Document:

exv10w1

Exhibit 10.1

TERMINATION PROTECTION AGREEMENT

     AGREEMENT effective May 6, 2009 between Thomas & Betts Corporation and its successors and
assigns (the “Company”) and Charles L. Treadway (“Executive”).

     WHEREAS, Executive has important management responsibilities and talents which benefit the
Company and its affiliates; and

     WHEREAS, the Company believes that its best interests are served if Executive is encouraged to
remain with the Company and the Company has determined that Executive’s ability to perform
Executive’s responsibilities and utilize Executive’s talents for the benefit of the Company, and
the Company’s ability to retain Executive as an employee, will be significantly enhanced if
Executive is provided with fair and reasonable protection from the risks associated with a change
in ownership or control of the Company; and

     WHEREAS, the Board has approved the terms and provisions of this Agreement at its meeting on
May 6, 2009;

     NOW, THEREFORE, the Company and Executive hereby agree as follows:

     1. Defined Terms.

     Unless otherwise indicated herein, capitalized terms used in this Agreement which are defined
in Schedule A shall have the meanings set forth in Schedule A.

     The Company and Executive both agree that the definition of “Change in Control” listed in
Schedule A shall be used for Executive in any and all plans, programs or agreements in which
Executive participates or to which Executive is a party in lieu of any similar definition used in
such plans, programs or agreements; provided, however, that the definition of
“Change in Control” listed in Schedule A shall not replace any such similar definition that serves
as a “permissible payment event” (within the meaning of Treas. Reg. § 1.409A-3(a)) under any such
plan, program or agreement.

     2. Effective Date; Term.

     This Agreement shall commence on May 6, 2009 (the “Effective Date”) and shall continue in
effect through December 31, 2012; provided, however, that the term of this
Agreement shall automatically be extended for one additional year beyond December 31, 2012 and for
successive one year periods thereafter, unless, not later than January 30 of the third calendar
year preceding the year in which the term would otherwise automatically extend (e.g., 2010 for the
2013 calendar year, 2011 for the 2014 calendar year, etc.), the Company shall have given written
notice to Executive that it does not wish to extend this Agreement for an additional year, in which
event this Agreement shall continue to be effective until December 31 of the calendar year
immediately preceding the calendar year in which the term would have otherwise automatically
extended; provided, further, that, notwithstanding any such notice by the Company
not to extend, if a Change in Control occurs during the original or any extended term of this
Agreement, this Agreement shall remain in effect for a period of three (3) years after such Change
in Control.

 

 

     3. Change in Control Benefits.

     Executive shall be entitled to the benefits provided under this Agreement if a Triggering
Event occurs. In the event that Executive’s employment is terminated as a result of death or
Disability, Executive shall not be entitled to the benefits provided in this Section 3; however,
Executive and/or Executive’s family shall be entitled to receive benefits at least equal to the
most favorable benefits provided by the Company under its plans, programs and policies relating to
death and/or disability benefits as in effect at any time during the 90-day period immediately
preceding the earlier of the Change in Control or the Termination Date.

          (a) Severance Payment. The Company shall pay Executive the aggregate of the following
amounts in one lump sum on the Payment Date:

               (i) to the extent not paid before the Payment Date in accordance with the Company’s ordinary
payroll practices, Executive’s earned but unpaid base salary through the date of the Triggering
Event at the rate in effect on the date of such Triggering Event, or if higher, at the highest rate
in effect at any time within the 90-day period preceding the Change in Control;

               (ii) to the extent not paid before the Payment Date in accordance with the terms of the
Company’s bonus plan, any unpaid annual bonus payable to Executive in respect of the calendar year
ending prior to the Triggering Event (but not less than the Average Bonus);

               (iii) an amount determined by multiplying the Average Bonus by a fraction, the numerator of
which is the number of days elapsed in the calendar year in which the Triggering Event occurs up to
and including the date of such Triggering Event and the denominator of which is 365;

               (iv) a lump sum amount, in cash, equal to three (3) times Executive’s Annual Compensation;

               (v) any unpaid earned and/or accrued vacation, and

               (vi) interest, for the period beginning on the date of the Triggering Event and ending on the
Payment Date at a rate equal to one hundred twenty (120) percent of the monthly, compounded
applicable federal rate, as in effect under Section 1274(d) of the Code for the month before the
month in which the Triggering Event occurs.

               Notwithstanding the foregoing, if the unpaid base salary or any portion thereof or the unpaid
annual bonus or any portion thereof is subject to a deferral election or the bonus is subject to
Section 409A of the Code, such amount shall be paid in accordance with the terms of such election
and/or the terms of the plan pursuant to which such amount was deferred.

          (b) Health Care Coverage.

               (i) The Company shall provide medical, prescription drug and dental coverage at the Company’s
expense to Executive and, if applicable, to Executive’s family members eligible for such coverage
under the Thomas & Betts Welfare Benefit Plan, until the

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third anniversary of the Termination Date (the “Initial Coverage Period”). The level of
coverage to be provided hereunder shall in no event be less than the level of coverage provided
immediately before the earlier of the Termination Date or the Change in Control.

               (ii) The following provisions shall apply if the coverage is self-insured by the Company. The
fair market value of coverage for each month included in the Initial Coverage Period shall be
deemed to consist of the related monthly premium as would be determined for purposes of COBRA under
Section 4980B of the Code (the “Fair Market Value”). If the Delayed Payment Date applies,
commencing with the month immediately following the month in which his Termination Date occurs and
ending as of the last day of the month in which the Delayed Payment Date occurs (the “Direct
Payment Period”), Executive shall be required to pay to the Company at the same time that COBRA
premium payments are otherwise due for that month an amount equal to the monthly Fair Market Value.
On the first day of the first month following the Delayed Payment Date, the Company shall reimburse
Executive for the aggregate amount paid by him during the Direct Payment Period (the “Aggregate
Premium Payment”). Effective with respect to the first month following the Direct Payment Period
and continuing through the end of the Initial Coverage Period or during the entire Initial Coverage
Period if the Delayed Payment Date does not apply, the Company shall cover Executive (and his
family members, if applicable) at its sole expense each month, but the Fair Market Value of such
coverage shall constitute imputed income to Executive. The Company shall make tax gross-up
payments with respect to such reimbursement for the Direct Payment Period and Company-paid coverage
during the Initial Coverage Period including (A) Company payment of any required withholding with
respect to the reimbursement and with respect to the Fair Market Value of the monthly Company-paid
coverage plus the amount of additional withholding due each month as a result of the Company’s
payment of such initial withholding amount and (B) Company payment to Executive of an amount equal
to any additional federal, state and local tax imposed on Executive with respect to income
recognized by Executive pursuant to the foregoing payments, including the amount of additional tax
imposed on Executive as a result of Company’s payment of such initial tax. The payment of such
additional tax pursuant to (B) shall be made no later than the end of the taxable year following
the taxable year in which Executive remits the related taxes.

               (iii) Following the Initial Coverage Period and for a period of eighteen months thereafter,
the Company shall permit Executive to elect to continue coverage at Executive’s expense by paying
the monthly COBRA premium, as directed by the Company. Notwithstanding the foregoing, the COBRA
continuation period that is mandated by Section 4980B of the Code shall be deemed to have run
concurrently with the Initial Coverage Period.

               (iv) If Executive becomes employed by a new employer, the coverage provided by Company under
this Section 3(b) shall terminate on the date Executive becomes eligible for the coverage provided
by Executive’s new employer.

               (v) For purposes of Section 409A of the Code, coverage provided hereunder during the period of
time that Executive would be entitled to continuation coverage pursuant to COBRA is intended to
qualify for the exception from “deferred compensation” as a medical benefit provided in accordance
with Treas. Reg. § 1.409A-1(b)(9)(v)(B). Any additional coverage hereunder shall be provided in
accordance with the Reimbursement and In-Kind

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Benefit Rule and the tax gross-up payments shall be provided in accordance with Treas. Reg.
§1.409A-3(i)(v).

          (c) Other Welfare Benefits. The Company shall provide disability, group term life and
accidental death and dismemberment insurance at the Company’s expense to Executive until the third
anniversary of his Termination Date. The level of coverage to be provided shall be no less than
the level of coverage provided immediately before the earlier of the Termination Date or the Change
in Control. To the extent that any such benefit is subject to Section 409A of the Code and to the
Delayed Payment Date, Executive shall be responsible for the payment of all expenses, including,
but not limited to, the cost of the premiums for such coverage until the Delayed Payment Date. The
Company shall reimburse Executive on the Delayed Payment Date for all such costs and expenses
incurred prior to such Delayed Payment Date, provided proof of payment has been provided
and shall assume the obligation to pay all future costs and expenses until the third anniversary of
the Termination Date. The Reimbursement and In-Kind Benefit Rule shall apply to amounts subject to
Section 409A of the Code.

          (d) Full Vesting of All Stock Options and Restricted Shares. Notwithstanding any
provision to the contrary in the Company’s equity incentive plans (the “Equity Plans”) or any award
agreement under the Equity Plans, (i) any outstanding, unexercisable stock options or unvested
restricted shares shall become fully exercisable and vested as of the Termination Date and (ii) all
stock options, whether or not such stock options first become exercisable pursuant to this
Agreement, shall remain exercisable until the earlier of (A) the tenth anniversary of the original
date of grant or (B) the latest date upon which the option could have expired by its original terms
under any circumstances; provided, however, that this sentence shall not restrict
the Company’s ability to adjust or settle outstanding stock options pursuant to the terms of the
Equity Plans, so long as Executive is treated in any such adjustment or settlement no less
favorably than any other employee of the Company; and further provided that
if Executive is, or ever has been, a “covered employee” (within the meaning of Section 162(m) of
the Code), only a pro-rata portion of any unvested restricted shares that are intended to
constitute “performance-based compensation” shall vest incident to an Anticipatory Termination
Triggering Event, and solely if the related performance conditions are fully met in accordance with
the certification required of the Company’s Compensation Committee by Section 162(m) of the Code.

          (e) Retirement Benefits. Executive shall be entitled to receive retirement benefits
in accordance with the provisions of the Company’s Executive Retirement Plan.

          (f) Outplacement Services. The Company shall pay the reasonable expenses incurred
with respect to executive outplacement services by any one qualified outplacement agency selected
by Executive and reasonably satisfactory to the Company from the Termination Date until the first
anniversary of the Termination Date; provided, however, that (i) such services are
directly related to Executive’s Separation from Service, and (ii) the period during which they are
covered and the payments made do not extend beyond the period described in Treas. Reg. §
1.409A-1(b)(9)(v)(E).

          (g) Grantor Trust. Within ninety (90) days following execution of this Agreement, the
Company shall establish a grantor trust, known as a rabbi trust, which shall

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provide for the Company to make an irrevocable contribution to fully fund the cash payments
provided for under this Agreement in the event of a Change in Control. Notwithstanding the
foregoing, such funding shall not be required if it would result in the imposition of additional
tax under Section 409A(b)(5) of the Code.

     4. Mitigation.

     Executive shall not be required to mitigate damages or the amount of any payment provided for
under this Agreement by seeking other employment or otherwise, and compensation earned from such
employment or otherwise shall not reduce the amounts otherwise payable under this Agreement. No
amounts payable under this Agreement shall be subject to reduction or offset in respect of any
claims which the Company (or any other person or entity) may have against Executive.

     5. Code Section 4999 Tax Gross-Up.

          (a) In the event that any payment or benefit received or to be received by Executive pursuant
to the terms of this Agreement (the “Contract Payments”) or otherwise in connection with
Executive’s termination of employment or contingent upon a change in ownership or control pursuant
to any plan or arrangement or other agreement with the Company (or any affiliate), (“Other
Payments” and, together with the Contract Payments, the “Payments”) would be subject to the excise
tax (the “Excise Tax”) imposed by Section 4999 of the Code, as determined as provided below, the
Company shall pay to Executive, at the time specified in Section 5(b) below, an additional amount
(the “Gross-Up Payment”) such that the net amount retained by Executive, after deduction of the
Excise Tax on the Payments and any federal, state and local income or other tax and excise tax upon
the payment provided for by this Section 5(a), and any interest, penalties or additions to tax
payable by Executive with respect thereto, shall be equal to the total value of the Payments at the
time such Payments are to be made. For purposes of determining whether any of the Payments will be
subject to the Excise Tax and the amounts of such Excise Tax, (1) the total amount of the Payments
shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and
all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be
treated as subject to the Excise Tax, except to the extent that, in the opinion of independent tax
counsel selected by the Company’s independent auditors and reasonably acceptable to Executive (“Tax
Counsel”), a Payment (in whole or in part) does not constitute a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code, or such “excess parachute payments” (in whole or in
part) are not subject to the Excise Tax, (2) the amount of the Payments that shall be treated as
subject to the Excise Tax shall be equal to the lesser of (A) the total amount of the Payments or
(B) the amount of “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code
(after applying clause (1) hereof), and (3) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by Tax Counsel in accordance with the principles of Sections
280G(d)(3) and (4) of the Code. For purposes of this Section 5, any additional tax under Section
409A of the Code shall not be taken into account for purposes of determining the amount of any
payment due to or on behalf of Executive.

          (b) The Gross-Up Payments provided for in Section 5(a) hereof shall be made upon the earlier
of (i) the payment to Executive of any Payment or (ii) the imposition upon

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Executive or payment by Executive of any Excise Tax, provided, however, if the Gross-Up
Payment is subject to the Delayed Payment Date, the Gross-Up Payments shall be made on the Delayed
Payment Date, if later. In no event shall any amount due to Executive under this Section 5 be paid
later than the end of the Executive’s taxable year following Executive’s taxable year in which such
taxes are remitted..

          (c) Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 10 business days after
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which Executive gives such
notice to the Company (or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies Executive in writing prior to the
expiration of such period that it desires to contest such claim, Executive shall:

          (i) give the Company any information reasonably requested by the Company relating to
such claim;

          (ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company and reasonably satisfactory to Executive;

          (iii) cooperate with the Company in good faith in order to effectively contest such
claim; and

          (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including, but not limited to, additional interest and penalties and related legal,
consulting or other similar fees) incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax or other tax (including interest
and penalties with respect thereto) imposed as a result of such representation and payment of costs
and expenses. All such costs and expenses incurred due to a tax audit or litigation addressing the
existence of or amount of a tax liability under this Section 5 shall be paid by the Company within
thirty (30) days of the date payment of such expenses is due or if such payment is subject to the
Delayed Payment Date, on the Delayed Payment Date, if later, but in any event not later than (A)
December 31 of the year following the year in which the taxes are remitted to the taxing authority,
or (B) where as a result of such audit or litigation no taxes are remitted, December 31 of the year
following the year in which the audit is complete or there is a final and nonappealable settlement
or other resolution of the litigation. Any Gross-Up Payment as a result of any Excise Tax or other
tax (including interest and penalties with respect thereto) imposed shall be paid at the time of
imposition of such Excise Tax or other tax or if such amount is subject to the Delayed Payment
Date, on the Delayed Payment Date, if later.

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          (d) The Company shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company directs
Executive to pay such claim and sue for a refund, the Company shall reimburse the Executive the
amount of the claimed tax within five (5) days of remittance of such amount to the Internal Revenue
Service or, if such reimbursement is subject to the Delayed Payment Date, on the Delayed Payment
Date, if later and shall indemnify and hold Executive harmless, on an after-tax basis, from any
Excise Tax or other tax (including interest or penalties with respect thereto) imposed with respect
to such reimbursement and such additional amount shall be paid at the time of imposition of such
Excise Tax or other tax or if such amount is subject to the Delayed Payment Date, on the Delayed
Payment Date, if later; and provided, further, that if Executive is required to
extend the statute of limitations to enable the Company to contest such claim, Executive may limit
this extension solely to such contested amount. The Company’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable hereunder and Executive
shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority. In addition, no position may be taken nor any final
resolution be agreed to by the Company without Executive’s consent if such position or resolution
could reasonably be expected to adversely affect Executive (including any other tax position of
Executive unrelated to the matters covered hereby).

          (e) As a result of any uncertainty in the application of Section 4999 of the Code at the time
of the initial determination by the Company or the Tax Counsel hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies and Executive thereafter is required to pay to the Internal
Revenue Service an additional amount in respect of any Excise Tax, the Company or the Tax Counsel
shall determine the amount of the Underpayment that has occurred and any such Underpayment shall
promptly be paid by the Company to or for the benefit of Executive, subject, however, to the
requirements of Section 5(b) regarding time of payment.

          (f) If, after the receipt by Executive of the Gross-Up Payment or an amount reimbursed by the
Company under Section 5(d) in connection with the contest of an Excise Tax claim, Executive
receives any refund with respect to such claim, Executive shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after taxes applicable
thereto). If after the receipt by Executive of an amount reimbursed by the Company in connection
with an Excise Tax claim, a determination is made that Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify Executive in writing of its
intent to contest the denial of such refund prior to the expiration of 30 days after such
determination, such reimbursement shall not be required to be repaid.

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     6. 409A Gross-Up Payment.

          (a) Subject to the requirements stated in this Section 6, in the event that amounts hereunder
become subject to the additional tax and interest under Section 409A of the Code (“409A additional
tax”) as a result of a plan document failure or an operational failure caused solely by the action
or inaction of the Company (and not at the request of Executive), the Company shall pay to
Executive an amount equal to such 409A additional tax and any additional taxes imposed upon
Executive due to the Company’s payment of such 409A additional tax (a “409A Gross-Up Payment”). In
no event, however, shall any amounts become payable under this Section 6 as a result of
compensation required to be included in gross income by reason of Section 409A(b)(3) of the Code.
Subject to the notification requirements set forth in Section 6(b) in the event the 409A additional
tax is not remitted by withholding, the 409A Gross-Up Payment shall be paid to Executive within
five business days of the date such taxes are remitted to the applicable taxing authority, or, if
the 409A Gross-Up Payment is subject to the Delayed Payment Date, on the Delayed Payment Date, if
later. In no event shall any amount due to Executive under this Section 6 be paid later than the
end of Executive’s taxable year following Executive’s taxable year in which such taxes are
remitted.

          (b) Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the 409A Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than (10) ten business days after
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which he gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, or if the Company notifies Executive at the time of
payment of the 409A Gross-Up Payment under Section 6(a) that it desires to contest the application
of the 409A additional tax (in either case, a “claim”), Executive shall (i) give the Company any
information reasonably requested by the Company relating to such claim, (ii) take such action in
connection with contesting such claim as the Company shall reasonably request in writing from time
to time, including ,without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith
in order effectively to contest such claim, and (iv) permit the Company to participate in any
proceeding relating to such claim; provided, however, that the Company shall bear
and pay directly all costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on an after-tax
basis, for any income tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. All such costs and expenses
incurred due to a tax audit or litigation addressing the existence of or amount of a tax liability
under this Section 6 shall be paid by the Company within thirty (30) days of the date payment of
such expenses is due or, if such payment is subject to the Delayed Payment Date, on the Delayed
Payment Date, if later, but in any event not later than (A) December 31 of the year following the
year in which the taxes are remitted to the taxing authority, or (B) where as a result of such
audit or litigation no taxes are remitted, December 31 of the year following the year in which the
audit is complete or there is a final and nonappealable settlement or other resolution of the
litigation. Without limitation on the

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foregoing provisions of this Section 6(b), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing authority in respect
of such claim, and Executive shall prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that any extension of the statute
of limitations relating to payment of taxes for the taxable year of Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to which
a 409A Gross-Up Payment would be payable hereunder, and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

          (c) If Executive becomes entitled to receive one or more refunds of all or any part of the
409A additional tax with respect to which a 409A Gross-Up Payment was made, Executive shall pay the
refund to the Company within five business days of the receipt of any such refund.

     7. Employment Status; No Effect Prior to Change in Control; Termination for Cause.

          (a) Executive and the Company acknowledge and agree that prior to a Change in Control,
Executive’s employment is “at will” and may be terminated at any time, by the Company with or
without Cause or by Executive with or without Good Reason, subject to applicable law. In the event
Executive’s employment is terminated for any reason prior to a Change in Control, other than an
Anticipatory Termination Triggering Event, Executive shall have no rights to any payments or
benefits under this Agreement and after any such termination, this Agreement shall be of no further
force or effect.

          (b) In the event Executive is terminated for Cause following a Change in Control, Executive
shall have no rights to any payments or benefits under this Agreement.

     8. Indemnification; Director’s and Officer’s Liability Insurance.

     Until the sixth anniversary of the Termination Date and for so long thereafter as any claim
for indemnification asserted on or prior to such date has not been fully adjudicated (the
“Indemnification Period”), the Company shall indemnify, defend, and hold harmless Executive against
all losses, damages, costs, expenses (including attorneys’ fees) or liabilities (including
attorneys’ fees) with respect to bona fide claims regarding actions or omissions or alleged actions
or omissions arising out of or relating to performance by Executive of services for, or in the
capacity of Executive as director, officer or employee of, the Company or any affiliate of the
Company which have occurred on or prior to the Termination Date to the same extent and on the same
terms and conditions (including with respect to advancement of expenses) as permitted under
applicable law and the Company’s certificate of incorporation and by-laws as in effect immediately
prior to the earlier of the Termination Date or the Change in Control. In addition, the Company
shall maintain Director’s and Officer’s liability insurance (from an insurance company rated not
less than A by A.M. Best Company) and, if Executive served or has served

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as a fiduciary of any pension or benefit plan, ERISA fiduciary insurance, on behalf of
Executive, at the level in effect immediately prior to the earlier of the Termination Date or the
Change in Control, for the Indemnification Period.

     9. Confidential Information.

     Executive acknowledges that any confidentiality agreement entered into by Executive and the
Company remains in full force and effect and survives the termination of his or her employment with
the Company; provided that nothing contained in such agreement or this Section 9 shall
prevent Executive from being employed by a competitor of any of the Company or utilizing
Executive’s general skills, experience, and knowledge, including those developed while employed by
any of the Company or its affiliates.

     10. Disputes.

     Any dispute or controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Memphis, Tennessee or, at the option of Executive, in the county
where Executive then resides, in accordance with the Rules of the American Arbitration Association
then in effect, except that Executive may, at Executive’s option, bring that action in a court of
competent jurisdiction, even if the Company has earlier instituted an action hereunder. Judgment
may be entered on an arbitrator’s award relating to this Agreement in any court having
jurisdiction.

     11. Costs of Proceedings.

     The Company shall pay for all costs and expenses of Executive, at least monthly, including
attorneys’ fees and disbursements, in connection with any legal proceeding (including arbitration),
whether instituted by the Company or by Executive during Executive’s lifetime, relating to the
interpretation or enforcement of any provision of this Agreement, except that if Executive
instituted the proceeding and the judge, arbitrator or other individual presiding over the
proceeding affirmatively finds that Executive instituted the proceeding in bad faith, then
Executive shall be required to pay all costs and expenses of Executive, including attorney’s fees
and disbursements, and shall not be entitled to reimbursement and shall reimburse the Company for
any amounts previously paid by the Company to Executive for such costs and expenses. The
Reimbursement and In-Kind Benefit Rule shall apply and if any payment is subject to the Delayed
Payment Date, it shall not be paid prior to the Delayed Payment Date.

     12. Successors and Assigns.

     Except as otherwise provided herein, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the Company and Executive and their respective heirs, legal
representatives, successors and assigns. If the Company shall be merged into or consolidated with
another entity, the provisions of this Agreement shall be binding upon and inure to the benefit of
the entity surviving such merger or resulting from such consolidation. The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business or assets of the Company, by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to

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perform it if no such succession had taken place. The provisions of this Section 12 shall
continue to apply to each subsequent employer of Executive in the event of any subsequent merger,
consolidation or transfer of assets of such subsequent employer.

     13. Withholding.

     Notwithstanding the provisions of Sections 4, 5 and 6 hereof, the Company may, to the extent
required by law, withhold applicable federal, state and local income and other taxes from any
payments due to Executive hereunder.

     14. Compliance with Code Section 409A.

     This Agreement is intended to comply with the requirements of Section 409A of the Code and
shall be construed and interpreted in accordance therewith in order to avoid the imposition of
additional tax thereunder.

     15. Applicable Law.

     This Agreement shall be governed by and construed in accordance with the laws of the State of
Tennessee, without reference to principles of conflicts of law, applicable to contracts made and to
be performed therein.

     16. Entire Agreement.

     This Agreement constitutes the entire agreement between the parties regarding severance
benefits following a Change in Control and supersedes and overrides any prior agreement entered
into between the Company and Executive regarding severance benefits following a Change in Control
between the Company and Executive. This Agreement may be changed only by a written agreement
executed by the Company and Executive.

     17. Notice.

     Notices and all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when personally delivered, delivered by a nationally
recognized overnight delivery service, or sent by certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses last given by each party to the other,
provided that all notices to the Company shall be directed to the attention of the Board
with a copy to the Secretary of the Company. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the third business day after the mailing
thereof, except that notice of change of address shall be effective only upon receipt.

     18. Severability.

     The provisions of this Agreement shall be deemed severable, and the invalidity or
unenforceability of any provision hereof shall not affect the validity or enforceability of the
other provisions hereof.

- 11 -

 

     IN WITNESS WHEREOF, the parties have executed this Agreement on the ___day of
                                        , 2009.

THOMAS & BETTS CORPORATION

	 	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name J.N. Raines	 	 
	 	 	Title   Vice President, General Counsel	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 
	 	 	          Charles L. Treadway	 	 

- 12 -

 

SCHEDULE A

TO CHARLES L. TREADWAY

TERMINATION PROTECTION AGREEMENT

CERTAIN DEFINITIONS

     As used in this Agreement, and unless the context requires a different meaning, the following
terms, when capitalized, have the meaning indicated:

     “Annual Compensation” means the sum of (i) Executive’s annual rate of base salary in
effect on the date of the Change in Control or, if higher, the Termination Date, (ii) the Average
Bonus and (iii) Executive’s perquisite allowance for the calendar year immediately prior to the
calendar year in which the earlier of the Termination Date or the Change in Control occurs.

     “Anticipatory Termination Triggering Event” means the Executive’s Separation from
Service for a reason other than death or Disability before a Change in Control provided
Executive’s employment is terminated by the Company or its affiliates without Cause and Executive
reasonably demonstrates that such Separation from Service was at the request or suggestion of any
individual or entity that is or was attempting to effectuate a Change in Control within the 12
months following such Separation from Service.

     “Average Bonus” means the greater of (i) Executive’s target bonus for the calendar
year immediately prior to the calendar year in which the earlier of the Termination Date or the
Change in Control occurs, or (ii) the highest bonus paid or payable to Executive in respect of any
of the five (5) calendar years (annualized with respect to any such calendar year for which
Executive has been employed for only a portion thereof) immediately prior to the calendar year in
which the earlier of the Termination Date or the Change in Control occurs. Notwithstanding the
foregoing, effective with respect to a Termination Date or Change in Control (whichever is earlier)
occurring on or after January 1, 2010, if Executive is or ever has been a “covered employee”
(within the meaning of Section 162(m) of the Code), the amount described in clause (i), above,
shall cease to apply, and shall be replaced by the phrase, “65% of Executive’s annual rate of base
salary for the calendar year immediately prior to the calendar year in which the earlier of the
Termination Date or the Change in Control occurs.”

     “Average Long Term Incentive Award” means the sum of (i) the average Black-Scholes
value (as determined by the accountant employed by the Company immediately prior to the Change in
Control) of the annual stock options granted to Executive during the three calendar years
immediately prior to the calendar year in which the earlier of the Termination Date or the Change
in Control occurs and (ii) the average value of the annual restricted stock awards (determined by
reference to the closing values of the restricted shares on the dates on which they were granted)
granted to Executive during the three calendar years immediately prior to the calendar year in
which the earlier of the Termination Date or the Change in Control occurs.

     “Board” means the Company’s Board of Directors.

 

 

     “Cause” shall mean Executive’s termination of employment due to:

(a) Executive’s conviction of, or plea of guilty or nolo contendere to, a felony; or

(b) the willful engaging by Executive in gross misconduct which is materially and
demonstrably injurious to the Company.

     For a termination of employment to be for Cause: (i) Executive must receive a written notice
which indicates in reasonable detail the facts and circumstances claimed to provide a basis for the
termination of Executive’s employment for Cause; (ii) Executive must be provided with an
opportunity to be heard no earlier than 30 days following the receipt of such notice (during which
notice period Executive has the opportunity to cure and has failed to cure or resolve the behavior
in question); and (iii) there must be a good faith determination of Cause by at least
three-quarters of the non-employee outside director members of the Board.

     “Change in Control” For the purpose of this Agreement, a “Change in Control” shall,
without limitation, be deemed to have occurred if:

          (a) A third person, including a “group” as such term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), becomes the beneficial owner,
directly or indirectly, of 25% or more of the combined voting power of the Company’s outstanding
voting securities ordinarily having the right to vote for the election of directors of the Company;
or

          (b) Individuals who, as of the date hereof, constitute the Board cease for any reason to
constitute at least a majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least three-quarters of the directors comprising the
Board as of the date hereof (other than an election or nomination of an individual whose initial
assumption of office is in connection with an actual or threatened election contest relating to the
election of directors of the Company) shall be, for purposes of this Agreement, considered as
though such person were a member of the Board as of the date hereof; or

          (c) The consummation of (i) any consolidation, share exchange, merger or amalgamation of the
Company as a result of which the individuals and entities who were the respective beneficial owners
of the outstanding common stock of the Company and the voting securities of the Company immediately
prior to such consolidation, share exchange, merger or amalgamation do not beneficially own,
immediately after such consolidation, share exchange, merger or amalgamation, directly or
indirectly, 50% or more, respectively, of the common stock and combined voting power of the voting
securities entitled to vote of the company resulting from such consolidation, share exchange,
merger or amalgamation; or (ii) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all the assets or earning power of the
Company; or

          (d) The approval by the shareholders of a plan of complete liquidation or dissolution of the
Company.

- 2 -

 

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Company” means Thomas & Betts Corporation and its successors and assigns.

     “Delayed Payment Date” means the first business day following the six-month
anniversary of the Termination Date. A payment or benefit shall not be subject to the Delayed
Payment Date if (i) the payment or benefit is not subject to Section 409A of the Code, (ii) the
payment event with respect to the payment or benefit, for purposes of Section 409A of the Code, is
other than Separation from Service, or (iii) on the Termination Date, no stock of the Company (or
any other entity considered a single employer with the Company under Treas. Reg. §1.409A-1(g) or
any successor thereto) is publicly traded on an established securities market or otherwise.

     “Disability” means total disability or permanent disability as determined under the
Company’s long-term disability plan in which Executive participates, as it exists from time to
time; provided, however, if Executive does not participate in the Company’s
long-term disability plan, then “Disability” means an illness or injury which prevents Executive
from performing his or her duties, as they existed immediately prior to the illness or injury, on a
full time basis for 180 consecutive business days, and is determined to be total and permanent
disability by a physician selected by the Company and acceptable to Executive or Executive’s legal
representative.

     “Good Reason” means any of the following actions, without Executive’s express prior
written approval, other than due to Executive’s permanent disability or death:

               (i) any reduction in Executive’s annual base salary;

               (ii) any failure to pay Executive an annual bonus, in cash, at least equal to the Average
Bonus;

               (iii) any failure by the Company to grant Executive with long term incentives annually that
are at least equal to the value of the Average Long Term Incentive Award, where the value of the
long term incentives granted to Executive in any year are determined by the accountants employed by
the Company immediately prior to the Change in Control using a valuation method consistent with the
methodology used to value the Average Long Term Incentive Award;

               (iv) Executive’s duties, titles, responsibilities or authority (including offices and
reporting relationships) are diminished in comparison to the duties, titles and responsibilities or
authority enjoyed by Executive immediately prior to the Change in Control, other than as a result
of an insubstantial and inadvertent action which is remedied by the Company promptly after receipt
of notice thereof by Executive;

               (v) any material reduction in Executive’s and/or Executive’s family’s eligibility to
participate and his/her/their level of benefit in each of the Company’s welfare benefit plans,
including, without limitation, all medical, prescription, dental, disability, salary continuance,
group life, accidental death and travel accident insurance plans and programs of the Company in
comparison to the highest level of eligibility and level of benefit enjoyed by Executive and
Executive’s family during the 90 day period preceding the Change in Control;

- 3 -

 

               (vi) any material reduction, in the aggregate, in Executive’s ability to participate in all
incentive, savings and retirement plans or programs applicable to other key executives (including
the Company’s restricted stock and stock option plans), to a level less favorable to Executive than
the highest level enjoyed by Executive in such plans or programs during the 90 day period preceding
the Change in Control;

               (vii) the Company’s requiring Executive to be based at any office or location which is located
more than 35 miles from the location where Executive was based immediately prior to the Change in
Control;

               (viii) any material reduction of any fringe benefits, including any car allowance enjoyed by
Executive during the ninety (90) day period immediately prior to the Change in Control;

               (ix) any material reduction in the level of Executive’s entitlement to a particular office or
office size or to particular furnishings or to secretarial or other assistance as enjoyed by
Executive during the ninety (90) day period immediately prior to the Change in Control;

               (x) any reduction in the level of Executive’s entitlement to paid vacation as enjoyed by
Executive during the ninety (90) day period immediately prior to the Change in Control;

               (xi) any termination of employment by Executive within the thirty-day period immediately
following the twelve-month anniversary of the Change in Control; or

               (xii) the failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform the Agreement, as contemplated in Section 12 of this Agreement.

     Executive’s continued employment shall not constitute consent to, or a waiver of rights with
respect to, any circumstances constituting Good Reason hereunder. For purposes of the Agreement,
any good faith determination of “Good Reason” made by Executive shall be conclusive.

     “Payment Date” means (i) the Delayed Payment Date, if (A) the payment is subject to
Section 409A of the Code, (B) the payment event for purposes of Section 409A of the Code is
Separation from Service, and (C) on the Termination Date stock of the Company (or any other entity
considered a single employer with the Company under Treas. Reg. §1.409A-1(g) or any successor
thereto) is publicly traded on an established securities market or otherwise, or (ii) in any other
case, the date that is ten (10) days after the Termination Date.

     “Reimbursement and In-Kind Benefit Rule” means, with respect to in-kind benefits
provided or expenses eligible for reimbursement which are subject to Section 409A of the Code, that
(i) the benefits provided or the amount of expenses eligible for reimbursement during any calendar
year shall not affect the benefits provided or expenses eligible for reimbursement in any other
calendar year, except as otherwise provided in Treas. Reg. § 1.409A-3(i)(1)(iv)(B), and (ii) the
reimbursement of an eligible expense shall be made as soon as practicable after Executive

- 4 -

 

requests such reimbursement, but not later than the December 31 following the calendar year in
which the expense was incurred and if the payment is subject to the Delayed Payment Date, not
earlier than the Delayed Payment Date.

     “Separation from Service” means Executive’s separation from service with the Company
and its affiliates within the meaning of Treas. Reg. § 1.409A-1(h) or any successor thereto.

     “Separation from Service Triggering Event” means the Executive’s Separation from
Service for a reason other than death or Disability on the date of or within three years following
a Change in Control provided Executive’s employment is terminated by the Company or its
affiliates without Cause or by Executive for Good Reason.

     “Termination Date” means the date of Executive’s Separation from Service.

     “Triggering Event” means the earlier to occur of (i) a Separation from Service
Triggering Event, or (ii) an Anticipatory Termination Triggering Event.

- 5 -exv10w2

Exhibit 10.2

March 10, 2009

Bhaskar Chaudhuri

Dear Bhaskar:

I am pleased to offer you a new position with Valeant Pharmaceuticals International (the
“Company”).

This letter outlines the details of your new position and your new employment terms. Your new
position is contingent upon your successful completion of a pre-employment drug screen and
background investigation.

	•	 	Title: President, Valeant Pharmaceuticals International. You will report to the
Chief Executive Officer.
	 
	•	 	Base Salary: $41,666.67 per month ($500,000 annualized).
	 
	•	 	Effective Date: March 10, 2009.
	 
	•	 	Sign-On Bonus: You have received, or will receive, a sign-on bonus of $250,000
within 30 days of the Effective Date; provided, however, if you voluntarily terminate your
employment, other than for Good Reason, prior to the first anniversary of the Effective Date
(or you are terminated for Cause within such period), you will be required to repay to the
Company a pro rata portion of such bonus determined by multiplying $250,000 times the quotient
obtained by dividing (a) the difference obtained by subtracting the number of days employed
from 365; by (b) 365.
	 
	•	 	Salary Adjustments: You will be eligible for participation in our Merit Increase
Program, based on performance, for the period beginning April 1, 2010. This policy is subject
to change as approved by the Compensation Committee of the Valeant Board of Directors.
	 
	•	 	Annual Incentive: You will be eligible to participate in Valeant’s management
bonus plan beginning in the 2009 calendar year. Your target bonus will be 60% of your Base
Salary, with the potential of 120% of your Base Salary. This plan, and therefore your
participation, is subject to change at the discretion of the Board of Directors. Bonuses are
payable at the time the other management bonuses are paid. To be eligible for any bonus
payment, you must be employed by the Company on the day in which the applicable bonus is paid
to other members of Valeant management.
	 
	•	 	Equity Awards: As indicated in the employment terms provided to by you by the
Company’s Chief Executive Officer, subject to the approval of the Company’s Board of
Directors, you will receive the following equity on the date of such approval (the “Grant
Date”):

          JMP BC          

          Initials          

 

 

Bhaskar Chaudhuri

March 10, 2009

Page 2 of 11

	 	o	 	Stock Options – You shall be granted options to acquire a whole number of
shares of the Company common stock with a Black-Scholes value equal to $1,500,000 as of the
Grant Date (the “Options”). For purposes of the preceding sentence, the Black-Scholes
value shall be established by the Company in accordance with its prior practices with
respect to the valuation of stock option grants for granting purposes; provided that the
value of the stock shall be determined for this purpose based on the Per Share Price on the
Grant Date. The exercise price of the Options will be priced at the fair market value at
the close of business on the Grant Date. The Options will vest over a four-year period
from the grant date of the Options (25% per year on the anniversary of the grant date) and
shall have a term of ten (10) years. If your employment is terminated by the Company
without Cause or by you for Good Reason, either in contemplation of a Change in Control or
at any time within twelve (12) months following a Change in Control, then any Option that
is not cancelled in connection with the Change in Control in exchange for cash payment will
vest on the termination date and shall remain exercisable for one year following the
termination date (but in no event beyond the 10-year term of the Option). If your
employment is terminated by the Company for Disability or by reason of your death, any
Option outstanding shall vest in full and remain exercisable following the termination date
(but in no event beyond the 10-year term of the Option).
	 
	 	o	 	Performance Restricted Share Units. You will also receive such number of
performance-based restricted stock units under the 2006 Plan (the “Performance Share
Units”) with a value equal to the quotient obtained by dividing $1,500,000 by the Per Share
Price on the Grant Date (such number of Performance Share Units, the “2009 Performance
Units”), which shall vest as follows, provided that, in all events, you are continually
employed by the Company through and including the 3 year anniversary of Grant Date:

	 	1.	 	If at the third anniversary of the Effective Date (the “First Measurement
Date”), the Adjusted Share Price (as defined below) equals the Single Vesting Share
Price (as defined below), you shall vest in 100% of the 2009 Performance Units (1 x the
2009 Performance Units).
	 
	 	2.	 	If at the First Measurement Date the Adjusted Share Price equals the Double
Vesting Share Price (as defined below), you shall vest in 200% of the 2009 Performance
Units (2 x the 2009 Performance Units).
	 
	 	3.	 	If at the First Measurement Date the Adjusted Share Price equals the Triple
Vesting Share Price (as defined below) you shall vest in 300% of the 2009 Performance
Units (3 x the 2009 Performance Units).
	 
	 	4.	 	Performance Share Units that could have been earned under any of subclauses 1,
2, or 3 above that are not earned on the First Measurement Date may be earned on the
fourth anniversary of the Effective Date (the “Second Measurement Date”), subject to
your continued employment through that date, based upon the Adjusted Share Price on
such Second Measurement Date.
	 
	 	5.	 	If the Adjusted Share Price on a measurement date is between the Single Vesting
Share Price and the Double Vesting Share Price or is between the Double Vesting Share
Price and the Triple Vesting Share Price, you shall vest in, and the Company shall
deliver, a number of Performance Share Units that is the mathematical interpolation
between the number of shares which would vest at defined ends of the spectrum.

          JMP BC          
          Initials          

 

 

Bhaskar Chaudhuri

March 10, 2009

Page 3 of 11

	 	6.	 	The Company shall distribute to you a number of shares of its common stock
equal to the number of Performance Shares Units that become vested as soon as
practicable (but in any event no later than 45 days) following the vesting date of such
Performance Shares Units. You shall not be permitted to sell, assign, transfer, or
otherwise dispose of more than fifty percent (50%) of the Net Shares (as defined below)
acquired upon settlement of the Performance Share Units until the expiration of the
two-year period following receipt, or, if sooner, until a Change in Control or until
you experience a termination of employment. For purposes of this letter, Net Shares
shall mean the net number of shares acquired by you upon settlement of the Performance
Share Units after subtracting any such shares withheld by the Company in payment of
withholding obligations applicable to such settlement.
	 
	 	7.	 	In the event of the occurrence of a Change in Control or termination of your
employment by death or Disability, the performance measures applicable to the
Performance Share Units will be applied as though the date of the Change in Control, or
employment termination date, as applicable, were the end of the measurement period,
with the number of units calculated in a manner consistent with the vesting schedule
described above (e.g., in the event of a Change in Control occurs or your employment is
terminated by death or Disability prior to the First Measurement Date, 100% will vest
at the date of such termination if the Adjusted Share Price is the Single Vesting Share
Price; 200% will vest if the Adjusted Share Price is the Double Vesting Share Price;
and 300% will vest if the Adjusted Share Price is the Triple Vesting Share Price; and
if the Adjusted Share Price on such measurement date is between the Single Vesting
Share Price and the Double Vesting Share Price or is between the Double Vesting Share
Price and the Triple Vesting Share Price, you shall vest in, and the Company shall
deliver, a number of Performance Share Units that is the mathematical interpolation
between the number of shares which would vest at defined ends of the spectrum).

	 	 	“Adjusted Share Price” means the sum of (i) the average closing prices of a share for the twenty
trading days prior the applicable measurement date (the “Per Share Price”), and (ii) the value
that would be derived from the number of shares (including fractions thereof) that would have
been purchased had an amount equal to each dividend paid on a share of common stock after the
Grant Date and on or prior to the applicable measurement date been deemed invested on the
dividend payment date, based on the closing price of the common stock on such dividend payment
date.

	 	 	 	“Single Vesting Share Price,” “Double Vesting Share Price,” and “Triple Vesting Share
Price” mean the Adjusted Share Prices equal to a compound annual share price
appreciation (the “Annual Compound TSR”) of 15%, 30% and 45%, respectively, as
measured between the Per Share Price on the Grant Date and the applicable measurement
date.

	 	 	Grant Notices and Grant Agreements shall be prepared consistent with the terms set forth above
and providing such other terms and conditions as are in the Company’s standard such agreements.
	 
	•	 	Share Purchase Commitment: You also agree to purchase at least $500,000 worth of
shares of the Company’s common stock on or before the first anniversary of the Effective Date
or such later date as determined by the Company (the “Purchased Shares”). You shall not be
permitted to sell any of the Purchased Shares until the earlier of one year after the Final
Purchase Date (as defined below) and your date of termination of employment for any reason.
As long as you remain employed by the Company, you shall retain ownership of at least (i)
seventy-five percent (75%) of the Purchased 

          JMP BC          
          Initials          

 

 

Bhaskar Chaudhuri

March 10, 2009

Page 4 of 11

	 	 	Shares until the second anniversary of the
Effective Date, (ii) fifty percent (50%) of the Purchase Shares until the third anniversary of the Effective Date, and (iii) twenty-five percent (25%) of
the Purchased Shares until the fourth anniversary of the Effective Date (the holding
requirements in this and the immediately preceding sentence shall be referred to as the
“Purchase Obligations”). Notwithstanding the foregoing, the Purchase Obligations shall be
waived upon the occurrence of a Change of Control. The “Final Purchase Date” shall mean the
date on which you have purchased shares that, together with other shares purchased by you on or
after the Effective Date, have an aggregate purchase price of $500,000.

	 	•	 	Matching Grants for Share Purchases: The Company shall make matching grants
with respect to the Purchased Shares and any additional shares of the Company’s common
stock you purchase (up to an aggregate purchased amount of $1,000,000 inclusive of the
Purchased Shares) on or before the first anniversary of the Effective Date. Such matching
grants shall be credited to you as soon as practicable after the end of any month in which
you purchase Company shares, in a number of restricted share units equal to the number of
shares purchased in such month (the “Matching Share Units”). The Matching Share Units
shall vest and be settled in shares on the following schedule: Twenty-five percent (25%)
of the Matching Share Units shall vest and be settled on the first anniversary of the Final
Purchase Date and an additional 25% of the Matching Share Units shall vest and be settled
on each of the second, third and fourth anniversaries of the Final Purchase Date, provided
you are employed on the relevant vesting date and you have not violated the Purchase
Obligations prior to such vesting date. If your employment is terminated by the Company
without Cause or by you for Good Reason, either in contemplation of a Change in Control or
at any time within twelve (12) months following a Change in Control, or if your employment
is terminated by the Company at any time for Disability or by reason of your death, then,
your Matching Share Units shall immediately vest and be settled in shares as soon as
practicable (but not more than 60 days) thereafter.
	 
	 	•	 	Until the expiration of the two-year period following the date on which any portion of
the Matching Share Units are settled, you shall not be permitted to sell, assign, transfer,
or otherwise dispose of more than fifty percent (50%) of the net number of shares acquired
by you upon such settlement of such portion of the Matching Share Units after subtracting
any such shares withheld by the Company in payment of withholding obligations applicable to
such settlement acquired upon settlement of the Matching Share Units. This restriction
shall cease to apply upon a Change in Control or your earlier termination of employment.

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

          JMP BC          
          Initials          

 

 

Bhaskar Chaudhuri

March 10, 2009

Page 5 of 11

	 	(i)	 	Diminution of Responsibility. (A) any material reduction in your duties or
responsibilities as in effect immediately prior thereto, or (B) removal of you from the
position of President, Valeant Pharmaceuticals International. For the avoidance of
doubt, the term “Diminution of Responsibility” shall not include any such removal
resulting from your death or disability, the termination of your employment for Cause,
or your termination of your employment other than for Good Reason. In addition,
notwithstanding anything herein to the contrary, the reduction or removal from you, in
part or in whole, from time to time, of any duties or responsibilities related to the
Company’s business in Europe and/or Latin America shall not by itself be deemed to be a
“Diminution of Responsibility”;
	 
	 	(ii)	 	Compensation Reduction. Any material reduction in your base salary or target
bonus opportunity which is not comparable to reductions in the base salary or target
bonus opportunity of other similarly-situated senior executives at the Company; or
	 
	 	(iii)	 	Company Breach. Any other material breach by the Company of any material
provision of this letter.

	•	 	Change in Control. For purposes of this letter, a “Change in Control” shall mean
any of the following events:

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

	 	(iii)	 	the closing of:

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

          JMP BC          
          Initials          

 

 

Bhaskar Chaudhuri

March 10, 2009

Page 6 of 11

	 	 	 	Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely
because thirty percent (30%) or more of the combined voting power of the Company’s then
outstanding securities is acquired by (i) a trustee or other fiduciary holding securities
under one or more employee benefit plans maintained by the Company or any of its
subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is owned
directly or indirectly by the stockholders of the Company in the same proportion as their
ownership of stock in the Company immediately prior to such acquisition.
	 
	 	 	 	Upon the occurrence of a Change in Control, at the election of the Company, either (i) the
unvested Options and Matching Share Units shall vest and all Options and Matching Share
Units shall be cancelled in exchange for a cash payment based in the case of any merger
transaction on the price received by shareholders in the transaction constituting the Change
in Control or in the case of any other event that constitutes a Change in Control, the
closing price of a Share on the date such Change in Control occurs (minus, in the case of
Options, the applicable exercise price per share) or (ii) all Options and Matching Share
Units shall be converted into options or units, as applicable, in respect of the common
stock of the acquiring entity (in a merger or otherwise) on the basis of the relative values
of such stock and the Shares at the time of the Change in Control, reflecting and continuing
the same vesting schedule in place immediately prior to the Change in Control; provided that
subclause (ii) shall only be applicable if the common stock of the acquiring entity is
publicly traded on an established securities market on the date on which such Change in
Control is effected.
	 
	 	•	 	Disability. The Company may terminate your employment, on written notice to you
after having established your Disability and while you remain Disabled, subject to the
payment by the Company to you of the applicable benefits provided pursuant to this letter.
For purposes of this letter, “Disability” shall mean your inability to substantially
perform your duties and responsibilities hereunder by reason of any physical or mental
incapacity for two or more periods of ninety (90) consecutive days each in any three
hundred and sixty (360) day period, as determined by a physician with no history of prior
dealings with the Company or you, as reasonably agreed upon by the Company and you. You
shall be entitled to the compensation and benefits provided for under this letter for any
period prior to your termination by reason of Disability during which you are unable to
work due to a physical or mental infirmity in accordance with the Company’s policies for
similarly-situated executives.
	 
	 	•	 	Cause. The Company may terminate your employment for “Cause”, subject to the
payment by the Company to you of the applicable benefits provided in this letter. “Cause”
shall mean, for purposes of this letter: (1) conviction of any felony (other than one
related to a vehicular offense) or other criminal act involving fraud; (2) willful
misconduct that results in a material economic detriment to the Company; (3) material
violation of Company policies and directives, which is not cured after written notice and
an opportunity for cure, (4) continued refusal by you to perform your duties after written
notice identifying the deficiencies and an opportunity for cure; and (5) a material
violation by you of any material covenants to the Company. No action or inaction shall be
deemed willful if not demonstrably willful and if taken or not taken by you in good faith
and with the understanding that such action or inaction was not adverse to the best
interests of the Company. Reference in this paragraph to the Company shall also include
direct and indirect
subsidiaries of the Company, and materiality shall be measured based on the action or
inaction and the impact upon the Company taken as a whole. The Company may suspend, with
pay, you

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	 	 	 	upon your indictment for the commission of a felony as described under clause (A) above.
Such suspension may remain effective until such time as the indictment is either dismissed
or a verdict of not guilty has been entered.

	•	 	Employee and Executive Benefits: You will be eligible to participate in the
employee benefit plans and programs generally made available to employees (on the terms and
conditions applicable generally to all employees) and the Valeant’s Executive Benefit Program:

	 	1)	 	Executive medical program
	 	2)	 	Executive medical reimbursement program up to $10,000 per year
	 	3)	 	Executive Vacation Program
	 	4)	 	Executive Annual Physical Program

	•	 	Reimbursement of Certain Expenses: The Company shall fully reimburse the
reasonable fees of your counsel and financial advisor incurred in connection with the
development and implementation of the terms of your employment.

	•	 	Conditions to Reimbursement. The following provisions shall be in effect for any
reimbursements (and in-kind benefits) to which you otherwise become under this Agreement, in
order to assure that such reimbursements (and benefits) do not create a deferred compensation
arrangement subject to Section 409A of the Internal Revenue Code of 1986, as amended
(“Section 409A”):

	 	 	 	(i) The amount of reimbursements (or in-kind benefits) to which you may become entitled in
any one calendar year shall not affect the amount of expenses eligible for reimbursement (or
in-kind benefits) hereunder in any other calendar year.
	 
	 	 	 	(ii) Each reimbursement to which you become entitled shall be made by the Company as soon as
administratively practicable following your submission of the supporting documentation, but
in no event later than the close of business of the calendar year following the calendar
year in which the reimbursable expense is incurred.
	 
	 	 	 	(iii) Your right to reimbursement (or in-kind benefits) cannot be liquidated or exchanged
for any other benefit or payment.

	•	 	At-Will Employment. Your employment with Valeant is “at will”. This means that
you or Valeant have the option to terminate your employment at any time, with or without
advance notice, and with or without cause. Valeant also may change your position, title, pay,
benefits, and other terms and conditions of your employment (except for the at will nature of
your employment and the terms of the Mediation and Arbitration Agreement) at any time, for any
reason, with or without notice. This offer of
employment does not constitute an express or implied agreement of continuing or long term
employment. The at will nature of your employment can be altered only by a written
agreement specifying the altered status of your employment. Such written agreement must be
signed by both you and the Chief Executive Officer.
	 
	•	 	Severance Benefits. Notwithstanding the immediately preceding bullet paragraph, if
your employment is terminated by the Company without Cause or by you for Good Reason, the
Company shall have the following obligations:

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March 10, 2009

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	 	•	 	The Company will pay you 150% of the sum of an amount equal to your annual salary as
of the date of your termination, plus an amount equal to your annual target bonus as of
the date of your termination, provided that, if your termination occurs either in
contemplation of a Change in Control or at any time within twelve (12) months following
a Change in Control, the Company shall pay you an amount which is 200% of the sum
otherwise determined under this bullet;
	 
	 	•	 	The Company will pay you any accrued but unpaid salary or vacation pay and any
deferred compensation. In addition, the Company will pay you any bonus earned but
unpaid in respect of any fiscal year preceding the termination date, plus any pro-rata
bonus for the year of termination based on a target-level bonus.
	 
	 	•	 	The Company will provide you with continued coverage under any health, medical,
dental or vision program or policy in which you were eligible to participate at the
time of your employment termination for 12 months following such termination on terms
no less favorable to you and your dependents (including with respect to payment for the
costs thereof) than those in effect immediately prior to such termination;
	 
	 	•	 	The performance measures applicable to the Performance Share Units will be applied
as though the termination date were the end of the measurement period, with the number
of units calculated in a manner consistent with the vesting schedule described above
(e.g., in the event of your termination prior to the First Measurement Date, 100% will
vest at the date of such termination if the Adjusted Share Price is the Single Vesting
Share Price; 200% will vest if the Adjusted Share Price is the Double Vesting Share
Price; and 300% will vest if the Adjusted Share Price is the Triple Vesting Share
Price; and if the Adjusted Share Price on such measurement date is between the Single
Vesting Share Price and the Double Vesting Share Price or is between the Double Vesting
Share Price and the Triple Vesting Share Price, you shall vest in, and the Company
shall deliver, a number of Performance Share Units that is the mathematical
interpolation between the number of shares which would vest at defined ends of the
spectrum); provided, however, that in the event you are entitled to payment under this
bullet point, only a pro rata portion of such calculated units will vest upon your
termination (based on the number of completed months elapsed from the date of grant to
the date of termination divided by 36 months). The Company shall deliver shares in
respect of such vested Performance Share Units, if any, as soon as practicable (but not
later
than sixty (60) days) following your termination date, and all other Performance Share
Units will be forfeited.
	 
	 	•	 	The Company shall provide outplacement services through one or more outside firms of
your choosing up to an aggregate of $20,000, which services shall extend until the
earlier of (i) 12 months following the termination of your employment or (ii) the date
that you secure full time employment.
	 
	 	•	 	You shall have three months following the termination date to exercise vested
Options (but in no event beyond the expiration of the 10-year Option term). Any
unvested portion of the Option, any unvested Performance Share Units and any unvested
Matching Share Units shall be forfeited.

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Bhaskar Chaudhuri

March 10, 2009

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Notwithstanding anything herein to the contrary, the Company shall have no obligation to pay or
provide any of the severance benefits set forth in this letter unless you execute and deliver,
within 60 days of the date of your termination, and do not revoke, a general release in form
satisfactory to the Company and any revocation period set forth in the release has lapsed. The
Company shall pay all cash severance benefits due within 10 business days following the
satisfaction of all of the conditions set forth in the preceding sentence. You shall not be
required to mitigate the amount of any severance payment provided for under this letter by seeking
other employment or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to you in any subsequent employment.

It is understood that, during your employment by Valeant Pharmaceuticals International, you will
not engage in any activities that constitute a conflict of interest with the interests of Valeant,
as outlined in Valeant’s conflict of interest policies for employees and executives in effect from
time to time. Without limiting the generality of the foregoing, you expressly acknowledge and
agree that, as a former securityholder of Dow Pharmaceuticals Sciences, Inc. (“Dow”) who may
receive future payments from the Company that are contingent on the achievement of certain approval
or commercial milestones relating to the Dow business, any action taken by you or at your direction
that is reasonably likely materially to (a) increase the likelihood of the Company achieving these
milestones, or (b) hasten their achievement, may be a conflict of interest. Accordingly, you agree
that, for so long there remains outstanding any contingent payment obligation by the Company to the
Dow securityholders, you shall not take any such action or give any such direction without
disclosing all relevant facts to, and receiving the prior consent of, the Chief Executive Officer
and the General Counsel to take such action or give such direction.

	•	 	Covenant Not to Solicit. To protect the confidential information and other trade
secrets of the Company and its affiliates, you agree, during your employment with the Company
or any of its affiliates and for a period of twenty-four (24) months after your cessation of
employment with the Company or any of its affiliates, not to solicit or participate in or
assist in any way in the solicitation of
any employees of the Company or any its affiliates. For purposes of this covenant, “solicit” or
“solicitation” means directly or indirectly influencing or attempting to influence employees of
the Company or any of its affiliates to become employed with any other person, partnership,
firm, corporation or other entity. You agree that the covenants contained in this paragraph are
reasonable and desirable to protect the confidential information and other trade secrets of the
Company and its affiliates, provided, that solicitation through general advertising or the
provision of references shall not constitute a breach of such obligations.
	 
	•	 	It is the intent and desire of you and the Company (and its affiliates) that the
restrictive provisions in the preceding paragraph be enforced to the fullest extent
permissible under the laws and public policies as applied in each jurisdiction in which
enforcement is sought. If any particular provision in the preceding paragraph shall be
determined to be invalid or unenforceable, such covenant shall be amended, without any action
on the part of either party hereto, to delete therefrom the portion so determined to be
invalid or unenforceable, such deletion to apply only with respect to the operation of such
covenant in the particular jurisdiction in which such adjudication is made. Your obligations
under the preceding paragraph shall survive the termination of your employment with or any
other employment arrangement with the Company or any of its affiliates.

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Bhaskar Chaudhuri

March 10, 2009

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	•	 	Remedies for Breach of Obligations Under the Covenant Not to Solicit above. You
acknowledge that the Company or its affiliates will suffer irreparable injury, not readily
susceptible of valuation in monetary damages, if you breach your obligations under the
paragraph captioned “Covenant Not to Solicit” above. Accordingly, you agree that the Company
and its affiliates will be entitled, in addition to any other available remedies, to obtain
injunctive relief against any breach or prospective breach by you of your obligations under
such paragraph in any Federal or state court sitting in the State of New Jersey, or, at the
Company’s (or its affiliate’s) election, in any other state in which you maintain your
principal residence or your principal place of business. You agree that the Company or its
affiliates may seek the remedies described in the preceding sentence notwithstanding any
arbitration or mediation agreement that you may enter into with the Company or any of its
affiliates. You hereby submit to the non-exclusive jurisdiction of all those courts for the
purposes of any actions or proceedings instituted by the Company or its affiliates to obtain
that injunctive relief, and you agree that process in any or all of those actions or
proceedings may be served by registered mail, addressed to the last address provided by you to
the Company or its affiliates, or in any other manner authorized by law.

You shall be indemnified by Valeant as provided in its by-laws and Certificate of Incorporation.

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

It is understood that you are required to read, review, agree, sign and return the following
documents included with this letter: 1) the Conflict of Interest Policy and Agreement, 2) the
Workers’ Compensation Fraudulent Claims notification, 3) the Employee Agreement concerning
inventions, discoveries, and improvements, and 4) the Mediation and Arbitration Agreement, and 5)
the Trading in Company Stock Interoffice Memorandum. Additionally, the Immigration and Reform Act
1986 requires each new employee to provide proof of eligibility to work in the United States.

Valeant Policy will govern any other matter not specifically covered by this letter.

By signing this letter, you agree and the Company hereby mutually agree that, except as
specifically provided herein, that certain Employment Agreement dated December 9, 2008 between you
and Valeant Pharmaceuticals North America (the “Old Employment Agreement”) that was scheduled to
terminate by its terms on the date that is six (6) months after its effective date is terminated as
of the day immediately preceding the Effective Date and that no amounts, liabilities or other
obligations are outstanding or due by Valeant Pharmaceuticals North America or the Company under or
pursuant to the Old Employment Agreement, other than earned but unpaid base salary through the day
immediately preceding the Effective Date. Notwithstanding the foregoing, to the extent required to
comply with the substitution rules

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Bhaskar Chaudhuri

March 10, 2009

Page 11 of 11

of Treasury regulation 1.409A-3(f) under Section 409A, severance benefits that become payable under
this Agreement with respect to a separation from service shall be governed as to timing and manner
of payment by the applicable terms of the Old Employment Agreement. The purpose of the foregoing
sentence is to comply with the substitution rules of Treasury regulation 1.409A-3(f) under Section
409A and it shall be interpreted accordingly. Except to the limited extent provided herein, this
letter agreement is intended to supersede the Old Employment Agreement and any other negotiations
or agreements with the Company or any of its affiliates relating to employment, severance,
benefits, compensation, change of control and any other subject matters contained in this letter
agreement; provided, however, that the Non-Compete Agreement dated December 9, 2008 by you in favor
of the Company shall remain in full force and effect and is unaffected by this letter agreement.
This letter is governed by the laws of the State of California.

As confirmation of acceptance of this new position and the terms and conditions set forth herein,
please sign and return this letter. In addition, please mail the original signed offer
letter in the envelope provided. A duplicate copy of this offer letter is included for your
records.

Sincerely,

	 	 	 	 	 	 	 	 	 
	/s/  J. Michael Pearson

	 	 	 	 	 	 	 	 
	J. Michael Pearson

Chairman and Chief Executive Officer
	 	 	 	 	 	 	 	 

AGREED AND ACCEPTED:

	 	 	 	 	 	 	 	 	 
	/s/  Bhaskar Chaudhuri

	 	 	 	Date:	 	3/10/09	 	 
	 

Bhaskar Chaudhuri

	 	 
	 	 
	 	 

	 	 

          JMP BC          
          Initials

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