Document:

exv10w1

Exhibit 10.1

EXECUTION VERSION

	 	 	 	 	 

	GOLDMAN SACHS BANK USA 

GOLDMAN SACHS LENDING 

PARTNERS LLC 

200 West Street 

New York, New York 10282
	 	MORGAN STANLEY

SENIOR FUNDING, INC.

1585 Broadway

New York, New York 10036
	 	JEFFERIES GROUP, INC.

520 Madison Avenue

New York, New York 10022

PERSONAL AND CONFIDENTIAL 

June 20, 2010

Valeant Pharmaceuticals International

One Enterprise

Aliso Viejo, California 92656

Attention: Peter Blott

Biovail Corporation

7150 Mississauga Road

Mississauga, Ontario

L5N 8M5

Attention: Peggy Mulligan

Commitment Letter

Ladies and Gentlemen:

We are pleased to confirm the arrangements under which each of Goldman Sachs Bank USA (“GS Bank”),
Goldman Sachs Lending Partners LLC (“GSLP” and, together with GS Bank, “Goldman Sachs”), Jefferies
Group, Inc. (“Jefferies”) and Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”, and together
with Goldman Sachs and Jefferies, the “Commitment Parties”) is exclusively authorized by Valeant
Pharmaceuticals International, a Delaware corporation (the “Company”) and Biovail Corporation, a
Canadian corporation (together with its subsidiaries, the “Merger Party” and, together with the
Company, “you”), to act as joint lead arranger, joint bookrunner and joint syndication agent in
connection with, and commits to provide the financing for, certain transactions described herein,
in each case on the terms and subject to the conditions set forth in this letter and the attached
Annexes A, B and C hereto (collectively, this “Commitment Letter”). Capitalized terms used but not
defined herein have the respective meanings given in the Annexes hereto.

You have informed the Commitment Parties that the Company intends to consummate a merger
transaction with the Merger Party, pursuant to which the Company will merge (the “Merger”) with
and into a newly-formed, wholly-owned subsidiary of the Merger Party, with the Company as the
surviving entity. In connection with, and immediately prior to, the Merger, the Company will (i)
tender for or call for redemption all of the Company’s 8.375% Senior Notes due 2016 (the “2016
Notes”) and all of the Company’s 7.625% Senior Notes due 2020 (the “2020 Notes” and, together with
the 2016 Notes, the “Existing Notes”) and solicit consents from the holders of the Existing Notes
to amend the indentures pursuant to which the Existing Notes were issued (the repayment of such
Existing Notes, along with any related fees, expenses and premiums, and the consent solicitation of
the holders of the Existing Notes, along with any related fees and expenses, collectively, the
“Refinancing”) upon terms and conditions

 

 

reasonably satisfactory to the Commitment Parties and (ii) pay a cash dividend of $1,314.0
million to the Company’s existing shareholders (the “Dividend”). You have also informed us that
the Refinancing, the Dividend, the Post-Merger Special Dividend (as defined in the Merger
Agreement), the Transaction Expenses and the working capital requirements of the Company and the
Merger Party after consummation of the Merger will be financed from the following sources:

	 	•	 	$500.0 million under a senior secured term loan A facility (the “Term A Facility”)
having the terms set forth on Annex B;

	 	•	 	up to $2,272.0 million under a senior secured term loan B facility (the “Term B
Facility” and, together with the Term A Facility, the “Term Facilities”) having the terms
set forth on Annex B, which shall be available to the Company as follows:

	 	•	 	up to $1,972.0 million shall be available on the Closing Date to fund
the Refinancing and the Dividend;

	 	•	 	$300.0 million shall be available on or prior to the later of (i)
December 31, 2010 or (ii) 60 days after the Closing Date, to fund the Post-Merger
Special Dividend to the shareholders of Parent after the consummation of the
Merger;

provided that the amount of the Term B Facility available to the Company on the Closing Date shall
be reduced on a dollar-for-dollar basis by (i) the net proceeds of any issuance of debt securities
(the “Securities”) consummated by the Company after the date hereof and on or prior to the Closing
Date, (ii) the aggregate principal amount of Existing Notes that remain outstanding on the Closing
Date, after giving effect to the making of the loans under the Senior Facilities and the
Refinancing and (iii) 50% of the net proceeds from the sale of properties or assets or any
interests therein that, individually or in a series of related transactions, generate net proceeds
in excess of $25.0 million, until the aggregate net proceeds after the date hereof equals $400.0
million and then 100% of any additional asset sale proceeds (except for sales of pharmaceutical
products in the ordinary course of business, which shall not be subject to this clause (iii)); and

	 	•	 	$250.0 million under a senior secured revolving credit facility (the “Revolving
Facility”; and, together with the Term Facilities, the “Senior Facilities”) having the
terms set forth on Annex B.

	1.	 	Commitments: Titles and Roles.

Each of GSLP, Morgan Stanley and Jefferies is pleased to confirm its commitment to act, and you
hereby appoint each of GSLP, Morgan Stanley and Jefferies to act, as joint lead arranger, joint
bookrunner and joint syndication agent in connection with the Senior Facilities and (i) GS Bank is
pleased to advise you of its several (but not joint) commitment to provide the Borrower with 45% of
the Senior Facilities, (ii) Morgan Stanley is pleased to advise you of its several (but not joint)
commitment to provide the Borrower with 45% of the Senior Facilities, and (iii) Jefferies is
pleased to advise you of its several (but not joint) commitment to provide the Borrower with 10% of
the Senior Facilities, in each case on the terms and subject to the conditions contained in this
Commitment Letter and the Fee Letter (referred to below). In addition, you hereby appoint GSLP to
act as administrative agent (the “Administrative Agent”) for the Senior Facilities. You agree that
GSLP will have “left” placement in any and all marketing materials or other documentation used in
connection with the Senior Facilities. You further agree that no other titles will be awarded and
no compensation (other than that expressly contemplated by this Commitment Letter and the Fee
Letter referred to below) will be paid in connection with the Senior Facilities unless you and we
shall so agree. Our fees for our commitment and for services related to the Senior Facilities are
set

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forth in a separate fee letter (the “Fee Letter”) entered into by the Company, the Merger Party and
the Commitment Parties on the date hereof.

	2.	 	Conditions Precedent.

Each Commitment Party’s commitment and agreements hereunder are subject to the following condition:
since January 1, 2010, there has not occurred any fact, circumstance, effect, change, event or
development that, individually or in the aggregate, has had or would reasonably be expected to have
a Material Adverse Effect (as defined below) on either the Company and its subsidiaries or the
Merger Party. Each Commitment Party’s commitments and agreements are also subject to the
satisfactory negotiation, execution and delivery of appropriate definitive loan documents relating
to the Senior Facilities including, without limitation, credit agreements, guarantees, security
agreements, pledge agreements, real property security agreements, opinions of counsel and other
related definitive documents (collectively, the “Loan Documents”) to be based upon and
substantially consistent with the terms set forth in this Commitment Letter (it being agreed that
the Loan Documents shall not contain any conditions precedent to the initial borrowing under the
Senior Facilities on the Closing Date other than the conditions precedent expressly set forth
herein and in Annexes B and C hereto, and the terms of the Loan Documents will be such that they do
not impair the availability of the Senior Facilities on the Closing Date if such conditions are
satisfied, it being understood that, to the extent the creation or perfection of any security
interest in the collateral (as contemplated in Annex B hereto) is not or cannot be provided or
perfected on the Closing Date (other than (i) the pledge and perfection of collateral with respect
to which a lien may be perfected solely by the filing of financing statements under the Uniform
Commercial Code, (ii) filings with the U.S. patent and trademark office and the U.S. copyright
office with respect to intellectual property collateral and (iii) to the extent applicable, the
delivery of certificated securities representing intercompany debt or equity interests required to
constitute collateral and related security powers) after your use of commercially reasonable
efforts to do so, then the creation or perfection, as the case may be, of such security interest
shall not constitute a condition precedent to the availability of the Senior Facilities on the
Closing Date, but shall instead be provided as promptly as reasonably practicable after the Closing
Date (and in any event within 30 days after the Closing Date plus any extensions granted by the
Administrative Agent in its sole discretion) pursuant to arrangements to be mutually agreed upon by
the Company and the Administrative Agent). Each Commitment Party’s commitment is also subject to
the Company having entered into an engagement letter with one or more investment banks (the
“Investment Banks”) reasonably acceptable to the Commitment Parties, pursuant to which the Company
engaged the Investment Banks in connection with a potential issuance of Securities.

As used in the prior paragraph, “Material Adverse Effect” means, with respect to any person, any
fact, circumstance, effect, change, event or development that materially adversely affects the
business, properties, financial condition or results of operations of such person and its
subsidiaries, taken as a whole, excluding any effect that results from or arises in connection with
(i) changes or conditions generally affecting the industries in which such person and any of its
subsidiaries operate, except to the extent such effect has a materially disproportionate effect on
such person and its subsidiaries, taken as a whole, relative to others in the industries in which
such person and any of its subsidiaries operate, (ii) general economic or regulatory, legislative
or political conditions or securities, credit, financial or other capital markets conditions, in
each case in the United States, Canada or any foreign jurisdiction, except to the extent such
effect has a materially disproportionate effect on such person and its subsidiaries, taken as a
whole, relative to others in the industries in which such person and any of its subsidiaries
operate, (iii) any failure, in and of itself, by such person to meet any internal or published
projections, forecasts, estimates or predictions in respect of revenues, earnings or other
financial or operating metrics for any period (it being understood that the facts or occurrences
giving rise to or contributing to such failure may be deemed to constitute, or be taken into
account in determining whether there has been or will be, a Material Adverse Effect), (iv) the
execution and delivery of the Merger Agreement or the public

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announcement or pendency of the Merger or any of the other transactions contemplated by the Merger
Agreement, including the impact thereof on the relationships, contractual or otherwise, of such
person or any of its subsidiaries with employees, labor unions, customers, suppliers or partners,
(v) any change, in and of itself, in the market price, credit rating or trading volume of such
person’s securities (it being understood that the facts or occurrences giving rise to or
contributing to such change may be deemed to constitute, or be taken into account in determining
whether there has been or will be, a Material Adverse Effect), (vi) any change in applicable Law
(as defined in the Merger Agreement), regulation or GAAP (or authoritative interpretation thereof),
except to the extent such effect has a materially disproportionate effect on such person and its
subsidiaries, taken as a whole, relative to others in the industries in which such person and any
of its subsidiaries operate, (vii) geopolitical conditions, the outbreak or escalation of
hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such
acts of war, sabotage or terrorism threatened or underway as of the date of the Merger Agreement or
(viii) any hurricane, tornado, flood, earthquake or other natural disaster.

Notwithstanding anything in this Commitment Letter, the Fee Letter or the Loan Documents to the
contrary, the only representations relating to the Company, the Merger Party and their respective
subsidiaries the accuracy of which will be a condition to the availability of the Senior Facilities
on the Closing Date will be (i) the representations made by or with respect to the Company, the
Merger Party and their respective subsidiaries in the Merger Agreement (but only to the extent that
the Company or the Merger Party has the right to terminate its obligations under the Merger
Agreement or decline to consummate the Merger as a result of a breach of such representations and
warranties in the Merger Agreement) and (ii) the Specified Representations (as defined below).

As used herein, “Specified Representations” means representations relating to incorporation or
formation; organizational power and authority to enter into the documentation relating to the
Senior Facilities; due execution; delivery and enforceability of such documentation; solvency; no
conflicts with laws; charter documents or material agreements; Federal Reserve margin regulations;
the Investment Company Act, Patriot Act; status of the Senior Facilities as first lien senior debt;
and, except as provided above, the creation, perfection and priority of the security interests
granted in the proposed collateral.

	3.	 	Syndication.

The Arrangers intend, and reserve the right, to syndicate the Senior Facilities to the Lenders
promptly following the date hereof, and you acknowledge and agree that the commencement of
syndication shall occur in the discretion of the Arrangers. The Arrangers will select the Lenders
after consultation with you. The Arrangers will lead the syndication, including determining the
timing of all offers to potential Lenders, any title of agent or similar designations or roles
awarded to any Lender and the acceptance of commitments, the amounts offered and the compensation
provided to each Lender from the amounts to be paid to the Arrangers pursuant to the terms of this
Commitment Letter and the Fee Letter. The Arrangers will, in consultation with you, determine the
final commitment allocations and will notify the Company of such determinations. You agree to use
commercially reasonable efforts to ensure that the Arrangers’ syndication efforts benefit from the
existing lending relationships of the Company and the Merger Party and their respective
subsidiaries. To facilitate an orderly and successful syndication of the Senior Facilities, you
agree that, until the earliest of (x) the termination of the syndication as determined by the
Arrangers, (y) the consummation of a Successful Syndication (as defined in the Fee Letter) and (z)
90 days after the Closing Date, neither the Company nor the Merger Party (including, in each case,
their respective subsidiaries) will syndicate or issue, attempt to syndicate or issue, announce or
authorize the announcement of the syndication or issuance of, any debt facility or any debt or
equity security of the Merger Party or the Company or any of their respective subsidiaries or
affiliates (other than (a) the Senior Facilities and other indebtedness contemplated hereby to
remain outstanding after the Closing Date and (b) the issuance of (i) common equity of the Merger
Party to shareholders of the Company on the Closing

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Date, (ii) the Securities (if any), (iii) equity issued in connection with the conversion of any
convertible debt securities of the Company or the Merger Party, hedging arrangements or warrants
and (iv) equity pursuant to employee stock plans of the Company and the Merger Party and other
similar arrangements to be mutually agreed upon by you and the Arrangers) without the prior written
consent of the Arrangers.

You agree to cooperate with the Commitment Parties, in connection with (i) the preparation of one
or more information packages regarding the business, operations and financial projections of the
Company and the Merger Party (collectively, the “Confidential Information Memorandum”) including,
without limitation, all information relating to the transactions contemplated hereunder prepared by
or on behalf of the Company or the Merger Party deemed reasonably necessary by the Commitment
Parties to complete the syndication of the Senior Facilities including, without limitation, using
commercially reasonable efforts to obtain (a) a public corporate family rating from Moody’s
Investor Services, Inc. (“Moody’s”) for the Company, (b) a public corporate credit rating from
Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation (“S&P”)) for the Company
and (c) a public credit rating for the Senior Facilities from each of Moody’s and S&P, and (ii) the
presentation of one or more information packages reasonably acceptable in format and content to the
Commitment Parties (collectively, the “Lender Presentation”) in meetings and other communications
with prospective Lenders or agents in connection with the syndication of the Senior Facilities
(including, without limitation, direct contact between senior management and representatives, with
appropriate seniority and expertise, of the Company and the Merger Party with prospective Lenders
and participation of such persons in meetings). You further agree that the commitments and
agreements of the Commitment Parties hereunder are conditioned upon your satisfaction of the
requirements of the foregoing provisions of this paragraph by a date sufficient to afford the
Arrangers a period of at least 30 consecutive days following the launch of the general syndication
of the Senior Facilities to syndicate the Senior Facilities prior to the Closing Date (as defined
in Annex B); provided that such period will not include any day from and including August 23, 2010
through September 6, 2010 or December 18, 2010 through January 3, 2011. You will be solely
responsible for the contents of any such Confidential Information Memorandum and Lender
Presentation (other than, in each case, any information contained therein that has been provided
for inclusion therein by the Commitment Parties solely to the extent such information relates to
the Commitment Parties) and all other information, documentation or materials delivered to the
Arrangers in connection therewith (collectively, the “Information”) and you acknowledge that the
Commitment Parties will be using and relying upon the Information without independent verification
thereof. You agree that Information regarding the Senior Facilities and Information provided by
the Company and the Merger Party or their respective representatives to the Arrangers in connection
with the Senior Facilities (including, without limitation, draft and execution versions of the Loan
Documents, the Confidential Information Memorandum, the Lender Presentation, publicly filed
financial statements, and draft or final offering materials relating to contemporaneous securities
issuances by the Company or the Merger Party) may be disseminated to potential Lenders and other
persons through one or more internet sites (including an IntraLinks, SyndTrak or other electronic
workspace (the “Platform”)) created for purposes of syndicating the Senior Facilities or otherwise,
in accordance with the Arrangers’ standard syndication practices, and you acknowledge that neither
the Arrangers nor any of their affiliates will be responsible or liable to you or any other person
or entity for damages arising from the use by others of any Information or other materials obtained
on the Platform, except, in the case of damages to you but not to any other person, to the extent
such damages are found by a final judgment of a court of competent jurisdiction to arise from the
gross negligence or willful misconduct of any Arranger or any of its affiliates or any of their
respective directors, employees, advisors or agents.

You acknowledge that certain of the Lenders may be “public side” Lenders (i.e. Lenders that do not
wish to receive material non-public information with respect to the Company, the Merger Party or
their respective affiliates or any of its or their respective securities) (each, a “Public
Lender”). At the request of the Arrangers, you agree to prepare an additional version of the
Confidential Information

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Memorandum and the Lender Presentation to be used by Public Lenders that does not contain material
non-public information concerning the Company, the Merger Party or their respective affiliates or
securities. It is understood that in connection with your assistance described above, at the
request of the Arrangers, you will provide, and cause all other applicable persons to provide,
authorization letters to the Arrangers authorizing the distribution of the Information to
prospective Lenders, containing a representation to the Arrangers that the public-side version does
not include material non-public information about the Company, the Merger Party or their respective
affiliates or its or their respective securities. In addition, you will clearly designate as such
all Information provided to the Commitment Parties by or on behalf of the Company or the Merger
Party which is suitable to make available to Public Lenders. You acknowledge and agree that the
following documents may be distributed to Public Lenders, unless you advise the Arrangers in
writing (including by email) within a reasonable time prior to their intended distributions that
such material should only be distributed to prospective Lenders that are not Public Lenders: (a)
drafts and final versions of the Loan Documents; (b) administrative materials prepared by the
Arrangers for prospective Lenders (such as a lender meeting invitation, allocations and funding and
closing memoranda); and (c) term sheets and notification of changes in the terms of the Senior
Facilities.

	4.	 	Information.

You represent and covenant that (i) all written Information (other than financial projections and
information of a general economic or industry specific nature) provided directly or indirectly by
the Merger Party or the Company to the Commitment Parties or the Lenders in connection with the
transactions contemplated hereunder is and will be, when furnished and when taken as a whole and
giving effect to all supplements thereto, complete and correct in all material respects and does
not and will not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein, in light of the circumstances under which they
were made, not materially misleading and (ii) the financial projections that have been or will be
made available to the Arrangers or the Lenders in connection with the transactions contemplated
hereunder by or on behalf of the Company or the Merger Party have been and will be prepared in good
faith based upon assumptions that are believed by the preparer thereof to be reasonable at the time
such financial projections are furnished to the Commitment Parties or the Lenders, it being
understood and agreed that financial projections are not a guarantee of financial performance and
actual results may differ from financial projections and such differences may be material. You
agree that if at any time prior to the Successful Syndication of the Senior Facilities as
determined by the Arrangers, any of the representations in the preceding sentence would be
incorrect in any material respect if the Information and financial projections were being
furnished, and such representations were being made, at such time, then you will promptly
supplement, or cause to be supplemented, the Information and financial projections so that such
representations will be correct in all material respects under those circumstances.

	5.	 	Indemnification and Related Matters.

In connection with arrangements such as this, it is the Commitment Parties’ policy to receive
indemnification. You agree to the provisions with respect to our indemnity and other matters set
forth in Annex A, which is incorporated by reference into this Commitment Letter.

	6.	 	Assignments; Amendments.

This Commitment Letter may not be assigned by you without the prior written consent of the
Commitment Parties (and any purported assignment without such consent will be null and void), is
intended to be solely for the benefit of the Commitment Parties and the other parties hereto and,
except as set forth in Annex A hereto, is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. Each of the Commitment Parties may
assign its commitments

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and agreements hereunder, in whole or in part, to any of its affiliates (provided that such
affiliates agree to abide by the confidentiality provisions of Section 7 of this Commitment Letter)
and, as provided above, to any Lender prior to the Closing Date; provided that any assignment by a
Commitment Party to any potential Lender made prior to the Closing Date shall not relieve such
Commitment Party of its obligations set forth herein to fund that portion of the commitments so
assigned. Neither this Commitment Letter nor the Fee Letter may be amended or any term or
provision hereof or thereof waived or otherwise modified except by an instrument in writing signed
by each of the parties hereto or thereto, as applicable, and any term or provision hereof or
thereof may be amended or waived only by a written agreement executed and delivered by all parties
hereto or thereto.

	7.	 	Confidentiality.

Please note that this Commitment Letter, the Fee Letter and any written communications provided by,
or oral discussions with, the Commitment Parties in connection with this arrangement are
exclusively for the information of the Company and the Merger Party and may not be disclosed to any
third party or circulated or referred to publicly without our prior written consent except, after
providing written notice to the Commitment Parties, pursuant to a subpoena or order issued by a
court of competent jurisdiction or by a judicial, administrative or legislative body or committee;
provided that we hereby consent to your disclosure of (i) this Commitment Letter, the Fee Letter
and such communications and discussions to the Company’s and the Merger Party’s respective
directors, employees, agents and advisors who are directly involved in the consideration of the
Senior Facilities and who have been informed by you of the confidential nature of such advice and
the Commitment Letter and Fee Letter and who have agreed to treat such information confidentially,
(ii) this Commitment Letter, the Fee Letter and such communications and discussions as required by
applicable law, rule or regulation or compulsory legal process (in which case you agree to inform
us promptly thereof to the extent not prohibited by law), (iii) the terms of this Commitment Letter
(but not the Fee Letter or the terms thereof, other than the aggregate amount of financing fees
payable to the Commitment Parties) and related communications or discussions in connection with the
preparation, filing and distribution of the Form S-4 and Joint Proxy Statement and any amendments
or supplements thereto contemplated by the Merger Agreement and (iv) the information contained in
Annex B to Moody’s and S&P; provided that such information is supplied only on a confidential basis
after consultation with the Commitment Parties.

Each Commitment Party agrees that it will treat as confidential all information provided to it
hereunder by or on behalf of you or any of your respective subsidiaries or affiliates; provided,
however, that nothing herein will prevent any Commitment Party from disclosing any such information
(a) pursuant to the order of any court or administrative agency or in any pending legal or
administrative proceeding, or otherwise as required by applicable law or compulsory legal process
(in which case such person agrees to inform you promptly thereof to the extent not prohibited by
law), (b) upon the request or demand of any regulatory authority having jurisdiction over such
person or any of its affiliates, (c) to the extent that such information is publicly available or
becomes publicly available other than by reason of improper disclosure by such person, (d) to such
person’s affiliates and their respective officers, directors, partners, employees, legal counsel,
independent auditors and other experts or agents who need to know such information and on a
confidential basis, (e) to potential and prospective Lenders, participants and any direct or
indirect contractual counterparties to any swap or derivative transaction relating to the borrower
and its obligations under the Senior Facilities, in each case, who are advised of the confidential
nature of such information, (f) to Moody’s and S&P; provided that such information is limited to
Annex B and is supplied only on a confidential basis after consultation with you or (g) for
purposes of establishing a “due diligence” defense. Each Commitment Party’s obligation under this
provision shall remain in effect until the earlier of (i) one year from the date hereof and (ii)
the date the definitive Loan Documents are entered into by the Commitment Parties, at which time
any confidentiality undertaking in the definitive Loan Documents shall supersede this provision.

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	8.	 	Absence of Fiduciary Relationship; Affiliates; Etc.

As you know, each Commitment Party, together with its respective affiliates (each collectively, a
“Commitment Party Group”), is a full service financial services firm engaged, either directly or
through affiliates, in various activities, including securities trading, investment banking and
financial advisory, investment management, principal investment, hedging, financing and brokerage
activities and financial planning and benefits counseling for both companies and individuals. In
the ordinary course of these activities, each Commitment Party Group may make or hold a broad array
of investments and actively trade debt and equity securities (or related derivative securities)
and/or financial instruments (including bank loans) for their own account and for the accounts of
their customers and may at any time hold long and short positions in such securities and/or
instruments. Such investment and other activities may involve securities and instruments of the
Company or the Merger Party, as well as of other entities and persons and their affiliates which
may (i) be involved in transactions arising from or relating to the engagement contemplated by this
Commitment Letter, (ii) be customers or competitors of the Company or the Merger Party, or (iii)
have other relationships with either of you. In addition, each Commitment Party Group may provide
investment banking, underwriting and financial advisory services to such other entities and
persons. Each Commitment Party Group may also co-invest with, make direct investments in, and
invest or co-invest client monies in or with funds or other investment vehicles managed by other
parties, and such funds or other investment vehicles may trade or make investments in securities of
the Company, the Merger Party or such other entities. The transactions contemplated by this
Commitment Letter may have a direct or indirect impact on the investments, securities or
instruments referred to in this paragraph. Although each Commitment Party Group in the course of
such other activities and relationships may acquire information about the transaction contemplated
by this Commitment Letter or other entities and persons which may be the subject of the
transactions contemplated by this Commitment Letter, no Commitment Party Group shall have any
obligation to disclose such information, or the fact that such Commitment Party Group is in
possession of such information, to the Company or the Merger Party or to use such information on
the Company’s or the Merger Party’s behalf.

Consistent with their respective policies to hold in confidence the affairs of its customers, no
Commitment Party Group will furnish confidential information obtained from you by virtue of the
transactions contemplated by this Commitment Letter to any of its other customers. Furthermore,
you acknowledge that no Commitment Party Group and none of their respective affiliates has an
obligation to use in connection with the transactions contemplated by this Commitment Letter, or to
furnish to you, confidential information obtained or that may be obtained by them from any other
person.

Each Commitment Party Group may have economic interests that conflict with yours, or your
respective equity holders and/or affiliates. You agree that each Commitment Party Group will act
under this Commitment Letter as an independent contractor and that nothing in this Commitment
Letter or the Fee Letter or otherwise will be deemed to create an advisory, fiduciary or agency
relationship or fiduciary or other implied duty between any Commitment Party Group and the Company
or the Merger Party or your respective equity holders or affiliates. You acknowledge and agree
that the transactions contemplated by this Commitment Letter and the Fee Letter (including the
exercise of rights and remedies hereunder and thereunder) are arm’s-length commercial transactions
between the Commitment Party Groups, on the one hand, and the Company, on the other, and in
connection therewith and with the process leading thereto, (i) no Commitment Party Group has
assumed (A) an advisory or fiduciary responsibility in favor of the Company or the Merger Party or
your respective equity holders or affiliates with Company or the Merger Party or your respective
equity holders or affiliates with respect to the financing transactions contemplated hereby, or in
each case, the exercise of rights or remedies with respect thereto or the process leading thereto
(irrespective of whether such Commitment Party has advised, is currently advising or will advise
the Company, its equity holders or its affiliates on other matters) or any other obligation to the
Company or the Merger Party except the obligations expressly set forth in this Commitment Letter
and

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the Fee Letter and (ii) each Commitment Party Group is acting solely as a principal and not as the
agent or fiduciary of the Company, its management, equity holders, affiliates, creditors or any
other person. Each of you acknowledge and agree that you have consulted your own legal and
financial advisors to the extent you deemed appropriate and that you are responsible for making
your own independent judgment with respect to such transactions and the process leading thereto.
You each agree that you will not claim that any Commitment Party Group has rendered advisory
services of any nature or respect, or owes a fiduciary or similar duty to the Company or the Merger
Party, in connection with such transactions or the process leading thereto.

Without limiting any other provision of this Section 8, the Company and the Merger Party (i)
expressly agree that this Commitment Letter and the Fee Letter are being addressed to each of you
solely at your mutual request, (ii) acknowledge that circumstances may arise where the interests of
the Company and the Merger Party hereunder and/or under the Fee Letter are adverse to one another
and (iii) agree not to assert any claim that you might allege based on any actual or potential
conflict arising from the fact that both of you are parties to this Commitment Letter and the Fee
Letter including, but not limited to, any such claim arising or resulting from the separate
retention by either of the Company or the Merger Party of any Commitment Party or any affiliate
thereof as an advisor in connection with the Merger and such Commitment Party’s or such affiliate’s
commitments, agreements and acts under this Commitment Letter.

In addition, each Commitment Party may employ the services of its affiliates in providing services
and/or performing their obligations hereunder and may exchange with such affiliates information
concerning the Company, the Merger Party and other companies that may be the subject of this
arrangement, and such affiliates will be entitled to the benefits afforded to the Commitment
Parties hereunder.

In addition, please note that the Commitment Parties do not provide accounting, tax or legal
advice. Notwithstanding anything herein to the contrary, each of the Company and the Merger Party
(and each employee, representative or other agent of the Company and the Merger Party) may disclose
to any and all persons, without limitation of any kind, the tax treatment and tax structure of the
Senior Facilities and all materials of any kind (including opinions or other tax analyses) that are
provided to you relating to such tax treatment and tax structure. However, any information
relating to the tax treatment or tax structure will remain subject to the confidentiality
provisions hereof (and the foregoing sentence will not apply) to the extent reasonably necessary to
enable the parties hereto, their respective affiliates, and their and their respective affiliates’
directors and employees to comply with applicable securities laws. For this purpose, “tax
treatment” means U.S. federal or state income tax treatment, and “tax structure” is limited to any
facts relevant to the U.S. federal income tax treatment of the transactions contemplated by this
Commitment Letter but does not include information relating to the identity of the parties hereto
or any of their respective affiliates.

	9.	 	Miscellaneous.

Each Commitment Party’s commitments and agreements hereunder will terminate upon the first to occur
of (i) the consummation of the Merger, (ii) the abandonment or termination of the definitive
documentation for the Merger (including the exhibits, schedules and all related documents) (the
“Merger Agreement“), (iii) a material breach by the Company or the Merger Party under this
Commitment Letter or the Fee Letter and (iv) February 28, 2011, unless the closing of the Senior
Facilities, on the terms and subject to the conditions contained herein, has been consummated on or
before such date.

The provisions set forth under Sections 3, 4, 5 (including Annex A) and 7 hereof and this Section 9
hereof will remain in full force and effect regardless of whether definitive Loan Documents are
executed and delivered. The provisions set forth under Sections 5 (including Annex A) and 7 hereof
and this Section 9

9

 

will remain in full force and effect notwithstanding the expiration or termination of this
Commitment Letter or the Commitment Parties’ commitments and agreements hereunder.

The Company and the Merger Party each agrees for itself and its affiliates that any suit or
proceeding arising in respect to this Commitment Letter or the Commitment Parties’ commitments or
agreements hereunder or the Fee Letter will be tried exclusively in the U.S. District Court for the
Southern District of New York or, if that court does not have subject matter jurisdiction, in any
state court located in the Borough of Manhattan in the City of New York, and the Company and the
Merger Party each agree to submit to the exclusive jurisdiction of, and to venue in, such court.
Any right to trial by jury with respect to any action or proceeding arising in connection with or
as a result of either the Commitment Parties’ commitments or agreements or any matter referred to
in this Commitment Letter or the Fee Letter is hereby waived by the parties hereto. This
Commitment Letter and the Fee Letter will be governed by and construed in accordance with the laws
of the State of New York without regard to principles of conflicts of laws. The Merger Party
shall provide evidence that it has appointed CT Corporation, as its agent for service of process
for purpose of the submission to jurisdiction set forth above.

The Commitment Parties hereby notify the Company and the Merger Party that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”) the Commitment Parties and each Lender may be required to obtain, verify
and record information that identifies the Borrower and each of the Guarantors, which information
includes the name and address of the Borrower and each of the Guarantors and other information that
will allow the Commitment Parties and each Lender to identify the Borrower and each of the
Guarantors in accordance with the Patriot Act. This notice is given in accordance with the
requirements of the Patriot Act and is effective for the Commitment Parties and each Lender.

This Commitment Letter may be executed in any number of counterparts, each of which when executed
will be an original, and all of which, when taken together, will constitute one agreement.
Delivery of an executed counterpart of a signature page of this Commitment Letter by facsimile
transmission or electronic transmission (in pdf or tif format) will be effective as delivery of a
manually executed counterpart hereof. This Commitment Letter and the Fee Letter are the only
agreements that have been entered into among the parties hereto with respect to the Senior
Facilities and set forth the entire understanding of the parties with respect thereto and supersede
any prior written or oral agreements among the parties hereto with respect to the Senior
Facilities.

[Remainder of page intentionally left blank]

10

 

Please confirm that the foregoing is in accordance with your understanding by signing and returning
to the Commitment Parties the enclosed copy of this Commitment Letter, together, if not previously
executed and delivered, with the Fee Letter on or before the close of business on June 21, 2010,
whereupon this Commitment Letter and the Fee Letter will become binding agreements between us. If
the Commitment Letter and Fee Letter have not been signed and returned as described in the
preceding sentence by such date, this offer will terminate on such date. We look forward to
working with you on this transaction.

	 	 	 	 	 
	 	Very truly yours,

GOLDMAN SACHS BANK USA

GOLDMAN SACHS LENDING PARTNERS LLC

 	 
	 	By:  	/s/ Alexis Maged	 
	 	 	Authorized Signatory 	 

	 	 	 	 	 
	 	JEFFERIES GROUP, INC.

 	 
	 	By:  	/s/ Charles J. Hendrickson	 
	 	 	Name:  	Charles J. Hendrickson	 
	 	 	Title:  	Managing Director	 
	 

	 	 	 	 	 
	 	MORGAN STANLEY SENIOR FUNDING, INC.

 	 
	 	By:  	/s/ Christy Silvester	 
	 	 	Name:  	Christy Silvester	 
	 	 	Title:  	Executive Director	 

 

 

	 	 	 	 	 
	ACCEPTED AND AGREED AS OF THE DATE FIRST WRITTEN ABOVE:

VALEANT PHARMACEUTICALS INTERNATIONAL

 	 
	By:  	/s/ J. Michael Pearson	 	 
	 	Name:  	J. Michael Pearson	 	 
	 	Title:  	Chairman and Chief Executive Officer	 	 
	 

	 	 	 	 	 
	BIOVAIL CORPORATION

 	 	 
	By:  	/s/ MJ Mulligan	 	 
	 	Name:  	MJ Mulligan	 	 
	 	Title:  	Chief Financial Officer	 	 
	 

 

 

Annex A

In the event that any Commitment Party becomes involved in any capacity in any action, proceeding
or investigation brought by or against any person, including shareholders, partners, members or
other equity holders of the Company or the Merger Party in connection with or as a result of either
this arrangement or any matter referred to in this Commitment Letter or the Fee Letter (together,
the “Letters”), the Company and the Merger Party each agree to periodically reimburse each
Commitment Party for its reasonable legal and other expenses (including the cost of any
investigation and preparation) incurred in connection therewith. The Company and the Merger Party
each also agrees to indemnify and hold each Commitment Party harmless against any and all losses,
claims, damages or liabilities to any such person in connection with or as a result of either this
arrangement or any matter referred to in the Letters (whether or not such investigation,
litigation, claim or proceeding is brought by you, your equity holders or creditors or an
indemnified person and whether or not any such indemnified person is otherwise a party thereto),
except to the extent that such loss, claim, damage or liability has been found by a final,
non-appealable judgment of a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of such Commitment Party in performing the services that are the
subject of the Letters. If for any reason the foregoing indemnification is unavailable to any
Commitment Party or insufficient to hold it harmless, then the Company and the Merger Party will
contribute to the amount paid or payable by the Commitment Party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect the relative economic interests
of (i) the Company and the Merger Party and their respective affiliates, shareholders, partners,
members or other equity holders on the one hand and (ii) the Commitment Parties on the other hand
in the matters contemplated by the Letters as well as the relative fault of (i) the Company and the
Merger Party and their respective affiliates, shareholders, partners, members or other equity
holders and (ii) the Commitment Parties with respect to such loss, claim, damage or liability and
any other relevant equitable considerations. The reimbursement, indemnity and contribution
obligations of the Company and the Merger Party under this paragraph will be in addition to any
liability which the Company or the Merger Party may otherwise have, will extend upon the same terms
and conditions to any affiliate of a Commitment Party and the partners, members, directors, agents,
employees and controlling persons (if any), as the case may be, of such Commitment Party and any
such affiliate, and will be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company and the Merger Party, each Commitment Party, any such
affiliate and any such person. The Company and the Merger Party each also agrees that neither any
indemnified party nor any of such affiliates, partners, members, directors, agents, employees or
controlling persons will have any liability to the Company or the Merger Party or any person
asserting claims on behalf of or in right of the Company or the Merger Party or any other person in
connection with or as a result of either this arrangement or any matter referred to in the Letters,
except to the extent that any losses, claims, damages, liabilities or expenses incurred by the
Company, the Merger Party or their respective affiliates, shareholders, partners or other equity
holders have been found by a final, non-appealable judgment of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such indemnified party in
performing the services that are the subject of the Letters; provided, however,
that in no event will such indemnified party or such other parties have any liability for any
indirect, consequential, special or punitive damages in connection with or as a result of such
indemnified party’s or such other parties’ activities related to the Letters. Each of the Company
and the Merger Party agree that, notwithstanding anything in this Commitment Letter to the contrary
and without limiting the Commitment Parties rights, remedies and defenses thereunder, in no event
shall the Commitment Parties or their partners, members, directors, agents, employees, controlling
persons or affiliates be liable (in the aggregate) to the Company or the Merger Party (or their
respective shareholders, partners, members or other equity holders) for damages under this
Commitment Letter or the Fee Letter or related to the financing contemplated thereby in an amount
in excess of $100.0 million.

Annex A-1

 

Neither the Company nor the Merger Party will be required to indemnify any Commitment Parties for
any amount paid or payable by such Commitment Party in the settlement of any action, proceeding or
investigation without such party’s consent, which consent will not be unreasonably withheld or
delayed; provided that the foregoing indemnity will apply to any such settlement in the
event that the Company or the Merger Party, as applicable, were offered the ability to assume the
defense of the action that was the subject matter of such settlement and elected not to so assume.
The provisions of this Annex A will survive any termination or completion of the arrangement
provided by the Letters.

Annex A-2

 

Annex B

Summary of the Senior Facilities

This Summary outlines certain terms of the Senior Facilities referred to in the Commitment Letter,
of which this Annex B is a part. Certain capitalized terms used herein are defined in the
Commitment Letter.

	 	 	 

	Borrower:

	 	Valeant Pharmaceuticals International (the “Borrower”).
	 
	 	 
	Guarantors:

	 	Biovail Corporation (the “Parent”) and, subject to exclusions to be mutually agreed upon by the
Borrower and the Administrative Agent, each of the Parent’s existing and subsequently acquired or
organized subsidiaries (other than foreign subsidiaries of the Borrower) (collectively, the
“Guarantors”) will guarantee (the “Guarantee”) all obligations under the Senior Facilities;
provided that Parent and its existing subsidiaries immediately prior to the Merger shall only be
Guarantors upon and after the consummation of the Merger.
	 
	 	 
	Purpose/Use of Proceeds:

	 	The proceeds of the Term Facilities will be used to fund the Refinancing, the Dividend, the
Post-Merger Special Dividend and all fees and expenses in connection with the Merger (such fees
and expenses, the “Transaction Expenses”). Amounts available under the Revolving Facility will be
used to finance transaction expenses related to the Merger, for permitted capital expenditures and
permitted acquisitions (subject to customary conditions and pro forma financial tests to be
agreed), to provide for the ongoing working capital requirements of Parent and its subsidiaries
following the Merger and for general corporate purposes.
	 
	 	 
	Joint Lead Arrangers,
Joint Bookrunners and
Syndication Agents:

	 	Goldman Sachs Lending Partners LLC (“GSLP”), Jefferies Group, Inc. (“Jefferies”) and Morgan
Stanley Senior Funding, Inc. (“Morgan Stanley” and together with GSLP and Jefferies, in their
capacities as Joint Lead Arrangers, Joint Bookrunners and Syndication Agents, the “Arrangers”).
	 
	 	 
	Administrative Agent: 

	 	Goldman Sachs Lending Partners LLC (in such capacity, the “Administrative Agent”).

	 
	 	 
	
Lenders:

	 	
Goldman Sachs Bank USA, Morgan Stanley and Jefferies and/or other financial institutions selected
by the Arrangers (each, a “Lender” and, collectively, the “Lenders”).
	 
	 	 
	Amount of Senior Facilities:

	 	Up to $3,022.0 million of senior secured bank financing to include:

	 	(i)	 	$500.0 million of
a senior secured term loan A (the “Term A Facility”)
which will be available on the Closing Date to fund the
Refinancing;

Annex B-1

 

	 	(ii)	 	up to $2,272.0 million of senior secured term loan B (the “Term B
Facility” and, together with the Term A Facility, the
“Term Facilities”): (i) up to $1,972.0 million of which
will be available on the Closing Date to fund, in part,
the Refinancing and to fund the Dividend and (ii) $300.0
million of which shall be available on a delayed-draw
basis, each as set forth below under “Availability”; and

	 	(ii)	 	a $250.0 million senior secured revolving credit facility (the “Revolving
Facility” and, together with the Term Facilities, the
“Senior Facilities”). The Revolving Facility (including
any Letters of Credit issued thereunder) shall be made
available in U.S. dollars.

	 	 	 

	 

	 	The amount of the Initial Draw under the Term B Facility (as
defined below) shall be reduced dollar-for-dollar by (i) the net
proceeds of any Securities issued after the date hereof and prior
to the Closing Date, (ii) the aggregate principal amount of the
Existing Notes that will remain outstanding on and after the
Closing Date, after giving effect to the making of the loans under
the Senior Facilities and the Refinancing and (iii) 50% of the net
proceeds from the sale of properties or assets or any interests
therein that, individually or in a series of related transactions,
generate net proceeds in excess of $25.0 million, until the
aggregate net proceeds after the date hereof equals $400.0 million
and then 100% of any additional asset sale proceeds (except for
sales of pharmaceutical products in the ordinary course of
business, which shall not be subject to this clause (iii)).
	 
	 	 
	Incremental Facility:

	 	On or before the final maturity date of each the
Senior Facilities, the Borrower will have the right,
but not the obligation, to increase the amount of
the Term B Facility by incurring an incremental term
loan facility (the “Incremental Facility”) in an
aggregate principal amount not to exceed $250.0
million; provided that (i) no event of default or
default exists or would exist after giving effect
thereto, (ii) all financial covenants would be
satisfied on a pro forma basis on the date of
incurrence and for the most recent determination
period, after giving effect to such Incremental
Facility and (iii) (a) the yield applicable to the
Incremental Facility will not be more than 0.25%
higher than the corresponding interest rate for the
existing Term B Facility, unless the interest rate
margins with respect to the Term B Facility is
increased by an amount equal to the difference
between the yield with respect to the Incremental
Facility and the corresponding interest rate on the
Term B Facility, minus 0.25%, (b) the maturity date
applicable to the Incremental Facility will not be
earlier than the maturity date of the Term B
Facility, (c) the weighted average life to maturity
of the Incremental Facility will not be shorter than
the then remaining weighted average life to maturity
of the Term B Facility and (d) all other terms
(other than pricing and amortization) of the
Incremental Facility, if not consistent with the
terms of the existing Term B Facility (except as
permitted by subclauses (a), (b) and (c) of

Annex B-2

 

	 	 	 

	 

	 	this clause (iii), must be reasonably acceptable to the Administrative Agent.
Such increased amounts will be provided by existing Lenders or other persons
who become Lenders in connection therewith; provided that no existing Lender
will be obligated to provide any such increased portion of the Senior
Facilities.
	 
	 	 
	Availability:

	 	Term A Facility: The entire $500.0 million of the
Term A Facility will be available on the Closing
Date to fund, in part, the Refinancing and the
Transaction Expenses, upon satisfaction of the
Initial Draw Conditions (as defined in Annex C to
the Commitment Letter).
	 
	 	 
	 

	 	Term B Facility: Two drawings may be made under the Term B
Facility. The first drawing under the Term Facility (the “Initial
Draw”) may be made on the Closing Date to fund, in part, the
Refinancing and the Transaction Expenses, upon satisfaction of the
Initial Draw Conditions. The second drawing under the Term B
Facility (the “Second Draw”) may be made on the Closing Date to
fund the Dividend, upon satisfaction of the Second Draw Conditions
(as defined in Annex C to the Commitment Letter).
	 
	 	 
	 

	 	Delayed-Draw Term B Facility: $300.0 million of the Term B Facility (the “Delayed-Draw Tranche”) will be
available to the Borrower on a delayed-draw basis to fund the Post-Merger Special Dividend on or prior to
the later of (i) December 31, 2010 or (ii) 60 days after the Closing Date.
Revolving Facility: Amounts available under the Revolving Facility may be borrowed, repaid and reborrowed on
and after the Closing Date until the maturity date thereof, including on the Closing Date to fund any
original issue discount or upfront fees resulting from the Commitment Party’s exercise of rights under the
“Market Flex” provisions of the Fee Letter; provided that after giving effect to all such borrowings on the
Closing Date there remains at least $100.0 million of undrawn availability under the Revolving Facility.
	 
	 	 
	Maturities:

	 	Term A Facility: 5 year anniversary of the Closing Date.
	 
	 	 
	 

	 	Term B Facility: 6 year anniversary of the Closing Date
	 
	 	 
	 

	 	Revolving Facility: 4.5 year anniversary of the Closing Date.
	 
	 	 
	Closing Date:

	 	The date on or before February 28, 2011 on which the initial borrowings under the Term Facilities are made,
upon satisfaction of the Initial Draw Conditions (the “Closing Date”).
	 
	 	 
	Amortization:

	 	Term A Facility: The outstanding principal amount of the Term A Facility will be payable as follows: 10% in
years 1 and 2, 20% in years 3 and 4, with the remaining balance due at the maturity of the Term A Facility.

Annex B-3

 

	 	 	 

	 

	 	Term B Facility: The outstanding principal amount of the Term B Facility will be payable in equal quarterly
amounts of 1% per annum, with the remaining balance due at the maturity of the Term B Facility.
	 
	 	 
	 

	 	Revolving Facility: None.
	 
	 	 
	Swing Line Loans:

	 	At the option of the Lender providing such swing line loans, a portion of the Revolving Facility to be
agreed upon may be made available as swing line loans.
	 
	 	 
	Letters of Credit:

	 	At the option of the issuing bank providing such Letter of Credit, a portion of the Revolving Facility to be
agreed upon may be made available for the issuance of letters of credit by an issuing bank to be agreed
(“Letters of Credit”).
	 
	 	 
	Interest Rate:

	 	All amounts outstanding under the Senior Facilities will bear interest, at the Borrower’s option, as follows:

	 	 	 	With respect to loans made under the Term A Facility and the Revolving
Facility:

	 	(i)	 	at the Base Rate plus 3.50% per annum; or
	 
	 	(ii)	 	at the reserve adjusted Eurodollar Rate plus
4.50% per annum;

	 	 	 	With respect to loans
made under the Term B Facility:

	 	(i)	 	at the Base Rate plus 3.75% per annum; or
	 
	 	(ii)	 	at the reserve adjusted Eurodollar Rate plus
4.75% per annum;

	 	 	 

	 

	 	provided, that the interest rate margins for the
Senior Facilities set forth in clauses (i) and
(ii) above with respect to each of the Term A
Facility, the Term B Facility and the Revolving
Facility shall be (x) decreased by 0.25% if the
credit ratings for the Senior Facilities are at
least Ba3 (stable) from Moody’s and BB- (stable)
from S&P prior to the Closing Date and (y)
increased by 0.75% if the credit rating for the
Senior Facilities is B2 (stable) or lower from
Moody’s or B (stable) or lower from S&P prior to
the Closing Date.
	 
	 	 
	 

	 	As used herein, the terms “Base Rate” and
“reserve adjusted Eurodollar Rate” will have
meanings customary and appropriate for
financings of this type, and the basis for
calculating accrued interest and the interest
periods for loans bearing interest at the
reserve adjusted Eurodollar Rate will be
customary and appropriate for financings of this
type subject, in the case of the Term B Facility
only, to a reserve adjusted Eurodollar Rate
“floor” of 1.75% and a Base Rate “floor” of
2.75%. In no event shall the Base Rate be less
than the sum of (i) the one-month reserve
adjusted Eurodollar Rate (after

Annex B-4

 

	 	 	 

	 

	 	giving effect to any reserve adjusted Eurodollar Rate “floor”) plus (ii) the
difference between the applicable stated margin for reserve adjusted Eurodollar
Rate loans and the applicable stated margin for Base Rate loans. After the
occurrence and during the continuance of an Event of Default, interest on all
amounts then outstanding will accrue at a rate equal to the rate on loans
bearing interest at the rate determined by reference to the Base Rate plus an
additional two percentage points (2.00%) per annum and will be payable on
demand.
	 
	 	 
	Interest Payments:

	 	Quarterly for loans bearing interest by
reference to the Base Rate; except as set forth
below, on the last day of selected interest
periods (which will be one, two, three and six
months and any other period mutually agreed upon
by the Borrower and the Lenders under the
Revolving Facility) for loans bearing interest
by reference to the Eurodollar Rate (and at the
end of every three months, in the case of
interest periods of longer than three months);
and upon prepayment, in each case payable in
arrears and computed on the basis of a 360-day
year (365/366 day year with respect to loans
bearing interest by reference to the Base Rate)
	 
	 	 
	Interest Rate Protection:

	 	 Within 90 days after the Closing Date, the
Borrower will obtain from a counterparty
satisfactory to the Administrative Agent
interest rate protection through interest rate
swaps, caps or other agreements satisfactory to
the Administrative Agent against increases in
the interest rates with respect to a notional
amount of indebtedness such that not less than
35% of the total funded indebtedness of the
Parent and its subsidiaries outstanding as of
the Closing Date will be either (i) subject to
such interest rate protection agreements or
(ii) fixed rate indebtedness, in each case for a
period of not less than three years.
	 
	 	 
	Funding Protection:

	 	Customary for transactions of this type,
including breakage costs, gross-up for
withholding, compensation for increased costs
and compliance with capital adequacy and other
regulatory restrictions. The Loan Documents
will contain customary Lender mitigation and
replacement provisions.
	 
	 	 
	Commitment Fees:

	 	Commitment fees equal to 0.75% per annum times
the daily average undrawn portion of the
Revolving Facility (reduced by the amount of
Letters of Credit issued and outstanding) will
accrue from the Closing Date and will be payable
quarterly in arrears.
	 
	 	 
	Delayed Draw Fee:

	 	Commitment fees equal to 0.75% per annum times
the undrawn amount of commitments under the
Delayed-Draw Tranche will accrue from the
Closing Date and will be payable quarterly in
arrears.
	 
	 	 
	Letters of Credit Fees:

	 	A fee equal to (i) the applicable margin then in
effect for loans bearing interest at the reserve
adjusted Eurodollar Rate made under the
Revolving Facility, times (ii) the average daily
maximum aggregate amount available to be drawn
under all Letters of Credit, will be payable
quarterly in arrears to the Lenders under the
Revolving Facility. In addition, a fronting
fee, to be agreed upon between the

Annex B-5

 

	 	 	 
	 

	 	issuer of each Letter of Credit and the Borrower, will be payable to such
issuer, as well as certain customary fees assessed thereby.
	 
	 	 
	Voluntary Prepayments:

	 	The Senior Facilities may be prepaid in whole or in
part without premium or penalty; provided that
loans bearing interest with reference to the
reserve adjusted Eurodollar Rate will be prepayable
only on the last day of the related interest period
unless the Borrower pays any related breakage
costs. Voluntary prepayments of the Term
Facilities will be applied to scheduled
amortization payments as directed by the Borrower.
	 
	 	 
	Mandatory Prepayments:

	 	The following mandatory prepayments will be
required (subject to certain customary basket
amounts to be negotiated in the definitive Loan
Documents):

	 	1.	 	Asset Sales:
Prepayments in an amount equal to 100% of the net cash
proceeds of the sale or other disposition of any property or
assets of Parent or its subsidiaries (in excess of certain
thresholds and subject to certain exceptions to be
determined), other than net cash proceeds of sales or other
dispositions of inventory in the ordinary course of business
and net cash proceeds that are reinvested in other assets
useful in the business of the Parent and its subsidiaries
within one year of receipt thereof.
	 
	 	2.	 	Insurance Proceeds:
Prepayments in an amount equal to 100% of the net cash
proceeds of insurance paid on account of any loss of any
property or assets of the Parent or its subsidiaries, other
than net cash proceeds that are reinvested in other assets
useful in the business of Parent and its subsidiaries (or
used to replace damaged or destroyed assets) within one year
of receipt thereof.
	 
	 	3.	 	Incurrence of
Indebtedness: Prepayments in an amount equal to 100% of
the net cash proceeds received from the incurrence of
indebtedness by the Parent or its subsidiaries (other than
indebtedness otherwise permitted under the Loan Documents and
other exceptions to be agreed), payable no later than the
first business day following the date of receipt.
	 
	 	4.	 	Equity Offerings:
Prepayments in an amount equal to 50% (subject to reductions
to a lower percentage upon achievement of certain financial
performance measures to be determined) of the net cash
proceeds received from the issuance of equity securities of
Parent, the Borrower or their respective subsidiaries (other
than issuances pursuant to employee stock plans and other
exceptions to be mutually agreed upon by the Borrower and the
Administrative Agent).
	 
	 	5.	 	Excess Cash Flow:
Prepayments in an amount equal to 50% (subject to reductions
to a lower percentage upon achievement

Annex B-6

 

	 		 	of certain financial performance measures to be determined)
of “excess cash flow” (to be defined in the applicable Loan
Document), payable within 90 days of fiscal year-end
(commencing for the fiscal year ended December 31, 2011);
provided that voluntary prepayments of loans under the
Revolving Facility (to the extent accompanied by a permanent
commitment reduction in like amount) or the Term Facilities
(other than, in each case, prepayments funded with the
proceeds of incurrences of indebtedness, equity issuances or
contributions or asset dispositions) shall be credited
against excess cash flow prepayment obligations on a
dollar-for-dollar basis.

	 	 	 

	 

	 	All mandatory prepayments will be applied without penalty or
premium (except for breakage costs, if any) and will be applied
first pro rata to the Term Facilities (and applied pro
rata to remaining scheduled amortization payments and the payments
at final maturity); provided that, at the election of holders of
loans under the Term B Facility, the portion of proceeds otherwise
allocable thereto may be allocated to repay the loans under Term A
Facility in full prior to prepayment of the loans under the Term B
Facility held by such holders; and, second, to outstanding
loans under the Revolving Facility.
	 
	 	 
	Security:

	 	The Senior Facilities, each Guarantee and any
interest rate and currency hedging obligations
of the Borrower or any Guarantor owed to the
Administrative Agent, the Arrangers, any Lender
or any affiliate of the Administrative Agent,
the Arrangers or any Lender (the “Hedging
Obligations”) will be secured by first priority
security interests in substantially all assets,
including, without limitation, substantially all
personal, material and owned real and mixed
property of the Borrower and the Guarantors
(except as otherwise agreed to by the Arrangers
or set forth below). In addition, the Senior
Facilities will be secured by a first priority
security interest in 100% of the capital stock
of the Borrower and each domestic subsidiary of
the Borrower, 65% of the capital stock of each
foreign subsidiary of the Borrower, and 100% of
the capital stock of each subsidiary of the
Parent that is not also a subsidiary of the
Borrower, and all intercompany debt. All
security arrangements relating to the Senior
Facilities and the Hedging Obligations will be
in form and substance reasonably satisfactory to
the Administrative Agent and the Arrangers and,
subject to the limitations set forth in the
Commitment Letter, will be perfected on the
Closing Date; provided, that with respect to
guarantees and collateral documentation
regarding the Merger Party, such documentation
shall be been delivered in escrow to counsel to
the Arrangers pursuant to instructions providing
for the release and effectiveness of such
documentation concurrently with the
effectiveness of the Merger as set forth in the
Merger Certificate (as defined in Annex C to the
Commitment Letter).

Annex B-7

 

	 	 	 

	 

	 	Notwithstanding the foregoing, the collateral
shall not include: (a) motor vehicles and other
assets subject to certificates of title, (b)
letter of credit rights (other than letter of
credit rights that are supporting obligations),
(c) deposit accounts the funds in which are used
solely for the payment of salaries and wages,
workers’ compensation and similar expenses, (d)
equity interests in any person that is not a
direct or indirect wholly owned subsidiary of
the Parent (with subsidiaries the minority
interest in which is held by management,
directors or employees of the Parent or its
subsidiaries or consists of rolled-over equity
to be treated as wholly owned for purposes of
the foregoing) if the organizational or
governance documents of such person prohibit the
grant of a security interest therein without the
consent of any third party, (e) any license,
contract or agreement if the grant of a security
interest therein would result in a breach
thereof (other than to the extent that any such
provision would be rendered ineffective pursuant
to applicable provisions of the UCC), (f) any
equipment owned by the Borrower or any Guarantor
that is subject to a purchase money security
interest if the agreement pursuant to which such
purchase money security interest has been
granted prohibits a grant of a security interest
therein without the consent of any third party,
(g) leasehold interests and (f) other assets
(including owned real property and commercial
tort claims) if the Administrative Agent, in
consultation with the Borrower, determines that
the cost or burden of creating or perfecting a
security interest therein shall be excessive in
view of the benefits to be obtained by the
Lenders therefrom.
	 
	 	 
	Representations and
Warranties:

	 	The credit agreement for the Senior Facilities
will contain representations and warranties by
the Borrower (with respect to the Parent, the
Borrower and their respective subsidiaries) as
to the following matters: due organization;
requisite power and authority; qualification;
equity interests and ownership; due
authorization, execution, delivery and
enforceability of the Loan Documents; creation,
perfection and priority of security interests;
no conflicts; governmental consents; historical
and projected financial condition; no material
adverse change; no restricted junior payments;
absence of material litigation; payment of
taxes; title to properties; environmental
matters; no defaults under material agreements;
Investment Company Act and margin stock matters;
ERISA and other employee matters; solvency of
the Parent, Borrower and each of the Guarantors,
subject to customary assumptions regarding
credit support; compliance with laws; full
disclosure; and Patriot Act and other related
matters.
	 
	 	 
	Covenants:

	 	The definitive Loan Documents for the Senior
Facilities will contain financial, affirmative
and negative covenants by each of the Parent and
the Borrower (with respect to Parent and the
Borrower and their subsidiaries) that consist of
the following:
	 
	 	 
	- financial covenants:

	 	maximum total leverage ratio, minimum total
interest coverage, maximum capital expenditures,
with financial definitions and

Annex B-8

 

	 	 	 

	 

	 	covenant levels to be mutually agreed upon by the Borrower and the Arrangers, and
	 
	 	 
	- affirmative covenants:

	 	delivery of financial statements and other reports (including the identification of
information as suitable for distribution to Public Lenders); maintenance of
existence; payment of taxes and claims; maintenance of properties; maintenance of
insurance; cooperation with syndication efforts; books and records; inspections;
annual lender meetings; compliance with laws; environmental matters; additional
collateral and guarantors; maintenance of corporate level and facility level ratings;
and further assurances, including, in each case, exceptions and baskets to be
mutually agreed upon by the Borrower and the Arrangers, and
	 
	 	 
	- negative covenants:

	 	limitations with respect to other indebtedness; liens; negative pledges; restricted
junior payments (e.g., no dividends, redemptions or voluntary payments on certain
debt); restrictions on subsidiary distributions; investments, mergers and
acquisitions; sales of assets (including subsidiary interests); sales and
lease-backs; transactions with affiliates; conduct of business; amendments and
waivers of organizational documents, junior indebtedness and other material
agreements; and changes to fiscal year, including, in each case, exceptions and
baskets to be mutually agreed upon by the Borrower and the Arrangers (including,
without limitation, to the limitation on restricted junior payments to permit the
Dividend and the Post-Merger Special Dividend).
	 
	 	 
	Events of Default:

	 	The definitive Loan Documents for the Senior Facilities will include events of
default (and usual and customary grace periods) that consist of the following:
failure to make payments when due, cross-default under material indebtedness,
noncompliance with covenants, breaches of representations and warranties, bankruptcy,
judgments in excess of specified amounts, ERISA, invalidity of security interests in
collateral, invalidity of guarantees and “change of control” (to be defined in a
manner to be mutually agreed upon by the Borrower and the Arrangers).
	 
	 	 
	Conditions Precedent to the
Initial Draw and the Second
Draw:

	 	The several obligations of the Lenders to make loans to the Borrower in respect of
the Initial Draw and the Second Draw will be subject to the conditions precedent
referred to in the Commitment Letter and listed on Annex C attached to the Commitment
Letter.
	 
	 	 
	Conditions to All Borrowings:

	 	The making of each extension of credit under the Senior Facilities will be subject to
(a) prior written notice of borrowing, (b) the accuracy of representations and
warranties that are qualified by materiality and the accuracy in all material
respects of the representations and warranties not so qualified (subject to the
limitations set forth in the Commitment Letter) and (c) after the Closing Date, the
absence of any default or event of default.

Annex B-9

 

	 	 	 

	 

	 	Notwithstanding the foregoing, any fact or matter that would cause a default or event
of default on the Closing Date had clause (c) been applicable on the Closing Date
shall not result in a failed condition to borrowing on the Closing Date, but, unless
cured or waived in accordance with the terms of the Loan Documents, shall constitute
a default or event of default, as applicable, immediately thereafter.
	 
	 	 
	 

	 	In addition, as conditions to the funding of the Delayed-Draw Tranche, (i) the Merger
shall have been consummated and become effective and (ii) the Parent shall have
declared the Post-Merger Special Dividend to its shareholders.
	 
	 	 
	Assignments and
Participations:

	 	The Lenders may assign all or, in an amount of not less than (x) $2.5 million with
respect to each of the Term A Facility and the Revolving Facility and (y) $1.0
million with respect to the Term B Facility, any part of, their respective shares of
the Senior Facilities to their affiliates (other than natural persons) or one or more
banks, financial institutions or other entities that are eligible assignees (to be
defined in the Loan Documents) which, in the case of assignments with respect to the
Term A Facility and the Revolving Facility (except in the case of assignments made by
or to Goldman Sachs), are reasonably acceptable to the Administrative Agent and
(except during the existence of an Event of Default) the Borrower, each such consent
not to be unreasonably withheld or delayed. Upon such assignment, such affiliate,
bank, financial institution or entity will become a Lender for all purposes under the
Loan Documents; provided, that assignments made to affiliates and other Lenders will
not be subject to the above described consent or minimum assignment amount
requirements. A $3,500 processing fee will be required in connection with any such
assignment. The Lenders will also have the right to sell participations, subject to
customary limitations on voting rights, in their respective shares of the Senior
Facilities.
	 
	 	 
	Requisite Lenders:

	 	Amendments and waivers will require the approval of Lenders holding more than 50% of
total commitments or exposure under the Senior Facilities, except that (x) any
amendment that would disproportionately affect the obligation of the Borrower to make
payment of the loans under either the Revolving Facility or the Term Facilities will
not be effective without the approval of holders of more than 50% of such class of
loans and (y) with respect to matters relating to the interest rates, maturity,
amortization, certain collateral issues and the definition of Requisite Lenders,
consent of each Lender directly and adversely affected thereby shall be required.
	 
	 	 
	Taxes:

	 	The Senior Facilities will provide that all payments are to be made free and clear of
any taxes (other than franchise taxes, taxes on overall net income), imposts,
assessments, withholdings or other deductions whatsoever not in existence on the date
on which the applicable institution became a Lender. Lenders will furnish to the

Annex B-10

 

	 	 	 

	 

	 	Administrative Agent appropriate certificates or other evidence of exemption
from U.S. federal tax withholding.
	 
	 	 
	Indemnity:

	 	The Senior Facilities will provide customary
and appropriate provisions relating to
indemnity and related matters in a form
reasonably satisfactory to the Borrower, the
Arrangers, the Administrative Agent and the
Lenders.
	 
	 	 
	Governing Law and
Jurisdiction:

	 	The Senior Facilities will provide that the
Borrower will submit to the exclusive
jurisdiction and venue of the federal and
state courts of the State of New York (except
to the extent the Collateral Agent requires
submission to any other jurisdiction in
connection with the exercise of any rights
under any security document or the
enforcement of any judgment) and will waive
any right to trial by jury. New York law
will govern the Loan Documents, except with
respect to certain security documents where
applicable local law is necessary for
enforceability or perfection.
	 
	 	 
	Counsel to the Arrangers and
Administrative Agent:

	 	Cahill Gordon & Reindel llp.

The foregoing is intended to summarize certain basic terms of the Senior Facilities. It is not
intended to be a definitive list of all of the requirements of the Lenders in connection with the
Senior Facilities. Any terms to be set forth in the Loan Documents that are not otherwise set
forth in this Summary of Senior Facilities shall be reasonably acceptable to each of the Borrower
and the Administrative Agent.

Annex B-11

 

Annex C

Summary of Conditions Precedent to the Senior Facilities

This Summary of Conditions Precedent outlines the conditions precedent to the Senior Facilities
referred to in the Commitment Letter, of which this Annex C is a part. Certain capitalized terms
used herein are defined in the Commitment Letter.

	A.	 	Initial Draw Conditions: The conditions to the Initial Draw (the “Initial Draw
Conditions”) shall consist of the following (together with any other conditions to funding
expressly set forth in the Commitment Letter and in Annex B thereto):
	 
	1.	 	Acquisition: The terms of the Merger Agreement (including the exhibits, schedules,
disclosure letters and all related documents) will be reasonably satisfactory to the
Arrangers; provided that the Arrangers acknowledge that the Merger Agreement draft dated as of
June 20, 2010 is reasonably acceptable to the Arrangers. All conditions precedent to the
consummation of the Merger in the Merger Agreement dated as of June 20, 2010 shall have been
satisfied or waived, without giving effect to any amendments thereto or any waivers or
consents that are materially adverse to the Arrangers or the Lenders in their capacities as
Lenders, in each case without the consent of the Arrangers (provided that any (i) change in
the form of Merger consideration, (ii) any increase in the Merger consideration or (iii) any
decrease in the Merger consideration that is not accompanied by a corresponding
dollar-for-dollar reduction in the Dividend and the amount of the Term B Facility, shall be
deemed to be materially adverse and require the consent of the Arrangers).
	 
	2.	 	Existing Indebtedness of the Company: There will not exist (pro forma for the Merger
and the financing thereof) any default or event of default under the Company’s 3.0%
Convertible Subordinated Notes due 2010 or 4.0% Convertible Subordinated Notes due 2013
(together, the “Convertible Notes”). Concurrently with the consummation of the Merger and
after giving effect to the financing thereof, the Company shall not have any material
indebtedness outstanding other than (i) under the Senior Facilities, as contemplated by the
Commitment Letter, (ii) the Securities, if issued, and (iii) the Company’s 3.0% Convertible
Subordinated Notes due 2010 and 4.0% Convertible Subordinated Notes due 2013. On or prior to
the Closing Date, the Company shall have:

	 	a.	 	either (i) issued an irrevocable call notice with respect to all of the
Existing Notes in accordance with the terms of the indentures governing the
Existing Notes and on terms reasonably acceptable to the Commitment Parties or (ii)
(A) consummated a tender offer (the “Tender Offer”) with respect to each of the
Existing Notes and solicited consents to amendments to the indentures (the
“Supplemental Indentures”) related thereto that will eliminate substantially all
the covenants contained therein on terms reasonably acceptable to the Commitment
Parties, (B) accepted for purchase at least 50.1% of each of the 2016 Notes and the
2020 Notes and (C) entered into the Supplemental Indentures related to each of the
2016 Notes and the 2020 Notes on terms reasonably acceptable to the Commitment
Parties; and
	 
	 	b.	 	repaid in full, terminated and released all liens relating to the
Company’s credit and guaranty agreement, dated as of May 26, 2010, between the
Company, the guarantors party thereto, GSLP as sole lead arranger and GS Bank, as
administrative agent and collateral agent (the “Existing GSLP Facility”).

Annex C-1

 

	3.	 	Financial Statements. The Arrangers shall have received (i) at least 30 days prior
to the Closing Date, audited financial statements of the Company and the Merger Party for each
of the three fiscal years immediately preceding the Merger ended more than 90 days prior to
the Closing Date; (ii) as soon as internal financial statements are available, and in any
event at least 5 days prior to the Closing Date, unaudited financial statements for any fiscal
quarter of the Company and the Merger Party ended after the date of the most recent audited
financial statements of such person and more than 45 days prior to the Closing Date; and (iii)
customary pro forma financial statements, giving effect to the Merger, the Refinancing, the
Dividend, the Senior Facilities and/or Securities and any borrowings thereunder.
	 
	4.	 	Performance of Obligations. All costs, fees, expenses (including, without
limitation, legal fees and expenses, title premiums, survey charges and recording taxes and
fees) and other compensation contemplated by the Commitment Letter and the Fee Letter payable
to the Commitment Parties, the Arrangers, the Administrative Agent or the Lenders on the
Closing Date shall have been paid to the extent due and the Company and the Merger Party shall
have complied in all material respects with all of their respective obligations under the
Commitment Letter and the Fee Letter.
	 
	5.	 	Customary Closing Documents. The Arrangers shall be satisfied that the Company and
the Merger Party have complied with the following closing conditions and delivered the
following customary documentation relating to the Borrower and all of the Guarantors
(including the Merger Party): (i) the delivery of customary legal opinions, corporate records
and documents from public officials, lien searches and officer’s certificates as to the
Borrower and each of the Guarantors; (ii) absence of pending or ongoing litigation seeking to
enjoin the Merger that could reasonably be expected to result in an injunction of the Merger
after the funding of the Senior Facilities; (iii) obtaining material third party and
governmental consents necessary in connection with the Merger or the financings thereof; (iv)
evidence of authority; (v) subject to the limitations set forth in the Commitment Letter,
perfection of liens, pledges, and mortgages on the collateral securing the Senior Facilities;
(vi) delivery of satisfactory commitments for title insurance; (vii) evidence of customary
insurance; and (viii) delivery of a solvency certificate from the chief financial officer of
the Borrower in form and substance, and with supporting documentation, reasonably satisfactory
to the Administrative Agent, as to the Borrower, Parent and each Guarantor. The Arrangers
will have received at least 10 days prior to the Closing Date all documentation and other
information required by bank regulatory authorities under applicable “know-your-customer” and
anti-money laundering rules and regulations, including the Patriot Act, to the extent
requested at least 15 days prior to the Closing Date; provided, that with respect to
guarantees and collateral documentation regarding Parent and each of the Guarantors that is
not a subsidiary of the Borrower, such documentation shall be been delivered in escrow to
counsel to the Arrangers pursuant to instructions providing for the release and effectiveness
of such documentation concurrently with the effectiveness of the Merger as set forth in the
Merger Certificate (as defined below).
	 
	6.	 	Maximum Leverage Ratio. At the time of funding, the total amount of indebtedness
will be limited such that the ratio of (i) total indebtedness for Parent and its subsidiaries
as of the Closing Date (assuming the consummation of the Merger) to (ii) pro forma
consolidated adjusted EBITDA (calculated in accordance with Regulation S-X together with such
additional adjustments as the Arrangers agree are appropriate, but not including any synergies
relating to the Merger) for the latest four-quarter period for which financial statements are
then publicly available will not be greater than 3.75:1.00.

Annex C-2

 

	B.	 	Second Draw Conditions: In addition to the continued satisfaction of the Initial
Draw Conditions, the Second Draw shall be subject to the following additional conditions
(collectively with the Initial Draw Conditions, the “Second Draw Conditions”):
	 
	1.	 	Merger Certificate. The certificate relating to the Merger (the “Merger
Certificate”) shall be filed with the Delaware Secretary of State substantially concurrently
with the funding of the Second Draw. The Merger Certificate shall provide that the Merger
shall become automatically effective at 12:01 a.m. (Eastern time) on the date following the
filing of the Merger Certificate (without any additional conditions to effectiveness).
	 
	2.	 	Existing Indebtedness of the Merger Party: There will not exist (pro forma for the
Merger and the financing thereof) any default or event of default under any material
indebtedness of the Parent or its subsidiaries. Pro forma for the consummation of the Merger,
all material pre-existing indebtedness of the Merger Party (other than indebtedness
outstanding under the Senior Facilities, any Securities, the Convertible Notes and the
Parent’s 5.375% Convertible Notes due 2014) shall have been repaid or repurchased in full, all
commitments relating thereto shall have been terminated, and all liens or security interests
related thereto shall have been terminated or released, in each case on terms satisfactory to
the Arrangers and subject to exceptions to be mutually agreed upon.

Annex C-3exv10w2

Exhibit 10.2

EXECUTION VERSION

          VOTING AGREEMENT, dated as of June 20, 2010 (this
“Agreement”), among Biovail Corporation, a Canadian corporation
(“Biovail”), Valeant Pharmaceuticals International, a Delaware
corporation (“Delaware”) and the party listed on Schedule A hereto
(the “Stockholder”).

          WHEREAS, Biovail, Valeant, Biovail Americas Corp., a direct, wholly owned subsidiary of
Biovail (“BAC”), and Beach Merger Corp., a direct, wholly owned subsidiary of BAC
(“Merger Sub”), propose to enter into an Agreement and Plan of Merger dated as of the date
hereof (as the same may be amended or supplemented, the “Merger Agreement”; capitalized
terms used but not defined herein shall have the meanings set forth in the Merger Agreement)
providing for the merger of Merger Sub with and into Valeant; and

          WHEREAS, the Stockholder owns the number of shares of Valeant Common Stock set forth opposite
its name on Schedule A hereto (such shares of Valeant Common Stock, together with any other shares
of capital stock of Valeant acquired by the Stockholder after the date hereof and during the term
of this Agreement, being collectively referred to herein as the “Subject Shares”); and

          WHEREAS, as a condition to its willingness to enter into the Merger Agreement, Biovail and
Valeant have requested that the Stockholder enter into this Agreement.

          NOW, THEREFORE, the parties hereto agree as follows:

          SECTION 1. Representations and Warranties of the Stockholder. The Stockholder hereby
represents and warrants to Biovail and Valeant as of the date hereof in respect of itself as
follows:

          (a) Authority; Execution and Delivery; Enforceability. The Stockholder has
all requisite power and authority to execute this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by the Stockholder of this Agreement and
consummation of the transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Stockholder. The Stockholder has duly executed and delivered this
Agreement, and this Agreement, assuming this Agreement constitutes a legal, valid and binding
obligation of the other parties hereto, constitutes the legal, valid and binding obligation of the
Stockholder, enforceable against the Stockholder in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or similar laws affecting
the rights of creditors generally and the availability of equitable remedies (regardless of whether
such enforceability is considered in a proceeding in equity or at law). The execution and delivery
by the Stockholder of this Agreement do not, and the consummation of the

 

 

transactions contemplated hereby and compliance with the terms hereof will not, conflict with,
or result in any violation of, or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancelation or acceleration of any obligation or to loss of
a material benefit under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any Lien upon any of the properties
or assets of the Stockholder under, any provision of any Contract to which the Stockholder is a
party or by which any properties or assets of the Stockholder are bound or, subject to the filings
and other matters referred to in the next sentence, any provision of any Judgment or Law applicable
to the Stockholder or the properties or assets of the Stockholder. No Consent of, or registration,
declaration or filing with, any Governmental Entity is required to be obtained or made by or with
respect to the Stockholder in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby, other than (i) compliance
with and filings under the HSR Act and Part IX of the Competition Act, if applicable to the
Stockholder’s receipt in the Merger of Biovail Common Stock, and (ii) such reports under Sections
13(d) and 16 of the Exchange Act or under Canadian Securities Laws as may be required in connection
with this Agreement and the transactions contemplated hereby.

          (b) The Subject Shares. The Stockholder is the record and beneficial owner
of, and has good and marketable title to, the Subject Shares set forth opposite its name on
Schedule A attached hereto, free and clear of any Liens. The Stockholder does not own, of record or
beneficially, any shares of capital stock of Valeant other than the Subject Shares set forth
opposite its name on Schedule A attached hereto. The Stockholder has the sole right to vote such
Subject Shares, and none of such Subject Shares is subject to any voting trust or other agreement,
arrangement or restriction with respect to the voting of such Subject Shares, except as
contemplated by this Agreement.

          SECTION 2. Representations and Warranties of Biovail. Biovail hereby
represents and warrants to the Stockholder and Valeant as follows: Biovail has all requisite
corporate power and authority to execute this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by Biovail of this Agreement and consummation of
the transactions contemplated hereby have been duly authorized by all necessary action on the part
of Biovail. Biovail has duly executed and delivered this Agreement, and this Agreement, assuming
this Agreement constitutes a legal, valid and binding obligation of the other parties hereto,
constitutes the legal, valid and binding obligation of Biovail, enforceable against Biovail in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or similar laws affecting the rights of creditors generally and the availability of
equitable remedies (regardless of whether such enforceability is considered in a proceeding in
equity or at law). The execution and delivery by Biovail of this Agreement do not, and the
consummation of the transactions contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancelation 

2

 

or acceleration of any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person under, or result in the
creation of any Lien upon any of the properties or assets of Biovail under, any provision of any
Contract to which Biovail is a party or by which any properties or assets of Biovail are bound or,
subject to the filings and other matters referred to in the next sentence, any provision of any
Judgment or Law applicable to Biovail or the properties or assets of Biovail. No Consent of, or
registration, declaration or filing with, any Governmental Entity is required to be obtained or
made by or with respect to Biovail in connection with the execution, delivery and performance of
this Agreement or the consummation of the transactions contemplated hereby, other than such reports
under the Securities Act, the Exchange Act or under Canadian Securities Laws as may be required in
connection with this Agreement and the transactions contemplated hereby.

          SECTION 3. Representations and Warranties of Valeant. Valeant hereby represents and
warrants to Biovail and the Stockholder as follows: Valeant has all requisite corporate power and
authority to execute this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery by Valeant of this Agreement and consummation of the transactions
contemplated hereby have been duly authorized by all necessary action on the part of Valeant.
Valeant has duly executed and delivered this Agreement, and this Agreement, assuming this Agreement
constitutes a legal, valid and binding obligation of the other parties hereto, constitutes the
legal, valid and binding obligation of Valeant, enforceable against Valeant in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or
similar laws affecting the rights of creditors generally and the availability of equitable remedies
(regardless of whether such enforceability is considered in a proceeding in equity or at law). The
execution and delivery by Valeant of this Agreement do not, and the consummation of the
transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional, accelerated or guaranteed rights or
entitlements of any person under, or result in the creation of any Lien upon any of the properties
or assets of Valeant under, any provision of any Contract to which Valeant is a party or by which
any properties or assets of Valeant are bound or, subject to the filings and other matters referred
to in the next sentence, any provision of any Judgment or Law applicable to Valeant or the
properties or assets of Valeant. No Consent of, or registration, declaration or filing with, any
Governmental Entity is required to be obtained or made by or with respect to Valeant in connection
with the execution, delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than such reports under the Securities Act, the Exchange
Act or under Canadian Securities Laws as may be required in connection with this Agreement and the
transactions contemplated hereby.

3

 

          SECTION 4. Covenants of the Stockholder. The Stockholder covenants and agrees as
follows:

          (a) At the Valeant Stockholder Meeting or any other meeting of the stockholders of Valeant
called to seek the Valeant Stockholders Approval or in any other circumstances upon which a vote,
consent or other approval (including by written consent) with respect to the Merger Agreement or
the Merger is sought, the Stockholder shall vote (or cause to be voted) the Subject Shares of the
Stockholder in favor of granting the Valeant Stockholder Approval.

          (b) At any meeting of stockholders of Valeant or at any adjournment thereof or in any other
circumstances upon which the Stockholder’s vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares of the Stockholder against (i) any
merger agreement or merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, recapitalization, dissolution, liquidation
or winding up of or by Valeant, (ii) any Valeant Takeover Proposal and (iii) any amendment of the
Valeant Charter or the Valeant By-laws or other proposal or transaction involving Valeant or any of
its Subsidiaries, which amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify any provision of the Merger Agreement or the Merger or change in any
manner the voting rights of any class of Valeant Capital Stock. The Stockholder shall not commit
or agree to take any action inconsistent with the foregoing.

          (c) Other than this Agreement, the Stockholder shall not (i) sell, transfer, pledge, assign
or otherwise dispose of (including by gift) (collectively, “Transfer”), or enter into any
Contract, option, derivative, hedging or other agreement or arrangement (including any profit- or
loss-sharing arrangement) with respect to the Transfer of, any Subject Shares to any person other
than pursuant to the Merger, or (ii) enter into any voting arrangement, whether by proxy, voting
agreement or otherwise, with respect to any Subject Shares and shall not commit or agree to take
any of the foregoing actions.

          (d) Subject to Section 8 below, the Stockholder shall not, nor shall it authorize or
permit any Representative of the Stockholder to (i) directly or indirectly solicit, initiate,
knowingly encourage, induce or facilitate any Valeant Takeover Proposal or any inquiry or proposal
that may reasonably be expected to lead to a Valeant Takeover Proposal or (ii) directly or
indirectly participate in any discussions or negotiations with any Person regarding, or furnish to
any Person any information with respect to, or cooperate in any way with any Person (whether or not
a Person making a Valeant Takeover Proposal) with respect to any Valeant Takeover Proposal or any
inquiry or proposal that may reasonably be expected to lead to a Valeant Takeover Proposal.

4

 

          (e) The Stockholder shall use all reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger.

          (f) The Stockholder hereby consents to and approves the actions taken by the Valeant Board in
approving the Merger Agreement. The Stockholder hereby waives, and agrees not to exercise or
assent to, any appraisal rights under Section 262 in connection with the Merger.

          SECTION 5. Termination. This Agreement shall terminate upon the
earliest of (i) the Effective Time, (ii) the termination of the Merger Agreement in accordance with
its terms, (iii) the occurrence of a Valeant Adverse Recommendation Change, or (iv) the End Date,
in each case other than with respect to the liability of any party for breach hereof prior to such
termination; provided that, notwithstanding anything herein to the contrary, the
obligations of the Stockholder pursuant to Section 4(c)(i) of this Agreement shall terminate on
December 30, 2010 if this Agreement does not terminate on an earlier date pursuant to the terms of
this Section 5.

          SECTION 6. Additional Matters. The Stockholder shall, from time to time, execute and
deliver, or cause to be executed and delivered, such additional or further consents, documents and
other instruments as Biovail or Valeant may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement.

          SECTION 7. Publication. The Stockholder hereby permits Biovail and Valeant to
publish and disclose in any proxy statement or prospectus (including any document or schedule filed
with the SEC), or any other regulatory filings in connection with the Merger Agreement, the
Stockholder’s identity and ownership of shares of Valeant Common Stock, the other information set
forth on Schedule A attached hereto, and the nature of its commitments, arrangements and
understandings pursuant to this Agreement. Each of Biovail and Valeant hereby permits the
Stockholder to publish and disclose in any regulatory filing or filings which it is required under
Law to make as a result of this Agreement the identity of Valeant and Biovail and the nature of the
commitments, arrangements and understandings of Valeant or Biovail pursuant to this Agreement.

          SECTION 8. Fiduciary Responsibilities. Notwithstanding any provision of this
Agreement to the contrary, nothing in this Agreement shall limit or restrict the rights and
obligations of G. Mason Morfit, Brandon Boze or any other designee of the Stockholder serving on
the Board of Directors of Valeant from taking any action in their capacity as directors of Valeant
(it being understood that this Agreement shall apply to the Stockholder solely in its capacity as a
stockholder of Valeant) or voting in their sole discretion on any matter, whether in connection
with the Merger Agreement or otherwise, and such actions shall not be deemed to constitute a breach
of any provision of this Agreement.

5

 

          SECTION 9. General Provisions.

          (a) Amendments. This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto.

          (b) Notice. All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or sent by overnight courier (providing proof of
delivery) to Biovail or Valeant in accordance with Section 9.02 of the Merger Agreement and to the
Stockholder at its address set forth on Schedule A hereto (or at such other address for a party as
shall be specified by like notice).

          (c) Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Wherever the words “include”, “includes” or
“including” are used in this Agreement, they shall be deemed to be followed by the words “without
limitation”.

          (d) Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule or law, or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as closely as possible
in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.

          (e) Counterparts. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties.

          (f) Entire Agreement; No Third-Party Beneficiaries. This Agreement (i) constitutes
the entire agreement and supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof and (ii) is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.

          (g) Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware regardless of the laws that might otherwise govern under
applicable principles of conflicts of law thereof.

6

 

          (h) Assignment. Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by operation of law or
otherwise by any of the parties without the prior written consent of the other parties. Any
purported assignment without such consent shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.

          (i) Enforcement. The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement in any Federal court located in the State of Delaware or in
any Delaware state court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any Delaware state court or any Federal court located in the State of
Delaware in the event any dispute arises out of this Agreement or the Merger, (ii) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave
from any such court, (iii) agrees that it will not bring any action relating to this Agreement or
the Merger in any court other than a Delaware state court or any Federal court sitting in the State
of Delaware and (iv) waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any transaction contemplated hereby.

7

 

               IN WITNESS WHEREOF, each party has duly executed this Agreement, all as of the date first
written above.

	 	 	 	 	 
	 	BIOVAIL CORPORATION,

 	 
	 	by  	/s/ William M. Wells	 
	 	 	Name:  	William M. Wells	 
	 	 	Title:  	Chief Executive Officer	 
	 
	 
	 	VALEANT PHARMACEUTICALS INTERNATIONAL,

 	 
	 	by  	/s/ J. Michael Pearson	 
	 	 	Name:  	J. Michael Pearson	 
	 	 	Title:  	Chairman and Chief Executive Officer	 
	 
	 
	 	VALUEACT CAPITAL MASTER FUND, L.P., by its

general partner, VA Partners I,

 	 
	 	by  	/s/ Jeffrey W. Ubben	 
	 	 	Name:  	Jeffrey W. Ubben	 
	 	 	Title:  	Chief Executive Officer	 

 

 

	 	 	 	 	 

SCHEDULE A

	 	 	 

	
Name and Address 

of Stockholder
	 	Number of Shares of

Valeant

Common Stock Owned
	 
	 	 
	ValueAct Capital Master Fund, L.P.

	 	15,138,358 shares*
	435 Pacific Ave., 4th Floor
	 	 
	San Francisco, CA 94133
	 	 
	TEL: (415) 362-3700
	 	 
	FAX: (415) 362-5727
	 	 
	Attn: Allison Bennington
	 	 
	abennington@valueact.com
	 	 

 

			
	*	 	G. Mason Morfit also owns 24,687 Virginia Restricted Stock Units.

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