, he has knowingly
relinquished, waived and forever released any and all rights to any personal recovery in any action
or proceeding that may be commenced on Executive’s behalf arising out of the aforesaid employment
relationship or the termination thereof, including, without limitation, claims for backpay, front
pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages,
exemplary damages, costs, expenses and attorneys’ fees.

Executive acknowledges and agrees that Executive has been advised to consult with an attorney
of Executive’s choosing prior to signing the Release. Executive understands and agrees that
Executive has the right and has been given the opportunity to review the Release with an attorney
of Executive’s choice should Executive so desire. Executive also agrees that Executive has entered
into the Release freely and voluntarily. Executive further acknowledges and agrees that Executive
has had at least twenty-one (21) calendar days to consider the Release, although Executive may sign
it sooner if Executive wishes. In addition, once Executive has signed the Release, Executive shall
have seven (7) additional days from the date of execution to revoke Executive’s consent and may do
so by writing to: ___. The Release shall not be effective, and no payments shall be due
hereunder, until the eighth (8th) day after Executive shall have executed the Release and returned
it to the Company, assuming that Executive had not revoked Executive’s consent to the Release prior
to such date.

Executive agrees never to seek reemployment or future employment with the Company or any of the
other Releasees.

It is understood and agreed by Executive that the payment made to him is not to be construed as an
admission of any liability whatsoever on the part of the Company or any of the other Releasees, by
whom liability is expressly denied.

The Release is executed by Executive voluntarily and is not based upon any representations or
statements of any kind made by the Company or any of the other Releasees as to the merits, legal
liabilities or value of his claims. Executive further acknowledges that he has had a full and
reasonable opportunity to consider the Release and that he has not been pressured or in any way
coerced into executing the Release.

The exclusive venue for any disputes arising hereunder shall be the state or federal courts located
in the State of New Jersey, and each of the parties hereto irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such proceeding brought
in such a court has been brought in an inconvenient forum. Each of the parties hereto also agrees
that any final and unappealable judgment against a party hereto in connection with any action, suit
or other proceeding may be enforced in any court of competent jurisdiction, either within or
outside of the United States. A certified or exemplified copy of such award or judgment shall be
conclusive evidence of the fact and amount of such award or judgment.

The Release and the rights and obligations of the parties hereto shall be governed and construed in
accordance with the laws of the State of New Jersey. If any provision hereof is unenforceable or
is held to be unenforceable, such provision shall be fully severable, and this document and its
terms shall be construed and enforced as if such unenforceable provision had never comprised a part
hereof, the remaining provisions hereof shall remain in full force and effect, and the court

24

 

construing the provisions shall add as a part hereof a provision as similar in terms and effect to
such unenforceable provision as may be enforceable, in lieu of the unenforceable provision.

The Release shall inure to the benefit of and be binding upon the Company and its successors and
assigns.

IN WITNESS WHEREOF, Executive and the Company have executed the Release as of the date and year
first written above.

	 	 	 
	

	 	
	 

	 	 
	 

	 	VALEANT PHARMACEUTICALS INTERNATIONAL

25

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