Document:

exv10w1

Exhibit 10.1

AMENDED AND RESTATED FIRST ACCEPTANCE CORPORATION

EMPLOYEE STOCK PURCHASE PLAN

Article I

INTRODUCTION

     1.1 Establishment of Plan. First Acceptance Corporation, a Delaware corporation (the
“Company”) with its principal offices located in Nashville, Tennessee, adopts the following
employee stock purchase plan for its eligible employees. This Plan shall be known as the Amended
and Restated First Acceptance Corporation Employee Stock Purchase Plan.

     1.2 Purpose. The purpose of this Plan is to provide an opportunity for eligible employees of
the Employer to become shareholders in the Company. It is believed that broad-based employee
participation in the ownership of the business will help to achieve the unity of purpose conducive
to the continued growth of the Employer and to the mutual benefit of its employees and
shareholders.

     1.3 Qualification. This Plan is intended to be an employee stock purchase plan which
qualifies for favorable Federal income tax treatment under Section 423 of the Code and is intended
to comply with the provisions thereof, including the requirement of Section 423(b)(5) of the Code
that all Employees granted options to purchase Stock under the Plan have the same rights and
privileges with respect to such options.

     1.4 Rule 16b-3 Compliance. This Plan is intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, and should be interpreted in accordance therewith.

Article II

DEFINITIONS

     As used herein, the following words and phrases shall have the meanings specified below:

     2.1 Board of Directors. The Board of Directors of the Company.

     2.2 Closing Market Price. The closing price of the Stock as reported in the consolidated
trading of the New York Stock Exchange or such market or exchange on which the Stock is then traded
on the date specified; provided that if there should be any material alteration in the present
system of reporting sales prices of such Stock, or if such Stock should no longer be listed on the
New York Stock Exchange or any other market or exchange, the market value of the Stock as of a
particular date shall be determined in such a method as shall be specified by the Plan
Administrator.

     2.3 Code. The Internal Revenue Code of 1986, as amended from time to time.

 

 

     2.4 Commencement Date. The first day of each Option Period. The first Commencement Date
shall be February 1, 2005. Thereafter, Option Periods shall begin on each July 1 and January 1.

     2.5 Contribution Account. The account established on behalf of a Participant to which shall
be credited the amount of the Participant’s contribution, pursuant to Article V.

     2.6 Effective Date. February 1, 2005.

     2.7 Employee. Any person employed by the Employer for a period of six (6) months.

     2.8 Employer. The Company and any corporation (i) which is a Subsidiary of the Company, (ii)
which is authorized by the Board of Directors to adopt this Plan with respect to its Employees, and
(iii) which adopts this Plan. The term “Employer” shall include any corporation into which an
Employer may be merged or consolidated or to which all or substantially all of its assets may be
transferred, provided that the surviving or transferee corporation would qualify as a subsidiary
under Section 2.18 hereof and that such corporation does not affirmatively disavow this Plan.

     2.9 Exercise Date. The last trading date of each Option Period on the New York Stock Exchange
or such market or exchange on which the Stock is then traded.

     2.10 Exercise Price. The price per share of the Stock to be charged to Participants at the
Exercise Date, as determined in Section 6.3.

     2.11 Five-Percent Shareholder. An Employee who owns five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any Subsidiary thereof.
In determining this five percent test, shares of stock which the Employee may purchase under
outstanding options, as well as stock attributed to the Employee under Section 424(d) of the Code,
shall be treated as stock owned by the Employee in the numerator, but shares of stock which may be
issued under options shall not be counted in the total of outstanding shares in the denominator.

     2.12 Grant Date. The first trading date of each Option Period on the New York Stock Exchange
or such market or exchange on which the Stock is then traded.

     2.13 Option Period. The first Option Period shall begin on February 1, 2005 and end on June
30, 2005. Thereafter, Option Periods shall be successive six (6) month periods commencing on July
1 and ending on December 31 and commencing on January 1 and ending on June 30.

     2.14 Participant. Any Employee of an Employer who has met the conditions for eligibility as
provided in Article IV and who has elected to participate in the Plan.

     2.15 Plan. Amended and Restated First Acceptance Corporation Employee Stock Purchase Plan.

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     2.16 Plan Administrator. The committee composed of one or more individuals to whom authority
is delegated by the Board of Directors to administer the Plan. The initial committee shall be the
Compensation Committee of the Board of Directors.

     2.17 Stock. Those shares of common stock of the Company which are reserved pursuant to
Section 6.1 for issuance upon the exercise of options granted under this Plan.

     2.18 Subsidiary. Any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the option, each of the
corporations other than the last corporation in the chain owns stock possessing fifty percent (50%)
or more of the combined voting power of all classes of stock in one of the other corporations in
such chain.

Article III

SHAREHOLDER APPROVAL

     3.1 Shareholder Approval Required. This Plan must be approved by the shareholders of the
Company within the period beginning twelve (12) months before and ending twelve (12) months after
its adoption by the Board of Directors.

     3.2 Shareholder Approval for Certain Amendments. Without the approval of the shareholders of
the Company, no amendment to this Plan shall increase the number of shares reserved under the Plan,
other than as provided in Section 10.3. Approval by shareholders must occur within one (1) year of
such amendment or such amendment shall be void ab initio, comply with applicable provisions of the
corporate charter and bylaws of the Company, and comply with Delaware law prescribing the method
and degree of shareholder approval required for issuance of corporate stock or options.

Article IV

ELIGIBILITY AND PARTICIPATION

     4.1 Conditions. Each Employee shall become eligible to become a Participant on the
Commencement Date next following the date on which he is employed by the Employer for a period of
six (6) months. No Employee who is a Five-Percent Shareholder shall be eligible to participate in
the Plan. Notwithstanding anything to the contrary contained herein, no individual who is not an
Employee shall be granted an option to purchase Stock under the Plan.

     4.2 Application for Participation. Each Employee who becomes eligible to participate shall be
furnished a summary of the Plan and an enrollment form. If such Employee elects to participate
hereunder, he shall complete such form and file it with his Employer no later than fifteen (15)
days prior to the next Commencement Date. The completed enrollment form shall indicate the amount
of Employee contributions authorized by the Employee. If no new enrollment form is filed by a
Participant in advance of any Option Period after the initial Option Period, that Participant shall
be deemed to have elected to continue to participate with the same contribution previously elected
(subject to the limit of 15% of base pay). If any Employee does

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not elect to participate in any given Option Period, he may elect to participate on any future
Commencement Date so long as he continues to meet the eligibility requirements.

     4.3 Date of Participation. All Employees who elect to participate shall be enrolled in the
Plan commencing with the first pay date after the Commencement Date following their submission of
the enrollment form. Upon becoming a Participant, the Participant shall be bound by the terms of
this Plan, including any amendments whenever made.

     4.4 Acquisition or Creation of Subsidiary. If the stock of a corporation is acquired by the
Company or another Employer so that the acquired corporation becomes a Subsidiary, or if a
Subsidiary is created, the Subsidiary in either case shall automatically become an Employer and its
Employees shall become eligible to participate in the Plan on the first Commencement Date after the
acquisition or creation of the Subsidiary, as the case may be. Notwithstanding the foregoing, the
Board of Directors may by appropriate resolutions (i) provide that the acquired or newly created
Subsidiary shall not be a participating Employer, (ii) specify that the acquired or newly created
Subsidiary will become a participating Employer on a Commencement Date other than the first
Commencement Date after the acquisition or creation, or (iii) attach any condition whatsoever to
eligibility of the employees of the acquired or newly created Subsidiary, except to the extent such
condition would not comply with Section 423 of the Code.

Article V

CONTRIBUTION ACCOUNT

     5.1 Employee Contributions. The enrollment form signed by each Participant shall authorize
the Employer to deduct from the Participant’s compensation an after-tax amount during each payroll
period not less than one percent (1%) nor more than an amount which is fifteen percent (15%) of the
Participant’s base pay on the Commencement Date. A Participant’s base pay shall be determined
before subtracting any elective deferrals to a qualified plan under Section 401(k) of the Code,
salary reduction contributions to a cafeteria plan under Section 125 of the Code or elective
deferrals to a nonqualified deferred compensation plan. The dollar amount deducted each payday
shall be credited to the Participant’s Contribution Account. Participant contributions will not be
permitted to commence at any time during the Option Period other than on the Commencement Date.
Unless otherwise determined by the Plan Administrator with respect to an Option Period, no interest
will accrue on any contributions or on the balance in a Participant’s Contribution Account.

     5.2 Modification of Contribution Rate. No change shall be permitted in a Participant’s amount
of withholding except upon a Commencement Date, and then only if the Participant files a new
enrollment form with the Employer at least fifteen (15) days in advance of the Commencement Date
designating the desired withholding rate. Notwithstanding the foregoing, a Participant may notify
the Employer at any time (except during the periods from June 21 through June 30 and December 22
through December 31) that he wishes to discontinue his contributions. This notice shall be in
writing and on such forms as provided by the Employer and shall become effective as of a date
provided on the form not more than fifteen (15) days following its receipt by the Employer. The
Participant shall become eligible to recommence contributions on the next Commencement Date.

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     5.3 Withdrawal of Contributions. A Participant may elect to withdraw the balance of his
Contribution Account at any time during the Option Period prior to the Exercise Date (except during
the periods from June 21 through June 30 and December 22 through December 31). The option granted
to a Participant shall be canceled upon his withdrawal of the balance in his Contribution Account.
This election to withdraw must be in writing on such forms as may be provided by the Employer. If
contributions are withdrawn in this manner, further contributions during that Option Period will be
discontinued in the same manner as provided in Section 5.2, and the Participant shall become
eligible to recommence contributions on the next Commencement Date.

     5.4 Limitations on Contributions. During each Option Period, the total contributions by a
Participant to his Contribution Account shall not exceed fifteen percent (15%) of the Participant’s
base pay for the Option Period. If a Participant’s total contributions should exceed this limit,
the excess shall be returned to the Participant after the end of the Option Period, without
interest.

Article VI

ISSUANCE AND EXERCISE OF OPTIONS

     6.1 Reserved Shares of Stock. The Company shall reserve four hundred thousand (400,000)
shares of Stock for issuance upon exercise of the options granted under this Plan.

     6.2 Issuance of Options. On the Grant Date each Participant shall be deemed to receive an
option to purchase Stock with the number of shares and Exercise Price determined as provided in
this Article VI, subject to the maximum limits specified in Section 6.6(a). All such options shall
be automatically exercised on the following Exercise Date, except for options which are canceled
when a Participant withdraws the balance of his Contribution Account or which are otherwise
terminated under the provisions of this Plan.

     6.3 Determination of Exercise Price. The Exercise Price of the options granted under this
Plan for any Option Period shall be the lesser of:

     (i) one hundred percent (100%) of the Closing Market Price of the Stock on the Exercise
Date; or

     (ii) one hundred percent (100%) of the Closing Market Price of the Stock on the Grant
Date.

     6.4 Purchase of Stock. On an Exercise Date, all options shall be automatically exercised,
except that the options of a Participant who has terminated employment pursuant to Section 7.1 or
who has withdrawn all his contributions shall expire. The Contribution Account of each Participant
shall be used to purchase the maximum number of shares of Stock, determined up to three decimal
places, determined by dividing the Exercise Price into the balance of the Participant’s
Contribution Account.

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     6.5 Terms of Options. Options granted under this Plan shall be subject to such amendment or
modification as the Employer shall deem necessary to comply with any applicable law or regulation,
including but not limited to Section 423 of the Code, and shall contain such other provisions as
the Employer shall from time to time approve and deem necessary; provided, however, that any such
provisions shall comply with Section 423 of the Code.

     6.6 Limitations on Options. The options granted hereunder are subject to the following
limitations:

     (a) The maximum number of shares of Stock which may be purchased by any Participant on
an Exercise Date shall be three thousand (3,000) shares. This maximum number of shares
shall be adjusted upon the occurrence of an event described in Section 10.3.

     (b) No Participant shall be permitted to accrue the right to purchase during any
calendar year Stock under this Plan (or any other Plan of the Employer or a Subsidiary which
is qualified under Section 423 of the Code) having a market value of greater than
twenty-five thousand dollars ($25,000.00) (as determined on the Grant Date for the Option
Period during which each such share of Stock is purchased) as provided in Section 423(b)(8)
of the Code.

     (c) No option may be granted to a Participant if the Participant immediately after the
option is granted would be a Five-Percent Shareholder.

     (d) No Participant may assign, transfer or otherwise alienate any options granted to
him under this Plan, otherwise than by will or the laws of descent and distribution, and
such options must be exercised during the Participant’s lifetime only by him.

     6.7 Pro-Rata Reduction of Optioned Stock. If the total number of shares of Stock to be
purchased under option by all Participants on an Exercise Date exceeds the number of shares of
Stock remaining authorized for issuance under Section 6.1, a pro-rata allocation of the shares of
Stock available for issuance will be made among Participants in proportion to their respective
Contribution Account balances on the Exercise Date, and any money remaining in the Contribution
Accounts shall be returned to the Participants.

     6.8 State Securities Laws. Notwithstanding anything to the contrary contained herein, the
Company shall not be obligated to issue shares of Stock to any Participant if to do so would
violate any State securities law applicable to the sale of Stock to such Participant. In the event
that the Company refrains from issuing shares of Stock to any Participant in reliance on this
Section, the Company shall return to such Participant the amount in such Participant’s Contribution
Account that would otherwise have been applied to the purchase of Stock.

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Article VII

TERMINATION OF PARTICIPATION

     7.1 Termination of Employment. Any Employee whose employment with the Employer is terminated
during the Option Period prior to the Exercise Date for any reason except death, disability or
retirement at or after age 65 shall cease being a Participant immediately. The balance of that
Participant’s Contribution Account shall be paid to such Participant as soon as practical after his
termination. The option granted to such Participant shall be null and void.

     7.2 Death. If a Participant should die while employed by the Employer, no further
contributions on behalf of the deceased Participant shall be made. The legal representative of the
deceased Participant may elect to withdraw the balance in said Participant’s Contribution Account
by notifying the Employer in writing prior to the Exercise Date in the Option Period during which
the Participant died (except during the periods from June 21 through June 30 and December 22
through December 31). In the event no election to withdraw is made on or before the June 20 or
December 21 preceding the Exercise Date, the balance accumulated in the deceased Participant’s
Contribution Account shall be used to purchase shares of Stock in accordance with Section 6.4.

     7.3 Retirement. If a Participant should retire from the employment of the Employer at or
after attaining age 65, no further contributions on behalf of the retired Participant shall be
made. The Participant may elect to withdraw the balance in his Contribution Account by notifying
the Employer in writing prior to the Exercise Date in the Option Period during which the
Participant retired (except during the periods from June 21 through June 30 and December 22 through
December 31). In the event no election to withdraw is made on or before the June 20 or December 21
preceding the Exercise Date, the balance accumulated in the retired Participant’s Contribution
Account shall be used to purchase shares of Stock in accordance with Section 6.4.

     7.4 Disability. If a Participant should terminate employment with the Employer on account of
disability, as determined by reference to the definition of “disability” in the Employer’s
long-term disability plan, no further contributions on behalf of the disabled Participant shall be
made. The Participant may elect to withdraw the balance in his Contribution Account by notifying
the Employer in writing prior to the Exercise Date in the Option Period during which the
Participant became disabled (except during the periods from June 21 through June 30 and December 22
through December 31). In the event no election to withdraw is made on or before the June 20 or
December 21 preceding the Exercise Date, the balance accumulated in the disabled Participant’s
Contribution Account shall be used to purchase shares of Stock in accordance with Section 6.4.

Article VIII

OWNERSHIP OF STOCK

     8.1 Stock Certificates. As soon as practical after the Exercise Date, the Plan Administrator
will, in its sole discretion, either credit a share account maintained for the benefit of each
Participant or issue certificates to each Participant for the number of shares of Stock purchased
under the Plan by such Participant during an Option Period. Such determination by

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the Plan Administrator shall apply equally to all shares of Stock purchased during the Option
Period. Certificates may be issued, at the request of a Participant, in the name of the
Participant, jointly in the name of the Participant and a member of the Participant’s family, to
the Participant as custodian for the Participant’s child under the Gift to Minors Act, or to the
legal representative of a deceased Participant. No certificate shall be issued for fractional
shares of Stock, and any such fractional share shall be converted into cash based upon the Closing
Market Price on the date a certificate is issued to the Participant.

     8.2 Premature Sale of Stock. If a Participant (or former Participant) sells or otherwise
disposes of any shares of Stock obtained under this Plan:

     (i) prior to two (2) years after the Grant Date of the option under which such shares
were obtained, or

     (ii) prior to one (1) year after the Exercise Date on which such shares were obtained,

that Participant (or former Participant) must notify the Employer immediately in writing concerning
such disposition.

     8.3 Restrictions on Sale. The Plan Administrator may, in its sole discretion, place
restrictions on the sale or transfer of shares of Stock purchased under the Plan during any Option
Period by notice to all Participants of the nature of such restrictions given in advance of the
Commencement Date of such Option Period. The restrictions may prevent the sale, transfer or other
disposition of any shares of Stock purchased during the Option Period for a period of up to two
years from the Grant Date, subject to such exceptions as the Plan Administrator may determine
(e.g., termination of employment with the Employer). If certificates are issued pursuant
to Section 8.1 for shares that are restricted, the certificates shall contain an appropriate legend
disclosing the nature and duration of the restriction. Any such restrictions and exceptions
determined by the Plan Administrator shall be applicable equally to all shares of Stock purchased
during the Option Period for which the restrictions are first applicable. In addition, such
restrictions and exceptions shall remain applicable during subsequent Option Periods unless
otherwise determined by the Plan Administrator. If the Plan Administrator should change or
eliminate the restrictions for a subsequent Option Period, notice of such action shall be given to
all Participants.

     8.4 Transfer of Ownership. A Participant who purchases shares of Stock under this Plan shall
be transferred at such time substantially all of the rights of ownership of such shares of Stock in
accordance with the Treasury regulations promulgated under Section 423 of the Code as in effect on
the Effective Date. Such rights of ownership shall include the right to vote, the right to receive
declared dividends, the right to share in the assets of the Employer in the event of liquidation,
the right to inspect the Employer’s books and the right to pledge or sell such Stock subject to the
restrictions in the Plan.

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Article IX

ADMINISTRATION AND AMENDMENT

     9.1 Administration. The Plan Administrator shall (i) administer the Plan, (ii) keep records
of the Contribution Account balance of each Participant, (iii) keep records of the share account
balance of each Participant, (iv) interpret the Plan, (v) determine all questions arising as to
eligibility to participate, amount of contributions permitted, determination of the Exercise Price,
and all other matters of administration, and (vi) determine whether to place restrictions on the
sale and transfer of Stock and the nature of such restrictions, as provided in Section 8.3. The
Plan Administrator shall have such duties, powers and discretionary authority as may be necessary
to discharge the foregoing duties, and may delegate any or all of the foregoing duties to any
individual or individuals (including officers or other Employees who are Participants). The Board
of Directors shall have the right at any time and without notice to remove or replace any
individual or committee of individuals serving as Plan Administrator. All determinations by the
Plan Administrator shall be conclusive and binding on all persons. Any rules, regulations, or
procedures that may be necessary for the proper administration or functioning of this Plan that are
not covered in this Plan document shall be promulgated and adopted by the Plan Administrator.

     9.2 Amendment. The Board of Directors of the Employer may at any time amend the Plan in any
respect, including termination of the Plan, without notice to Participants. If the Plan is
terminated, all options outstanding at the time of termination shall become null and void and the
balance in each Participant’s Contribution Account shall be paid to that Participant.
Notwithstanding the foregoing, no amendment of the Plan as described in Section 3.2 shall become
effective until and unless such amendment is approved by the shareholders of the Company.

Article X

MISCELLANEOUS

     10.1 Expenses. The expenses of administering the Plan shall be paid by the Participants
except as determined by the Plan Administrator in its sole discretion.

     10.2 No Contract of Employment. Nothing in this Plan shall be construed to constitute a
contract of employment between an Employer and any Employee or to be an inducement for the
employment of any Employee. Nothing contained in this Plan shall be deemed to give any Employee
the right to be retained in the service of an Employer or to interfere with the right of an
Employer to discharge any Employee at any time, with or without cause, regardless of the effect
which such discharge may have upon him as a Participant of the Plan.

     10.3 Adjustment Upon Changes in Stock. The aggregate number of shares of Stock reserved for
purchase under the Plan as provided in Section 6.1, and the calculation of the Exercise Price as
provided in Section 6.3, shall be adjusted by the Plan Administrator (subject to direction by the
Board of Directors) in an equitable manner to reflect changes in the capitalization of the Company,
including, but not limited to, such changes as result from merger,

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consolidation, reorganization, recapitalization, stock dividend, dividend in property other than
cash, stock split, combination of shares, exchange of shares and change in corporate structure. If
any adjustment under this Section 10.3 would create a fractional share of Stock or a right to
acquire a fractional share of Stock, such fractional share shall be disregarded and the number of
shares available under the Plan and the number of shares covered under any options granted pursuant
to the Plan shall be the next lower number of shares, rounding all fractions downward.

     10.4 Employer’s Rights. The rights and powers of any Employer shall not be affected in any
way by its participation in this Plan, including but not limited to the right or power of any
Employer to make adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all
or any part of its business or assets.

     10.5 Limit on Liability. No liability whatever shall attach to or be incurred by any past,
present or future shareholders, officers or directors, as such, of the Company or any Employer,
under or by reason of any of the terms, conditions or agreements contained in this Plan or implied
therefrom, and any and all liabilities of any and all rights and claims against the Company, an
Employer, or any shareholder, officer or director as such, whether arising at common law or in
equity or created by statute or constitution or otherwise, pertaining to this Plan, are hereby
expressly waived and released by every Participant as a part of the consideration for any benefits
under this Plan; provided, however, no waiver shall occur, solely by reason of this Section 10.5,
of any right which is not susceptible to advance waiver under applicable law.

     10.6 Gender and Number. For the purposes of the Plan, unless the contrary is clearly
indicated, the use of the masculine gender shall include the feminine, and the singular number
shall include the plural and vice versa.

     10.7 Governing Law. The validity, construction, interpretation, administration and effect of
this Plan, and any rules or regulations promulgated hereunder, including all rights or privileges
of any Participants hereunder, shall be governed exclusively by and in accordance with the laws of
the State of Delaware, except that the Plan shall be construed to the maximum extent possible to
comply with Section 423 of the Code and the Treasury regulations promulgated thereunder.

     10.8 Headings. Any headings or subheadings in this Plan are inserted for convenience of
reference only and are to be ignored in the construction of any provisions hereof.

     10.9 Severability. If any provision of this Plan is held by a court to be unenforceable or is
deemed invalid for any reason, then such provision shall be deemed inapplicable and omitted, but
all other provisions of this Plan shall be deemed valid and enforceable to the full extent possible
under applicable law.

10exv10w1

Exhibit 10.1

November 11, 2010

Dear Rajiv:

This letter outlines the details of your employment with Valeant Pharmaceuticals International,
Inc. (the “Company”), and your Company assignment.

	 	•	 	Title: President, Valeant Pharmaceuticals International, Inc. and Chief
Operating Officer, Specialty Pharmaceuticals; you will report to the Chief Executive
Officer.
	 
	 	•	 	Base Salary: $62,500 per month ($750,000 annualized), effective as of
November 1, 2010.
	 
	 	•	 	Annual Incentive: You will be eligible to participate in the Company’s
management bonus plan for the period from September 28, 2010 through December 31, 2010,
with a target bonus of 60%, with the potential of 120% of your base pay. You will be
eligible to participate in the Company’s management bonus plan beginning in the 2011
calendar year. Your target bonus will be 60%, with the potential of 120% of your base
pay. This plan, and therefore your participation, is subject to change at the
discretion of the Board of Directors. Bonuses are payable at the time the other
management bonuses are paid. To be eligible for any bonus payment, you must be employed
by the Company, and not have given or received notice of the termination of your
employment, on the day on which the applicable bonus is paid to other members of the
Company management.
	 
	 	•	 	Equity Awards: Subject to you entering into this agreement prior to the
Equity Grant Date, as defined below, you will receive the following equity:

Stock Options — On the Equity Grant Date, you shall be granted options
under the Company’s 2007 Equity Compensation Plan (the “Plan”) to acquire
185,000 shares of the Company common stock (“Shares”) (the “Options”). The
Options will vest over a four-year period beginning October 8, 2011 (25% per
year on each of October 8, 2011, 2012, 2013 and 2014), provided that you are
employed by the Company on the vesting date, and shall have a term of five (5)
years. Except as set forth below, if your employment terminates for any reason
prior to the vesting date, your unvested Options will be forfeited (and, in the
case of a termination of your employment for Cause, your vested Options will
also be forfeited). Notwithstanding anything to the contrary in the Plan, (i)
if your employment is terminated by the Company without Cause or by you for Good
Reason (each as defined below), at any time within the twelve (12) months
following a Change in Control, then any Option that is not cancelled in
connection with the Change in Control in exchange for cash payment will vest on
the Termination Date (as defined below) and shall remain exercisable for one
year following the Termination Date (but in no event beyond the 5-year term of
the Option) and (ii) if your

 

 

November 11, 2010

Mr. Rajiv De Silva

Page 2 of 14

employment is terminated by reason of your death, any Option outstanding shall
vest in full and remain exercisable for the remainder of the term of the Option.
The “Termination Date” shall be the date specified as the effective date of the
termination of your employment in any notice of termination of employment
provided by the Company to you or accepted by the Company in the event of your
giving notice of the termination of your employment.

The Equity Grant Date shall be the earliest date that is five clear trading days
following the trading date on which there is no undisclosed material
information. The exercise price of the Options shall be based on the volume
weighted average pricing (“VWAP”) on the Toronto Stock Exchange (“TSX”) or the
New York Stock Exchange (“NYSE”) or other stock exchange where the majority of
the trading volume and value of the Shares occurs, for the five trading days
immediately preceding such grant date, except that to the extent required by
Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”),
the exercise price shall be based on the greater of (i) VWAP as calculated above
or (ii) the VWAP on the TSX or NYSE or other stock exchange where the majority
of the trading volume and value of the Shares occurs, for the single trading day
immediately preceding such grant date.

The Company shall enter into a stock option award agreement with you 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 stock option award agreement.

Performance Restricted Share Units. Subject to shareholder approval of
an increase in the number of performance awards that may be paid to an
individual in any single year under the Plan, on the Equity Grant Date you will
also receive 85,000 performance-based restricted stock units under the Plan (the
“Performance Share Units”), which shall vest as follows, provided that, except
as set forth herein, you are continually employed by the Company through the
applicable vesting date:

	 	(i)	 	Single Vesting Share Price.
	 
	 	 	 	If at June 28, 2013, the Adjusted Share Price (as defined below) equals the
Single Vesting Share Price (as defined below), you shall vest in 25% of the
Performance Share Units.
	 
	 	 	 	If at September 28, 2013, the Adjusted Share Price equals the Single Vesting
Share Price, you shall vest in an additional 50% of the Performance Share
Units.

 

 

November 11, 2010

Mr. Rajiv De Silva

Page 3 of 14

	 	 	 	If at December 28, 2013, the Adjusted Share Price equals the Single Vesting
Share Price, you shall vest in an additional 25% of the Performance Share
Units.
	 
	 	(ii)	 	Double Vesting Share Price.
	 
	 	 	 	If at June 28, 2013, the Adjusted Share Price equals the Double Vesting
Share Price (as defined below), you shall vest in 50% of the Performance
Share Units.
	 
	 	 	 	If at September 28, 2013, the Adjusted Share Price equals the Double Vesting
Share Price, you shall vest in an additional 100% of the Performance Share
Units.
	 
	 	 	 	If at December 28, 2013, the Adjusted Share Price equals the Double Vesting
Share Price, you shall vest in an additional 50% of the Performance Share
Units.
	 
	 	(iii)	 	Triple Vesting Share Price.
	 
	 	 	 	If at June 28, 2013, the Adjusted Share Price equals the Triple Vesting
Share Price (as defined below), you shall vest in 75% of the Performance
Share Units.
	 
	 	 	 	If at September 28, 2013, the Adjusted Share Price equals the Triple Vesting
Share Price, you shall vest in an additional 150% of the Performance Share
Units.
	 
	 	 	 	If at December 28, 2013, the Adjusted Share Price equals the Triple Vesting
Share Price, you shall vest in an additional 75% of the Performance Share
Units.
	 
	 	(iv)	 	Performance Share Units that could have been
vested under either of paragraphs (i), (ii), or (iii) that do not
become vested on June 28, 2013,
September 28, 2013, or December 28, 2013, may become vested on June 28,
2014, September 28, 2014, or December 28, 2014, respectively, based upon
the Adjusted Share Price on the applicable measurement date, provided
that you are employed by the Company

 

 

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Mr. Rajiv De Silva

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	 	 	 	on such applicable vesting date. Any
Performance Share Units that are not vested as of December 28, 2014 shall
be immediately forfeited.
	 
	 	(v)	 	If the Adjusted Share Price on a measurement
date set forth in clauses (i), (ii) and (iii) is between the Single
Vesting Share Price and the Double Vesting Share Price or is between
the Double Vesting Share Price and the Triple Vesting Share Price, you
shall vest in a number of Performance Share Units that is the
mathematical linear interpolation between the number of Performance
Share Units which would vest at defined ends of the applicable
spectrum.
	 
	 	(vi)	 	“Adjusted Share Price” means the sum of (i) the
average of the closing prices of Shares during the 20 consecutive
trading days starting on the specified measurement date (or if such
measurement date does not fall on a trading day, the immediately
following trading day) (“Average Share Price”), and (ii) the value that
would be derived from the number of Shares (including fractions
thereof) that would have been purchased had an amount equal to each
dividend paid on a share of common stock after the Equity Grant Date
and on or prior to the applicable measurement date been deemed invested
on the dividend payment date, based on the closing price of the common
stock on such dividend payment date. The Adjusted Share Price and
Average Share Price shall be subject to equitable adjustment to reflect
stock splits, stock dividends and other capital adjustments.
	 
	 	(vii)	 	“Single Vesting Share Price,” “Double Vesting
Share Price” and “Triple Vesting Share Price” means the Adjusted Share
Prices equal to a compound annual share price appreciation (the “Annual
Compound TSR”) of 15%, 30% and 45%, respectively, as measured from a
base price of $26.51 over a measurement period from October 25, 2010 to
the last trading day of the period used to calculate the Adjusted Share
Price. Such base price shall be subject to equitable adjustment to
reflect stock splits, stock dividends and other capital adjustments
(such price, as adjusted, the “Base Price”).
	 
	 	(viii)	 	Notwithstanding the foregoing vesting provisions of the Performance
Share Units, if on any date between the Equity Grant
Date and October 25, 2013, the average of the closing prices of Shares
during 20 consecutive trading days (“Per Share Price”) on such date

 

 

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	 		 	(A) exceeds $58.24, then you will become vested in 85,000 of the
Performance Share Units that could have been earned under clause (i)
above;
	 
	 		 	(B) exceeds $80.82, then you will become vested in the additional 85,000
of the Performance Share Units that could have been earned under clause
(ii) above; and
	 
	 		 	(C) exceeds $108.58, then you will become vested in the additional
85,000 of the Performance Share Units that could have been earned under
clause (iii) above;
	 
	 	 	 	provided, however, that the vesting that takes place pursuant to this
clause (viii) if the Per Share Price target is achieved shall only take
place the first time such Per Share Price target is achieved on such
vesting date, there is no interpolation of vesting pursuant to this
clause (viii), and to vest in any of the Performance Share Units
pursuant to this clause (viii) you must remain employed by the Company
through the applicable vesting date. The Per Share Price specified
herein shall be subject to equitable adjustment to reflect stock splits,
stock dividends and other capital adjustments.
	 
	 	(ix)	 	The Company shall distribute to you a number of
shares of its common stock equal to the number of Performance Shares
Units that become vested as soon as practicable (but in any event no
later than 45 days) following the vesting date of such Performance
Shares Units.
	 
	 	(x)	 	Notwithstanding anything to the contrary in the
Plan, in the event of your death, the performance measures applicable
to the Performance Share Units will be applied as though the date of
death was the end of the 20 consecutive trading-day average measurement
period, with the number of units calculated in a manner consistent with
the vesting schedule described above, but based on the Annual Compound
TSR determined through the date of death. Notwithstanding the
immediately preceding sentence, if death occurs prior to October 25,
2011, the measurement date will still be the date of death, but the
Annual Compound TSR will be determined based on an assumed measurement
period of one year. Any Performance Share Units that
did not become vested prior to the date of death for a reason set forth
in this clause (x) or that do not become vested as a result of this
clause (x) shall be forfeited immediately following the date of death.

 

 

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	 	(xi)	 	Subject to clause (xii) below, and
notwithstanding anything to the contrary in the Plan, in the event of
an involuntary termination of your employment by the Company without
Cause or by you with Good Reason, or in the event of your Disability
(each as defined below), in each case, following October 25, 2011, the
performance measures applicable to the Performance Share Units will be
applied as though your employment Termination Date was the end of the
20 consecutive trading-day average measurement period, with the number
of units calculated in a manner consistent with the vesting schedule
described above, but based on the Annual Compound TSR determined
through your Termination Date, provided, however, only a pro rata
portion of such calculated Performance Share Units will vest upon
termination. Any Performance Share Units that did not become vested
prior to your termination of employment for a reason set forth in this
clause (xi) or that do not become vested as a result of this clause
(xi) shall be forfeited immediately following the date of your
termination of employment. In the event of a termination of employment
for a reason set forth in this clause (xi) that occurs prior to October
25, 2011, the award of Performance Share Units shall be forfeited.
	 
	 	(xii)	 	Notwithstanding anything to the contrary in
the Plan, in the event of a Change in Control, the Performance Share
Units will be converted into a number of time-based restricted stock
units (the “Resulting RSUs”) determined by applying the performance
measures applicable to the Performance Share Units as though the sum of
(i) fair market value of the Company common stock on the date of the
Change in Control and (ii) the value that would be derived from the
number of Shares (including fractions thereof) that would have been
purchased had an amount equal to each dividend paid on a share of
common stock after the Equity Grant Date and on or prior to the
applicable measurement date been deemed invested on the dividend
payment date, based on the closing price of the common stock on such
dividend payment date was the Adjusted Share Price, with the number of
Resulting RSUs equal to the number of Performance Share Units that
would have vested based on the Annual Compound TSR determined through
the Change in Control. Notwithstanding the immediately preceding
sentence, if termination following a Change in Control occurs prior to
October 25, 2011, the measurement date will still be the date of Change
in Control, but the Annual Compound TSR will be determined based on an
assumed measurement period of one year.
The Resulting RSUs will vest on October 25, 2013, subject to your
continued employment; provided that in the event of an involuntary
termination of your employment by the Company without Cause or by you
with Good Reason within the twelve (12) months following a Change in
Control,

 

 

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Mr. Rajiv De Silva

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	 	 	 	the vesting and payment of such Resulting RSUs will be
accelerated to your Termination Date. Any Performance Share Units that
did not become Resulting RSUs shall be forfeited on the Change in
Control. Any Resulting RSUs that did not become vested prior to your
termination of employment for a reason set forth in this clause (xii) or
that do not become vested as a result of this clause (xii) shall be
forfeited immediately following the date of your termination of
employment.
	 
	 	(xiii)	 	The Company shall enter into a restricted share unit award agreement
with you 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.

Share Ownership Commitment. You also agree to comply with any share
ownership requirements adopted by the Company applicable to you, which shall be
on the same terms as similarly situated executives of the Company.

Matching Grants for Share Purchases. In connection with such share
ownership, you shall also be eligible to receive matching share units to the
extent such a program is established by the Company for similarly situated
executives of the Company.

	 	•	 	Good Reason. You may terminate your employment for Good Reason (as defined
below) by delivering to the Company a Notice of Termination (as defined below) not less
than thirty (30) days prior to the termination of your employment for Good Reason. The
Company shall have the option of terminating your 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 this letter, as may be applicable. For purposes of this
letter, Good Reason shall mean the occurrence of any of the events or conditions
described in clauses (i) through (iii) immediately below 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 you which notice must be provided by you
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 you.
	 
	 	(i)	 	Diminution of Responsibility. (A) any material reduction in your duties or
responsibilities as in effect immediately prior thereto, or (B) removal of you from the
position of President, Valeant Pharmaceuticals International, Inc. or Chief Operating
Officer, Specialty Pharmaceuticals. For the avoidance of doubt, the term “Diminution of
Responsibility” shall not include any such removal resulting from a

 

 

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Mr. Rajiv De Silva

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	 	 	 	promotion, your
death or Disability, the termination of your employment for Cause, or your termination
of your employment other than for Good Reason;
	 
	 	(ii)	 	Compensation Reduction. Any reduction in your base salary or target bonus opportunity
which is not comparable to reductions in the base salary or target bonus opportunity of
other similarly-situated senior executives at the Company; or
	 
	 	(iii)	 	Company Breach. Any other material breach by the Company of any material provision
of this letter.
	 
	 	•	 	Change in Control. For purposes of this Agreement, a “Change in Control”
shall mean any of the following events:
	 
	 	(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 fifty percent (50%) 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.

 

 

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Mr. Rajiv De Silva

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Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to
this letter, solely because fifty percent (50%) 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.

	 	•	 	Disability. The Company may terminate your employment, on written notice to
you after having established your Disability and while you remain Disabled, subject to
the payment by the Company to you of the applicable benefits provided pursuant to this
letter. For purposes of this letter, “Disability” shall have the meaning assigned to
such term in the Plan.
	 
	 	•	 	Cause. The Company may terminate your employment for “Cause”, subject to the
payment by the Company to you of the applicable benefits provided in this letter.
“Cause” shall mean, for purposes of this letter, “cause” as defined by applicable
common law, and (1) conviction of any felony or indictable offense (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 you to perform your duties after
written notice identifying the deficiencies and an opportunity for cure; and (5) a
material violation by you 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 you 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 you, with pay, upon your indictment
for the commission of a felony or indictable offense as described under clause (1)
above. Such suspension may remain effective until such time as the indictment is either
dismissed or a verdict of not guilty has been entered.
	 
	 	•	 	Integration Award. On or before December 31, 2010, the Company shall pay to
you an amount equal to $500,000, less applicable withholding amounts, in recognition of
your efforts in leading the integration of Biovail Corporation and Valeant
Pharmaceuticals International following the merger of such entities; provided, however,
if prior to October 1, 2011, your employment with the Company is terminated by you or
the Company for any reason, other than by reason of death, then you shall reimburse the
Company for the gross amount of such award.
	 
	 	•	 	Employee and Executive Benefits. You will be eligible to participate in the
employee benefit plans and programs generally made available to similarly situated

 

 

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Mr. Rajiv De Silva

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	 	 	 	employees of the Company on the terms and conditions applicable generally to all
employees. In addition, the Company shall reimburse you for incremental taxes incurred
by you outside of the United States because of any services you provide to the Company
outside of the United States or any business that the Company conducts outside of the
United States, if such incremental amount during any tax year exceeds 1% or more of
your average base salary for such tax year. You shall be required to participate in
any tax equalization program the Company may have in effect from time to time in order
to qualify for the benefit described in the preceding sentence.
	 
	 	•	 	Reimbursement of Certain Expenses. The Company shall fully reimburse the
reasonable fees of your counsel and financial advisor incurred in connection with the
development and implementation of the terms of your employment.
	 
	 	•	 	Conditions to Reimbursement. The following provisions shall be in effect for
any reimbursements (and in-kind benefits) to which you otherwise may become entitled
under this letter, in order to assure that such reimbursements (and in-kind benefits)
do not create a deferred compensation arrangement subject to Section 409A:
	 
	 	(i)	 	The amount of reimbursements (or in-kind benefits) to which you may become
entitled in any one calendar year shall not affect the amount of expenses eligible for
reimbursement (or in-kind benefits) hereunder in any other calendar year.
	 
	 	(ii)	 	Each reimbursement to which you become entitled shall be made by the Company as
soon as administratively practicable following your submission of the supporting
documentation, but in no event later than the close of business of the calendar year
following the calendar year in which the reimbursable expense is incurred.
	 
	 	(iii)	 	Your right to reimbursement (or in-kind benefits) cannot be liquidated or
exchanged for any other benefit or payment.
	 
	 	•	 	At-Will Employment. Your employment with the Company is “at will”. This
means that you or the Company have the option to terminate your employment at any time,
with or without advance notice, and with or without cause. This offer of employment
does not constitute an express or implied agreement of continuing or long term
employment. The at will nature of your employment can be altered only by a
written agreement specifying the altered status of your employment. Such written
agreement must be signed by both you and the Chief Executive Officer.
	 
	 	•	 	Severance Benefits. Notwithstanding the immediately preceding bullet
paragraph, if your employment is terminated by the Company without Cause or by you for
Good Reason, the Company shall have the following obligations:
	 
	 	(i)	 	The Company will pay you an amount equal to 1.6 times your annual salary as of
the date of your termination, provided that, if your termination occurs either in
contemplation of a Change in Control or at any time within twelve (12) months

 

 

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Mr. Rajiv De Silva

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	 	 	 	following a Change in Control, the Company shall instead pay you an amount equal to two times the
sum of (A) your annual salary as of the date of termination, plus (B) your annual target
bonus as of the date of your termination.
	 
	 	(ii)	 	The Company will pay you any accrued but unpaid salary or vacation pay and any
deferred compensation. In addition, the Company will pay you any bonus earned but
unpaid in respect of any fiscal year preceding the Termination Date. The Company will
also pay you a bonus in respect of the fiscal year in which the Termination Date
occurs, as though you had continued in employment until the payment of bonuses by the
Company to its executives for such fiscal year, in an amount equal to the product of
(A) the lesser of (x) the bonus that you would have been entitled to receive based on
actual achievement against the stated performance objectives or (y) the bonus that you
would have been entitled to receive assuming that the applicable performance objectives
for such fiscal year were achieved at “target”, and (B) a fraction (i) the numerator of
which is the number of days in such fiscal year through Termination Date and (ii) the
denominator of which is 365; provided that, if your termination occurs either in
contemplation of a Change in Control or at any time within twelve (12) months following
a Change in Control, then in the foregoing calculation the amount under (A) shall be
equal to (y). Any bonus payable to you under this bullet shall be paid in no event
later than March 15 of the calendar year following the calendar year in which the
Termination Date occurs.
	 
	 	(iii)	 	The Company will provide you with continued coverage under any health,
medical, dental or vision program or policy in which you were eligible to participate
at the time of your employment termination for 12 months following such termination on
terms no less favorable to you and your dependents (including with respect to payment
for the costs thereof) than those in effect immediately prior to such termination.
	 
	 	(iv)	 	The Company shall provide outplacement services through one or more outside
firms of your choosing up to an aggregate of $20,000, which services shall extend until
the earlier of (i) 12 months following the termination of your employment or (ii) the
date that you secure full time employment.
	 
	 	 	 	Notwithstanding anything herein to the contrary, the Company shall have no obligation to
pay or provide any of the severance benefits set forth in this letter and shall have no
obligations to you in respect of the termination of your employment save and except for
obligations that are expressly established by applicable employment standards legislation
unless you execute and deliver, within 60 days of the date of your termination, and do
not revoke, a general release in form satisfactory to the Company and any revocation
period set forth in the release has lapsed. The Company shall pay all cash severance
benefits due within 10 business days following the satisfaction of all of the conditions
set forth in the preceding sentence. You shall not be required to mitigate the amount of
any severance payment provided for under this letter by
seeking other employment or otherwise and no such payment shall be offset or

 

 

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Mr. Rajiv De Silva

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	 	 	 	reduced by
the amount of any compensation or benefits provided to you in any subsequent employment.
	 
	 	 	 	Notwithstanding anything herein to the contrary, in no event shall the timing of your
execution of the general release, directly or indirectly, result in you designating the
calendar year of payment, and if a payment that is subject to execution of the general
release could be made in more than one taxable year, payment shall be made in the later
taxable year.
	 
	 	 	 	It is understood that, during your employment by the Company, you will not engage in any
activities that constitute a conflict of interest with the interests of the Company, as
outlined in the Company’s conflict of interest policies for employees and executives in
effect from time to time.
	 
	 	•	 	Covenant Not to Solicit. To protect the confidential information and other
trade secrets of the Company and its affiliates, you agree, during your employment with
the Company or any of its affiliates and for a period of twelve (12) months after your
cessation of employment with the Company or any of its affiliates, not to solicit,
attempt to solicit, or participate in or assist in any way in the solicitation or
attempted solicitation of any employees or independent contractors of the Company or
any its affiliates. For purposes of this covenant, “solicit” or “solicitation” means
directly or indirectly influencing or attempting to influence employees of the Company
or any of its affiliates to become employed with any other person, partnership, firm,
corporation or other entity. You agree that the covenants contained in this paragraph
are reasonable and necessary to protect the confidential information and other trade
secrets of the Company and its affiliates, provided, that solicitation through general
advertising or the provision of references shall not constitute a breach of such
obligations.
	 
	 	•	 	Remedies for Breach of Obligations Under the Covenants Not to Solicit Above.
It is the intent and desire of you and the Company (and its affiliates) that the
restrictive provisions in the paragraph captioned “Covenant Not to Solicit” above 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 in such paragraph 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. Your obligations under the two
preceding paragraphs shall survive the termination of your employment with or any other
employment arrangement with the Company or any of its affiliates. You acknowledge that
the Company or its affiliates will suffer irreparable injury, not readily susceptible
of valuation in monetary damages, if you breach your obligations under the paragraph
captioned “Covenant Not to Solicit” above. Accordingly, you agree that the Company

 

 

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Mr. Rajiv De Silva

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	 	 	 	and its affiliates will be entitled, in addition to any other available remedies, to obtain
injunctive relief against any breach or prospective breach by you of your obligations
under either such paragraph in any Federal or state court sitting in the State of New
Jersey, or, at the Company’s (or its affiliate’s) election, in any other state or
jurisdiction in which you maintain your principal residence or your principal place of
business. You agree that the Company or its affiliates may seek the remedies described
in the preceding sentence notwithstanding any arbitration or mediation agreement that
you may enter into with the Company or any of its affiliates. You hereby submit to the
non-exclusive jurisdiction of all those courts for the purposes of any actions or
proceedings instituted by the Company or its affiliates to obtain that injunctive
relief, and you agree that process in any or all of those actions or proceedings may be
served by registered mail, addressed to the last address provided by you to the Company
or its affiliates, or in any other manner authorized by law.
	 
	 	•	 	Indemnification. You shall be indemnified by the Company as provided in its
by-laws or, if applicable, pursuant to an indemnification agreement with the Company if
such agreement are provided to similarly situated executives.
	 
	 	•	 	Section 409A. The parties intend for the payments and benefits under this
Agreement to be exempt from Section 409A or, if not so exempt, to be paid or provided
in a manner which complies with the requirements of such section, and intend that this
Agreement shall be construed and administered in accordance with such intention. Any
payments that qualify for the “short-term deferral” exception or another exception
under Section 409A shall be paid under the applicable exception. For purposes of the
limitations on nonqualified deferred compensation under Section 409A, each payment of
compensation under this Agreement shall be treated as a separate payment of
compensation. 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 letter during the six-month period immediately following your
separation from service shall instead be paid on the first business day after the date
that is six months following your 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 you under Section 409A.

It is understood that you are required to read, review, agree, sign and return the following
documents included with this letter: 1) the Confidentiality Agreement and Schedule, and 2) the
Standards of Business Conduct.

Policies of the Company will govern any other matter not specifically covered by this letter.

 

 

November 11, 2010

Mr. Rajiv De Silva

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Except as specifically described in the following sentence, the terms of this letter constitute the
entire agreement between the Company and you with respect to the subject matter hereof, superseding
all prior agreements and negotiations, including, without limitation, the terms of the Employment
Offer Letter, dated December 17, 2008, and the Amendment to Employment Offer Letter, dated March
30, 2010, in each case between Valeant Pharmaceuticals International and you. For the avoidance of
doubt, the terms of any prior equity awards previously granted to you shall not be deemed to apply
to the Options and Performance Share Units granted hereunder and any such prior equity awards shall
remain subject to the terms in effect in accordance with the terms of such awards. This letter is
governed by the laws of the State of New Jersey. All currency amounts set forth in the letter
agreement refer to U.S. dollars.

As confirmation of acceptance of this employment offer, please sign this letter indicating your
agreement and acceptance of the terms and conditions of employment. In addition, please mail the
original signed offer letter in the envelope provided. A duplicate copy of this offer
letter is included for your records.

Sincerely,

Valeant Pharmaceuticals International, Inc.

	 	 	 	 	 	 	 

	 

	 	By:
	 	/s/ J. Michael Pearson
 

J. Michael Pearson
	 	 
	 

	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Rajiv De Silva
 

Rajiv De Silva

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