EXECUTIVE EMPLOYMENT AGREEMENT

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

			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,

			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

			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

			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”).

	(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.

	(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 15 th 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.

	(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

			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. A