Separation Agreement with Former CEO

Release Agreement with Former CEO



EXHIBIT 10.1

EXECUTION VERSION

VALEANT PHARMACEUTICALS INTERNATIONAL

EXECUTIVE EMPLOYMENT AGREEMENT

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

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

1.

 

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

 

2.

 

Employment. During the Employment Term:

 

(a)

 

Executive shall be employed as Chief Executive Officer of the Company. In addition, effective as of the Effective Date, Executive shall be elected by the Board of Directors of the Company (the “Board”) as a director of the Company and as Chairman of the Board. For as long as the Executive is employed by the Company as the Chief Executive Officer, the Company shall nominate the Executive for re-election to the Board. At the time of his termination of employment with the Company for any reason, the Executive shall resign from the Board if requested to do so by the Company. Executive shall not receive any compensation in addition to the compensation described in Sections 3 and 4 of this Agreement for serving as a director of the Company and Chairman of the Board.

 

 

(b)

 

Executive shall report directly to the Board. Executive shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar executive capacity.

 

 

(c)

 

Excluding periods of vacation and sick leave to which Executive is entitled, Executive shall devote reasonable attention and time to the business and affairs of

 


 

 

 

 

the Company to the extent necessary to discharge the responsibilities of Executive hereunder. Prior to joining or agreeing to serve on corporate, civil or charitable boards or committees, Executive shall obtain approval of the Board. Executive may manage personal and family investments, participate in industry organizations and deliver lectures at educational institutions, so long as such activities do not interfere with the performance of Executive’s responsibilities hereunder.

 

 

(d)

 

Executive shall be subject to and shall abide by each of the Company’s personnel policies applicable and communicated in writing to senior executives, including but not limited to any policy the Company adopts restricting hedging investments in Company equity by Company executives.

3.

 

Annual Compensation.

 

 

(a)

 

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

 

 

(b)

 

Performance Bonus.

 

(i)

 

For each fiscal year of the Company ending during the Employment Term, beginning with the 2009 fiscal year, Executive shall be eligible to receive a target annual cash bonus of 100% of the Base Salary (such target bonus, as may hereafter be increased, the “Target Bonus”) with the opportunity to receive a maximum annual cash bonus of 200% of the Base Salary, payable in accordance with the Company’s customary practices applicable to bonuses paid to its executives.

 

 

(ii)

 

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

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subclause (i), shall be deliverable in shares of Company common stock (“Shares”) on the fifth anniversary of the Effective Date. In addition to the Annual Bonus Share Units, Executive shall be eligible for a cash bonus for services performed during the 2008 fiscal year up to a maximum of 100% of Base Salary. The Company shall enter into an award agreement with the Executive for the above grant of restricted share units, incorporating the terms set forth in this Agreement and otherwise on the terms and conditions set forth in the Company’s standard form of restricted share unit award agreement.

 

 

(iii)

 

Any annual cash bonus will be based on performance by Executive and the Company based on performance targets to be established by the Board or the Committee on or before March 31 of the applicable calendar year, except that any cash bonus payable for 2008 shall be paid at the sole discretion of the Board or the Committee.

4.

 

Long-Term Compensation

 

 

(a)

 

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

 

 

(b)

 

Time-Based Stock Option.

 

(i)

 

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

 

 

(ii)

 

The Option shall become vested and exercisable with respect to twenty-five percent (25%) of the total number of Shares underlying the Option on each of the first four anniversaries of the Effective Date, provided that,

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except as specifically set forth in Section 8 of this Agreement, the Executive remains employed by the Company through the applicable vesting dates.

 

 

(iii)

 

Executive shall not be permitted to sell, assign, transfer, or otherwise dispose of more than fifty percent (50%) of the Net Shares (as defined below) acquired upon exercise of the Option until the expiration of the two-year period following such exercise, or, if sooner, until a Change in Control (as defined below) or until Executive experiences a termination of employment. For purposes of this Section, Net Shares shall mean the net number of Shares acquired by Executive upon exercise of the Option after subtracting any such Shares surrendered to the Company as payment for the exercise price and any such Shares withheld in payment of withholding obligations applicable to the exercise of the Option.

 

 

(iv)

 

The Company shall enter into an award agreement with the Executive for the above grant of Options, incorporating the terms set forth in this Agreement and otherwise on the terms and conditions set forth in the Company’s standard form of non-qualified stock option award agreement.

 

(c)

 

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

 

 

(i)

 

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

 

 

(ii)

 

If the Third Anniversary Average Price equals or exceeds a value which produces a Compound Annual TSR of 30%, Executive shall vest in and the Company shall deliver to Executive as soon as practicable (but in any

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event no later than 45 days) following the third anniversary of the Effective Date, a number of Shares equal to two times the number of Performance Share Units granted pursuant to this Section 4(c); provided that, except as otherwise specifically set forth in Section 8 of this Agreement, Executive is employed by the Company on such anniversary date.

 

 

(iii)

 

If the Third Anniversary Average Price equals or exceeds a value which produces a Compound Annual TSR of 45%, Executive shall vest in and the Company shall deliver to Executive as soon as practicable (but in any event no later than 45 days) following the third anniversary of the Effective Date, a number of Shares equal to three times the number of Performance Share Units granted pursuant to this Section 4(c); provided that, except as otherwise specifically set forth in Section 8 of this Agreement, Executive is employed by the Company on such anniversary date.

 

 

(iv)

 

If the Third Anniversary Average Price produces a Compound Annual TSR between 15% and 30%, or between 30% and 45%, Executive shall vest in and the Company shall deliver a number of Performance Share Units that is the mathematical interpolation between the number of shares which would vest at such two percentages; provided that, except as otherwise specifically set forth in Section 8 of this Agreement, Executive is employed by the Company on such anniversary date.

 

 

(v)

 

Performance Share Units that could have been earned under any of subclauses (i), (ii), (iii) or (iv) that are not earned on the third anniversary of the Effective Date may be earned on the fourth anniversary of the Effective Date based on the Compound Annual TSR from the Effective Date through the fourth anniversary of the Effective Date using the same performance targets described in subsections (i) through (iv) above (net of any Performance Share Units that were earned on the third anniversary of the Effective Date based on performance to such date); provided that, except as otherwise specifically set forth in Section 8 of this Agreement, Executive is employed by the Company on the fourth anniversary date.

 

 

(vi)

 

Any Performance Share Units that vest as of the third anniversary of the Commencement Date will not be affected if the Compound Annual TSR on the fourth anniversary is less than that generated by the Third Anniversary Average Price. Any Performance Share Units that are not vested as of the fourth anniversary of the Effective Date shall be immediately forfeited.

 

 

(vii)

 

Executive shall not be permitted to sell, assign, transfer, or otherwise dispose of more than fifty percent (50%) of the Net Shares (as defined below) acquired upon settlement of the Performance Share Units until the expiration of the two-year period following receipt, or, if sooner until a

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Change in Control or until Executive experiences a termination of employment. For purposes of this Section, Net Shares shall mean the net number of Shares acquired by Executive upon settlement of the Performance Share Units after subtracting any such Shares withheld by the Company in payment of withholding obligations applicable to such settlement.

 

 

(viii)

 

The Company shall enter into a restricted share unit award agreement with the Executive for the above grant of Performance- Share Units, incorporating the terms set forth in this Agreement and otherwise on the terms and conditions set forth in the Company’s standard form of performance-based restricted share unit award agreement.

 

(d)

 

Share Purchase Requirement and Matching Share Units.

 

 

(i)

 

Prior to the first anniversary of the Effective Date, Executive shall purchase, on the market and during periods of open trading in accordance with applicable law, Shares with an aggregate purchase price of not less than $3,000,000 (the “Purchased Shares”); provided, however, if Executive is precluded from completing such purchases in the marketplace due to being subject to blackout periods or other restrictions on his ability to purchase such shares due to his possession of material inside information, the Company shall either extend the period of time to complete such market purchases such that Executive shall have a reasonable opportunity to complete the purchase of the Purchased Shares, or sell such shares directly to Executive on or prior to such first anniversary of the Effective Date.

 

 

(ii)

 

Executive shall not be permitted to sell the Purchased Shares for one year following the Final Purchase Date (as defined below). In addition, as long as Executive remains employed by the Company, Executive shall retain ownership of at least seventy-five percent (75%) of the Purchased Shares until the second anniversary of the Effective Date, fifty percent (50%) of the Purchase Shares until the third anniversary of the Effective Date, and twenty-five percent (25%) of the Purchased Shares until the fourth anniversary of the Effective Date (the “Purchase Obligations”). The “Final Purchase Date” shall mean the date on which Executive purchases Shares that, together with other Shares purchased by Executive on or after the Effective Date, have an aggregate purchase price of $3,000,000.

 

 

(iii)

 

As soon as practicable after the end of any month during which Executive makes a purchase of all or any portion of the Purchased Shares, the Company shall grant to the Executive a number of restricted share units equal to the number of Purchased Shares so purchased in such month (up to a maximum aggregate number of restricted share units equal to the number of Purchased Shares with an aggregate purchase price of $5,000,000) (the “Matching Share Units”).

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(iv)

 

The Matching Restricted Share Units shall vest and be settled in Shares on the following schedule: Twenty-five percent (25%) of the Matching Share Units shall vest and be settled on the first anniversary of the Final Purchase Date and an additional 25% of the Matching Share Units shall vest and be settled each of the second, third, and fourth anniversaries of the Effective Date, provided Executive is employed on the relevant vesting date and Executive has not violated the Purchase Obligations prior to such vesting date.

 

 

(v)

 

Executive shall not be permitted to sell, assign, transfer, or otherwise dispose of more than fifty percent (50%) of the Net Shares (as defined below) acquired upon settlement of the Matching Share Units until the expiration of the two-year period following such settlement, or, if sooner, until a Change in Control (as defined below) or until Executive experiences a termination of employment. For purposes of this Section, Net Shares shall mean the net number of Shares acquired by Executive upon settlement of the Matching Share Units after subtracting any such Shares withheld by the Company in payment of withholding obligations applicable to such settlement.

 

(e)

 

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

 

5.

 

Other Benefits.

 

(a)

 

Employee Benefits. Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to employees generally, including, without limitation, all pension, retirement, profit sharing, savings, medical, hospitalization, disability, dental, life or travel accident insurance benefit plans. Executive’s participation in such plans, practices and programs shall be on the same basis and terms as are applicable to employees of the Company generally.

 

 

(b)

 

Executive Benefits. Executive shall be entitled to participate in all executive benefit or incentive compensation plans now maintained or hereafter established by the Company for the purpose of providing compensation and/or benefits to comparable executive employees of the Company including, but not limited to, the Company’s deferred compensation plans and any supplemental retirement, deferred compensation, supplemental medical or life insurance or other bonus or incentive compensation plans. Unless otherwise provided herein, Executive’s participation in such plans shall be on the same basis and terms, as other senior executives of the Company. No additional compensation provided under any of such plans shall be deemed to modify or otherwise affect the terms of this Agreement or any of Executive’s entitlements hereunder.

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(c)

 

Fringe Benefits and Perquisites. Executive shall be entitled to all fringe benefits and perquisites generally made available by the Company to its senior executives. In addition, during the Employment Term, the Company shall provide Executive with (or reimburse Executive for the cost of) life insurance in the face amount of $10,000,000, subject to Executive’s insurability and Executive taking steps reasonably requested by the Company to obtain such insurance, if required.

 

 

(d)

 

Business Expenses. Upon submission of proper invoices in accordance with the Company’s normal procedures, Executive shall be entitled to receive prompt reimbursement of all reasonable out-of-pocket business, entertainment and travel expenses (including travel in first-class) incurred by him in connection with the performance of his duties hereunder. Such reimbursement shall in no event occur later than March 15th of the year following the year in which the expenses were incurred.

 

 

(e)

 

Office and Facilities. Executive shall be provided with an appropriate office at the Company’s headquarters, with such secretarial and other support facilities as are commensurate with Executive’s status with the Company, which facilities shall be adequate for the performance of his duties hereunder.

 

 

(f)

 

Vacation and Sick Leave. Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment under this Agreement, pursuant to the following:

 

(i)

 

Executive shall be entitled to annual vacation in accordance with the policies as periodically established by the Board for senior executives of the Company, which shall in no event be less than four weeks per year;

 

 

(ii)

 

in addition to the aforesaid paid vacations, Executive shall be entitled, without loss of pay, to absent himself voluntarily from the performance of his employment for such additional periods of time and for such valid and legitimate reasons as the Board in its discretion may determine. Further, the Board shall be entitled to grant to Executive a leave or leaves of absence with or without pay at such time or times and upon such terms and conditions as the Board in its discretion may determine; and

 

 

(iii)

 

Executive shall be entitled to sick leave (without loss of pay) in accordance with the Company’s policies as in effect from time to time.

 

6.

 

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

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(a)

 

Death. Executive’s employment shall be terminated as of the date of Executive’s death and Executive’s beneficiaries shall be entitled to the benefits provided in Section 8(b) hereof.

 

 

(b)

 

Disability. The Company may terminate Executive’s employment, on written notice to Executive after having established Executive’s Disability and while Executive remains Disabled, subject to the payment by the Company to Executive of the benefits provided in Section 8(b) hereof. For purposes of this Agreement, “Disability” shall mean Executive’s inability to substantially perform his duties and responsibilities hereunder by reason of any physical or mental incapacity for two or more periods of ninety (90) consecutive days each in any three hundred and sixty (360) day period, as determined by a physician with no history of prior dealings with the Company or Executive, as reasonably agreed upon by the Company and Executive. Executive shall be entitled to the compensation and benefits provided for under this Agreement for any period prior to Executive’s termination by reason of Disability during which Executive is unable to work due to a physical or mental infirmity in accordance with the Company’s policies for similarly-situated executives.

 

 

(c)

 

Cause. The Company may terminate Executive’s employment for “Cause,” effective as of the date of the Notice of Termination (as defined in Section 7 below) and as evidenced by a resolution adopted in good faith by a majority of the independent members of the Board, subject to the payment by the Company to Executive of the benefits provided in Section 8(a) hereof. “Cause” shall mean, for purposes of this agreement: (1) conviction of any felony (other than one related to a vehicular offense) or other criminal act involving fraud; (2) willful misconduct that results in a material economic detriment to the Company; (3) material violation of Company policies and directives, which is not cured after written notice and an opportunity for cure, (4) continued refusal by Executive to perform his duties after written notice identifying the deficiencies and an opportunity for cure; and (5) a material violation by Executive of any material covenants to the Company. No action or inaction shall be deemed willful if not demonstrably willful and if taken or not taken by the Executive in good faith and with the understanding that such action or inaction was not adverse to the best interests of the Company. Reference in this paragraph to the Company shall also include direct and indirect subsidiaries of the Company, and materiality shall be measured based on the action or inaction and the impact upon the Company taken as a whole. The Company may suspend, with pay, the Executive upon Executive’s indictment for the commission of a felony as described under clause (A) above. Such suspension may remain effective until such time as the indictment is either dismissed or a verdict of not guilty has been entered.

 

 

(d)

 

Without Cause. The Company may terminate Executive’s employment without Cause. The Company shall deliver to Executive a Notice of Termination (as defined in Section 7 below) not less than thirty (30) days prior to the termination of Executive’s employment without Cause and the Company shall have the option of terminating Executive’s duties and responsibilities prior to the expiration of

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such thirty-day notice period, subject to the payment by the Company of the benefits provided in either Section 8(e) or Section 8(f) hereof, as may be applicable.

 

 

(e)

 

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

 

(i)

 

Diminution of Responsibility. (A) any material reduction in his duties or responsibilities as in effect immediately prior thereto, or (B) removal of Executive from the position of Chief Executive Officer or Chairman of the Board, except in connection with the termination of his employment for Disability, Cause, as a result of his death or by Executive other than for Good Reason;

 

 

(ii)

 

Compensation Reduction. Any reduction in Executive’s base salary or target bonus opportunity; or

 

 

(iii)

 

Company Breach. Any other material breach by the Company of any material provision of this Agreement.

 

 

(f)

 

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

7.

 

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

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hereunder shall be effective without such Notice of Termination (unless waived by the party entitled to receive such notice).

 

8.

 

Compensation Upon Termination. Upon termination of Executive’s employment during the Employment Term, Executive shall be entitled to the following benefits:

 

(a)

 

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

 

 

(i)

 

any accrued and unpaid Base Salary;

 

 

(ii)

 

reimbursement for any and all monies advanced or expenses incurred in connection with Executive’s employment for reasonable and necessary expenses incurred by Executive on behalf of the Company for the period ending on the termination date;

 

 

(iii)

 

any accrued and unpaid vacation pay;

 

 

(iv)

 

any previous compensation which Executive has previously deferred (including any interest earned or credited thereon), in accordance with the terms and conditions of the applicable deferred compensation plans or arrangements then in effect, including the arrangements provided for in Sections 3(b)(ii) and 4(a) of this Agreement to the extent vested as of Executive’s termination date; and

 

 

(v)

 

any amount or benefit as provided under any benefit plan or program (the foregoing items in Sections 8(a)(i) through 8(a)(v) being collectively referred to as the “Accrued Compensation”).

 

(b)

 

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

 

 

(i)

 

The Company shall pay to Executive within sixty (60) days following the termination date, any bonus earned but unpaid in respect of any fiscal year preceding the termination date;

 

 

(ii)

 

The Company shall deliver to Executive, on the date that is six months and one day following Executive’s termination date (or, if sooner, Executive’s death), Shares in respect of the Annual Bonus Share Units and the 2008 RSU Grant;

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(iii)

 

The Company shall deliver to Executive, as soon as practicable (but in no event more than sixty (60) days) following Executive’s termination date, Shares in respect of the Matching Share Units;

 

 

(iv)

 

The Option shall vest in full and remain exercisable for one year following Executive’s termination date (but in no event beyond the expiration of the Option term); and

 

 

(v)

 

The performance measures applicable to the Performance Share Units will be applied as though the termination date were the end of the measurement period and the units so earned will vest and be payable in a manner consistent with the vesting schedule described in Section 4(c) of this Agreement (e.g., 100% at a Compound Annual TSR of 15%, 200% at a Compound Annual TSR of 30%), but based on the Compound Annual TSR determined through the termination date. The Company shall deliver Shares in respect of such vested Performance Share Units, if any, as soon as practicable (but not later than sixty (60) days) following Executive’s termination date and all other Performance Share Units will be forfeited.

 

(c)

 

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

 

 

(i)

 

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

 

 

(ii)

 

The Company shall pay to Executive any bonus earned but unpaid in respect of any fiscal year preceding the termination date within sixty (60) days following the termination date.

 

 

(iii)

 

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

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(iv)

 

The Company shall pay Executive as severance pay, in lieu of any further compensation for the periods subsequent to the termination date, an amount in cash, which amount shall be payable in a lump sum payment within sixty (60) days following such termination (subject to Section 10), equal to two (2) times the sum of (A) Executive’s Base Salary, and (B) the Target Bonus; and

 

 

(v)

 

The Company shall provide Executive continued coverage under any health, medical, dental or vision program or policy in which Executive was eligible to participate as of the time of his employment termination for two (2) years following such termination on terms no less favorable to Executive and his dependents (including with respect to payment for the costs thereof) than those in effect immediately prior to such termination.

 

 

(vi)

 

The Company shall deliver to Executive, on the date that is six months and one day following Executive’s termination date, Shares in respect of the Annual Bonus Share Units and the 2008 RSU Grant, and Executive shall have three months following the termination date to exercise vested Options (but in no event beyond the expiration of the Option Term. Any unvested portion of the Option), any unvested Performance Share Units, and any unvested Matching Share Units shall be forfeited.

 

 

(vii)

 

The performance measures applicable to the Performance Share Units will be applied as though the termination date were the end of the measurement period, with the number of units calculated in a manner consistent with the vesting schedule described in Section 4(c) of this Agreement (e.g., 100% at a Compound Annual TSR of 15%, 200% at a Compound Annual TSR of 30%), but based on the Compound Annual TSR determined through the termination date; provided, however, that in the event Executive is entitled to benefits pursuant to this Section, only a pro rata portion of such calculated units will vest upon termination (based on the number of completed months elapsed from the date of grant to the date of termination divided by 36 months). The Company shall deliver Shares in respect of such vested Performance Share Units, if any, as soon as practicable (but not later than sixty (60) days) following Executive’s termination date and all other Performance Share Units will be forfeited.

 

(d)

 

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

 

 

(i)

 

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

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(ii)

 

The Company shall pay Executive any bonus earned but unpaid in respect of any fiscal year preceding the termination date within sixty (60) days following the termination date;

 

 

(iii)

 

In the event such termination occurs after the end of the Company’s 2008 fiscal year, the Company shall pay Executive the Pro Rata Bonus;

 

 

(iv)

 

The Company shall pay Executive as severance pay and in lieu of any further Base Salary for periods subsequent to the termination date, an amount in cash, which amount shall be payable in a lump sum payment within sixty (60) days following such termination (subject to Section 10), equal to three (3) times the sum of (A) Executive’s Base Salary and (B) the Target Bonus;

 

 

(v)

 

The Company shall provide Executive with continued coverage under any health, medical, dental or vision program or policy in which Executive was eligible to participate as of the time of his employment termination for two (2) years following such termination on terms no less favorable to Executive and his dependents (including with respect to payment for the costs thereof) than those in effect immediately prior to such termination.

 

 

(vi)

 

Annual Bonus Share Units and the 2008 RSU Grant shall be payable, in the Company’s discretion, in either cash or in shares of the acquiring entity, on the on the date that is six months and one day following Executive’s termination date. Notwithstanding the above, the Annual Bonus Share Units and the 2008 RSU Grant shall be payable in shares of the acquiring entity only if the common stock of the acquiring entity is publicly traded on an established securities market on the date on which such shares are payable.

 

 

(vii)

 

If the Option and the Matching Share Units are not cancelled in connection with a Change in Control in exchange for a cash payment (as set forth in Section 9), each outstanding Option and Matching Share Unit will vest, the Option will remain exercisable for one year following the termination date (but not beyond the Option term), and each Matching Share Unit will be settled as soon as practicable (but in no event more than sixty (60) days) following the termination date.

 

 

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

 

9.

 

Change in Control.

 

 

(a)

 

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

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(i)

 

the acquisition (other than from the Company, by any person (as such term is defined in Section 13(c) or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of thirty percent (30%) or more of the combined voting power of the Company’s then outstanding voting securities;

 

 

(ii)

 

the individuals who, as of the date hereof, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board, unless the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, and such new director shall, for purposes of this Agreement, be considered as a member of the Incumbent Board; or

 

 

(iii)

 

the closing of:

 

 

(1)

 

a merger or consolidation involving the Company if the stockholders of the Company, immediately before such merger or consolidation, do not, as a result of such merger or consolidation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of the corporation resulting from such merger or consolidation in substantially the same proportion as their ownership of the combined voting power of the voting securities of the Company outstanding immediately before such merger or consolidation; or

 

 

(2)

 

a complete liquidation or dissolution of the Company or an agreement for the sale or other disposition of all or substantially all of the assets of the Company.

 

 

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to Section 9, solely because thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities is acquired by (i) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Company or any of its subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is owned directly or indirectly by the stockholders of the Company in the same proportion as their ownership of stock in the Company immediately prior to such acquisition.

 

 

(b)

 

Upon the occurrence of a Change in Control, at the election of the Company, the Options and the Matching Share Units shall either be (i) cancelled in exchange for a cash payment based in the case of any merger transaction on the price received by shareholders in the transaction constituting the Change in Control or in the case of any other event that constitutes a Change in Control, the closing price of a Share on the date such Change in Control occurs (minus, in the case of Options, the applicable exercise price per share) or, (ii) converted into options or units, as

15


 

 

 

 

applicable, in respect of the common stock of the acquiring entity (in a merger or otherwise) on the basis of the relative values of such stock and the Shares at the time of the Change in Control; provided that subclause (ii) shall only be applicable if the common stock of the acquiring entity is publicly traded on an established securities market on the date on which such Change in Control is effected.

 

 

(c)

 

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

10.

 

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

 

11.

 

Records and Confidential Data.

 

 

(a)

 

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

16


 

 

 

 

Executive alone or in conjunction with others or otherwise, shall be and is the property of the Company and its affiliates.

 

 

(b)

 

Except to the extent required to be disclosed at law or pursuant to judicial process or administrative subponea, the Confidential Information will be kept confidential by Executive, will not be used in any manner which is detrimental to the Company, will not be used other than in connection with Executive’s discharge of his duties hereunder, and will be safeguarded by Executive from unauthorized disclosure.

 

 

(c)

 

Following the termination of Executive’s employment hereunder, as soon as possible after the Company’s written request, Executive will return to the Company all written Confidential Information which has been provided to Executive and Executive will destroy all copies of any analyses, compilations, studies or other documents prepared by Executive or for Executive’s use containing or reflecting any Confidential Information. Within five (5) business days of the receipt of such request by Executive, he shall, upon written request of the Company, deliver to the Company a document certifying that such written Confidential Information has been returned or destroyed in accordance with this Section 11(c).

 

 

(d)

 

For the purposes of this Agreement, “Confidential Information” shall mean all confidential and proprietary information of the Company and its affiliates, including, without limitation, information derived from reports, investigations, experiments, research, work in progress, drawing, designs, plans, proposals, codes, marketing and sales programs, client lists, client mailing lists, supplier lists, financial projections, cost summaries, pricing formula, marketing studies relating to prospective business opportunities and all other concepts, ideas, materials, or information prepared or performed for or by the Company or its affiliates. For purposes of this Agreement, the Confidential Information shall not include and Executive’s obligation’s shall not extend to (i) information which is generally available to the public, (ii) information obtained by Executive other than pursuant to or in connection with this employment and (iii) information which is required to be disclosed by law or legal process.

 

 

(e)

 

Executive’s obligations under this Section 11 shall survive the termination of the Employment Term.

12.

 

Covenant Not to Solicit and Not to Compete.

 

 

(a)

 

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

17


 

 

 

 

partnership, firm, corporation or other entity. Executive agrees that the covenants contained in this Section 12(a) are reasonable and desirable to protect the Confidential Information of the Company, provided, that solicitation through general advertising or the provision of references shall not constitute a breach of such obligations.

 

 

(b)

 

Covenant Not to Compete. To protect the Confidential Information and other trade secrets of the Company, Executive agrees, during the term of this Agreement and for a period of twelve (12) months after Executive’s cessation of employment with the Company during the Employment Term pursuant to Section 6(c) or 6(f) hereof, not to engage in Prohibited Activities (as defined below). For the purposes of this Agreement, the term “Prohibited Activities” means directly or indirectly engaging as an owner, employee, consultant or agent of any entity that develops, manufactures, markets and/or distributes (directly or indirectly) prescription or non-prescription pharmaceuticals or medical devices for treatments in the fields of neurology, dermatology, oncology or hepatology; provided, that Prohibited Activities shall not mean Executive’s investment in securities of a publicly-traded company equal to less than five (5%) percent of such company’s outstanding voting securities. Executive agrees that the covenants contained in this Section 12(b) are reasonable and desirable to protect the Confidential Information of the Company.

 

 

(c)

 

It is the intent and desire of Executive and the Company that the restrictive provisions of this Section 12 be enforced to the fullest extent permissible under the laws and public policies as applied in each jurisdiction in which enforcement is sought. If any particular provision of this Section 12 shall be determined to be invalid or unenforceable, such covenant shall be amended, without any action on the part of either party hereto, to delete therefrom the portion so determined to be invalid or unenforceable, such deletion to apply only with respect to the operation of such covenant in the particular jurisdiction in which such adjudication is made.

 

 

(d)

 

Executive’s obligations under this Section 12 shall survive the termination of the Employment Term.

13.

 

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

18


 

 

 

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

 

14.

 

Miscellaneous.

 

(a)

 

Successors and Assigns.

 

 

(i)

 

This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and permitted assigns and the Company shall require any successor or assign to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or assignment had taken place. The Company may not assign or delegate any rights or obligations hereunder except to a successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company. The term “the Company” as used herein shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise.

 

 

(ii)

 

Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by Executive, his beneficiaries or legal representatives, except by will or by the, laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal personal representatives.

 

(b)

 

Fees and Expenses. The Company shall pay all reasonable legal and financial advisory fees and related expenses, up to a maximum amount of $40,000, incurred by Executive in connection with the negotiation of this Agreement and related employment arrangements. Executive acknowledges that he has had the opportunity to consult with legal counsel of his choice in connection with the drafting, negotiation and execution of this Agreement and related employment arrangements.

 

 

(c)

 

Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by Certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company shall be directed to the attention of the General Counsel of the Company with a copy to the Chairman of the Compensation Committee of the Board. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.

19


 

 

(d)

 

Indemnity Agreement. Executive shall be indemnified by the Company as provided in Company’s by-laws and Certificate of Incorporation. The obligations under this paragraph shall survive any termination of the Employment Term.

 

 

(e)

 

Withholding. The Company shall be entitled to withhold the amount, if any, of all taxes of any applicable jurisdiction required to be withheld by an employer with respect to any amount paid to Executive hereunder. The Company, in its sole and absolute discretion, shall make all determinations as to whether it is obligated to withhold any taxes hereunder and the amount hereof.

 

 

(f)

 

Release of Claims. The termination benefits described in Sections 8(c) and 8(d) of this Agreement shall be conditioned on Executive delivering to the Company, and failing to revoke, a signed release of claims in the form of Exhibit A hereto within twenty-one days following Executive’s termination date; provided, however, that Executive shall not be required to release any rights Executive may have to be indemnified by the Company under Section 14(d) of this Agreement.

 

 

(g)

 

Modification. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

 

 

(h)

 

Arbitration. If any legally actionable dispute arises under this Agreement or otherwise which cannot be resolved by mutual discussion between the parties, then the Company and Executive each agree to resolve that dispute by binding arbitration before an arbitrator experienced in employment law. Said arbitration will be conducted in accordance with the rules applicable to employment disputes of the Judicial Arbitration and Mediation Services (“JAMS”) and the law applicable to the claim. The parties shall have 30 calendar days after notice of such arbitration has been given to attempt to agree on the selection of an arbitrator from JAMS. In the event the parties are unable to agree in such time, JAMS will provide a list of five (5) available arbitrators and an arbitrator will be selected from such five-member panel provided by JAMS by the parties alternately striking out one name of a potential arbitrator until only one name remains. The party entitled to strike an arbitrator first shall be selected by a toss of a coin. The parties agree that this agreement to arbitrate includes any such disputes that the Company may have against Executive, or Executive may have against the Company and/or its related entities and/or employees, arising out of or relating to this Agreement, or Executive’s employment or Executive’s termination including, but not limited to, any claims of discrimination or harassment in violation of applicable law and any other aspect of Executive’s compensation, employment, or Executive’s termination. The parties further agree that arbitration as provided for

20


 

 

 

 

in this Section 14(h) is the exclusive and binding remedy for any such dispute and will be used instead of any court action, which is hereby expressly waived, except for any request by either party for temporary or preliminary injunctive relief pending arbitration in accordance with applicable law or for breaches by Executive of Executive’s obligations under Sections 11 or 12 above or an administrative claim with an administrative agency. The parties agree that the arbitration provided herein shall be conducted in or around Morristown, New Jersey unless otherwise mutually agreed or unless Executive’s primary place of employment is a different location. The Company shall pay the cost of any arbitration brought pursuant to this paragraph, excluding, however, the cost of representation of Executive unless such cost is awarded in accordance with law or otherwise awarded by the arbitrators. Except as otherwise provided above, the arbitrator may award legal fees to the prevailing party in his sole discretion, provided that the percentage of fees so awarded shall not exceed 1% of the net worth of the paying party (i.e., the Company or Executive).

 

 

(i)

 

Effect of Other Law. Anything herein to the contrary notwithstanding, the terms of this Agreement shall be modified to the extent required to meet the provisions of the Sarbanes-Oxley Act of 2002, Section 409A of the Code, or other federal law applicable to the employment arrangements between the Executive and the Company. Any delay in providing benefits or payments, any failure to provide a benefit or payment, or any repayment of compensation that is required under the preceding sentence shall not in and of itself constitute a breach of this Agreement, provided, however, that the Company shall provide economically equivalent payments or benefits to Executive to the extent permitted by law.

 

 

(j)

 

Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New Jersey applicable to contracts executed in and to be performed entirely within such State, without giving effect to the conflict of law principles thereof.

 

 

(k)

 

No Conflicts. Executive represents and warrants to the Company that he is not a party to or otherwise bound by any agreement or arrangement (including, without limitation, any license, covenant, or commitment of any nature), or subject to any judgment, decree, or order of any court or administrative agency, that would conflict with or will be in conflict with or in any way preclude, limit or inhibit Executive’s ability to execute this Agreement or to carry out his duties and responsibilities hereunder.

 

 

(l)

 

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

 

 

(m)

 

Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof.

21


 

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

 

 

 

 

 

 

VALEANT PHARMACEUTICALS INTERNATIONAL.
 

 

 

By:  

/s/ Norma Provencio

 

 

 

Title: Chair — Compensation Committee Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

EXECUTIVE
 

 

 

By:  

/s/ J. Michael Pearson

 

 

 

Name: J. Michael Pearson

 

 

 

 

 

22


 

 

 

 

 

 

EXHIBIT A
FORM OF RELEASE AGREEMENT

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

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

23


 

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

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

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

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

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

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

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

24


 

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

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

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

 

 

 

 

 

 

 

 

 

VALEANT PHARMACEUTICALS INTERNATIONAL

25

 



 



EXHIBIT 10.2

SEPARATION AGREEMENT

     THIS SEPARATION AGREEMENT (“Agreement”), dated as of February 1, 2008 between VALEANT PHARMACEUTICALS INTERNATIONAL (the “Company”), and TIMOTHY C. TYSON (the “Executive”).

W I T N E S S E T H:

     WHEREAS, the Executive and the Company are parties to an Amended and Restated Executive Employment Agreement, effective as of October 24, 2002 and amended as of March 21, 2005 (the “Employment Agreement”);

     WHEREAS, the Executive and the Company have mutually agreed to the termination of the Executive’s employment as Chief Executive Officer and President of the Company; and

     WHEREAS, the Executive and the Company desire to set forth herein their respective rights and obligations in connection with the termination of the Executive’s employment with the Company.

     NOW, THEREFORE, in consideration of the mutual promises, representations and warranties set forth herein, and for other good and valuable consideration, it is hereby agreed as follows:

     1. Termination of Employment. The Executive shall remain employed by the Company as Chief Executive Officer and President of the Company, until February 1, 2008 (the “Termination Date”). The Executive shall execute a letter, effective as of the Termination Date, resigning as an officer and/or director of the Company and each of its subsidiaries and affiliates.

     2. Consulting Services.

               (a) For a period of three months following the Termination Date (the “Consulting Period”), the Executive shall provide such consulting services to the Company as the Chief Executive Officer of the Company shall reasonably request and at such times and at such locations that are mutually agreeable to the Executive and the Company; provided, however, that such consulting services to be provided by the Executive shall not unreasonably interfere with the Executive’s other business commitments. The parties hereby agree that it is anticipated that the level of services provided by the Executive to the Company during the Consulting Period shall be not more than 20% of the average level of services provided by the Executive to the Company over the thirty-six month period preceding the Termination Date.

 


 

               (b) In exchange for providing such consulting services during the Consulting Period, the Executive shall receive a monthly consulting fee equal to $29,800, payable in accordance with the Company’s normal payroll practices.

               (c) The Consulting Period may be terminated, and no further consulting payments shall be due to the Executive (other than unpaid fees for consulting services performed prior to the date of termination), upon 10 days written notice by either party. At the conclusion of the three-month Consulting Period, the Executive and the Company may mutually agree to extend the Consulting Period for an additional three months at the same rate of compensation.

     3. Payments. In connection with the Executive’s termination of employment and, together with the treatment of the Executive’s equity awards as provided in Section 4 hereof, in complete satisfaction of the Company’s obligations to the Executive under Section 7(c) of the Employment Agreement:

               (a) the Company shall pay or provide to the Executive the “Accrued Compensation” (as defined in the Employment Agreement) in accordance with the Company’s normal payroll practices. The parties have agreed that no bonus has been earned or is payable with respect to services performed during 2007.

               (b) provided that the Executive signs a general release substantially in the form attached hereto as Exhibit A (the “Release”) within 21 days following the Termination Date and fails to revoke such Release (the “Release Condition”), the Company shall pay the Executive a lump sum amount equal to $3,577,600, less applicable amounts withheld in accordance with Section 13 of this Agreement, representing two times the sum of the Executive’s 2008 annual base salary and 2008 target annual bonus (the “Severance Amount”). Notwithstanding Section 7(c)(iii) of the Employment Agreement, payment of the Severance Amount shall be made on the first business day following expiration of six months following the Termination Date.

               (c) provided that the Release Condition is satisfied, the Company shall pay the Executive a lump sum amount equal to $78,198, less applicable amounts withheld in accordance with Section 13 of this Agreement, representing the Executive’s “Pro-Rata Bonus” (as defined in the Employment Agreement). Payment of the Pro-Rata Bonus shall be made on the first business day following expiration of six months following the Termination Date.

               (d) through the second anniversary of the Termination Date, the Executive and his dependents shall continue to be eligible to participate in the Company health, medical, dental, or vision plans in which he is currently eligible to participate on terms no less favorable to the Executive and his dependents (including with respect to payment for the costs thereof) than those in effect immediately prior to the Termination Date. Such two-year period shall run concurrently with the health plan

2


 

continuation coverage period provided for under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).

     4. Equity Awards. In accordance with Section 7(c)(v) of the Employment Agreement, (i) all long-term equity incentive awards (including restricted stock awards, restricted stock units, performance shares and stock options) granted to the Executive that are outstanding as of the Termination Date (“Eligible Awards”) will become vested as of the Termination Date, (ii) any Eligible Award which is a stock option shall remain outstanding and exercisable for a period of two years following the Termination Date (but not beyond its original expiration date), and (iii) any Eligible Award which is a restricted stock unit or performance share shall be settled in accordance with the terms of the applicable award agreement (or, in the absence of an award agreement, in accordance with the terms of the award as granted by the Compensation Committee of the Company’s Board of Directors).

     5. No Mitigation. The Executive shall be under no obligation to seek other employment in order to be eligible to receive the payments and benefits set forth herein.

     6. Return of Property. On the Termination Date, the Executive shall return all company property to the Company, including any identification cards, any computer hardware and software, all paper or computer-based files, business documents, and/or other records as well as all copies thereof, credit cards, keys and any other Company supplies or equipment in his possession.

     7. Restrictive Covenants. The Executive shall continue to be bound by the covenants set forth in Sections 10 and 11 of the Employment Agreement and the Company shall continue to be entitled to the benefits of Section 12 of the Employment Agreement, and such Sections shall survive the termination of the Employment Agreement. The Executive shall not be bound by the covenants relating to “Prohibited Activities” set forth in Article 7(c) of the Employment Agreement. The Executive shall take no action which is intended or would reasonably be expected to damage or otherwise diminish the reputation of the Company or any of its subsidiaries, affiliates, officers or directors, or lead to unwanted or unfavorable publicity to the Company or any of its subsidiaries, affiliates, officers or directors; provided that, nothing in this Agreement shall prohibit the Executive from providing truthful and accurate information if required by any court or government agency or body, provided that the Executive notifies the Company promptly of the receipt by him of any request that he provide such information. In addition, the Company shall make no public statement which is intended, or would reasonably be expected, to damage or otherwise diminish the Executive’s reputation, or lead to unwanted or unfavorable publicity to the Executive.

     8. Certain Obligations of the Company. The Company shall continue to be bound by the obligations set forth in Section 13(d) of the Employment Agreement and such Section shall survive the termination of the Employment Agreement. In addition, Section 9 of the Employment Agreement (and Exhibit A thereto) shall survive

3


 

the termination of the Employment Agreement; provided, however, that notwithstanding anything to the contrary in the Employment Agreement (and Exhibit A thereto), the Executive shall not be entitled to the payment of any amount thereunder unless and until such time as the Executive receives a claim that is described in the first sentence of Section (c) of Exhibit A (or such earlier time as the Company, based on advice of independent accountants or its legal counsel, deems appropriate in its sole discretion).

     9. Severability. Should any provision of this Agreement be held, by a court of competent jurisdiction, to be invalid or unenforceable, such invalidity or unenforceability shall not render the entire Agreement invalid or unenforceable, and this Agreement and each individual provision hereof shall be enforceable and valid to the fullest extent permitted by law.

     10. Successors and Assigns. (a) This Agreement and all rights under this Agreement are personal to the Executive and shall not be assignable other than by will or the laws of descent. All of the Executive’s rights under this Agreement shall inure to the benefit of his heirs, personal representatives, designees or other legal representatives, as the case may be.

               (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Any person succeeding to the business of the Company by merger, purchase, consolidation or otherwise shall assume by contract or operation of law the obligations of the Company under this Agreement.

     11. Governing Law. This Agreement shall be construed in accordance with and governed by the laws of the State of California, without regard to the conflicts of laws rules thereof.

     12. Notices. All notices, requests and demands given to or made upon the respective parties hereto shall be deemed to have been given or made three (3) business days after the date of mailing when mailed by registered or certified mail, postage prepaid, or on the date of delivery if delivered by hand, or by any nationally-recognized overnight delivery service, addressed to the parties at their addresses set forth below or to such other addresses furnished by notice given in accordance with this Section 11: (a) if to the Company, Attn: General Counsel, One Enterprise, Aliso Viejo, CA 92656 and (b) if to the Executive, the address last on file with the Company with a copy to Henry Morgenbesser, Allen & Overy LLP, 1221 Avenue of the Americas, New York, New York 10020.

     13. Withholding. All payments required to be made by the Company to the Executive under this Agreement shall be subject to withholding, employment, social security, medicare, unemployment and other payroll taxes and deductions in accordance with the Company’s policies applicable to senior executives of the Company and the provisions of any applicable employee benefit plan or program of the Company.

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     14. Counsel Fees. The Company shall pay all reasonable legal fees and expenses, up to a maximum of $25,000, incurred by Executive in connection with the negotiation of this Separation Agreement.

     15. Complete Understanding. This Agreement supersedes any prior contracts, understandings, discussions and agreements relating to employment between the Executive and the Company, including but not limited to the Employment Agreement (except to the extent provided in Sections 7 and 8 hereof), and constitutes the complete understanding between the parties with respect to the subject matter hereof. No statement, representation, warranty or covenant has been made by either party with respect to the subject matter hereof except as expressly set forth herein.

     16. Modification; Waiver. (a) This Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Company and the Executive or in the case of a waiver, by the party against whom the waiver is to be effective. Any such waiver shall be effective only to the extent specifically set forth in such writing.

               (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

     17. Headings. The headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of this Agreement.

     18. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by the other party hereto.

     18. Arbitration. (a) Any controversy, dispute or claim arising out of or relating to this Agreement or the breach hereof which cannot be settled by mutual agreement (other than with respect to the matters covered by Section 7 for which the Company may, but shall not be required to, seek injunctive relief) shall be finally settled by binding arbitration in accordance with the Federal Arbitration Act (or if not applicable, the applicable state arbitration law) as follows: Any party who is aggrieved shall deliver a notice to the other party setting forth the specific points in dispute. Any points remaining in dispute twenty (20) days after the giving of such notice may be submitted to arbitration in Orange County, to the American Arbitration Association, before a single arbitrator appointed in accordance with the arbitration rules of the American Arbitration Association, modified only as herein expressly provided. After the aforesaid twenty (20) days, either party, upon ten (10) days notice to the other, may so

5


 

submit the points in dispute to arbitration. The arbitrator may enter a default decision against any party who fails to participate in the arbitration proceedings.

               (b) The decision of the arbitrator on the points in dispute shall be final, unappealable and binding, and judgment on the award may be entered in any court having jurisdiction thereof.

               (c) Except as otherwise provided in this Agreement, the arbitrator shall be authorized to apportion its fees and expenses and the reasonable attorneys’ fees and expenses of any such party as the arbitrator deems appropriate. In the absence of any such apportionment, the fees and expenses of the arbitrator shall be borne equally by each party, and each party shall bear the fees and expenses of its own attorney.

               (d) The parties agree that this Section 19 has been included to rapidly and inexpensively resolve any disputes between them with respect to this Agreement, and that this Section 19 shall be grounds for dismissal of any court action commenced by either party with respect to this Agreement, other than post-arbitration actions seeking to enforce an arbitration award. In the event that any court determines that this arbitration procedure is not binding, or otherwise allows any litigation regarding a dispute, claim, or controversy covered by this Agreement to proceed, the parties hereto hereby waive any and all right to a trial by jury in or with respect to such litigation.

               (e) The parties shall keep confidential, and shall not disclose to any person, except as may be required by law, the existence of any controversy hereunder, the referral of any such controversy to arbitration or the status or resolution thereof.

(The remainder of this page is intentionally left blank.)

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed in its corporate name, and the Executive has manually signed his name hereto, all as of the day and year first above written.

 

 

 

 

 

 

VALEANT PHARMACEUTICALS INTERNATIONAL
 

 

 

By:  

/s/ Norma Provencio

 

 

 

Name:  

NORMA PROVENCIO

 

 

 

Title:  

Chair — Compensation Committee
Board of Directors

 

 

 

 

 

 

 

 

 

 

 

  

/s/ Timothy C. Tyson

 

 

 

TIMOTHY C. TYSON 

 

 

 

 

 

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EXHIBIT A
RELEASE AGREEMENT

               Valeant Pharmaceuticals International (the “Company”) has agreed that, in return for my signing this Release Agreement, dated as of February ___, 2008 (the “Agreement”), the Company will provide me with the benefits described in the Separation Agreement, dated as of February 1, 2008 between me and the Company (the “Separation Agreement”). I understand that I am not entitled to severance benefits unless I sign this Agreement. I understand that, regardless of whether I sign this Agreement, the Company will pay me any accrued salary and vacation to which I am entitled by law. In consideration for the benefits I am receiving under this Agreement:

     (1) I hereby release the Company and its parent, subsidiaries, predecessors, successors, and affiliates, and their officers, directors, employees, shareholders, and agents from any and all claims, liabilities, or obligations of every kind, but only to the extent (a) actually known by me or, if unknown, are of such a nature that a prudent person acting under similar circumstances would know of such claims; and (b) arising at any time prior to and through the date I sign this Agreement. This general release includes, but is not limited to: all federal and state statutory and common law claims; claims related to my employment, termination of my employment, breach of contract, tort, discrimination, harassment, retaliation, fraud, emotional distress, compensation or benefits; and claims for any form of equity or compensation. In releasing claims potentially unknown to me at present, I acknowledge that I have understood and waived all rights and benefits under Section 1542 of the California Civil Code, and any law or legal principle of similar effect in any jurisdiction. California Civil Code Section 1542 provides as follows: “ A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

     (2) I acknowledge that I am knowingly and voluntarily waiving and releasing any rights that I may have under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), and that the consideration given for the waiver and release in the preceding paragraph is in addition to anything of value to which I was already entitled and provided to me in order to obtain a full release of all claims, including claims for age discrimination. I further acknowledge that I have been advised by this writing that: (a) my waiver and release do not apply to any rights or claims that may arise after the execution date of this Agreement; (b) I have the right to consult with an attorney prior to executing this Agreement; (c) I have twenty-one (21) days to consider this Agreement (although I may choose voluntarily to execute this Agreement earlier); (d) I have seven (7) days following the execution of this Agreement to revoke the Agreement as to only any claim I may have for age discrimination under the ADEA by providing written notice to the head of the Company’s Human Resources department which is received by 5:00 p.m. on the seventh day following my execution of this Agreement (I acknowledge that I

8


 

do not have a right to revocation with respect to any other claims); and (e) this Agreement will be effective upon my execution of it, but that no benefits will be owed to me any sooner than the payment date set forth in the Separation Agreement. I further acknowledge that 90% of the benefits provided to me by this Agreement are for the release of any potential claim for age discrimination I may have under the ADEA.

     (3) Notwithstanding anything herein to the contrary, I am not releasing: (a) any claims that relate to my right to enforce this Agreement or the Separation Agreement, (b) my rights of indemnification and directors and officers liability insurance coverage (or replacements therefor) to which I was entitled immediately prior to the date of this Agreement with regard to my service on behalf of the Company and its affiliates (including, without limitation, under Section 13(d) of the Executive Employment Agreement); (c) my rights under any tax-qualified pension or claims for accrued vested benefits under any other employee benefit plan, policy or arrangement maintained by the Company or under COBRA; (d) my rights under the provisions of the Executive Employment Agreement which are intended to survive the termination of my employment; or (e) my rights as a stockholder.

* * *

               This Agreement constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to my release of all known and unknown claims against the Company. I acknowledge and understand that certain provisions in my Amended and Restated Executive Employment Agreement dated as of January 1, 2005 are intended to and do survive the termination of my employment and the execution of the Separation Agreement and this Agreement. I am not relying on any promise or representation, written or oral, that is not expressly stated herein. This Agreement may only be modified by a written agreement signed by both me and a duly authorized officer of the Company and approved by the Company’s Board of Directors.

 

 

 

UNDERSTOOD AND AGREED:

 

 

 

 

 

 

 

Timothy C. Tyson

 

Date

 

 

 

 

 

 

 

Valeant Pharmaceuticals International

 

Date

9


EX-10.3 4 a37735exv10w3.htm EXHIBIT 10.3

 

EXHIBIT 10.3

RELEASE AGREEMENT

     Valeant Pharmaceuticals International (the “Company”) has agreed that, in return for my signing this Release Agreement, dated as of February 1st, 2008 (the “Agreement”), the Company will provide me with the benefits described in the Separation Agreement, dated as of February 1, 2008 between me and the Company (the “Separation Agreement”). I understand that I am not entitled to severance benefits unless I sign this Agreement. I understand that, regardless of whether I sign this Agreement, the Company will pay me any accrued salary and vacation to which I am entitled by law. In consideration for the benefits I am receiving under this Agreement:

     (1) I hereby release the Company and its parent, subsidiaries, predecessors, successors, and affiliates, and their officers, directors, employees, shareholders, and agents from any and all claims, liabilities, or obligations of every kind, but only to the extent (a) actually known by me or, if unknown, are of such a nature that a prudent person acting under similar circumstances would know of such claims; and (b) arising at any time prior to and through the date I sign this Agreement. This general release includes, but is not limited to: all federal and state statutory and common law claims; claims related to my employment, termination of my employment, breach of contract, tort, discrimination, harassment, retaliation, fraud, emotional distress, compensation or benefits; and claims for any form of equity or compensation. In releasing claims potentially unknown to me at present, I acknowledge that I have understood and waived all rights and benefits under Section 1542 of the California Civil Code, and any law or legal principle of similar effect in any jurisdiction. California Civil Code Section 1542 provides as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”

     (2) I acknowledge that I am knowingly and voluntarily waiving and releasing any rights that I may have under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), and that the consideration given for the waiver and release in the preceding paragraph is in addition to anything of value to which I was already entitled and provided to me in order to obtain a full release of all claims, including claims for age discrimination. I further acknowledge that I have been advised by this writing that: (a) my waiver and release do not apply to any rights or claims that may arise after the execution date of this Agreement; (b) I have the right to consult with an attorney prior to executing this Agreement; (c) I have twenty-one (21) days to consider this Agreement (although I may choose voluntarily to execute this Agreement earlier); (d) I have seven (7) days following the execution of this Agreement to revoke the Agreement as to only any claim I may have for age discrimination under the ADEA by providing written notice to the head of the Company’s Human Resources department which is received by 5:00 p.m. on the seventh day following my execution of this Agreement (I acknowledge that I do not have a right to revocation with respect to any other claims); and (e) this Agreement will be effective upon my execution of it, but that no benefits will be owed to

 


 

me any sooner than the payment date set forth in the Separation Agreement. I further acknowledge that 90% of the benefits provided to me by this Agreement are for the release of any potential claim for age discrimination I may have under the ADEA.

     (3) Notwithstanding anything herein to the contrary, I am not releasing: (a) any claims that relate to my right to enforce this Agreement or the Separation Agreement, (b) my rights of indemnification and directors and officers liability insurance coverage (or replacements therefor) to which I was entitled immediately prior to the date of this Agreement with regard to my service on behalf of the Company and its affiliates (including, without limitation, under Section 13(d) of the Executive Employment Agreement); (c) my rights under any tax-qualified pension or claims for accrued vested benefits under any other employee benefit plan, policy or arrangement maintained by the Company or under COBRA; (d) my rights under the provisions of the Executive Employment Agreement which are intended to survive the termination of my employment; or (e) my rights as a stockholder.

* * *

          This Agreement constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to my release of all known and unknown claims against the Company. I acknowledge and understand that certain provisions in my Amended and Restated Executive Employment Agreement dated as of January 1, 2005 are intended to and do survive the termination of my employment and the execution of the Separation Agreement and this Agreement. I am not relying on any promise or representation, written or oral, that is not expressly stated herein. This Agreement may only be modified by a written agreement signed by both me and a duly authorized officer of the Company and approved by the Company’s Board of Directors.

 

 

 

UNDERSTOOD AND AGREED:

 

 

 

 

 

/s/ Timothy C. Tyson

 

February 1, 2008

 

 

 

Timothy C. Tyson

 

Date

 

 

 

/s/ Norma Provencio

 

February 1, 2008

 

 

 

Valeant Pharmaceuticals International

 

Date

2