Valeant Pharmaceuticals International, Inc. (Form: 10-Q, Received: 08/08/2011 06:04:56)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2011
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number: 001-14956

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)


Canada (State or other jurisdiction of incorporation or organization)		98-0448205 (I.R.S. Employer Identification No.)
7150 Mississauga Road, Mississauga, Ontario (Address of principal executive offices)		L5N 8M5 (Zip Code)

(905) 286-3000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


	Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common shares, no par value — 300,237,443 shares issued and outstanding as of August 2, 2011.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011

INDEX


Part I.	Financial Information
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010	1
	Consolidated Statements of Income for the three months and six months ended June 30, 2011 and 2010	2
	Consolidated Statements of Accumulated Deficit for the three months and six months ended June 30, 2011 and 2010	3
	Consolidated Statements of Cash Flows for the three months and six months ended June 30, 2011 and 2010	4
	Notes to the Consolidated Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	65
Part II.	Other Information
Item 1.	Legal Proceedings	66
Item 1A.	Risk Factors	66
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	67
Item 4.	(Removed and Reserved)	67
Item 5.	Other Information	67
Item 6.	Exhibits	67
Signatures		69

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011

Introductory Note

On September 28, 2010, Biovail Corporation completed the acquisition of Valeant Pharmaceuticals International through a wholly-owned subsidiary, pursuant to an Agreement and Plan of Merger, dated as of June 20, 2010, with Valeant Pharmaceuticals International surviving as a wholly-owned subsidiary of Biovail Corporation (the "Merger"). In connection with the Merger, Biovail Corporation was renamed "Valeant Pharmaceuticals International, Inc."

Except where the context otherwise requires, all references in this Quarterly Report on Form 10-Q (this "Form 10-Q") to the "Company", "we", "us", "our" or similar words or phrases are to Valeant Pharmaceuticals International, Inc. and its subsidiaries, taken together, after giving effect to completion of the Merger; references to "Biovail" are to Biovail Corporation prior to the completion of the Merger and "Valeant" are to Valeant Pharmaceuticals International.

All dollar amounts in this report are expressed in United States ("U.S.") dollars.

Forward-Looking Statements

Caution regarding forward-looking information and statements and "Safe Harbor" statements under the U.S. Private Securities Litigation Reform Act of 1995:

To the extent any statements made in this Form 10-Q contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and may be forward-looking information within the meaning defined under applicable Canadian securities legislation (collectively, "forward-looking statements").

These forward-looking statements relate to, among other things: the expected benefits of the Merger and other acquisitions, such as cost savings, operating synergies and growth potential of the Company; business plans and prospects, prospective products or product approvals, future performance or results of current and anticipated products; the impact of healthcare reform; exposure to foreign currency exchange rate changes and interest rate changes; the outcome of contingencies, such as certain litigation and regulatory proceedings; general market conditions; and our expectations regarding our financial performance, including revenues, expenses, gross margins, liquidity and income taxes.

Forward-looking statements can generally be identified by the use of words such as "believe", "anticipate", "expect", "intend", "estimate", "plan", "continue", "will", "may", "could", "would", "target", "potential" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements may not be appropriate for other purposes. Although we have indicated above certain of these statements set out herein, all of the statements in this Form 10-Q that contain forward-looking statements are qualified by these cautionary statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including, but not limited to, factors and assumptions regarding the items outlined above. Actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things, the following:

•: our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;
•: factors relating to the integration of Valeant and Biovail, as well as other companies, businesses and products acquired by the Company, including the time and resources required to integrate such companies, businesses

and products, the difficulties associated with such integrations, and the achievement of the anticipated benefits from such integrations;

•: the challenges and difficulties associated with managing a larger, more complex, combined business;
•: the challenges and difficulties associated with managing the rapid growth of our Company and business;
•: our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of our significant operating subsidiary in Barbados, as well as the low tax rate for the profits of our PharmaSwiss S.A. subsidiary based in Switzerland;
•: the introduction of products that compete against our products that do not have patent or data exclusivity rights, which products represent a significant portion of our revenues;
•: our ability to retain, motivate and recruit executives and other key employees;
•: our future cash flow, our ability to service and repay our existing debt and our ability to raise additional funds, if needed, in light of our current and projected levels of operations, acquisition activity and general economic conditions;
•: our ability to identify, acquire and integrate acquisition targets and to secure and maintain third-party research, development, manufacturing, marketing or distribution arrangements;
•: our ability to close transactions on a timely basis or at all;
•: the risks associated with the international scope of our operations;
•: the impacts of the Patient Protection and Affordable Care Act in the U.S. and other legislative and regulatory reforms in the countries in which we operate;
•: the uncertainties associated with the acquisition and launch of new products, including, but not limited to, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing;
•: the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including, but not limited to, the U.S. Food and Drug Administration, the Canadian Therapeutic Products Directorate and European and Australian regulatory approvals, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful challenges to our generic products and infringement or alleged infringement of the intellectual property of others;
•: the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products;
•: the results of continuing safety and efficacy studies by industry and government agencies;
•: the risk that our products could cause, or be alleged to cause, personal injury, leading to withdrawals of products from the market;
•: our ability to obtain components, raw materials or other products supplied by third parties;
•: the outcome of legal proceedings, investigations and regulatory proceedings;
•: economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;
•: the disruption of delivery of our products and the routine flow of manufactured goods across the U.S. border; and
•: other risks detailed from time to time in our filings with the U.S. Securities and Exchange Commission (the "SEC") and the Canadian Securities Administrators (the "CSA"), as well as our ability to anticipate and manage the risks associated with the foregoing.

iii

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found under Item 1A. of Part II of this Form 10-Q and under Item 1A. "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and in the Company's other filings with the SEC and CSA. We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. These forward-looking statements speak only as of the date made.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(All dollar amounts expressed in thousands of U.S. dollars)
(Unaudited)

			As of June 30 2011			As of December 31 2010

ASSETS
Current assets:
	Cash and cash equivalents		$	238,945		$	394,269
	Marketable securities			2,954			6,083
	Accounts receivable, net			411,547			274,819
	Inventories, net			259,783			229,582
	Prepaid expenses and other current assets			24,964			26,088
	Assets held for sale			4,336			4,014
	Income taxes receivable			23,738			8,243
	Deferred tax assets, net			79,420			77,068

		Total current assets		1,045,687			1,020,166
Marketable securities				9,170			2,083
Property, plant and equipment, net				318,851			281,752
Intangible assets, net				6,959,907			6,372,780
Goodwill				3,358,917			3,001,376
Deferred tax assets, net				81,722			80,085
Other long-term assets, net				53,619			36,875

	Total assets		$	11,827,873		$	10,795,117

LIABILITIES
Current liabilities:
	Accounts payable		$	126,709		$	101,324
	Accrued liabilities			415,651			442,114
	Acquisition-related contingent consideration			111,007			—
	Income taxes payable			67,552			9,153
	Deferred revenue			19,062			21,520
	Current portion of long-term debt			17,500			116,900
	Liabilities for uncertain tax positions			646			646
	Deferred tax liabilities, net			3,767			799

		Total current liabilities		761,894			692,456
Deferred revenue				42,506			50,021
Acquisition-related contingent consideration				309,691			20,220
Long-term debt				4,529,289			3,478,377
Liabilities for uncertain tax positions				101,795			96,102
Deferred tax liabilities, net				1,251,086			1,436,743
Other long-term liabilities				166,194			110,102

Total liabilities				7,162,455			5,884,021

SHAREHOLDERS' EQUITY
Common shares, no par value, unlimited shares authorized, 300,195,091 and 302,448,934 issued and outstanding at June 30, 2011 and December 31, 2010, respectively				5,872,994			5,251,730
Additional paid-in capital				396,838			495,041
Accumulated deficit				(1,887,343	)		(934,511	)
Accumulated other comprehensive income				282,929			98,836

	Total shareholders' equity			4,665,418			4,911,096

	Total liabilities and shareholders' equity		$	11,827,873		$	10,795,117

Commitments and contingencies (note 18)

The accompanying notes are an integral part of these consolidated financial statements.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(All dollar amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

	Three Months Ended June 30						Six Months Ended June 30

	2011			2010			2011			2010
Revenues
Product sales	$	530,035		$	231,245		$	1,030,456		$	443,278
Alliance and royalty		65,988			4,647			124,402			8,996
Service and other		13,364			2,879			19,555			6,132

		609,387			238,771			1,174,413			458,406

Expenses
Cost of goods sold (exclusive of amortization of intangible assets shown separately below)		169,912			63,850			339,199			122,805
Cost of alliance and service revenues		3,395			3,372			37,340			6,679
Selling, general and administrative		149,657			45,094			289,163			88,607
Research and development		17,764			23,644			31,434			36,221
Amortization of intangible assets		114,946			33,299			226,989			66,599
Restructuring and integration costs		27,626			2,881			45,165			3,494
Acquired in-process research and development		2,000			10,242			4,000			61,245
Acquisition-related costs		1,869			7,577			3,376			7,577
Legal settlements		2,000			—			2,400			—
Acquisition-related contingent consideration		1,752			—			2,138			—

		490,921			189,959			981,204			393,227

Operating income		118,466			48,812			193,209			65,179
Interest income		1,086			234			1,889			422
Interest expense		(83,073	)		(9,952	)		(151,824	)		(19,779	)
Loss on extinguishment of debt		(14,748	)		—			(23,010	)		—
Foreign exchange and other		847			667			3,654			44
Gain (loss) on investments, net		21,158			(392	)		22,927			(547	)

Income before provision for (recovery of) income taxes		43,736			39,369			46,845			45,319
Provision for (recovery of) income taxes		(12,624	)		5,400			(15,997	)		14,500

Net income	$	56,360		$	33,969		$	62,842		$	30,819

Basic earnings per share	$	0.19		$	0.21		$	0.21		$	0.19

Diluted earnings per share	$	0.17		$	0.21		$	0.19		$	0.19

Weighted-average common shares (000s)
Basic		303,426			158,510			303,587			158,449
Diluted		331,369			161,019			332,130			160,115

Cash dividends declared per share	$	—		$	0.095		$	—		$	0.185

The accompanying notes are an integral part of these consolidated financial statements.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF ACCUMULATED DEFICIT

(All dollar amounts are expressed in thousands of U.S. dollars)
(Unaudited)

	Three Months Ended June 30						Six Months Ended June 30

	2011			2010			2011			2010
Accumulated deficit, beginning of period	$	(1,206,692	)	$	(263,464	)	$	(934,511	)	$	(245,974	)
Net income		56,360			33,969			62,842			30,819
Repurchase of common shares		(145,764	)		—			(292,605	)		—
Repurchase of equity component of convertible debt		(574,791	)		—			(654,831	)		—
Employee withholding taxes related to share-based awards		(16,456	)		—			(68,238	)		—
Cash dividends declared and dividend equivalents		—			(15,174	)		—			(29,514	)

Accumulated deficit, end of period	$	(1,887,343	)	$	(244,669	)	$	(1,887,343	)	$	(244,669	)

The accompanying notes are an integral part of these consolidated financial statements.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(All dollar amounts expressed in thousands of U.S. dollars)
(Unaudited)

			Three Months Ended June 30						Six Months Ended June 30

			2011			2010			2011			2010
Cash Flows From Operating Activities
Net income			$	56,360		$	33,969		$	62,842		$	30,819
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			122,276			40,233			249,278			80,281
	Amortization of deferred revenue			(4,776	)		(4,776	)		(9,551	)		(9,551	)
	Amortization of discounts on long-term debt			1,945			2,837			4,587			5,638
	Amortization of deferred financing costs			469			1,332			1,761			2,644
	Share-based compensation			25,558			1,895			55,451			3,552
	Tax benefits from stock options exercised			(7,566	)		—			(31,616	)		—
	Deferred income taxes			(18,724	)		700			(38,497	)		5,000
	Acquired in-process research and development			2,000			10,242			4,000			61,245
	Acquisition-related contingent consideration			1,752			—			2,138			—
	Allowances for losses on accounts receivable and inventories			2,091			3,757			2,472			246
	Acquisition accounting adjustment on inventory sold			16,262			—			46,171			—
	Non-cash cost of alliance revenue			—			—			30,686			—
	Payment of accrued legal settlements			(400	)		—			(16,400	)		(5,950	)
	Additions to accrued legal settlements			—			—			400			—
	Loss on extinguishment of debt			14,748			—			23,010			—
	Payment of accreted interest on repurchase of convertible debt			(2,712	)		—			(5,001	)		—
	Gain on sale of marketable securities			(21,316	)		—			(21,316	)		—
	Other			6,263			238			6,982			(129	)
	Changes in operating assets and liabilities:
		Accounts receivable		67,736			(11,432	)		(50,745	)		3,404
		Inventories		(8,217	)		5,314			5,143			(5,810	)
		Prepaid expenses and other current assets		12,497			2,961			5,627			5,236
		Accounts payable		27,497			(566	)		(10,309	)		(30,296	)
		Accrued liabilities		(51,814	)		17,803			10,928			3,000
		Income taxes payable		(13,730	)		3,676			(14,593	)		5,077
		Deferred revenue		(1,543	)		730			(462	)		(740	)

Net cash provided by operating activities				226,656			108,913			312,986			153,666

Cash Flows From Investing Activities
Acquisition of businesses, net of cash acquired				(96,565	)		—			(560,267	)		—
Acquisition of intangible assets				(8,000	)		(10,242	)		(310,885	)		(60,245	)
Proceeds from sales and maturities of marketable securities				83,865			3,750			86,639			4,965
Purchases of marketable securities				(29,326	)		—			(69,342	)		—
Purchases of property, plant and equipment				(12,474	)		(2,860	)		(33,979	)		(6,494	)
Proceeds from sale of assets				—			—			—			8,542

Net cash used in investing activities				(62,500	)		(9,352	)		(887,834	)		(53,232	)

Cash Flows From Financing Activities
Issuance of long-term debt				—			—			2,139,688			—
Repayment of long-term debt				—			(12,500	)		(975,000	)		(12,500	)
Repurchase of common shares				(224,814	)		—			(499,564	)		—
Repurchase of convertible debt				(199,788	)		—			(339,013	)		—
Borrowings under credit facilities				100,000			—			100,000			—
Payment of employee withholding tax upon vesting of share-based awards				(15,200	)		—			(54,678	)		—
Tax benefits from stock options exercised				7,566			—			31,616			—
Proceeds from exercise of stock options				6,133			1,254			29,362			2,798
Financing costs paid				(4,066	)		—			(19,813	)		—
Cash dividends paid				—			(14,256	)		—			(28,502	)

Net cash provided by (used in) financing activities				(330,169	)		(25,502	)		412,598			(38,204	)

Effect of exchange rate changes on cash and cash equivalents				3,206			(385	)		6,926			(127	)

Net increase (decrease) in cash and cash equivalents				(162,807	)		73,674			(155,324	)		62,103
Cash and cash equivalents, beginning of period				401,752			102,892			394,269			114,463

Cash and cash equivalents, end of period			$	238,945		$	176,566		$	238,945		$	176,566

Non-Cash Investing and Financing Activities
Acquisition of businesses, contingent consideration at fair value			$	(369,679	)	$	—		$	(397,150	)	$	—
Settlement of convertible debt, equity issued				(892,000	)		—			(892,000	)		—
Cash dividends declared but unpaid				—			(15,064	)		—			(15,064	)

The accompanying notes are an integral part of these consolidated financial statements.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

1. DESCRIPTION OF BUSINESS

On September 28, 2010 (the "Merger Date"), Biovail Corporation ("Biovail") completed the acquisition of Valeant Pharmaceuticals International ("Valeant") through a wholly-owned subsidiary pursuant to an Agreement and Plan of Merger, dated as of June 20, 2010, with Valeant surviving as a wholly-owned subsidiary of Biovail (the "Merger"). In connection with the Merger, Biovail was renamed "Valeant Pharmaceuticals International, Inc." (the "Company"). The Company is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements (the "unaudited consolidated financial statements") have been prepared by the Company in United States ("U.S.") dollars and in accordance with U.S. generally accepted accounting principles ("U.S. GAAP") for interim financial reporting, which do not conform in all respects to the requirements of U.S. GAAP for annual financial statements. Accordingly, these condensed notes to the unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto prepared in accordance with U.S. GAAP that are contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the "2010 Form 10-K"). The unaudited consolidated financial statements have been prepared using accounting policies that are consistent with the policies used in preparing the Company's audited consolidated financial statements for the year ended December 31, 2010. There have been no changes to the Company's significant accounting policies since December 31, 2010, except as described below under "Adoption of New Accounting Standards". The unaudited consolidated financial statements reflect all normal and recurring adjustments necessary for the fair presentation of the Company's financial position and results of operations for the interim periods presented.

Certain prior year amounts have been reclassified to conform to the presentation adopted by the Company following the Merger. These reclassifications include the following:

•: costs incurred by the Company's contract research division in connection with contract research services provided to external customers, prior to its disposal in July 2010, have been reclassified from research and development expenses to cost of alliance and service revenues; and
•: amounts expensed as acquired in-process research and development ("IPR&D") have been reclassified from research and development expenses to a separate line item.

As described in note 3, the Merger was accounted for as a business combination under the acquisition method of accounting. Biovail was both the legal and accounting acquirer in the Merger. Accordingly, the unaudited consolidated financial statements reflect the assets, liabilities, revenues and expenses of Valeant from the Merger Date.

Use of Estimates

In preparing the unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the unaudited consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates and the

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

On an ongoing basis, management reviews its estimates to ensure that these estimates appropriately reflect changes in the Company's business and new information as it becomes available. If historical experience and other factors used by management to make these estimates do not reasonably reflect future activity, the Company's results of operations and financial position could be materially impacted.

Adoption of New Accounting Standards

Effective January 1, 2011, the Company has adopted on a prospective basis the provisions of the following new accounting standards:

•: Guidance on the recognition and classification of fees imposed on pharmaceutical manufacturers under the U.S. Patient Protection and Affordable Care Act.
•: Guidance recognizing the milestone method of revenue recognition as a valid application of the proportional performance model when applied to research and development arrangements.
•: Amendments to the recognition and measurement guidance for multiple-element revenue arrangements.

The adoption of these new standards did not have a significant impact on the unaudited consolidated financial statements.

The Company will adopt the provisions of the following new accounting standards effective January 1, 2012:

•: Guidance that results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and International Financial Reporting Standards ("IFRS"). The amendments change some fair value measurement principles and disclosure requirements under U.S. GAAP. The adoption of this new guidance is not expected to have a material impact on the Company's consolidated financial statements.
•: Guidance requiring entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. The amendments do not change the components of other comprehensive income or the calculation of earnings per share. As the guidance relates only to the presentation of other comprehensive income, the adoption of this accounting standard will not have a significant impact on the Company's consolidated financial statements.

3. BUSINESS COMBINATIONS

Biovail Merger With Valeant

Description of the Transaction

On September 28, 2010, a wholly-owned subsidiary of Biovail acquired all of the outstanding equity of Valeant in a share transaction, in which each share of Valeant common stock was cancelled and converted into the right to receive 1.7809 Biovail common shares. The fair value of the consideration transferred as of the Merger Date to effect the acquisition of Valeant amounted to $3.9 billion in the aggregate. As a result of the Merger, Valeant became a wholly-owned subsidiary of the Company.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

3. BUSINESS COMBINATIONS (Continued)

Basis of Presentation

The transaction has been accounted for as a business combination under the acquisition method of accounting, which requires, among other things, the share consideration transferred be measured at the acquisition date based on the then-current market price and that most assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. Acquisition-related transaction costs and certain acquisition-related restructuring charges are not included as a component of the acquisition accounting, but are accounted for as expenses in the periods in which the costs are incurred.

Assets Acquired and Liabilities Assumed

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the Merger Date, as well as measurement period adjustments to the amounts originally recorded in 2010. The measurement period adjustments did not have a material impact on the Company's previously reported results of operations or financial position in any period subsequent to the Merger Date and, therefore, the Company has not retrospectively adjusted its consolidated financial statements.

	Amounts Recognized as of Merger Date (as previously reported) ^(a)			Measurement Period Adjustments ^(b)			Amounts Recognized as of June 30, 2011 (as adjusted)

Cash and cash equivalents	$	348,637		$	—		$	348,637
Accounts receivable		194,930			—			194,930
Inventories		208,874			—			208,874
Other current assets		30,869			—			30,869
Property, plant and equipment		184,757			—			184,757
Identifiable intangible assets, excluding acquired IPR&D ^(c)		3,844,310			(224,939	)		3,619,371
Acquired IPR&D ^(d)		1,404,956			(4,195	)		1,400,761
Other non-current assets		6,108			—			6,108
Current liabilities		(385,574	)		874			(384,700	)
Long-term debt, including current portion		(2,913,614	)		—			(2,913,614	)
Deferred income taxes, net		(1,467,791	)		157,816			(1,309,975	)
Other non-current liabilities		(149,307	)		(46,022	)		(195,329	)

Total indentifiable net assets		1,307,155			(116,466	)		1,190,689
Equity component of convertible debt		(225,971	)		—			(225,971	)
Call option agreements		(28,000	)		—			(28,000	)
Goodwill		2,878,856			116,466			2,995,322

Total fair value of consideration transferred	$	3,932,040		$	—		$	3,932,040

(a): As previously reported in the 2010 Form 10-K.
(b): The measurement period adjustments primarily reflect: (i) changes in the estimated fair values of certain identifiable intangible assets to better reflect the competitive environment, market potential and economic lives of certain products; and (ii) the tax impact of pre-tax measurement period adjustments and resolution of certain tax aspects of the transaction. The measurement period adjustments were made to reflect market participant assumptions about facts and circumstances existing as of the Merger Date, and did not result from intervening events subsequent to the Merger Date.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

3. BUSINESS COMBINATIONS (Continued)

(c): The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:

		Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of June 30, 2011 (as adjusted)

Product brands	16	$	3,114,689	$	(190,779	)	$	2,923,910
Corporate brands	20		168,602		98			168,700
Product rights	9		360,970		(52,949	)		308,021
Out-licensed technology and other	7		200,049		18,691			218,740

Total identifiable intangible assets acquired	15	$	3,844,310	$	(224,939	)	$	3,619,371

(d): The following table summarizes the amounts assigned to acquired IPR&D assets:

	Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of June 30, 2011 (as adjusted)

Ezogabine/retigabine ⁽¹⁾	$	891,461	$	—		$	891,461
Dermatology products		431,323		(3,100	)		428,223
Other		82,172		(1,095	)		81,077

Total IPR&D assets acquired	$	1,404,956	$	(4,195	)	$	1,400,761

(1): Refer to note 5 — Collaboration Agreement.

PharmaSwiss

Description of the Transaction

On March 10, 2011, the Company acquired all of the issued and outstanding stock of PharmaSwiss S.A. ("PharmaSwiss"), a privately-owned branded generics and over-the-counter ("OTC") pharmaceutical company based in Zug, Switzerland. The total consideration transferred to effect the acquisition of PharmaSwiss comprised cash paid of $491.2 million (€353.1 million) and the rights to contingent payments of up to $41.7 million (€30.0 million) if certain net sales milestones of PharmaSwiss are achieved for the 2011 calendar year. The fair value of the contingent payments was determined to be $27.5 million as of the acquisition date.

In connection with the transaction, in February 2011, the Company entered into foreign currency forward-exchange contracts to buy €130.0 million, which were settled on March 9, 2011. The Company recorded a $5.1 million gain on the settlement of these contracts, which was partially offset by a foreign exchange loss of $2.4 million recognized on the remaining €220.0 million bought to finance the transaction. The net foreign exchange gain of $2.7 million was recognized in earnings in the three-month period ended March 31, 2011.

PharmaSwiss is an existing partner to several large pharmaceutical and biotech companies offering regional expertise in such functions as regulatory, compliance, sales, marketing and distribution, in addition to developing its own product portfolio. Through its business operations, PharmaSwiss offers a broad product

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

3. BUSINESS COMBINATIONS (Continued)

portfolio in seven therapeutic areas and operations in 19 countries throughout Central and Eastern Europe, including Serbia, Hungary, the Czech Republic and Poland, as well as in Greece and Israel.

Assets Acquired and Liabilities Assumed

The transaction has been accounted for as a business combination under the acquisition method of accounting. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date. The following recognized amounts are provisional and subject to change:

•: amounts and useful lives for identifiable intangible assets and property, plant and equipment, pending the finalization of valuation efforts;
•: amounts for income tax assets and liabilities, pending finalization of estimates and assumptions in respect of certain tax aspects of the transaction, and the filing of PharmaSwiss's pre-acquisition tax returns; and
•: amount of goodwill pending the completion of the allocation of the consideration transferred to the assets acquired and liabilities assumed.

The Company will finalize these amounts as it obtains the information necessary to complete the measurement process. Any changes resulting from facts and circumstances that existed as of the acquisition date may result in retrospective adjustments to the provisional amounts recognized at the acquisition date. These changes could be significant. The Company expects to finalize these amounts no later than one year from the acquisition date.

	Amounts Recognized as of Acquisition Date (as previously reported) ^(a)			Measurement Period Adjustments ^(b)			Amounts Recognized as of June 30, 2011 (as adjusted)

Cash and cash equivalents	$	43,940		$	—		$	43,940
Accounts receivable ^(c)		63,509			(1,880	)		61,629
Inventories ^(d)		72,144			(1,410	)		70,734
Other current assets		14,429			—			14,429
Property, plant and equipment		9,737			—			9,737
Identifiable intangible assets ^(e)		202,071			7,169			209,240
Other non-current assets		3,122			—			3,122
Current liabilities		(46,866	)		—			(46,866	)
Deferred income taxes, net		(18,176	)		(518	)		(18,694	)
Other non-current liabilities		(720	)		—			(720	)

Total indentifiable net assets		343,190			3,361			346,551
Goodwill ^(f)		171,105			1,052			172,157

Total fair value of consideration transferred	$	514,295		$	4,413		$	518,708

(a): As previously reported in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.
(b): The measurement period adjustments primarily reflect: (i) an increase in the total fair value of consideration transferred pursuant to a working capital adjustment provision of the purchase agreement; (ii) changes in the estimated fair value of certain intangible assets; and (iii) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

3. BUSINESS COMBINATIONS (Continued)

were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company's previously reported consolidated financial statements for the quarter ended March 31, 2011 and, therefore, the Company has not retrospectively adjusted those financial statements.

(c): The fair value of trade accounts receivable acquired was $61.6 million, with the gross contractual amount being $66.8 million, of which the Company expects that $5.2 million will be uncollectible.
(d): Includes $18.2 million to record PharmaSwiss's inventory at its estimated fair value.
(e): The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

		Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments		Amounts Recognized as of June 30, 2011 (as adjusted)

Partner relationships ⁽¹⁾	7	$	130,183	$	—	$	130,183
Product brands	9		71,888		7,169		79,057

Total identifiable intangible assets acquired	7	$	202,071	$	7,169	$	209,240

(1): The partner relationships intangible asset represents the value of existing arrangements with various pharmaceutical and biotech companies, for whom PharmaSwiss provides regulatory, compliance, sales, marketing and distribution functions.

(f)

Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the provisional values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:

•: cost savings, operating synergies and other benefits expected to result from combining the operations of PharmaSwiss with those of the Company;
•: the value of the going-concern element of PharmaSwiss's existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and
•: intangible assets that do not qualify for separate recognition (for instance, PharmaSwiss's assembled workforce).

The provisional amount of goodwill has been allocated to the Company's Branded Generics — Europe business segment as indicated in note 10.

Acquisition-Related Costs

As of June 30, 2011, the Company had incurred $1.4 million of transaction costs directly related to the PharmaSwiss acquisition, which includes expenditures for advisory, legal, valuation, accounting and other similar services. These costs have been expensed as acquisition-related costs.

Revenue and Earnings of PharmaSwiss

The revenues of PharmaSwiss for the period from the acquisition date to June 30, 2011 were $81.6 million and earnings were $10.8 million, excluding the effects of the acquisition accounting adjustments.

Elidel®/Xerese™

On June 29, 2011, the Company entered into a license agreement with Meda Pharma SARL ("Meda") to acquire the exclusive rights to commercialize both Elidel® Cream and Xerese™ Cream in the U.S., Canada

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

3. BUSINESS COMBINATIONS (Continued)

and Mexico. In addition, the Company and Meda have the right to undertake development work in respect of Elidel® and Xerese™ products. The Company made an upfront payment to Meda of $76.0 million, and the Company will pay a series of potential milestones of up to $16.0 million and guaranteed royalties totaling $120.0 million in the aggregate through 2011 and 2012. Thereafter, the Company will pay a double-digit royalty to Meda on net sales of Elidel®, Xerese™ and Zovirax®, including additional minimum royalties of $120.0 million in the aggregate during 2013-2015. The Company acquired the U.S. and Canadian rights to non-ophthalmic topical formulations of Zovirax® in the first quarter of 2011 (as described in note 4).

The Elidel®/Xerese™ transaction has been accounted for as a business combination under the acquisition method of accounting. The fair value of the upfront and contingent consideration, inclusive of royalty payments, was determined to be $437.7 million as of the acquisition date. The total fair value of the consideration transferred has been provisionally assigned (pending the finalization of a definitive valuation) to product brands intangible assets ($406.4 million), acquired IPR&D assets ($33.5 million) and a net deferred income tax liability ($(2.2) million). The product brands intangible assets have an estimated weighted-average useful life of approximately eight years. The acquired IPR&D assets relate to the development of a Xerese® life-cycle product. As of June 30, 2011, the Company had incurred $0.6 million of transaction costs directly related to the license agreement, which have been expensed as acquisition-related costs. In the period from the acquisition date to June 30, 2011, the revenue and earnings from the sale of Elidel® and Xerese™ products under the license agreement were not material to the Company's consolidated results of operations.

Pro Forma Impact of Material Business Combinations

The following table presents unaudited pro forma consolidated results of operations for the three-month and six-month periods ended June 30, 2011 and 2010, as if the PharmaSwiss acquisition had occurred as of January 1, 2010 and the Merger had occurred as of January 1, 2009. The unaudited pro forma information does not include the license agreement to acquire the rights to Elidel® and Xerese™, as the impact is immaterial to these pro forma results and it was impracticable to obtain the necessary historical information as discrete financial statements for these product lines were not prepared.

	Three Months Ended June 30					Six Months Ended June 30

	2011		2010			2011		2010
Revenues	$	609,387	$	546,421		$	1,217,485	$	1,051,535
Net income (loss)		71,410		(6,464	)		98,757		(49,490	)
Basic earnings (loss) per share	$	0.24	$	(0.02	)	$	0.33	$	(0.17	)
Diluted earnings (loss) per share	$	0.22	$	(0.02	)	$	0.30	$	(0.17	)

The unaudited pro forma consolidated results of operations were prepared using the acquisition method of accounting and are based on the historical financial information of the Company, Valeant and PharmaSwiss. Except to the extent realized in the three-month and six-month periods ended June 30, 2011, the unaudited pro forma information does not reflect any cost savings, operating synergies and other benefits that the Company may achieve as a result of the Merger or PharmaSwiss acquisition, or the costs necessary to achieve these cost savings, operating synergies and other benefits. In addition, except to the extent recognized in the three-month and six-month periods ended June 30, 2011, the unaudited pro forma

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

3. BUSINESS COMBINATIONS (Continued)

information does not reflect the costs to integrate the operations of the Company with Valeant and PharmaSwiss.

The unaudited pro forma information is not necessarily indicative of what the Company's consolidated results of operations actually would have been had the PharmaSwiss acquisition and the Merger been completed on January 1, 2010 and January 1, 2009, respectively. In addition, the unaudited pro forma information does not purport to project the future results of operations of the Company. The unaudited pro forma information reflects primarily adjustments consistent with the unaudited pro forma information related to the Merger as reported in the 2010 Form 10-K and the following unaudited pro forma adjustments related to PharmaSwiss:

•: elimination of PharmaSwiss's historical intangible asset amortization expense;
•: additional amortization expense related to the provisional fair value of identifiable intangible assets acquired; and
•: the exclusion from pro forma earnings in the three-month and six-month periods ended June 30, 2011 of the acquisition accounting adjustments on PharmaSwiss's inventory that was sold subsequent to the acquisition date of $15.3 million and $18.8 million, respectively, and the exclusion of acquisition-related costs of $1.4 million in the six-month period ended June 30, 2011, and the inclusion of those amounts in pro forma earnings for the corresponding periods of 2010.

In addition, all of the above adjustments were adjusted for the applicable tax impact.

Other

In the six-month period ended June 30, 2011, the Company acquired Ganehill Pty Limited ("Ganehill"), an Australian company engaged in the marketing and distribution of skin care products under the Invisible Zinc™ brand. The fair value of the total cash and contingent consideration transferred to effect the acquisition of Ganehill was $19.4 million, which was allocated primarily to product brands intangible assets ($12.7 million) and goodwill ($5.4 million). In addition, the Company acquired certain other businesses, including the Canadian rights to ACZONE®, for $6.4 million in the aggregate, which was recorded to identifiable intangible assets. The Company does not consider these acquisitions to be material, individually or in the aggregate, to its consolidated results of operations and is therefore not presenting actual or pro forma financial information.

4. ASSET ACQUISITIONS AND DISPOSITION

Zovirax®

On February 22, 2011 and March 25, 2011, the Company acquired the U.S. and Canadian rights, respectively, to non-ophthalmic topical formulations of Zovirax® from GlaxoSmithKline ("GSK"). Pursuant to the terms of the asset purchase agreements, the Company paid GSK an aggregate amount of $300.0 million in cash for both the U.S. and Canadian rights. The Company had been marketing Zovirax® in the U.S. since January 1, 2002, under a 20-year exclusive distribution agreement with GSK, which distribution agreement terminated following the closing of the U.S. transaction. The Company has entered into new supply agreements and new trademark license agreements with GSK with respect to the U.S. and Canadian territories.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

4. ASSET ACQUISITIONS AND DISPOSITION (Continued)

This acquisition was accounted for as a purchase of identifiable intangible assets. Accordingly, the purchase price (including costs of acquisition) was allocated to the product brand intangible asset, with an estimated weighted-average useful life of 11 years. In addition, the Company reclassified the $91.4 million unamortized carrying amount of the original exclusive distribution agreement from product rights to the product brand intangible asset, to be amortized over the same 11-year estimated useful life.

Cloderm®

On March 31, 2011, the Company out-licensed the product rights to Cloderm® Cream, 0.1%, in the U.S. to Promius Pharma LLC, an affiliate of Dr. Reddy's Laboratories, in exchange for a $36.0 million upfront payment, which was received in early April 2011, and future royalty payments. The Cloderm® product rights intangible asset was recorded at a fair value of $31.8 million as of the Merger Date, and had a remaining unamortized carrying value of $30.7 million at March 31, 2011. Cloderm® was considered a non-core asset with respect to the Company's business strategy, which contemplates, on an ongoing basis, the selective purchase and sale of products and assets with a focus on core geographies and therapeutic classes. The Company, therefore, considers the out-license or sale of non-core assets to be part of its ongoing major and central operations. Accordingly, proceeds on the out-license or sale of non-core assets are recognized as alliance revenue, with the associated costs, including the carrying amount of related intangible assets, recorded as cost of alliance revenue. In connection with the sale of Cloderm®, the Company recognized the upfront payment as alliance revenue in the three-month period ended March 31, 2011, and expensed the carrying amount of the Cloderm® intangible assets as cost of alliance revenue. The Company will recognize the future royalty payments as alliance revenue as they are earned.

Other

On February 9, 2011, the Company acquired the Canadian rights to Cholestagel® from Genzyme Corporation ("Genzyme") for a $2.0 million upfront payment and potential future milestone payments. This acquisition was accounted for as a purchase of IPR&D assets with no alternative future use and, accordingly, the upfront payment was charged to acquired IPR&D expense as of the acquisition date. During the three-month period ended June 30, 2011, the Company made a first milestone payment of $2.0 million to Genzyme, which was charged to acquired IPR&D expense in the period.

5. COLLABORATION AGREEMENT

In October 2008, Valeant closed the License and Collaboration Agreement (the "Collaboration Agreement") to develop ezogabine/retigabine in collaboration with GSK. Pursuant to the terms of the Collaboration Agreement, Valeant granted co-development rights and worldwide commercialization rights to GSK. In consideration, the Company will receive future cash flows from worldwide sales of ezogabine/retigabine products. In March 2011, the European Commission granted marketing authorization for Trobalt™ (retigabine) as an adjunctive treatment of partial onset seizures, with or without secondary generalization in adults aged 18 years and above with epilepsy. In June 2011, the U.S. Food and Drug Administration ("FDA") approved the New Drug Application ("NDA") for Potiga™ (ezogabine) tablets as adjunctive treatment of partial-onset seizures in patients aged 18 years and older; however, the FDA recommended that ezogabine be scheduled as a controlled substance under the Controlled Substances Act prior to the marketing or launch of Potiga™. As of June 30, 2011, final classification was still under review by the U.S. Drug Enforcement Administration and Potiga™ will not be available for sale until this process is complete.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

5. COLLABORATION AGREEMENT (Continued)

In connection with the first sale of Trobalt™ by GSK in the European Union (which occurred in May 2011), GSK paid the Company a $40.0 million milestone payment and will pay up to a 20% royalty on net sales of the product. Upon the first sale of Potiga™ in the U.S., GSK will pay the Company a $45.0 million milestone payment, and the Company will share up to 50% of the net profits from the sale of Potiga™. As substantive uncertainty existed at the inception of the Collaboration Agreement as to whether the milestones would be achieved because of the uncertainty involved with obtaining regulatory approval, no amounts were previously recognized for these potential milestone payments. The milestone payments (1) relate solely to past performance of the Company, (2) are reasonable relative to the other deliverables and payment terms within the Collaboration Agreement, and (3) are commensurate with the Company's efforts in collaboration with GSK to achieve the milestone events and the increase in value of ezogabine/retigabine. Accordingly, the milestones are considered substantive, and the milestone payments are being recognized by the Company as alliance and royalty revenue upon achievement. In the three-month period ended June 30, 2011, the Company recorded the $40.0 million milestone payment from GSK in connection with the launch of Trobalt™.

The Company's rights to ezogabine/retigabine are subject to an asset purchase agreement between Meda Pharma GmbH & Co. KG ("Meda Pharma") and Xcel Pharmaceuticals, Inc., which was acquired by Valeant in 2005 (the "Meda Pharma Agreement"). Under the Meda Pharma Agreement, the Company is required to make certain milestone and royalty payments to Meda Pharma. Within the U.S., Canada, Australia and New Zealand, any royalty payments to Meda Pharma will be shared by the Company and GSK. In the rest of the world, the Company will be responsible for the payment of these royalties to Meda Pharma from the royalty payments it receives from GSK. In connection with the approval of the NDA for Potiga™, the Company made a $6.0 million milestone payment to Meda Pharma in June 2011. As this potential milestone payment had been included in the estimated net future cash flows used to determine the fair value of the ezogabine/retigabine IPR&D assets as of the Merger Date, the payment of this milestone to Meda Pharma was recorded as an addition to the value of those assets. Amortization of the ezogabine/retigabine IPR&D assets will commence with the launch of Potiga™ in the U.S.

6. MERGER-RELATED RESTRUCTURING AND INTEGRATION COSTS

In connection with the Merger, the Company initiated measures to integrate the operations of Biovail and Valeant, capture operating synergies and generate cost savings across the Company. Costs associated with these initiatives include: employee termination costs (including related share-based payments) payable to approximately 500 employees of Biovail and Valeant who have been, or will be, terminated as a result of the Merger; IPR&D termination costs related to the transfer of product-development programs that did not align with the Company's research and development model to other parties; costs to consolidate or close facilities and relocate employees; asset impairment charges to write down property, plant and equipment to fair value; and contract termination and lease cancellation costs. The following table summarizes the major

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

6. MERGER-RELATED RESTRUCTURING AND INTEGRATION COSTS (Continued)

components of costs incurred in connection with these initiatives and a reconciliation of the liability balance:

	Employee Termination Costs

	Employee Termination Costs									Contract Termination, Facility Closure and Other Costs
	Severance and Related Benefits			Share-Based Compensation			IPR&D Termination Costs			Contract Termination, Facility Closure and Other Costs			Total
Balance, January 1, 2010	$	—		$	—		$	—		$	—		$	—
Costs incurred and charged to expense		58,727			49,482			13,750			12,862			134,821
Cash payments		(33,938	)		—			(13,750	)		(8,755	)		(56,443	)
Non-cash adjustments		—			(49,482	)		—			(2,437	)		(51,919	)

Balance, December 31, 2010		24,789			—			—			1,670			26,459
Costs incurred and charged to expense		5,260			3,446			—			8,833			17,539
Cash payments		(20,603	)		—			—			(2,510	)		(23,113	)
Non-cash adjustments		—			(165	)		—			—			(165	)

Balance, March 31, 2011		9,446			3,281			—			7,993			20,720
Costs incurred and charged to expense		5,632			295			—			15,847			21,774
Cash payments		(8,305	)		(2,033	)		—			(7,067	)		(17,405	)
Non-cash adjustments		—			—			—			(1,300	)		(1,300	)

Balance, June 30, 2011	$	6,773		$	1,543		$	—		$	15,473		$	23,789

Facility closure costs incurred in the three-month period ended June 30, 2011 included a $9.0 million charge for the remaining operating lease obligation (net of estimated sublease rentals that could be reasonably obtained) related to the Company's Mississauga, Ontario corporate office facility, which was vacated as of June 30, 2011, and a charge of $1.3 million related to a lease termination payment on the Company's Aliso Viejo, California corporate office facility. The Company is transitioning a number of its corporate office functions to Bridgewater, New Jersey. As a result, a portion of the previously vacated space in the Bridgewater facility has been reoccupied, resulting in a $1.1 million reversal of a previously recognized restructuring accrual related to that space.

In addition to costs identified with the Company's restructuring initiatives, the Company incurred $7.1 million of integration-related costs in the three-month period ended June 30, 2011, of which $3.5 million had been paid as of June 30, 2011. These costs were primarily related to the alignment of manufacturing operations in Brazil and the integration of PharmaSwiss into the Company's European operations.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

7. FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents the components of the Company's financial assets and liabilities measured at fair value as of June 30, 2011 and December 31, 2010:

				As of June 30, 2011										As of December 31, 2010

				Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Carrying Value			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
	Cash and cash equivalents:
		Money market funds		$	59,842		$	59,842	$	—	$	—		$	91,448		$	91,448	$	—	$	—
	Marketable securities:
		Available-for-sale equity securities:
			Sanitas ordinary shares ^(a)		9,170			9,170		—		—			—			—		—		—
		Available-for-sale debt securities:
			Corporate bonds		2,954			2,954		—		—			6,340			—		6,340		—
			Government-sponsored enterprise securities		—			—		—		—			1,826			—		1,826		—

				$	71,966		$	71,966	$	—	$	—		$	99,614		$	91,448	$	8,166	$	—

Liabilities:
	Acquisition-related contingent consideration			$	(420,698	)	$	—	$	—	$	(420,698	)	$	(20,220	)	$	—	$	—	$	(20,220	)

(a): In June 2011, in connection with an agreement to acquire AB Sanitas ("Sanitas"), as described in note 20, the Company invested $9.2 million to acquire 660,891 ordinary shares of Sanitas, which represented approximately 2.0% of the outstanding share capital of Sanitas.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

7. FAIR VALUE MEASUREMENTS (Continued)

Fair value measurements are estimated based on valuation techniques and inputs categorized as follows:

•: Level 1 — Quoted prices (unadjusted) for identical securities in active markets.
•: Level 2 — Quoted prices (unadjusted) for identical securities in markets that are not active.
•: Level 3 — Discounted cash flow method (income approach) using significant inputs not observable in the market.

The fair value measurement of contingent consideration obligations arising from business combinations is determined using unobservable (Level 3) inputs. These inputs include (i) the estimated amount and timing of projected cash flows; (ii) the probability of the achievement of the factor(s) on which the contingency is based; and (iii) the risk-adjusted discount rate used to present value the probability-weighted cash flows. The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis for the six months ended June 30, 2011:

			Balance, January 1, 2011			Issuances			Net Unrealized Loss (Gain) ^(a)			Foreign Exchange ^(b)			Transfers Into Level 3			Transfers Out of Level 3			Balance, June 30, 2011

	Acquisition-related contingent consideration			20,220			397,150			2,138			1,190			—			—			420,698

(a): Recognized as acquisition-related contingent consideration in the consolidated statements of income.
(b): Included in foreign exchange and other in the consolidated statements of income.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

There were no significant assets or liabilities that were re-measured at fair value on a non-recurring basis subsequent to initial recognition in the six months ended June 30, 2011.

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table summarizes the estimated fair values of the Company's financial instruments as of June 30, 2011 and December 31, 2010:

	As of June 30, 2011						As of December 31, 2010

	Carrying Value			Fair Value			Carrying Value			Fair Value
Cash equivalents	$	59,842		$	59,842		$	91,448		$	91,448
Marketable securities		12,124			12,124			8,166			8,166
Long-term debt		(4,546,789	)		(4,766,900	)		(3,595,277	)		(4,174,561	)

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

8. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The following table summarizes the Company's marketable securities by major security type as of June 30, 2011 and December 31, 2010:

	As of June 30, 2011									As of December 31, 2010

					Gross Unrealized									Gross Unrealized
	Cost Basis		Fair Value		Gross Unrealized					Cost Basis		Fair Value		Gross Unrealized
	Cost Basis		Fair Value		Gains		Losses			Cost Basis		Fair Value		Gains		Losses
Sanitas ordinary shares	$	9,319		9,170	$	—	$	(149	)	$	—		—	$	—	$	—
Corporate bonds		2,942		2,954		12		—			6,234		6,340		106		—
Government-sponsored enterprise securities		—		—		—		—			1,825		1,826		1		—

	$	12,261	$	12,124	$	12	$	(149	)	$	8,059	$	8,166	$	107	$	—

All marketable debt securities held as of June 30, 2011 mature within one year. Gross gains and losses realized on the sale of marketable debt securities were not material in the three-month or six-month periods ended June 30, 2011 and 2010.

9. INVENTORIES

The components of inventories as of June 30, 2011 and December 31, 2010 were as follows:

	As of June 30 2011			As of December 31 2010

Raw materials	$	57,121		$	55,486
Work in process		38,168			43,587
Finished goods		183,593			158,574

		278,882			257,647
Less allowance for obsolescence		(19,099	)		(28,065	)

	$	259,783		$	229,582

In the three-month and six-month periods ended June 30, 2011, cost of goods sold included $16.3 million and $46.2 million, respectively, primarily related to the acquisition accounting adjustments on the acquired Valeant and PharmaSwiss inventories that were sold in those respective periods. As of June 30, 2011, substantially all of the acquisition accounting adjustments related to the Valeant and PharmaSwiss inventories had been recognized in cost of goods sold.

The decline in the allowance for obsolescence in the six-month period ended June 30, 2011 primarily reflected the write off of obsolete inventory against the allowance.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

10. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

The major components of intangible assets as of June 30, 2011 and December 31, 2010 were as follows:

			As of June 30, 2011							As of December 31, 2010

			Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
	Product brands		$	4,947,614	$	(539,159	)	$	4,408,455	$	4,227,465	$	(404,951	)	$	3,822,514
	Corporate brands			177,966		(6,716	)		171,250		169,675		(2,191	)		167,484
	Product rights			876,739		(255,430	)		621,309		1,074,611		(279,275	)		795,336
	Partner relationships			135,754		(6,450	)		129,304		—		—			—
	Out-licensed technology and other			230,476		(36,148	)		194,328		205,332		(17,842	)		187,490

		Total finite-lived intangible assets		6,368,549		(843,903	)		5,524,646		5,677,083		(704,259	)		4,972,824
Indefinite-lived intangible assets:
	Acquired IPR&D			1,435,261		—			1,435,261		1,399,956		—			1,399,956

			$	7,803,810	$	(843,903	)	$	6,959,907	$	7,077,039	$	(704,259	)	$	6,372,780

The increase in intangible assets primarily reflects the acquisition of the PharmaSwiss, Elidel® and Xerese™ identifiable intangible assets (as described in note 3) and the rights to Zovirax® (as described in note 4), partially offset by the impact of the measurement period adjustments in connection with the Merger (as described in note 3) and the carrying amount of the Cloderm® intangible assets expensed on the out-license of the product rights (as described in note 4).

Amortization expense related to intangible assets was recorded as follows:

	Three Months Ended June 30				Six Months Ended June 30

	2011		2010		2011		2010
Alliance and royalty revenue	$	268	$	268	$	536	$	536
Cost of goods sold		2,025		2,025		4,051		4,051
Amortization expense		114,946		33,299		226,989		66,599

	$	117,239	$	35,592	$	231,576	$	71,186

Estimated aggregate amortization expense for each of the five succeeding years ending December 31 is as follows:

			2011			2012			2013			2014			2015

	Amortization expense		$	568,585		$	532,388		$	529,162		$	519,943		$	506,252

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

10. INTANGIBLE ASSETS AND GOODWILL (Continued)

Goodwill

The change in the carrying amount of goodwill in the six-month period ended June 30, 2011 was as follows:

	U.S. Neurology and Other		U.S. Dermatology			Canada and Australia			Branded Generics — Europe			Branded Generics — Latin America			Total

Balance, January 1, 2011	$	1,379,516	$	498,508		$	394,787		$	352,736		$	375,829		$	3,001,376
Additions ^(a)		—		—			5,388			172,157			—			177,545
Adjustments ^(b)		187,248		(338	)		(32,963	)		(24,623	)		(12,858	)		116,466
Foreign exchange and other		—		—			16,271			25,165			22,094			63,530

Balance, June 30, 2011	$	1,566,764	$	498,170		$	383,483		$	525,435		$	385,065		$	3,358,917

(a): Relates to the acquisitions of PharmaSwiss and Ganehill (as described in note 3).
(b): Reflects the impact of measurement period adjustments related to the Merger (as described in note 3).

As described in note 3, the allocation of the goodwill balance associated with the acquisition of PharmaSwiss is provisional and subject to the completion of the allocation of the consideration transferred to the assets acquired and liabilities assumed.

11. LONG-TERM DEBT

Long-term debt as of June 30, 2011 and December 31, 2010 comprised the following:

		Maturity Date	As of June 30 2011			As of December 31 2010

Revolving Credit Facility		December 2012	$	100,000		$	—
Term Loan A Facility				—			975,000
Senior Notes:
	6.50%	July 2016		950,000			—
	6.75%	October 2017		497,770			497,589
	6.875%	December 2018		992,973			992,498
	7.00%	October 2020		695,956			695,735
	6.75%	August 2021		650,000			—
	7.25%	July 2022		539,973			—
Convertible Notes:
	4.00%	November 2013		—			220,792
	5.375% ^(a)	August 2014		102,617			196,763
Other				17,500			16,900

				4,546,789			3,595,277
Less current portion				(17,500	)		(116,900	)

			$	4,529,289		$	3,478,377

(a): Refer to note 12 — Securities Repurchase Program.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

11. LONG-TERM DEBT (Continued)

Aggregate maturities of long-term debt, including the current portion, for each of the five succeeding years ended December 31 and thereafter are as follows:


2011	$	17,500
2012		100,000
2013		—
2014		114,782
2015		—
Thereafter		4,350,000

Total gross maturities		4,582,282
Unamortized discounts		(35,493	)

Total long-term debt	$	4,546,789

Revolving Credit Facility

On June 29, 2011, Valeant entered into a Credit and Guaranty Agreement (the "Credit Agreement"), consisting of a $200.0 million senior secured revolving credit facility (the "Revolving Credit Facility"). The Revolving Credit Facility will mature on the one-and-one-half-year anniversary of the closing date and will not amortize. As of June 30, 2011, Valeant had borrowed an aggregate principal amount of $100.0 million under the Revolving Credit Facility.

Borrowings under the Revolving Credit Facility will bear interest at a rate per annum equal to, at Valeant's option, either (a) a base rate determined by reference to the highest of (1) the prime rate, (2) the federal funds effective rate plus ¹ / 2 of 1%, and (3) a LIBO rate determined by reference to the costs of funds for U.S. dollar deposits for a one-month interest period adjusted for certain additional costs plus 1%, or (b) a LIBO rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, plus an applicable margin in each case of (a) or (b). The applicable margin for borrowings under the Revolving Credit Facility will be 2.0% with respect to base rate borrowings and 3.0% with respect to LIBO rate borrowings. As of June 30, 2011, the effective rate of interest on the Company's borrowings under the Revolving Credit Facility was 3.22%.

Under certain circumstances, Valeant will be required to make mandatory prepayments of the loans under the Revolving Credit Facility, on a pro rata basis, subject to certain exceptions set forth in the Credit Agreement. Valeant will be permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the Revolving Credit Facility at any time without premium or penalty, other than customary "breakage" costs with respect to LIBO rate loans.

Valeant's obligations under the Revolving Credit Facility are guaranteed by the Company and the same guarantors under the Company's senior notes indentures. Valeant's obligations and the obligations of the guarantors under the Revolving Credit Facility are secured by first-priority security interests in substantially all tangible and intangible assets of Valeant and the guarantors, including 100% of the capital stock of Valeant and each domestic subsidiary of Valeant, 65% of the capital stock of each foreign subsidiary of Valeant that is directly owned by Valeant or a guarantor, and 100% of the capital stock of Valeant and each other subsidiary of the Company (other than Valeant's subsidiaries) that is owned by a guarantor, in each case subject to certain exclusions set forth in the credit documentation governing the Revolving Credit Facility.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

11. LONG-TERM DEBT (Continued)

The Revolving Credit Facility contains a number of covenants that, among other things and subject to certain exceptions, restrict Valeant's ability and the ability of the Company and its subsidiaries to: incur additional indebtedness; create liens; enter into agreements and other arrangements that include negative pledge clauses; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; create restrictions on the payment of dividends or other distributions by subsidiaries; make investments, loans, advances and acquisitions; merge, amalgamate or sell assets, including equity interests of the subsidiaries; enter into sale and leaseback transactions; engage in transactions with affiliates; enter into new lines of business; and enter into amendments of or waivers under subordinated indebtedness, organizational documents and certain other material agreements.

The Credit Agreement requires that Valeant maintain a maximum leverage ratio of 4.75 to 1.00 as of the last day of each fiscal quarter. The Credit Agreement also contains certain customary affirmative covenants and events of default. If an event of default, as specified in the Credit Agreement, shall occur and be continuing, Valeant may be required to repay all amounts outstanding under the Revolving Credit Facility. As of June 30, 2011, Valeant was in compliance with all covenants associated with the Revolving Credit Facility.

Term Loan A Facility

On September 27, 2010, Valeant and certain of its subsidiaries entered into a Credit and Guaranty Agreement (the "Old Credit Agreement") with a syndicate of lending institutions, consisting of (1) a four-and-one-half-year non-amortizing $125.0 million revolving credit facility, (2) a five-year amortizing $1.0 billion term loan A facility (the "Term Loan A Facility"), and (3) a six-year amortizing $1.625 billion term loan B facility (the "Term Loan B Facility"). Effective November 29, 2010, the Term Loan B Facility was prepaid in full. Effective March 8, 2011, Valeant terminated the Old Credit Agreement, using a portion of the net proceeds from the 2016 Notes and 2022 Notes offering (as described below) to prepay the amounts outstanding under the Term Loan A Facility and cancel the undrawn revolving credit facility.

2016 Notes and 2022 Notes

On March 8, 2011, Valeant issued $950.0 million aggregate principal amount of 6.50% senior notes due 2016 (the "2016 Notes") and $550.0 million aggregate principal amount of 7.25% senior notes due 2022 (the "2022 Notes") in a private placement. The 2016 Notes will mature on July 15, 2016 and the 2022 Notes will mature on July 15, 2022. The 2016 Notes accrue interest at the rate of 6.50% per year and the 2022 Notes accrue interest at the rate of 7.25% per year, payable semi-annually in arrears on each January 15 and July 15, commencing on July 15, 2011. The 2016 Notes were issued at par and the 2022 Notes were issued at 98.125% of par for an effective annual yield of 7.50%. The 2016 Notes and 2022 Notes are senior unsecured obligations of Valeant and are jointly and severally guaranteed on a senior unsecured basis by the Company and each of the Company's subsidiaries (other than Valeant) that is a guarantor under its other senior notes. Certain of the future subsidiaries of Valeant and the Company may be required to guarantee the 2016 Notes and 2022 Notes.

Net proceeds of the 2016 Notes and 2022 Notes offering of $975.0 million were used to prepay the amount outstanding under Valeant's Term Loan A Facility, as described above. In addition, net proceeds of $274.8 million were used to fund the repurchase of common shares of the Company from ValueAct Capital Master Fund, L.P. ("ValueAct") in March 2011 (as described in note 12).

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

11. LONG-TERM DEBT (Continued)

Valeant may redeem all or a portion of the 2016 Notes at any time prior to July 15, 2013, and the 2022 Notes at any time prior to July 15, 2016, in each case, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a "make-whole" premium. On or after July 15, 2013, Valeant may redeem all or a portion of the 2016 Notes and, on or after July 15, 2016, Valeant may redeem all or a portion of the 2022 Notes, in each case at the redemption prices applicable to the 2016 Notes or the 2022 Notes, as set forth in the 2016 Notes and 2022 Notes indenture, plus accrued and unpaid interest to the date of redemption of the 2016 Notes or the 2022 Notes, as applicable. In addition, prior to July 15, 2013 for the 2016 Notes and July 15, 2014 for the 2022 Notes, Valeant may redeem up to 35% of the aggregate principal amount of either the 2016 Notes or the 2022 Notes, at redemption prices of 106.500% and 107.250%, respectively, of the principal amount thereof, plus accrued and unpaid interest to the redemption date, in each case with the net proceeds of certain equity offerings.

If Valeant or the Company experiences a change in control, Valeant may be required to repurchase the 2016 Notes or 2022 Notes, as applicable, in whole or in part, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the purchase date of the 2016 Notes or the 2022 Notes, as applicable.

The 2016 Notes and 2022 Notes indenture contains covenants that limit the ability of the Company and certain of its subsidiaries to, among other things: incur or guarantee additional debt; make certain investments and other restricted payments; create liens; enter into transactions with affiliates; engage in mergers, consolidations or amalgamations; repurchase capital stock, repurchase subordinated debt and make certain investments; and transfer and sell assets. If an event of default, as specified in the 2016 Notes and 2022 Notes indenture, shall occur and be continuing, either the trustee or the holders of a specified percentage of the 2016 Notes and 2022 Notes may accelerate the maturity of all the 2016 Notes and 2022 Notes.

2021 Notes

On February 8, 2011, Valeant issued at par $650.0 million aggregate principal amount of 6.75% senior notes due 2021 (the "2021 Notes") in a private placement. Interest on the 2021 Notes accrues at the rate of 6.75% per year and will be payable semi-annually in arrears on each February 15 and August 15, commencing on August 15, 2011. The 2021 Notes will mature on August 15, 2021. The 2021 Notes are senior unsecured obligations of Valeant and are jointly and severally guaranteed on a senior unsecured basis by the Company and each of the Company's subsidiaries (other than Valeant) that is a guarantor under its other senior notes. Certain of the future subsidiaries of Valeant and the Company may be required to guarantee the 2021 Notes.

The net proceeds of the 2021 Notes offering were used principally to finance the acquisitions of PharmaSwiss (as described in note 3) and Zovirax® (as described in note 4).

Valeant may redeem all or a portion of the 2021 Notes at any time prior to February 15, 2016, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of redemption, plus a "make-whole" premium. On or after February 15, 2016, Valeant may redeem all or a portion of the 2021 Notes at the redemption prices applicable to the 2021 Notes as set forth in the 2021 Notes indenture, plus accrued and unpaid interest to the date of redemption of the 2021 Notes. In addition, prior to February 15, 2014, Valeant may redeem up to 35% of the aggregate principal amount of the 2021

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

11. LONG-TERM DEBT (Continued)

Notes at a redemption price of 106.750% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of certain equity offerings.

If Valeant or the Company experiences a change in control, Valeant may be required to repurchase the 2021 Notes, in whole or in part, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the purchase date of the 2021 Notes.

The 2021 Notes indenture contains covenants substantially consistent with those contained in the 2016 Notes and 2022 Notes indenture (as described above).

4.0% Convertible Notes

On April 20, 2011, the Company distributed a notice of redemption to holders of Valeant's 4.0% convertible subordinated notes due 2013 (the "4.0% Convertible Notes"), pursuant to which all of the outstanding 4.0% Convertible Notes would be redeemed on May 20, 2011 (the "Redemption Date"), at a redemption price of 100% of the outstanding aggregate principal amount, plus accrued and unpaid interest to, but excluding, the Redemption Date. The 4.0% Convertible Notes called for redemption could be converted at the election of the holders at any time before the close of business on May 19, 2011. Consequently, all of the outstanding 4.0% Convertible Notes were converted into 17,782,764 common shares of the Company, at a conversion rate of 79.0667 common shares per $1,000 principal amount of notes, which represented a conversion price of approximately $12.65 per share.

Immediately prior to settlement, the carrying amount of the liability component of the 4.0% Convertible Notes was $221.4 million and the estimated fair value of the liability component was $226.0 million. The difference of $4.6 million between the carrying amount and the estimated fair value of the liability component was recognized as a loss on extinguishment of debt in the three-month period ended June 30, 2011. The difference of $666.0 million between the estimated fair value of the liability component of $226.0 million and the aggregate fair value of the common shares issued to effect the settlement of $892.0 million resulted in charges to additional paid-in capital and accumulated deficit of $226.0 million and $440.0 million, respectively.

With respect to Valeant's call option agreements in respect of the shares underlying the conversion of $200.0 million principal amount of the 4.0% Convertible Notes, these agreements consisted of purchased call options on 15,813,338 common shares, which matured on May 20, 2011, and written call options on the identical number of shares, which mature on August 18, 2011. As of the Merger Date, these call options are to be settled in common shares of the Company. In June 2011, 11,479,365 common shares were received on the net-share settlement of the purchased call options, which common shares were subsequently cancelled.

12. SECURITIES REPURCHASE PROGRAM

On November 4, 2010, the Company announced that its board of directors had approved a securities repurchase program (the "securities repurchase program"), pursuant to which the Company may make purchases of its common shares, convertible notes and/or senior notes, from time to time, up to an aggregate maximum value of $1.5 billion, subject to any restrictions in the Company's financing agreements and applicable law.

In the six-month period ended June 30, 2011, the Company repurchased $109.0 million aggregate principal amount of the 5.375% senior convertible notes due 2014 (the "5.375% Convertible Notes") for an aggregate purchase price of $344.0 million. The carrying amount of the 5.375% Convertible Notes

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

12. SECURITIES REPURCHASE PROGRAM (Continued)

purchased was $93.3 million (net of $3.1 million of related unamortized deferred financing costs) and the estimated fair value of the 5.375% Convertible Notes exclusive of the conversion feature was $111.6 million. The difference of $18.3 million between the net carrying amount and the estimated fair value was recognized as a loss on extinguishment of debt. The difference of $232.4 million between the estimated fair value of $111.6 million and the purchase price of $344.0 million resulted in charges to additional paid-in capital and accumulated deficit of $17.6 million and $214.8 million, respectively. The portion of the purchase price attributable to accreted interest on the debt discount amounted to $5.0 million, and is presented in the consolidated statements of cash flows as payment of accreted interest in cash flows from operating activities. The remaining portion of the payment of $339.0 million is presented in the consolidated statement of cash flows as an outflow from financing activities, which includes a payment to the note holders of a $15.2 million premium above the carrying value.

In March 2011, the Company repurchased 7,366,419 of its common shares from ValueAct for an aggregate purchase price of $274.8 million. These common shares were subsequently cancelled. As of June 30, 2011, the Company had recorded an estimated $24.2 million receivable from ValueAct in relation to withholding taxes on the March 2011 repurchase. In May 2011, a subsidiary of the Company purchased 4,498,180 of the Company's common shares from ValueAct for an aggregate purchase price of $224.8 million. In June 2011, the Company purchased these common shares from its subsidiary and the common shares were subsequently cancelled. G. Mason Morfit is a partner and a member of the Management Committee of ValueAct Capital. Mr. Morfit joined the Company's board of directors on September 28, 2010, effective with the Merger, and prior thereto served as a member of Valeant's board of directors since 2007. ValueAct Capital is the general partner and the manager of ValueAct.

In connection with the securities repurchase program, through June 30, 2011, the Company had repurchased a total of $235.2 million principal amount of the 5.375% Convertible Notes for consideration of $603.3 million and 14,169,599 of its common shares for consideration of $559.7 million. Subsequent to June 30, 2011, the Company repurchased an additional $11.4 million principal amount of the 5.375% Convertible Notes for cash consideration of $41.7 million.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

13. SHARE-BASED COMPENSATION

The following table summarizes the components and classification of share-based compensation expense related to stock options and RSUs for the three-month and six-month periods ended June 30, 2011 and 2010:

	Three Months Ended June 30				Six Months Ended June 30

	2011		2010		2011		2010
Stock options ^(a)	$	9,075	$	559	$	26,725	$	1,182
RSUs		16,483		1,336		28,726		2,370

Stock-based compensation expense	$	25,558	$	1,895	$	55,451	$	3,552

Cost of goods sold ^(a)	$	267	$	123	$	702	$	261
Selling, general and administrative expenses ^(a)		25,024		1,505		53,898		2,832
Research and development expenses ^(a)		267		267		702		459
Restructuring and other costs		—		—		149		—

Stock-based compensation expense	$	25,558	$	1,895	$	55,451	$	3,552

(a): On March 9, 2011, the Company's compensation committee of the board of directors approved an equitable adjustment to all stock options outstanding as of that date for employees and directors as of such date, in connection with the post-Merger special dividend of $1.00 per common share declared on November 4, 2010 and paid on December 22, 2010. As the Company's stock option awards do not automatically adjust for dividend payments, this adjustment was treated as a modification of the terms and conditions of the outstanding options. The incremental fair value of the modified awards was determined to be $15.4 million, of which $9.2 million related to vested options, which was expensed as of March 9, 2011 as follows: cost of goods sold ($0.2 million), selling, general and administrative expenses ($8.8 million) and research and development expenses ($0.2 million). The remaining $6.2 million is being recognized over the remaining requisite service period of the unvested options.

The Company recognized $7.5 million and $31.6 million of tax benefits from stock options exercised in the three-month and six-month periods ended June 30, 2011, respectively. The Company did not recognize any tax benefits from stock options exercised during the corresponding periods of 2010.

Stock Options

The following table summarizes stock option activity during the six-month period ended June 30, 2011:

			Weighted- Average Exercise Price			Aggregate Intrinsic Value

Outstanding, January 1, 2011	12,203		$	11.99
Granted	384			39.38
Equitable adjustment	416			11.00
Exercised	(1,807	)		15.43
Expired or forfeited	(371	)		19.36

Outstanding, June 30, 2011	10,825		$	12.18	6.1	$	429,729

Vested and exercisable, June 30, 2011	5,389		$	7.61	5.7	$	238,585

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

13. SHARE-BASED COMPENSATION (Continued)

The weighted-average grant-date fair value of stock options granted to employees in the six-month period ended June 30, 2011 was $11.71. The total intrinsic value of stock options exercised in the six-month period ended June 30, 2011 was $18.6 million. Proceeds received on the exercise of stock options in the six-month period ended June 30, 2011 amounted to $29.4 million. As of June 30, 2011, the total remaining unrecognized compensation expense related to non-vested stock options amounted to $56.0 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.6 years.

Time-Based RSUs

The following table summarizes non-vested time-based RSU activity during the six-month period ended June 30, 2011:

			Weighted- Average Grant-Date Fair Value

Non-vested, January 1, 2011	2,213		$	24.61
Granted	151			42.25
Vested	(202	)		15.39
Forfeited	(71	)		21.16

Non-vested, June 30, 2011	2,091		$	26.90

As of June 30, 2011, the total remaining unrecognized compensation expense related to non-vested time-based RSUs amounted to $24.0 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.3 years.

Performance-Based RSUs

The following table summarizes non-vested performance-based RSU activity during the six-month period ended June 30, 2011:

			Weighted- Average Grant-Date Fair Value

Non-vested, January 1, 2011	2,496		$	33.25
Granted	40			71.79
Vested	(1,254	)		52.72
Forfeited	(27	)		17.82

Non-vested, June 30, 2011	1,255		$	15.37

As of June 30, 2011, the total remaining unrecognized compensation expense related to non-vested performance-based RSUs amounted to $31.8 million, which will be amortized over the weighted-average remaining requisite service period of approximately 1.9 years.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

13. SHARE-BASED COMPENSATION (Continued)

Deferred Share Units

Prior to May 2011, non-management directors received non-cash compensation in the form of deferred share units ("DSUs"), which entitled such directors to receive a lump-sum cash payment in respect of their DSUs either following the date upon which they ceased to be a director of the Company or, with respect to DSUs granted after the Merger Date as part of the annual retainer, one year after such date. Effective May 16, 2011 (the "Modification Date"), the board of directors of the Company modified the existing DSUs held by current directors from units settled in cash to units settled in common shares, which changed these DSUs from a liability award to an equity award. Accordingly, as of the Modification Date, the Company reclassified the $9.3 million aggregate fair value of the 182,053 DSUs held by current directors from accrued liabilities to additional paid-in capital. In the period from January 1, 2011 to the Modification Date, the Company recorded $3.6 million of compensation expense related to the change in the fair value of the DSUs held by current directors. As the modified DSUs were fully vested, no additional compensation expense will be recognized after the Modification Date. The DSUs held by former directors of Biovail were not affected by the modification and will continue to be cash settled. In the six-month period ended June 30, 2011, the Company recognized $3.6 million of compensation expense in restructuring and integration costs related to the change in the fair value of DSUs still held by former directors. As of June 30, 2011, there were 64,294 DSUs still held by former directors of Biovail.

The following table summarizes DSU activity during the six-month period ended June 30, 2011:

			Weighted- Average Grant-Date Fair Value

Outstanding, January 1, 2011	382		$	14.43
Granted	18			39.79
Settled for cash	(154	)		14.87

Outstanding, June 30, 2011	246		$	16.00

Effective May 16, 2011, in lieu of grants of DSUs, unless the Company determines otherwise, non-management directors will receive their annual equity compensation retainer in the form of RSUs, which will vest immediately upon grant and will be settled in common shares of the Company on the first anniversary of the date upon which the director ceases to be a director of the Company. In addition, a non-management director may elect to receive some or all of his or her cash retainers in RSUs, which will be vested upon grant and will be settled in common shares of the Company when the director ceases to be a director of the Company (unless a different payment is elected in accordance with the procedures established by the Company).

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

14. COMPREHENSIVE INCOME

Comprehensive income for the three-month and six-month periods ended June 30, 2011 and 2010 comprised the following:

		Three Months Ended June 30						Six Months Ended June 30

		2011			2010			2011			2010
Net income		$	56,360		$	33,969		$	62,842		$	30,819

Comprehensive income
Foreign currency translation adjustment ^(a)			84,360			(5,965	)		183,440			(1,924	)
Net unrealized holding gain (loss) on available-for-sale equity securities ^(b) :
	Arising in period		2,441			—			21,167			—
	Reclassification to net income		(21,316	)		—			(21,316	)		—
Unrealized holding loss on available-for-sale debt securities:
	Arising in period		(70	)		294			(96	)		387
Pension adjustment ^(c)			(102	)		—			898			—

Other comprehensive income (loss)			65,313			(5,671	)		184,093			(1,537	)

Comprehensive income		$	121,673		$	28,298		$	246,935		$	29,282

(a): Income taxes are not provided for foreign currency translation adjustments arising on the translation of the Company's operations having a functional currency other than the U.S. dollar, except to the extent of translation adjustments related to the Company's retained earnings for foreign jurisdictions in which the Company is not considered to be permanently reinvested.
(b): Primarily reflects the gain recognized on the Company's investment in shares of common stock of Cephalon (as described in note 15).
(c): Reflects changes in defined benefit obligations and related plan assets of legacy Valeant defined benefit pension plans.

The components of accumulated other comprehensive income as of June 30, 2011 were as follows:

	Foreign Currency Translation Adjustment		Net Unrealized Holding Gain on Available- For-Sale Equity Securities			Net Unrealized Holding Gain (Loss) on Available- For-Sale Debt Securities			Pension Adjustment		Total

Balance, January 1, 2011	$	98,926	$	—		$	(90	)	$	—	$	98,836
Foreign currency translation adjustment		183,440		—			—			—		183,440
Net unrealized holding gain on available-for-sale equity securities		—		21,167			—			—		21,167
Reclassification to net income		—		(21,316	)		—			—		(21,316	)
Unrealized holding loss on available-for-sale debt securities		—		—			(96	)		—		(96	)
Pension adjustment		—		—			—			898		898

Balance, June 30, 2011	$	282,366	$	(149	)	$	(186	)	$	898	$	282,929

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

15. GAIN (LOSS) ON INVESTMENTS, NET

In March 2011, in connection with an offer to acquire Cephalon, Inc. ("Cephalon"), the Company had invested $60.0 million to acquire 1,034,908 shares of common stock of Cephalon, which represented 1.366% of the issued and outstanding common stock of Cephalon as of March 14, 2011. On May 2, 2011, Cephalon announced that it had agreed to be acquired by Teva Pharmaceutical Industries Inc. and, consequently, the Company disposed of its entire equity investment in Cephalon for net proceeds of $81.3 million, which resulted in a net realized gain of $21.3 million recognized in earnings in the three-month period ended June 30, 2011.

16. INCOME TAXES

In the three-month period ended June 30, 2011, the Company recognized a recovery of income taxes of $12.6 million, which comprised $16.6 million related to the expected tax benefit in tax jurisdictions outside of Canada offset with tax expense of $4.0 million related to Canadian income taxes and, in the six-month period ended June 30, 2011, the Company recognized a recovery of income taxes of $16.0 million, which comprised $19.8 million related to the expected tax benefit in tax jurisdictions outside of Canada offset with tax expense of $3.8 million related to Canadian income taxes. In the six months ended June 30, 2011, the Company's effective tax rate was primarily impacted by (i) tax benefit of current U.S. losses, (ii) the release of liabilities for uncertain tax positions due to the settlement of various tax examinations in the U.S., and (iii) a partial increase of the valuation allowance specific to the Canadian net deferred tax assets.

The Company records a valuation allowance against its deferred tax assets to reduce the net carrying value to an amount that it believes is more likely than not to be realized. When the Company establishes or reduces the valuation allowance against its deferred tax assets, the provision for income taxes will increase or decrease, respectively, in the period such determination is made. The valuation allowance against deferred tax assets was $187.8 million as of June 30, 2011 and $186.4 million as of December 31, 2010. The Company does not record a valuation allowance against its U.S. foreign tax credits as it has determined it is more likely than not the Company will realize these deferred tax assets in the future. However, the Company continues to monitor its U.S. foreign source income and losses in the future and assess the need for a valuation allowance.

The Company is currently assessing the impact of changes in tax law for various U.S. state jurisdictions. As of June 30, 2011, the Company does not believe these enacted changes will have an impact on the measurement of the Company's ending deferred tax balances; however, the Company will continue to monitor the impact of these changes in future periods.

As of June 30, 2011, the Company had $112.7 million of unrecognized tax benefits, which included $22.2 million relating to interest and penalties. Of the total unrecognized tax benefits, $73.8 million would reduce the Company's effective tax rate, if recognized. It is anticipated that up to $1.5 million of the unrecognized tax benefits may be resolved within the next 12 months.

The Company's continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. As of June 30, 2011, the Company had accrued $20.7 million for interest and $1.5 million for penalties. The Company accrued additional interest and penalties of $0.9 million during the three months ended June 30, 2011.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

16. INCOME TAXES (Continued)

Valeant is currently under examination by the Internal Revenue Service for the 2009 tax year, as well as various state tax audits for years 2002 to 2009. The Company is currently under examination for years 2003 to 2006 and remains open to examination for years 2007 and later.

17. EARNINGS PER SHARE

Earnings per share for the three-month and six-month periods ended June 30, 2011 and 2010 were calculated as follows:

		Three Months Ended June 30				Six Months Ended June 30

		2011		2010		2011		2010
Net income		$	56,360	$	33,969	$	62,842	$	30,819

Basic weighted-average number of common shares outstanding (000s)			303,426		158,510		303,587		158,449
Dilutive potential common shares (000s):
	Stock options and RSUs		9,975		592		9,201		496
	Convertible debt		17,968		1,917		19,342		1,170

Diluted weighted-average number of common shares outstanding (000s)			331,369		161,019		332,130		160,115

Basic earnings per share		$	0.19	$	0.21	$	0.21	$	0.19
Diluted earnings per share		$	0.17	$	0.21	$	0.19	$	0.19

In both of the three-month and six-month periods ended June 30, 2011, stock options to purchase approximately 178,000 common shares of the Company had exercise prices greater than the average trading price of the Company's common shares, and were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive, compared with approximately 2,165,000 and 2,183,000 stock options in the corresponding periods of 2010.

18. LEGAL PROCEEDINGS

From time to time, the Company becomes involved in various legal and administrative proceedings, which include product liability, intellectual property, antitrust, governmental and regulatory investigations, and related private litigation. There are also ordinary course employment-related issues and other types of claims in which the Company routinely becomes involved, but which individually and collectively are not material.

Unless otherwise indicated, the Company cannot reasonably predict the outcome of these legal proceedings, nor can it estimate the amount of loss, or range of loss, if any, that may result from these proceedings. An adverse outcome in certain of these proceedings could have a material adverse effect on the Company's business, financial condition and results of operations, and could cause the market value of its common shares to decline.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

18. LEGAL PROCEEDINGS (Continued)

From time to time, the Company also initiates actions or files counterclaims. The Company could be subject to counterclaims or other suits in response to actions it may initiate. The Company cannot reasonably predict the outcome of these proceedings, some of which may involve significant legal fees. The Company believes that the prosecution of these actions and counterclaims is important to preserve and protect the Company, its reputation and its assets.

Governmental and Regulatory Inquiries

On May 16, 2008, Biovail Pharmaceuticals, Inc., the Company's former subsidiary, entered into a written plea agreement with the U.S. Attorney's Office ("USAO") for the District of Massachusetts whereby it agreed to plead guilty to violating the U.S. Anti-Kickback Statute and pay a fine of $22.2 million.

In addition, on May 16, 2008, the Company entered into a non-prosecution agreement with the USAO whereby the USAO agreed to decline prosecution of Biovail in exchange for continuing cooperation and a civil settlement agreement and payment of a civil penalty of $2.4 million. A hearing before the U.S. District Court in Boston took place on September 14, 2009 and the plea was approved.

In addition, as part of the overall settlement, Biovail entered into a Corporate Integrity Agreement ("CIA") with the Office of the Inspector General and the Department of Health and Human Services on September 11, 2009. The CIA requires Biovail to have a compliance program in place and to undertake a set of defined corporate integrity obligations for a five-year term. The CIA also includes requirements for an independent review of these obligations. The first of such reviews was completed in January, 2011. Failure to comply with the obligations under the CIA could result in financial penalties.

Antitrust

On April 4, 2008, a direct purchaser plaintiff filed a class action antitrust complaint in the U.S. District Court for the District of Massachusetts against Biovail, GlaxoSmithKline plc, and SmithKline Beecham Inc. (the latter two of which are referred to here as "GSK") seeking damages and alleging that Biovail and GSK took actions to improperly delay FDA approval for generic forms of Wellbutrin XL®. The direct purchaser plaintiff in the Massachusetts federal court lawsuit voluntarily dismissed its complaint on May 27, 2008, and shortly thereafter re-filed a virtually identical complaint in the U.S. District Court for the Eastern District of Pennsylvania. In late May and early June 2008, additional direct and indirect purchaser class actions were also filed against Biovail and GSK in the Eastern District of Pennsylvania, all making similar allegations. These complaints have now been consolidated, resulting in a lead direct purchaser and a lead indirect purchaser action.

On September 10, 2008, Biovail and GSK filed motions to dismiss both the direct and indirect purchaser actions. Those motions were heard on February 26, 2009. In the direct purchaser case, on March 13, 2009, the Court granted in part and denied in part the motions, dismissing the Sherman Act Section 2 monopolization claim that had been made by the direct purchasers against Biovail. Biovail and GSK answered the remaining claims in the direct purchaser case on April 16, 2009. On March 26, 2009, before an order issued on the motions to dismiss the indirect purchaser plaintiffs' claims, the indirect purchaser plaintiffs filed an amended complaint. The pending motions were therefore denied as moot, and new motions to dismiss the indirect purchaser plaintiffs' claims were filed on April 30, 2009. On July 30, 2009, the Court dismissed all indirect purchaser claims except the antitrust claims (limited as to Biovail's

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

18. LEGAL PROCEEDINGS (Continued)

concerted actions) in California, Nevada, Tennessee and Wisconsin and the consumer protection claims of California and Florida.

On May 13, 2010, Aetna, Inc. ("Aetna") filed a motion to intervene as an indirect purchaser. The Court denied Aetna's motion to intervene on July 21, 2010. Subsequently, the direct purchaser plaintiffs and Aetna Health of California Inc. filed a motion to substitute Aetna Health of California Inc. as the representative of the pending California claims on August 13, 2010. The Court granted this motion on September 22, 2010.

Additionally, on September 14, 2010, the indirect purchaser plaintiffs filed a motion for leave to amend their complaint to add claims under Illinois's Antitrust Act and New York's Donnelly Act. The Company and GSK opposed the indirect purchaser plaintiffs' motion. On December 21, 2010, the Court granted in part and denied in part the motion for leave to amend, permitting indirect purchasers leave to amend their complaint to assert claims under New York's Donnelly Act but not under Illinois's Antitrust Act.

Plaintiffs have filed motions for class certification. The Company and GSK opposed the motions. A hearing on direct purchaser plaintiffs' class certification motion was heard by the Court on April 5, 2011. A hearing on indirect purchaser plaintiffs' class certification motion took place on April 29, 2011. The Court has not indicated a timetable for rulings on these motions.

Fact discovery ended on June 30, 2011. Expert discovery is scheduled to end November 17, 2011. A summary judgment hearing is scheduled for February 22, 2012.

The Company believes that each of these complaints lacks merit and that the Company's challenged actions complied with all applicable laws and regulations, including federal and state antitrust laws, FDA regulations, U.S. patent law and the Hatch Waxman Act.

Intellectual Property

On January 18, 2010, a Canadian Federal Court judge presiding over Biovail and Depomed, Inc. ("Depomed") v. Apotex Inc. ("Apotex") et al. issued a decision in a proceeding pursuant to the PMNOC Regulations in Canada to determine whether Apotex's allegations that a Depomed patent was invalid and/or not infringed was justified. This proceeding related to a Canadian application filed by Apotex to market a generic version of the 500mg formulation of Glumetza® (extended release metformin hydrochloride tablets) licensed in Canada by Depomed to Biovail Laboratories International SRL, now known as Valeant International (Barbados) SRL ("VIB"). Pursuant to the decision issued by the Court, Health Canada can authorize Apotex to market in Canada its generic version of the 500mg formulation of Glumetza®. The decision, which was amended on January 20, 2010, found under Canadian law that Apotex's allegation was justified that the Depomed Canadian patent at issue in the matter (No. 2,290,624) (the "'624 Patent") is obvious. The judge found that the evidence presented by the parties was "evenly balanced" as to obviousness. The judge found in favour of Biovail and Depomed as to all other issues related to the '624 Patent under Canadian law. Apotex was authorized by Health Canada on February 4, 2010 to market its generic version of 500 mg Glumetza® in Canada. This decision, however, did not find the patent invalid and does not preclude the filing of a subsequent patent infringement suit against Apotex. Biovail and Depomed commenced action for patent infringement against Apotex in Canadian Federal Court on February 8, 2010. Pleadings have now closed, but no further steps have been taken.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

18. LEGAL PROCEEDINGS (Continued)

On or about June 24, 2010, Biovail and VIB received a Notice of Allegation from Mylan Pharmaceuticals ULC ("Mylan") with respect to Bupropion Hydrochloride 150 mg and 300 mg tablets, marketed in Canada by Biovail as Wellbutrin® XL. The patents in issue are Canadian Patent Nos. 2,142,320, 2,168,364 and 2,524,300. Mylan alleges that its generic form of Wellbutrin® XL does not infringe the patents and, alternatively, that the patents are invalid. Following an evaluation of the allegations in the Notice of Allegation, an application for an order prohibiting the Minister from issuing a Notice of Compliance to Mylan was issued in the Federal Court on August 6, 2010, relating to Canadian Patent Nos. 2,524,300 and 2,168,324. Mylan has now withdrawn its allegations of invalidity. The matter is proceeding in the ordinary course. The parties have exchanged evidence. The hearing of the application, which will proceed with respect to Canadian Patent No. 2,168,324, is scheduled for March 26, 2012.

In May 2011, Mylan filed a Statement of Claim in the Federal Court of Canada against the Company, VIB and Valeant Canada seeking to impeach Canadian Patent No. 2,524,300. The Company has filed a motion to dismiss this proceeding on the basis that Mylan has no standing to bring the action.

On or about December 1, 2008, the FDA accepted an ANDA filed by VIB seeking approval to market generic formulations of the 200 mg, 300 mg and 400 mg strengths of quetiapine fumarate extended release tablets (sold under the brand name Seroquel XR by AstraZeneca Pharmaceuticals LP ("AstraZeneca")). On January 9, 2009, AstraZeneca and AstraZeneca UK Limited filed a complaint against Biovail, VIB and BTA Pharmaceuticals, Inc. ("BTA") in the U.S. District Court for the District of New Jersey alleging infringement of U.S. Patent Nos. 4,879,288 (the "'288 Patent") and 5,948,437 (the "'437 Patent") by the filing of that ANDA, thereby triggering a 30-month stay of the FDA's approval of that application. Answers and Counterclaims have been filed. A Markman hearing was held on November 22, 2010, in Trenton New Jersey. The Court's claim construction ruling was entered on November 30, 2010, and was generally favorable to the Company. The Court's ruling provides the Company with grounds for motions for summary judgment of non-infringement and invalidity of certain claims. Fact discovery and related proceedings were commenced and have now been completed by the parties. The case is presently in the expert discovery phase. On March 28, 2011, Biovail amended its ANDA application, converting the patent certification for the '437 Patent from a Paragraph IV certification to a Paragraph III certification. Biovail has informed the Court, the Plaintiff and the co-Defendants in the litigation of the change in certification. With this certification change, Biovail believes that no further case or controversy exists with respect to the patent-in-suit. On May 2, 2011, the case was dismissed by the Court.

On or about January 5, 2010, VIB received a Notice of Paragraph IV Certification dated January 4, 2010 from Watson Laboratories, Inc. — Florida ("Watson"), related to Watson's ANDA filing for Bupropion Hydrobromide Extended-release Tablets, 174 mg and 348 mg, which correspond to the Company's Aplenzin® Extended-release Tablets 174 mg and 348 mg products. Watson asserted that U.S. Patent Nos. 7,241,805, 7,569,610, 7,572,935 and 7,585,897 which are listed in the FDA's Orange Book for Aplenzin® are invalid or not infringed. VIB subsequently received from Watson a second Notice of Paragraph IV Certification for U.S. Patent Nos. 7,645,802 and 7,649,019, which were listed in the FDA's Orange Book after Watson's initial certification. Watson has alleged these patents are not infringed or invalid. VIB filed suit pursuant to the Hatch-Waxman Act against Watson on February 18, 2010, in the U.S. District Court for the District of Delaware and on February 19, 2010, in the U.S. District Court for the Southern District of Florida, thereby triggering a 30-month stay of the approval of Watson's ANDA. The Delaware action has been dismissed without prejudice and the litigation is proceeding in the Florida Court. VIB received a third Notice of Paragraph IV Certification from Watson dated March 5, 2010, seeking to market its products

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

18. LEGAL PROCEEDINGS (Continued)

prior to the expiration of U.S. Patent Nos. 7,662,407 and 7,671,094. VIB received a fourth Notice of Paragraph IV Certification from Watson on April 9, 2010. VIB filed a second Complaint against Watson in Florida Court on the third and fourth Notices on April 16, 2010. The two actions have been consolidated into the first-filed case before the same judge. In the course of discovery the issues have been narrowed and only five of the patents remain in the litigation. Mandatory mediation was completed unsuccessfully on December 17, 2010. The trial in this matter was held in June 2011. A schedule has been set for post-trial matters, including the submission of witness summaries and post-trial briefs in July and August 2011, and closing arguments by the parties are scheduled to be made in September 2011. A judgment in this matter is anticipated by the end of 2011 or early 2012.

On or about January 27, 2010, VIB received a Notice of Paragraph IV Certification from Paddock dated January 22, 2010, relating to Paddock's ANDA filing for Bupropion Hydrobromide Extended-release Tablets, 174 mg and 522 mg, which correspond to the Company's Aplenzin® Extended-release Tablets 174 mg and 522 mg products. Paddock has certified that the six patents currently listed in the FDA's Orange Book for Aplenzin®, plus an additional unlisted VIB patent relating to bupropion hydrobromide, are not infringed and/or invalid. A Complaint was filed on March 9, 2010 against Paddock in the U.S. District Court for the District of Minnesota. A parallel suit in the U.S. District Court for the District of Delaware has been dismissed without prejudice. A second suit was filed in the U.S. District Court for the District of Minnesota on April 15, 2010 following a second Paragraph IV certification received from Paddock. Both cases, which are now consolidated before the same judge, are proceeding in the ordinary course.

On or about August 20, 2010, Biovail and VIB received a Notice of Paragraph IV Certification from Par Pharmaceutical, Inc. dated August 18, 2010, related to Par's ANDA filing for Bupropion Hydrobromide Extended Release Tablets, 174 mg and 348 mg, which corresponds to the Company's Aplenzin® Extended-release Tablets, 174 mg and 348 mg products. Par has certified that eight patents currently listed in the Orange Book for Aplenzin® are invalid, unenforceable and or not infringed. A Complaint was filed against Par Pharmaceutical Companies, Inc. and Par Pharmaceutical, Inc. on September 22, 2010 in the U.S. District Court for the Southern District of New York. The case is proceeding in the ordinary course.

General Civil Actions

Complaints have been filed by the City of New York, the State of Alabama, the State of Mississippi, the State of Louisiana and a number of counties within the State of New York, claiming that Biovail, and numerous other pharmaceutical companies, made fraudulent misstatements concerning the "average wholesale price" ("AWP") of their prescription drugs, resulting in alleged overpayments by the plaintiffs for pharmaceutical products sold by the companies.

The City of New York and plaintiffs for all the counties in New York (other than Erie, Oswego and Schenectady) voluntarily dismissed Biovail and certain others of the named defendants on a without prejudice basis. Similarly, the State of Mississippi voluntarily dismissed its claim against Biovail and a number of defendants on a without prejudice basis.

In the case brought by the State of Alabama, the Company has answered the State's Amended Complaint and discovery is ongoing. On October 16, 2009, the Supreme Court of Alabama issued an opinion reversing judgments in favour of the State in the first three cases that were tried against co-defendant companies. The Alabama Supreme Court also rendered judgment in favour of those defendants, finding that the State's fraud-based theories failed as a matter of law. A trial date has not been set.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

18. LEGAL PROCEEDINGS (Continued)

The cases brought by the New York State counties of Oswego, Schenectady and Erie, each of which was originally brought in New York State court, were removed by defendants to Federal Court on October 11, 2006. Biovail answered the complaint in each case after the removal to Federal Court. The cases were subsequently remanded and, following the remand, the New York State Litigation Coordinating Panel granted the defendants' application to coordinate the three actions for pretrial purposes in Erie County. The Company settled these cases, which have been dismissed with prejudice. The settlement amount payable was not material.

A Third Amending Petition for Damages and Jury Demand was filed on November 10, 2010 in Louisiana State Court by the State of Louisiana claiming that a former subsidiary of the Company, and numerous other pharmaceutical companies, knowingly inflated the AWP and "wholesale acquisition cost" of their prescription drugs, resulting in alleged overpayments by the State for pharmaceutical products sold by the companies. The State has subsequently filed additional amendments to its Petition, none of which materially affect the claims against the Company. The matter is in preliminary stages and the Company intends to defend against this action.

On December 15, 2009, Biovail was served with a Seventh Amended Complaint under the False Claims Act in an action captioned United States of America, ex rel. Constance A. Conrad v. Actavis Mid-Atlantic, LLC, et al., United States District Court, District of Massachusetts. This case was originally filed in 2002 and maintained under seal until shortly before Biovail was served. Twenty other companies are named as defendants. In the Seventh Amended Complaint, Conrad alleges that various formulations of Rondec, a product formerly owned by Biovail, were not properly approved by the FDA and therefore not a "Covered Outpatient Drug" within the meaning of the Medicaid Rebate Statute. As such, Conrad alleges that Rondec was not eligible for reimbursement by federal healthcare programs, including Medicaid. Conrad seeks treble damages and civil penalties under the False Claims Act. A briefing schedule for motions to dismiss has been set with a hearing to take place in mid-December 2011. The Company intends to file a motion to dismiss.

Legacy Valeant Litigation

Valeant is the subject of a Formal Order of Investigation with respect to events and circumstances surrounding trading in its common stock, the public release of data from its first pivotal Phase III trial for taribavirin in March 2006, statements made in connection with the public release of data and matters regarding its stock option grants since January 1, 2000 and its restatement of certain historical financial statements announced in March 2008. In September 2006, Valeant's board of directors established a Special Committee to review its historical stock option practices and related accounting, and informed the U.S. Securities and Exchange Commission ("SEC") of these efforts. Valeant has cooperated fully and will continue to cooperate with the SEC in its investigation. The Company cannot predict the outcome of the investigation.

On August 27, 2008, Valeant was served product liability complaints related to the pharmaceutical Permax in six separate cases by plaintiffs Prentiss and Carol Harvey; Robert and Barbara Branson; Dan and Mary Ellen Leach; Eugene and Bertha Nelson; Beverly Polin; and Ira and Michael Price against Eli Lilly and Company and Valeant Pharmaceuticals International in Superior Court, Orange County, California (the "California Permax Actions"). The California Permax Actions were consolidated under the heading of Branson v. Eli Lilly and Company, et al. On May 5, 2010, Valeant reached an agreement in principle with

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

18. LEGAL PROCEEDINGS (Continued)

plaintiffs to settle the California Permax Actions, and has recently finalized all settlement documentation and payments for those matters. Five of the six California Permax cases were dismissed on March 29, 2011, and the last case was dismissed on June 2, 2011. The portion of these settlements for which Valeant is responsible did not have a material impact on the Company's financial results. In addition to the lawsuits described above, Valeant has received, and from time to time receives, communications from third parties relating to potential claims that may be asserted with respect to Permax.

On January 12, 2009, Valeant was served a complaint in an action captioned Eli Lilly and Company v. Valeant Pharmaceuticals International, Case No. 1:08-cv-1720-SEB-TAB in the U.S. District Court for the Southern District of Indiana, Indianapolis Division (the "Lilly Action"). In the Lilly Action, Eli Lilly and Company ("Lilly") brought a claim against Valeant for breach of contract and seeks a declaratory judgment arising out of a February 25, 2004 letter agreement between and among Lilly, Valeant and Amarin Corporation, plc related to cost-sharing for Permax product liability claims. On February 2, 2009, Valeant filed counterclaims against Lilly seeking a declaratory judgment and indemnification under the letter agreement. Valeant has responded to two motions for partial summary judgment brought by Lilly, and is in the process of defending the Lilly Action. Non-expert discovery closed on July 1, 2010, and expert discovery closed on September 15, 2010. On February 14, 2011, the court granted Lilly's first motion for partial summary judgment declaring that cost-sharing obligations under the contract are based exclusively upon the date on which either party first receives written notice of such claim, regardless of Valeant's dismissal or prevailing on the merits of a product liability claim, and that the costs of product liability claims to be shared by the parties include settlement costs, judgments, and the costs of defense incurred by Lilly and/or Valeant, including attorneys' fees, expert fees, and expenses. The court's order reserved ruling on whether the contract lacked consideration, government of the contract by the Uniform Commercial Code, reasonableness of non-joint representation counsel fees, and Valeant's equitable defenses. On February 15, 2011, the court denied Lilly's second motion for partial summary judgment holding that Valeant did not waive its right to recoup its own costs of defense, and is not barred from attempting to assert and set-off its defense costs. On March 23, 2011, the parties reached an agreement in principle to settle this matter and subsequently entered into a formal written agreement reflecting the settlement terms. The terms of the settlement are not material to Valeant. This matter was dismissed by the Court on June 11, 2011.

On or around January 19, 2009, Tolmar, Inc. ("Tolmar") notified Galderma Laboratories, L.P. and Dow Pharmaceutical Sciences, Inc. ("Dow") that it had submitted an ANDA, No. 090-903, with the FDA seeking approval for the commercial manufacture, use and sale of its Metronidazole Topical Gel, 1% (the "Tolmar Product") prior to the expiration of U.S. Patent Nos. 6,881,726 (the "'726 patent") and 7,348,317 (the "'317 patent"). The '726 and '317 patents are owned by Dow, and licensed to Galderma. The ANDA contains a Paragraph IV certification alleging that the claims of the '726 and '317 patents will not be infringed by the manufacture, use, importation, sale or offer for sale of the Tolmar Product. On March 3, 2009, Galderma Laboratories, L.P., Galderma S.A., and Dow filed a complaint against Tolmar for the patent infringement of the '726 and '317 patents, pending in the United States District Court for the Northern District of Texas, Dallas Division. A Court-ordered preliminary mediation in the matter was conducted on October 13, 2010 and the parties were unable to reach any settlement. A trial date has not been assigned by the Court. This lawsuit was filed within forty-five days of Tolmar's Paragraph IV certification. As a result, The Hatch-Waxman Act provides an automatic stay on the FDA's final approval of Tolmar's ANDA for thirty months, which expired in July 2011.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

19. SEGMENT INFORMATION

Business Segments

Effective with the Merger, the Company operates in the following business segments, based on differences in products and services and geographical areas of operations:

•: U.S. Neurology and Other consists of sales of pharmaceutical and OTC products indicated for the treatment of neurological and other diseases, as well as alliance revenue from the licensing of various products the Company developed or acquired. In addition, this segment includes revenue from contract research services provided by the Company's contract research division prior to its disposal in July 2010.
•: U.S. Dermatology consists of pharmaceutical and OTC product sales, and alliance and contract service revenues in the areas of dermatology and topical medication.
•: Canada and Australia consists of pharmaceutical and OTC products sold in Canada, Australia and New Zealand.
•: Branded Generics — Europe consists of branded generic pharmaceutical products sold primarily in Poland, Serbia, Hungary, the Czech Republic and Slovakia.
•: Branded Generics — Latin America consists of branded generic pharmaceutical and OTC products sold primarily in Mexico, Brazil and exports out of Mexico to other Latin American markets.

Corporate includes the finance, treasury, tax and legal operations of the Company's businesses and maintains and/or incurs certain assets, liabilities, expenses, gains and losses related to the overall management of the Company, which are not allocated to the other business segments. In addition, share-based compensation is considered a corporate cost, since the amount of such expense depends on company-wide performance rather than the operating performance of any single segment.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

19. SEGMENT INFORMATION (Continued)

Segment Revenues and Profit

Segment revenues and profit for the three-month and six-month periods ended June 30, 2011 and 2010 were as follows:

			Three Months Ended June 30						Six Months Ended June 30

			2011			2010			2011			2010
Revenues ^(a) :
	U.S. Neurology and Other		$	234,503		$	159,075		$	444,102		$	307,379
	U.S. Dermatology			109,853			41,418			262,560			80,392
	Canada and Australia			84,000			28,884			154,244			53,396
	Branded Generics — Europe ^(b)			116,300			9,394			192,393			17,239
	Branded Generics — Latin America			64,731			—			121,114			—

		Total revenues		609,387			238,771			1,174,413			458,406

Segment profit (loss) ^(c) :
	U.S. Neurology and Other			137,749			63,067			237,258			139,729
	U.S. Dermatology			38,938			16,359			73,746			31,902
	Canada and Australia			29,677			11,617			50,599			21,135
	Branded Generics — Europe ^(d)			(6,668	)		6,818			(1,289	)		12,292
	Branded Generics — Latin America			2,140			—			(3,798	)		—

		Total segment profit		201,836			97,861			356,516			205,058

Corporate ^(e)				(48,123	)		(28,349	)		(106,228	)		(67,563	)
Restructuring and integration costs				(27,626	)		(2,881	)		(45,165	)		(3,494	)
Acquired IPR&D				(2,000	)		(10,242	)		(4,000	)		(61,245	)
Acquisition-related costs				(1,869	)		(7,577	)		(3,376	)		(7,577	)
Legal settlements				(2,000	)		—			(2,400	)		—
Acquisition-related contingent consideration				(1,752	)		—			(2,138	)		—

Operating income				118,466			48,812			193,209			65,179
Interest income				1,086			234			1,889			422
Interest expense				(83,073	)		(9,952	)		(151,824	)		(19,779	)
Loss on extinguishment of debt				(14,748	)		—			(23,010	)		—
Foreign exchange and other				847			667			3,654			44
Gain (loss) on investments, net				21,158			(392	)		22,927			(547	)

Income before provison for (recovery of) income taxes			$	43,736		$	39,369		$	46,845		$	45,319

(a): Segment revenues in the three-month period ended June 30, 2011 reflect incremental revenues from Valeant products and services as follows: U.S. Neurology and Other — $54.4 million; U.S. Dermatology — $75.6 million; Canada and Australia — $48.2 million; Branded Generics — Europe — $43.4 million; and Branded Generics — Latin America — $64.7 million. Segment revenues in the six-month period ended June 30, 2011 reflect incremental revenues from Valeant products and services as follows: U.S. Neurology and Other — $122.2 million; U.S. Dermatology — $137.3 million; Canada and Australia — $91.4 million; Branded Generics — Europe — $95.6 million; and Branded Generics — Latin America — $121.1 million.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

19. SEGMENT INFORMATION (Continued)

(b): Branded Generics — Europe segment revenues in the three-month and six-month periods ended June 30, 2011 reflect incremental revenues from PharmaSwiss products and services of $65.4 million and $81.6 million, respectively, commencing on the acquisition date (as described in note 3).
(c): Segment profit (loss) in the three-month and six-month periods ended June 30, 2011 reflects the addition of Valeant operations. Segment profit (loss) in the three-month period includes the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets as follows: U.S. Neurology and Other — $2.0 million; U.S. Dermatology — $14.6 million; Canada and Australia — $8.8 million; Branded Generics — Europe — $7.3 million; and Branded Generics — Latin America — $11.9 million. Segment profit (loss) in the six-month period includes the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets as follows: U.S. Neurology and Other — $19.0 million; U.S. Dermatology — $36.4 million; Canada and Australia — $18.4 million; Branded Generics — Europe — $17.0 million; and Branded Generics — Latin America — $27.9 million.
(d): Branded Generics — Europe segment profit reflects the addition of PharmaSwiss operations commencing on the acquisition date, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $23.6 million and $28.7 million in the three months and six months ended June 30, 2011, respectively.
(e): Corporate reflects non-restructuring-related share-based compensation expense of $25.6 million and $55.5 million in the three months and six months ended June 30, 2011, respectively, compared with $1.9 million and $3.6 million in the corresponding periods of 2010.

Segment Assets

Total assets increased $1,032.8 million, or 10%, to $11,827.9 million as of June 30, 2011, compared with $10,795.1 million at December 31, 2010, which reflected:

•: in the U.S. Dermatology segment:
•: the acquisition of the Elidel® and Xerese™ identifiable intangible assets ($439.9 million), as described in note 3; and
•: the addition of the Zovirax® product brand intangible asset ($300.0 million), as described in note 4.
•: in the Branded Generics — Europe segment:
•: the acquired assets of PharmaSwiss ($585.0 million), as described in note 3.

20. SUBSEQUENT EVENTS

Sanitas

On May 23, 2011, the Company agreed to acquire Sanitas, a publicly-traded specialty pharmaceuticals company based in Kaunas, Lithuania. The major shareholders of Sanitas have agreed to sell the Company 87.2% of the outstanding ordinary shares of Sanitas. After the acquisition of this controlling block of shares, the Company plans to commence a mandatory tender offer to acquire the remaining minority interest. The total purchase price is expected to be approximately €314.0 million (approximately $455.3 million as of June 30, 2011) in cash, in addition to the assumption of approximately €50.0 million (approximately $72.5 million as of June 30, 2011) in debt.

Sanitas has a broad branded generics product portfolio consisting of 390 products in nine countries throughout Central and Eastern Europe, primarily Poland, Russia and Lithuania. Sanitas has in-house

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(All tabular amounts expressed in thousands of U.S. dollars, except per share data)
(Unaudited)

20. SUBSEQUENT EVENTS (Continued)

development capabilities in dermatology, ophthalmology and hospital injectables, and a pipeline of internally developed and acquired dossiers.

As of August 2, 2011, the Company had invested $21.1 million to acquire 1,502,432 shares of Sanitas, which represented approximately 4.8% of the outstanding shares. The purchase of the controlling interest, which is subject to certain closing conditions, including certain merger clearances and there being no material adverse change, is expected to close in the third quarter of 2011 and the mandatory tender offer is expected to close in the fourth quarter of 2011.

Dermik

Effective July 8, 2011, the Company entered into an asset purchase agreement to acquire Dermik, a dermatological unit of Sanofi in the U.S. and Canada, as well as the worldwide (excluding France) rights to Sculptra® Aesthetic, for a total purchase price of approximately $425.0 million. The acquisition includes Dermik's available inventories and manufacturing facility located in Laval, Quebec. The transaction is subject to certain closing conditions and regulatory approvals and is expected to close prior to year-end.

Ortho Dermatologics

On July 15, 2011, the Company entered into an asset purchase agreement to acquire the assets of the Ortho Dermatologics division of Janssen Pharmaceuticals, Inc., for a total purchase price of approximately $345.0 million. The assets to be acquired include prescription brands RETIN-A MICRO®, ERTACZO® and RENOVA®. The transaction is subject to certain closing conditions and regulatory approvals and is expected to close prior to year-end.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

INTRODUCTION

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the unaudited consolidated financial statements, and notes thereto, prepared in accordance with United States ("U.S.") generally accepted accounting principles ("GAAP") for the interim period ended June 30, 2011 (the "unaudited consolidated financial statements"). This MD&A should also be read in conjunction with the annual MD&A and the audited consolidated financial statements and notes thereto prepared in accordance with U.S. GAAP that are contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the "2010 Form 10-K").

Additional information relating to the Company, including the 2010 Form 10-K, is available on SEDAR at www.sedar.com and on the U.S. Securities and Exchange Commission (the "SEC") website at www.sec.gov.

Unless otherwise indicated herein, the discussion and analysis contained in this MD&A is as of August 5, 2011.

All dollar amounts are expressed in U.S. dollars.

COMPANY PROFILE

On September 28, 2010 (the "Merger Date"), Biovail Corporation ("Biovail") completed the acquisition of Valeant Pharmaceuticals International ("Valeant") through a wholly-owned subsidiary pursuant to an Agreement and Plan of Merger, dated as of June 20, 2010, with Valeant surviving as a wholly-owned subsidiary of Biovail (the "Merger"). In connection with the Merger, Biovail was renamed "Valeant Pharmaceuticals International, Inc." ("we", "us", "our" or the "Company"). We are a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of pharmaceutical products primarily in the areas of neurology, dermatology and branded generics.

BIOVAIL MERGER WITH VALEANT

The Merger has been accounted for as a business combination under the acquisition method of accounting. Biovail was both the legal and accounting acquirer in the Merger. Accordingly, the Company's consolidated financial statements reflect the assets, liabilities and results of operations of Valeant from the Merger Date. Acquisition-related transaction costs and certain acquisition-related restructuring charges are not included as a component of the acquisition accounting, but are accounted for as expenses in the periods in which the costs are incurred.

BUSINESS DEVELOPMENT

Since the Merger, our strategy has been to focus the business on core geographies and therapeutic classes through selective acquisitions, dispositions and strategic partnerships with other pharmaceutical companies. As described below, we have completed a number of transactions in the first half of 2011 to expand our North American dermatology and European branded generic product portfolios.

•: On March 10, 2011, we acquired all of the issued and outstanding stock of PharmaSwiss S.A. ("PharmaSwiss"), a privately-owned branded generics and over-the-counter ("OTC") pharmaceutical company based in Zug, Switzerland. The total consideration transferred to effect the acquisition of

PharmaSwiss comprised cash paid of $491.2 million (€353.1 million) and the rights to contingent payments of up to $41.7 million (€30.0 million) if certain net sales milestones of PharmaSwiss are achieved for the 2011 calendar year. The fair value of the contingent payments was determined to be $27.5 million as of the acquisition date. The total fair value of consideration transferred of $518.7 million has been provisionally assigned primarily to inventories ($70.7 million), identifiable intangible assets ($209.2 million) and goodwill ($172.2 million). PharmaSwiss is an existing partner to several large pharmaceutical and biotech companies offering regional expertise in such functions as regulatory, compliance, sales, marketing and distribution, in addition to developing its own product portfolio. Through its business operations, PharmaSwiss offers a broad product portfolio in seven therapeutic areas and operations in 19 countries throughout Central and Eastern Europe, including Serbia, Hungary, the Czech Republic and Poland, as well as in Greece and Israel.

•: On February 22, 2011 and March 25, 2011, we acquired the U.S. and Canadian rights, respectively, to non-ophthalmic topical formulations of Zovirax® from GlaxoSmithKline ("GSK"). Pursuant to the terms of the asset purchase agreements, we paid GSK an aggregate amount of $300.0 million in cash for both the U.S. and Canadian rights. We had been marketing Zovirax® in the U.S. since January 1, 2002, under a 20-year exclusive distribution agreement with GSK, which distribution agreement terminated following the closing of the U.S. transaction. We have entered into new supply agreements and new trademark license agreements with GSK with respect to the U.S. and Canadian territories.
•: On March 31, 2011, we out-licensed the product rights to Cloderm® Cream, 0.1%, in the U.S. to Promius Pharma LLC, an affiliate of Dr. Reddy's Laboratories, in exchange for a $36.0 million upfront payment, which was received in early April 2011, and future royalty payments. In connection with the sale of Cloderm®, we recognized the upfront payment as alliance revenue in the first quarter of 2011, and expensed the $30.7 million carrying amount of the Cloderm® intangible assets as cost of alliance revenue. We will recognize the future royalty payments as alliance revenue as they are earned.
•: On June 29, 2011, we entered into a license agreement with Meda Pharma SARL ("Meda") to acquire the exclusive rights to commercialize both Elidel® Cream and Xerese™ Cream in the U.S., Canada and Mexico. In addition, we and Meda have the right to undertake development work in respect of Elidel® and Xerese™ products. We made an upfront payment to Meda of $76.0 million, and we will pay a series of potential milestones of up to $16.0 million and guaranteed royalties totaling $120.0 million in the aggregate through 2011 and 2012. Thereafter, we will pay a double-digit royalty to Meda on net sales of Elidel®, Xerese™ and Zovirax®, including additional minimum royalties of $120.0 million in the aggregate during 2013-2015. The fair value of the upfront and contingent consideration, inclusive of royalty payments, was determined to be $437.7 million as of the acquisition date, which has been provisionally assigned primarily to product brands intangible assets ($406.4 million) and acquired IPR&D assets ($33.5 million). The acquired IPR&D assets relate to the development of a Xerese™ life-cycle product. The projected cash flows from the acquired IPR&D assets were adjusted for the probability of successful development and commercialization of the product. A risk-adjusted discount rate of 13% was used to present value the projected cash flows. Material cash inflows are expected to commence in 2014. Solely for purposes of estimating the fair value of these assets, we have estimated that we will incur costs of approximately $14.0 million to complete the project.

In addition, we have entered into the following business transactions, which are expected to be completed prior to year-end:

•: On May 23, 2011, we agreed to acquire AB Sanitas ("Sanitas"), a publicly-traded specialty pharmaceuticals company based in Kaunas, Lithuania. The major shareholders of Sanitas have agreed to sell us 87.2% of the outstanding ordinary shares of Sanitas. After the acquisition of this controlling block of shares, we plan to commence a mandatory tender offer to acquire the remaining minority interest. The total purchase price is expected to be approximately €314.0 million (approximately $455.3 million as of June 30, 2011) in cash, in addition to the assumption of approximately €50.0 million (approximately $72.5 million as of June 30, 2011) in debt. Sanitas has a broad branded generics product portfolio consisting of 390 products in nine countries throughout Central and Eastern Europe, primarily Poland,

Russia and Lithuania. Sanitas has in-house development capabilities in dermatology, ophthalmology and hospital injectables, and a pipeline of internally developed and acquired dossiers. As of August 2, 2011, we had invested $21.1 million to acquire 1,502,432 shares of Sanitas, which represented approximately 4.8% of the outstanding shares. The purchase of the controlling interest, which is subject to certain closing conditions, including certain merger clearances and there being no material adverse change, is expected to close in the third quarter of 2011 and the mandatory tender offer is expected to close in the fourth quarter of 2011.

•: Effective July 8, 2011, we entered into an asset purchase agreement to acquire Dermik, a dermatological unit of Sanofi in the U.S. and Canada, as well as the worldwide (excluding France) rights to Sculptra® Aesthetic, for a total purchase price of approximately $425.0 million. The acquisition includes Dermik's available inventories and manufacturing facility located in Laval, Quebec. Dermik's total 2010 revenues including contract manufacturing revenues were approximately $240 million. The transaction is subject to certain closing conditions and regulatory approvals and is expected to close prior to year-end.
•: On July 15, 2011, we entered into an asset purchase agreement to acquire the assets of the Ortho Dermatologics division of Janssen Pharmaceuticals, Inc., for a total purchase price of approximately $345.0 million. The assets to be acquired include prescription brands RETIN-A MICRO®, ERTACZO® and RENOVA®. Total revenue for this product portfolio was approximately $150 million in 2010. The transaction is subject to certain closing conditions and regulatory approvals and is expected to close prior to year-end.

COLLABORATION AGREEMENT

In October 2008, Valeant closed the License and Collaboration Agreement (the "Collaboration Agreement") to develop ezogabine/retigabine in collaboration with GSK. Pursuant to the terms of the Collaboration Agreement, Valeant granted co-development rights and worldwide commercialization rights to GSK. In consideration, we will receive future cash flows from worldwide sales of ezogabine/retigabine products by GSK. In March 2011, the European Commission granted marketing authorization for Trobalt™ (retigabine) as an adjunctive treatment of partial onset seizures, with or without secondary generalization in adults aged 18 years and above with epilepsy. In June 2011, the U.S. Food and Drug Administration ("FDA") approved the New Drug Application ("NDA") for Potiga™ (ezogabine) tablets as adjunctive treatment of partial-onset seizures in patients aged 18 years and older; however, the FDA recommended that ezogabine be scheduled as a controlled substance under the Controlled Substances Act prior to the marketing or launch of Potiga™. As of June 30, 2011, final classification was still under review by the U.S. Drug Enforcement Administration and Potiga™ will not be available for sale until this process is complete.

In connection with the first sale of Trobalt™ by GSK in the European Union (which occurred in early May 2011), GSK paid us a $40.0 million milestone payment and will pay up to a 20% royalty on net sales of the product. Upon the first sale of Potiga™ in the U.S. (which is anticipated to occur no earlier than the fourth quarter of 2011), GSK will pay us a $45.0 million milestone payment, and we will share up to 50% of the net profits from the sale of Potiga™. We are recognizing the milestone payments as alliance and royalty revenue upon achievement. Amortization of the ezogabine/retigabine IPR&D assets will commence with the launch of Potiga™ in the U.S. In addition, we anticipate an increase in selling, general and administrative expenses in the second half of 2011, in connection with pre-launch activities associated with Potiga™.

We are also proceeding with the development of a modified-release formulation of ezogabine/retigabine and will share development expenses with GSK.

MERGER-RELATED COST-RATIONALIZATION AND INTEGRATION INITIATIVES

We believe the complementary nature of the Biovail and Valeant businesses presents an opportunity to capture significant operating synergies and cost savings. The Merger has provided, and should continue to provide, opportunities to realize cost savings from, among other things, reductions in research and development, general and administrative expenses, and sales and marketing. In total, we have identified approximately

$350 million of annual cost synergies that we expect to realize by the end of 2012, over $300 million of which is expected to be realized in 2011. Approximately $82.0 million and $158.0 million of cost synergies were realized in the second quarter and first half of 2011, respectively. This amount does not include potential revenue synergies or the potential benefits of expanding the Biovail corporate structure to Valeant's operations. Further, we currently expect our combined cash tax rate to be less than 10% for 2011.

We estimate that we will incur costs of up to $180 million (of which the non-cash component, including share-based compensation, is expected to be approximately $55 million) in connection with these cost-rationalization and integration initiatives. These costs include: employee termination costs (including related share-based payments) payable to approximately 500 employees of Biovail and Valeant who have been, or will be, terminated as a result of the Merger; IPR&D termination costs related to the transfer of product-development programs that did not align with the Company's research and development model to other parties; costs to consolidate or close facilities and relocate employees; asset impairment charges to write down property, plant and equipment to fair value; and contract termination and lease cancellation costs. The following table summarizes the major components of costs incurred in connection with these initiatives and a reconciliation of the liability balance:

	Employee Termination Costs

	Employee Termination Costs									Contract Termination, Facility Closure and Other Costs
	Severance and Related Benefits			Share-Based Compensation			IPR&D Termination Costs			Contract Termination, Facility Closure and Other Costs			Total
($ in 000s)	$			$			$			$			$
Balance, January 1, 2010		—			—			—			—			—
Costs incurred and charged to expense		58,727			49,482			13,750			12,862			134,821
Cash payments		(33,938	)		—			(13,750	)		(8,755	)		(56,443	)
Non-cash adjustments		—			(49,482	)		—			(2,437	)		(51,919	)

Balance, December 31, 2010		24,789			—			—			1,670			26,459
Costs incurred and charged to expense		5,260			3,446			—			8,833			17,539
Cash payments		(20,603	)		—			—			(2,510	)		(23,113	)
Non-cash adjustments		—			(165	)		—			—			(165	)

Balance, March 31, 2011		9,446			3,281			—			7,993			20,720
Costs incurred and charged to expense		5,632			295			—			15,847			21,774
Cash payments		(8,305	)		(2,033	)		—			(7,067	)		(17,405	)
Non-cash adjustments		—			—			—			(1,300	)		(1,300	)

Balance, June 30, 2011		6,773			1,543			—			15,473			23,789

Facility closure costs incurred in the second quarter of 2011 included a $9.0 million charge for the remaining operating lease obligation (net of estimated sublease rentals that could be reasonably obtained) related to the Company's Mississauga, Ontario corporate office facility, which was vacated as of June 30, 2011, and a charge of $1.3 million related to a lease termination payment on the Company's Aliso Viejo, California corporate office facility. We are transitioning a number of our corporate office functions to Bridgewater, New Jersey. As a result, a portion of the previously vacated space in the Bridgewater facility has been reoccupied, resulting in a $1.1 million reversal of a previously recognized restructuring accrual related to that space.

In addition to costs identified with our restructuring initiatives, we incurred $7.1 million of integration-related costs in the second quarter of 2011, of which $3.5 million had been paid as of June 30, 2011. These costs were primarily related to the alignment of manufacturing operations in Brazil and the integration of PharmaSwiss into our European operations.

SELECTED FINANCIAL INFORMATION

As described above under "Biovail Merger with Valeant", our results of operations, financial condition and cash flows reflect Biovail's stand-alone operations as they existed prior to the completion of the Merger. The results of Valeant's business have been included in our results of operations, financial condition and cash flows only for the periods subsequent to the completion of the Merger. Therefore, our financial results for the second quarter and first half of 2010 do not reflect Valeant's operations.

The following table provides selected financial information for the periods indicated:

	Three Months Ended June 30										Six Months Ended June 30

	2011		2010		Change						2011		2010		Change
($ in 000s, except per share data)	$		$		$			%			$		$		$			%
Revenues		609,387		238,771		370,616			155			1,174,413		458,406		716,007			156
Operating expenses		490,921		189,959		300,962			158			981,204		393,227		587,977			150
Net income		56,360		33,969		22,391			66			62,842		30,819		32,023			104
Basic earnings per share		0.19		0.21		(0.02	)		(10	)		0.21		0.19		0.02			11
Diluted earnings per share		0.17		0.21		(0.04	)		(19	)		0.19		0.19		—			—
Cash dividends declared per share		—		0.095		(0.095	)		(100	)		—		0.185		(0.185	)		(100	)

	As of June 30 2011		As of December 31 2010		Change

	$		$		$		%
Total assets		11,827,873		10,795,117		1,032,756		10
Long-term debt, including current portion		4,546,789		3,595,277		951,512		26

Financial Performance

Changes in Revenues

•: incremental revenues from Valeant products and services of $286.3 million and $567.6 million in the second quarter and first half of 2011, respectively;
•: the inclusion of PharmaSwiss revenues from the acquisition date of $65.4 million and $81.6 million in the second quarter and first half of 2011, respectively;
•: alliance revenue of $40.0 million recognized in the second quarter of 2011, related to the milestone payment from GSK in connection with the launch of Trobalt™; and
•: alliance revenue of $36.0 million recognized in the first quarter of 2011 on the out-license of the Cloderm® product rights in March 2011.

Changes in Earnings

Net income increased $22.4 million, or 66%, to $56.4 million (diluted earnings per share of $0.17) in the second quarter of 2011, compared with $34.0 million (diluted earnings per share of $0.21) in the second quarter of 2010, and increased $32.0 million, or 104%, to $62.8 million (diluted earnings per share of $0.19) in the first

half of 2011, compared with $30.8 million (diluted earnings per share of $0.19) in the first half of 2010, reflecting the following factors:

•: an increased contribution (product sales revenue less cost of goods sold, exclusive of amortization of intangible assets) from product sales of $192.7 million and $370.8 million in the second quarter and first half of 2011, respectively, mainly related to the addition of Valeant and PharmaSwiss product sales (net of incremental charges in those respective periods of $16.3 million and $46.2 million, in the aggregate, to cost of goods sold from the sale of acquired inventories that were written up to fair value), as well as higher volumes and pricing for Xenazine® products and a lower supply price for Zovirax® inventory purchased from GSK, as a result of the new supply agreement that became effective with the acquisition of the U.S. rights;
•: a $21.3 million net realized gain on the disposal of our equity investment in Cephalon, Inc. ("Cephalon"), which was realized in the second quarter of 2011 (as described below under "Results of Operations — Non-Operating Income (Expense) — Gain (Loss) on Investments, Net); and
•: decreases of $8.2 million and $57.2 million in acquired IPR&D expense in the second quarter and first half of 2011, respectively, as described below under "Results of Operations — Operating Expenses — Acquired IPR&D".

Those factors were partially offset by:

•: the inclusion of Valeant operating costs in the second quarter and first half of 2011, net of realized synergies from the Merger;
•: increases of $81.6 million and $160.4 million in amortization expense in the second quarter and first half of 2011, respectively, primarily related to the identifiable intangible assets of Valeant and PharmaSwiss;
•: increases of $73.1 million and $132.0 million in interest expense in the second quarter and first half of 2011, respectively, reflecting legacy Valeant debt assumed as of the Merger Date, and the post-Merger issuances of senior notes in the fourth quarter of 2010 and first quarter of 2011 (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)");
•: the inclusion of $27.6 million and $45.2 million of primarily Merger-related restructuring charges and other integration costs in the second quarter and first half of 2011, respectively;
•: increases in non-restructuring-related share-based compensation of $23.7 million and $51.8 million in the second quarter and first half of 2011, respectively, including approximately $16.1 million and $30.2 million, in those respective periods, related to the amortization of the fair value increment on Valeant stock options and RSUs converted into Company awards as of the Merger Date, and $9.2 million related to an equitable adjustment to certain vested stock options awards outstanding as of March 9, 2011, in connection with the post-Merger special dividend of $1.00 per common share declared and paid in the fourth quarter of 2010; and
•: charges of $14.7 million and $23.0 million on the extinguishment of debt in the second quarter and first half of 2011, respectively, mainly in connection with the repurchase of a portion of our 5.375% senior convertible notes due 2014 (the "5.375% Convertible Notes"), as described below under "Financial Condition, Liquidity and Capital Resources — Securities Repurchase Program", and the share settlement of the 4.0% convertible subordinated notes due 2013 of Valeant (the "4.0% Convertible Notes"), as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)".

Changes in Financial Condition

As of June 30, 2011, we had cash and cash equivalents of $238.9 million and long-term debt, including the current portion, of $4,546.8 million. In the first quarter of 2011, we issued $2,150.0 million aggregate principal

amount of senior notes, and used a portion of the net proceeds to prepay the $975.0 million outstanding under our senior secured term loan A facility (the "Term Loan A Facility"), as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)". In addition, operating cash flows of $226.7 million and $313.0 million in the second quarter and first half of 2011, respectively, were a significant source of liquidity. In the second quarter of 2011, we also borrowed $100.0 million under our new one-and-one-half-year, non-amortizing $200.0 million senior secured revolving credit facility (the "Revolving Credit Facility") that we entered into in June 2011.

In the first half of 2011, we paid $871.2 million, in the aggregate, in connection with the purchases of businesses and intangible assets, mainly in respect of the PharmaSwiss, Zovirax® and Elidel®/Xerese™ acquisitions. In addition, we purchased 11,864,599 of our common shares from ValueAct Capital Master Fund, L.P. ("ValueAct") for an aggregate purchase price $499.6 million, and we repurchased $109.0 million principal amount of the 5.375% Convertible Notes for total consideration of $344.0 million. In May 2011, we issued 17,782,764 of our common shares in connection with the settlement of all of the outstanding 4.0% Convertible Notes.

Cash Dividends

No dividends were declared or paid in the first half of 2011. While our board of directors will review our dividend policy from time to time, we currently do not intend to pay dividends in the foreseeable future. In addition, the covenants contained in the Revolving Credit Facility include restrictions on the payment of dividends. Under our former dividend policy, we declared cash dividends per share of $0.095 and $0.185 in the second quarter and first half of 2010, respectively.

RESULTS OF OPERATIONS

Business Segments

Effective with the Merger, we operate in the following business segments, based on differences in products and services and geographical areas of operations:

•: U.S. Neurology and Other consists of sales of pharmaceutical and OTC products indicated for the treatment of neurological and other diseases, as well as alliance revenue from the licensing of various products we developed or acquired. In addition, this segment includes revenue from contract research services provided by the Company's contract research division prior to its disposal in July 2010.
•: U.S. Dermatology consists of pharmaceutical and OTC product sales, and alliance and contract service revenues in the areas of dermatology and topical medication.
•: Canada and Australia consists of pharmaceutical and OTC products sold in Canada, Australia and New Zealand.
•: Branded Generics — Europe consists of branded generic pharmaceutical products sold primarily in Poland, Serbia, Hungary, the Czech Republic and Slovakia.
•: Branded Generics — Latin America consists of branded generic pharmaceutical and OTC products sold primarily in Mexico, Brazil and exports out of Mexico to other Latin American markets.

Revenues By Segment

The following table displays revenues by segment for the second quarters and first halves of 2011 and 2010, the percentage of each segment's revenues compared with total revenues in the respective period, and the dollar

and percentage change in the dollar amount of each segment's revenues. Percentages may not add due to rounding.

	Three Months Ended June 30												Six Months Ended June 30

	2011 ^(a)				2010				Change				2011 ^(b)				2010				Change
($ in 000s)	$		%		$		%		$		%		$		%		$		%		$		%
U.S. Neurology and Other		234,503		38		159,075		67		75,428		47	$	444,102		38		307,379		67		136,723		44
U.S. Dermatology		109,853		18		41,418		17		68,435		165		262,560		22		80,392		18		182,168		227
Canada and Australia		84,000		14		28,884		12		55,116		191		154,244		13		53,396		12		100,848		189
Branded Generics — Europe ^(c)		116,300		19		9,394		4		106,906		NM		192,393		16		17,239		4		175,154		NM
Branded Generics — Latin America		64,731		11		—		—		64,731		NM		121,114		10		—		—		121,114		NM

Total revenues		609,387		100		238,771		100		370,616		155		1,174,413		100		458,406		100		716,007		156

NM — Not meaningful

(a): Revenues by segment in the second quarter of 2011 reflect the addition of revenues from Valeant products and services as follows: U.S. Neurology and Other — $54.4 million; U.S. Dermatology — $75.6 million; Canada and Australia — $48.2 million; Branded Generics — Europe — $43.4 million; and Branded Generics — Latin America — $64.7 million.
(b): Revenues by segment in the first half of 2011 reflect the addition of revenues from Valeant products and services as follows: U.S. Neurology and Other — $122.2 million; U.S. Dermatology — $137.3 million; Canada and Australia — $91.4 million; Branded Generics — Europe — $95.6 million; and Branded Generics — Latin America — $121.1 million.
(c): Branded Generics — Europe segment revenues reflect incremental revenues from PharmaSwiss products and services of $65.4 million and $81.6 million in the second quarter and first half of 2011, respectively.

Total revenues increased $370.6 million, or 155%, to $609.4 million in the second quarter of 2011, compared with $238.8 million in the second quarter of 2010, and increased $716.0 million, or 156%, to $1,174.4 million in the first half of 2011, compared with $458.4 million in the first half of 2010. A substantial portion of these increases was due to the incremental revenues of Valeant and PharmaSwiss of $286.3 million and $65.4 million, respectively, in the second quarter of 2011, and $567.6 million and $81.6 million, respectively, in the first half of 2011, while the remaining increase was mainly attributable to the effect of the following factors:

•

in the U.S. Neurology and Other segment:

•: alliance revenue of $40.0 million in the second quarter of 2011 related to the milestone payment from GSK in connection with the launch of Trobalt™; and
•: increases in Xenazine® product sales of $10.0 million, or 62%, to $26.3 million in the second quarter of 2011, compared with $16.3 million in the second quarter of 2010, and $18.2 million, or 63%, to $47.1 million in the first half of 2011, compared with $28.9 million in the first half of 2010, reflecting year-over-year increases in patient enrollment and the positive effect of price increases and lower gross-to-net sales provisions.

Those factors were partially offset by:

•: decreases in Wellbutrin XL® product sales of $8.8 million, or 18%, to $39.8 million in the second quarter of 2011, compared with $48.6 million in the second quarter of 2010, and $7.7 million, or 8%, to $86.2 million in the first half of 2011, compared with $93.9 million in the first half of 2010, mainly due to the introduction of an additional generic competitor in the fourth quarter of 2010. We anticipate a continuing decline in Wellbutrin XL® product sales due to generic erosion, although we have implemented a number of new initiatives to support the brand. In addition, Wellbutrin XL® product sales, which represented approximately 7% of our total revenues in each of the second quarter and first half of 2011, are expected to represent a declining percentage of total revenues due to anticipated growth in other parts of our business and recent acquisitions.

•

in the U.S. Dermatology segment:

•: alliance revenue of $36.0 million in the first quarter of 2011 related to the out-license of the Cloderm® product rights; and
•: an increase in Zovirax® product sales of $7.6 million, or 9%, to $88.0 million in the first half of 2011, compared with $80.4 million in the first half of 2010, reflecting the shipment of launch quantities of a new 30g presentation of the ointment form of the product in the first quarter of 2011. As anticipated, we experienced a decline in Zovirax® product sales of $20.0 million to $34.0 million in the second quarter of 2011 from $54.0 million in the first quarter of 2011, as we introduced physicians and patients to the new 30g presentation and remaining wholesale inventories of the original 15g ointment tubes were sold through.

In the third quarter of 2011, we intend to reduce our overall wholesaler inventory levels from approximately one month to two-to-three weeks of supply. This is expected to have a one-time negative impact on our product sales revenue in the third quarter of 2011 of approximately $15.0 million to $30.0 million.

Segment Profit

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as restructuring and acquisition-related costs and legal settlement and acquired IPR&D charges, are not included in the measure of segment profit, as management excludes these items in assessing financial performance. In addition, share-based compensation is not allocated to segments, since the amount of such expense depends on company-wide performance rather than the operating performance of any single segment.

The following table displays profit (loss) by segment for the second quarters and first halves of 2011 and 2010, the percentage of each segment's profit (loss) compared with corresponding segment revenues in the respective period, and the dollar and percentage change in the dollar amount of each segment's profit (loss). Percentages may not add due to rounding.

	Three Months Ended June 30																Six Months Ended June 30

	2011 ^(a)						2010				Change						2011 ^(b)						2010				Change
($ in 000s)	$			%			$		%		$			%			$			%			$		%		$			%
U.S. Neurology and Other		137,749			59			63,067		40		74,682			118			237,258			53			139,729		45		97,529			70
U.S. Dermatology		38,938			35			16,359		39		22,579			138			73,746			28			31,902		40		41,844			131
Canada and Australia		29,677			35			11,617		40		18,060			155			50,599			33			21,135		40		29,464			139
Branded Generics — Europe ^(c)		(6,668	)		(6	)		6,818		73		(13,486	)		(198	)		(1,289	)		(1	)		12,292		71		(13,581	)		(110	)
Branded Generics — Latin America		2,140			3			—		—		2,140			NM			(3,798	)		(3	)		—		—		(3,798	)		NM

Total segment profit		201,836			33			97,861		41		103,975			106			356,516			30			205,058		45		151,458			74

NM — Not meaningful

(a): Segment profit (loss) in the second quarter of 2011 reflects the addition of Valeant's operations, including the impact of acquisition accounting adjustments related to inventory and identifiable intangible assets as follows: U.S. Neurology and Other — $2.0 million; U.S. Dermatology — $14.6 million; Canada and Australia — $8.8 million; Branded Generics — Europe — $7.3 million; and Branded Generics — Latin America — $11.9 million.
(b): Segment profit (loss) in the first half of 2011 reflects the addition of Valeant's operations, including the impact of acquisition accounting adjustments related to inventory and identifiable intangible assets as follows: U.S. Neurology and Other — $19.0 million; U.S. Dermatology — $36.4 million; Canada and Australia — $18.4 million; Branded Generics — Europe — $17.0 million; and Branded Generics — Latin America — $27.9 million.
(c): Branded Generics — Europe segment profit reflects the addition of PharmaSwiss operations commencing on the acquisition date, including the impact of acquisition accounting adjustments related to inventory and identifiable intangible assets of $23.6 million and $28.7 million in the second quarter and first half of 2011, respectively.

Total segment profit increased $104.0 million, or 106%, to $201.8 million in the second quarter of 2011, compared with $97.9 million in the second quarter of 2010, and increased $151.5 million, or 74%, to $356.5 million in the first half of 2011, compared with $205.1 million in the first half of 2010. A substantial portion of these increases was due to the inclusion of operations of Valeant, net of realized synergies from the Merger, and PharmaSwiss, while the remaining increase was mainly attributable to the effect of the following factors:

•

in the U.S. Neurology and Other segment:

•: alliance revenue of $40.0 million in the second quarter of 2011 related to the Trobalt™ milestone payment from GSK; and
•: increased contribution from Xenazine® product sales of $11.6 million and $18.0 million in the second quarter and first half of 2011, respectively, reflecting higher volumes and the positive effect of price increases and lower gross-to-net adjustments.

•

in the U.S. Dermatology segment:

•: an increased contribution from Zovirax® product sales of $6.2 million and $19.6 million in the second quarter and first half of 2011, respectively, reflecting the supply of the new 30g presentation of the ointment form of the product in the first quarter of 2011, and a lower supply price for inventory purchased from GSK, as a result of the new supply agreement that became effective with the acquisition of the U.S. rights, such that we retain a greater share of the economic interest in the brand; and
•: a net contribution of $5.3 million from the out-license of Cloderm® in the first quarter of 2011, taking into account the $30.7 million carrying amount of the Cloderm® intangible assets that was expensed as cost of alliance revenue.

Operating Expenses

The following table displays the dollar amount of each operating expense category for the second quarters and first halves of 2011 and 2010, the percentage of each category compared with total revenues in the respective period, and the dollar and percentage changes in the dollar amount of each category. Percentages may not add due to rounding.

	Three Months Ended June 30														Six Months Ended June 30

	2011				2010				Change						2011				2010				Change
($ in 000s)	$		%		$		%		$			%			$		%		$		%		$			%
Cost of goods sold (exclusive of amortization of intangible assets shown separately below)		169,912		28		63,850		27		106,062			166			339,199		29		122,805		27		216,394			176
Cost of alliance and service revenues		3,395		1		3,372		1		23			1			37,340		3		6,679		1		30,661			459
Selling, general and administrative		149,657		25		45,094		19		104,563			232			289,163		25		88,607		19		200,556			226
Research and development		17,764		3		23,644		10		(5,880	)		(25	)		31,434		3		36,221		8		(4,787	)		(13	)
Amortization of intangible assets		114,946		19		33,299		14		81,647			245			226,989		19		66,599		15		160,390			241
Restructuring and integration costs		27,626		5		2,881		1		24,745			NM			45,165		4		3,494		1		41,671			NM
Acquired IPR&D		2,000		—		10,242		4		(8,242	)		(80	)		4,000		—		61,245		13		(57,245	)		(93	)
Acquisition-related costs		1,869		—		7,577		3		(5,708	)		(75	)		3,376		—		7,577		2		(4,201	)		(55	)
Legal settlements		2,000		—		—		—		2,000			NM			2,400		—		—		—		2,400			NM
Acquisition-related contingent consideration		1,752		—		—		—		1,752			NM			2,138		—		—		—		2,138			NM

Total operating expenses		490,921		81		189,959		80		300,962			158			981,204		84		393,227		86		587,977			150

NM — Not meaningful

Cost of Goods Sold

Cost of goods sold, which excludes the amortization of intangible assets described separately below under "— Amortization of Intangible Assets", increased $106.1 million, or 166%, to $169.9 million in the second quarter of 2011, compared with $63.9 million in the second quarter of 2010, and increased $216.4 million, or 176%, to $339.2 million in the first half of 2011, compared with $122.8 million in the first half of 2010. The percentage increases in cost of goods sold were higher than the corresponding 155% and 156% increases in total product sales in the second quarter and first half of 2011, respectively, primarily due to:

•: the impact of the acquisition accounting adjustments of $16.3 million and $46.2 million related to acquired inventories that were subsequently sold in the second quarter and first half of 2011, respectively. Substantially all of the acquisition accounting adjustments on Valeant and PharmaSwiss inventories has been recognized in cost of goods sold as of June 30, 2011.

That factor was partially offset by:

•: the effect of the lower supply price for Zovirax® inventory purchased from GSK, as a result of the new supply agreement that became effective with the acquisition of the U.S. rights, which favourably impacted cost of goods sold by $5.4 million and $12.0 million in the second quarter and first half of 2011, respectively.

Cost of Alliance and Service Revenues

Cost of alliance and service revenues was $3.4 million in each of the second quarters of 2011 and 2010, and increased $30.7 million, or 459%, to $37.3 million in the first half of 2011, compared with $6.7 million in the first half of 2010, primarily due to the inclusion of the $30.7 million carrying amount of the Cloderm® intangible asset, which was expensed on the out-license of the product rights in the first quarter of 2011.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $104.6 million, or 232%, to $149.7 million in the second quarter of 2011, compared with $45.1 million in the second quarter of 2010, and increased $200.6 million, or 226%, to $289.2 million in the first half of 2011, compared with $88.6 million in the first half of 2010, primarily due to:

•: the addition of Valeant's operating costs; and
•: increases of $23.5 million and $51.1 million in share-based compensation expense charged to selling, general and administrative expenses in the second quarter and first half of 2011, respectively, including approximately $16.4 million and $38.8 million, in those respective periods, related to the amortization of the fair value increment on Valeant stock options and RSUs converted into Company awards and the equitable adjustment to certain vested stock option awards, in connection with the post-Merger special dividend of $1.00 per common share declared and paid in the fourth quarter of 2010.

Those factors were partially offset by:

•: decreases in compensation expense of $3.1 million and $0.4 million in the second quarter and first half of 2011, respectively, related to existing deferred share units ("DSUs") held by current directors. In May 2011, those DSUs were modified from units settled in cash to units settled in common shares, which converted the DSUs from a liability award to an equity award. As the modified DSUs were fully vested, no additional compensation expense will be recognized after the date of modification.

Research and Development Expenses

Research and development expenses declined $5.9 million, or 25%, to $17.8 million in the second quarter of 2011, compared with $23.6 million in the second quarter of 2010, and declined $4.8 million, or 13%, to

$31.4 million in the first half of 2011, compared with $36.2 million in the first half of 2010, reflecting the impact of the termination of certain of our specialty central nervous system ("CNS") drug development programs in the fourth quarter of 2010, which more than offset the addition of Valeant's research and development expenses.

Amortization of Intangible Assets

Amortization expense increased $81.6 million, or 245%, to $114.9 million in the second quarter of 2011, compared with $33.3 million in the second quarter of 2010, and increased $160.4 million, or 241%, to $227.0 million in the first half of 2011, compared with $66.6 million in the first half of 2010, primarily due to the amortization of the Valeant and PharmaSwiss identifiable intangible assets of $75.4 million and $151.3 million in the second quarter and first half of 2011, respectively.

Restructuring and Integration Costs

As described above under "Merger-Related Cost-Rationalization and Integration Initiatives", we recognized primarily Merger-related restructuring charges and other integration costs of $27.6 million and $45.2 million in the second quarter and first half of 2011, respectively.

Acquired IPR&D

In the second quarter and first half of 2011, we recorded acquired IPR&D charges of $2.0 million and $4.0 million, respectively, related to the acquisition of the Canadian rights to Cholestagel®, which was accounted for as a purchase of IPR&D assets with no alternative future use. In the corresponding periods of 2010, we paid $10.2 million and $61.2 million to acquire certain specialty CNS drug development programs, which programs were terminated following the Merger.

Non-Operating Income (Expense)

The following table displays the dollar amounts of each non-operating income or expense category in the second quarters and first halves of 2011 and 2010; and the dollar and percentage changes in the dollar amount of each category.

	Three Months Ended June 30											Six Months Ended June 30

	2011			2010			Change					2011			2010			Change
($ in 000s; Income (Expense))	$			$			$			%		$			$			$			%
Interest income		1,086			234			852			364		1,889			422			1,467			348
Interest expense		(83,073	)		(9,952	)		(73,121	)		735		(151,824	)		(19,779	)		(132,045	)		668
Loss on extinguishment of debt		(14,748	)		—			(14,748	)		NM		(23,010	)		—			(23,010	)		NM
Foreign exchange and other		847			667			180			27		3,654			44			3,610			NM
Gain (loss) on investments, net		21,158			(392	)		21,550			NM		22,927			(547	)		23,474			NM

Total non-operating income (expense)		(74,730	)		(9,443	)		(65,287	)		691		(146,364	)		(19,860	)		(126,504	)		637

NM — Not meaningful

Interest Expense

Interest expense increased $73.1 million, or 735%, to $83.1 million in the second quarter of 2011, compared with $10.0 million in the second quarter of 2010, and increased $132.0 million, or 668%, to $151.8 million in the first half of 2011, compared with $19.8 million in the first half of 2010, reflecting primarily the legacy Valeant debt assumed as of the Merger Date (partially reduced by the repayment of the Term Loan A Facility in the first quarter of 2011), and the post-Merger issuances of senior notes in the fourth quarter of 2010 and first quarter of 2011 (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)").

Loss on Extinguishment of Debt

In the second quarter and first half of 2011, we recognized losses of $14.7 million and $23.0 million, respectively, mainly on the repurchase of a portion of the 5.375% Convertible Notes (as described below under "Financial Condition, Liquidity and Capital Resources — Securities Repurchase Program") and the share settlement of the 4.0% Convertible Notes (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)").

Gain (Loss) on Investments, Net

In March 2011, in connection with an offer to acquire Cephalon, we had invested $60.0 million to acquire shares of common stock of Cephalon. On May 2, 2011, Cephalon announced that it had agreed to be acquired by Teva Pharmaceutical Industries Inc. and, consequently, we disposed of our entire equity investment in Cephalon for net proceeds of $81.3 million, which resulted in a net realized gain of $21.3 million that was recognized in earnings in the second quarter of 2011.

Income Taxes

The following table displays the dollar amounts of the current and deferred provisions for income taxes in the second quarters and first halves of 2011 and 2010; and the dollar and percentage changes in the dollar amount of each provision. Percentages may not add due to rounding.

	Three Months Ended June 30									Six Months Ended June 30

	2011			2010		Change				2011			2010		Change
($ in 000s; Income (Expense))	$			$		$			%	$			$		$			%
Current income tax expense		6,100			4,700		1,400		30		22,500			9,500		13,000		137
Deferred income tax expense (recovery)		(18,724	)		700		(19,424	)	NM		(38,497	)		5,000		(43,497	)	NM

Total provision for (recovery of) income taxes		(12,624	)		5,400		(18,024	)	NM		(15,997	)		14,500		(30,497	)	NM

NM — Not meaningful

In the second quarter of 2011, we recognized a recovery of income taxes of $12.6 million, which comprised $16.6 million related to the expected tax benefit in tax jurisdictions outside of Canada offset with tax expense of $4.0 million related to Canadian income taxes and, in the first half of 2011, we recognized a recovery of income taxes of $16.0 million, which comprised $19.8 million related to the expected tax benefit in tax jurisdictions outside of Canada offset with tax expense of $3.8 million related to Canadian income taxes. In the second quarter and first half of 2011, our effective tax rate was primarily impacted by (i) tax benefit of current U.S. losses, (ii) the release of liabilities for uncertain tax positions due to the settlement of various tax examinations in the U.S., and (iii) a partial increase of the valuation allowance specific to the Canadian net deferred tax assets.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Selected Measures of Financial Condition

The following table displays a summary of our financial condition as of June 30, 2011 and December 31, 2010:

	As of June 30 2011			As of December 31 2010			Change

($ in 000s; Asset (Liability))	$			$			$			%
Cash and cash equivalents		238,945			394,269			(155,324	)		(39	)
Long-lived assets ^(a)		10,637,675			9,655,908			981,767			10
Long-term debt, including current portion		(4,546,789	)		(3,595,277	)		(951,512	)		26
Shareholders' equity		(4,665,418	)		(4,911,096	)		245,678			(5	)

(a): Long-lived assets comprise property, plant and equipment, intangible assets and goodwill.

Cash and Cash Equivalents

Cash and cash equivalents declined $155.3 million, or 39%, to $238.9 million as of June 30, 2011, compared with $394.3 million at December 31, 2010, which primarily reflected the following uses of cash:

•: $975.0 million repayment of the Term Loan A Facility (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)");
•: $871.2 million paid, in the aggregate, in connection with the purchases of businesses and intangible assets, mainly in respect of the PharmaSwiss, Zovirax® and Elidel®/Xerese™ acquisitions;
•: $499.6 million related to the purchase of common shares from ValueAct and $344.0 million paid to repurchase a portion of the 5.375% Convertible Notes, which included the payment of accreted interest of $5.0 million (as described below under "Financial Condition, Liquidity and Capital Resources — Securities Repurchase Program");
•: $60.0 million paid to acquire shares of common stock of Cephalon;
•: $54.7 million of employee withholding taxes paid in connection with the exercise of share-based awards; and
•: purchases of property, plant and equipment of $34.0 million.

Partially offset by the following sources of cash:

•: $2,139.7 million of net proceeds on the issuance of senior notes (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)");
•: $313.0 million in operating cash flows;
•: $100.0 million of borrowings under the Revolving Credit Facility;
•: $81.3 million of net proceeds on the disposal of the Cephalon common stock; and
•: $61.0 million in proceeds from stock option exercises, including tax benefits.

Long-Lived Assets

Long-lived assets increased $981.8 million, or 10%, to $10,637.7 million as of June 30, 2011, compared with $9,655.9 million at December 31, 2010, primarily due to:

•: $439.9 million assigned to the Elidel® and Xerese™ identifiable intangible assets;
•: the inclusion of the identifiable intangible assets and goodwill of PharmaSwiss, which amounted to $381.4 million in the aggregate;

•: the $300.0 million paid to acquire the U.S. and Canadian rights to Zovirax®; and
•: purchases of property, plant and equipment of $34.0 million.

Those factors were partially offset by:

•: the depreciation of plant and equipment and amortization of intangible assets of $249.3 million in the aggregate; and
•: the $30.7 million carrying amount of the Cloderm® intangible assets expensed in connection with the out-license of the product rights.

Long-term Debt

Long-term debt (including the current portion) increased $951.5 million, or 26%, to $4,546.8 million as of June 30, 2011, compared with $3,595.3 million at December 31, 2010, primarily due to:

•: the issuance of $2,150.0 million principal amount of senior notes in the first quarter of 2011 (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)"); and
•: the $100.0 million borrowed under the Revolving Credit Facility.

That factor was partially offset by:

•: the $975.0 million repayment of the Term Loan A Facility;
•: the share settlement of the $221.4 million carrying amount of the liability component of the 4.0% Convertible Notes (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)"); and
•: the repurchase of $96.4 million carrying amount of the liability component of the 5.375% Convertible Notes, exclusive of related deferred financing costs (as described below under "Financial Condition, Liquidity and Capital Resources — Securities Repurchase Program").

Shareholders' Equity

Shareholders' equity declined $245.7 million, or 5%, to $4,665.4 million as of June 30, 2011, compared with $4,911.1 million at December 31, 2010, primarily due to:

•: a charge for the excess of $666.0 million of the fair value of the common shares issued to effect the settlement of the 4.0% Convertible Notes over the estimated fair value of the liability component (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)");
•: a decrease of $499.6 million related to the purchase of common shares from ValueAct; and
•: a charge for the excess of $232.4 million of the purchase price of the 5.375% Convertible Notes over the estimated fair value of the liability component (as described below under "Financial Condition, Liquidity and Capital Resources — Securities Repurchase Program").

That factor was partially offset by:

•: the $892.0 million fair value of the common shares issued upon settlement of the 4.0% Convertible Notes (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)");
•: a positive foreign currency translation adjustment of $183.4 million to other comprehensive income, mainly due to the impact of a weakening of the U.S. dollar relative to a number of other currencies, including the Polish zloty, Mexican peso, euro, Brazilian real and Canadian dollar, which increased the reported value of our net assets denominated in those currencies;

•: net income of $62.8 million, including $55.5 million of share-based compensation recorded in additional paid-in capital; and
•: proceeds of $29.4 million from the issuance of common shares on the exercise of stock options.

Cash Flows

The following table displays cash flow information for the second quarters and first halves of 2011 and 2010:

	Three Months Ended June 30											Six Months Ended June 30

	2011			2010			Change					2011			2010			Change
($ in 000s)	$			$			$			%		$			$			$			%
Net cash provided by operating activities		226,656			108,913			117,743			108		312,986			153,666			159,320			104
Net cash used in investing activities		(62,500	)		(9,352	)		(53,148	)		NM		(887,834	)		(53,232	)		(834,602	)		NM
Net cash provided by (used in) financing activities		(330,169	)		(25,502	)		(304,667	)		NM		412,598			(38,204	)		450,802			NM
Effect of exchange rate changes on cash and cash equivalents		3,206			(385	)		3,591			NM		6,926			(127	)		7,053			NM

Net increase (decrease) in cash and cash equivalents		(162,807	)		73,674			(236,481	)		NM		(155,324	)		62,103			(217,427	)		NM
Cash and cash equivalents, beginning of period		401,752			102,892			298,860			290		394,269			114,463			279,806			244

Cash and cash equivalents, end of period		238,945			176,566			62,379			35		238,945			176,566			62,379			35

NM — Not meaningful

Operating Activities

Net cash provided by operating activities increased $117.7 million, or 108%, to $226.7 million in the second quarter of 2011, compared with $108.9 million in the second quarter of 2010, primarily due to:

•: the inclusion of cash flows from the operations of Valeant and PharmaSwiss in the second quarter of 2011;
•: the receipt of the $40.0 million milestone payment from GSK in connection with the launch of Trobalt™ in the second quarter of 2011;
•: the receipt in the second quarter of 2011 of the $36.0 million upfront payment related to the sale of Cloderm®; and
•: the increased contribution from Xenazine® and Zovirax® product sales of $11.6 million and $6.2 million, respectively, in the second quarter of 2011.

Those factors were partially offset by:

•: payments related to the Merger-related restructuring charges ($17.4 million) and legacy Valeant pre-Merger restructuring cost obligations assumed as of the Merger Date ($6.5 million).

Net cash provided by operating activities increased $159.3 million, or 104%, to $313.0 million in the first half of 2011, compared with $153.7 million in the first half of 2010, primarily due to:

•: the inclusion of cash flows from the operations of Valeant and PharmaSwiss in the first half of 2011;
•: the receipt of the $40.0 million milestone payment from GSK in connection with the launch of Trobalt™;
•: the receipt of the $36.0 million upfront payment related to the sale of Cloderm®; and
•: the increased contribution from Xenazine® and Zovirax® product sales of $18.0 million and $19.6 million, respectively, in the first half of 2011.

Those factors were partially offset by:

•: payments related to the Merger-related restructuring charges ($40.5 million) and legacy Valeant pre-Merger restructuring cost obligations assumed as of the Merger Date ($22.4 million) in the first half of 2011; and

•: legal settlement payments of $16.0 million in the first quarter of 2011 related to Biovail legacy litigation matters.

Investing Activities

Net cash used in investing activities increased $53.1 million to $62.5 million in the second quarter of 2011, compared with $9.3 million in the second quarter of 2010, primarily due to:

•: an increase of $104.6 million, in the aggregate, related to the purchases of businesses and intangible assets, mainly in respect of the Elidel®/Xerese™ acquisition in the second quarter of 2011; and
•: the $20.0 million paid in April 2011 to acquire shares of common stock of Cephalon.

Those factors were partially offset by:

•: a decrease of $81.3 million related to the net proceeds on the disposal of the Cephalon common stock; and
•: a decrease of $10.2 million related to the acquisition of certain specialty CNS drug development programs in the second quarter of 2010 that did not similarly occur in the second quarter of 2011.

Net cash used in investing activities increased $834.6 million to $887.8 million in the first half of 2011, compared with $53.2 million in the first half of 2010, primarily due to:

•: an increase of $871.2 million, in the aggregate, related to the purchases of businesses (net of cash acquired) and intangible assets, mainly in respect of the PharmaSwiss, Zovirax® and Elidel®/Xerese™ acquisitions in the first half of 2011;
•: the $60.0 million paid to acquire shares of common stock of Cephalon; and
•: an increase of $27.5 million in purchases of property, plant and equipment.

Those factors were partially offset by:

•: a decrease of $81.3 million related to the net proceeds on the disposal of the Cephalon common stock; and
•: a decrease of $60.2 million related to the acquisition of certain specialty CNS drug development programs in the first half of 2010 that did not similarly occur in the first half of 2011.

Financing Activities

Net cash used in financing activities increased $304.7 million to $330.2 million in the second quarter of 2011, compared with $25.5 million in the second quarter of 2010, primarily due to:

•: an increase of $224.8 million related to the purchase of common shares from ValueAct in the second quarter of 2011;
•: an increase of $199.8 million related to the repurchase of a portion of the 5.375% Convertible Notes (exclusive of the payment of accreted interest reflected as an operating activity) in the second quarter of 2011; and
•: an increase of $15.2 million related to employee withholding taxes paid on the exercise of employee share-based awards.

Those factors were partially offset by:

•: a decrease of $100.0 million in borrowings under the Revolving Credit Facility; and
•: a decrease of $12.4 million in proceeds from stock option exercises, including tax benefits.

Net cash provided by financing activities was $412.6 million in the first half of 2011, compared with cash used of $38.2 million in the first half of 2010, reflecting an increase of $450.8 million, primarily due to:

•: an increase related to net proceeds of $2,139.7 million from the issuance of senior notes in the first quarter of 2011 (as described below under "Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)");
•: an increase related to borrowings under the Revolving Credit Facility of $100.0 million; and
•: an increase of $58.2 million in proceeds from stock option exercises, including tax benefits.

Those factors were partially offset by:

•: a decrease of $975.0 million related to the repayment of the Term Loan A Facility in the first quarter of 2011;
•: a decrease of $499.6 million related to the purchase of common shares from ValueAct in the first half of 2011;
•: a decrease of $339.0 million related to the repurchase of a portion of the 5.375% Convertible Notes (exclusive of the payment of accreted interest reflected as an operating activity) in the first half of 2011; and
•: a decrease of $54.7 million related to employee withholding taxes paid on the exercise of employee share-based awards.

Financial Assets (Liabilities)

The following table displays our net financial liability position as of June 30, 2011 and December 31, 2010:

				As of June 30 2011			As of December 31 2010

										Change
			Maturity Date							Change
($ in 000s; Asset (Liability))			Maturity Date	$			$			$			%
Financial assets:
	Cash and cash equivalents				238,945			394,269			(155,324	)		(39	)
	Marketable securities				12,124			8,166			3,958			48

	Total financial assets				251,069			402,435			(151,366	)		(38	)

Financial liabilities:
	Revolving Credit Facilty		December 2012		(100,000	)		—			(100,000	)		NM
	Term Loan A Facility				—			(975,000	)		975,000			(100	)
	Senior Notes:
		6.50%	July 2016		(950,000	)		—			(950,000	)		NM
		6.75%	October 2017		(497,770	)		(497,589	)		(181	)		—
		6.875%	December 2018		(992,973	)		(992,498	)		(475	)		—
		7.00%	October 2020		(695,956	)		(695,735	)		(221	)		—
		6.75%	August 2021		(650,000	)		—			(650,000	)		NM
		7.25%	July 2022		(539,973	)		—			(539,973	)		NM
	Convertible Notes:
		4.00%	November 2013		—			(220,792	)		220,792			(100	)
		5.375%	August 2014		(102,617	)		(196,763	)		94,146			(48	)
	Other				(17,500	)		(16,900	)		(600	)		4

	Total financial liabilities				(4,546,789	)		(3,595,277	)		(951,512	)		26

Net financial liabilities					(4,295,720	)		(3,192,842	)		(1,102,878	)		35

NM — Not meaningful

Our primary sources of liquidity are our cash flows from operations and issuances of long-term debt securities. We believe that existing cash and cash generated from operations, funds available under the Revolving Credit Facility, supplemented with additional debt issuances as needed, will be sufficient to meet our liquidity needs, based on our current expectations. We have no material commitments for expenditures related to property, plant and equipment. Part of our business strategy is to expand through strategic acquisitions, which requires us to seek additional debt financing, issue additional equity securities or sell assets, as necessary, to finance future acquisitions or for other general corporate purposes. We currently intend to raise approximately $1.0 billion in debt in order to finance the acquisitions of Sanitas, Dermik and Ortho Dermatologics in the second half of 2011. We have already negotiated for a bridge loan until this longer-term financing is in place.

On September 27, 2010, Valeant and certain of its subsidiaries entered into a Credit and Guaranty Agreement (the "Old Credit Agreement") with a syndicate of lending institutions, consisting of (1) a four-and-one-half-year non-amortizing $125.0 million revolving credit facility, (2) a five-year amortizing $1.0 billion Term Loan A Facility, and (3) a six-year amortizing $1.625 billion term loan B facility (the "Term Loan B Facility"). Effective November 29, 2010, the Term Loan B Facility was repaid in full. Effective March 8, 2011, Valeant terminated the Old Credit Agreement, using a portion of the net proceeds from the combined offering of 6.50% senior notes due 2016 (the "2016 Notes") and 6.75% senior notes due 2022 (the "2022 Notes") (as described below) to prepay the amounts outstanding under the Term Loan A Facility.

On June 29, 2011, Valeant entered into a Credit and Guaranty Agreement (the "Credit Agreement"), consisting of a one-and-one-half-year, non-amortizing $200.0 million Revolving Credit Facility. As of June 30, 2011, we had borrowed an aggregate principal amount of $100.0 million under the Revolving Credit Facility and were in compliance with all covenants. In July 2011, we borrowed an additional $12.0 million under this facility.

On February 8, 2011, Valeant issued $650.0 million aggregate principal amount of 6.75% senior notes due 2021 (the "2021 Notes"). Interest on the 2021 Notes accrues at the rate of 6.75% per year. The net proceeds of the 2021 Notes offering were principally used to finance the PharmaSwiss and Zovirax® acquisitions.

On March 8, 2011, Valeant issued $950.0 million aggregate principal amount of 2016 Notes and $550.0 million aggregate principal amount of 2022 Notes. The 2016 Notes accrue interest at the rate of 6.50% per year, and the 2022 Notes accrue interest at the rate of 7.25% per year. The 2016 Notes were issued at par and the 2022 Notes were issued at 98.125% of par for an effective annual yield of 7.50%. Net proceeds of the 2016 Notes and 2022 Notes offering were principally used to prepay the amounts outstanding under Valeant's Term Loan A Facility, as described above, and to fund the repurchase of our common shares from ValueAct in March 2011 (as described below under "— Securities Repurchase Program").

The senior notes issued by Valeant are senior unsecured obligations of Valeant and are jointly and severally guaranteed on a senior unsecured basis by the Company and each of its subsidiaries (other than Valeant) that is a guarantor under its other senior notes. Certain of the future subsidiaries of Valeant and the Company may be required to guarantee the senior notes. The non-guarantor subsidiaries had total assets of $3,859.3 million and total liabilities of $1,423.8 million as of June 30, 2011, and net revenues of $362.8 million and a loss from operations of $24.7 million for the six-month period ended June 30, 2011.

On April 20, 2011, we distributed a notice of redemption to holders of the 4.0% Convertible Notes, pursuant to which all of the outstanding 4.0% Convertible Notes on May 20, 2011 would be redeemed. Prior to that date, at the election of the holders, all of the outstanding 4.0% Convertible Notes were converted into 17,782,764 common shares of the Company, at a conversion rate of 79.0667 common shares per $1,000 principal amount of notes, which represented a conversion price of approximately $12.65 per share. The carrying amount of the 4.0% Convertible Notes prior to settlement was $221.4 million and the aggregate fair value of the common shares issued to effect the settlement was $892.0 million. The difference of $670.6 million between the carrying amount and the fair value of the common shares issued upon settlement was recognized as a loss on extinguishment of debt ($4.6 million) and a charge to shareholders' equity ($666.0 million).

in common shares of the Company. In June 2011, we received 11,479,365 common shares of the Company on the net-share settlement of the purchased call options, which common shares were subsequently cancelled.

Securities Repurchase Program

On November 4, 2010, we announced that the board of directors approved a securities repurchase program (the "securities repurchase program"), pursuant to which we may make purchases of our common shares, convertible notes and/or senior notes, from time to time, up to an aggregate maximum value of $1.5 billion, subject to any restrictions in the Company's financing agreements and applicable law. Our board of directors also approved a sub-limit of up to 16.0 million common shares, representing approximately 10% of the Company's public float (as estimated at the commencement of the securities repurchase program), to be purchased for cancellation under a normal course issuer bid through the facilities of the New York Stock Exchange ("NYSE") and Toronto Stock Exchange ("TSX"). We may initially make purchases under the securities repurchase program of up to 15.0 million common shares through the facilities of the NYSE, in accordance with applicable rules and guidelines. This represented approximately 5% of our issued and outstanding common shares as of November 4, 2010. Following additional filings and related approvals, we may also purchase common shares over the TSX. The program does not require us to repurchase a minimum number of securities, and the program may be modified, suspended or terminated at any time without prior notice. The securities repurchase program will terminate on November 7, 2011 or at such earlier time as we complete our purchases. The amount of securities to be purchased and the timing of purchases under the securities repurchase program may be subject to various factors, which may include the price of the securities, general market conditions, corporate and regulatory requirements, alternate investment opportunities and restrictions under our financing agreements. The securities to be repurchased will be funded using our cash resources.

In the first half of 2011, we repurchased $109.0 million aggregate principal amount of the 5.375% Convertible Notes for an aggregate purchase price of $344.0 million. The carrying amount of the 5.375% Convertible Notes purchased was $93.3 million (net of $3.1 million of related unamortized deferred financing costs). The difference of $250.7 million between the net carrying amount and the purchase price was recognized as a loss on extinguishment of debt ($18.3 million) and a charge to shareholders' equity ($232.4 million). The portion of the purchase price attributable to accreted interest on the debt discount amounted to $5.0 million in the first half of 2011, and is presented in the consolidated statements of cash flows as payment of accreted interest in cash flows from operating activities. The remaining portion of the payment of $339.0 million is presented in the consolidated statement of cash flows as an outflow from financing activities, which includes a payment to the note holders of a $15.2 million premium above the carrying value. Subsequent to June 30, 2011, we repurchased an additional $11.4 million principal amount of the 5.375% Convertible Notes for cash consideration of $41.7 million.

In March 2011, we repurchased 7,366,419 of our common shares from ValueAct for an aggregate purchase price of $274.8 million. These common shares were subsequently cancelled. As of June 30, 2011, we had recorded an estimated $24.2 million receivable from ValueAct in relation to withholding taxes on the March 2011 repurchase. In May 2011, a subsidiary of the Company purchased 4,498,180 of our common shares from ValueAct for an aggregate purchase price of $224.8 million. In June 2011, the Company purchased these common shares from its subsidiary and the common shares were subsequently cancelled. G. Mason Morfit is a partner and a member of the Management Committee of ValueAct Capital. Mr. Morfit joined the Company's board of directors on September 28, 2010, effective with the Merger, and prior thereto served as a member of Valeant's board of directors since 2007. ValueAct Capital is the general partner and the manager of ValueAct.

Since the commencement of the securities repurchase program, we have repurchased a total of $246.6 million principal amount of the 5.375% Convertible Notes for total consideration of $645.0 million and 14,169,599 of our common shares for total consideration of $559.7 million.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material future effect on our results of operations, financial condition, capital expenditures, liquidity, or capital resources.

The following table summarizes contractual obligations related to long-term debt and acquisition-related contingent consideration obligations as of June 30, 2011:

	Payments Due by Period

	Total		2011		2012 and 2013		2014 and 2015		Thereafter
($ in 000s)	$		$		$		$		$
Long-term debt, including interest obligations ^(a)		7,054,655		156,636		710,192		714,952		5,472,875
Acquisition-related contingent consideration ^(b)		247,076		26,038		131,038		80,000		10,000

(a): Expected interest payments assume repayment of the principal amount of the related debt obligations at maturity.
(b): Primarily reflects the minimum guaranteed obligations related to the license agreement for Elidel® and Xerese™ (as described above under "Business Development"). These amounts do not include contingent obligations related to future milestone or royalty payments. Such contingent obligations are recorded at fair value in the unaudited consolidated financial statements.

There have been no other material changes outside the normal course of business to the items specified in the contractual obligations table and related disclosures under the heading "Off-Balance Sheet Arrangements and Contractual Obligations" in the annual MD&A contained in the 2010 Form 10-K.

OUTSTANDING SHARE DATA

Our common shares are listed on the TSX and the NYSE under the ticker symbol "VRX".

As of August 2, 2011, we had 300,237,443 issued and outstanding common shares and 1,597,887 common shares issuable in connection with the Merger. In addition, we had 10,774,325 stock options and 2,076,507 time-based RSUs that each represent the right of a holder to receive one of the Company's common shares, and 1,255,930 performance-based RSUs that represent the right of a holder to receive up to 300% of the RSUs granted. A maximum of 2,761,794 common shares could be issued upon vesting of the performance-based RSUs outstanding.

Assuming full share settlement, 7,204,927 common shares are issuable upon the conversion of the 5.375% Convertible Notes (based on a current conversion rate of 69.6943 common shares per $1,000 principal amount of notes, subject to adjustment). Under the written call option agreement on our common shares in respect of the 4.0% Convertible Notes, the counterparties have the right but not the obligation to buy from us 15,813,338 of our common shares.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies and estimates are those policies and estimates that are most important and material to the preparation of our consolidated financial statements, and which require management's most subjective and complex judgment due to the need to select policies from among alternatives available and make estimates about matters that are inherently uncertain. There have been no material changes to our critical accounting policies and estimates disclosed under the heading "Critical Accounting Policies and Estimates" in the annual MD&A contained in the 2010 Form 10-K.

NEW ACCOUNTING STANDARDS

Adoption of New Accounting Standards

Information regarding the adoption of new accounting standards is contained in note 2 to the unaudited consolidated financial statements.

Recently Issued Accounting Standards, Not Adopted as of June 30, 2011

We will adopt the provisions of the following new accounting standards effective January 1, 2012:

•: Guidance that results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and International Financial Reporting Standards

("IFRS"). The amendments change some fair value measurement principles and disclosure requirements under U.S. GAAP. The adoption of this new guidance is not expected to have a material impact on our consolidated financial statements.

•: Guidance requiring entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. The amendments do not change the components of other comprehensive income or the calculation of earnings per share. As the guidance relates only to the presentation of other comprehensive income, the adoption of this accounting standard will not have a significant impact on our consolidated financial statements.

FORWARD-LOOKING STATEMENTS

Caution regarding forward-looking information and statements and "Safe Harbor" statements under the U.S. Private Securities Litigation Reform Act of 1995:

To the extent any statements made in this MD&A contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and may be forward-looking information within the meaning defined under applicable Canadian securities legislation (collectively, "forward-looking statements").

Forward-looking statements can generally be identified by the use of words such as "believe", "anticipate", "expect", "intend", "estimate", "plan", "continue", "will", "may", "could", "would", "target", "potential" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements may not be appropriate for other purposes. Although we have indicated above certain of these statements set out herein, all of the statements in this MD&A that contain forward-looking statements are qualified by these cautionary statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, including, but not limited to, factors and assumptions regarding the items outlined above. Actual results may differ materially from those expressed or implied in such statements. Important factors that could cause actual results to differ materially from these expectations include, among other things, the following:

•: our ability to compete against companies that are larger and have greater financial, technical and human resources than we do, as well as other competitive factors, such as technological advances achieved, patents obtained and new products introduced by our competitors;
•: factors relating to the integration of Valeant and Biovail, as well as other companies, businesses and products acquired by the Company, including the time and resources required to integrate such companies, businesses and products, the difficulties associated with such integrations, and the achievement of the anticipated benefits from such integrations;
•: the challenges and difficulties associated with managing a larger, more complex, combined business;
•: the challenges and difficulties associated with managing the rapid growth of our Company and business;
•: our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of our significant operating subsidiary in Barbados, as well as the low tax rate for the profits of our PharmaSwiss S.A. subsidiary based in Switzerland;

•: the introduction of products that compete against our products that do not have patent or data exclusivity rights, which products represent a significant portion of our revenues;
•: our ability to retain, motivate and recruit executives and other key employees;
•: our future cash flow, our ability to service and repay our existing debt and our ability to raise additional funds, if needed, in light of our current and projected levels of operations, acquisition activity and general economic conditions;
•: our ability to identify, acquire and integrate acquisition targets and to secure and maintain third-party research, development, manufacturing, marketing or distribution arrangements;
•: our ability to close transactions on a timely basis or at all;
•: the risks associated with the international scope of our operations;
•: the impacts of the Patient Protection and Affordable Care Act in the U.S. and other legislative and regulatory reforms in the countries in which we operate;
•: the uncertainties associated with the acquisition and launch of new products, including, but not limited to, the acceptance and demand for new pharmaceutical products, and the impact of competitive products and pricing;
•: the difficulty in predicting the expense, timing and outcome within our legal and regulatory environment, including, but not limited to, the U.S. Food and Drug Administration, the Canadian Therapeutic Products Directorate and European and Australian regulatory approvals, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful challenges to our generic products and infringement or alleged infringement of the intellectual property of others;
•: the success of preclinical and clinical trials for our drug development pipeline or delays in clinical trials that adversely impact the timely commercialization of our pipeline products;
•: the results of continuing safety and efficacy studies by industry and government agencies;
•: the risk that our products could cause, or be alleged to cause, personal injury, leading to withdrawals of products from the market;
•: our ability to obtain components, raw materials or other products supplied by third parties;
•: the outcome of legal proceedings, investigations and regulatory proceedings;
•: economic factors over which the Company has no control, including changes in inflation, interest rates, foreign currency rates, and the potential effect of such factors on revenues, expenses and resulting margins;
•: the disruption of delivery of our products and the routine flow of manufactured goods across the U.S. border; and
•: other risks detailed from time to time in our filings with the U.S. Securities and Exchange Commission (the "SEC") and the Canadian Securities Administrators (the "CSA"), as well as our ability to anticipate and manage the risks associated with the foregoing.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found under Item 1A. of Part II of this Form 10-Q and under Item 1A. "Risk Factors" of the 2010 Form 10-K, and in our other filings with the SEC and CSA. We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. These forward-looking statements speak only as of the date made.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Except as described below, there have been no material changes to our exposures to market risks as disclosed under the heading "Quantitative and Qualitative Disclosures About Market Risks" in the annual MD&A contained in the 2010 Form 10-K.

Interest Rate Risk

As of June 30, 2011, we had $4,464.8 million principal amount of fixed rate debt that requires U.S. dollar repayment. The estimated fair value of our fixed rate debt as of June 30, 2011 was $4,649.4 million. If interest rates were to increase or decrease by 100 basis-points the fair value of our long-term debt would increase or decrease by approximately $252.0 million. We are subject to interest rate risk on our variable rate debt as changes in interest rates could adversely affect earnings and cash flows. A 100 basis-points change in interest rates would have an annualized pre-tax effect of approximately $1.0 million in our consolidated statements of operations and cash flows, based on current outstanding borrowings on our Revolving Credit Facility. While our variable-rate debt may impact earnings and cash flows as interest rates change, it is not subject to changes in fair value.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2011. Based on this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2011.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the three-month period ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information concerning legal proceedings, reference is made to note 18 to the unaudited consolidated financial statements included under Part I, Item 1, of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

The following should be read in conjunction with and supplements and amends the risk factors that may affect the Company's business or operations in Part I, Item 1A. of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

We have grown at a very rapid pace. Our inability to properly manage or support this growth may have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common shares to decline.

We have grown very rapidly over the past few years as a result of our acquisitions. This growth has put significant demands on our processes, systems and people. We have made and expect to make further investments in additional personnel, systems and internal control processes to help manage our growth. If we do not manage and support our rapid growth appropriately, there may be a material adverse effect on our business, financial position and results of operations, and the market value of our common shares could decline.

Failure to close transactions could damage our business.

There are a number of risks and uncertainties relating to our closing transactions, including our proposed transactions to acquire Sanitas and certain assets and rights relating to Dermik and Ortho Dermatologics. There is no assurance as to when or if such transactions will close. There is no assurance that the closing conditions will be satisfied or waived or that other events will not intervene to delay or result in the termination of the related agreements. If such transactions are not completed for any reason, we will be subject to several risks, including the following: (i) the market price of our common shares may reflect a market assumption that such transactions will occur, and a failure to complete such transactions could result in a negative perception by the market of us generally and a decline in the market price of our common shares; and (ii) many costs relating to the such transactions may be payable by us whether or not such transactions are completed. If such transactions are not completed, the risks described above may materialize and cause a material adverse effect on our business, financial position and results of operations and could cause the market value of our common shares to decline.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On November 4, 2010, the Company announced that the board of directors approved a securities repurchase program (the "securities repurchase program"), pursuant to which the Company may make purchases of its common shares, convertible notes and/or senior notes, from time to time, up to an aggregate maximum value of $1.5 billion, subject to any restrictions in the Company's financing agreements and applicable law. The securities repurchase program expires on November 7, 2011.

Set forth below is information regarding securities repurchased under the securities repurchase program, as well as common shares and other equity securities of the Company purchased other than pursuant to the securities repurchase program, in the three-month period ended June 30, 2011:

Period			Average Price Paid Per Share (or Unit)				Approximate Dollar Value of Shares (or Units) That May Yet Be Purchased Under the Plan

April 2011	—		$	—	—		$	764,354,931
May 2011	11,480	⁽¹⁾	$	3,463.87	11,480	⁽¹⁾	$	724,589,745
May 2011	4,498,180	⁽²⁾	$	49.98	4,498,180	⁽²⁾	$	499,775,726
June 2011	45,158	⁽¹⁾	$	3,603.87	45,158	⁽¹⁾	$	337,032,220
June 2011	11,479,365	⁽³⁾	$	14.15	—		$	337,032,220

(1): $1,000 principal amount of 5.375% senior convertible notes due 2014.
(2): Common shares.
(3): 11,479,365 common shares of the Company were received on the net share settlement of purchased call options, which had a strike price of $14.15.

Item 3. Defaults Upon Senior Securities

None.

Item 4. (Removed and Reserved)

Item 5. Other Information

None.

Item 6. Exhibits


2.1**		Asset Purchase Agreement dated July 8, 2011 among Valeant Pharmaceuticals International, Inc., Valeant International (Barbados) SRL and Sanofi *†
2.2**		Asset Purchase Agreement dated July 15, 2011 among Valeant Pharmaceuticals International, Inc. (as guarantor only), Valeant International (Barbados) SRL, Valeant Pharmaceuticals North America LLC and Janssen Pharmaceuticals, Inc. *†
2.3		Purchase Agreement, dated as of May 6, 2011, between ValueAct Capital Master Fund, L.P. and 0909657 B.C. Ltd., originally filed as Exhibit 2.4 to the Company's Quarterly Report on Form 10-Q filed on May 10, 2011, which is incorporated by reference herein.
10.1		Credit and Guaranty Agreement, dated June 29, 2011, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 6, 2011, which is incorporated by reference herein.
10.2		Separation Agreement between Valeant Pharmaceuticals International, Inc. and Mark Durham, dated July 7, 2011, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 7, 2011, which is incorporated by reference herein.
10.3		Employment Letter between Valeant Pharmaceuticals International, Inc. and Brian Stolz, dated June 27, 2011, originally filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on July 7, 2011, which is incorporated by reference herein.


10.4		Valeant Pharmaceuticals International, Inc. 2011 Omnibus Incentive Plan, effective as of April 6, 2011, as amended on and approved by the shareholders on May 16, 2011, originally filed as Annex A to the Company's Management Proxy Circular and Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 14, 2011, as amended by the Supplement dated May 10, 2011 to the Company's Management Proxy Circular and Proxy Statement filed with the Securities and Exchange Commission on May 10, 2011, which is incorporated herein by reference.
10.5		Amendment, dated April 6, 2011 and approved by the shareholders on May 16, 2011, to Biovail Corporation 2007 Equity Compensation Plan, originally filed as Annex B to the Company's Management Proxy Circular and Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 14, 2011, which is incorporated herein by reference.
10.6**		Valeant Pharmaceuticals International, Inc. Directors Share Unit Plan, effective May 16, 2011.
10.7**		License Agreement, dated June 29, 2011, between Meda Pharma SARL and Valeant International (Barbados) SRL.*
31.1**		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document††
101.SCH		XBRL Taxonomy Extension Schema††
101.CAL		XBRL Taxonomy Extension Calculation Linkbase††
101.LAB		XBRL Taxonomy Extension Label Linkbase††
101.PRE		XBRL Taxonomy Extension Presentation Linkbase††
101.DEF		XBRL Taxonomy Extension Definition Linkbase††

*: Portions of this exhibit have been omitted pursuant to an application for confidential treatment. Such information has been omitted and filed separately with the SEC.
**: Filed herewith.
†: One or more exhibits or schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
††: Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		Valeant Pharmaceuticals International, Inc. (Registrant)

Date: August 5, 2011		/s/ J. MICHAEL PEARSON J. Michael Pearson Chairman and Chief Executive Officer (Principal Executive Officer)

Date: August 5, 2011		/s/ PHILIP W. LOBERG Philip W. Loberg Executive Vice President and Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

INDEX TO EXHIBITS

Exhibit No.		Exhibit Description

2.1**		Asset Purchase Agreement dated July 8, 2011 among Valeant Pharmaceuticals International, Inc., Valeant International (Barbados) SRL and Sanofi*†
2.2**		Asset Purchase Agreement dated July 15, 2011 among Valeant Pharmaceuticals International, Inc. (as guarantor only), Valeant International (Barbados) SRL, Valeant Pharmaceuticals North America LLC and Janssen Pharmaceuticals, Inc.*†
2.3		Purchase Agreement, dated as of May 6, 2011, between ValueAct Capital Master Fund, L.P. and 0909657 B.C. Ltd., originally filed as Exhibit 2.4 to the Company's Quarterly Report on Form 10-Q filed on May 10, 2011, which is incorporated by reference herein.
10.1		Credit and Guaranty Agreement, dated June 29, 2011, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 6, 2011, which is incorporated by reference herein.
10.2		Separation Agreement between Valeant Pharmaceuticals International, Inc. and Mark Durham, dated July 7, 2011, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 7, 2011, which is incorporated by reference herein.
10.3		Employment Letter between Valeant Pharmaceuticals International, Inc. and Brian Stolz, dated June 27, 2011, originally filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on July 7, 2011, which is incorporated by reference herein.
10.4		Valeant Pharmaceuticals International, Inc. 2011 Omnibus Incentive Plan, effective as of April 6, 2011, as amended on and approved by the shareholders on May 16, 2011, originally filed as Annex A to the Company's Management Proxy Circular and Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 14, 2011, as amended by the Supplement dated May 10, 2011 to the Company's Management Proxy Circular and Proxy Statement filed with the Securities and Exchange Commission on May 10, 2011, which is incorporated herein by reference.
10.5		Amendment, dated April 6, 2011 and approved by the shareholders on May 16, 2011, to Biovail Corporation 2007 Equity Compensation Plan, originally filed as Annex B to the Company's Management Proxy Circular and Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 14, 2011, which is incorporated herein by reference.
10.6**		Valeant Pharmaceuticals International, Inc. Directors Share Unit Plan, effective May 16, 2011.
10.7**		License Agreement, dated June 29, 2011, between Meda Pharma SARL and Valeant International (Barbados) SRL.*
31.1**		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certification of the Chief Executive Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certification of the Chief Financial Officer pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document††
101.SCH		XBRL Taxonomy Extension Schema††
101.CAL		XBRL Taxonomy Extension Calculation Linkbase††

Exhibit No.		Exhibit Description

101.LAB		XBRL Taxonomy Extension Label Linkbase††
101.PRE		XBRL Taxonomy Extension Presentation Linkbase††
101.DEF		XBRL Taxonomy Extension Definition Linkbase††

*: Portions of this exhibit have been omitted pursuant to an application for confidential treatment. Such information has been omitted and filed separately with the SEC.
**: Filed herewith.
†: One or more exhibits or schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
††: Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

QuickLinks

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets
Consolidated Statements of Income (Loss)
Consolidated Statements of Accumulated Deficit
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Defaults Upon Senior Securities

Item 5. Other Information

Item 6. Exhibits

SIGNATURES
INDEX TO EXHIBITS

Exhibit 2.1

*** [Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. The omissions have been indicated with asterisks (“***”), and the omitted text has been filed separately with the Commission.]

ASSET PURCHASE AGREEMENT

among

SANOFI,

VALEANT INTERNATIONAL (BARBADOS) SRL

and

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

Dated July 8, 2011

TABLE OF CONTENTS

			Page

Article	1	Definitions And Terms	10
	1.1	Definitions	10
	1.2	Other Definitional Provisions	25
	1.3	Interpretation	27

Article	2	Transferred Assets and Assumed Liabilities	28
	2.1	Transferred Assets	28
	2.2	Assumed Liabilities	33

Article	3	Purchase Price and Inventory Purchase Price	38
	3.1	Purchase Price	38
	3.2	Allocation of the Purchase Price	38
	3.3	Inventory Purchase Price — Stock-takes	38

Article	4	Closing	41
	4.1	Closing	41
	4.2	Deliveries by Seller	42
	4.3	Deliveries by Purchasers	44
	4.4	Local Transfers	44

Article	5	Representations and Warranties of Seller	45
	5.1	Corporate Organization	45
	5.2	Authority; Binding Effect	46
	5.3	No Violations; Consents and Approvals	46
	5.4	Scope of and Title to Transferred Assets	47
	5.5	Product Registrations	48
	5.6	Contracts	48
	5.7	Transferred Intellectual Property	49
	5.8	Movable Assets and Inventory	52
	5.9	Owned Real Property	53
	5.10	Environmental Matters	55
	5.11	Employees and Employee Benefit Plans	55
	5.12	Labor Relations	57
	5.13	Information to and Consultation with Employee Representatives	58
	5.14	Litigation	58
	5.15	Compliance with Laws	59
	5.16	Certain Financial Information	60
	5.17	Absence of any Changes	60
	5.18	Brokers and Finders	61
	5.19	Product Liability	61
	5.20	Suppliers and Customers	61
	5.21	Regulatory Matters	61

	5.22	Foreign Corrupt Practices Act; International Trade Sanctions	64
	5.23	Tax Matters	65
	5.24	No Other Representation and/or Warranty	65

Article	6	Representations and Warranties of Purchasers	66
	6.1	Corporate Organization	66
	6.2	Authority; Binding Effect	66
	6.3	No Violations; Consents and Approvals	67
	6.4	Financial Capability	68
	6.5	Brokers and Finders	68
	6.6	GST, HST and QST Registration — Canada	68
	6.7	No Other Representation and/or Warranty	68
	6.8	Independent Assessment	68

Article	7	Covenants of the Parties	69
	7.1	Covenants Prior to Closing	69
	7.2	Post-Closing Covenants	79
	7.3	Consents pertaining to Transferred Contracts — Shared Contracts	98
	7.4	Waiver of Bulk-Sales Laws	99
	7.5	Title Insurance	99
	7.6	***	100

Article	8	Conditions Precedent to Closing	100
	8.1	Mutual Conditions Precedent to Closing	100
	8.2	Additional Conditions Precedent of Purchasers	100
	8.3	Additional Conditions Precedent of Seller	101

Article	9	Indemnification	102
	9.1	Indemnification	102
	9.2	Indemnification Process for Direct Claims	103
	9.3	Indemnification Process for Third Party Claims	104
	9.4	Limitation on Indemnity Payments	106

Article	10	Termination	112
	10.1	Conditions of Termination	112
	10.2	Consequences of Termination	112

Article	11	General Provisions	113
	11.1	Expenses and Taxes	113
	11.2	Amendments; Waiver	114
	11.3	Entire Agreement	114
	11.4	Confidentiality; Public Announcements	115
	11.5	Governing Law; Dispute Resolution	116
	11.6	Captions	117
	11.7	Notices	117
	11.8	Severability	118
	11.9	Binding Effect; No Assignment	119

11.10	Specific Performance	119
11.11	Incorporation by Reference	119
11.12	Counterparts	120
11.13	French Assets	120

iii

LIST OF SCHEDULES WITHIN THE DISCLOSURE LETTER

Schedule 1.1(A)	Discontinued Product Patents

Schedule 1.1(B)	Discontinued Products and Discontinued Product Territories

Schedule 1.1(C)	Discontinued Product Trademarks

Schedule 1.1(D)	Discontinued Product Copyrights

Schedule 1.1(E)	IT Global Software Licenses

Schedule 1.1(F)	Knowledge of Purchasers

Schedule 1.1(G)	Knowledge of Seller

Schedule 1.1(H)	Products and Product Territories

Schedule 1.1(I)	Regional Products

Schedule 1.1(J)	Shared Contracts

Schedule 1.1(K)	Third Party Products

Schedule 1.1(M)	Worldwide Products

Schedule 2.1.1(a)	Transferred Intellectual Property (U.S.)

Schedule 2.1.1(b)	Transferred Contracts (U.S.)

Schedule 2.1.1(d)	Product Registrations (U.S.)

Schedule 2.1.2(b)	Facility Assets

Schedule 2.1.2(c)	Transferred Intellectual Property (Non-U.S.)

Schedule 2.1.2(d)	Transferred Contracts (Non-U.S.)

Schedule 2.1.2 (f)	Product Registrations (Non-U.S.)

Schedule 2.1.2 (i)	Movable Assets located at Third Party Manufacturing Locations

Schedule 2.1.2 (j)	Other Movable Assets

Schedule 2.1.3 (k)	Excluded Movable Assets

Schedule 3.1	Allocation of Purchase Price Between Purchasers

Schedule 3.2	Allocation of Purchase Price Among Transferred Assets

Schedule 3.3.2	Breakdown of Inventory

Schedule 5.4(a)(ii)	Non-Transferred Functions

Schedule 5.5(a)	Other Product Registrations

Schedule 5.6(a)	Intra-Group Agreements

Schedule 5.6(d)	Notices from Third Parties

Schedule 5.7(b)	Exclusive Out-Licenses

Schedule 5.8(b)	Warehouses

Schedule 5.9(a)	Real Property

Schedule 5.9(c)	Certificate of Location for the Owned Property

Schedule 5.9(i)	Encumbrances

Schedule 5.9(m)	Certain Documents

Schedule 5.10	Environmental Matters

Schedule 5.10(g)	Environmental Documents

Schedule 5.11(a)(i)	Eligible Employees

Schedule 5.11(a)(ii)	Mandatorily Transferred Employees

Schedule 5.11(b)	Seller Compensation and Benefit Plans

Schedule 5.11(h)	Transaction Compensation

Schedule 5.14(a)	Legal Proceedings

Schedule 5.14(b)	Orders

Schedule 5.14(d)	Audits

Schedule 5.15(a)	Compliance with Laws

Schedule 5.15(b)	Required Governmental Approvals

Schedule 5.16	Unaudited Financial Information

Schedule 5.17	Changes since ***

Schedule 5.19	Product Liability

Schedule 5.20	Suppliers and Customers

Schedule 5.21(d)	Written Information Received regarding Applications for Marketing Approvals

Schedule 5.21(h)	Product Recalls since ***

Schedule 5.21(i)	Notification regarding Recalls and Warning Letters

Schedule 7.1.1	Operation pending Closing

Schedule 7.1.1(h)	Actions Relating to Agreements

Schedule 7.1.2.4	Antitrust Approvals

Schedule 7.2.4	Clinical Study

Schedule 7.2.5.3	Procedure Applicable to Marketing and Promotional Activities

Schedule 7.2.9(b)	Non-solicit Employees

Schedule 7.2.17.1(a)	Seller IT Services to Business Purchaser

Schedule 7.2.17.1(b)	Business Purchaser IT Services to Seller

Schedule 7.2.17.3	Other Transitional Services

Schedule 7.3(e)	Purchase Price Reduction

Schedule 8.1(d)	Material Consents

vii

LIST OF EXHIBITS TO THE DISCLOSURE LETTER

Exhibit A	Reserved

Exhibit B	Business Purchaser Toll Manufacturing Agreement

Exhibit C	Seller Supply Agreements

Exhibit D-1	Patent Assignment Agreement

Exhibit D-2	Trademark Assignment Agreement

Exhibit D-3	Know-How Assignment Agreement

Exhibit D-4	Copyright Assignment Agreement

Exhibit E	Intellectual Property License and Hold Harmless Agreement

Exhibit F	Lease Agreement

Exhibit G	Amended and Restated Joint Defense Agreement

Exhibit H	Canadian Deed of Sale

Exhibit I	Inventory Purchase Agreement

Exhibit J	General Release

Exhibit K	Transitional Distribution Agreement

Exhibit L	Reserved

Exhibit M	Rebate, Return and Chargeback Agreement

viii

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”) is made on July 8, 2011, by and among Sanofi, a French corporation with its principal place of business located at 174, avenue de France, 75013 Paris, France (“Seller”), Valeant International (Barbados) SRL, an international society with restricted liability established under the laws of Barbados (“IP Purchaser”), and Valeant Pharmaceuticals International, Inc., a corporation organized under the laws of Canada (“Business Purchaser” and, together with IP Purchaser, “Purchasers”).

Seller, IP Purchaser and Business Purchaser are individually referred to as a “Party” and collectively as the “Parties”.

Unless otherwise indicated, capitalized terms used herein shall have the meaning set forth in Article 1 .

RECITAL

WHEREAS, Seller desires to sell, transfer and assign, or cause its Relevant Affiliates to sell, transfer and assign, to Purchasers, and Purchasers desire to purchase and assume from Seller and its Relevant Affiliates, all of the Transferred Assets and the Assumed Liabilities, as more specifically provided herein.

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the Parties hereto agree as follows:

ARTICLE 1 DEFINITIONS AND TERMS

1.1 Definitions

As used in this Agreement, the following terms shall have the meanings set forth below:

“Affiliate” shall mean, as to any Person, any other Person which, directly or indirectly, controls, is controlled by, or is under common control with, such Person. For the purpose of this definition, “control”, “controlled by” or “under common control with” means the possession of the power to direct or cause the direction of management and policies of such Person, whether through direct or indirect ownership of voting securities or otherwise.

“Agreement” shall mean this Asset Purchase Agreement, as the same may be amended or supplemented from time to time in accordance with the terms of this Agreement, including the Disclosure Letter and the Exhibits and Schedules thereto.

“Amended and Restated Joint Defense Agreement” means the Amended and Restated Joint Defense Agreement entered into between Seller and Business Purchaser with respect to the ***, in the form attached as Exhibit G to the Disclosure Letter.

“Ancillary Agreements” shall mean the Patent Assignment Agreement, the Trademark Assignment Agreement, the Copyright Assignment Agreement, the Know-How Assignment Agreement, the Intellectual Property License and Hold Harmless Agreement, the Business Purchaser Toll Manufacturing Agreement, the Seller Supply Agreements, the Lease Agreement, the Transition Services Agreement, the IT Transition Services Agreement, the Inventory Purchase Agreements, the Canadian Deed of Sale, the Amended and Restated Joint Defense Agreement, the Transitional Distribution Agreement, the General Release, the Technical and Regulatory Agreement, the Rebate, Return and Chargeback Agreement and any Local Transfer Agreements.

“Appurtenances” means privileges, rights, easements and appurtenances both at law and equity belonging to or for the benefit of the Owned Lands, including means of access between the Owned Lands and a public way, rights in respect of or for any other uses upon which the present use is dependent (such as pipelines, cables, railway sidings) and rights existing in and to any streets, alleys, passages and other rights-of-way.

“Assumed Liabilities” shall mean the IP Purchaser Assumed Liabilities and the Business Purchaser Assumed Liabilities.

“Authorized Person” of any Person shall mean any officer or employee of such Person duly authorized to take the subject action.

“Business” shall mean, collectively, the Worldwide Products Business and the Regional Products Business.

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on which banks in Paris, France, in Montreal, Canada or in New York, New York are obligated by Law or executive order to close.

“Canadian Competition Act” shall mean the Canadian Competition Act, R.S.C. 1985, c. C-34, and the regulations thereunder.

“Canadian Competition Act Approval” shall mean: (a) Purchasers or the Parties shall have received from the Commissioner an advance ruling certificate issued under section 102(1) of the Canadian Competition Act in respect of the transactions contemplated by this Agreement and such advance ruling certificate has not been modified or withdrawn; or (b) the applicable waiting period under section 123(1) of the Canadian Competition Act shall have expired or shall have been terminated early under section 123(2) of the Canadian Competition Act, or the obligation to submit a notification under Part IX of the Canadian Competition Act shall have been waived pursuant to section 113(c) of the Canadian Competition Act, and Purchasers shall have received a letter from the Commissioner confirming that the Commissioner does not, at that time, intend to make an application under Section 92 of the Canadian Competition Act in respect of the transactions contemplated by this Agreement, and such letter has not been modified or withdrawn.

“Canadian Deed of Sale” shall mean the deed of sale transferring to Business Purchaser a one hundred percent (100%) registered interest in the Owned Real Property and the Facility to be executed by Seller and/or Seller’s Canadian Relevant Affiliate, on the one hand, and Business Purchaser, on the other hand, with an intervention, if applicable, which deed shall be governed by the laws of the Province of Québec, Canada.

“Canadian Pension Plan” shall mean a “registered pension plan” as defined in the Income Tax Act (Canada).

“Closing” shall mean, subject to the satisfaction or waiver of all other conditions precedent set forth in Article 8 , the closing of the transactions contemplated by this Agreement.

“Closing Inventory Value” shall mean the value of the Inventory existing on the Closing Date calculated in accordance with the provisions of Section 3.3.2 .

“Commissioner” shall mean the Commissioner of Competition appointed under the Canadian Competition Act or any Person duly authorized to perform duties on behalf of the Commissioner of Competition.

“Consent” shall mean any of the consents, approvals, authorizations and waivers of any Third Party that are necessary for the transfer of the Transferred Assets, other than Governmental Approvals.

“Copyrights” shall mean copyrights in all works of authorship, whether or not published, including copyrights in computer software (whether in source code, object code, or other form), algorithms, databases, compilations and data, copyrights in technology supporting the foregoing, copyrights in all documentation, including user manuals and training materials, related to any of the foregoing and all registrations and applications for registration of any of the foregoing.

***

“Discontinued Product Copyrights” shall mean the Copyrights owned by Seller or its Affiliates related to Discontinued Products in the Discontinued Product Territories and set forth on Schedule 1.1(D) to the Disclosure Letter.

“Discontinued Product Patents” shall mean the Patents owned by Seller or its Affiliates related to Discontinued Products in the Discontinued Product Territories and set forth on Schedule 1.1(A) to the Disclosure Letter.

“Discontinued Product Territories” shall mean, with respect to each Discontinued Product, the countries of the world corresponding to such Discontinued Product set forth on Schedule 1.1(B) to the Disclosure Letter.

“Discontinued Product Trademarks” shall mean the Trademarks owned by Seller or its Affiliates related to Discontinued Products in the Discontinued Product Territories and set forth on Schedule 1.1(C ) to the Disclosure Letter.

“Discontinued Products” shall mean the products set forth on Schedule 1.1(B) to the Disclosure Letter.

“Encumbrance” shall mean any mortgage, security interest, lien, hypothec, pledge, easements, title retention clause or other encumbrance of any kind, character or description, whether or not of record, in respect of a particular property or asset.

“Environment” shall mean any land, soil, substrata, groundwater, surface water, drinking water, sediment or air.

“Environmental Laws” shall mean all Laws (including the Canadian Environmental Protection Act, 1999 and the Environment Quality Act (Québec)) relating to the protection of health, safety or the Environment, including Laws relating to Environmental Releases or threatened Environmental Releases of Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials.

“Environmental Matters” shall mean all matters relating to the Transferred Assets, including the Facility and the Owned Land, in connection with: (a) pollution or contamination of the Environment or the presence, existence, disposal or Environmental Release of Hazardous Materials, including Liability to perform Remedial Action, (b) any personal injury to any Person, including illness and disease, resulting from the exposure to any Hazardous Materials, (c) the

creation, production or existence of any noise, vibration, odor, radiation, legal nuisance or any other adverse impact on the Environment or on any Person or resulting in harm or damage to, or restriction of use of property, including Liability to perform Remedial Action, (d) a violation of or requirement to come into compliance with Environmental Laws or Governmental Approvals relating to the Environment or (e) the disposal, or arrangement for same, of any Hazardous Materials generated in connection with the operation of the Transferred Assets, or at the Facility or the Owned Land.

“Environmental Release” shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, escape or migration of Hazardous Materials into the Environment.

“ERISA” shall mean the U.S. Employee Retirement Income Security Act of 1974, as amended.

“Excluded Patents” shall mean United States Patent Number ***, United States Patent Number ***, Canadian Patent Number ***, Canadian Patent Number ***, Canadian Patent Number *** and Canadian Patent Number ***, and all divisionals, continuations, continuations-in-part, reissues, extensions or foreign counterparts of any of the foregoing.

“Facility” shall mean the manufacturing and packaging facility of Seller’s Canadian Relevant Affiliate and adjacent office building and distribution facility, each located in Laval, Québec, Canada and described on Schedule 5.9(a) to the Disclosure Letter.

“FDA” shall mean the United States Food and Drug Administration, or any successor agency thereto having the administrative authority to regulate the marketing of human pharmaceutical products or biological therapeutic products, delivery systems and devices in the United States.

“Fundamental Reps” shall mean the representations and warranties set forth in Sections 5.1 (Corporate Organization), 5.2 (Authority; Binding Effect), 5.4(b) (Title to Transferred Assets), 5.18 (Brokers and Finders), 6.1 (Corporate Organization), 6.2 (Authority; Binding Effect) and 6.5 (Brokers and Finders).

“Governmental Approvals” shall mean any notices, reports or other filings to be made, or any consents, registrations, permits, authorizations, approvals, franchises, orders, certificates, directives, licenses, variances, registrations or other rights issued to or required by Seller or its Relevant Affiliates relating to the Business or any of the Transferred Assets to be obtained from any Governmental Authority, including any Antitrust Approvals, but excluding the Product Registrations, and, in the case of the Facility, to manufacture, package and distribute Products or Third Party Products pursuant to manufacturing agreements with Third Parties.

“Governmental Authority” shall mean any central, supranational, national, federal, state, provincial, municipal, regional or local judicial, legislative, executive authority, agency, court, board, department, bureau, official, minister, Canadian crown corporation to the extent it exercises regulatory authority, body, board, commission or other governmental entity, including any competent governmental authority responsible for the determination, assessment or collection of Taxes.

“Hazardous Materials” shall mean any material, substance, chemical, waste, hazardous waste, pollutant, contaminant or hazardous or toxic substance which is listed or regulated pursuant to any Environmental Law, including asbestos, formaldehyde, polychlorinated biphenyls, lead based paint, radioactive materials, waste oil and other petroleum products.

“Health Canada” shall mean the Canadian federal regulatory authority known as Health Canada which has the administrative authority to regulate the approval and making of human pharmaceutical products or biological therapeutic products, delivery systems and medical devices in Canada.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“IFRS” shall mean international financial reporting standards, as issued by the International Accounting Standards Board (IASB), as in effect as of the applicable date.

“Improvements” shall mean all buildings, fixtures, sidings, parking lots, roadways, structures, erections, fixed machinery, fixed equipment and Appurtenances situated on, in, under, over or forming part of, the Owned Lands and/or the Facility.

“Intellectual Property” shall mean Patents, Trademarks, Know-How and Copyrights.

“Inventory” shall mean to the extent owned by Seller and/or its Relevant Affiliate (i) the finished Products having passed Seller’s or its Affiliates’ quality control and monthly and quarterly impairment procedures; (ii) the excipients, raw materials, active ingredients, work in progress, by-products, operating supplies and packaging materials of Products manufactured at the Facility; and (iii) the excipients, raw materials (other than active ingredients), work in progress, by-products, operating supplies and packaging materials used in the manufacture at the Facility of products (other than Products) manufactured for Seller or any of its Affiliates or any Third Party.

“Inventory Purchase Agreements” shall mean the individual agreements between Seller and/or its Relevant Affiliates, on the one hand, and Purchasers and/or their Relevant Affiliates,

on the other hand, in respect of the sale of Inventory, in the form attached as Exhibit I to the Disclosure Letter.

“IT Global Software Licenses” shall mean the contracts entered into by Seller and/or its Relevant Affiliates regarding software licenses partially but not exclusively applicable to the Business or the Facility that are set forth in Schedule 1.1(E) to the Disclosure Letter.

“Know-How” shall mean know-how, trade secrets and other confidential and proprietary information, including invention rights, technical, pre-clinical and clinical data, instructions, dossiers, processes, methods, formulas, formulation information, packaging and chemical specifications, raw material specifications, chemical and finished goods analytical test methods, stability data, testing data and quality control data for biological, chemical, pharmacological, toxicological, physical, analytical, clinical and safety.

“Knowledge of Purchasers” shall mean the actual knowledge of the individuals set forth on Schedule 1.1(F) to the Disclosure Letter, after such individuals have made (or are deemed to have made) reasonable inquiry of the persons directly reporting to such listed persons (and any persons actually specified by such directly reporting persons as having relevant information).

“Knowledge of Seller” shall mean the actual knowledge of the individuals set forth on Schedule 1.1(G) to the Disclosure Letter, after such individuals have made (or are deemed to have made) reasonable inquiry of the persons directly reporting to such listed persons (and any persons actually specified by such directly reporting persons as having relevant information), in each case in respect only of the representations and warranties listed opposite their respective names in such Schedule 1.1(G) .

“Law” shall mean, as applicable, all national, federal, territorial, foreign, state, provincial, regional, municipal and local laws (including common law and civil law), treaties, decrees, rulings, injunctions, statutes, codes, rules, regulations, ordinances, policies, practices, binding guidelines issued by Health Canada or the FDA, Orders, permits and directives of, or issued by, all Governmental Authorities.

“Legal Proceeding” shall mean any claim, action, assertion, suit, case, litigation, proceeding, injunction, prohibition, order, notice of a claim, inquiry, summons, charge, criminal prosecution, investigation demand letter, finding of deficiency or non-compliance, adverse inspection report, notice of violation, penalty, fine, sanction, subpoena, request for recall, remedial action, arbitration, mediation or alternative dispute resolution proceeding.

“Liability” shall mean all debts, liabilities, costs, guarantees, commitments and obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due,

direct or indirect whenever or however arising (including whether arising out of any contract, common law or tort based on negligence or strict liability) and whether or not the same would be required by generally accepted principles and accounting policies to be reflected in financial statements or disclosed in the notes thereto.

“Licensed Intellectual Property” shall mean all Intellectual Property that Seller and/or its Relevant Affiliates is licensed to use pursuant to a Transferred Contract.

“Local Transfer Agreements” shall mean the local transfer agreements to be executed on or after the Closing Date by Seller, Purchasers and/or their respective Relevant Affiliates in accordance with local Laws and Section 4.4 .

“Material Adverse Effect” shall mean any change, circumstance, event or effect (other than any matter described in the Disclosure Letter attached hereto to the extent the import of such matter is reasonably apparent on the face of such disclosure) that, individually or in the aggregate, has or would reasonably be expected to have, a material adverse effect on the Business, the Transferred Assets, results of operations or condition (financial or otherwise) of the Transferred Assets or the Business, or the Assumed Liabilities, taken as a whole, or on the ability of Seller or its Relevant Affiliates to perform their respective obligations under, or consummate, the transactions contemplated by this Agreement; provided , however no effect arising from or relating to the following will be deemed to constitute a Material Adverse Effect, or will be taken into account in determining whether a Material Adverse Effect has occurred: (i) any change in business, economic, social, political or legal conditions or financial markets generally in the Product Territories or elsewhere, (ii) any change or condition generally affecting the pharmaceutical industry in the Product Territories or elsewhere, (iii) changes in Laws or accounting standards, including interpretations thereof by courts or any other Governmental Authority, (iv) the outbreak of war or acts of terrorism, hurricanes, other natural disasters or acts of God in the Product Territories or elsewhere or (v) the announcement of, or the taking of any action required by or with the written consent of either Purchaser pursuant to, this Agreement and the Ancillary Agreements, except, in each case, where such change has a disproportionate adverse effect on the results of operations or condition (financial or otherwise) of the Transferred Assets or Business, taken as a whole, relative to other Persons carrying on a similar business.

“Material Consents” shall mean the Consents set forth in Schedule 8.1(d) to the Disclosure Letter.

“Material Transferred Contracts” shall mean the written contracts identified with an “x” and set forth on Schedule 2.1.1(b) to the Disclosure Letter and the written contracts identified with an “x” and set forth on Schedule 2.1.2(d) to the Disclosure Letter.

“Multi-Employer Plans” shall mean: (i) with respect to arrangements maintained in the United States, a “multiemployer plan” as defined in Section 3(37) of ERISA; and (ii) with

respect to arrangements maintained in Canada, Seller Compensation and Benefit Plans to which Seller or its Affiliates are required to contribute and which are not maintained or administered by Seller or its Affiliates.

“Order” shall mean any award, judgment, decision, injunction, stipulation, order, ruling, subpoena, writ, determination, decree, consent decree, or verdict entered, issued, made or rendered by any arbitrator, mediator or Governmental Authority.

“Owned Lands” shall mean the lands of the Facility described in Schedule 5.9(a) to the Disclosure Letter.

“Owned Real Property” shall mean the Owned Lands, the Improvements and the Appurtenances.

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“Patents” shall mean patents and patent applications, divisionals, continuations, continuations-in-part, reissues, re-examinations, substitutions, and supplementary protection certificates and other extensions thereof and statutory invention registrations.

“Permitted Encumbrance” shall mean, to the extent it does not materially and adversely impact the value or continued use of the affected property on substantially the same basis as the Business is currently being operated and such assets are currently being used, (i) any security interest or title retention clause granted in the ordinary course of business pertaining to Inventory purchased by Seller or its Relevant Affiliates, (ii) Encumbrances for Taxes and mechanics’, materialmen’s Encumbrances for construction in progress, workmen’s, repairmen’s, warehousemen’s, landlord’s and carriers’ liens arising in the ordinary course of business which are either not yet due and payable or are being contested in good faith in the ordinary course of business by appropriate proceedings, which such contested Encumbrances shall be deemed Excluded Liabilities, (iii) non material title defects or irregularities, unregistered easements or rights of way, and other unregistered restrictions or other encumbrances affecting the use of the Facility or the Owned Lands, including the matters disclosed in Schedule 5.9(c) to the Disclosure Letter, (iv) non-exclusive licenses of Intellectual Property granted in the ordinary course of business, (v) rights of existing tenants, or of Seller or any of its Affiliates pursuant to the Lease Agreement, as tenants only pursuant to written leases delivered to Purchasers prior to the date of this Agreement, and/or (vi) zoning, entitlement and other land use and environmental regulations by any Governmental Authority or registered agreements with municipalities or public utilities ( provided , however , that such regulations or agreements have not been violated).

“Person” shall mean any individual, corporation, partnership (whether general, limited or limited liability), association, joint venture, limited liability company, joint stock company,

unincorporated organization, trust or other legal entity or organization, having legal personality, or the right to sue in its own name.

“Product Registrations” shall mean all approvals, clearances, licenses, authorizations, permits, variances, exemptions, orders and registrations issued prior to the Closing Date to Seller or its Affiliates by the relevant Governmental Authorities to manufacture, market, package, import, distribute and/or sell the Products in the corresponding Product Territories

“Product Territories” shall mean (i) with respect to each Worldwide Product, worldwide, and (ii) with respect to each Regional Product, the countries of the world corresponding to such Regional Product set forth on Schedule 1.1(H) to the Disclosure Letter.

“Products” shall mean, collectively, all Worldwide Products and all Regional Products.

“Rebate, Return and Chargeback Agreement” shall mean the Rebate, Return and Chargeback Agreement between Seller and its Affiliates, on the one hand, and Purchasers and their Affiliates, on the other hand, in the form attached as Exhibit M to the Disclosure Letter.

“Regional Products” shall mean the products set forth on Schedule 1.1(I) to the Disclosure Letter.

“Regional Products Business” shall mean the research, development, commercialization, manufacturing, packaging, distributing, marketing and selling of Regional Products exclusively in the corresponding Product Territories as carried on by Seller or any of its Affiliates (or as Seller or any of its Affiliates has rights to carry on) as of the date of this Agreement.

“Registered” shall mean issued by, registered with, renewed by or the subject of a pending application before any Governmental Authority or Internet domain name registrar.

“Relevant Affiliate” shall mean, as to any of the Parties, and as the context requires, any Affiliate which, according to the provisions of this Agreement, is intended to be a signatory to any of the Ancillary Agreements, or which, as of the date of this Agreement or the Closing Date, has any right, title or interest in or to the Transferred Assets or the Assumed Liabilities.

“Remedial Action” shall mean the investigation, remediation, cure, treatment, removal, containment, neutralization, monitoring or other applicable response action undertaken with respect to the presence or release of any Hazardous Materials to the extent required under Environmental Laws and/or by final and binding demands from Governmental Authorities.

“Retained Copyrights” shall mean all Copyrights owned by Seller or its Affiliates that, as of the date of this Agreement, are partially but not exclusively used or held for use in connection with (i) the Worldwide Products Business, and/or (ii) the Regional Products Business, or (iii) the manufacturing or packaging of Third Party Products at the Facility. For the avoidance of doubt and for the purpose of example only, with respect to Regional Products, the Retained Copyrights include all Copyrights used in connection with the manufacturing, packaging, distributing, marketing and selling of Regional Products in territories other than the corresponding Product Territories (whether or not such Copyrights are also used or held for use in connection with the manufacturing, packaging, distributing, marketing and selling of Regional Products in corresponding Product Territories).

“Retained Intellectual Property” shall mean the Retained Patents, Retained Trademarks, Retained Know-How and Retained Copyrights, and all rights to sue and recover damages for past, present and future infringement, dilution, misappropriation, unlawful imitation or other violation or breach thereof or conflict therewith.

“Retained Know-How” shall mean all Know-How owned by Seller or its Affiliates that, as of the date of this Agreement, is partially but not exclusively used or held for use in connection with (i) the Worldwide Products Business, (ii) the Regional Products Business, or (iii) the manufacturing or packaging of Third Party Products at the Facility. For the avoidance of doubt and for the purpose of example only, with respect to Regional Products, the Retained Know-How includes all Know-How used in connection with the manufacturing, packaging, distributing, marketing and selling of Regional Products in territories other than the corresponding Product Territories (whether or not such Know-How is also used or held for use in connection with the manufacturing, packaging, distributing, marketing and selling of Regional Products in the corresponding Product Territories).

“Retained Patents” shall mean, collectively, the Excluded Patents and all Patents owned by Seller or its Affiliates that, as of the date of this Agreement, are used or held for use partially but not exclusively in connection with (i) the Worldwide Products Business, (ii) the Regional Products Business, or (iii) the manufacturing or packaging of Third Party Products at the Facility.

“Retained Trademarks” shall mean all Trademarks (other than the Discontinued Product Trademarks) owned by Seller or its Affiliates that, as of the date of this Agreement, are used or held for use partially but not exclusively in connection with (i) the Worldwide Products Business and (ii) the Regional Products Business, including any rights to the Sanofi, Aventis, Sanofi-Synthelabo, Sanofi Aventis or Canderm trademarks or trade names. For the avoidance of doubt and for the purpose of example only, with respect to any Regional Product, the Retained Trademarks include all of Seller’s and its Affiliates’ rights in Trademarks in all territories other than the corresponding Product Territories (whether or not such Trademarks are the same as or similar or Trademarks used or held for use in connection with the manufacturing, packaging, distributing, marketing and selling of such Regional Product in the corresponding Product Territories).

“Sanofi Accounting Principles and Practices” shall mean the Sanofi accounting principles and practices applied on a consistent basis, based on (i) the accounting policies, principles, practices, techniques, categorizations, evaluation rules and procedures, methods, and bases adopted in the preparation of the relevant balance sheets, as described in the notes to the consolidated financial statements of Seller (as set forth in Seller’s Form 20-F for the period ended December 30, 2010, filed with the U.S. Securities Exchange Commission on March 1, 2011 under number 001-31368), including in respect of the exercise of management judgment in the preparation of the balances sheets and (ii) to the extent not covered by (i) prepared in accordance with the accounting rules, methods and principles set forth in IFRS.

“Seller Canadian Pension Plan” shall mean the Pension Plan for Employees of Sanofi-Aventis Canada Inc., (Canada Revenue Agency Registration Number 0325860 and Régie des Rentes du Québec Registration Number 021916).

“Seller Canadian Pension Plan Member” shall mean a Transferred Employee who participates in the Seller Canadian Pension Plan.

“Seller Compensation and Benefit Plans” shall mean all plans, arrangements, agreements, programs, policies, practices or undertakings, whether funded or unfunded, insured or uninsured, registered or unregistered including (i) all “employee benefit plans” within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA), (ii) all bonus, vacation, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option, incentive, severance or change-in-control plans or other similar plans, policies, arrangements or agreements, (iii) all employment agreements (or form employment agreements for non-management employees outside of the United States, provided that such form employment agreements are representative of the employment agreements for all such non-management employees), (iv) all medical, dental, disability, health and life insurance plans, and (v) all other employee benefit and fringe benefit plans, policies, arrangements or agreements, in the case of each of (i) through (v) under which Seller or any of its Relevant Affiliates has or will have any liability or contingent liability or which is maintained or contributed to by Seller or any of its Relevant Affiliates, in each case, for the benefit of any of the Eligible Employees or their beneficiaries, excluding Statutory Plans, and in excess of mandatory benefits provided in the relevant country pursuant to applicable Laws or industry wide collective bargaining agreements.

“Seller Supply Agreements” means the Sculptra Supply Agreement and the Frankfurt Supply Agreement, in the form attached as Exhibit C to the Disclosure Letter.

“Shared Contracts” shall mean the contracts of Seller and/or its Relevant Affiliates, other than the IT Global Software Licenses, which are applicable to the Business or the Facility but not exclusively applicable to the Business or the Facility and which are set forth on Schedule 1.1(J) to the Disclosure Letter.

“Statutory Plans” shall mean statutory benefit plans which Seller or any of its Affiliates are required to participate or comply with, including plans administered pursuant to applicable federal, provincial, municipal, state, health tax, workplace safety insurance and employment insurance legislation.

“Tax Return” shall mean any return, declaration, report, claim for refund, information return or statement relating to Taxes, including any amended return, extension request with respect thereto and any schedule or attachment thereto.

“Taxes” shall mean all taxes, charges, fees, duties (including customs duties), levies or other assessment, whether national, federal, regional, foreign, state, provincial, territorial, municipal or local, including taxes on profits, revenues, turnover, sales, purchases, consumption, gains and income taxes, arising on the sale, license, hire, gift or other disposal of any assets which are imposed by any Governmental Authority, and such term shall include any interest, penalties or additions to tax attributable thereto.

“Technical and Regulatory Agreement” means the agreement relating to certain projects of Seller and its Affiliates related to the transfer to the Facility of certain Products and certain capital expenditures initiated by Seller and its Affiliates, as well as other regulatory, technical development and quality-related activities in relation to certain Products, in the form attached as Exhibit L to the Disclosure Letter.

“Third Party” shall mean any Person who is not a Party. Third Party shall not include any Affiliate of a Party, except where the context otherwise requires.

“Third Party Products” shall mean all products manufactured and/or packaged by Seller or any of its Affiliates at the Facility for the benefit of Third Parties (other than Affiliates of Seller) pursuant to the contracts set forth on Schedule 1.1(K) to the Disclosure Letter.

“Trademarks” shall mean trademarks, service marks, composite marks, trade names, corporate names, logos, slogans, trade dress and Internet domain names, and other similar designations of origin, together with the goodwill symbolized by, and all registrations or applications for registrations of, any of the foregoing.

“Transfer Taxes” shall mean any federal, state, provincial, county, local, foreign or other sales, use, transfer, conveyance, documentary transfer, recording or other similar Tax, fee or charge imposed upon the sale, transfer or assignment of property or any interest therein or the recording thereof, and any penalty, addition to Tax or interest with respect thereto, but such term will not include any Tax on, based upon or measured by, the net income, gains or profits from such sale, transfer or assignment of the property or any interest thereon.

“Transferred Assets” shall mean the IP Purchaser Transferred Assets and the Business Purchaser Transferred Assets.

“Transferred Books and Records” shall mean all current and historical books and records in the possession of Seller or its Affiliates, or for which Seller or its Affiliates have the right to deliver, relating exclusively to the Products in their respective Product Territories or the Discontinued Products in their respective Discontinued Product Territories, in whatever form kept, including electronic form, including the operations and sales books, records, files, research, documents, clinical studies, books of account, sales and purchase records, lists of suppliers and customers, regulatory filings, submissions, applications and correspondence, formulae, business reports, plans, projections and manuals, surveys, plans, files, records, assessments, correspondence, and other data and information, sales or otherwise, in each case used in, or held for use in or related exclusively to the Transferred Assets or the Products in the applicable Product Territories or to the Facility or Transferred Employees, and all tangible documentation, materials and information related exclusively to or embodying the Transferred Know-How or related exclusively to or embodying the other Transferred Intellectual Property or the Intellectual Property included in the Transferred Discontinued Product Assets; provided , however , Transferred Books and Records shall not include (i) invoices or (ii) books or records that are subject to restrictions on transfer pursuant to applicable Law regarding personally identifiable information or subject to privacy policies regarding personally identifiable information.

“Transferred Contracts” shall mean the written contracts set forth on Schedule 2.1.1(b) to the Disclosure Letter and Schedule 2.1.2(d) to the Disclosure Letter.

“Transferred Copyrights” shall mean all Copyrights (other than the Retained Copyrights and the Discontinued Product Copyrights), owned by Seller or its Affiliates that, as of the date of this Agreement, are exclusively used or held for use in connection with (i) the Worldwide Products Business, (ii) the Regional Products Business, or (iii) the manufacturing and packaging of Third Party Products at the Facility.

“Transferred Discontinued Product Assets” shall mean all Intellectual Property (including all Discontinued Product Trademarks, all Discontinued Product Patents and all Discontinued Product Copyrights), and all rights to sue and recover damages for past, present and future infringement, dilution, misappropriation, unlawful imitation or other violation or breach thereof or conflict therewith), all Product Registrations, and all Governmental Approvals, in each case that are owned by Seller or its Affiliates that, as of the date of this Agreement, are exclusively used in or held for use in connection with or exclusively related to the Discontinued Products in the corresponding Discontinued Product Territories.

“Transferred Intellectual Property” shall mean the Transferred Patents, Transferred Trademarks, Transferred Know-How and Transferred Copyrights, and all rights to sue and recover damages for past, present and future infringement, dilution, misappropriation, unlawful imitation or other violation or breach thereof or conflict therewith.

“Transferred Know-How” shall mean all Know-How (other than the Retained Know-How) owned by Seller or its Affiliates that, as of the date of this Agreement, exclusively used or held for use in connection with (i) the Worldwide Products Business, (ii) the Regional Products Business, or (iii) the manufacturing or packaging of Third Party Products at the Facility.

“Transferred Patents” shall mean all Patents (other than the Discontinued Product Patents and the Retained Patents) owned by Seller or its Affiliates that, as of the date of this Agreement, are exclusively used or held for use in connection with (i) the Worldwide Products Business, (ii) the Regional Products Business, or (iii) the manufacturing or packaging of Third Party Products at the Facility.

“Transferred Trademarks” shall mean all Trademarks (other than the Discontinued Product Trademarks and the Retained Trademarks) owned by Seller or its Affiliates that, as of the date of this Agreement, are exclusively used or held for use in connection with (i) the Worldwide Products Business or (ii) the Regional Products Business.

“Transitional Distribution Agreement” means the agreement to be executed at Closing by Seller, Purchasers and/or their respective Relevant Affiliates, pursuant to which Seller (or its Relevant Affiliates) will distribute *** and, subject to Section 7.3 , *** for Purchasers (or their Relevant Affiliates) in particular countries until the applicable Product Registration in such countries is transferred to Purchasers (or their Relevant Affiliates), in the form attached as Exhibit K to the Disclosure Letter.

“United States” means the United States of America and its territories, commonwealths and possessions.

“Unsatisfied Order” shall mean any order of Product from a Third Party already accepted by Seller or any of its Relevant Affiliates prior to the Closing Date, but which is not shipped by Seller or its Affiliates on such Closing Date.

“V.A.T.” shall mean the Tax imposed by the Sixth Directive of the European Community, as further amended, and any national legislation implementing that directive together with legislation supplemental thereto or any other Tax of a similar nature imposed elsewhere instead of or in addition to value added tax, including the goods and services tax (“GST”) and harmonized sales tax (“HST”) imposed under the Excise Tax Act (Canada) and the Québec sales tax (“QST”) imposed under An Act respecting the Québec Sales Tax .

“WARN Act” shall mean the Worker Adjustment and Retraining Notification Act of 1988, as amended, and the rules and regulations promulgated thereunder or any similar applicable Law requiring notice to employees in the event of a closing or layoff.

“Worldwide Products” shall mean the products set forth on Schedule 1.1(M) to the Disclosure Letter.

“Worldwide Products Business” shall mean the research, worldwide development, commercialization, manufacturing, packaging, distributing, marketing and selling of Worldwide Products as carried on by Seller or any of its Affiliates (or as Seller or any of its Affiliates has rights to carry on) as of the date of this Agreement.

1.2 Other Definitional Provisions

The following terms are defined elsewhere in this Agreement, as indicated below:

Term		Section

***		9.1(a)
Accrued Time Benefit		7.2.6(g)
Acquisition Position		7.1.7(a)
Aggregate Closing Inventory Value		3.3.3(a)
Amended and Restated Joint Defense Agreement		4.2(g)
API		9.1(a)
Basket		9.4(c)(ii)
Business Purchaser		Preamble
Business Purchaser Assumed Liabilities		2.2.2
Business Purchaser Toll Manufacturing Agreement		4.2(a)
Business Purchaser Transferred Assets		2.1.2
Cap		9.4(c)(ii)
CDSA		5.15(c)
Closing Date		4.1
Competitive Business		7.2.8(a)
Confidential Information		11.4
Copyright Assignment Agreement		4.2(d)
Direct Claim		9.2
Disclosure Supplement		7.1.6(b)
Draft Canadian Tax Legislation		7.2.8(d)
Draft Closing Date Inventory Statement		3.3.2
Eligible Employees		5.11(a)
Excluded Accounts Receivable		2.1.3(d)
Excluded Assets		2.1.3
Excluded Liabilities		2.2.3
Excluded Returns		2.2.3(e)
Extension Period		7.2.2(a)(iii)
FDCA		5.15(c)
Final Closing Date Inventory Statement		3.3.3(a)
Final Inventory Purchase Price		3.3.4(c)
ICC		11.5(b)

ICC Court		11.5(b)
Indemnifiable Party		9.1(c)
Indemnifying Party		9.1(c)
Initial Inventory Purchase Price		3.3.1
Intellectual Property License and Hold Harmless Agreement		4.2(e)
IP Purchaser		Preamble
IP Purchaser Assumed Liabilities		2.2.1
IP Purchaser Transferred Assets		2.1.1
ITA		7.2.8(d)
Know-How Assignment Agreement		4.2(d)
Lease Agreement		4.2(f)
Local Expiration Date		7.2.2(b)
Local Transfer		4.4
Losses		9.1(a)
Mandatorily Transferred Employees		5.11(a)
Material Adverse Effect		9.1(a), 8.2(b)
Minimum Claim Threshold		9.4(c)(ii)
New York Courts		11.5(b)
Notice		11.7
Parties		Preamble
Party		Preamble
Patent Assignment Agreement		4.2(d)
Purchase Price		3.1
Purchaser Canadian Plan		7.2.6(d)
Purchasers		Preamble
Purchasers Indemnified Parties		9.1(a)
QTA		7.2.8(d)
Recordal Notification		7.2.14(a)
Regulatory Agency		5.21(a)
Relevant Information		7.2.3(c)
Resolution Accounting Firm		3.3.3(a)
Restrictive Covenants		7.2.8(a)
Rules		11.5(b)
Seller		Preamble
Seller Indemnified Parties		9.1(b)
Seller Notice		7.1.6(a)
Seller Supply Agreements		4.2(c)
Subsequent Event		7.1.6(b)
Termination Date		9.4(b)
Termination Right Notice		7.1.6(b)
Third Party Claim		9.3(a)
Third Party Claim Notice		9.3(a)
Trademark Assignment Agreement		4.2(d)
Transferred Employees		7.1.7(a)
V.A.T. Payment		11.1(e)

1.3 Interpretation

The words “hereof,” “herein,” “hereinafter,” “hereinabove” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. A reference to an Article or Section is, except as otherwise expressly stated, a reference to an Article or Section of this Agreement. A reference to a Schedule or Exhibit is, except as otherwise expressly stated, a reference to a Schedule or Exhibit to the Disclosure Letter.

Terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. Whenever required by the context, any pronoun used in this Agreement will include the corresponding masculine, feminine or neuter forms.

Time periods based on a number of days within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and, if applicable, by extending the period to the next Business Day following if the last day of the period is not a Business Day.

All references to “U.S. dollars,” “$” or “dollars” shall refer to United States dollars, unless otherwise specified.

The words “include,” “includes” and “including” and words of similar import will be by way of example rather than by limitation.

For the purposes of any assets, liabilities or entities located in the Province of Québec or charged by any deed of hypothec (or any other loan document) and for all other purposes pursuant to which the interpretation or construction of this Agreement may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall include “movable property,” (b) “real property” or “real estate” shall include “immovable property,” (c) “tangible property” shall include “corporeal property,” (d) “intangible property” shall include “incorporeal property,” (e) “security interest,” “mortgage” and “lien” shall include a “hypothec,” “right of retention,” “prior claim” and a “resolutory clause,” (f) all references to filing, perfection, priority, remedies, registering or recording under personal property security legislation shall include publication under the Civil Code of Québec , (g) all references to “perfection” of or “perfected” liens or security interest shall include a reference to an “opposable” or “set up” lien or security interest as against Third Parties, (h) any “right of offset,” “right of setoff” or similar expression shall include a “right of compensation,” (i) “common law” shall include “civil law” including but not limited to the provisions of the Civil Code of Québec (j) “tort” shall include “delict,” (k) “bailor” shall include “depositor” and “bailee” shall include “depositary,” (l) “goods” shall include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (m) an “agent” shall include a “mandatary,” (n) “construction liens” shall include “legal hypothecs,” (o) “joint and several” shall include “solidary,” (p) “gross negligence or willful misconduct” shall be deemed to be “intentional or gross fault,” (q) “beneficial ownership” shall include “ownership on behalf of another as mandatary” or

“ownership constituting a patrimony by appropriation,” (r) “easement” shall include “servitude,” (s) “priority” shall include “prior claim,” (t) “survey” shall include “certificate of location and plan,” (u) “state” shall include “province,” (v) “fee simple title” shall include “absolute ownership,” (w) “accounts” shall include “claims,” (x) “conditional sale” shall include “installment sale,” and (y) “purchase money financing” or “purchase money lien” shall include “installment sales, leases, leasing contracts and vendor’s hypothecs.”

Where there is any inconsistency between the definitions set out in Section 1.1 and the definitions set out in any other Section or Schedule then, for the purposes of construing such other Section or Schedule, the definitions set out in such other Section or Schedule shall prevail.

ARTICLE 2 TRANSFERRED ASSETS AND ASSUMED LIABILITIES

2.1 Transferred Assets

2.1.1 Upon the terms and subject to the conditions of this Agreement, including the conditions precedent set forth in Article 8 and Section 11.13 , on the Closing Date, Seller shall, and/or shall cause its Relevant Affiliates to, sell, assign, transfer, convey and deliver to IP Purchaser all of Seller’s and/or its Relevant Affiliates right, title and interest to, in and under the IP Purchaser Transferred Assets, free and clear of all Encumbrances, other than Permitted Encumbrances, and IP Purchaser shall, or shall cause its Relevant Affiliates to, purchase, acquire and assume from Seller and/or its Relevant Affiliates the IP Purchaser Transferred Assets. For purposes of this Agreement, “IP Purchaser Transferred Assets” means only the following:

(a) all right, title and interest of Seller and its Relevant Affiliates in the Transferred Intellectual Property that is exclusively used in or held for use for the United States (whether or not Registered), including the Transferred Intellectual Property that is Registered set forth on Schedule 2.1.1(a) to the Disclosure Letter (it being understood that there are no material Trademarks for which an application has not been filed);

(b) subject to Section 7.3 , all rights in the Transferred Contracts relating exclusively to the United States set forth on Schedule 2.1.1(b) to the Disclosure Letter, including any Unsatisfied Orders;

(c) subject to Section 7.2.2 , all Governmental Approvals held by Seller and its Relevant Affiliates necessary for the lawful operation of the IP Purchaser

Transferred Assets to the extent transferable to IP Purchaser and/or any of its Relevant Affiliates under applicable Law;

(d) all Product Registrations for Seller products marketed in the United States to the extent they are transferable to IP Purchaser and/or its Relevant Affiliates under applicable Law set forth on Schedule 2.1.1(d) to the Disclosure Letter, it being understood that any Product Registrations not transferred on the Closing Date and held by Seller and/or its Relevant Affiliates that are necessary for the lawful operation of the Business, the Facility or the Transferred Assets shall be governed by the terms of Section 7.2.2 ;

(e) subject to Section 7.2.3 , all Transferred Books and Records for the Products in the United States;

(f) all advertising, marketing, promotional and sales materials (including in store materials), pricing lists, consulting deliverables, customer lists, sales records, vendor reports, master graphics files for all Product related items, financial data, market research, annual reports, research and development files, regulatory files, adverse event reports and files and other literature, catalogs and other sales-related materials currently owned by Seller or its Relevant Affiliates (including customer and supplier lists) to the extent exclusively relating to the Business and/or the Products in the United States;

(g) the amount of, and all rights to, any insurance proceeds received by Seller after the date of this Agreement in respect of the loss, destruction or condemnation of any IP Transferred Assets occurring prior to the Closing or relating to any Assumed Liabilities assumed by the IP Purchaser, to the extent such proceeds are not otherwise used by Seller or its Affiliates to repair such loss or destruction or settle such Assumed Liability prior to or after the Closing; and

(h) all right, title and interest of Seller and its Relevant Affiliates in the Intellectual Property included in the Transferred Discontinued Product Assets exclusively used in or held for use for the United States and all other Transferred Discontinued Product Assets in the United States.

2.1.2 Upon the terms and subject to the conditions of this Agreement, including the conditions precedent set forth in Article 8 and Section 11.13 , on the Closing Date, Seller shall, and/or shall cause its Relevant Affiliates to, sell, assign, transfer, convey and deliver to Business Purchaser all of Seller’s and/or its Relevant Affiliates right, title and interest to, in and under the Business Purchaser Transferred Assets, free and clear of all Encumbrances, other than Permitted Encumbrances, and Business Purchaser shall, or shall cause its Relevant Affiliates

to, purchase, acquire and assume from Seller and/or its Relevant Affiliates the Business Purchaser Transferred Assets. For purposes of this Agreement, “Business Purchaser Transferred Assets” means all of the right, title and interest of Seller and its Relevant Affiliates in the assets exclusively used in or held for use for the Product Territories in connection with the Business (but excluding (x) the items specified in Section 2.1.3 below and (y) the IP Purchaser Transferred Assets), together with the following assets:

(a) all right, title and interest of Seller and its Relevant Affiliates in the Facility and Owned Real Property;

(b) all right, title and interest of Seller and its Relevant Affiliates in (i) all tangible assets physically located at the Facility (other than the tangible assets contemplated by Section 2.1.3(m) and those listed on Schedule 2.1.3(k) to the Disclosure Letter, but including those assets set forth on Schedule 2.1.2(b) to the Disclosure Letter) and (ii) all tangible assets exclusively related to the Business and/or the Products not physically located at the Facility;

(c) all right, title and interest of Seller and its Relevant Affiliates in the Transferred Intellectual Property that is not exclusively used in or held for use for the United States (whether or not Registered), including the Transferred Intellectual Property that is Registered and set forth on Schedule 2.1.2(c) to the Disclosure Letter (it being understood that there are no material Trademarks for which an application has not been filed);

(d) subject to Section 7.3 , all rights outside the United States in the Transferred Contracts set forth on Schedule 2.1.2(d) to the Disclosure Letter, including any Unsatisfied Orders;

(e) all Governmental Approvals held by Seller and its Relevant Affiliates necessary for the lawful operation of the Business Purchaser Transferred Assets to the extent transferable to Business Purchaser and/or any of its Relevant Affiliates under applicable Law;

(f) all Product Registrations for Seller products marketed outside the United States to the extent they are transferable to Business Purchaser and/or its Relevant Affiliates under applicable Law set forth on Schedule 2.1.2(f) to the Disclosure Letter, it being understood that any Product Registrations not transferred on the Closing Date and held by Seller and/or its Relevant Affiliates that are necessary for the lawful operation of the Business, the Facility or the Transferred Assets shall be governed by the terms of Section 7.2.2 ;

(g) subject to Section 7.2.3 , all Transferred Books and Records for the Products outside the United States;

(h) all advertising, marketing, promotional and sales materials (including in store materials), pricing lists, consulting deliverables, customer lists, sales records, vendor reports, master graphics files for all Product related items, financial data, market research, annual reports, research and development files, regulatory files, adverse event reports and files and other literature, catalogs and other sales-related materials currently owned by seller or its Relevant Affiliates (including customer and supplier lists) to the extent exclusively relating to the Business and/or the Products outside the United States;

(i) all movable assets exclusively related to the Products in the corresponding Product Territories (including molds and dies, owned by Seller and/or its Affiliates but located at Third Party manufacturing locations and not necessary for the manufacture of Products by Seller and/or its Relevant Affiliates pursuant to the Seller Supply Agreements) including the movable assets set forth on Schedule 2.1.2(i) to the Disclosure Letter;

(j) all movable assets set forth on Schedule 2.1.2(j) to the Disclosure Letter;

(k) the Inventory, it being agreed that the Inventory will be determined in accordance with the provisions of Section 3.3 and the Inventory Purchase Agreements;

(l) all right, title and interest of Seller and its Relevant Affiliates in the Intellectual Property included in the Transferred Discontinued Product Assets that is not exclusively used in or held for use for the United States and all other Transferred Discontinued Product Assets in the Discontinued Product Territories (other than the United States);

(m) the amount of, and all rights to, any insurance proceeds received by Seller after the date of this Agreement in respect of the loss, destruction or condemnation of any Business Transferred Assets occurring prior to the Closing or relating to any Assumed Liabilities assumed by Business Purchaser, to the extent such proceeds are not otherwise used by Seller or its Affiliates to repair such loss or destruction or settle such Assumed Liability prior to or after the Closing; and

(n) all rights in the intangible assets (other than those described in clauses (a) through (e) and (m) above) exclusively used in or held for use for the Product Territories outside of the United States in connection with the Business.

2.1.3 All assets, rights and business of Seller and/or its Affiliates other than the Transferred Assets (the “Excluded Assets”) shall be retained and are not being sold, assigned, transferred, conveyed or delivered to Purchasers, which Excluded Assets shall include:

(a) cash and cash equivalents (including investments and securities) and all bank or other deposit accounts of Seller and any of its Affiliates;

(b) the Retained Intellectual Property (including the Excluded Patents) and any other Intellectual Property that is not either Transferred Intellectual Property or Transferred Discontinued Product Assets;

(c) any rights or assets related to the Products and/or the Business located outside the corresponding Product Territories, and any rights or assets related to the Discontinued Products located outside the corresponding Discontinued Product Territories;

(d) any rights to the accounts receivable related to the sales of the Products or Third Party Products on or prior to the Closing Date (other than with respect to any Unsatisfied Orders of Products) (collectively, the “Excluded Accounts Receivable”);

(e) any cause of action, lawsuit, judgment, claim or demand of Seller or any of its Affiliates in respect of the Excluded Liabilities or the Excluded Assets;

(f) without prejudice to Sections 2.1.1(g) and 2.1.2(m) , all rights to insurance policies of Seller or any of its Affiliates (including any captive insurance policies, fronted insurance policies, surety bonds or corporate insurance policies or practices, or any form of self-insurance whatsoever), any refunds paid or payable in connection with or relating to the cancellation or discontinuance of any such policies or practices and any claims made under such policies;

(g) any Seller Compensation and Benefit Plan, any assets in respect of any Seller Compensation and Benefit Plan and any other compensation and benefit plans sponsored by Seller or any of its Affiliates in respect of Transferred Employees;

(h) any records relating to the negotiation and consummation of the transactions contemplated by this Agreement, including (i) communications with Third Parties and analyses relating to such transactions and (ii) communications with legal counsel representing Seller and the right to assert the attorney-client privilege with respect thereto;

(i) any rights of Seller and its Affiliates under this Agreement and any Ancillary Agreements;

(j) the equity interests of any Person;

(k) any movable assets set forth in Schedule 2.1.3(k) to the Disclosure Letter and any other movable assets not referred to in Section 2.1.2 or Section 2.1.1 to the Disclosure Letter;

(l) all employees of Seller or its Affiliates (including sales force), other than Transferred Employees;

(m) any tangible assets located within the Leasable Area (as defined in the Lease Agreement);

(n) any cause of action, lawsuit, judgment, claim or demand with respect to the Transferred Assets (x) in respect of the Excluded Liabilities or (y) to the extent relating to the period of time before the Closing;

(o) any assets relating to research for Products;

(p) any assets exclusively related to ***; and

(q) any other asset, property or right not included in the definition of Transferred Assets.

2.2 Assumed Liabilities

2.2.1 Upon the terms and subject to the conditions of this Agreement, including the conditions precedent set forth in Article 8 and Section 11.13 , on the Closing Date, IP Purchaser shall assume and be liable for only the following Liabilities of Seller and/or its Relevant Affiliates, other than the Excluded Liabilities (the “IP Purchaser Assumed Liabilities”):

(a) any Liability, Legal Proceeding or Tax which is not an Excluded Liability and arises from and after the Closing in respect of or relating to IP Purchaser’s ownership or operation of any of the IP Purchaser Transferred Assets or performance or non-performance of any of the Transferred Contracts transferred

pursuant to Section 2.1.1(b) from and after the Closing, including (i) any Liabilities arising out of or relating to the packaging, manufacture, use or return of any Product or Third Party Product in the United States after the Closing Date, other than Excluded Returns (subject to the Rebate, Return and Chargeback Agreement) and (ii) any Liability for accounts payable, accrued expenses and similar items that relate to the IP Purchaser Transferred Assets to the extent they arise, or are incurred during or otherwise relate to the period from and after the Closing (even if such Liabilities were invoiced prior to the Closing);

(b) any Transfer Taxes arising from or relating to the transfer of the IP Purchaser Transferred Assets as contemplated by this Agreement; and

(c) any Liability of the IP Purchaser or any of its Affiliates under this Agreement or any Ancillary Agreement or with respect to the IP Purchaser Transferred Assets to the extent arising from and after the Closing.

2.2.2 Upon the terms and subject to the conditions of this Agreement, including the conditions precedent set forth in Article 8 and Section 11.13 , on the Closing Date, Business Purchaser shall assume and be liable for only the following Liabilities of Seller and/or its Relevant Affiliates, other than the Excluded Liabilities (the “Business Purchaser Assumed Liabilities”):

(a) (x) any Liability, Legal Proceeding or Tax which is not an Excluded Liability and arises from and after the Closing in respect of or relating to Business Purchaser’s ownership or operation of any of the Business Purchaser Transferred Assets, the Facility or the Business or performance or non-performance of any of the Transferred Contracts transferred pursuant to Section 2.1.2(d) from and after the Closing, including (i) any Liabilities arising out of or relating to the packaging, manufacture, use or return of any Product or Third Party Product outside of the United States and Canada after the Closing Date, other than Excluded Returns (subject to the Rebate, Return and Chargeback Agreement) and (ii) any Liability for accounts payable, accrued expenses and similar items that relate to the Business Purchaser Transferred Assets (including utilities, real estate taxes and other similar expenses at the Facility which will be allocated on a per diem basis to the extent such accounts payable relate to periods both before and after the Closing) to the extent they arise, or are incurred during or otherwise relate to the period from and after the Closing (even if such Liabilities were invoiced prior to the Closing), and (y) any Liability with respect to Environmental Matters to the extent arising as a result of facts or circumstances occurring from and after the Closing (regardless of whether caused by Business Purchaser or a Third Party), except for Liabilities with respect to Environmental Matters to the extent arising as a result of facts or circumstances occurring prior to the Closing;

(b) any Transfer Taxes arising from or relating to the consummation of the transactions contemplated by this Agreement other than those Transfer Taxes described in Section 2.2.1(b) ;

(c) any Liability of Business Purchaser or any of its Affiliates under this Agreement or any Ancillary Agreement or with respect to the Business Purchaser Transferred Assets to the extent arising from and after the Closing (including any liabilities arising from Business Purchaser’s conduct of the Business after the Closing with respect to ***);

(d) except as specifically set forth in Section 2.2.3(o) , all Liabilities: (i) for salary, wages, bonuses, commissions, vacations, vacation pay and other compensation relating to employment with Business Purchaser of all Transferred Employees for periods of service on and after the Closing; (ii) arising as a result of or in respect of the termination of employment by Business Purchaser of any Transferred Employees after the Closing (including by way of constructive dismissals, deemed termination or equivalent concepts under applicable laws); and (iii) arising as a result of or in respect of the termination of employment by Seller or its Affiliates of any Eligible Employees in the United States, Canada, *** or *** prior to or after the Closing and in connection with the transactions contemplated by this Agreement (including by way of constructive dismissals, deemed termination or equivalent concepts under applicable laws other than as set forth in Section 2.2.3(p) ); and

(e) any Liability with respect to *** described on Schedule 7.2.4 to the Disclosure Letter that arises based on actions or omissions on or after the Closing.

2.2.3 Purchasers shall not hereunder assume or become liable for any Liability of Seller or its Relevant Affiliates other than the Assumed Liabilities (the “Excluded Liabilities”), which Excluded Liabilities shall include:

(a) any Liability to the extent arising out of or relating to any business or activity of Seller or any of its Affiliates, other than the ownership or operation of the Business, the Transferred Assets or the Facility after the Closing or the performance or non-performance of the Transferred Contracts after the Closing;

(b) any Liability arising after the Closing in respect of or relating to Seller’s ownership or operation of any of the Transferred Assets, the Facility or the Business or performance or non-performance of any of the Transferred Contracts on or prior to the Closing, including (i) subject to the Rebate, Return and Chargeback Agreement, any Liabilities arising out of or relating to Excluded Returns and (ii) any Liability with respect to Environmental Matters to the extent

arising as a result of facts or circumstances occurring prior to the Closing (regardless of whether caused by Seller or a third party), except for Liabilities with respect to Environmental Matters to the extent arising as a result of facts or circumstances occurring from and after the Closing, Taxes payable in respect of the period prior to the Closing, the performance or non-performance of the Transferred Contracts on or prior to the Closing or that arise from breaches by Seller or its Relevant Affiliates of the Transferred Contracts or defaults by Seller or its Relevant Affiliates occurring on or prior to the Closing;

(c) any Liability for accounts payable, accrued expenses and similar items (including utility, real estate Taxes and other similar expenses at the Facility, which will be allocated on a per diem basis to the extent such accounts payable relate to periods both before and after the Closing) to the extent that they arise or are incurred during, or otherwise relate to the period prior to the Closing (even if such Liabilities are invoiced after the Closing);

(d) subject to the provisions of Section 9.1(a)(vi) , any Liability relating to any Legal Proceeding that (i) on the Closing Date is pending against Seller and/or its Relevant Affiliates, in connection with or relating to the Transferred Assets, the Eligible Employees, the Facility, the Business or any other business of Seller or its Relevant Affiliates, including those set forth in Schedule 5.14(a) to the Disclosure Letter, or (ii) arises after the Closing Date, to the extent arising from or relating to Products sold on or prior to the Closing Date or acts or omissions of Seller and/or its Relevant Affiliates on or prior to the Closing Date;

(e) any Liability with respect to the packaging, manufacture, sales or use of (i) the Products or Third Party Products on or prior to the Closing Date or (ii) the Inventory on or before the Closing Date; provided , however , that with respect to returns, rebates and chargebacks of Products or Third Party Products after the Closing Date, Excluded Liabilities shall be determined pursuant to the Rebate, Return and Chargeback Agreement (returns, rebates and chargebacks so determined, collectively, “Excluded Returns”);

(f) any Liability with respect to *** as described in, and subject to, the Transition Services Agreement;

(g) any Liability to the extent relating to, arising out of or resulting from any Excluded Assets;

(h) any Liability with respect to paying fees or commissions to any broker, finder or agent retained by Seller, its Affiliates or their representatives with respect to the transactions contemplated by this Agreement;

(i) except as provided in Section 11.1 relating to Transfer Taxes applicable to the consummation of the transactions contemplated by this Agreement or any Ancillary Agreement, any Tax Liability of Seller or any of its Affiliates;

(j) except as specifically set forth in Section 2.2.2(d)(iii) , any Liability arising from or in connection with the employment or termination of employment of any person employed by Seller or its Affiliates during the period on, prior to or following the Closing Date if such employee does not become a Transferred Employee;

(k) except as specifically set forth in Section 7.2.6(b) , any Liability (including any contributions or premiums owing under any Statutory Plan) arising from or in connection with or relating to the employment of any Transferred Employee during the period prior to the Closing Date;

(l) any Liability (including any contributions or premiums owing under any Statutory Plan) arising from or in connection with the Seller Canadian Pension Plan during the period on, prior to, or following the Closing Date;

(m) any Liability under any Seller Compensation and Benefit Plan during the period on, prior to or following the Closing Date, including arising from any claims for benefits, or contributions or premiums owing under any such plan;

(n) any Liability arising out of or related to any contract of Seller or its Relevant Affiliates that is not a Transferred Contract;

(o) any Liability arising under Seller’s severance plans, policies or practices or any Law that becomes payable to any Eligible Employee primarily providing services in a jurisdiction other than the United States, Canada, *** and *** in connection with the termination of any such Eligible Employee’s employment by Seller, Business Purchaser or any of their respective Affiliates;

(p) any Liability arising under the sanofi-aventis U.S. Affiliates’ Separation Plan; provided , in each case, that Business Purchaser offered employment to each Eligible Employee primarily providing services in the United States in accordance with the requirements of an Acquisition Position; and

(q) any Liability of Seller and/or its Affiliates for indebtedness for borrowed money.

ARTICLE 3 PURCHASE PRICE AND INVENTORY PURCHASE PRICE

3.1 Purchase Price

Upon the terms and subject to the conditions of this Agreement, IP Purchaser and Business Purchaser each agree to deliver or cause to be delivered to Seller at Closing, in consideration of the aforesaid sale, transfer and assignment of the Transferred Assets other than the Inventory, immediately available funds in the amount set forth on Schedule 3.1 to the Disclosure Letter, which together totals *** (the “Purchase Price”). Payment of the Purchase Price shall be made by wire transfer of immediately available funds to such bank account as shall have been notified in writing to Purchasers by Seller not less than three (3) days in advance of the Closing Date. The Purchase Price shall not be subject to any adjustment or revision whatsoever, except as set forth in Section 7.3(e) .

3.2 Allocation of the Purchase Price

The Purchase Price shall be allocated according to Schedule 3.2 to the Disclosure Letter. The Purchase Price shall be allocated among the Transferred Assets such that Purchasers, as purchasers, on the one hand, and Seller or its Relevant Affiliate, as the case may be, as seller, on the other hand, recognize and allocate the same amount to each Transferred Asset in accordance with such Schedule 3.2 . Purchasers and Seller or its Relevant Affiliate, as the case may be, shall report an allocation of the Purchase Price among the Transferred Assets in a manner entirely consistent with such Schedule 3.2 and shall not take any position inconsistent therewith in the preparation of financial statements, the filing of any Tax Returns or in the course of any audit by any Governmental Authority, Tax review or Tax proceeding relating to any Tax Returns.

3.3 Inventory Purchase Price — Stock-takes

3.3.1 In addition to the Purchase Price, Business Purchaser shall pay at Closing by wire transfer of immediately available funds to the bank account designated in writing by Seller to Business Purchaser not less than three (3) days in advance of the Closing Date, in consideration of the purchase of the Inventory, the initial Inventory Purchase Price in an amount equal to *** ( the “Initial Inventory Purchase Price”).

3.3.2 Schedule 3.3.2 to the Disclosure Letter sets out a breakdown by unit types, and the agreed price per unit of, the Inventory (other than Inventory supplied by Seller or its Affiliates) held by Seller and its Affiliates as of May 31, 2011. Business Purchaser and Seller shall procure that physical stock-takes of the Inventory existing as of the Closing Date are conducted on or about the Closing Date. Such stock-takes shall be conducted by Seller and observed by representatives of its auditors and by representatives of Business Purchaser, if Business Purchaser’s

representatives choose to attend. Seller shall give Business Purchaser reasonable prior notice of the places and times of such stock-takes so that representatives of Business Purchaser may be present during such stock-takes. Within twenty (20) Business Days following the Closing Date, Seller shall provide Business Purchaser with a statement prepared by Seller and reviewed by its auditors on the basis of the physical stock-takes of the Inventory existing as of the Closing Date, in each country in the applicable Product Territory showing the breakdown of the Inventory at the Closing Date by unit types (in the same format as Schedule 3.3.2 to the Disclosure Letter), and setting out its proposed valuation of the Closing Inventory Value (each such statement being a “Draft Closing Date Inventory Statement”).

The Closing Inventory Value shall be calculated in accordance with:

(a) the following specific policies, conventions and assumptions:

(i) All items of Inventory shall be valued at the agreed price per unit as set out in Schedule 3.3.2 to the Disclosure Letter;

(ii) Any item of Inventory that (i) is damaged or (ii) has less than *** remaining shelf life as at the Closing Date will not be transferred to Business Purchaser and, if requested by Business Purchaser will be destroyed by Seller at Seller’s cost and expense; and

(iii) Currency exchange rates, whenever applicable, shall be determined in accordance with the applicable currency exchange rate as reported in The Wall Street Journal on the Business Day immediately prior to the day on which the applicable payment is due hereunder.

(b) to the extent not covered by (a) above, the Sanofi Accounting Principles and Practices; and

3.3.3 Business Purchaser (or its designated representatives) shall have the right to review all working papers and procedures used to prepare the Draft Closing Date Inventory Statements and the calculation of the Closing Inventory Values. Unless, within fifteen (15) Business Days after delivery of the Draft Closing Date Inventory Statements, Business Purchaser notifies Seller in writing that it objects to a Draft Closing Date Inventory Statement and/or the calculation of the Closing

Inventory Values and specifies the basis for such objection and sets out Business Purchaser’s proposed valuation of the Closing Inventory Value, the Draft Closing Date Inventory Statements and the calculation of the Closing Inventory Values shall become final and binding upon the Parties for the purpose of this Section 3.3 .

(a) If Business Purchaser objects to a Draft Closing Date Inventory Statement and/or the calculation of the Closing Inventory Value within such fifteen (15) Business Days period and the Parties are unable to resolve all such objections within a further twenty (20) Business Days after such notification has been given, all remaining matters in dispute shall be submitted to the office of an internationally reputed accounting firm (other than the auditors of Seller or Purchasers) (the “Resolution Accounting Firm”). In the event the Parties are unable to agree upon the selection of the Resolution Accounting Firm within five (5) Business Days after expiration of the twenty (20) Business Day period referred to above, the Resolution Accounting Firm shall be appointed by the International Center for Expertise of the International Chamber of Commerce, Paris, France. The request to the International Center for Expertise shall include a copy of this Agreement. The Resolution Accounting Firm shall make a final and binding determination as to all remaining matters in dispute with respect to the relevant Draft Closing Date Inventory Statement(s) and Closing Inventory Value(s) which determination shall be conclusive and binding on Purchasers and Seller. The cost of retaining the Resolution Accounting Firm with respect to any Draft Closing Date Inventory Statement shall be borne by the Party whose proposed valuation deviates greatest from the valuation finally determined by the Resolution Accounting Firm. Purchasers and Seller agree to cooperate with each other in order to resolve any and all matters in dispute as soon as possible and make their best efforts to cause the Resolution Accounting Firm to determine disputed matters within twenty (20) Business Days following its appointment or as soon thereafter as practicable. The Draft Closing Date Inventory Statements as agreed or determined pursuant to this Section 3.3.3 shall be aggregated and as so aggregated shall constitute the “Final Closing Date Inventory Statement,” with the aggregate of the Closing Inventory Values set out therein being the “Aggregate Closing Inventory Value.”

(b) Business Purchaser and Seller shall each provide the other and its representatives (including accountants) reasonable access to all information and employees necessary to facilitate the preparation of the Draft Closing Date Inventory Statements and the calculation of the Closing Inventory Values.

3.3.4 As soon as the Closing Date Inventory Statement and the Aggregate Closing Inventory Value are agreed or determined in accordance with the procedure set forth in Section 3.3.3 above, the Initial Inventory Purchase Price shall be adjusted on a dollar-for-dollar basis according to the following provisions:

(a) In the event that the Aggregate Closing Inventory Value is greater than ***, the Initial Inventory Purchase Price shall be increased by an amount equal to the difference between the Aggregate Closing Inventory Value and *** and Business Purchaser shall pay such amount to Seller in accordance with the provisions of Section 3.3.6 ; provided , that in the event that the Aggregate Closing Inventory Value is *** or more, such Aggregate Closing Inventory Value shall be ***.

(b) In the event that the Aggregate Closing Inventory Value is less than ***, the Initial Inventory Purchase Price shall be decreased by an amount equal to the difference between the Aggregate Closing Inventory Value and *** and Seller shall pay such amount to Business Purchaser in accordance with the provisions of Section 3.3.6 . For the avoidance of doubt, in the event that the Aggregate Closing Inventory Value is greater than or equal to ***, there will be no adjustment to the Initial Inventory Purchase Price.

(c) The Initial Inventory Purchase Price as adjusted in accordance with the provisions of this Section 3.3.4 shall be the “Final Inventory Purchase Price”. The allocation of the Final Inventory Purchase Price among Seller’s Affiliates shall be determined by Seller. For the avoidance of doubt, any price paid pursuant to the Inventory Purchase Agreements shall be deemed to be part of the Initial Inventory Purchase Price and subject to adjustment in accordance with this Section 3.3 .

3.3.5 The calculations giving rise to the Initial Inventory Purchase Price and Final Inventory Purchase Price are done on an EXW (as defined in ICC Incoterms 2010) basis.

3.3.6 Any adjustments provided for in Section 3.3.4 shall bear interest from the Closing Date through the date of payment at ***. Any adjustment pursuant to Section 3.3.4 , together with interest thereon, shall be paid by wire transfer of immediately available funds to accounts designated by Seller or Business Purchaser, as the case may be, within ten (10) Business Days after the date the Closing Date Inventory Statement and the Aggregate Closing Inventory Value are agreed or determined in accordance with the procedure set forth in Section 3.3.3 . Seller or Business Purchaser, as the case may be, shall be responsible for determining the allocation of any adjustments to be made among their respective Affiliates.

ARTICLE 4 CLOSING

4.1 Closing

The Closing shall take place at Jones Day, 222 East 41 st Street, New York, New York, (a) at 10:00 a.m., New York City time on the fifth Business Day after which the last

condition to Closing set forth in Article 8 shall have been satisfied (other than those conditions that by their nature or pursuant to the terms of this Agreement are to be satisfied at the Closing, but subject to the satisfaction or the waiver of those conditions) or (b) at such other time and place and on such other day as shall be mutually agreed upon in writing by the Parties (the “Closing Date”). For tax and accounting purposes only, the Closing of the transactions contemplated by this Agreement shall be deemed to be effective as of 11:59 p.m., local time on the Closing Date; for purposes of allocating risk of loss and assets and liabilities pursuant to Article 11 , the Closing shall be deemed to be effective upon Seller’s receipt of payment of the Purchase Price and Inventory Purchase Price.

4.2 Deliveries by Seller

At the Closing, Seller shall deliver or cause to be delivered to Purchasers the following:

(a) Reserved;

(b) a Business Purchaser Toll Manufacturing Agreement, in the form attached as Exhibit B to the Disclosure Letter (the “Business Purchaser Toll Manufacturing Agreement”), duly executed by Seller and/or its Relevant Affiliates and pertaining to the manufacture and supply by Purchasers and/or their Relevant Affiliates to Seller after Closing of certain products and materials;

(c) each of the Seller Supply Agreements, in the form attached as Exhibit C to the Disclosure Letter (the “Seller Supply Agreements”), duly executed by Seller and/or its Relevant Affiliates and pertaining to the full service supply by Seller and/or its Relevant Affiliates to Purchasers after Closing of certain Products and other products and materials;

(d) (i) a Patent Assignment Agreement, in the form attached as Exhibit D-1 to the Disclosure Letter (the “Patent Assignment Agreement”), duly executed by Seller and/or its Relevant Affiliates and pertaining to the Transferred Patents and the Discontinued Product Patents, (ii) a Trademark Assignment Agreement, in the form attached as Exhibit D-2 to the Disclosure Letter (the “Trademark Assignment Agreement”), duly executed by Seller and/or its Relevant Affiliates and pertaining to the Transferred Trademarks and the Discontinued Product Trademarks, (iii) a Know-How Assignment Agreement, in the form attached as Exhibit D-3 to the Disclosure Letter (the “Know-How Assignment Agreement”), duly executed by Seller and/or its Relevant Affiliates and pertaining to the Transferred Know How and (iv) a Copyright Assignment Agreement, in the form attached as Exhibit D-4 to the Disclosure Letter (the “Copyright Assignment Agreement”), duly executed by Seller and/or its Relevant Affiliates and pertaining to the Transferred Copyrights and the Discontinued Product Copyrights.

(e) an Intellectual Property License and Hold Harmless Agreement, in the form attached as Exhibit E to the Disclosure Letter (the “Intellectual Property License and Hold Harmless Agreement”), duly executed by Seller and/or its Relevant Affiliates and pertaining to the use of certain Intellectual Property retained by Seller;

(f) a Lease Agreement, in the form attached as Exhibit F to the Disclosure Letter (the “Lease Agreement”), duly executed by Seller and/or its Relevant Affiliates, which Lease Agreement shall be governed by the Law of the Province of Québec, Canada;

(g) an Amended and Restated Joint Defense Agreement, in the form attached as Exhibit G to the Disclosure Letter (the “Amended and Restated Joint Defense Agreement”), duly executed by Seller and/or its Relevant Affiliates;

(h) the Canadian Deed of Sale, in the form attached as Exhibit H to the Disclosure Letter, duly executed by Seller and/or its Canadian Relevant Affiliate;

(i) the Inventory Purchase Agreements, substantially in the form attached as Exhibit I to the Disclosure Letter, duly executed by Seller on behalf of itself and its Affiliates;

(j) the General Release and Discharge, in the form attached as Exhibit J to the Disclosure Letter, duly executed by Seller on behalf of itself and its Affiliates;

(k) the Transitional Distribution Agreement, in the form attached as Exhibit K to the Disclosure Letter, duly executed by Seller on behalf of itself and its Affiliates;

(l) reserved;

(m) the Rebate, Return and Chargeback Agreement, in the form attached as Exhibit M to the Disclosure Letter, duly executed by Seller on behalf of itself and its Affiliates;

(n) a certificate duly executed by an Authorized Person of Seller, dated as of the Closing Date, to the effect that the conditions set forth in Sections 8.2(a) , 8.2 (b) and 8.2 (c) have been satisfied;

(o) subject to Section 4.4 and except as set forth in Section 7.2.14 , any Local Transfer Agreements, duly executed by Seller and/or its Relevant Affiliates; and

(p) all such other deeds, agreements, endorsements, assignments and other instruments, in form and substance reasonably acceptable to Purchasers and Seller, which shall be necessary or reasonably desirable to convey the Transferred Assets and Assumed Liabilities to Purchasers pursuant to the terms of this Agreement, duly executed by Seller and/or its Relevant Affiliates.

4.3 Deliveries by Purchasers

At the Closing, Purchasers shall deliver or cause to be delivered to Seller the following:

(a) the payment of the Purchase Price and the Initial Inventory Purchase Price, plus all V.A.T. payable to Seller or its Relevant Affiliates at Closing pursuant to Section 11.1(e) , by wire transfer as set forth in Section 3.1 ;

(b) original counterparts of each of the agreements referred to in Sections 4.2(a) through 4.2(m) duly executed by IP Purchaser, Business Purchaser and/or their Relevant Affiliates;

(c) a certificate duly executed by an Authorized Person of Purchasers, dated as of the Closing Date, to the effect that the conditions set forth in Sections 8.3(a) and (b) have been satisfied;

(d) subject to Section 4.4 , any Local Transfer Agreements, duly executed by IP Purchaser, Business Purchaser and/or their Relevant Affiliates; and

(e) all such other deeds, endorsements, assignments and other instruments, in form and substance reasonably acceptable to Purchasers and Seller, which shall be necessary or desirable to convey the Transferred Assets and Assumed Liabilities to Purchasers pursuant to the terms of this Agreement, duly executed by IP Purchaser, Business Purchaser and/or their Relevant Affiliates.

4.4 Local Transfers

If required by local Laws of any country to perfect the transfer of any Transferred Assets and except as set forth in Section 7.2.14 , local closings in each such country shall take place on the Closing Date or as promptly as practicable after the Closing Date (each, a “Local Transfer” ) and Seller and Purchasers shall, or shall cause their respective Relevant Affiliates to, execute and deliver such instruments and take such actions, consistent with

the terms and conditions of this Agreement, in form and substance reasonably acceptable to Purchasers and Seller, as may be required to complete any such Local Transfer. In the event of any inconsistency between this Agreement and the Local Transfer Agreements, this Agreement shall prevail.

Any portion of the Purchase Price that would be payable for such Local Transfers by Purchasers or by any Purchasers’ Relevant Affiliate will be determined in accordance with Schedule 3.2 to the Disclosure Letter , and shall be deemed (i) to be included in the Purchase Price and (ii) to have been paid to Seller or Seller’s Relevant Affiliate as part of the Purchase Price. Notwithstanding the foregoing, the portion of the Purchase Price payable with respect to the Facility shall be as set forth in Schedule 3.2 to the Disclosure Letter , unless the Parties otherwise agree.

To the extent any amount is required by Law to be paid by Purchasers or their Relevant Affiliates to Seller or its Relevant Affiliates in connection with any such Local Transfer, Seller shall, on the date of such Local Transfer, reimburse Purchasers for the full amount of the payment actually made in respect of the Transferred Assets transferred by such Local Transfer. Without limiting the foregoing reimbursement obligation, such Local Transfers shall be subject to the provisions of Section 11.1 . In no event shall the transactions contemplated under this Agreement be conditioned upon or subject to the execution of any Local Transfer Agreements.

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER

Except as disclosed in the Schedules to this Agreement (as they may be supplemented pursuant to Section 7.1.6 ), Seller hereby represents and warrants to Purchasers as of the date of this Agreement and the Closing Date as follows (notwithstanding any provision to the contrary in the Canadian Deed of Sale and the Local Transfer Agreements, the following representations shall be the sole and exclusive representations and warranties given to Purchasers and their Affiliates with respect to the Transferred Assets and the Business, and shall apply equally to any Transferred Asset or portion of the Business which is subject to the Canadian Deed of Sale or a Local Transfer Agreement):

5.1 Corporate Organization

Each of Seller and its Relevant Affiliates is a corporation or other legal entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization and each of Seller and its Relevant Affiliates has all requisite corporate or other organizational power and authority to own and operate the Business that it conducts as currently conducted as of the date of this Agreement and that it will conduct as of the Closing Date , by Seller and/or its Relevant Affiliates , including to own, license and operate the Transferred Assets as and in the places where owned, licensed or operated by such Person. Each of Seller and its Relevant Affiliates is duly qualified or licensed to do business and is in good standing in each jurisdiction in which such qualification or licensing is necessary under applicable Law, except where the failure to be so qualified or

licensed and to be in good standing would not reasonably be expected, individually or in the aggregate, to be materially adverse to the Business.

5.2 Authority; Binding Effect

(a) Each of Seller and its Relevant Affiliates has full corporate or other organizational power and authority to execute, deliver and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party and each other agreement, document, instrument, deed or certificate contemplated by this Agreement and the Ancillary Agreements to be executed by Seller or any of its Relevant Affiliates in connection with the consummation of the transactions contemplated hereby and thereby.

(b) The execution, delivery and performance by Seller of this Agreement, and the execution, delivery and performance by Seller and its Relevant Affiliates of any of the Ancillary Agreements to which it is a party have been duly authorized or, with respect to the Ancillary Agreements, shall have been duly authorized at the Closing Date, by all necessary corporate action on the part of Seller and its Relevant Affiliates, as the case may be, and no additional authorization on the part of Seller is necessary in connection with the execution, delivery and performance of this Agreement or on the part of Seller and its Relevant Affiliates in connection with the execution, delivery or performance of the Ancillary Agreements.

(c) This Agreement constitutes, and on the Closing Date, will constitute, and each of the Ancillary Agreements when duly executed and delivered on the Closing Date, assuming the due authorization, execution and delivery by the other parties hereto and thereto, will constitute, legal, valid and binding obligations of Seller and its Relevant Affiliates that are parties thereto, enforceable against them in accordance with their respective terms, except as may be subject to applicable bankruptcy, insolvency, moratorium or other similar Laws, now or hereafter in effect, relating to or affecting the rights of creditors generally and by legal and equitable limitations on the enforceability of specific remedies.

5.3 No Violations; Consents and Approvals

(a) Subject to receipt of the Consents and the Governmental Approvals set forth in Schedule 7.1.2.4 and Schedule 8.1(d) to the Disclosure Letter, the execution, delivery and performance of this Agreement and the Ancillary Agreements by Seller and/or its Relevant Affiliates, and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) conflict with, violate, result in the breach of, or constitute a default under, any provision of the

certificate of incorporation, articles or bylaws or similar governing documents of Seller or any of its Relevant Affiliates, (ii) conflict with, violate, result in the breach of, or constitute a default under the Transferred Contracts or any other commitment of Seller or any of its Relevant Affiliates, or (iii) conflict with, violate, result in the breach of, or constitute a default under any Law applicable to Seller and/or any of its Relevant Affiliates, except in the case of clause (ii) as would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Business or have a material adverse effect on the ability of Seller or its Relevant Affiliates to perform their respective obligations under, and consummate the transactions contemplated by, this Agreement or the Ancillary Agreements.

(b) Except for the Consents and the Governmental Approvals set forth in Schedule 7.1.2.4 and Schedule 8.1(d) to the Disclosure Letter, no consents or approvals are required on the part of Seller or any of its Relevant Affiliates in connection with the execution, delivery and/or performance of this Agreement or any of the Ancillary Agreements, the absence of which would prevent Purchasers and their Relevant Affiliates to continue after the Closing to conduct, in all material respects, the Business as conducted by Seller and its Relevant Affiliates as of the date of this Agreement.

(c) There is no pending Legal Proceeding involving Seller or its Relevant Affiliates or, to the Knowledge of Seller, threatened against Seller or its Relevant Affiliates, which questions or challenges the validity of this Agreement or the Ancillary Agreements or seeks to prevent, enjoin, alter or delay any of the transactions contemplated hereby or thereby or any action to be taken pursuant to this Agreement or the Ancillary Agreements.

5.4 Scope of and Title to Transferred Assets

(a) ***

(b) Seller and/or its Relevant Affiliates have good title to, or in the case of leased property, a valid leasehold interest in, the Transferred Assets, free and clear of all Encumbrances except Permitted Encumbrances. Seller and/or its Relevant Affiliates (i) have not granted, or agreed to grant, (A) any ownership interest or right in, or with respect to, any Transferred Asset other than Inventory sold in the ordinary course of business or (B) any right to acquire or receive any Transferred Asset other than Inventory sold in the ordinary course of business or any interest or right in Inventory sold in the ordinary course of business or with respect to Inventory sold in the ordinary course of business and (ii) are not a party to or bound by any contract, other than this Agreement, affecting or relating to the transfer of any Transferred Asset other than Inventory sold in the ordinary course

of business (or any interest or right in Inventory sold in the ordinary course of business or with respect to Inventory sold in the ordinary course of business).

(c) Except as described on Schedule 2.1.2(i) and Schedule 2.1.2(j) to the Disclosure Letter, all of the tangible property having an individual net book value in excess of Twenty Thousand U.S. Dollars ($20,000) (or the equivalent in local currency) that are Transferred Assets are located at the Facility.

5.5 Product Registrations

(a) Schedule 2.1.1(d) and Schedule 2.1.2(f) to the Disclosure Letter , collectively, set forth (i) all Product Registrations issued to Seller and/or to its Affiliates on or prior to the date of this Agreement, and (ii) all applications for Product Registrations made by Seller and/or its Affiliates that are pending on the date of this Agreement. To the Knowledge of Seller and except as set forth in Schedule 5.5(a) to the Disclosure Letter, there is no other Product Registration necessary for the lawful operation of the Business as currently conducted by Seller and/or its Relevant Affiliates .

(b) To the Knowledge of Seller, each Product Registration set forth on Schedule 2.1.1(d) , Schedule 2.1.2(f) and Schedule 5.5(a) to the Disclosure Letter has been validly issued by the appropriate Governmental Authority, is in full force and effect, and will be eligible to be renewed upon expiration. Neither Seller nor any of its Relevant Affiliates has received any written notice or claim which has not been complied with or withdrawn by any applicable Governmental Authorities asserting any material violation of any regulatory requirement with respect to the Product Registrations. To the Knowledge of Seller, no event has occurred that allows, or after lapse of time would allow, the revocation, suspension, cancellation or premature termination of any Product Registration that is, or after notice or lapse of time would reasonably be expected to be, individually or in the aggregate, materially adverse to the Business.

5.6 Contracts

(a) The Transferred Contracts, together with the Shared Contracts, the IT Global Software Licenses and intra-group agreements among Seller and its Affiliates which are subject to Section 7.1.3 , constitute as of the date of this Agreement all of the written contracts and agreements or other legally binding material commitments, obligations or undertakings or arrangements by Seller and/or its Relevant Affiliates in respect of their operation of the Business and the Facility as currently conducted by Seller and/or its Relevant Affiliates . Seller has made available to Purchasers or their representatives a true and correct copy of each

Transferred Contract, Shared Contract and IT Global Contract, together with all amendments, modifications or supplements thereto. Schedule 5.6(a) to the Disclosure Letter sets forth a brief description of each intra-group agreements among Seller and its Affiliates which are subject to Section 7.1.3 .

(b) Each Material Transferred Contract is a valid and binding agreement of Seller and/or its Relevant Affiliates that are parties thereto, and to the Knowledge of Seller, the counterparties thereto, and is in full force and effect in all material respects.

(c) Seller and/or its Relevant Affiliates have performed in all material respects all of the obligations required to be performed by Seller and/or its Relevant Affiliates under the Material Transferred Contracts, and none of them is in material breach (nor have there occurred events which would constitute a material breach with the passage of time or giving notice or both) thereunder. To the Knowledge of Seller, no Third Party to any of the Material Transferred Contracts is in material breach thereunder.

(d) Except as set forth on Schedule 5.6(d) to the Disclosure Letter, neither Seller nor any of its Relevant Affiliates has received from (i) any Third Party to any of the Material Transferred Contracts any written notice that any such Third Party intends to terminate any such Material Transferred Contract or (ii) any Third Party to any of the Material Transferred Contracts any claim of material breach from any such Third Party with respect to the performance of obligations by Seller or any of its Relevant Affiliates pursuant to any such Material Transferred Contract.

(e) With the exception of this Agreement and any Ancillary Agreement to which they are party, neither Seller nor any of its Relevant Affiliates are party to or bound or affected by any Contract relating to the Business limiting the freedom of the Business to compete in any line of business or any geographic area, acquire goods or services from any or services to any customer or potential customer, or transfer or move any of its assets or operations.

5.7 Transferred Intellectual Property

(a) Schedule 2.1.1(a) and Schedule 2.1.2(c) to the Disclosure Letter, collectively, contain true and complete lists of all (i) Patents that are Registered or for which an application has been filed, (ii) Trademarks that are Registered or for which an application has been filed (including Internet domain names) and (iii) Copyrights that are Registered or for which an application has been filed and material Copyrights that are not Registered, in each case that are owned by Seller or its

Affiliates that are included in the Transferred Intellectual Property. Schedule 2.1.1(b) and Schedule 2.1.2(d) to the Disclosure Letter, collectively, set forth a true, correct and complete list of all Transferred Contracts pursuant to which Seller and/or its Relevant Affiliates (i) are granted or obtain any right to use any Intellectual Property in the conduct of the Business (other than any contract granting rights to use generally commercially available software for which the ongoing aggregate annual fees are less than Two Hundred Fifty Thousand U.S. Dollars ($250,000)), (ii) are restricted in their right to use or register any Intellectual Property used in the conduct of the Business, or (iii) permit any other Person, to use, enforce, or register any Intellectual Property owned by Seller or its Affiliates and used in the conduct of the Business, including any license agreements, coexistence agreements, and covenants not to sue.

(b) Except as set forth in Schedule 5.7(b) to the Disclosure Letter and except as is not and would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Business, (i) Seller and/or its Relevant Affiliates are the exclusive beneficial, and with respect to applications and registrations, record owner of all right, title and interest in and to each item of Transferred Intellectual Property, free and clear of all Encumbrances (other than Permitted Encumbrances), and have the right to use the Transferred Intellectual Property in the operation of the Business as currently conducted as of the date of this Agreement by Seller and/or its Relevant Affiliates , (ii) the Transferred Intellectual Property has not been adjudged invalid or unenforceable, and (iii) Seller and/or it Relevant Affiliates have the right to use the Licensed Intellectual Property in the relevant Product Territories in connection with the operation of the Business as currently conducted as of the date of this Agreement by Seller and/or its Relevant Affiliates in accordance with the terms of the Transferred Contracts governing such Licensed Intellectual Property.

(c) To the Knowledge of Seller, the operation of the Business as currently conducted as of the date of this Agreement, by Seller and/or its Relevant Affiliates does not infringe, misappropriate, dilute or otherwise violate the Intellectual Property of any Third Party and there is no Legal Proceeding pending or, to the Knowledge of Seller, threatened in writing, with respect to the foregoing against Seller and/or its Relevant Affiliates, and, to the Knowledge of Seller, there is no valid basis for a claim, concerning the foregoing or concerning the ownership, validity, registerability or enforceability of any Transferred Intellectual Property (other than the review of pending patent and trademark applications by applicable Governmental Authorities in the ordinary course, and not excluding oppositions, reexaminations or interferences). To the Knowledge of Seller, no Third Party is engaging in any activity that infringes, misappropriates, dilutes or otherwise violates any Transferred Intellectual Property.

(d) Seller and/or its Relevant Affiliates have taken reasonable measures to maintain in confidence all material trade secrets and confidential information included in the Transferred Intellectual Property, including by maintaining, and ensuring compliance with, a policy of requiring all Persons having access thereto to execute written non-disclosure agreements. Each current and former employee and officer of Seller and/or its Relevant Affiliates who has been involved with the research or development of any material Intellectual Property used or held for use in the Business has executed a proprietary information and inventions agreement or agreements or has otherwise assigned in writing or by operation of law to Seller or its Relevant Affiliates all rights in the material Transferred Intellectual Property used or held for use in the Business. No current or former employee or officer of Seller and/or its Relevant Affiliates has excluded works or inventions that would reasonably have been expected to be material to the Business from his assignment of inventions pursuant to such employee’s proprietary information and inventions agreement.

(e) The consummation of the transactions contemplated by this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Third Party in respect of, any of the Transferred Intellectual Property or the Licensed Intellectual Property or Intellectual Property to which Purchasers obtain rights or access pursuant to the Ancillary Agreements.

(f) To the Knowledge of Seller, Seller and/or its Relevant Affiliates are in material compliance with any applicable Laws or regulations relating to personally identifiable information collected, used or held for use in connection with the Business. Seller and/or its Relevant Affiliates have taken reasonable measures to ensure such personally identifiable information is protected against unauthorized access, use, modification or other misuse. No Legal Proceedings are pending, or to the Knowledge of Seller threatened in writing against Seller and/or its Relevant Affiliates alleging that the operation of the Business as currently conducted violates applicable Laws or regulations relating to personally identifiable information.

(g) Except for Sections 2.1.1(a) , 2.1.2(c) , 5.4(a) , 5.4(b) , 5.6 , 5.14 and 5.17 , notwithstanding any other representation or warranty contained in this Article 5 , the representations and warranties contained in this Section 5.7 constitute the sole representations and warranties of Seller and its Relevant Affiliates relating to Intellectual Property. For the avoidance of doubt, except to the extent otherwise specified in this Section 5.7 , Seller and its Affiliates are not granting any warranty or making any representation to Purchasers regarding any Intellectual Property included in the Transferred Discontinued Product Assets, which are transferred to Purchasers on an “as is” basis.

5.8 Movable Assets and Inventory

(a) The moveable assets used in, held for use in or relating to the Business that are included in the Transferred Assets are in normal working order, ordinary wear and tear excepted and having regard to their respective age and use.

(b) The Inventory included in the Closing Inventory Value is of a good and saleable quality and condition and usable (taking into account shelf life, among other matters) in the ordinary course of business for its intended purposes and has been manufactured and stored in compliance with, and meets, all applicable product specifications and the requirements of the Product Registrations. None of such Inventory is obsolete or expired, and all such Inventory has at least eighteen (18) months’ shelf life remaining (with the exception of excipients at the Facility, none of which is obsolete in accordance with the standard rule of obsolescence of the Facility). All work-in-process and finished goods inventory transferred to Business Purchaser on the Closing Date will be free of any material defect or other material deficiency. No material quantities of Inventory are held on a consignment basis. The quantity of Inventory included in the Closing Inventory Value as of the date of this Agreement is, and as of the Closing Date will be, consistent in all material respects with past practice, subject to seasonality adjustments in the ordinary course of business. Schedule 5.8(b) to the Disclosure Letter sets forth a complete list of the addresses of all warehouses and other facilities at which any material Inventory is located as of the date of this Agreement, and where it will be located as of the Closing Date. Seller and its Affiliates do not give any warranty with respect to the Inventory, other than as expressly set forth in this Section 5.8 .

(c) Since ***, neither Seller nor any of its Relevant Affiliates has, with respect to the Business, made any change in the selling, distribution, advertising, terms of sale or collection practices that is inconsistent with past practices and would be material to the Business, taken as a whole. Since ***, neither Seller nor any of its Relevant Affiliates has, with respect to the Business, (i) entered into any material business practices, programs or long-term allowances not previously used in the ordinary course of business, or (ii) engaged in the practice of “channel stuffing” or any program, activity or other action (including any rebate, discount, chargeback or refund policy or practice), in the case of this clause (ii), that would reasonably be expected to result, directly or indirectly, in a trade buy-in that is significantly in excess of normal customer purchasing patterns consistent in all material respects with the past practices of the Business during the previous *** months.

5.9 Owned Real Property

(a) Schedule 5.9(a) to the Disclosure Letter sets out the municipal address of the Facility, a registrable legal description of all of the Owned Lands and the names of all Relevant Affiliates holding any interest in the Owned Real Property. The Relevant Affiliates set out on Schedule 5.9(a) to the Disclosure Letter have good, valid and marketable title to the Owned Real Property free and clear of all Encumbrances except Permitted Encumbrances.

(b) The present use of the Owned Real Property is in all material respects in conformity with all applicable Laws, including, without limitation, all applicable zoning laws, ordinances and regulations and with all registered deeds, restrictions of record or other agreements affecting such Owned Real Property (including all Permitted Encumbrances), and to the Knowledge of Seller there is no proposed change thereto that would so affect any of the Owned Real Property or the use thereof, nor any violation thereof. There exists no Legal Proceedings with any regulatory authority or other person relating to the Owned Real Property or the activities conducted thereon. Since ***, no damage or destruction has occurred with respect to any of the Owned Real Property that would have a Material Adverse Effect whether or not covered by an enforceable insurance policy. Seller and its Affiliates have not received any notification of any and, to the Knowledge of Seller there are no material outstanding or incomplete work orders or deficiency notices relating to any of the Owned Real Property.

(c) The Improvements on the Owned Lands are located wholly within the boundaries of the Owned Lands (and within the mandatory set-back from such lot lines established by zoning ordinances or otherwise, except as set forth in the Certificate of Location attached hereto as Schedule 5.9(c) to the Disclosure Letter) and do not encroach upon any easement or right of way affecting the Owned Lands. There is no encroachment onto the Owned Lands by buildings or improvements from any adjoining lands.

(d) The Improvements on the Owned Lands are in good condition and repair, and are suitable and adequate for the operation of the Business subject to reasonable wear and tear.

(e) All Taxes with respect to the Owned Real Property and the Facility that are due have been paid in full, and there are no local improvement charges or special levies outstanding in respect of the Owned Real Property nor has Seller or any of its Relevant Affiliates received any written notification of any proposed local improvement charges or special levies that would affect the Owned Real Property.

(f) The Owned Lands are served by all utilities and other services required for the operation of the Business and such utilities and services are sufficient for the operation of the Facility as the same is currently operated.

(g) The Owned Lands have full and free legally enforceable access to and from public roadways, which access is sufficient for the purposes of the operation of the Business.

(h) The Owned Lands are zoned so as to permit their current use for industrial buildings and office buildings with related parking facilities. Since ***, the Facility has passed all inspections by all Governmental Authorities having jurisdiction over it.

(i) Except as set forth in Schedule 5.9(i) to the Disclosure Letter, neither Seller nor any of its Affiliates has leased or otherwise granted to any Person (other than pursuant to this Agreement) any right to occupy or possess or otherwise encumber any portion of the Owned Real Property or given notice to any Third Party of their intent to do the same.

(j) Neither Seller nor any of its Affiliates is a party to or obligated under any option, right of first refusal or other contractual right to sell or dispose of any of the Owned Real Property, or any portion thereof or interest therein, to any Person (other than pursuant to this Agreement).

(k) To the Knowledge of Seller, there are no expropriation or condemnation proceedings pending against the Owned Lands, and, to the Knowledge of Seller, there are no expropriation or condemnation proceedings threatened or proposed against the Owned Lands.

(l) All requisite certificates of occupancy and other permits or approvals required with respect to the Improvements and the occupancy and use thereof have been obtained and are currently in effect.

(m) Prior to the date of this Agreement, and provided such documents are in the possession of Seller or any Affiliate of Seller or any of their respective representatives or agents (or for which Seller or any Affiliate of Seller or any of their respective representatives or agents have the right to deliver), Seller has delivered to, or made available for review by, Purchasers true and correct copies of all deeds, mortgages, surveys, certificates of location, title opinions and reports on title, licenses, title insurance policies, permanent certificates of occupancy, or equivalent documentation with respect to the Owned Real Property, appraisals,

valuations or other information evidencing the market value of the Owned Real Property, any reports or findings relating to building inspections, roof conditions, structural elements, services or other physical condition of the Improvements and Owned Real Property, material evidencing Encumbrances and Appurtenances, materials relating to notices of violation or deficiency notices affecting the Owned Real Property and other documents relating to or affecting the title to the Owned Real Property, and all of the same are identified on Schedule 5.9(m) to the Disclosure Letter. To the Knowledge of Seller, none of the documents identified on such Schedule 5.9(m) and delivered to Purchasers has been amended or rescinded.

(n) All material Appurtenances necessary for the continued use and operation of the Owned Real Property for the Business are listed in Schedule 5.9(a) to the Disclosure Letter and none of the contracts creating or governing such material Appurtenances requires the consent of any other party to the transactions contemplated by this Agreement.

5.10 Environmental Matters

***

5.11 Employees and Employee Benefit Plans

(a) Schedule 5.11(a)(i) to the Disclosure Letter (which Schedule shall be updated by Seller as necessary) contains a list of employees employed primarily in the Business, the Facility or providing services primarily related to the Transferred Assets (the “Eligible Employees”), together with a description of the respective job title, service date, current wages, salaries or hourly rate of pay, benefits, vacation entitlement, accrued paid time off, commissions, bonus and any other material compensation terms or entitlement of such Eligible Employees who are employed in the United States, Canada, *** or ***. Schedule 5.11(a)(i) to the Disclosure Letter also lists Eligible Employees on inactive status, including lay-off, short-term disability leave, long-term disability leave, pregnancy and parental leave or other extended absences, or receiving benefits pursuant to workers’ compensation legislation, and specifies the last date of active employment and the expected date of return of each such Eligible Employee. Schedule 5.11(a)(ii) to the Disclosure Letter (which Schedule shall be updated by Seller as necessary) contains a list of the Eligible Employees of Seller or its Affiliates that shall transfer to Purchasers or its Affiliates by operation of Law on the Closing Date (the “Mandatorily Transferred Employees”). The employees listed in Schedule 5.11(a)(ii) to the Disclosure Letter are all employed by Seller or its Affiliates and work mainly or wholly in relation to the Business or the Facility. To the Knowledge of Seller, no Person other than the employees listed in Schedule 5.11(a)(ii) to the Disclosure Letter has the right to demand employment from

Purchasers or their Affiliates as a result of the purchase of the Business or the Transferred Assets by Purchasers or their Affiliates.

(b) Schedule 5.11(b) to the Disclosure Letter sets forth a complete list of the material Seller Compensation and Benefit Plans covering Eligible Employees in the United States, Canada, *** or ***. Seller has provided Purchasers or their representatives with current and complete copies of all material Seller Compensation and Benefit Plans, as amended to date, including, if oral, written summaries of the terms thereof.

(c) Seller and its Affiliates have complied in all material respects with all obligations owed to the Eligible Employees including any obligations arising under applicable Laws, collective agreements and terms and conditions of employment, as appropriate.

(d) As of the date of this Agreement, none of the Eligible Employees has received from or given to the applicable human resources department any notice terminating his or her employment.

(e) Seller and its Affiliates have made no promise or commitment to create any additional Seller Compensation and Benefit Plan for the benefit of any Eligible Employee or to materially improve or materially change the benefits provided to any Eligible Employee under any Seller Compensation and Benefit Plan. Each Seller Compensation and Benefit Plan is established, registered, amended, funded, administered and invested in all material respects in compliance with (i) the terms of such Seller Compensation and Benefit Plan (including terms of any documents in respect of such Seller Compensation and Benefit Plans), (ii) any applicable collective agreements and (iii) all Laws.

(f) Other than the Seller Canadian Pension Plan, none of the Seller Compensation and Benefit Plans is a Canadian Pension Plan.

(g) None of the Seller Compensation and Benefit Plans maintained under the laws of the United States or any Canadian jurisdiction is a Multi-Employer Plan.

(h) Except as disclosed in Schedule 5.11(h) to the Disclosure Letter or as expressly provided in this Agreement, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any Eligible Employee in the United States, Canada, *** or *** to severance pay, unemployment compensation or any other payment from Purchasers, in addition to the monies he or she would have received in the

absence of this transaction, or (ii) accelerate the time of payment or vesting, or increase the amount of compensation due any such employee by Purchasers or any of their Affiliates.

5.12 Labor Relations

(a) Since ***, neither Seller nor any of its Relevant Affiliates has been or is a party to or was or is bound by any collective bargaining agreement covering any Eligible Employees (other than mandatory industry-wide collective bargaining agreements where applicable) and, to the Knowledge of Seller, in the United States and Canada, there are no labor unions, employee associations or other organizations representing any Eligible Employees.

(b) To the Knowledge of Seller, there is no labor union organizing activities with respect to any Eligible Employees.

(c) Since ***, there has been no actual or, to the Knowledge of Seller, threatened material labor disputes, strikes, lockouts, slow downs or work stoppages against or affecting Seller or its Affiliates with respect to the Business or the Facility.

(d) Seller and its Affiliates are in material compliance with all applicable Laws respecting employment and employment practices, including all Laws respecting terms and conditions of employment, health and safety, wages and hours, child labor, immigration, employment discrimination, disability rights or benefits, equal opportunity, plant closures and layoffs, affirmative action, workers’ compensation, labor relations, employee leave issues and unemployment insurance.

(e) Seller and its Affiliates have not received notice of any material Legal Proceeding currently pending or threatened in any forum by or on behalf of any Eligible Employee in the United States, Canada, *** or ***, by a former employer in respect of any such employee, or by any Governmental Authority alleging breach of any express or implied contract of employment, any nondisclosure agreement, common law nondisclosure obligation, fiduciary duty, noncompetition agreement or restrictive covenant, any applicable Law governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship.

(f) Seller and its Affiliates are and have been in material compliance with all notice and other requirements under the WARN Act. Neither Seller nor any of its Affiliates has incurred any liability or obligation under the WARN Act which remains unsatisfied with respect to any Eligible Employees.

5.13 Information to and Consultation with Employee Representatives

All formalities regarding the provision of information to and/or consultation with, and the obtaining of the opinion of, employee representatives and/or works councils to be complied with by Seller and its Relevant Affiliates in connection with the transactions contemplated hereby have been complied with in accordance with applicable Laws.

5.14 Litigation

(a) Except as set forth on Schedule 5.14(a) to the Disclosure Letter, as of the date of this Agreement, there are no material Legal Proceedings pending against Seller or any of its Relevant Affiliates, or to the Knowledge of Seller, threatened that relate to the Products, the Transferred Assets, the Facility or the Business, or that, if determined adversely to Seller or its Relevant Affiliates, would:

(i) have a Material Adverse Effect,

(ii) enjoin, restrict or prohibit the transfer of all or any part of the Transferred Assets as contemplated by this Agreement,

(iii) result in any material change in the manner in which the Business is currently conducted as of the date of this Agreement by Seller and/or its Relevant Affiliates; or

(iv) delay, restrict or prevent Seller or any of its Relevant Affiliates from fulfilling any of their obligations set out in this Agreement or arising from this Agreement.

(b) Except as set forth on Schedule 5.14(b) to the Disclosure Letter, as of the date of this Agreement, there is no Order outstanding against or applicable to Seller or any of its Relevant Affiliates, the Products, the Facility, the Transferred Assets or the Business, relating to, or that could impose any Liability on Purchasers or the Business, or any limitation on the ability of Purchasers to operate the Business, the Facility or the Transferred Assets as currently conducted as of the date of this Agreement by Seller and/or its Relevant Affiliates .

(c) Seller and/or its Relevant Affiliates have not sold any Products in the Product Territories which have not complied in all material respects with the warranties expressly or implicitly given by Seller or its Relevant Affiliates or which do not comply in all material respects with all applicable product specifications and the

requirements of the Product Registrations and applicable Laws or otherwise give rise to any claim by any customer or any Third Party in respect thereof.

(d) Except as set forth on Schedule 5.14(d) to the Disclosure Letter, since ***, neither Seller nor any of its Affiliates has undergone any audit, review, inspection, investigation, survey or examination of records by a Governmental Authority relating to the Business, the Facility or the Transferred Assets.

5.15 Compliance with Laws

(a) Set forth on Schedule 5.15(a) to the Disclosure Letter is a complete list of the material Governmental Approvals held by Seller and/or its Relevant Affiliates necessary for the lawful operation of the Business, the Facility and the Transferred Assets, as currently conducted as of the date of this Agreement by Seller and/or its Relevant Affiliates , all such Governmental Approvals are in full force and effect and to the Knowledge of Seller no suspension or cancellation of any of such material Governmental Approvals is pending or threatened in writing.

(b) Except as set forth on Schedule 5.15(b) to the Disclosure Letter, the Governmental Approvals set forth on Schedule 5.15(a) to the Disclosure Letter are all of the material Governmental Approvals necessary for the lawful operation of the Business, the Facility and the Transferred Assets in the Product Territories, as currently conducted as of the date of this Agreement .

(c) To the Knowledge of Seller, the operation of the Business by Seller and/or its Relevant Affiliates does not violate or conflict in any material respect with any applicable Law or any necessary Governmental Approval in the Product Territories, including the Federal Food, Drug and Cosmetic Act of 1938, as amended (the “FDCA”), the Public Health Service Act of 1944, as amended, and the regulations of the FDA promulgated thereunder, the Food and Drugs Act, as amended, the Controlled Drugs and Substances Act, as amended, and the regulations promulgated thereunder (the “CDSA”), federal Medicare and Medicaid statutes and related state or local statutes or regulations, provincial formulary and drug pricing statutes, including the rules and regulations promulgated thereunder, any comparable foreign Laws for any of the foregoing; foreign, federal, state or provincial criminal or civil Laws (including the federal Anti-Kickback Statute (42 U.S.C. §1320a-7(b)), Stark Law (42 U.S.C. §1395nn), False Claims Act (42 U.S.C. §1320a-7b(a)), Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d et. seq.), as well as, in the case of each of the foregoing, any comparable foreign, state, provincial or local Laws or regulations; and state or provincial licensing, disclosure and reporting requirements. Neither Seller nor any of its Relevant Affiliates has received any written notice that Seller or any of its Relevant Affiliates is not in compliance in

any material respect with any applicable Law with respect to the operation of the Business, the Facility or the Transferred Assets.

5.16 Certain Financial Information

The unaudited pro-forma financial information set forth on Schedule 5.16 to the Disclosure Letter has been prepared in good faith from Seller’s and/or its Relevant Affiliates’ books and records and, on the basis of the assumptions regarding the structure of operation of the Business and the manufacture of Products and Third Party Products at the Facility set out in such Schedule 5.16 , fairly presents, in all material respects, the state of affairs of the Business and the manufacture of Products and Third Party Products at the Facility for the periods indicated therein in accordance with IFRS, except as set forth on such Schedule 5.16 , provided that, none of Seller, its Affiliates nor any other Person acting on their behalf shall be deemed to have made any representation or warranty in this Section 5.16 as to the accuracy or completeness of any projections, budgets, forecasts, forward-looking statements or pro-forma business plans.

5.17 Absence of any Changes

Except as set forth on Schedule 5.17 to the Disclosure Letter, since ***,

(a) there has not been any change in the Sanofi Accounting Principles and Practices that would have a material adverse effect on the Business;

(b) the Business, the Facility and the Transferred Assets have been operated in the ordinary course of business in a manner consistent in all material respects with past practice;

(c) there has not been any Material Adverse Effect or any material change in the financial condition or operations of the Business or the Transferred Assets, other than changes in the ordinary course of business and changes resulting from the announcement of the transactions contemplated by this Agreement or contemplated by this Agreement;

(d) neither Seller nor any Relevant Affiliate has changed the manner of billing of, or the credit lines made available to, any customers of the Business; and

(e) neither Seller nor any Relevant Affiliate has authorized, agreed or otherwise become committed to do any of the foregoing.

5.18 Brokers and Finders

There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Seller or any of its Affiliates who might be entitled to any fee or commission from Purchasers or any of their Affiliates in connection with the transactions contemplated by this Agreement or the Ancillary Agreements.

5.19 Product Liability

Except as set forth in Schedule 5.19 to the Disclosure Letter, since ***, no Legal Proceedings related to product liability have been initiated against Seller or any of its Relevant Affiliates or their agents and, to the Knowledge of Seller, no such Legal Proceedings have been threatened or filed against Seller or any of its Relevant Affiliates relating to any of the Products or any Third Party Product. There is no Order outstanding against Seller or any of its Relevant Affiliates relating to such a Legal Proceeding on account of any of the Products or any Third Party Product.

5.20 Suppliers and Customers

Schedule 5.20 to the Disclosure Letter sets forth, (a) the top *** active pharmaceutical ingredient suppliers of the Business (determined based on aggregate purchases for the twelve (12)-month period ended December 31, 2010), (b) each supplier who constitutes a sole source of supply to the Business, and (c) the top *** customers of the Business (determined based on aggregate sales for the twelve (12)-month period ended December 31, 2010). To the Knowledge of Seller, there has been no FDA regulatory action instituted against any supplier listed in Schedule 5.20 to the Disclosure Letter that could be reasonably expected to have a material impact on such supplier’s ability to supply the Business in accordance with past practices.

5.21 Regulatory Matters

(a) Except as would not reasonably be expected to be materially adverse to the Business, (i) each of Seller and its Relevant Affiliates holds all Product Registrations, including all authorizations required by any applicable Governmental Authority in the Product Territories (any such Governmental Authority, a “Regulatory Agency”) that is necessary in the relevant Product Territories for the lawful operating of the Business and the testing, manufacturing, sale or distribution, as applicable, of each of the Products and (ii) all such Product Registrations are valid and in full force and effect as of the date of this Agreement. Since ***, there has not occurred any violation of, default (with or without notice or lapse of time or both) under, or event giving to others any right of termination, amendment or cancellation of, with or without notice or lapse of time or both, of any Product Registration, except as has not had and would not reasonably be expected to be materially adverse to the Business. Seller and each of its Relevant Affiliates are in compliance in all material respects with the terms of all Product Registrations, and no event has occurred that, to the Knowledge of Seller, would

reasonably be expected to result in a penalty under or the revocation, cancellation, non-renewal or adverse modification of any Product Registration, except as has not had and would not reasonably be expected to be materially adverse to the Business.

(b) With respect to the Business, each of Seller and its applicable Relevant Affiliates are in compliance in all material respects with the terms of (1) the Corporate Integrity Agreement, dated August 30, 2007, between the Office of Inspector General of the Department of Health and Human Services, Aventis, Inc., Aventis Pharmaceuticals, Inc., sanofi-aventis U.S. Inc. and sanofi-aventis U.S. LLC; and (2) the Addendum, dated May 22, 2009, to the Corporate Integrity Agreement between the Office of Inspector General of the Department of Health and Human Services, Aventis, Inc., Aventis Pharmaceuticals, Inc., sanofi-aventis U.S. Inc. and sanofi-aventis U.S. LLC.

(c) All pre-clinical and clinical investigations conducted or sponsored by each of Seller and its Relevant Affiliates relating to the Business are being conducted in compliance in all material respects with all applicable Laws administered or issued by the applicable Governmental Authorities in the relevant Product Territories.

(d) To the Knowledge of Seller and except as set forth in Schedule 5.21(d) to the Disclosure Letter, neither Seller nor any of its Relevant Affiliates has received any written information from any Governmental Authority with jurisdiction over the marketing, sale, use handling and control, safety, efficacy, reliability, or manufacturing of drugs or medical devices which would reasonably be expected to lead to the denial of any application for marketing approval related to the Business currently pending before any applicable Governmental Authority.

(e) Seller and/or its Relevant Affiliates, as applicable, have completed and filed all annual or other reports required by any applicable Governmental Authority in order to maintain the Product Registrations or the Governmental Approvals set forth on Schedule 5.15(a) to the Disclosure Letter, except where the failure to file such reports would not have a Material Adverse Effect. To the Knowledge of Seller, all such reports, documents, claims, permits and notices were complete and accurate in all material respects on the date filed (or were corrected in or supplemented by a subsequent filing). No Governmental Authority has commenced or, to the Knowledge of Seller, threatened to initiate any Legal Proceeding alleging any violations of any federal, state, provincial or local or any payor “fraud and abuse,” consumer protection and false claims statutes and regulations or any pricing or rebate reporting requirements or to seek exclusion, whether voluntary or otherwise, of Seller, its employees, and/or Seller’s Relevant Affiliates from participation in any federally or state-funded program. Neither

Seller nor its Relevant Affiliates nor, to the Knowledge of Seller, any of their respective employees has received any written notice to such effect.

(f) To the Knowledge of Seller, none of Seller, any of its Relevant Affiliates, or any officer, employee, agent or distributor of Seller or any of its Relevant Affiliates, has made an untrue statement of a material fact or a fraudulent statement to a Regulatory Agency, failed to disclose a material fact to the relevant Regulatory Agency requiring such disclosure, or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities,” set forth in 56 Fed. Reg. 46191 (September 10, 1991) Neither Seller nor any of its Relevant Affiliates, nor any officer, employee, agent or distributor of Seller or any of its Relevant Affiliates, has been convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or any similar Law or authorized by 21 U.S.C. § 335a(b) or any similar Law. Neither Seller nor any of its Relevant Affiliates, nor any officer, employee, agent or distributor of Seller or any of its Relevant Affiliates, has been convicted of any crime or engaged in any conduct for which such Person could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act of 1935, as amended, or any similar Law or program.

(g) As to each Product subject to the FDCA and the regulations of the FDA promulgated thereunder, the Food and Drugs Act, the CDSA and the regulations promulgated thereunder, or similar Law in any foreign jurisdiction that is or has been developed, manufactured, tested, distributed or marketed by or on behalf of Seller or any of the Relevant Affiliates, each such Product is being or has been developed, manufactured, tested, distributed or marketed in compliance in all material respects with all applicable requirements under the FDCA and the regulations of the FDA promulgated thereunder, the Food and Drugs Act, the CDSA and the regulations promulgated thereunder, and similar Laws in any foreign jurisdiction, including those relating to investigational use, premarket clearance or marketing approval, good manufacturing practices, good clinical practices, good laboratory practices, labeling, advertising, record keeping, filing of reports, and security. There is no action or proceeding pending or, to the Knowledge of Seller, threatened, including any prosecution, injunction, seizure, civil fine, debarment, suspension or recall alleging any violation applicable to any Product, except as would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Business, nor has Seller received written notice of any actual or potential violation of law or regulation, except as would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Business.

(h) Since ***, except as set forth on Schedule 5.21(h) to the Disclosure Letter, to the Knowledge of Seller, each of Seller and its Relevant Affiliates have neither voluntarily nor involuntarily initiated, conducted or issued, or caused to be initiated, conducted or issued, any recall, field alerts, field corrections, market withdrawal or replacement, safety alert, warning, “dear doctor” letter, investigator notice, safety alert or other notice or action relating to an alleged lack of safety, efficacy or regulatory compliance of any Product. To the Knowledge of Seller, there are no facts which are reasonably likely to cause (i) the recall, market withdrawal or replacement of any Product sold or intended to be sold by Seller or its Relevant Affiliates, (ii) a change in the marketing classification or a material change in the labeling of any such Products, or (iii) a termination or suspension of the marketing of such Products.

(i) Since *** and except as set forth in Schedule 5.21(i) to the Disclosure Letter, neither Seller nor any of its Relevant Affiliates has received any written notice that any Regulatory Agency has (i) commenced or, to the Knowledge of Seller, threatened to initiate, any action to request the recall of any Product sold or intended to be sold by Seller or its Relevant Affiliates; or (ii) commenced or, to the Knowledge of Seller, threatened to initiate, any action to enjoin manufacture or distribution of any Product sold or intended to be sold by Seller or its Relevant Affiliates.

(j) To the Knowledge of Seller, none of Seller nor any of its Affiliates has withheld from Purchasers any Post-Marketing Approval Studies because such Post-Marketing Approval Studies contained results regarding the safety of any Product that would materially alter the results set forth in the Post-Marketing Approval Studies provided to Purchasers on or prior to the date of this Agreement.

5.22 Foreign Corrupt Practices Act; International Trade Sanctions

To the Knowledge of Seller, neither Seller, nor any of its Relevant Affiliates, nor any of their respective directors, agents, employees or any other Persons acting on their behalf has, in connection with the operation of the Business and the Facility, (i) used any corporate or other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful or unrecorded funds in violation of the Foreign Corrupt Practices Act of 1977, as amended, as if it were applicable to Seller or such Relevant Affiliate at that time, the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, as amended, or any other similar applicable Law, (ii) paid, accepted or received any unlawful contributions, payments, expenditures or gifts, or (iii) violated or operated in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign Laws and regulations.

5.23 Tax Matters

(a) Seller and its Affiliates have paid on a timely basis all Taxes relating to the Transferred Assets and the Business that are due and payable, except for such Taxes that are being contested in good faith by appropriate proceedings.

(b) There are no pending or, to the Knowledge of Seller, threatened, audits, investigations, disputes, notices of deficiency, claims or other actions or proceedings for or relating to any Taxes of Seller or any of its Affiliates which could reasonably be expected to result in any Encumbrances on any Transferred Asset or result in any liability of Purchasers of any of its Affiliates for any Tax.

(c) Any Seller Relevant Affiliate that is a party to the Canadian Deed of Sale is a resident of Canada for the purposes of the Income Tax Act (Canada).

(d) No person who is disposing of a Transferred Asset pursuant to this Agreement that is “taxable Canadian property” as defined in the Income Tax Act (Canada) is a non-resident of Canada for the purposes of the Income Tax Act (Canada).

5.24 No Other Representation and/or Warranty

The representations and/or warranties provided in this Article 5 (together with the Schedules, any Disclosure Supplement and any certificate delivered pursuant to Section 4.2(n) ) are the only representations and/or warranties given by Seller in connection with the Transferred Assets, the Business, the Facility and the transactions herein contemplated. The representations and warranties made in this Agreement with respect to the Transferred Assets, the Business, the Facility and the transactions herein contemplated are in lieu of all other representations and warranties Seller or any of its Affiliates might have given Purchasers, including implied warranties of merchantability, implied warranties of fitness for a particular purpose and other implied warranties under applicable Law. Except as specifically set forth in this Article 5 , none of Seller, its Affiliates nor any other Person acting on their behalf shall be deemed to have made any representation or warranty as to the accuracy or completeness of any information, documents, projections, estimates, budgets, forecasts, forward-looking statements, pro-forma business plans or other material such as confidential information memoranda, data rooms or management interviews and presentations prepared and made available to Purchasers in order to assist Purchasers in making their own evaluation of the transactions contemplated herein, and Purchasers acknowledge that such information relies on assumptions and that they conducted their own investigation and analysis of such information and data and assume any responsibility in connection with the relevance of the use of such information for their own analyses. Notwithstanding anything in this Agreement to the contrary, no representation or warranty is being made as to the Transferred Discontinued Product Assets. Purchasers acknowledge that all other

representations and warranties that Seller, its Affiliates or anyone purporting to represent Seller or its Affiliates gave or might have given, or which might be provided or implied by applicable Law or commercial practice with respect to the Transferred Assets, the Business, the Facility and the transactions herein are hereby expressly excluded.

ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASERS

As of the date of this Agreement and the Closing Date, each of the Purchasers, severally but not jointly, represents and warrants to Seller as follows:

6.1 Corporate Organization

Such Purchaser, (x) in the case of IP Purchaser, is an international society with restricted liability, duly organized and in good standing under the Laws of Barbados and (y), in the case of Business Purchaser, is a corporation validly existing under the Laws of Canada. Such Purchaser’s Relevant Affiliates (other than IP Purchaser and Business Purchaser) are corporations or other legal entities duly organized, validly existing and in good standing under the Laws of the jurisdiction of their respective organizations. Each of such Purchaser and its Relevant Affiliates have all requisite corporate or other organizational power and authority to own and operate its properties and assets and to carry on its business as currently conducted. Each of such Purchaser and its Relevant Affiliates is duly qualified or licensed to do business and is in good standing in each jurisdiction in which such qualification or licensing is necessary under applicable Law, except where the failure to be so qualified or licensed and to be in good standing would not reasonably be expected, individually or in the aggregate, to materially delay the Closing or prevent Purchasers and/or their Relevant Affiliates from complying with their respective obligations under this Agreement and the Ancillary Agreements.

6.2 Authority; Binding Effect

(a) Such Purchaser and/or its Relevant Affiliates has full corporate or other organizational company power and authority to execute, deliver and perform its obligations under this Agreement and the Ancillary Agreements to which it is a party, and each other agreement, document, instrument, deed or certificate contemplated by this Agreement and the Ancillary Agreements to be executed by such Purchaser or any of its Relevant Affiliates in connection with the consummation of the transactions contemplated hereby and thereby.

(b) The execution, delivery and performance by such Purchaser of this Agreement, and the execution, delivery and performance by such Purchaser and/or their Relevant Affiliates of any of the Ancillary Agreements to which it is a party have been duly authorized or, with respect to the Ancillary Agreements, shall have been duly authorized at the Closing Date, by all necessary corporate action on the

part of such Purchaser or its Relevant Affiliates, as the case may be and no additional authorization on the part of such Purchaser is necessary in connection with the execution, delivery and performance of this Agreement or by such Purchaser and/or its Relevant Affiliates in connection with the execution, delivery and performance of the Ancillary Agreements.

(c) This Agreement constitutes, and on the Closing Date, will constitute, and each of the Ancillary Agreements when duly executed and delivered on the Closing Date, assuming the due authorization, execution and delivery by the other parties hereto and thereto, will constitute, legal, valid and binding obligations of such Purchaser and/or its Relevant Affiliates that are parties thereto, enforceable against them in accordance with their respective terms, except as may be subject to applicable bankruptcy, insolvency, moratorium or other similar Laws, now or hereafter in effect, relating to or affecting the rights of creditors generally and by legal and equitable limitations on the enforceability of specific remedies.

6.3 No Violations; Consents and Approvals

(a) Subject to receipt of the Antitrust Approvals, the execution, delivery and performance of this Agreement and the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby do not and will not: (i) conflict with, violate, result in the breach of, or constitute a default under, any provision of the certificate of incorporation, articles or bylaws or similar governing documents of such Purchaser or any of its Relevant Affiliates, (ii) conflict with, violate, result in the breach of, constitute a default under, under any contract pursuant to which such Purchaser or its Relevant Affiliates is bound, or (iii) conflict with, violate, result in the breach of, or constitute a default under any Law applicable to such Purchaser and/or any of its Relevant Affiliates.

(b) Except for the Antitrust Approvals, no consents or approvals are required on the part of such Purchaser or any of their Affiliates in connection with the execution, delivery and performance of this Agreement or any of the Ancillary Agreements to which it is a party.

(c) There is no pending Legal Proceeding involving such Purchaser and/or its Affiliates or, to the Knowledge of Purchasers, threatened against such Purchaser, which questions or challenges the validity of this Agreement or seeks to prevent, enjoin, alter or delay any of the transactions contemplated hereby or any action to be taken pursuant to this Agreement.

6.4 Financial Capability

As of the Closing Date, Purchasers, collectively, will have on hand, available funds sufficient to enable Purchasers to pay in full all amounts contemplated to be paid and to satisfy all other obligations hereunder by Purchasers in connection with this Agreement and the transactions contemplated hereby. Giving effect thereto, following the Closing, Purchasers, collectively, will have capital resources sufficient to satisfy all Assumed Liabilities relating to the Business or Transferred Assets.

6.5 Brokers and Finders

There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchasers or any of their Affiliates who might be entitled to any fee or commission from Seller or any of its Affiliates in connection with the transactions contemplated by this Agreement or the Ancillary Agreements.

6.6 GST, HST and QST Registration — Canada

Business Purchaser is duly registered under Subdivision (d) of Division V of Part IX of the Excise Tax Act (Canada) with respect to the goods and services and harmonized sales tax and under Division I of Chapter VIII of Title I of the An Act respecting the Québec Sales Tax with respect to Québec sales tax, and its registration numbers are(i) 138454145 RT0001 (Business Number - GST/HST), (ii) 1148593859 (Quebec Enterprise Number - NEQ) and (iii) 1017928003 TQ0003 (Quebec Identification and File Number).

6.7 No Other Representation and/or Warranty

The representations and/or warranties provided in this Article 6 are the only representations and/or warranties given by Purchasers in connection with the transactions herein contemplated.

6.8 Independent Assessment

Purchasers have not relied on any representation and warranty of Seller, except those expressly included herein.

ARTICLE 7 COVENANTS OF THE PARTIES

7.1 Covenants Prior to Closing

7.1.1 Operation of the Transferred Assets Pending the Closing

Except as set forth on Schedule 7.1.1 to the Disclosure Letter, as otherwise contemplated by this Agreement or with the prior written consent of Purchasers, during the period from the date of this Agreement until the Closing Date, Seller covenants and agrees that, with respect to the Business, the Facility and the Transferred Assets, Seller shall, and shall cause its Relevant Affiliates to (i) operate the Business, the Facility and the Transferred Assets in the ordinary course of business, consistent in all material respects with past practice and in compliance in all material respects with applicable Laws; and (ii) pay or perform all material obligations relating to the Business as they become due and owing. Without limiting the generality of the foregoing and except as otherwise contemplated by this Agreement or with the prior written consent of Purchasers, not to be unreasonably withheld or delayed, during the period from the date of this Agreement until the Closing Date, Seller covenants and agrees that, with respect to the Business, the Facility and the Transferred Assets, Seller shall not, and shall not permit its Relevant Affiliates to:

(a) fail to maintain in the ordinary course of business consistent in all material respects with past practice their business relations with their contract manufacturers, other Third Party suppliers, regulators, customers and other Third Parties having business relationships with the Business;

(b) sell, pledge, dispose of, grant, transfer, lease, license, encumber or authorize the sale, pledge, disposition, grant, transfer, lease, license or encumbrance of any assets that are (or would otherwise be) Transferred Assets, other than (i) sales of Inventory or obsolete equipment in the ordinary course of business consistent in all material respects with past practice or (ii) Permitted Encumbrances;

(c) acquire any material properties or assets that would be Transferred Assets other than in the ordinary course of business consistent with past practices, except for Transferred Assets that would not reasonably be expected to result in the assumption by Purchasers of material Assumed Liabilities at the Closing pursuant to the terms of this Agreement;

(d) make any settlement of or compromise any material Tax liability, change in any material respect any Tax election or Tax method of accounting, make any new material Tax election or adopt any material new Tax method of accounting that would affect the Tax treatment of any Transferred Asset from and after the Closing;

(e) except as provided in the Amended and Restated Joint Defense Agreement in the form agreed by the Parties (including prior to the execution thereof), settle any litigation or claim or waive any claims or rights of value in a manner that would

constitute an Assumed Liability or otherwise be materially adverse to the Business from and after the Closing;

(f) with respect to the assets of the Facility set forth on Schedule 2.1.2 (b) to the Disclosure Letter: (i) fail to maintain such assets in a state of repair, order and condition consistent in all material respects with their operation in the ordinary course of business in accordance with past practice, usual and ordinary wear and tear excepted or (ii) fail to maintain the insurance coverages with respect thereto as in effect on the date of this Agreement;

(g) with respect to the Owned Real Property, (i) fail to maintain such property in a state of repair, order and condition consistent in all material respects with its operation in the ordinary course of business in accordance with past practice, usual and ordinary wear and tear excepted or (ii) fail to maintain the insurance coverages with respect thereto as in effect on the date of this Agreement;

(h) enter into any new contract, agreement or commitment that would be a Transferred Contract (provided that, notwithstanding any provision to the contrary in this Agreement or the Ancillary Agreements, (1) Seller and its Relevant Affiliates may after the date of this Agreement renew any contract, agreement or commitment pertaining to the Transferred Assets, the Products or the Business on terms that are generally consistent with their current terms except for (w) any agreements pursuant to which a payment is payable contingent upon the achievement of any specified regulatory, business or other milestone after the Closing, (x) license, distributor or contract manufacturing agreements, (y) any agreements set forth on Schedule 7.1.1(h) to the Disclosure Letter or (z) any agreements ***, in each case as to which Purchasers’ prior written consent will be required), (2) any such new or renewed agreements shall be deemed to be included on the Schedules to this Agreement in lieu of the agreements they replace, and (3) the execution and performance of such new or renewed agreement shall not constitute a breach of any representation, warranty or covenant of Seller or its Relevant Affiliates);

(i) except as permitted in accordance with Section 7.1.1(h) , terminate, waive any material provision of, amend or otherwise modify in any material respect any Transferred Contract;

(j) except as may be required pursuant to applicable Law or any industry-wide collective bargaining agreement, enter into, terminate or modify any Seller Compensation and Benefit Plan (or any arrangement that would be a Seller Compensation and Benefit Plan if in effect on the date of this Agreement) or grant any bonuses, salary or wage increase, or otherwise increase the compensation

payable to any Eligible Employee, except in the ordinary course of business consistent with past practice for Eligible Employees.

(k) terminate (other than for cause), reassign, transfer or otherwise materially modify the duties of any key Eligible Employee;

(l) other than in the ordinary course of business, hire or transfer any individual who would become an Eligible Employee;

(m) fail to take any action necessary to protect or maintain the Transferred Intellectual Property (to the extent that necessary prosecution rights are held by Seller or its Relevant Affiliates), including the prosecution of all pending applications for Patents and Trademarks, the filing of any documents or other information or the payment of any maintenance or other fees related thereto for the period up to the Closing Date, in each case other than in the ordinary course of business consistent in all material respects with past practice;

(n) with respect to the Business, (i) make any material change in the selling, distribution, advertising, terms of sale or collection practices that are inconsistent in any material respect with past practices, (ii) enter into any material business practices, programs or long-term allowances not previously used in the ordinary course of business, or (iii) engage in the practice of “channel stuffing” or any program, activity or other action (including any rebate, discount, chargeback or refund policy or practice), that, in any such case, would reasonably be expected to result, directly or indirectly, in purchases of Products or Third Party Products that are in excess of normal customer purchasing patterns consistent with past practice of the Business during the twelve (12) months prior to the date of this Agreement;

(o) communicate with any Eligible Employees regarding the compensation, benefits or other treatment that they will receive from Purchasers in connection with the transactions contemplated hereby, unless any such communications have been reviewed and approved by Purchasers, provided, however, to the extent communication is mandated by applicable Laws or by collective bargaining agreements applicable to the Eligible Employees, Seller shall provide Business Purchaser a reasonable opportunity to review and approve such communications prior to making such communications, but Seller shall not be required to obtain such approval prior to making any mandated communication to the extent delay would result in criminal or civil penalties;

(p) demolish or remove any of the existing Improvements, or erect new Improvements at the Facility or on the Owned Real Property or any portion

thereof not in the ordinary course of business or that would require payment by Purchasers following the Closing;

(q) terminate, cancel, amend, waive, modify or fail to maintain or comply with any material Governmental Approvals;

(r) take any action with respect to the ***; or

(s) agree, in writing or otherwise, to take or authorize any of the foregoing actions.

7.1.2 Required Actions

7.1.2.1 Subject to the terms and conditions of this Agreement, including without limitation Section 7.1.2.2 , each of the Parties shall use their *** efforts to take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with the other parties in doing, all things necessary to consummate and make effective, as soon as reasonably possible (and in any event no later than the Outside Date), the transactions contemplated by this Agreement and the Ancillary Agreements, and neither Party shall take any action that would reasonably be likely to materially delay or interfere with the Parties’ ability to obtain as soon as reasonably possible the Consents or nonactions required to be obtained in connection with the consummation of the transactions contemplated by this Agreement.

7.1.2.2 Purchasers shall use their *** efforts to obtain all such required Consents or nonactions from such Governmental Authorities so as to enable the Closing to occur as soon as reasonably possible (and in any event no later than the Outside Date), and shall use their *** efforts to furnish to the Seller all assistance, cooperation and information as necessary to obtain such required Consents or nonactions. Without limiting the foregoing, to the extent necessary to accomplish the foregoing, Purchasers shall make their *** efforts promptly to take any and all actions with respect to the Transferred Assets and/or the assets of the Purchasers or any of their Affiliates, including, but not limited to, selling, holding separate, licensing, terminating, modifying or otherwise disposing of such assets (or agreeing to, or permitting, any of the foregoing with respect to such assets) whether by consent decree, hold separate order or otherwise (collectively the “Action” or “Actions”); provided, however, that Purchasers shall not be required pursuant to this Section 7.1.2.2 to propose, commit to or take any Action that is not conditioned upon the consummation of the transactions contemplated by this Agreement, or that would require Purchasers to take an Action or Actions that would affect a material portion of the value of *** (a “Material Antitrust Action”).

Purchasers shall determine and direct the strategy by which the Parties will seek such required Consents or nonactions, provided that prior to taking any strategic decisions Purchasers shall consult with Seller and shall consider Seller’s reasonable advice in connection therewith.

7.1.2.3 Seller shall use its *** efforts to obtain all such required Consents or nonactions from such Governmental Authorities so as to enable the Closing to occur as soon as reasonably possible (and in any event no later than the Outside Date), and shall use its *** efforts to furnish to the Purchasers all assistance, cooperation and information as necessary to obtain such required Consents or nonactions.

7.1.2.4 In connection with and without limiting the generality of the foregoing, each of Purchasers and Seller shall:

(a) make or cause to be made, in consultation and cooperation with the other and as promptly as practicable and no later than *** Business Days after the date of this Agreement, (i) an appropriate filing of a Notification and Report Form pursuant to the HSR Act relating to the transactions contemplated by this Agreement, (ii) a notification pursuant to Section 114(1) of the Competition Act and an application for an advance ruling certificate pursuant to Section 102 of the Competition Act relating to the transactions contemplated by this (collectively, the “Antitrust Approvals”) and *** shall bear the cost of all applicable filing fees in connection with such Antitrust Approvals. Neither Party shall withdraw any filing referred to in this Section 7.1.2.4 or take any other step that has the effect of suspending, extending or terminating any applicable waiting period, nor shall a Party enter into any agreement with an Antitrust Authority not to consummate (or regarding the timing of consummation of) the transactions contemplated by this Agreement, without the prior written consent of the other Party;

(b) give the other reasonable prior notice of any such notice or filing and, to the extent reasonably practicable, of any communication with any Governmental Authority regarding the transactions contemplated by this Agreement (including with respect to any of the actions referred to in Section 7.1.2.2 and in this Section 7.1.2.4 , and permit the other to review and discuss in advance, and consider in good faith the views of, and secure the participation of, the other in connection with any such registration, declaration, notice, filing or communication;

(c) respond as promptly as practicable under the circumstances to, and promptly comply with, any inquiries received from any Governmental Authority or any other authority enforcing applicable antitrust, competition, foreign investment, trade regulation or similar Laws for additional information or documentation in connection with antitrust, competition, foreign investment, trade regulation or

similar matters, and not extend, restart or suspend any waiting period under the HSR Act or Competition Act or enter into any agreement with such Governmental Authorities or other authorities regarding the consummation of any of the transactions contemplated by this Agreement, except with the prior written consent of the other Party hereto; and

(d) ***

7.1.2.5 Notwithstanding any other provision in this Agreement, the existence of any actual or potential claim or cause of action of Purchasers or their Affiliates against Seller or its Affiliates shall not excuse Purchasers from fully performing their obligations under Section 7.1.2.2 , and Section 7.1.2.4 , or otherwise constitute a defense to Purchasers’ failure to fully perform same.

7.1.3 Termination of Intra-Group Agreements

Effective as of the Closing, Seller shall terminate, and shall cause its Relevant Affiliates to terminate, at its own cost and expenses, and only to the extent they relate to the Business in the applicable Product Territories or the Facility, each of the agreements among them relating to the Business in the applicable Product Territories or the Facility. Seller shall indemnify and hold harmless Purchasers and their Affiliates from any claim of any Affiliate of Seller in connection with the termination of agreements referenced in this Section 7.1.3 .

7.1.4 Access to Information

Prior to the Closing Date, subject to applicable Laws, Seller shall, and shall cause its Relevant Affiliates and their respective employees and representatives (including attorneys, consultants and accountants) to (i) give to Purchasers and their authorized representatives reasonable access to the Transferred Assets during normal business hours on a Business Day and upon reasonable notice in a manner that does not unreasonably disturb the day-to-day operation of the Business or the Facility by Seller or its Relevant Affiliates and (ii) furnish Purchasers and their authorized representatives with such reasonable financial and operating data and other information that is available with respect to the Transferred Assets, the Facility and the Business or sale of the Products (or consent to authorize Purchasers to obtain appropriate records from any Governmental Authority) as Purchasers may from time to time request, including arranging for interviews and meetings during normal business hours on a Business Day and upon reasonable notice. In the event that Purchasers are required by applicable Law or the rules of any stock exchange to prepare pro-forma financial statements reflecting the acquisition of the Business, then, from the date of this Agreement through the Closing and continuing for a period ending *** after the Closing, Seller shall, and shall cause its Relevant Affiliates and their

respective employees and representatives (including attorneys, consultants and accountants) to promptly provide any necessary financial information to the extent available and reasonable access to Seller’s appropriate personnel and external accountants subject to provisions above. All information thus provided shall be subject to the provisions of Section 11.4 ; for the avoidance of doubt, Seller will not be responsible for preparing any such financial statements for Purchasers nor will Seller have any liability as a result of such financial statements. Any request for visits, interviews, meetings or information in accordance with this section shall be addressed by Purchasers to Tom Wiatrowski of Seller.

7.1.5 Litigation

Without prejudice to the Amended and Restated Joint Defense Agreement, until the Closing Date, Purchasers and Seller shall promptly notify each other of any Legal Proceedings commenced or threatened in writing against either Purchasers or Seller which relate to the Business, Transferred Assets, Products, this Agreement or the transactions contemplated hereby.

7.1.6 Disclosure Supplement

(a) From the date of this Agreement until the earlier to occur of the Closing Date or the termination of this Agreement pursuant to Article 10 , Seller shall provide prompt written notice (each, a “Seller Notice”) to Purchasers of (i) the failure of any of the representations and warranties set forth in Article 5 to be true and correct in any material respect (subject to any qualifications set forth in the applicable representation or warranty or Disclosure Letter), (ii) events or conditions that could reasonably result in the conditions set forth in Sections 8.2(a) , (b) or (c) not being satisfied, (iii) any circumstance that would reasonably be expected to result in a Material Adverse Effect or (iv) any Product Registration becoming invalid or not in full force and effect.

(b) In the event Seller delivers a notice to Purchasers that (i) identifies any matter, event or fact which first arises after the date of this Agreement and prior to Closing (a “Subsequent Event”), and (ii) contains an express affirmative statement by Seller that Purchasers have the right to terminate this Agreement pursuant to Section 10.1(d) as a result of the conditions precedent set forth in Sections 8.2(a) , (b) or (c) not being fulfilled (each such written notification, a “Termination Right Notice”), such Termination Right Notice shall also be

accompanied by a supplement to the Schedules specifying such change or changes as are necessary to reflect the Subsequent Event (a “Disclosure Supplement”); provided , however that Seller shall not be permitted to deliver to Purchasers any Termination Right Notice and Disclosure Supplement less than *** Business Days prior to the Closing.

(c) Any notification of matters, facts or events delivered in any notice pursuant to Section 7.1.6(a) that does not rise to the level to permit Purchasers to terminate this Agreement pursuant to Section 10.1(d) shall not permit the delivery of a Disclosure Supplement by Seller and shall not limit otherwise existing indemnification rights of the Purchaser Indemnified Parties.

(d) As of the Closing, if Purchasers shall have waived their right to terminate this Agreement with respect to a Termination Right Notice and Disclosure Supplement, then the Schedules shall thereupon be deemed to be amended by such Disclosure Supplement and the Purchaser Indemnified Parties shall be deemed to have waived any claim for indemnification pursuant to Article 9 of this Agreement based on any breach of representation or warranty that would have otherwise existed in the absence of such disclosure solely for the portion of any Subsequent Event disclosed in such Disclosure Supplement; provided , that in the event Purchasers following the Closing become aware of any additional material matter, event or fact which first arose prior to Closing that renders materially inaccurate or misleading such Termination Right Notice and Disclosure Supplement, then the Schedules shall thereupon be deemed not to have been amended by such Disclosure Supplement and such Disclosure Supplement will be deemed not to have cured any misrepresentation or breach of warranty that otherwise might have existed hereunder by reason of such variance or inaccuracy and the Purchaser Indemnified Parties shall not have been deemed to waive any claim for indemnification they may have against Seller for the portion of any such Subsequent Event disclosed in such Disclosure Supplement.

7.1.7 Offer of Employment to Eligible Employees

(a) Subject to Section 11.13 , as soon as possible after the date of this Agreement and in any case prior to the Closing Date, Business Purchaser shall provide each Eligible Employee (other than the Mandatorily Transferred Employees and Eligible Employees outside the United States, Canada, *** and ***) with an offer of employment, effective as of the Closing Date (or, with respect to such Eligible Employees who are on disability leave, effective at such time that such employee returns to active status, provided that Business Purchaser shall not be required to offer employment to such Eligible Employees who do not return to active status within *** months following Closing); provided that each offer of employment to an Eligible Employee primarily providing services in the United States will satisfy the requirements for an “Acquisition Position” (as defined in the sanofi-

aventis U.S. Affiliates’ Separation Plan). Such offers of employment shall also comply with, and be subject to, Business Purchaser’s applicable policies as communicated to Seller prior to the date of this Agreement, to the extent not incompatible with the requirement for any such offer to an Eligible Employee providing services primarily in the United States to satisfy such requirements for an Acquisition Position. Such Eligible Employees who have accepted such offer of employment no later than the Closing Date (or, in the case of employees who are on disability leave as of the Closing Date, within ten (10) days of returning to active status), together with the Mandatorily Transferred Employees (excluding those Mandatorily Transferred Employees who, as the case may be, may have objected to their transfer to Business Purchaser in accordance with applicable Law) and who are employed by Seller or one of its Affiliates on the Closing Date (or, in the case of employees who are on disability leave as of the Closing Date, are employed by Seller or one of its Affiliates when the employee returns to active status), are referred to herein collectively as the “Transferred Employees.” Seller shall provide the necessary contact information and reasonable assistance to enable Business Purchaser to make all such offers of employment, subject to applicable Law.

(b) Business Purchaser and Seller agree that the Eligible Employees outside the United States, Canada, *** and *** will not be treated as Transferred Employees for purposes of allocating Liabilities pursuant to this Agreement, even if such employees transfer to Business Purchaser by reason of being Mandatorily Transferred Employees. ***

(c) During the period from the date of this Agreement until the Closing Date, Purchasers will not, and will cause their Relevant Affiliates not to, communicate with any Eligible Employees regarding the compensation, benefits or other treatment they will receive from Purchasers in connection with the transactions contemplated hereby, unless any such communications have been reviewed and approved by Sellers.

7.1.8 Governmental Approvals

Purchasers and Seller shall take all commercially reasonable steps necessary to ensure the transfer or reissuance to the applicable Purchaser of any Governmental Approvals required to continue the operation of the Business after the Closing Date in accordance with all applicable Laws.

7.1.9 Obligations of Purchasers Relating to Transferred Employees

Other than to the extent required by applicable Law or the collective bargaining agreements applicable to the Transferred Employees, (i) nothing contained in this Agreement shall be construed to require, or prevent the termination of,

employment by Purchasers of any individual, (ii) except as set forth in Section 7.2.6 or Section 7.1.7 , nothing contained in this Agreement shall be construed to require from Purchasers minimum benefit or compensation levels or prevent any change by Purchasers in the employee benefits provided to any individual Transferred Employee and (iii) except as set forth in Section 7.2.6 , Purchasers and their Affiliates shall not be obligated to continue or assume any employee benefit plan or program of Seller or its Affiliates (including, but not limited to, the Seller Compensation and Benefit Plans) or be responsible for any obligation or Liability thereunder.

7.1.10 Information as to Transfer of Product Registrations

Within forty-five (45) days after the date of this Agreement, Purchasers will deliver to Seller a schedule containing the name of the entity to which the Product Registration will be transferred in each Product Territory, such other information as to Purchasers or their Affiliates or designated transferee as shall be required by Seller to complete the transfer of the corresponding Product Registrations and a proposed timetable for effecting the transfer of the Product Registrations in each Product Territory. The proposed timetable referred to in the preceding sentence shall be consistent with the terms of this Agreement and subject to the approval of Seller, such approval not to be unreasonably withheld, delayed or conditioned.

7.1.11 Inventory Updates On or before the *** Business Day of each calendar month from the date of this Agreement through the Closing Date, Seller shall, or shall cause its Affiliates to, provide to Purchasers a good faith calculation of the actual Inventory levels as of the last Business Day of the preceding month

7.1.12 Tax Elections

Seller and its Relevant Affiliates, and each Purchaser and its Relevant Affiliates, may make tax elections in connection with the transfer of the Transferred Assets from Seller to Purchasers; provided , however , that Seller consults with Purchasers with respect to any elections made by Seller and its Relevant Affiliates that are reasonably expected to affect either Purchaser; and provided, further, that each Purchaser consults with Seller with respect to any elections made by such Purchaser or their Relevant Affiliates that are reasonably expected to affect Seller.

7.2 Post-Closing Covenants

7.2.1 Transferred Assets and Assumed Liabilities Not Transferred at Closing; Excluded Liabilities Wrongfully Transferred at Closing

Subject to the terms of the Ancillary Agreements, in the event that (x) either of Purchasers discovers after the Closing that it, or its Affiliates, is the owner of, receives or otherwise comes to possess any Excluded Asset or is liable for any Excluded Liability, (y) Seller discovers after the Closing that it, or its Affiliates, is the owner of, receives or otherwise comes to possess any Transferred Asset (including the receipt of payments made pursuant to Transferred Contracts and proceeds from accounts receivable) or any asset that is the subject of a breach of Section 5.4(a) or is liable for any Assumed Liability, such Party shall, or shall cause its Affiliates to, use commercially reasonable efforts to convey such asset or liability, at no cost, to the Party so entitled thereto in accordance with this Agreement (and the relevant Party will cause such entitled Party to accept such asset or assume such liability).

7.2.2 Transfer of Product Registrations, Related Applications and Dossiers

Subject to the provision by Purchasers of the schedule referred to in Section 7.1.10 , the Products Registrations and related applications shall then be transferred to IP Purchaser, Business Purchaser or any of their Relevant Affiliates, in accordance with the following provisions:

(a) With respect to any Product that is marketed in any corresponding Product Territories on the basis of an existing Product Registration, the following provisions shall apply on a Product Territory by Product Territory basis, (or on a group of Product Territories by group of Product Territories basis, in the event any single Product Registration applies to a group of Product Territories as a whole):

(i) Seller shall use, and shall cause its Relevant Affiliates to use, all commercially reasonable efforts to complete the transfer of the corresponding Product Registrations as promptly as practicable after the Closing Date to the benefit of Purchasers or their Relevant Affiliates or relevant Third Party, as proposed and approved in accordance with Section 7.1.10 above.

(ii) Purchasers or their Relevant Affiliates shall use all commercially reasonable efforts to assist Seller in the transfer of such Product Registrations, accept the transfer of the corresponding Product Registrations and formalize with Seller and/or its Relevant Affiliates and

any applicable Governmental Authority, as promptly as practicable after the Closing Date, all necessary documents.

(iii) If (A) the Parties (and/or their Relevant Affiliates, as appropriate) have not submitted an application to transfer a Product Registration within *** months following the Closing Date, or (B) the transfer is not approved by the relevant Governmental Authority within a period of *** months following the Closing Date, Seller and/or its Relevant Affiliates shall have the right, at Seller’s discretion (but after information to Purchasers) to withdraw such Product Registration; provided , however , that so long as Purchasers are attempting in good faith to obtain the approval to transfer a Product Registration, such *** month period shall be extended, but not past the date that is *** months following the Closing Date (such extended time period, the “Extension Period”). Upon such withdrawal, Seller shall promptly provide Purchasers with a copy of the dossier submitted for such application.

(b) In those countries where the Product Registration cannot be transferred at Closing, Seller and/or its Relevant Affiliates will continue to promote, distribute and/or sell the relevant Products after the Closing Date pursuant to the Transitional Distribution Agreement. Seller or its Relevant Affiliates shall then transfer the corresponding Product Registrations to Business Purchaser (in accordance with the provisions of Section 7.2.2(a) ) at the expiration, on a Product by Product and Product Territory by Product Territory basis, of Seller’s and/or its Relevant Affiliate’s obligation to promote, distribute and/or sell such Product in such Product Territory under such Transitional Distribution Agreement (as applicable, the “Local Expiration Date” ).

(c) The following provisions shall apply in any applicable Product Territory where, as of the Closing Date, Seller and/or its Relevant Affiliates, have obtained a Product Registration from the competent Governmental Authority but where the relevant Product is not already launched:

(i) On or as soon as reasonably practicable after the Closing Date, Seller or its Relevant Affiliates shall transfer said Product Registration and provide the related dossier to Business Purchaser and/or its Relevant Affiliates when said transfer is possible and permitted under applicable Law.

(ii) Business Purchaser and/or its Relevant Affiliates shall use its commercially reasonable efforts to assist Seller and/or its Relevant Affiliates for the transfer of such Product Registration.

(iii) If (A) the Parties have not submitted an application to transfer a Product Registration within *** months following the Closing Date or (B) the transfer is not approved by the relevant Governmental Authority within a period of *** months following the Closing Date, Seller and/or its Relevant Affiliates shall have the right, at Seller’s discretion (but after information to Purchasers), to withdraw such Product Registration. Upon such withdrawal, Seller and/or its Relevant Affiliates shall deliver to IP Purchaser or Business Purchaser, as applicable, a copy of the related dossier.

(d) Each of the Parties shall, and will procure that its Relevant Affiliates shall, cooperate and use all commercially reasonable efforts to obtain transfers of the Product Registrations in accordance with the provisions of Sections 7.2.2(a)-(c) . Subject to appropriate confidentiality protection, each of Purchasers, on the one hand, and Seller, on the other hand, will furnish to the other Party such necessary information and reasonable assistance as such other Party may reasonably request in connection with the foregoing.

(e) Each of the Parties shall bear all its internal costs resulting from the implementation of the provisions of Section 7.2.2(a)-(c) , and Purchasers shall bear all reasonable external costs resulting from the implementation of the provisions of Sections 7.2.2(a)-(c) . IP Purchaser or Business Purchaser, as applicable, shall therefore, upon presentation of the appropriate documentation evidencing such costs, reimburse to Seller or to its Affiliates, as appropriate, all reasonable and documented external costs incurred by Seller and such Affiliates for the implementation of the provisions of Sections 7.2.2(a)-(c) . Such reimbursement shall be made on a quarterly basis by IP Purchaser or Business Purchaser, as applicable, and/or its Affiliates. Without limiting the foregoing, to the extent that, any Product Registrations are not transferred to IP Purchaser or Business Purchaser, as applicable, as of the Closing, Seller shall continue to promote, distribute and/or sell any Products relating to such Product Registration for a further period ending *** months following Closing, or until the end of the Extension Period, if applicable, pursuant to the Transitional Distribution Agreement .

(f) With respect to any Product for which, after the Closing Date, Product Registrations covering corresponding Product Territories are held by Seller or its Relevant Affiliates, and where such Product Registration holder remains responsible to the applicable Governmental Authorities with respect to the promotion, distribution and sales of Product covered by such Product Registration, which responsibility cannot be and/or has not been delegated to IP Purchaser or Business Purchaser, as applicable, or its Affiliates:

(i) Purchasers shall promptly provide Seller with a copy of any promotional materials (including texts and visuals) prepared by Purchasers or their Relevant Affiliates in respect of the Products in such Product Territories and obtain Seller’s approval before their use in the promotion of the Products in such Product Territories.

(ii) Seller shall review the promotional materials and within ten (10) Business Days after receipt of the documents notify IP Purchaser or Business Purchaser, as applicable, in writing of either Seller’s approval of such promotional materials or Seller’s comments thereto. It being understood that Seller will only review medical and regulatory issues contained in such promotional materials, to the exclusion of commercial and marketing matters, and will only report to IP Purchaser required changes to those portions of the promotional materials that do not comply with good practices of the pharmaceutical industry as defined in the IFPMA Code, the Pharmaceutical Advisory Advertising Board code, the Rx&D code and/or any other applicable code in the Product Territory concerned. IP Purchaser or Business Purchaser, as applicable, shall amend the promotional materials accordingly.

7.2.3 Transfer of Books and Records

(a) Except as set forth in the Amended and Restated Joint Defense Agreement, as promptly as reasonably possible after the Closing Date, but no later than twenty (20) Business Days thereafter, Seller shall transmit, and/or shall cause its Relevant Affiliates to transmit, to Purchasers all Transferred Books and Records to the extent in the possession of Seller and its Affiliates or that Seller or its Affiliates have the right to deliver.

(b) Seller and/or its Relevant Affiliates shall have the right to retain any Transferred Books and Records for legal, regulatory, tax or accounting purposes , so long as Seller or its Relevant Affiliates provide at least one copy of such Transferred Books and Records to Purchasers .

(c) Seller shall give, and shall cause its Affiliates to give, Purchasers access to its books and records that relate partially but not exclusively to the Transferred Assets or the Products in their respective Product Territories (the “Relevant Information”), subject to the following conditions:

(i) If it is reasonably practicable for the Relevant Information to be physically extracted from the corresponding books and records, or if it is reasonably practicable for a copy of the corresponding books and records to be

transmitted to Purchasers redacting any information that is not Relevant Information, then Seller shall, and shall cause its Affiliates to, transmit to Purchasers such extract or such redacted copy.

(ii) If it is not reasonably practicable for the Relevant Information to be physically extracted or to be transmitted in a redacted form, then Seller shall, and shall cause its Affiliates to, give access to such Relevant Information to Purchasers according to the following conditions:

(x) Such Relevant Information must be reasonably useful to Purchasers with respect to the Business, the Facility, the Transferred Assets or the Assumed Liabilities or to satisfy Purchasers’ Tax or financial reporting requirements, (y) the access shall be given in the offices of Seller or its Affiliates during normal business hours, and (z) all information included in such books and records that is not Relevant Information shall be subject to the signature by Purchasers, prior to disclosure, of a confidentiality and restricted use agreement containing provisions at least as strict as the provisions defined in the confidentiality agreement signed by Seller and an Affiliate of Purchasers on March 23, 2011.

(d) To the extent Purchasers or their Relevant Affiliates request after the Closing copies of selected invoices of Seller or its Affiliates pertaining to certain Products applicable to the relevant Product Territories and certain customers of the Business (e.g., in the event of a dispute with the relevant customer), Seller shall provide Purchasers with copies of such invoices (redacted as provided in paragraph (c) if appropriate); provided , however , that Purchasers shall make reasonable efforts to limit such requests to copies required for its commercial operation of the Business.

7.2.4 Clinical Studies

***

7.2.5 Excluded Accounts Receivables; Transferred Contracts; Marketing and Promotional Activities

7.2.5.1 Excluded Accounts Receivable

(a) Notwithstanding the provisions of Section 7.2.5.1(b) , if at any time during the *** period after the Closing Date, either of Purchasers or any of their Affiliates receives any Excluded Accounts Receivable, then the applicable Purchaser shall pay (or shall cause such Affiliate to pay) to Seller (or to such Affiliate of Seller as

Seller may have designated in writing to Purchasers), as soon as practicable the amount recovered.

(b) For a period of *** after the Closing Date, Seller shall be entitled to collect the Excluded Accounts Receivable and, with respect to any Third Party with whom the Business will have a relationship after the Closing, Seller shall consult and coordinate with Purchasers to discuss and consider any necessary or appropriate actions with a view to collecting the Excluded Accounts Receivable in a reasonable manner. Purchasers shall not waive or release any of the Excluded Accounts Receivable without the prior written consent of Seller.

7.2.5.2 Payments under Transferred Contracts

(a) If and to the extent that Seller (or any of its Relevant Affiliates) has, prior to the Closing Date, received any deposit or payment in advance in respect of obligations to be satisfied after the Closing under any Transferred Contracts or other agreement assumed by either of Purchasers, Seller (or its Relevant Affiliate) shall reimburse to the applicable Purchaser, within twenty (20) Business Days from the Closing Date, an amount corresponding to the amount of such deposit or payment in advance. To the extent that any such deposit or payment in advance was received by, and a corresponding payment to the applicable Purchaser is made by, Seller’s Canadian Relevant Affiliate, Business Purchaser and Seller’s Canadian Relevant Affiliate shall make and file, in a timely manner, a joint election to have the rules in subsection 20(24) of the Income Tax Act (Canada) and section 157.10 of the Taxation Act (Québec), and any equivalent or corresponding provision under applicable provincial or territorial tax legislation, apply to the obligations of Seller’s Canadian Relevant Affiliate which arise from the operation of the Business and to which paragraph 12(1)(a) of the Income Tax Act (Canada) and paragraph 87(a) of the Taxation Act (Québec) applies.

(b) If and to the extent that Seller (or any of its Relevant Affiliates) has, prior to the Closing Date, made any deposit or payment in respect of supplies of goods not received prior to Closing under any Transferred Contracts, Purchasers shall reimburse to Seller (or its Relevant Affiliate), within thirty (30) Business Days from the date of receipt of any invoice showing such amounts are due, with reasonable supporting documents, the amount thereof.

(c) If and to the extent that Seller (or any Affiliate thereof) has, prior to the Closing Date, received any good or service prior to the Closing under any Transferred Contract, the payment for which becomes due and payable and is paid by either of Purchasers (or any of their Affiliates) after the Closing Date, upon request and the presentation of reasonable supporting documentation of such payment by the applicable Purchaser (or any of its Affiliates), Seller shall reimburse the

applicable Purchaser or its Affiliates, as applicable, for the amount of such payment within thirty (30) days from the date of such request less the amount of any V.A.T. for which the applicable Purchaser (or its Relevant Affiliate) has been or is able to obtain credit or repayment.

(d) In the event of a disagreement between the Parties as to the determination of amounts due pursuant to this Section 7.2.5.2 , such disagreement shall be submitted for final and binding adjudication to an independent expert in accordance with the provisions of Section 3.3.3 ( mutatis mutandis )

7.2.5.3 Specific Procedure for Marketing and Promotional Activities

The specific cut-off procedure applicable to marketing and promotional activities and contracts is set forth in greater details in Schedule 7.2.5.3 to the Disclosure Letter hereto.

7.2.6 Transferred Employees

(a) Following the Closing Date, Business Purchaser shall provide each Transferred Employee with compensation and benefits and other terms and conditions of employment that are ***. For greater certainty, such compensation, benefits and other terms and conditions of employment do not include participation in, or benefits under, any defined benefit pension plan.

(b) In accordance with its internal policies, Business Purchaser shall recognize the past service of Transferred Employees with Seller or its Affiliates for purposes of determining, as applicable, the eligibility for participation, vesting and the calculation of benefits (including severance) of any Transferred Employee under all employee benefit plans offered by Business Purchaser and its Affiliates to the Transferred Employees, including vacation plans or arrangements, 401(k), registered retirement savings plan or other retirement plans and any severance or welfare plans (but excluding for purposes of any defined benefit pension plan). For each Seller Canadian Pension Plan Member, to the extent required by applicable Laws, for purposes of eligibility for membership in, vesting in, and entitlement to benefits under the Purchaser Canadian Plan, but not for purposes of benefit accrual, the Purchaser Canadian Plan shall recognize the Seller Canadian Pension Plan Member’s period of membership in the Seller Canadian Pension Plan, and Seller shall provide to Business Purchaser all Seller Canadian Pension Plan Member data necessary to fulfill such obligation. Business Purchaser shall ensure that insured employee benefit plans, such as medical, dental and disability plans, shall be in place effective as of the Closing Date and that all Transferred Employees shall be enrolled in such plans from the Closing Date. In addition, ***.

(c) Business Purchaser shall provide each Transferred Employee whose employment is terminated during the *** month period following Closing with severance benefits *** upon a termination of employment under the same circumstances. For the avoidance of doubt, the obligations of this Section 7.2.6(c) shall not constitute an Excluded Liability for purposes of Section 2.2.3(o) or Section 2.2.3(p) and the obligations of Buyer Purchaser pursuant to this Section 7.2.6 shall in no event be deemed plans or policies of Seller.

(d) Effective as of the Closing Date, each Seller Canadian Pension Plan Member shall cease to actively participate in and accrue benefits under the Seller Canadian Pension Plan, and Business Purchaser shall, effective as of and from the Closing Date, establish or designate a Canadian Pension Plan or Canadian Pension Plans or other retirement savings plan to cover each Seller Canadian Pension Plan Member in respect of service on and after the Closing Date (the “Purchaser Canadian Plan”).

(e) Seller shall retain responsibility, as plan sponsor and administrator of the Seller Canadian Pension Plan, for all pension and other benefit entitlement accrued by Seller Canadian Pension Plan Members under the Seller Canadian Pension Plan as at the Closing Date.

(f) For purposes of allocating Liabilities under Section 2.2.2 and Section 2.2.3 , (i) Liabilities with respect to accidental death and dismemberment, disability, life and other similar benefits shall be treated as incurred when the event giving rise to such claim occurred and (ii) Liabilities with respect to medical, dental, and other similar benefits when the services with respect to such claim are rendered; provided , however , any claim above that relates to a continuous period of hospitalization shall be deemed to be incurred at the commencement of such period of hospitalization.

(g) Seller shall retain liability to Transferred Employees for any bonus accrued or any discretionary bonus payable under the applicable Seller Compensation and Benefit Plan with respect to periods on and prior to the Closing Date and shall pay no later than thirty (30) days following the Closing to each Transferred Employee a bonus for the portion of the calendar year preceding the Closing in an amount no less than the greater of (i) amounts accrued by Seller and its Affiliates in respect of such bonuses for the year in which the Closing occurs and (ii) a pro-rata amount payable pursuant to the terms of such Seller Compensation and Benefit Plan for the period of the year of Closing occurring prior to Closing, without regard to any term of such Seller Compensation and Benefit Plan that would require continued service of such Transferred Employee after the Closing. Unless otherwise required by Law, the internal policies of Seller or any agreement applicable to any of the Transferred Employees, Seller or its Affiliates shall pay all accrued but unpaid vacation and/or paid time off benefits for periods on and

prior to the Closing Date to the Transferred Employees covered by any such Law, internal policy or agreement. Seller shall provide to Business Purchaser no later than five (5) Business Days following the Closing Date a list of those Transferred Employees who will not receive payment of their accrued but unused vacation and/or paid time off benefits together with the amount of their accrued vacation and/or paid time off benefit (“Accrued Time Benefit”), and Business Purchaser shall credit those Transferred Employees with their Accrued Time Benefit under Business Purchaser’s or its Relevant Affiliate’s vacation policy and/or paid time off policy for use or payment in lieu of use in 2011. To the extent Business Purchaser so credits any Transferred Employee with his or her Accrued Time Benefit, Seller shall pay Business Purchaser within thirty (30) days thereafter an amount for such Transferred Employee’s Accrued Time Benefit equal to the amount of such Transferred Employee’s base salary in 2011 multiplied by a fraction, the numerator of which is the aggregate number of work days included in the Accrued Time Benefit, and the denominator of which is the aggregate number of work days of a Transferred Employee in 2011, net of any Tax benefit to Business Purchaser or its applicable Affiliate from such payment.

(h) Business Purchaser and Seller will permit each Transferred Employee who participates in a 401(k) plan or registered retirement savings plan maintained by Seller or one of its Affiliates to elect to make a direct rollover of the Transferred Employee’s 401(k) or registered retirement savings plan account balance into Business Purchaser’s 401(k) plan or registered retirement savings plan after the Closing Date, including, to the extent permitted by the applicable Business Purchaser plan, the direct rollover of any outstanding loan balances such that the Transferred Employee will continue to make payments under the terms of such loans under Business Purchaser’s 401(k) plan or registered retirement savings plan, subject to compliance with applicable Law and subject to the reasonable requirements of Business Purchaser’s 401(k) plan or registered retirement savings plan.

(i) Prior to Closing, Seller shall cause to be paid all amounts then owing under the applicable workers’ compensation Laws with respect to the Transferred Employees for the period prior to Closing including but not limited to premiums on insurable earnings, non-compliance interest and charges and any surcharges, fines or penalties, and shall use reasonable best effort to obtain written confirmation issued by the appropriate workers’ compensation boards and agencies to such effect.

(j) In the United States, Seller shall not, at any time on or before the Closing Date, effectuate (i) a plant closing as defined in the WARN Act affecting any site of employment or one or more facilities or operating units within any site of employment involved in the Business; (ii) a mass layoff as defined in the WARN Act affecting any site of employment involved in the Business; or (iii) any similar

action under the WARN Act requiring notice to employees in the event of an employment loss or layoff, in each case, without Business Purchaser’s written consent. No later than five (5) business days prior to the Closing Date, Seller shall provide Business Purchaser with a list setting forth the number of employees who were or will be terminated from each site of employment involved in the Business in the United States and Canada during the ninety (90)-day period ending on the Closing Date (which list, for purposes of employees primarily providing services in the United States, shall include any employees who may be terminated by Seller or its Affiliates on the Closing Date) and the date of each such termination with respect to each termination ( provided , that, for purposes of employees primarily providing services in the United States, such list shall include only those employees who were or will be terminated for reasons which qualify the terminations as “employment losses” under the WARN Act); provided , however , that this sentence shall not apply with respect to any site of employment at which sufficient employees have not been employed at any time in such ninety (90)-day period for terminations of employment at such site to be subject to the WARN Act.

(k) Except to the extent necessary to comply with the provisions set forth in Section 7.2.6(f) , Business Purchaser shall, or shall cause one of its Affiliates to, assume responsibility for continuation coverage under Sections 601 et seq. of ERISA, and any state continuation coverage requirements to all Transferred Employees in the United States (and their qualified beneficiaries) for whom a “qualifying event” under COBRA has or will occur on or after the Closing.

(l) No provision in this Agreement shall (i) create any third party beneficiary or other rights in any employee or former employee (including any beneficiary or dependent thereof) of Seller, Business Purchaser, their respective Affiliates or any other Person other than the Parties and their respective successors and permitted assigns, (ii) constitute or create, or be deemed to constitute or create, an employment agreement, (iii) constitute or be deemed to constitute an amendment to any benefit plan sponsored or maintained by Seller, Business Purchaser or their respective Affiliates, or (iv) alter or change the employment at-will status, where applicable, of the Eligible Employees.

(m) No later than *** months following the Closing, Seller shall provide Purchasers with a statement setting forth the Short Term Disability Costs incurred by Seller or its Affiliates during the six (6) months following the Closing and, within thirty (30) days following the receipt of such statement, Purchasers shall reimburse Seller for such costs. “Short Term Disability Costs” shall mean amounts paid by Seller and its Affiliates following the Closing under Seller’s short-term disability policy (as in effect on the date of this Agreement) to Eligible Employees on short term disability immediately prior to the Closing.

7.2.7 Insurance

From the Closing Date, Purchasers shall be responsible for all insurance coverage of the Business and Purchasers acknowledge that, as of such Closing Date, the Business and the Facility shall cease to be covered by insurance policies of Seller or of any of its Affiliates (other than in relation to insured events taking place before the Closing) and neither Purchasers nor any of their Affiliates shall make any claim under any such policies in relation to insured events arising after the Closing. Seller shall be entitled to make arrangements with its insurers to reflect this Section 7.2.7 .

7.2.8 Non-Competition

(a) Except in accordance with the terms and conditions of Section 7.3(e) and the Ancillary Agreements and subject to applicable Law, for a period of *** years following the Closing Date, Seller shall not, directly or indirectly, and shall cause its Subsidiaries not to, *** (a “Competitive Business”); provided , however , that the foregoing shall not restrict Seller or any of its Subsidiaries from (i) acquiring (A) in the aggregate up to *** of the outstanding capital stock of any publicly traded company or (B) a diversified business engaged in part (such part not to be more than *** of the aggregate revenues or net income of such business) in a Competitive Business provided further that in this last case, Seller shall be required within *** months of the acquisition of such Competitive Business to procure the transfer of such Competitive Business to a Third Party or (ii) continuing the business of Seller or its Affiliates, other than the Business, as conducted on the date of this Agreement, or (iii) engaging in any activity with respect to a Product or any similar product in countries other than the Product Territories corresponding to such Products. Seller acknowledges that (i) the agreements in this Section 7.2.8 and Section 7.2.9 (together, the “Restrictive Covenants”) impose a reasonable restraint in light of the activities and business of Seller and its Affiliates on the date of this Agreement and the current plans of Purchasers, Seller and their respective Affiliates; and (ii) the Restrictive Covenants are being granted to maintain and preserve the value of the Transferred Assets, and Purchasers’ failure to receive the benefits contemplated by the Restrictive Covenants would have the effect of significantly reducing the value of the Business and the Transferred Assets to Purchasers.

(b) Each Party hereto acknowledges that the other Party will be irreparably harmed and that there may be no adequate remedy at law for any violation by any Party of any of the covenants or agreements contained in this Section 7.2.8 and Section 7.2.9 . It is accordingly agreed that, in addition to any other remedies which may be available upon the breach of any such covenants or agreements, each Party hereto shall have the right to injunctive relief to restrain a breach or threatened breach of the other Party’s covenants and agreements contained in this Section

7.2.8 and Section 7.2.9 , in any court of competent jurisdiction over the Parties and the matter, subject to Section 11.5 .

(c) All of the Restrictive Covenants shall be construed as an agreement independent of any other provision in this Agreement or the Ancillary Agreements, and the existence of any claim or cause of action of Seller or any of its Affiliates against Purchasers, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by Purchasers of such covenants.

(d) The Parties agree that no proceeds shall be received or receivable by Seller or any of its Relevant Affiliates for granting of the Restrictive Covenants and agreements in Section 7.2.8 and Section 7.2.9 and that any amount that can reasonably be regarded as being in part the consideration for the Restrictive Covenants and agreements contained in this Section 7.2.8 and Section 7.2.9 shall be received by Seller or any of its Relevant Affiliates as consideration for the disposition of the Transferred Assets. The Parties intend that proposed subsection 56.4(5) of the Draft Technical Income Tax Legislation to amend the Income Tax Act (Canada) (the “ITA”) released by the Department of Finance (Canada) on July 16, 2010) (the “Draft Canadian Tax Legislation”) apply to this Agreement pursuant to proposed subsections 56.4(7) and (8) of the ITA, and that the equivalent provisions of any Canadian provincial Law apply, such that section 68 of the ITA (or any equivalent provision of any Canadian provincial Law) may not be applied to deem any consideration to be received or receivable by Seller or any of its Relevant Affiliates for any Restrictive Covenant granted pursuant to this Agreement. The Parties therefore agree, to the extent determined desirable to ensure the application of proposed subsection 56.4(5) of the ITA, that the joint election provided for in proposed paragraph 56.4(7)(h) of the ITA shall be made by Business Purchaser and Seller and/or Business Purchaser and Seller’s Relevant Affiliates in prescribed form (or such other form as is reasonably requested) and manner and on a timely basis. The joint election provided for in paragraph h of section 333.9 of the Taxation Act (Québec) (“QTA”) shall be made by Business Purchaser and Seller and/or Business Purchaser and Seller’s Relevant Affiliates in prescribed form (or such other form as is reasonably requested) and manner and on a timely basis, in accordance with section 333.15 of the QTA. If any relevant Canadian provincial Governmental Authority proposes or enacts provisions similar to the Draft Canadian Tax Legislation, then any such similar provincial election shall be made. In the event that the Draft Canadian Tax Legislation (or any similar Canadian provincial tax legislation) is amended prior to enactment or is otherwise amended, then the Parties agree to co-operate and to take such further action, execute such further document, and make such further election as may be necessary or desirable to ensure that no consideration is or is deemed to be received or receivable by Seller or any of its Relevant Affiliates for any Restrictive Covenant granted pursuant to this Agreement.

7.2.9 Non-Solicitation of Employees

(a) For a period of *** following the Closing Date, Seller shall not, directly or indirectly, and shall cause its Affiliates not to, directly or indirectly, solicit or otherwise attempt to induce any of the Transferred Employees to terminate their employment relationship with Purchasers (or their Affiliates); provided , however , that the foregoing shall not restrict Seller or any of its Affiliates from advertising for employment in a newspaper, trade publications or other media not targeted specifically at the Transferred Employees or hiring any employees who respond to such an advertisement or apply for employment with Seller or any of its Affiliates to the extent neither Seller nor any of its Affiliates solicited such employees in violation of this Section 7.2.9(a) .

(b) For a period of *** following the Closing Date, Purchasers shall not, directly or indirectly, and shall cause their Affiliates not to, directly or indirectly, solicit or otherwise attempt to induce any employees employed by Seller (or its Affiliates) with significant responsibility relating to the Products who are not Transferred Employees to terminate their employment relationship with Seller. Such employees are listed on Schedule 7.2.9(b) to the Disclosure Letter, unless the individual’s employment has been previously terminated by Seller (or an Affiliate); provided , however , that the foregoing shall not restrict Purchasers or any of their Affiliates from advertising for employment in a newspaper, trade publications or other media not targeted specifically at such employees or hiring any employees who respond to such an advertisement or apply for employment with Business Purchaser or any of its Affiliates, so long as such employees were not solicited in violation of this Section 7.2.9(b) .

7.2.10 Temporary Authorization to use Retained Trademarks

(a) Purchasers hereby acknowledge that all right, title and interest in and to all Retained Trademarks, together with all variations and acronyms thereof and all Trademarks containing or incorporating, or confusingly similar to, any of the foregoing, are owned exclusively by Seller and/or its Affiliates.

(b) Seller shall (or shall procure that its Relevant Affiliate shall) grant to Purchasers and Purchasers’ Affiliates a temporary authorization to use Retained Trademarks including the words Sanofi-Aventis, Canderm, Sanofi or Aventis, following the Closing Date, exclusively for the sale in the Product Territories of:

(i) the Inventory purchased by Purchasers from Seller or its Affiliates, until such time as the Inventory transferred at the Closing to Purchasers containing such names has been sold or destroyed, and

(ii) the Products manufactured or sold by Purchasers after the Closing Date, until expiration of *** months after the Closing Date, except that, if upon expiration of such *** month period, Purchasers or their Affiliates or designee have not obtained all Governmental Approvals which are necessary in connection with the removal of any such Retained Trademark from any applicable Product labeling in the relevant Product Territory (except for the United States and Canada), Seller hereby agrees to up to *** extensions of such ***-month period until such Governmental Approvals have been obtained; provided that Purchasers or their Affiliates (as applicable) have been and continue to be diligent in connection with obtaining such Governmental Approvals. Purchasers shall use their reasonable best efforts to obtain such Governmental Approvals as promptly as possible.

Purchasers shall use, and shall cause their Affiliates and designees to use, such Retained Trademarks only as they were used by Seller or its Affiliates in connection with the sale of Products in the relevant Product Territory prior to the Closing Date. Purchasers shall not, and shall cause their Affiliates not to, use any such Retained Trademarks except as permitted pursuant to this Agreement. For the avoidance of doubt, related Retained Trademarks including the words Sanofi-Aventis, Canderm, Sanofi or Aventis may not be used on advertising, marketing and promotional materials by Purchasers or their Affiliates other than in accordance with Section 7.2.5.3 .

(c) Purchasers agree to promptly correct or remedy uses of any of the Retained Trademarks which, in the reasonable judgment of Seller, fail to comply with the terms of this Agreement.

(d) Purchasers shall not (i) seek or obtain any registration of any Retained Trademarks, including any registration for any Trademark similar to any Retained Trademark or any registration for any Retained Trademark in any jurisdiction where neither Seller nor its Affiliates has yet obtained a registration, (ii) take any action, or assist any other Person, to challenge or attack Seller’s and/or its Affiliates’ title to or the validity, subsistence or enforceability of any of the Retained Trademarks, or (iii) use the Retained Trademarks with other Trademarks belonging to Purchasers, their Affiliates or any Third Party so as to form a composite or combined Trademark or in any other manner that would reasonably be expected to cause confusion regarding source or origin.

7.2.11 National Stage Discontinued Product Patent Filings

Seller shall, as soon as reasonably practicable, file or cause to be filed national phase patent applications in the United States and Canada based on ***.

7.2.12 Update of Trademark Recordals

With respect to any Trademarks listed in Schedule 2.1.1(a) or Schedule 2.1.2(c) to the Disclosure Letter where the entity listed as “Record Owner” is not the same as the entity listed as “Owner,” prior to Closing, Seller will provide instructions to its local Trademark agents/counsel in the applicable jurisdictions to make the necessary filings to update the records of the relevant Governmental Authorities to indicate that such Trademarks are owned by the entity listed as “Owner.”

7.2.13 Further Actions

(a) Each of the Parties shall, and shall cause its Relevant Affiliates to, execute, deliver and file such instruments of transfer or assignment, files, books and records and shall take such other actions as may be required or reasonably requested by the other Party to carry out the intent of this Agreement and to consummate the transactions contemplated hereby, subject to Section 7.2.14 .

(b) After the Closing, upon reasonable advance written notice, Purchasers and Seller shall furnish or cause to be furnished to each other, as promptly as reasonably practicable, such information and assistance (to the extent within the reasonable control of such Party) relating to the Transferred Assets (including access to books and records) as is reasonably requested for the filing of all Tax Returns and the satisfaction of contractual or legal obligations to Third Parties, subject to Section 7.2.3 .

(c) Neither Party shall be required by this Section 7.2.13 to take any action that would unreasonably interfere with the conduct of its business or unreasonably disrupt its normal operations.

7.2.14 Transferred Intellectual Property — Expenses

(a) Seller shall be responsible for, and shall pay, all expenses (whether incurred before or after the Closing Date) related to recording with the appropriate Governmental Authorities any changes of ownership of any Transferred Trademarks between or among Seller’s Affiliates or changes of entity name which occurred prior to the Closing Date and which were not completed on or prior to the Closing Date. Seller shall notify Purchasers that such recordals have been completed promptly following receipt of notification thereof from the applicable Governmental Authorities (each such Purchaser notification, a “Recordal Notification”).

(b) Purchasers shall be responsible for, and shall pay all expenses (whether incurred before or after the Closing Date) involved in notarization, authentication, legalization and/or consularization of the signature of Purchasers’ representatives on the Trademark Assignment Agreement, Patent Assignment Agreement, Copyright Assignment Agreement and any other documents necessary to record the Transferred Intellectual Property in the name of Purchasers, as well as on the Trademark, Patent and Copyright assignment documents by country, and use commercially reasonably efforts promptly to record such assignment documents with the appropriate Governmental Authorities. If the Trademark Assignment Agreement or the Patent Assignment Agreement does not or is insufficient to permit Purchasers to proceed with such recordals, Purchasers shall provide, reasonably promptly after receiving notice thereof, draft assignment documents by country, at Purchaser’s expense, for execution by Seller. Seller shall be responsible for, and shall pay all expenses (whether incurred before or after the Closing Date) involved in notarization, authentication, legalization and/or consularization of the signatures of Seller’s representatives on all assignment documents. Purchasers shall inform Seller of the completion of these recordals promptly following receipt of notification thereof from the applicable Governmental Authorities and send to Seller a copy of the official certificates or notices of recordals issued by the concerned Governmental Authorities, provided such Governmental Authorities issue such documents.

(c) Purchasers shall be responsible for, and shall pay all expenses related to the maintenance of the Transferred Intellectual Property with respect to the period beginning on and after the Closing Date. If Seller receives any bills or invoices for expenses related to the maintenance of the Transferred Intellectual Property, which expenses were incurred after the Closing Date, then Seller shall forward to Purchasers such bills or invoices for payment by Purchasers.

7.2.15 Correspondence

From and after the Closing, (i) Seller shall use commercially reasonable efforts to cause to be delivered to Purchasers any mail or other communications received by Seller or its Affiliates related to the Transferred Assets or the Assumed Liabilities and (ii) Purchasers shall use commercially reasonable efforts to cause to be delivered to Seller any mail or other communications received by Purchasers or their Affiliates related to the Exclud ed Assets or Excluded Liabilities. The provisions of this Section 7.2.15 are not intended to, and shall not be deemed to, constitute an authorization by Seller or Purchasers to permit the other to accept service of process on its behalf and neither Seller nor either of Purchasers is or shall be deemed to be the agent of the other for service of process purposes.

7.2.16 Other Bidders

Seller agrees not to release any third party from the confidentiality and standstill provisions of any agreement to which it or any of its Affiliates is a party in respect of the Business, the Facility or the Transferred Assets.

7.2.17 Transitional Services

7.2.17.1 IT Transitional Services

(a) Upon the request of Business Purchaser notified to Seller within *** days from the date of this Agreement, effective as of the Closing Date and for a maximum period of *** months following the Closing Date, Seller shall provide the Business Purchaser with such of the IT services currently used for the operation of the Business and identified in Schedule 7.2.17.1(a ), as Business Purchaser may elect to receive.

Such services shall be provided (i) under conditions substantially similar to the conditions, in terms of availability and quality, under which Seller provides each of them at the date of this Agreement for the operation of the Business, (ii) at the following prices:

(x) during the first *** day period following the Closing Date, the services shall be provided ***; and

(y) during the remaining period, the services shall be provided ***, which price will be invoiced on a quarterly basis and paid within thirty (30) days of the date of invoice.

Business Purchaser shall have the right to terminate any of such services upon thirty (30) days’ prior written notice.

(b) Upon request of Seller notified to Business Purchaser within *** days from the date of this Agreement, effective as of the Closing Date and for a maximum period of *** months following the Closing Date, Business Purchaser shall provide Seller with such of the IT services currently used for the operation of Seller’s other activities and identified in Schedule 7.2.17.1(b ) as Seller may elect to receive.

(x) during the first *** day period following the Closing Date, the services shall be provided ***; and

(y) during the remaining period, the services shall be provided ***, which price will be invoiced on a quarterly basis and paid within thirty (30) days of the date of invoice.

Such services shall be provided under conditions substantially similar to the conditions, in terms of availability and quality, under which the Facility provides each of them at the date of this Agreement for the operation of such other activities.

Business Purchaser shall have the right to terminate any of such services upon *** days’ prior written notice.

7.2.17.2 IT Transition Plan and Costs

Business Purchaser and Seller agree that the current IT system cannot be operated independently from Seller’s IT systems and that transition costs resulting from the segregation of functions and infrastructure are required to allow the Facility to operate, subject to the services to be provided pursuant to the provisions of Section 7.2.17.2(a ) above, on a standalone basis as of the Closing Date. Such Parties agree that, promptly following the date of this Agreement, they shall jointly establish in good faith a detailed transition plan and budget according to which the transition (i) shall be realised in the most cost effective but realistic manner, and (ii) shall be completed by the Closing Date. Such Parties agree that the costs of the transition shall be ***. Such Parties also agree that no commitment shall be taken over and above a total transition cost of *** without the prior agreement of both such Parties.

Such Parties, on a monthly basis, shall proceed to a true up of their respective costs to reflect the agreed sharing. Should the actual costs borne by either of such Parties during a given month exceed its share, the difference shall be invoiced to the other Party and paid within thirty (30) days from the date of the invoice.

With respect to such transition costs to be shared equally between such Parties, it is agreed between such Parties that for the calculation of the share to be borne by each of such Parties (i) internal costs shall be calculated according to their respective accounting principles and policies excluding corporate overhead with a margin of *** percent, and (ii) outside costs shall be charged at cost without any margin.

7.2.17.3 Other Transitional Services

Upon request of Business Purchaser notified to Seller within *** days from the date of this Agreement, effective as of the Closing Date and for a maximum period of *** months following the Closing Date, Seller shall provide Business Purchaser with such of the services necessary for the operation of the Business and identified in Schedule 7.2.17.3 as Business Purchaser may elect to receive.

(x) during the first *** day period following the Closing Date, the services shall be provided ***; and

(y) during the remaining period, the services shall be provided ***, which price will be invoiced on a quarterly basis and paid within thirty (30) days of the date of invoice.

Such services shall be provided under conditions similar to the conditions, in terms of availability and quality, under which Seller provides each of them at the date of this Agreement for the operation of the Business.

Business Purchaser shall have the right to terminate any of such services upon *** days’ prior written notice.

Such services shall also include, to the extent permitted by law, the provision to Business Purchaser on a transitional basis the benefit of the certificate of authorization of the Facility pending obtaining a new certificate of authorization in the name of Business Purchaser or the transfer of the existing certificate of authorization to Business Purchaser. Business Purchaser shall make as soon as reasonably possible after the date of this Agreement all applications necessary to obtain a new certificate of authorization or the transfer of the existing certificate of authorization and shall use all reasonable efforts to obtain a new certificate of authorization in the name of Business Purchaser or the transfer of the existing certificate of authorization to Business Purchaser. Seller shall provide such assistance as may reasonably be requested by Business Purchaser in connection therewith.

Business Purchaser shall bear all costs resulting from obtaining such new certificate of authorization or for the transfer of the existing certificate of authorization. Any liability arising out of or in connection with the provision to Business Purchaser on a transitional basis of the benefit of the certificate of authorization of the Facility shall be an Assumed Liability. For the avoidance of doubt, neither the obtaining of a new certificate of authorization nor the transfer of the existing certificate of authorization nor the provision to Business Purchaser on a transitional basis of the benefit of the certificate of authorization after the Closing Date as referred to above shall be considered a condition precedent to the consummation of the transactions contemplated by this Agreement.

From the date of this Agreement, Business Purchaser and Seller shall negotiate in good faith and agree on the terms and conditions of a formal IT service agreement and a formal transitional agreement to be executed separately and incorporating the principles defined in Section 7.2.17.1 to 7.2.17.3 .

7.2.17.4 Business Purchaser and Seller acknowledge and agree that the principles defined in this Section 7.2.17 are binding upon them, that the formalization of these two agreements is not a material condition of their obligations under this Agreement, and that in no case shall their execution be considered directly or

indirectly as a condition precedent to the Closing of the transactions contemplated by this Agreement.

7.3 Consents pertaining to Transferred Contracts — Shared Contracts

(a) Within fifteen (15) Business Days from the date of this Agreement, Purchasers shall communicate to Seller a list of entities among Purchasers and their Relevant Affiliates, to whom the Transferred Contracts should be assigned by Seller and its Relevant Affiliates, it being understood that for Transferred Contracts, the assignment of which requires a Material Consent, the list of such entities is attached hereto as Schedule 8.1(d ) to the Disclosure Letter. Prior to the Closing Date, and thereafter to the extent reasonably necessary, Seller shall, and shall cause its Relevant Affiliates to, use commercially reasonable efforts to obtain the Material Consents. Prior to and until *** months after the Closing Date, if reasonably required by Purchasers, Seller shall use, and shall cause its Relevant Affiliates to use all commercially reasonable efforts to obtain any Consents other than a Material Consent and to provide any notices required by any Transferred Contracts or Shared Contracts upon the consummation of the transactions contemplated hereby. Purchasers shall, and shall cause their Affiliates to, cooperate with Seller and its Relevant Affiliates to obtain the Material Consents and any other Consents, such cooperation to include any reasonably necessary guaranty from Purchasers regarding compliance by their respective Affiliates of the performance of their obligations under the Transferred Contracts or Shared Contracts; provided , however , that in no event shall Purchasers be required to provide any guaranty in respect of indebtedness for borrowed money. Seller and its Relevant Affiliates shall not be obligated to pay any consideration to any Third Party from whom Consent or approval is required in order to obtain such Consent or approval.

(b) It is however specified that the Shared Contracts set forth on Schedule 1.1(J) to the Disclosure Letter, shall be either partially assigned as of the Closing to one of Purchasers or their Affiliates solely with respect to the Business, the Facility or the Transferred Assets, or terminated on the Closing Date with respect to the subject matter of such Shared Contracts that is related the Business, the Facility or the Transferred Assets, whichever is permitted according to the terms of such Shared Contracts.

(c) In each instance in which a Consent cannot be obtained, or if an attempted transfer or assignment would be ineffective or would adversely affect the ability of Seller and/or its Relevant Affiliate to convey the interest in question to Purchasers or their Relevant Affiliate, Seller shall use, and/or shall cause the corresponding Relevant Affiliate to use, all its commercially reasonable efforts to enter into any such alternative arrangement and agreement with Purchasers or their Relevant Affiliate as may be appropriate in order to allow Purchasers or their

Relevant Affiliate to realize, receive and enjoy substantially similar rights and benefits at no incremental cost to Seller and its Relevant Affiliates.

(d) For the avoidance of doubt, no provision of this Agreement shall be interpreted or construed (i) as an attempt to transfer or assign any Transferred Contract that is by its terms non-transferable or assignable without the required Consent, or (ii) as far as any such Consent which pertains to a Transferred Contract and which is not a Material Consent, as creating a condition precedent to Purchasers’ obligation to close under this Agreement.

(e) Notwithstanding the above, if and to the extent that the valid transfer or assignment of any of the Transferred Contracts listed in Schedule 7.3(e) to the Disclosure Letter to Purchasers would require a Material Consent that has not been obtained prior to Closing, the transfer or assignment of such contracts to the applicable Purchaser shall automatically be deemed not to have occurred and Seller may, at its sole option, decide no later than three (3) Business Days prior to the Closing Date that (i) any such Transferred Contract shall no longer be considered a Transferred Contract and therefore not transfer to the applicable Purchaser and that, consequently, (ii) any assets exclusively related to such contracts that are set forth in Schedule 7.3(e) to the Disclosure Letter shall no longer be considered a Transferred Asset and therefore shall not transfer to Purchasers and (iii) any employees who exclusively work with the Product at issue and the relevant agreement to which such Consent pertains, who would otherwise have been a Transferred Employee, shall not be transferred to Business Purchaser. In such case, the Purchase Price shall be adjusted in accordance with the provisions set forth in Schedule 7.3(e) to the Disclosure Letter. In addition, should there be a reduction of the Purchase Price pursuant to this Section 7.3(e) , (x) Seller’s non-competition obligations in respect of the Product relating to the agreement to which such Consent relates shall be deemed waived solely with respect to Seller performing its obligations under such agreement and (y) the condition to the Parties’ obligation to consummate the Closing set forth in Section 8.1(d) with respect to the relevant Consent shall be deemed satisfied. ***

7.4 Waiver of Bulk-Sales Laws

Each of the Parties hereby waives on behalf of itself and its respective Affiliates compliance with the requirements and provisions of the “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Transferred Assets to Purchasers, as applicable.

7.5 Title Insurance

Prior to the Closing, Seller will obtain a binding commitment for title insurance in favour of Business Purchaser in customary form under local Law with respect to the Owned

Real Property, which policy will contain a Survey — Enforced Removal — Limited Marketability endorsement in respect of setback compliance at the Owned Real Property, and Seller shall deliver a copy of the same to Business Purchaser.

7.6 ***

***

ARTICLE 8 CONDITIONS PRECEDENT TO CLOSING

8.1 Mutual Conditions Precedent to Closing

The obligations of each Party hereto to consummate the Closing shall be subject to the satisfaction, or waiver by each Party, at or prior to the Closing, of the following conditions:

(a) No Legal Proceeding by any Government Authority shall be pending, and no Law shall have been promulgated or come into effect or enforced by any court of competent jurisdiction or Governmental Authority that restrains or prohibits the consummation of the transactions contemplated hereby;

(b) No Legal Proceeding by any Person shall be pending that restrains, or prohibits any party from performing this Agreement, the Ancillary Agreements or any transaction contemplated hereby or thereby;

(c) All Antitrust Approvals, including the Canadian Competition Act Approval, shall have been obtained, without imposing any Material Antitrust Action, and any applicable waiting period (and any extension thereof) under applicable Law, relating to the consummation of the transactions contemplated by this Agreement shall have expired or have been terminated; and

(d) Subject to Section 7.3(e) , the Material Consents and Governmental Approvals identified on Schedule 8.1(d) to the Disclosure Letter shall have been obtained by and for the benefit of Purchasers.

8.2 Additional Conditions Precedent of Purchasers

In addition to the fulfillment of the conditions set forth in Section 8.1 , the obligation of Purchasers to consummate the Closing is subject to the satisfaction or Purchasers’ waiver at or prior to Closing of each of the following additional conditions:

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(a) Since the date of this Agreement, no event or events shall have occurred which have had or would reasonably be expected to have a Material Adverse Effect;

(b) The representations and warranties of Seller set forth in this Agreement shall be true and correct as of the Closing Date, as though made on and as of the Closing Date (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date, and excluding any matters disclosed in a Disclosure Supplement), except where the failure to be true and correct (without giving effect to any limitation as to “materiality,” “material adverse effect” or “Material Adverse Effect” set forth therein, but giving effect to any dollar threshold specified therein) has not had and would not reasonably be expected to have a Material Adverse Effect; provided , that the Fundamental Reps shall be true and correct in all respects as of the Closing Date;

(c) Seller shall, and shall have caused its Relevant Affiliates to, have duly performed and complied in all material respects with each agreement, covenant and condition herein that Seller and/or its Relevant Affiliates are required to perform or comply with on or prior to the Closing Date; and

(d) Seller shall have executed, and shall have caused its Relevant Affiliates to execute, the agreements and other documents required to be delivered pursuant to Section 4.2 .

8.3 Additional Conditions Precedent of Seller

In addition to the fulfillment of the conditions set forth in Section 8.1 , the obligation of Seller to consummate the Closing is subject to the satisfaction or Seller’s waiver at or prior to Closing of each of the following additional conditions:

(a) The representations and warranties of Purchasers set forth in this Agreement shall be true and correct as of the Closing Date, as though made on and as of the Closing Date (except to the extent such representations and warranties are specifically made as of a particular date, in which case such representations and warranties shall be true and correct as of such date), except where the failure to be true and correct (without giving effect to any limitation as to “materiality” or “material adverse effect” set forth therein, but giving effect to any dollar threshold specified therein) has not had and would not reasonably be expected to, individually or in the aggregate, result in a material delay in the Closing or materially adversely affect Purchasers’ and/or their Relevant Affiliates ability to perform their respective obligations under this Agreement and the Ancillary Agreements;

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(b) Purchasers shall have duly performed and complied in all material respects with each agreement, covenant and condition herein that they are required to perform or comply with on or prior to the Closing Date; and

(c) Purchasers shall have delivered the Purchase Price, and shall have executed and shall have caused their Relevant Affiliates to execute, the agreements and other document required to be delivered pursuant to Section 4.3 .

ARTICLE 9 INDEMNIFICATION

The provisions of this Article 9 on indemnification for breach of representations and warranties shall collectively and exclusively apply to the breach of any and all of the representations and warranties contained in any of this Agreement or any Ancillary Agreement.

9.1 Indemnification

(a) Indemnification by Seller . From and after the Closing, and subject to this Article 9 , Seller hereby agrees to indemnify Purchasers, their Affiliates and their respective officers, directors, managers, employees, agents and representatives (collectively, the “Purchasers Indemnified Parties”) for any and all losses, damages, penalties, assessments, Liabilities, claims, demands, judgments, demands, dues, fines, fees, suits, actions, costs and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) incurred by the Purchaser Indemnified Parties arising out of, or related to (i) any inaccuracy or breach of any representation or warranty on the part of Seller or any of its Relevant Affiliates contained in this Agreement or any of the Ancillary Agreements ( provided , that in determining the amount of any indemnifiable Losses with respect to a breach of a representation or warranty by Seller for purposes of this Section 9.1(a)(i) , such representations and warranties shall be read without regard to any limitation as to “Material Adverse Effect” or “materiality” qualifications (other than any dollar thresholds) contained therein, except with respect to the “materiality” qualifications set forth in Sections 5.4(a) , 5.8(b) , 5.8(c) , the last sentence of 5.9(b) , 5.11(b) , 5.15(a) , 5.16(a) and 5.17(c) , (ii) any failure to deliver a Seller Notice required to be delivered pursuant to Section 7.1.6(a) , (iii) any failure to perform, breach or violation by Seller or any of its Relevant Affiliates of any of its other covenants or agreements contained in this Agreement or any of the Ancillary Agreements, (iv) any Excluded Liabilities; (v) any amounts that would not be recoverable by Purchasers or its Affiliates as a consequence of the failure by Seller or its Affiliates to comply if necessary with the requirements and provisions of “bulk-sale” and “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Transferred Assets to Purchasers, as applicable, (vi) any financial penalties or payment obligations imposed by any Governmental Authority related to the matter referred to in item one (1) of Schedule 5.14(a) to the Disclosure Letter (the

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“***”) for actions taken by or on behalf of Seller, its Affiliates, and their respective officers, directors and employees prior to the Closing. The Parties acknowledge and agree that (A) except as provided in the Amended and Restated Joint Defense Agreement, the indemnification obligations of Seller in Section 9.1(a)(vi) shall be the exclusive liability of Seller to the Purchaser Indemnified Parties in respect of the *** and neither Seller nor any of its Affiliates shall have any indemnification obligation with respect to any Liability arising out of, or related to, the ***, other than as expressly set forth in Section 9.1(a)(vi) , including in the event that as a consequence of the *** and (B) Purchasers have been informed by Seller that (w) effective August 30, 2007, Aventis Inc., Aventis Pharmaceuticals, Inc., Sanofi-aventis US Inc and Sanofi-aventis US LLC, all of which are Affiliates of Seller (collectively, referred to as “API”), have entered into a CIA with the OIG, and that they have received a copy of such CIA and its Addendum dated May 22, 2009, (x) API is the owner of certain of the Transferred Assets and Section IV.C of the Addendum provides that the CIA and its Addendum may be binding on the purchaser of such Transferred Assets unless otherwise agreed in writing by the OIG, (y) neither Seller nor any of its Affiliates shall have any indemnification obligation with respect to any Liability which could arise out of, or relate to, the decision of the OIG to impose all or part of the obligations of the CIA or any new corporate integrity agreement to Purchasers or their Affiliates following consummation of the transactions contemplated by this Agreement, and (z) *** shall be treated as a Third Party Claim for purposes of this Agreement.

(b) Indemnification by Purchasers . From and after the Closing, and subject to this Article 9 , Purchasers hereby agree, severally but not jointly, to indemnify Seller, its Affiliates and their respective officers, directors, managers, employees, agents and representatives (collectively, the “Seller Indemnified Parties”) for any and all Losses incurred by the Seller Indemnified Parties arising out of, or related to (i) any inaccuracy or breach of any representation or warranty on the part of Purchasers or any of its Relevant Affiliates contained in this Agreement or any of the Ancillary Agreements, (ii) any failure to perform, breach or violation by Purchasers or any of their Relevant Affiliates of any of its covenants or agreements contained in this Agreement or any of the Ancillary Agreements, and (iii) any of the Assumed Liabilities.

(c) All claims made by any Party (the “Indemnifiable Party”) against the other Party (the “Indemnifying Party”) under this Article 9 shall only be validly asserted as provided by Sections 9.2 and 9.3 below.

9.2 Indemnification Process for Direct Claims

In the event of a claim (other than a Third Party Claim, as defined in Section 9.3 ) made by one Party against another Party under Section 9.1 (a “Direct Claim”), the

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Indemnifiable Party shall give reasonably prompt written notice to the Indemnifying Party of such Direct Claim, specifying the nature and grounds of such Direct Claim and the amount or estimated amount thereof (which estimate is for informational purposes only and shall not be considered a conclusive determination of the final amount of such Direct Claim); provided , however , that the failure to give reasonably prompt notice shall not relieve the applicable Indemnifying Party of its indemnification obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by any delay in receiving such notice.

In the event a Purchaser Indemnified Party makes a claim against Seller on the basis of an infringement, misappropriation, dilution or other violation by a Third Party of any Transferred Intellectual Property, the Purchaser Indemnified Party shall cooperate with the Indemnifying Party and make any claim or demand against such Third Party which is (i) appropriate and related to the Direct Claim based on such infringement, misappropriation, dilution or other violation and (ii) reasonable in the judgment of the Indemnifying Party. The Indemnifying Party shall consult the Indemnifiable Party with respect to the prosecution of such claim or demand. Any amount obtained by the Indemnifiable Party as a result of such claim or demand shall be deducted from the amount of the indemnification to be paid by the Indemnifying Party to the Indemnifiable Party.

9.3 Indemnification Process for Third Party Claims

(a) In the event that any Legal Proceeding is asserted or instituted by any Third Party in respect of which an Indemnifying Party may be obligated to provide indemnification hereunder (such Legal Proceeding being hereinafter referred to as a “Third Party Claim”), the Indemnifiable Party shall give reasonably prompt written notice to the Indemnifying Party of such Third Party Claim, specifying the nature and grounds of such Third Party Claim and the amount or estimated amount thereof (which estimate shall not be considered a conclusive determination of the final amount of such Third Party Claim) (a “Third Party Claim Notice”); provided , however , that the failure to give reasonably prompt notice shall not relieve the applicable Indemnifying Party of its indemnification obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by any delay in receiving such notice.

(b) In the event of a Third Party Claim, the Indemnifying Party shall have the right, if it so elects, to assume the defense of the Third Party Claim and take such action to avoid, defend, dispute, resist, appeal or compromise such Third Party Claim and for such purpose may retain counsel of its choice, reasonably acceptable to the Indemnifiable Party, to represent the Indemnifiable Party and any others that the Indemnifying Party may reasonably designate in connection with such Third Party Claim and shall pay the fees and disbursements of such counsel with regard thereto. The Indemnifiable Party shall have the right, if it so notifies the

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Indemnifying Party, to be consulted in such defense of the Third Party Claim and to participate at its own expense and with counsel of its choice. In such event, the Indemnifying Party shall afford the Indemnifiable Party and its counsel the opportunity to comment and the right to object (which comments shall be taken into account to the extent reasonable and such right to object shall not be unreasonably exercised) with respect to the conduct of the defense of such Third Party Claim. If requested by the Indemnifying Party, the Indemnifiable Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim which the Indemnifying Party defends, or, if (i) appropriate and related to the Third Party Claim in question and (ii) reasonable in the judgment of the Indemnifying Party, in making any counterclaim against the Person asserting the Third Party Claim, or any cross complaint against any Person. The Indemnifying Party shall consult the Indemnifiable Party with respect to the prosecution of such counterclaim, demand or cross complaint. In such case and to the extent the counterclaim or cross complaint is related to the circumstances or facts giving rise to the Loss, any amount obtained by the Indemnifiable Party as a result thereof shall be deducted from the amount of the indemnification to be paid by the Indemnifying Party to the Indemnifiable Party.

In the event the Indemnifying Party does not assume the defense in respect of the Third Party Claim, the Indemnifying Party shall have the right, if it so notifies the Indemnifiable Party, to be consulted in such defense of the Third Party Claim and to participate at its own expense and with counsel of its choice. In such event, the Indemnifiable Party shall afford the Indemnifying Party and its counsel the opportunity to comment and the right to object (which comments shall be taken into account to the extent reasonable and such right to object shall not be unreasonably exercised) with respect to the conduct of the defense of such Third Party Claim.

(c) From and after the delivery of a Third Party Claim Notice hereunder, at the reasonable request of the Indemnifying Party, the Indemnifiable Party shall promptly provide the Indemnifying Party with copies of any document received or sent in connection with the Third Party Claim and shall grant the Indemnifying Party and its representatives all reasonable access to the books, records and properties of the Indemnifiable Party to the extent reasonably related to the matters to which the Third Party Claim Notice relates. The Indemnifying Party shall not, and shall require that its representatives not, use (except in connection with such Third Party Claim) or disclose to any Third Party other than the Indemnifying Party’s representatives (except as may be required by applicable Law) any information obtained pursuant to this Section 9.3(c) . All such access shall be granted during normal business hours on a Business Day and shall be granted under conditions which will not unreasonably interfere with the business and operations of the Indemnifiable Party.

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(d) Any compromise or settlement made or caused to be made by the Indemnifying Party or the Indemnifiable Party, as the case may be, in connection with any Third Party Claim shall be binding upon, and be for the benefit of, the Indemnifying Party and the Indemnifiable Party, as the case may be, in the same manner as if a final Order had been entered by a court of competent jurisdiction in the amount of such settlement or compromise; provided , however , that no settlement or compromise shall be entered into by either the Indemnifying Party or the Indemnifiable Party without the express written consent of the other Party (which consent shall not be unreasonably withheld or delayed). In the event the Indemnifiable Party refuses to consent to a settlement providing for a monetary payment that does not impose any other restrictions on the Indemnifiable Party, the Indemnifying Party shall not be liable to indemnify the Indemnifiable Party for any amount in excess of the amount of such settlement proposal.

9.4 Limitation on Indemnity Payments

(a) General Limitations

(i) The amount of any Loss for which indemnification is provided under this Article 9 shall be (x) net of any amounts actually recovered by the Indemnifiable Party under insurance policies or from Third Parties (other than amounts recovered from another Indemnifiable Party) with respect to such Loss and (y) reduced to take account of the actual amount, if any, by which the Taxes of the Indemnifiable Party or its Affiliates shall be reduced by such Loss. If the Indemnifiable Party actually receives a full or partial recovery under any insurance policies or from a Third Party (other than from another Indemnifiable Party) following payment of indemnification by the Indemnifying Party in respect of such Loss, the Indemnifiable Party shall forward such insurance or other such amounts recovered to the Indemnifying Party less any costs, fees and expenses or increased premiums, duly evidenced, directly incurred (or, with respect to increased premiums, to be directly incurred) by the Indemnifiable Party in connection with the recovery of such amount (not to exceed the amount of indemnification paid by the Indemnifying Party). Notwithstanding anything to the contrary herein, the Indemnifiable party shall have no obligation hereunder to seek insurance coverage for a Loss.

(ii) Subject to Section 11.10 , from and after the Closing, indemnification under this Article 9 shall constitute the sole and exclusive remedy of any Party with respect to any and all claims relating to this Agreement and the Ancillary Agreements, other than claims based on fraud. For purposes of this Agreement, “fraud” means a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her material detriment. Each Party waives, and shall cause its Relevant

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Affiliates to waive, any other right against the other Party and its Affiliates for indemnification pursuant to any breach of representations or warranties, other than as provided in this Agreement or any Ancillary Agreement.

(iii) For the purposes of this Article 9 , all amounts which are denominated in a currency other than the U.S. dollar shall be converted into U.S. dollars at the rate published in the Wall Street Journal on the date of the notice of claim by the Indemnifiable Party, except to the extent attributable to payments to Third Parties (it being understood that the amounts of such payments shall be converted into U.S. dollars at the rate published in the Wall Street Journal on the date of such payment).

(iv) In no event shall any Indemnifiable Party be entitled to double recovery under this Agreement or any Ancillary Agreement. In particular, in the event any circumstances giving rise to a Loss constitute a breach of more than one representation and warranty, obligation or covenant on the part of the Indemnifying Party, the Indemnifiable Party shall only be entitled to be indemnified once in respect of such Loss. No indemnification shall be available to Purchasers Indemnified Parties hereunder in respect of any Loss which is directly attributable to (i) the conduct by Purchasers or their Affiliates before or after the Closing Date or (ii) the conduct by Seller or its Affiliates before the Closing Date at the direction or request of Purchasers or their Affiliates. Purchasers and their Affiliates shall not be entitled to any indemnification hereunder if and to the extent a Loss has been taken into account for the purposes of the determination of the Inventory Purchase Price.

(v) If any claim for indemnification is based upon a liability which is contingent, the Indemnifying Party shall not be liable to make any indemnification payment to the Indemnifiable Party unless and until such contingent liability becomes due and payable, other than payments made to the Indemnifiable Party to cover the costs and expenses of investigating or defending such contingent liability, including reasonable attorneys’ fees incurred by the Indemnifiable Party; provided , however , that any claim for indemnification that is made with respect to a contingent liability prior to the termination of the survival period defined in Section 9.4(b) shall not be denied, and no Indemnifying Party’s liability hereunder shall be extinguished solely because such liability remains contingent at the end of such survival period.

(vi) In no event shall any Indemnified Party be entitled to indemnification hereunder for any Loss arising out of or in connection with a change or development in Law (including, subject to Section 9.4(c)(vi) , any Environmental Law) after the date of this Agreement, including any

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change or development in the interpretation thereof, but excluding any change in the rates of taxation in force at the date of this Agreement.

(vii) In no event shall Purchasers and their Affiliates be entitled to any indemnification with respect to Transferred Discontinued Product Assets which are transferred on as “as is” basis, as expressly acknowledged by Purchasers.

(b) Survival of Representations, Warranties and Covenants

Notwithstanding anything to the contrary contained in this Agreement, and notwithstanding any statute of limitations that might otherwise apply, the obligation of any Indemnifying Party to indemnify any Indemnifiable Party from and against any Loss (x) arising from the breach of a representation or warranty set forth in Section 5.10 (Environmental Matters) will terminate *** after the Closing Date, (y) arising from the breach of a representation or warranty set forth in Section 5.4(a) (Scope of Transferred Assets) will terminate *** after the Closing Date and (z) arising from the breach of any other representation or warranty in Article 5 of this Agreement or the breach of a covenant in Section 7.1 will terminate *** after the Closing Date (as applicable, the “Termination Date”), except that claims in respect of breaches thereof pending on, or asserted prior to, the applicable Termination Date will continue to survive until such claims have been resolved; provided , however , that there will be no termination or expiration of the right to indemnification for breach of the Fundamental Reps; provided , further , that to the extent that such claims of breaches relate to Transferred Assets that were not transferred to Purchasers as of the Closing Date, the Termination Date in respect of such claims shall be *** after the date on which the applicable Transferred Assets were transferred to Purchasers.

(i) To the extent that any Losses incurred by a Purchasers Indemnified Party arise out of (A) a breach of Seller’s representations in Section 5.3 or Section 5.4 , or (B) a breach of Seller’s covenants to convey a Transferred Asset and is capable of mitigation through the conveyance to Purchasers or the applicable Purchasers Indemnified Party of any non-conveyed asset giving rise to such Loss (or another non-conveyed asset that would cure such Loss), Purchasers and Seller shall cooperate (at Seller’s expense) to effect any arrangement reasonably proposed by Purchasers for the conveyance to Purchasers or the applicable Purchasers Indemnified Party of such asset. To the extent that any Losses incurred by a Purchasers Indemnified Party arise out of a breach of Seller’s covenants in Section 7.3 which is capable of mitigation through making available to Purchasers or the applicable Purchasers Indemnified Party any Shared Contract giving

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rise to such Loss (or another asset that would cure such Loss), Purchasers and Seller shall cooperate (at Seller’s expense) to effect any arrangement reasonably proposed by Purchasers to mitigate such Loss. In such event, if Seller is unable to effect such arrangement, Purchasers shall be entitled to obtain a reasonably equivalent replacement or substitute for such asset on a commercially reasonable basis, and the reasonable cost of such reasonably equivalent replacement or substitute will be an indemnifiable Loss hereunder.

(ii) Notwithstanding the foregoing, no claim for indemnification made pursuant to Section 9.1(a)(i) or Section 9.1(a)(ii) (other than in cases of fraud which will have no such limitations): (A) will be indemnifiable unless the Losses with respect to each individual item or group of related items underlying such claim exceed *** (the “Minimum Claim Threshold”), provided that if the Losses with respect to such item or group of related items exceed the Minimum Claim Threshold, the full amount of the Claim (including the first ***) will be indemnifiable, subject to the other limitations herein, and (B) will be indemnifiable until the indemnifiable Losses pursuant to Section 9.1(a)(i) or Section 9.1(a)(ii) respectively exceed *** in the aggregate (the “Basket”), in which event the Indemnifying Party will reimburse the Indemnifiable Party for the full amount of the indemnifiable Losses; provided that, notwithstanding any other provision of this Agreement, the maximum amount for which an Indemnifying Party may be liable with respect to claims made pursuant to Section 9.1(a)(i) and Section 9.1(a)(ii) respectively (other than claims made in cases of fraud, which will have no such limitation), will not exceed *** of the Purchase Price (the “Cap”); provided further that claims made with respect to the Fundamental Reps and Section 5.4(a) (Scope of Transferred Assets) will not be subject to, and will not be considered in calculating whether claims have exceeded, the Basket, Cap or Minimum Claim Threshold.

(iii) The Indemnifying Party shall not be liable, either in contract or tort, for indirect, incidental or punitive damages or multiple of earnings damages or loss of goodwill (except in each case to the extent payable by an Indemnified Party in connection with a Third Party Claim).

(iv) Notwithstanding any other provision to the contrary, in relation to Environmental Matters, the Purchaser Indemnified Parties shall not be entitled to indemnification under Section 9.1(a) for that portion of any Losses attributable to the increase, exacerbation, or aggravation of any Remedial Action resulting from an Environmental Matter existing prior to the Closing Date, when such increase, exacerbation or aggravation results directly from:

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(A) any Environmental Releases following the Closing or any conduct of any Purchasers Indemnified Party following the Closing that resulted in such increase, exacerbation or aggravation;

(B) any site closure of the Facility resulting in the application of a clean-up standard for Remedial Action stricter than the standard which would have applied for a use comparable to the last industrial operation of the Facility on the Closing Date; or

(C) any substantial change in the nature of the activities and services performed at the Facility or any substantial change at the Facility resulting in the application of a clean-up standard for Remedial Action stricter than the standard which would have applied for a use comparable to the industrial operation of the Facility on the Closing Date.

(v) In addition, Purchasers shall not voluntarily approach any Governmental Authorities for the purpose of instigating Remedial Action for pollution which is reasonably likely to require indemnification by Seller pursuant to Section 9.1(a) unless Purchasers have first consulted with Seller as to the appropriateness and contents of such approach; provided , however , Purchasers shall not be obligated to first consult with Seller if such consultation would be impracticable under the circumstances, including, if an approach to the Governmental Authorities is reasonably necessary to avert an imminent danger of harm or serious pollution of the Environment (in such circumstances, Purchasers shall promptly notify Seller after such approach) . If Purchasers go forward with an approach to Governmental Authorities after conferring with Seller, Purchasers shall take into account reasonable comments from Seller and shall keep Seller reasonably informed of any material developments in such matter. If permitted by the Governmental Authorities, Purchasers shall provide Seller with the opportunity to attend scheduled meetings with the Governmental Authorities with respect to such matter.

(vi) If Seller is reasonably likely to be responsible for more than *** of the reasonably foreseeable Remedial Action costs related to any Environmental Matter, Seller will have the right to select qualified and appropriate agents and/or contractors who are reasonably acceptable to Purchasers with the prior written consent of Purchasers (such consent not to be unreasonably withheld, delayed or conditioned) in respect of any Remedial Action for which Seller is responsible in connection with any Environmental Matters subject to indemnification under Section 9.1(a) . Seller will give Business Purchaser reasonable advance notice of the nature and scope of Seller’s Remedial Action and the names of any agents

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or contractors hired by Seller in connection therewith, all of which shall not interfere with Business Purchaser’s use of the affected property and be subject to Business Purchaser’s approval, such approval not to be unreasonably withheld, conditioned or delayed. Business Purchaser grants to Seller and its agents and contractors the right of access to the affected property for the purposes of carrying out Seller’s obligations under this Agreement, subject to compliance with the notice requirements set forth in the immediately preceding sentence. All Remedial Action undertaken by Seller and its agents and contractors shall fully comply with Environmental Laws at the time of such Remedial Action. Seller will be responsible to Purchasers for the actions of its agents and contractors. Each Party shall be permitted to have a representative present during all remediation activities. Seller shall provide Business Purchaser with copies of all material correspondence received from or provided to Governmental Authorities with respect to the Remedial Action and shall provide Business Purchaser with a reasonable opportunity to comment on all reports and workplans to be submitted to Governmental Authorities and shall take into account any reasonable comments from Business Purchaser. Seller shall keep Business Purchaser informed of any material developments with respect to the Remedial Action and shall provide Business Purchaser with an opportunity to attend meetings with Governmental Authorities with respect to such matters. Notwithstanding the foregoing, in the event that Seller fails to (i) promptly select a firm acceptable to Purchasers or (ii) diligently prove remediation, Seller’s rights under this Section 9.4(c)(vi) shall be waived and Purchasers shall have the sole right to control the applicable Remedial Action in all respects. If remediation is already in process when Purchasers reasonably determine that Seller is reasonably likely to be responsible for more than *** of the foreseeable Remedial Action costs related to any Environmental Matter, then the Parties will work together in good faith to determine an appropriate plan of action to complete remediation.

(vii) Notwithstanding anything contained in this Agreement to the contrary, no Party shall be entitled to recover an amount pursuant to any provision of this Agreement to the extent that such Party or any of its Affiliates has already recovered such amount (under this Agreement or otherwise).

(viii) Notwithstanding anything contained in this Agreement to the contrary, (x) in the event that any Losses may be indemnifiable hereunder pursuant to both of clauses (i) and (iv) of Section 9.1(a) , such Losses shall be deemed to be indemnifiable solely pursuant to clause (iv) of such Section, and Purchasers hereby waive the right to seek indemnification for such Losses pursuant to clause (i) of such Section and (y) to the extent of any Excluded Liabilities, Purchasers will not assert the existence of such Excluded

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Liabilities or the failure to disclose the same for purposes of determining the satisfaction of the condition precedent set forth in Section 8.2(b) .

ARTICLE 10 TERMINATION

10.1 Conditions of Termination

This Agreement may be only terminated and the transactions contemplated hereby may be only abandoned prior to the Closing:

(a) by the mutual written agreement of each of Purchasers and Seller;

(b) (i) by either Purchasers, on the one hand, or Seller, on the other hand, if the Closing shall not have occurred on or before April 1, 2012; provided , however , that the right to terminate pursuant to this Section 10.1(b) is not available to any Party whose breach of any provision of this Agreement results in or causes the failure of the Closing to be consummated by such time;

(c) by either Purchasers, on the one hand, or Seller, on the other hand, if any Law that makes the consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or if consummation of the transactions contemplated by this Agreement would violate any non-appealable final Order of any Governmental Authority; or

(d) by Purchasers if the conditions precedent set forth in Sections 8.2(a) , (b) or (c) are not fulfilled, or by Seller if the conditions precedent set forth in Sections 8.3(a) or (b) are not fulfilled, in each case as a result of a breach, failure or misrepresentation which has not been cured within twenty (20) Business Days of receiving written notice thereof from the terminating Party indicating that unless such breach, failure or misrepresentation is cured in accordance with this Section 10.1(d) , the terminating Party intends to terminate this Agreement (it being understood that such twenty (20) Business Day cure period will, to the extent necessary, extend the date set forth in Section 10.1(b) ).

10.2 Consequences of Termination

In the event of termination of this Agreement in accordance with Section 10.1 , this Agreement shall thereafter become void and have no effect, and no Party hereto shall have any liability or obligations to the other Party or their respective Affiliates, except (i) for the obligations contained in this Section 10.2 and Sections 11.1 , 11.4 , 11.5 and 11.7 , and (ii) for the obligations resulting from a willful breach of any obligations under this

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Agreement; provided that such breach occurred prior to the termination of this Agreement.

ARTICLE 11 GENERAL PROVISIONS

11.1 Expenses and Taxes

(a) Except as expressly set forth otherwise in this Agreement and to the extent legally feasible, any and all payments to be made by one Party and/or its Affiliates to the other Party and/or its Affiliates as a result of or in connection with this Agreement shall be made solely by Seller to Purchasers or by Purchasers to Seller, as the case may be, it being understood that each Party will be then responsible for allocating the amounts thus received from the other Party to its Affiliates.

(b) Each Party shall pay all fees and expenses incurred by it in connection with this Agreement and the transactions contemplated hereby, except that the Parties agree that Purchasers shall pay all Taxes applicable to, or resulting from the acquisition of, the Transferred Assets (other than Taxes payable by Seller under applicable Law), including any Transfer Taxes, Canadian GST and QST (to the extent applicable to the Facility and other Transferred Assets) and any filing, registration, recording or transfer fees or duties payable in connection with the instruments of transfer provided for in this Agreement. Purchasers shall indemnify and hold harmless Seller and its Affiliates with respect to such Taxes it is obligated to pay pursuant to the preceding sentence. Each Party will cooperate and consult with each other prior to filing Tax Returns in respect of such Taxes and will cooperate and otherwise take commercially reasonable efforts to obtain any exemptions for or refunds of such Taxes.

(c) Purchasers shall communicate to Seller the GST and QST numbers of any entity which purchases Transferred Assets from Seller or its Affiliates pursuant to a transaction which is subject to GST or QST.

(d) To the extent permitted under subsection 221(2) of the Excise Tax Act (Canada) and any equivalent or corresponding provision under An Act respecting the Québec Sales Tax , Purchasers shall self-assess and remit directly to the appropriate Governmental Authority any GST/HST and QST payable in connection with the transfer of the Owned Real Property and the Facility.

(e) All amounts payable by Purchasers to Seller under this Agreement exclude V.A.T. If any such payment constitutes the whole or any part of the consideration for a taxable supply by Seller to Purchasers, the amount of such payment shall be

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increased by an amount equal to the rate of V.A.T. chargeable in respect of such supply multiplied by the portion of such payment that constitutes the whole or any part of the consideration for a taxable supply by Seller to Purchasers (“V.A.T. Payment”). Therefore, subject to applicable Law, Seller shall issue to Purchasers a tax invoice with respect to such supply and Purchasers shall pay the V.A.T. Payment within the time prescribed by applicable Law, plus any interest and penalties.

(f) Seller shall be responsible for the timely filing (taking into account any extensions received from the relevant Governmental Authorities) of all Tax Returns of Seller or of its Relevant Affiliates required by Law to be filed with respect to the Business, the Facility or the Transferred Assets for periods ending on or prior to the Closing Date.

(g) Purchasers shall be responsible for the timely filing (taking into account any extensions received from the relevant Government Authorities) of all Tax Returns required by Law to be filed with respect to the Business, the Facility or the Transferred Assets for the periods ending after the Closing Date. All Taxes indicated as due and payable on such Tax Returns shall be paid by Purchasers when required by Law, except such Taxes as maybe contested by Purchasers in good faith and pursuant to appropriate Legal Proceedings.

11.2 Amendments; Waiver

This Agreement and the Ancillary Agreements may only be amended, supplemented or modified and any provision of this Agreement may only be waived, pursuant to a written instrument making specific reference to this Agreement and executed by duly Authorized Persons of the Parties.

11.3 Entire Agreement

This Agreement, together with the Disclosure Letter and the Exhibits and Schedules thereto, the confidentiality agreement signed by Seller and an Affiliate of Purchasers on March 23, 2011 and the Ancillary Agreements, constitutes the entire understanding and agreement between the Parties with respect to the matters herein and supersedes any previous agreements, understandings, or statement of intent in each case, written or oral, of every nature between the Parties with respect to those matters.

To the extent any provision of any Ancillary Agreement is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall prevail.

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11.4 Confidentiality; Public Announcements

The terms and conditions of this Agreement shall be maintained in strict confidence by each of the Parties from and after the date of this Agreement with the same degree of care as it maintains its own confidential and proprietary information and shall not be, without the prior written consent of the other Party, which consent shall not be unreasonably withheld, published, disseminated or disclosed to any Third Party nor used by such Party for any purpose except to the extent necessary for the performance of this Agreement.

Without limitation to the foregoing, Purchasers and Seller shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement, the other Party’s name or the transactions contemplated hereby and neither Purchasers nor Seller shall issue any such press release or make any such public statement without having first submitted a draft thereof to the other Party. The issuance thereof shall not be made without the prior written approval of the other Party (such approval not to be unreasonably withheld).

However, the approval by the other Party shall be unnecessary if the disclosing Party is subject to a requirement of applicable Law or by the applicable rules of any stock exchange to disclose the existence and terms of this Agreement, or if such disclosure is necessary, as in the reasonable opinion of the disclosing Party’s counsel, in order to implement the provisions of this Agreement. In such event, the disclosing Party shall notify without delay the other Party and provide the other Party with a copy of the contemplated disclosure prior to submission or release as the case may be, unless notifying is impracticable due to circumstances beyond the Party’s control. The other Party may provide comments to the submission or release and the disclosing Party shall in such case take into consideration all such reasonable comments. Unless otherwise agreed with the other Party, the disclosing Party shall only disclose such information that is needed to comply with applicable Law or stock exchange rules.

From and after the date of this Agreement, Seller shall not, and shall cause its Affiliates and its respective officers, employees, and directors not to, directly or indirectly, disclose, reveal, divulge or communicate to any Person other than authorized officers, directors and employees of Purchasers or use or otherwise exploit for their own benefit or for the benefit of anyone other than Purchasers, any Confidential Information. Seller and its officers, directors, employees and Affiliates shall not have any obligation to keep confidential any Confidential Information if and to the extent disclosure thereof is specifically required by Law or stock exchange rules; provided , however , that in the event disclosure is required by applicable Law or stock exchange rules, Seller shall, to the extent reasonably possible, provide Purchasers with prompt notice of such requirement prior to making any disclosure so that Purchasers may seek an appropriate protective order. For purposes of this Section 11.4 , “Confidential Information” shall mean any information with respect to the Business, including methods of operation, customers, customer lists, products, prices, fees, costs, inventions, Transferred Assets, marketing methods, plans, personnel, suppliers, competitors, markets or other specialized information or proprietary matters; provided , that Confidential Information does not include, and there shall be no obligation hereunder with respect to, information that (i) is

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generally available to the public on the date of this Agreement or (ii) becomes generally available to the public other than as a result of a disclosure not otherwise permissible hereunder.

11.5 Governing Law; Dispute Resolution

(a) This Agreement shall be governed in all respects by the Laws of New York, without regard to the principles of conflicts of laws thereof that might mandate the application of the laws of another jurisdiction.

(b) Except as otherwise provided in Sections 3.3.3 and 9.3 herein, all disputes arising under and in connection with this Agreement and the Ancillary Agreements or the breach termination or validity thereof shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (“ICC”) as in effect as of the date of commencement of the arbitration proceedings (the “Rules”) by three (3) arbitrators one of whom shall be nominated by each of the Parties in accordance with the Rules. The two (2) Party appointed arbitrators shall have thirty (30) days from the confirmation by the ICC Court of Arbitration (“ICC Court”) of the nomination of the second arbitrator to agree on the nomination of a third arbitrator who shall serve as chair of the arbitral tribunal. On the request of any Party, any arbitrator not timely nominated in accordance with this Agreement or the Rules, shall be appointed by the ICC Court. Any arbitrator appointed by the ICC Court shall be admitted to the practice of law in a common law jurisdiction. The arbitration proceedings shall take place in New York, New York and shall be conducted in the English language. In addition to monetary damages, the arbitral tribunal shall be empowered to award equitable relief, including, but not limited to an injunction and specific performance of any obligation under this Agreement. The arbitral tribunal is not empowered to award damages in excess of compensatory damages, and each party hereby irrevocably waives any right to recover punitive, exemplary or similar damages with respect to any Dispute. The arbitral award shall be final and binding upon the Parties and judgment upon any award rendered may be entered in any court having jurisdiction. However, prior to the appointment of the arbitral tribunal, any Party may bring an action or proceeding in any court of competent jurisdiction seeking temporary injunctive or equitable relief (or their non-U.S. equivalents), or to prevent irreparable harm preserve the status quo until any arbitration is commenced. The Parties agree that any court action or proceeding to compel or in support of arbitration or for provisional remedies in aid of arbitration, including but not limited to any action to enforce the provisions of this Section, may be brought in the federal or state courts located in New York, New York (the “New York Courts”). The Parties hereby unconditionally and irrevocably submit to the non-exclusive jurisdiction of the New York Courts for such purpose, and in any action to enforce any arbitration award rendered hereunder, and waive any right to stay or dismiss any such actions or proceedings brought before the New York Courts on the basis of

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forum non conveniens or improper venue. Except in a proceeding to enforce the results of the arbitration or as otherwise required by Law, no Party nor any arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written agreement of both Parties. The arbitrators may award the prevailing party such costs, including arbitrator’s fees, the fees of the ICC and reasonable attorneys’ fees, costs and necessary disbursements in addition to any other Losses to which such arbitrators determine such party may be entitled.

11.6 Captions

The captions appearing in this Agreement and the Ancillary Agreements are inserted only as a matter of convenience and as a reference and in no way define, limit or describe the scope or intent of such agreements or any of the provisions thereof.

11.7 Notices

Any notice or other communication provided for herein (the “Notice”) or given hereunder to a Party must be in writing, and sent by email or facsimile transmission (with a confirmation copy by express courier within one (1) Business Day), delivered in person, or sent by a reputable express courier, addressed as follows:

If to Purchasers or any of their Affiliates :

Valeant Pharmaceuticals International, Inc.

14 Main Street

Madison, New Jersey 07940

Attention: President

Facsimile: (949) 242-2840

and

Valeant International (Barbados) SRL

Welches Christ Church

Barbados, BB17154

Attention: President

Facsimile: (246) 420-1532

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Attention: Stephen F. Arcano, Esq. and Marie L. Gibson, Esq.

Email: stephen.arcano@skadden.com and marie.gibson@skadden.com

Facsimile: (212) 735-2000

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If to Seller or any of its Affiliates :

Sanofi

174, Avenue de France

75013 Paris

France

Attention : General Counsel

Email: karen.linehan@sanofi.com

Facsimile: +33 (1) 53.77.43.03

with a copy (which shall not constitute notice) to:

Jones Day

2 rue Saint Florentin

75001 Paris

France

Attention: Gael Saint Olive, Esq.

Email: gsaintolive@jonesday.com

Facsimile: +33 (1) 56.59.39.38

All such Notices shall (a) if delivered by email or facsimile transmission, be deemed given upon electronic confirmation of receipt ( provided , that any such delivery of a Notice shall be followed by an overnight delivery of same), (b) if delivered in person, be deemed given upon actual receipt by the Person to receive delivery, and (c) if sent by overnight courier, be deemed given two (2) Business Days following the day sent by express courier. Any Party from time to time may change its address, facsimile number or other information for the purpose of Notices to that Party by giving notice specifying such change to the others Parties; provided that any such Notice delivered after 5:00 p.m. (local time) in the place of receipt or on a day that is not a Business Day will not be deemed given or received until 9:00 a.m. (local time) the next succeeding Business Day. Any notice sent by either Purchaser shall be deemed to have been sent on behalf of both Purchasers.

11.8 Severability

The invalidity or unenforceability of any provision of this Agreement or the Ancillary Agreements shall not affect the validity or enforceability of any other provision of this Agreement, each of which shall remain in full force and effect and the invalidity and unenforceability of this Agreement or the Ancillary Agreements shall not affect the validity or enforceability in any jurisdiction in which such determination had not been made except to the extent such invalidity or unenforceability causes such agreements to no longer contain all of the material provisions reasonably expected by the Parties to be contained. The Parties, however, agree to substitute any invalid or unenforceable provision by a valid and enforceable provision which maintains, to the fullest extent

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possible, the respective interests of the Parties as established by the present terms and conditions of the Agreement.

11.9 Binding Effect; No Assignment

This Agreement and the Ancillary Agreements shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person not Party to this Agreement other than the Relevant Affiliates of the Parties and, with respect to Article 9 only, the Indemnifiable Parties. No assignment of this Agreement or of any rights or obligations hereunder may be made by either Party without the prior written consent of the other Party and any attempted assignment without such required consent shall be null and void, except that either Party may assign all or any portion of its rights under this Agreement to one or more Affiliate(s) without the consent of the other Party ( provided that such assignee undertakes at the time of the assignment that if such assignee ceases to be an Affiliate such right will, immediately prior to the assignee ceasing to be an Affiliate, be re-assigned to the corresponding Party or another of its Affiliates) and no such assignment will relieve the assigning party of liability.

11.10 Specific Performance

The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, that monetary damages may be inadequate and that a party may have no adequate remedy at Law. The Parties accordingly agree that subject to Section 11.5 herein, without the necessity of posting bond or other undertaking, the Parties hereto will be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Agreement, this being in addition to any other remedy to which such Party is entitled at Law or in equity (including an action in execution of title ( action en passation de titre ) under the laws of Québec, Canada). In the event that a Party seeks in equity to enforce the provisions of this Agreement, no Party will allege, and each Party hereby waives the defense or counterclaim that, there is an adequate remedy at Law.

11.11 Incorporation by Reference

There may be included in the Schedules to the Disclosure Letter items and information that are not “material,” and such inclusion will not be deemed to be an acknowledgment or agreement that any such item or information (or any non-disclosed item or information of comparable or greater significance) is “material,” or to affect the interpretation of such term for purposes of this Agreement. Matters reflected in the Schedules to the Disclosure Letter are not necessarily limited to matters required by this Agreement to be disclosed therein. Such Schedules each set forth items of disclosure with specific reference to the particular Section or subsection of this Agreement to which the information in the applicable disclosure relates; provided , however , that any information set forth in one

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Section of the Schedules to the Disclosure Letter will be deemed to apply to each other Section or subsection thereof to which its relevance is reasonably apparent on its face.

11.12 Counterparts

This Agreement may be executed in any number of counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument.

11.13 French Assets Notwithstanding anything to the contrary contained in this Agreement or in the Ancillary Agreements;

(a) Purchasers shall not have any right to, and Seller shall not have any obligation to transfer, any right, title or interest to any Transferred Assets to the extent located in the Republic of France.

(b) Purchasers shall not have any obligation to assume, and Seller shall not have any right to assign, any obligations relating to any Assumed Liabilities to the extent located in the Republic of France.

(c) Purchasers shall not have any obligation to offer employment to any Eligible Employees or Mandatorily Transferred Employees to the extent located in the Republic of France.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective Authorized Persons on the day and year first above written.

	SANOFI


	By:	/s/ Jose Ferrer
		Name: Jose Ferrer
		Title: Vice President, Head of Legal Operations


	VALEANT INTERNATIONAL (BARBADOS) SRL


	By:	/s/ Alexander Matheson
		Name: Alexander Matheson
		Title: Senior Director, Business and Legal Affairs


	VALEANT PHARMACEUTICALS INTERNATIONAL, INC.


	By:	/s/ Rajiv de Silva
		Name: Rajiv de Silva
		Title: President and COO Specialty Pharmaceuticals

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Exhibit 2.2

*** [Portions of this exhibit have been omitted pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission.
The omissions have been indicated with asterisks ("***"), and
the omitted text has been filed separately with the Commission.]

ASSET PURCHASE AGREEMENT

among

JANSSEN PHARMACEUTICALS, INC.,

VALEANT INTERNATIONAL (BARBADOS) SRL

VALEANT PHARMACEUTICALS NORTH AMERICA LLC

and,

solely for the purposes set forth herein,

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

DATED AS OF JULY 15, 2011

TABLE OF CONTENTS

		Page

Article I DEFINITIONS AND TERMS
Section 1.1	Definitions	1
Section 1.2	Other Definitional Provisions	8
Article II PURCHASE AND SALE
Section 2.1	Purchase and Sale of Assets	8
Section 2.2	Consents	9
Section 2.3	Excluded Assets	10
Section 2.4	Assumption of Certain Obligations	11
Section 2.5	Retained Liabilities	11
Section 2.6	Purchase Price	12
Section 2.7	Purchase Price Adjustment	12
Section 2.8	Allocation of Purchase Price	14
Section 2.9	Taxes	14
Section 2.10	***.	14
Section 2.11	Risk of Loss	15
Section 2.12	Transferred Domain Names	15
Article III CLOSING
Section 3.1	Closing	15
Article IV CONDITIONS TO CLOSING
Section 4.1	Conditions to the Obligations of Purchasers and Seller	15
Section 4.2	Conditions to the Obligations of Purchasers	16
Section 4.3	Conditions to the Obligations of Seller	16
Article V REPRESENTATIONS AND WARRANTIES OF SELLER
Section 5.1	Organization	17
Section 5.2	Authority; Binding Effect	17
Section 5.3	Non-Contravention	17
Section 5.4	Governmental Authorization	17
Section 5.5	Financial Information	17
Section 5.6	Absence of Material Changes	18
Section 5.7	No Litigation	18
Section 5.8	Compliance with Laws	19
Section 5.9	Product Registrations	19
Section 5.10	Material Contracts	19
Section 5.11	Intellectual Property	19
Section 5.12	Title to Purchased Assets	20
Section 5.13	Product Liability	20

		Page

Section 5.14	Inventory	20
Section 5.15	Suppliers and Customers	20
Section 5.16	Sufficiency of Assets	21
Section 5.17	Tax Matters	21
Section 5.18	Employees and Employee Benefit Plans	21
Section 5.19	Labor Matters	21
Section 5.20	Regulatory Matters	21
Section 5.21	Brokers	23
Article VI REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Section 6.1	Organization	23
Section 6.2	Authority; Binding Effect	23
Section 6.3	Non-Contravention	23
Section 6.4	Governmental Authorization	24
Section 6.5	Financial Capability	24
Section 6.6	Condition of the Business	24
Section 6.7	Brokers	24
Article VII COVENANTS
Section 7.1	Information and Documents	24
Section 7.2	Conduct of Business	25
Section 7.3	Efforts to Consummate; Certain Governmental Matters	26
Section 7.4	Employee Matters	27
Section 7.5	Litigation Support	29
Section 7.6	Trade Notification	29
Section 7.7	Use of Seller Names and Excluded Trademarks	29
Section 7.8	Further Assurances	29
Section 7.9	Assistance in Collecting Certain Amounts	30
Section 7.10	Bulk Transfer Laws	30
Section 7.11	Non-Competition	30
Section 7.12	Insurance	31
Section 7.13	Licenses and Additional Rights	31
Section 7.14	Supplemental Disclosure	32
Section 7.15	Transfer of Product Registrations, Related Applications and Dossiers	32
Section 7.16	Product Returns, Rebates and Chargebacks	33
Section 7.17	Correspondence	37
Section 7.18	Assistance with Financial Reporting	37
Section 7.19	OTC Switch, Supply Agreement and Transition Services Agreement	37
Article VIII INDEMNIFICATION
Section 8.1	Indemnification by Seller	37
Section 8.2	Indemnification by Purchasers	37
Section 8.3	Notice of Claims	38
Section 8.4	Third Party Claims	38
Section 8.5	Expiration	38
Section 8.6	Certain Limitations	39

		Page

Section 8.7	Losses Net of Insurance, Etc.	39
Section 8.8	Sole Remedy/Waiver	39
Section 8.9	Indemnity Payments	39
Section 8.10	No Consequential Damages	39
Article IX TERMINATION
Section 9.1	Termination	40
Section 9.2	Effect of Termination	40
Article X MISCELLANEOUS
Section 10.1	Notices	41
Section 10.2	Amendment; Waiver	42
Section 10.3	Assignment	42
Section 10.4	Entire Agreement	42
Section 10.5	Fulfillment of Obligations	42
Section 10.6	Parties in Interest	42
Section 10.7	Public Disclosure	42
Section 10.8	Confidentiality; Return of Information	42
Section 10.9	Expenses	43
Section 10.10	Governing Law; Jurisdiction; No Jury Trial	43
Section 10.11	Arbitration; Mediation	43
Section 10.12	Specific Performance	44
Section 10.13	Counterparts	44
Section 10.14	Headings	44
Section 10.15	Severability	44
Section 10.16	Guarantee	44

iii

SCHEDULES


1(a)		Products
1.1(a)		Knowledge of Seller
1.1(b)		Transferred Trademark Rights
1.1(c)		Transferred Patents
1.1(d)		Transferred Intellectual Property Licenses
1.1(e)		Transferred Domain Names
2.1(a)(i)		Assumed Contracts
2.1(a)(iv)		Transferred Governmental Authorizations
2.1(b)		Inventory
2.8(a)		Allocation
4.2(iv)		Required Consents
5.3		Consents
5.4		Governmental Authorizations (Seller)
5.5		Financial Information
5.6		Material Changes in Business
5.7		Litigation
5.8		Compliance with Law
5.9		Product Registrations
5.10		Material Contracts
5.11		Material Transferred Intellectual Property
5.12		Purchased Assets
5.14		Inventory
5.15		Suppliers and Customers
5.16		Sufficiency of Assets
5.17(a)		Tax Proceedings
5.18(a)		Seller Compensation and Benefit Plans
5.20		Regulatory Matters
6.4		Governmental Authorizations (Purchasers)
7.2		Conduct of Business

EXHIBITS


A		Form of ***
B		Form of ***
C		Seller Closing Deliverables
D		Purchasers Closing Deliverables
E		OD Employees

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement, dated as of July 15, 2011, by and among Janssen Pharmaceuticals, Inc. a Pennsylvania corporation (" Seller "), Valeant International (Barbados) SRL, an international society with restricted liability established under the laws of Barbados (" Products Purchaser "), Valeant Pharmaceuticals North America LLC, a Delaware LLC (" Inventory Purchaser ", " Employer " or, together with Products Purchaser, " Purchasers ") and, solely with respect to Section 10.16, Valeant Pharmaceuticals International, Inc. (" Parent ").

W I T N E S S E T H:

WHEREAS, Seller, directly or indirectly through its Affiliates (such term, and each other capitalized term used but not defined in these Recitals, having the meaning set forth in Article I of this Agreement), manufactures or has manufactured by third parties, distributes or has distributed by third parties, markets and sells the Products;

WHEREAS, the Parties desire that, at the Closing, Seller shall sell, or cause to be sold, to Purchasers, and Purchasers shall purchase from Seller and the Divesting Entities, all of the Purchased Assets and assume all of the Assumed Liabilities upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained herein, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS AND TERMS

Section 1.1 Definitions . As used in this Agreement, the following terms shall have the meanings set forth or as referenced below:

" AAA " shall have the meaning set forth in Section 10.11(a).

" AAA Rules " shall have the meaning set forth in Section 10.11(b).

" Accounts Receivable " shall mean all accounts receivable, notes receivable and other indebtedness due and owed by any third party to Seller or any of its Affiliates arising or held in connection with the sale of any of the Products prior to the Closing Date.

" Affiliate " shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made. For purposes of this definition, "control" of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise and, in any event and, without limitation of the previous sentence, any Person owning more than fifty percent (50%) or more of the voting securities of another Person shall be deemed to control that Person.

" Agreement " shall mean this Agreement, including all Schedules and Exhibits attached hereto, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof.

" Allocation " shall have the meaning set forth in Section 2.8(a).

" Ancillary Agreements " means the ***, the Transition Services Agreement, the OTC Switch Agreement and the Supply Agreement.

" Arbitrator " shall have the meaning set forth in Section 10.11(b).

" Assumed Contracts " shall have the meaning set forth in Section 2.1(a)(i).

" Assumed Liabilities " shall have the meaning set forth in Section 2.4.

" Business " shall mean the business of developing, commercializing, manufacturing, packaging, marketing, distributing and selling the Products as conducted by Seller, the Divesting Entities and any of their respective Affiliates in the Territory as of the date hereof.

" Business Day " shall mean any day other than a Saturday, a Sunday or a day on which banks in New York City, New York or Barbados, are authorized or obligated by law or executive order to close.

" Cash Equivalents " shall mean cash, checks, money orders, marketable securities, short-term instruments and other cash equivalents, funds in time and demand deposits or similar accounts, and any evidence of indebtedness issued or guaranteed by any Governmental Authority.

***

" Chargeback Claims " shall have the meaning set forth in Section 7.16(e)(i).

" Closing " shall mean the consummation of the transactions contemplated by this Agreement pursuant to the terms of this Agreement.

" Closing Date " shall have the meaning set forth in Section 3.1(a).

" Code " shall mean the Internal Revenue Code of 1986, as amended.

" Commercial Rebates " shall have the meaning set forth in Section 7.16(d)(i).

" Commercial Rebate Tail Period " shall have the meaning set forth in Section 7.16(d)(i)(1).

" Competing Business " shall have the meaning set forth in Section 7.11.

" Competition Laws " shall mean Laws of any jurisdiction in the Territory that are designed or intended to prohibit, restrict or regulate actions that may have the purpose or effect of creating a monopoly, lessening competition or restraining trade.

" Confidentiality Agreement " shall mean that certain letter agreement dated May 18, 2011, between Valeant Pharmaceuticals International, Inc., an Affiliate of Purchasers, and Johnson & Johnson Consumer Companies, Inc., an affiliate of Seller.

" Damaged Inventory " shall mean any Inventory that (i) has less than *** shelf life remaining as of the Closing Date (unless otherwise mutually agreed by the Parties), (ii) is adulterated within the meaning set forth in any applicable Law, (iii) is materially damaged or (iv) is not saleable in accordance with the past practice of the Business.

" DDMAC " shall have the meaning set forth in Schedule 5.20 .

" Deductible " shall have the meaning set forth in Section 8.6.

" Designated Shared Contracts " shall have the meaning set forth in Section 7.13(c).

" Disclosure Supplement " shall have the meaning set forth in Section 7.14(b).

" Dispute " shall have the meaning set forth in Section 10.11(a).

" Disputed Item " shall have the meaning set forth in Section 2.7(b).

" Divesting Entities " shall mean, collectively, all Affiliates of Seller that have any right, title or interest in, to or under the Purchased Assets.

" Employer " shall have the meaning set forth in the preamble of this Agreement.

" Environmental Law " shall mean any applicable Law relating directly or indirectly to (i) the protection of the environment (including air, water vapor, surface water, groundwater, drinking water supply, surface or subsurface land), (ii) occupational health and safety or (iii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, recycling, Release or disposal of, Hazardous Materials.

" Environmental Liabilities " shall mean all Liabilities and Losses arising under Environmental Laws relating to Seller's and its Affiliates' ownership or operation of the Business and the Purchased Assets, including Liabilities and Losses resulting from (i) failure to comply with any requirement of, or any liability imposed under, any Environmental Law, (ii) failure to obtain or comply with any required Environmental Permit, (iii) any Release of Hazardous Materials or Remedial Action or (iv) harm or injury to any real property, to any Person, to public health or to any natural resource as a result of exposure to Hazardous Materials (other than Remedial Action).

" Environmental Permit " shall mean a permit, license, certificate, approval or authorization issued by a Governmental Authority in the Territory pursuant to an Environmental Law.

" ERISA " shall mean the US Employee Retirement Income Security Act of 1974, as amended.

" Excluded Assets " shall have the meaning set forth in Section 2.3.

" Excluded Trademarks " shall mean, whether registered or unregistered, all trademarks, trade dress, service marks, service names, brand marks, trade names, brand names, logos, business symbols, slogans or other designations of origin and all registrations, registration applications and rights relating thereto, other than the Transferred Trademark Rights.

" FDA " shall mean the Food and Drug Administration and any successor agency.

" FDCA " shall have the meaning set forth in Section 5.20(a).

" Final Inventories " shall have the meaning set forth in Section 2.7(c).

" Financial Information " shall mean the financial data set forth on Schedule 5.5 .

" Food and Drugs Act " shall have the meaning set forth in Section 5.20(a).

" Formulae " shall mean the percentages and specifications of ingredients used to manufacture the Products for the Business in the Territory.

" Fundamental Reps " shall mean the representations and warranties set forth in Section 5.1 (Organization), Section 5.2 (Authority; Binding Effect), Section 5.12 (Title to Purchased Assets), Section 5.21 (Brokers), Section 6.1 (Organization), Section 6.2 (Authority; Binding Effect) and Section 6.7 (Brokers).

" GAAP " shall mean accounting principles generally accepted in the United States, as in effect as of the date hereof.

" Government Rebate Tail Period " shall have the meaning set forth in Section 7.16(c)(i).

" Government Rebates " shall have the meaning set forth in Section 7.16(c)(i).

" Governmental Authority " shall mean any supranational, national, federal, provincial, state or local judicial, legislative, executive or regulatory authority, board, commission, body or instrumentality, including the FDA.

" Governmental Authorizations " shall mean all licenses, permits, clearances, variances, exemptions, Governmental Orders, registrations, certificates and other authorizations, consents and approvals required to carry on the Business in the Territory under the applicable Laws of any Governmental Authority with competent jurisdiction.

" Governmental Order " shall mean any order, writ, judgment, decision, ruling, subpoena, verdict, injunction, decree, consent decree, stipulation, determination or award entered, issued, made or rendered by any Governmental Authority.

" Government Rebate Programs " shall have the meaning set forth in Section 7.16.

" Hazardous Materials " shall mean all materials, pollutants or contaminants regulated pursuant to any Environmental Law, including oils, petroleum, petroleum products, asbestos and asbestos-containing materials.

" Inactive OD Employee " shall have the meaning set forth in Section 7.4(b).

" Indemnified Party " shall have the meaning set forth in Section 8.3.

" Indemnifying Party " shall have the meaning set forth in Section 8.3.

" Independent Accountant " shall have the meaning set forth in Section 2.7(c).

" Intellectual Property Schedules " shall mean, collectively, Schedule 1.1(b) , Schedule 1.1(c) , Schedule 1.1(d) and Schedule 1.1(e) .

" Inventories " shall mean all finished goods inventory of the Products.

" Inventories Statement " shall have the meaning set forth in Section 2.7(a).

" Inventory Purchaser " shall have the meaning set forth in the preamble of this Agreement.

" Knowledge of Seller " shall mean the actual knowledge of the individuals listed on Schedule 1.1(a) , after such individuals have made (or are deemed to have made) reasonable inquiry.

" Laws " shall mean, as applicable, any national, federal, territorial, state, provincial, regional, foreign, municipal or local laws (including common law and civil law), statutes, ordinances, rules, regulations, codes, treaties, binding guidelines, decrees, rulings, directives or Governmental Orders, in each case, of, or issued by, any Governmental Authorities.

" Legal Proceeding " shall mean any claim, action, suit, case, litigation, proceeding, charge, criminal prosecution, judicial, governmental or regulatory investigation, arbitration, mediation or alternative dispute resolution proceeding.

" Liabilities " shall mean any and all debts, liabilities, costs, assessments, expenses, claims, losses, damages, deficiencies and obligations, whether accrued or fixed, known or unknown, liquidated or unliquidated, asserted or unasserted, absolute or contingent, matured or unmatured, determined or determinable, due or to become due, whenever or however arising (including whether arising out of any contract, common law or tort based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.

" Licensed Know-How " shall mean, collectively, all inventions, discoveries, Formulae, trade secrets, know-how and ideas, rights in research and development, commercially practiced processes and inventions, whether patentable or not, and design rights, in each case that are owned by Seller or a Divesting Entity as of the date hereof, are primarily related to the Products and are necessary to or otherwise used or held for use in the conduct of the Business.

" Lien " shall mean, with respect to any property or asset, any lien, security interest, mortgage, pledge, assessment, restriction, adverse claim, levy, charge, hypothecation, easement, title retention clause, encumbrance or other similar claim of any kind, character or description, whether or not of record, or any contract to give any of the foregoing, in respect of such property or asset.

" Losses " shall have the meaning set forth in Section 8.1.

" Material Adverse Effect " shall mean, with respect to Seller, any change, effect, event, circumstance, occurrence or state of facts that, individually or in the aggregate, is or would reasonably be expected to be materially adverse to (i) the business, results of operations or condition (financial or otherwise) of the Business, the Products, the Purchased Assets and the Assumed Liabilities, taken as a whole, or (ii) the ability of Seller or its Affiliates to consummate the transactions contemplated by this Agreement and the Ancillary Agreements; provided , that none of the following changes, effects, events, circumstances, occurrences or states of facts shall be deemed, either alone or in combination, to constitute a Material Adverse Effect, or be taken into account in determining whether there has been or would reasonably be expected to be a Material Adverse Effect: (a) changes or effects in the general economic conditions or the securities, syndicated loan, credit or financial markets in the Territory; (b) changes in GAAP; (c) changes or effects, including legal, tax or regulatory changes, that generally affect the industry in which the Business operates in the Territory; (d) changes or effects that arise out of or are attributable to the commencement, occurrence, continuation or intensification of any war, sabotage, armed hostilities or acts of terrorism in the Territory; (e) earthquakes, hurricanes or other natural disasters in the Territory; (f) any failure by the Business to meet internal projections, plans or forecasts for any period (it being understood that the facts or occurrences giving rise or contributing to any such failure may be deemed to constitute, or be taken in to account in determining whether there has been or would reasonably be expected to be, a Material Adverse Effect); or (g) changes or effects that directly arise out of or are directly attributable to the negotiation, execution, public announcement or performance of this Agreement or the compliance with the provisions thereof, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners or employees; (h) any matter disclosed in the Schedules to this Agreement solely to the extent reasonably apparent from the face of the Schedule, except, in the case of clauses (a) and (c), to the extent such change, effect or event has a disproportionate adverse effect on the

business, results of operations or condition (financial or otherwise) of the Business, the Products, the Purchased Assets and the Assumed Liabilities, taken as a whole, relative to other participants carrying on a similar business in the industry in which the Business operates in the Territory.

" Material Assumed Contract " shall have the meaning set forth in Section 5.10.

***

" NDCs " shall have the meaning set forth in Section 7.7(a).

" Non-Assigned Asset " shall have the meaning set forth in Section 2.2(b).

" Non-Inventory Purchased Assets " shall have the meaning set forth in Section 2.1(a).

" Non-Responsible Party " shall have the meaning set forth in Section 7.16(c)(ii).

" Obligations " shall have the meaning set forth in Section 10.16.

" OD " shall mean the Ortho Dermatologics Division of Ortho-McNeil-Janssen Pharmaceuticals, Inc.

" OD Employees " shall have the meaning set forth in Section 7.4(b).

" Outside Date " shall have the meaning set forth in Section 9.1(ii).

" OTC Switch Agreement " means the OTC switch agreement to be entered into by the Parties as of the Closing Date in a form to be mutually agreed by the Parties.

" Parent " shall have the meaning set forth in the preamble of this Agreement.

" Party " means Seller, on the one hand, or Inventory Purchaser or Products Purchaser individually or jointly, as the context so requires, on the other hand, and the term " Parties " means collectively Seller and Purchasers.

" Permitted Liens " shall mean (i) all Liens approved in writing by a Purchaser as Permitted Liens, (ii) Liens, including minor title defects or irregularities affecting the Purchased Assets, that, individually and in the aggregate, do not and would not reasonably be expected to materially detract from the value or impair the use of the property subject thereto or make such property unmarketable, (iii) Liens for Taxes not yet due, payable, delinquent or subject to penalties for non-payment, or which are being contested in good faith in the ordinary course of business by appropriate proceedings and (iv) mechanics', materialmen's, carriers', workmen's, warehousemen's, repairmen's, landlords' or other like Liens and security obligations that are incurred in the ordinary course of business and are not delinquent.

" Person " shall mean an individual, a limited liability company, a joint venture, a corporation, a partnership, an association, a Governmental Authority, a trust, a division or an operating group of any of the foregoing or any other entity or organization.

" Products Purchaser " shall have the meaning set forth in the preamble of this Agreement.

" Product Registrations " shall have the meaning set forth in Section 5.9.

" Products " shall mean the products set forth on Schedule 1(a) .

" Promotional Materials " shall have the meaning set forth in Section 2.1(a)(vi).

" Purchase Price " shall have the meaning set forth in Section 2.6.

" Purchased Assets " shall have the meaning set forth in Section 2.1(a).

" Purchasers " shall have the meaning set forth in the preamble of this Agreement.

" Purchaser Material Adverse Effect " shall have the meaning set forth in Section 6.3.

" Records " shall have the meaning set forth in Section 2.1(a)(v).

" Registration Information " shall mean copies of the Product Registrations, together with copies of related correspondence between Seller or any of the Divesting Entities and the applicable Governmental

Authority, current approved packaging and any other existing files and dossiers, in each case relating solely to the Product Registrations and/or to the underlying data or information used to support, maintain or obtain marketing authorization of the underlying Product; provided however that with respect to any such correspondence, packaging, files and dossiers that are not solely related to such Product Registrations and/or such underlying data or information, but that are necessary or otherwise used or held for use in the conduct of the Business as of the Closing Date, then Seller shall, and shall cause each other applicable Divesting Entity to, use commercially reasonable efforts to extract or redact such correspondence, packaging, files and dossiers and transfer to Purchaser all portions of such correspondence, packaging, files and dossiers that are solely related to such Product Registrations and/or such underlying data or information.

" Regulatory Agency " shall have the meaning set forth in Section 5.20(a).

" Release " shall mean any spilling, leaking, pumping, pouring, emitting, emptying, injecting, depositing, disposing, discharging, dispersal, escaping, dumping, migrating or leaching into or through the environment, including surface water, soil or groundwater (including the abandonment or discarding of barrels, containers, and other receptacles containing Hazardous Materials), or as otherwise defined under any applicable Environmental Laws.

" Remedial Action " shall mean action to clean up soil, sediments, surface water or groundwater in response to a Release of Hazardous Materials, including: associated action taken to investigate, monitor, assess and evaluate the extent and severity of any such Release; action taken to remediate any such Release; post-remediation monitoring of any such Release; and preparation of all reports, studies, analyses or other documents relating to the above. " Remedial Action " also shall refer to any judicial, administrative or other proceeding relating to any of the above, including: the negotiation and execution of judicial or administrative consent decrees; responding to information requests by any Governmental Authority; and defending claims brought by any Governmental Authority or any other Person, whether such claims are equitable or legal in nature, relating to the cleanup of the environment, including soil, surface water, groundwater and sediments in response to a Release of Hazardous Materials and associated actions.

" Representatives " shall mean, with respect to either Party, such Party's Affiliates and their respective parents, directors, officers, employees, attorneys, accountants, representatives, financial advisors, lenders, consultants and other agents.

" Resolution Period " shall have the meaning set forth in Section 2.7(c).

" Responsible Party " shall have the meaning set forth in Section 7.16(c)(ii).

" Restrictive Covenants " shall have the meaning set forth in Section 7.11.

" Retained Liabilities " shall have the meaning set forth in Section 2.5.

" Seller " shall have the meaning set forth in the preamble of this Agreement.

" Seller Compensation and Benefit Plans " shall mean all plans, arrangements, agreements, programs, policies, practices or undertakings, whether oral or written, formal or informal, funded or unfunded, insured or uninsured, registered or unregistered including (i) all "employee benefit plans" within the meaning of Section 3(3) of ERISA (whether or not subject to ERISA), (ii) all bonus, vacation, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option, incentive, severance or change-in-control plans or other similar plans, policies, arrangements or agreements, (iii) all employment agreements, (iv) all medical, dental, disability, health and life insurance plans, and (v) all other employee benefit and fringe benefit plans, policies, arrangements or agreements, in the case of each of (i) through (v) under which the Seller or any of the Divesting Entities has or will have any liability or contingent liability and which is maintained or contributed to by Seller or any of the Divesting Entities for the benefit of any of the OD Employees or their beneficiaries.

" Seller Names " shall mean the names and logos of Seller, the Divesting Entities and any and all of its and their Affiliates.

" Seller Notice " shall have the meaning set forth in Section 7.14(a).

" Shared Contract " shall have the meaning set forth in Section 5.10.

" Subsequent Event " shall have the meaning set forth in Section 7.14(b).

" Supply Agreement " shall mean the supply agreement, to be entered into by the Parties as of the Closing Date in a form to be mutually agreed by the Parties.

" Tax Return " shall mean any return, report, declaration, information return, statement or other document filed or required to be filed with any Taxing Authority in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax.

" Taxes " shall mean all taxes, charges, duties, fees, levies or other assessments, including income, excise, property, sales or use, value added, profits, license, withholding (with respect to compensation or otherwise), payroll, employment, net worth, capital gains, transfer, stamp, social security, environmental, occupation and franchise taxes, imposed by any Taxing Authority, and including any interest, penalties and additions attributable thereto, and all amounts payable pursuant to an agreement or arrangement with respect to taxes.

" Taxing Authority " shall mean any Governmental Authority exercising any authority to impose, regulate or administer the imposition of Taxes.

" Termination Right Notice " shall have the meaning set forth in Section 7.14(b).

" Territory " shall mean the United States.

" Third Party Claim " shall have the meaning set forth in Section 8.4(a).

" Third Party Claim Notice " shall have the meaning set forth in Section 8.3.

" Transfer Taxes " shall mean any federal, state, county, local, foreign and other sales, use, transfer, value added, conveyance, documentary transfer, stamp duty, recording or other similar tax, fee or charge imposed in connection with the transactions contemplated by this Agreement or the recording of any sale, transfer or assignment of property (or any interest therein) effected pursuant to this Agreement.

" Transferred Domain Names " shall mean the domain names set forth on Schedule 1.1(e) .

" Transferred Employee Records " shall mean the records of Seller and the Divesting Entities that relate to Transferred Employees, other than performance reports.

" Transferred Employees " shall have the meaning set forth in Section 7.4(b).

" Transferred Intellectual Property " shall mean, collectively, (i) the Transferred Trademark Rights, (ii) the Transferred Patents, (iii) the Transferred Domain Names, and (vi) the Transferred Intellectual Property Licenses.

" Transferred Intellectual Property Licenses " shall mean, collectively, all licenses and agreements set forth on Schedule 1.1(d) .

" Transferred Patents " shall mean the patents and patent applications set forth on Schedule 1.1(c) .

" Transferred Trademark Rights " shall mean, whether registered or unregistered, (a) all trademarks, trade dress, service marks, service names, brand marks, trade names set forth on Schedule 1.1(b) and (b) all material trademarks, trade dress, service marks, service names, brand marks, trade names, brand names, logos, business symbols, slogans or other designations of origin used solely or held for use solely with respect to the Products (this subsection (b), the " Unscheduled Trademark Rights "), and, in all cases, all registrations, registration applications and rights relating thereto, together with all goodwill associated with the foregoing, excluding the Seller Names (other than "Ortho Dermatologics").

" Transition Lots " means those lots of a Product for which Product was partially sold prior to the Closing and partially sold on or following the Closing.

" Transition Services Agreement " shall mean the transition services agreement, to be entered into by the Parties as of the Closing Date in a form to be mutually agreed by the Parties.

" United States " shall mean the United States of America and its territories, commonwealths and possessions.

" Unscheduled Trademark Rights " shall have the meaning set forth in the definition of Transferred Trademark Rights.

" UPCs " shall have the meaning set forth in Section 7.7(a).

Section 1.2 Other Definitional Provisions . (a) The words "hereof," "herein," "hereto" and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(b) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa.

(d) The words " include ," " includes " and " including " and words of similar import will be by way of example rather than by limitation.

(e) Time periods based on a number of days within or following which any payment is to be made or act is to be done shall be calculated by excluding the day on which the period commences and including the day on which the period ends and, if applicable, by extending the period to the next Business Day following if the last day of the period is not a Business Day.

(f) When a reference is made in this Agreement to an Article, a Section, an Exhibit or a Schedule, such reference shall be to an Article or a Section of, or an Exhibit or a Schedule to, this Agreement unless otherwise indicated.

ARTICLE II

PURCHASE AND SALE

Section 2.1 Purchase and Sale of Assets .

(a) Upon the terms and subject to the conditions set forth herein, at the Closing, Seller shall, and shall cause the Divesting Entities to, sell, convey, assign and transfer to Products Purchaser, and Products Purchaser shall purchase, acquire and accept from Seller and the Divesting Entities, free and clear of all Liens (other than Permitted Liens), all of Seller's and the Divesting Entities' rights, titles and interests in the Territory in, to or under the assets set forth below (collectively, the " Non-Inventory Purchased Assets " or, collectively with the Inventories, the " Purchased Assets "):

(i) the listed contracts and other agreements and commitments that are set forth on Schedule 2.1(a)(i) and all purchase orders for finished goods Products that are outstanding as of the Closing (the " Assumed Contracts ");

(ii) the Transferred Intellectual Property, including all trademark rights relating to "Ortho Dermatologics" (but excluding any trademark rights relating to the combination of the word "Ortho" with any other name, which shall be Excluded Trademarks), and all rights with respect to all formulations and reformulations of the Products, including non-prescription (over-the-counter) formulations of the Products and the re-formulated Products;

(iii) the Product Registrations and the Registration Information (including pending applications and applications that are in the process of being prepared by Seller or any of its Affiliates for Product Registrations);

(iv) Governmental Authorizations relating solely to the Purchased Assets, each of which are set forth on Schedule 2.1(a)(iv) , to the extent such Governmental Authorizations are identified on such Schedule as being transferable pursuant to applicable Law;

(v) all financial, accounting and operating data and records relating solely to the Business or the Purchased Assets (the " Records "), including correspondence with the FDA, customer and vendor

lists to the extent relating solely to the Business or the Purchased Assets, all files and documents (including credit information) to the extent relating to customers and vendors solely of the Products, all pre-clinical and clinical data in respect of the Products, the Transferred Employee Records, to the extent permitted by applicable Law and all other business and financial records, files, books and documents (whether in hard copy or computer format) to the extent relating solely to the Business or the Purchased Assets; provided , however , that Seller may retain a copy of (A) all such business and financial records, (B) any other books and records to the extent necessary for reporting, regulatory, tax, accounting or litigation purposes and (C) any correspondence to, with or from any Person in connection with the Business, in each case to the extent related to the Excluded Assets or as otherwise required by Law or Seller's or the Divesting Entities' internal policies for record-keeping purposes;

(vi) all advertising, marketing, market research, sales and promotional materials, if any, relating solely to the Business or the Purchased Assets (including the Products) that are in Seller's or any Divesting Entities' physical possession or under its or their control (collectively, " Promotional Materials ");

(vii) all claims (including, subject to Section 7.5, counterclaims), defenses, causes of action, rights under express or implied warranties, rights of recovery, rights of set-off, rights of subrogation and all other rights of any kind against any third party, solely related to the Business other than (A) arising under Seller's or its Affiliates' insurance policies, (B) relating to any Retained Liabilities or Excluded Assets or (C) relating the purchase or procurement of any good, service or product for, or on behalf of, the Business at any time up until the Closing, along with any and all recoveries in connection thereto (to the extent not related to the assets described in clauses (ii)-(vi) or (viii)-(x) of this Section 2.1(a) or the Assumed Liabilities);

(viii) all goodwill and going concern value associated with the Purchased Assets or the Business;

(ix) an electronic copy of all of the materials in the electronic dataroom relating solely to the Business on compact disc media; and

(x) all other assets of the Seller or its Affiliates that are used or held for use solely in connection with the operation or conduct of the Business (except for interests in the Inventories, land, real estate or the items described in clauses (i)-(xiv) of Section 2.3).

(b) Upon the terms and subject to the conditions set forth herein, at the Closing, Seller shall, and shall cause the Divesting Entities to, sell, convey, assign and transfer to Inventory Purchaser, and Inventory Purchaser shall purchase, acquire and accept from Seller and the Divesting Entities, free and clear of all Liens (other than Permitted Liens), all of Seller's and the Divesting Entities' rights, titles and interests in the Territory in, to or under the Inventories, other than the Damaged Inventory. Schedule 2.1(b) sets out a breakdown by unit types, and the agreed price per unit of, the Inventories held by Seller and the Divesting Entities. On or within two (2) days prior to the Closing Date, Seller shall conduct an audited physical stock-take of the Inventories, at which time it shall determine that portion of the Inventories that constitute the Damaged Inventories (subject to Purchasers' rights set out in Section 2.7). One or more representatives of Inventory Purchaser shall attend such stock-take and shall notify Seller immediately if they identify any physically and materially damaged Inventory; provided , that nothing in this Section 2.1(b) shall prejudice Purchasers' rights under Section 2.7. Seller shall provide Inventory Purchaser with reasonable prior written notice of the date, time and location of such stock-take.

Section 2.2 Consents . (a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign or transfer any Transferred Intellectual Property License, Assumed Contract or other Purchased Asset that is not assignable or transferable without the consent of any Person, other than Seller, Purchasers or any of their respective Affiliates, to the extent that such consent shall not have been given prior to the Closing; provided , however , that Seller shall use, both prior to and for *** after the Closing, commercially reasonable efforts to obtain, and Purchasers shall use their commercially reasonable efforts to assist and cooperate with Seller in connection therewith, all necessary consents to the assignment and transfer thereof; provided , further , that (i) none of Seller, Purchasers or any of their respective Affiliates shall be required to pay money to any third party, commence any litigation or offer or grant any accommodation

(financial or otherwise) to any third party in connection with such efforts and (ii) to the extent the foregoing shall require any action by Seller that would, or would continue to, affect the Business after the Closing, such action shall require the prior written consent of Purchasers (which consent shall not be unreasonably withheld, conditioned or delayed). Purchasers agree that Seller and the Divesting Entities shall not have any liability arising out of or relating to the failure to obtain any consents that may have been or may be required in connection with the transactions contemplated by this Agreement.

(b) With respect to any Transferred Intellectual Property License, Assumed Contract or other Purchased Asset that is not transferred, licensed or assigned to Purchasers at the Closing by reason of Section 2.2(a) (the " Non-Assigned Asset "), after the Closing and until any requisite consent is obtained and the foregoing is transferred and assigned to Purchasers, Seller shall, and shall cause the Divesting Entities to, use commercially reasonable efforts to provide to Purchasers substantially comparable benefits thereof and shall enforce, at the request of and for the account of Purchasers, any rights of Seller or the Divesting Entities arising thereunder against any Person, including the right to elect to terminate in accordance with the terms thereof upon the advice of Purchasers. To the extent that a Purchaser is provided with benefits of any Non-Assigned Asset, such Purchaser shall perform, at the direction of Seller or the applicable Divesting Entity, the obligations of Seller or the Divesting Entity thereunder. Notwithstanding anything to the contrary set forth herein, to the extent that any Assumed Liability relates to any Non-Assigned Asset, such Assumed Liability shall be deemed to be a Retained Liability until such Non-Assigned Asset is transferred and assigned to Purchasers, or unless Purchasers (but primarily to the extent that they) obtain the benefit of such Non-Assigned Asset under this Section 2.2(b).

Section 2.3 Excluded Assets . Purchasers acknowledge and agree that they are not acquiring any rights, titles or interests in, to or under any of the following assets (collectively, the " Excluded Assets "):

(i) any Cash Equivalents;

(ii) any Accounts Receivable;

(iii) any losses, loss carryforwards and rights to receive refunds, credits and loss carryforwards with respect to any and all Taxes of Seller or any of its Affiliates that constitute Retained Liabilities pursuant to Section 2.5(ix);

(iv) (A) subject to Section 2.1(a)(v), the corporate books and records of Seller and its Affiliates to the extent not related solely to the Purchased Assets, including those portions of the Tax Returns and other corporate books and records that do not relate solely to the Purchased Assets, (B) all personnel records, (C) any attorney work product, attorney-client communications and other items protected by attorney-client privilege and (D) any documents that were received from third parties in connection with their proposed acquisition of the Purchased Assets or the Products or that were prepared by Seller or any of its Affiliates in connection therewith;

(v) any current and prior insurance policies and all rights of any nature with respect thereto, including all insurance recoveries thereunder and rights to assert claims with respect to any such insurance recoveries;

(vi) the Seller Names (other than as set forth in Section 2.1(a)(ii)) and the Excluded Trademarks (including any Seller Names relating to the combination of the word "Ortho" with any name other than "Dermatologics");

(vii) any real estate owned or leased by Seller or any of its Affiliates;

(viii) any equipment whatsoever;

(ix) any rights, claims and credits of Seller or any of its Affiliates relating to any Excluded Asset or any Retained Liability, including any guarantees, warranties, indemnities and similar rights in favor of Seller or any of its Affiliates relating to any Excluded Asset or any Retained Liability;

(x) any Seller Compensation and Benefit Plan, any assets in respect of any Seller Compensation and Benefit Plan and any other compensation and benefit plans sponsored by Seller, any Divesting Entity or any of their Affiliates in respect of Transferred Employees;

(xi) the equity interests of any Person;

(xii) the Damaged Inventory;

(xiii) any claims or rights relating to discontinued products that are not Products;

(xiv) all employees of Seller, any Divesting Entity or any of their Affiliates other than the Transferred Employees; and

(xv) any other assets (including intellectual property, software and information technology systems), properties or rights of Seller or any of its Affiliates other than the Purchased Assets.

Section 2.4 Assumption of Certain Obligations . Upon the terms and subject to the conditions set forth herein, Products Purchaser agrees, effective at the Closing, to assume and to satisfy and discharge the following Liabilities of Seller and its Affiliates relating to the Business, in each case other than the Retained Liabilities (all of the foregoing Liabilities being collectively referred to hereinafter as the " Assumed Liabilities "):

(i) except as provided in this Section 2.4, all Liabilities arising out of or relating to Legal Proceedings commenced after the Closing, irrespective of the legal theory asserted, arising from the manufacture, advertising, marketing, distribution, sale or use of the Products in the Territory, solely to the extent relating to the period of time on or after the Closing;

(ii) all Liabilities arising out of or relating to any Assumed Contract, to the extent relating to the period of time on or after the Closing;

(iii) the Liabilities to customers, suppliers or other third parties for Products, materials and services, to the extent relating to the Business, ordered in the ordinary course of business and in compliance with Section 7.2 prior to the Closing, but scheduled to be delivered or provided after the Closing;

(iv) (A) all other Liabilities arising out of or relating to the return of any Product, including all Liabilities for any credits or rebates in respect of any Product in the Territory, subject to Section 7.16, (B) all Liabilities for any recall or post-sale warning in respect of any Product in the Territory manufactured by or for Purchasers or their Affiliates or successors on or after the Closing or to the extent arising from Purchasers' or their Affiliates' or successors' conduct on or after the Closing or and (C) all consumer products Liabilities, including those related to consumer fraud and economic loss, related to the manufacture, advertising, marketing, distribution, sale, or use of the Products in the Territory prior to the Closing Date, but only to the extent the related Legal Proceeding or claim is commenced after the *** anniversary of the Closing Date, up to a maximum total Liability of ***;

(v) except as set forth in Section 7.4(f), all Liabilities with respect to Transferred Employees of the Business arising or occurring with respect to periods of service on and after the date such employee becomes a Transferred Employee;

(vi) all other Liabilities (including Environmental Liabilities but excluding Liabilities related to Taxes, which shall be governed by Section 2.4(vii)) arising out of or relating to the Business or the Purchased Assets, including the use, ownership, possession, operation, sale or lease of the Purchased Assets, to the extent such Liabilities relate to the period of time on or after Closing, other than the Retained Liabilities set out in Section 2.5(i) to Section 2.5(viii) and Section 2.5(x); and

(vii) all Liabilities for Taxes arising out of or relating to the ownership of the Business or the Purchased Assets in any taxable period, or a portion thereof, beginning after the Closing Date.

Section 2.5 Retained Liabilities . Notwithstanding anything to the contrary set forth in Section 2.4, Seller and its Affiliates shall retain and be responsible for the following (collectively, the " Retained Liabilities "):

(i) all Liabilities to suppliers or other third parties for materials and services incurred prior to the Closing, other than Liabilities referred to in Section 2.4(iii);

(ii) all consumer products Liabilities, including those related to consumer fraud and economic loss, related to the manufacture, advertising, marketing, distribution, sale, or use of the Products in the

Territory on or prior to the Closing Date, for which (A) the related Legal Proceeding or claim is commenced on or before the *** anniversary of the Closing Date, and (B) the related Legal Proceeding or claim is commenced after the *** anniversary of the Closing Date, but only to the extent that the associated aggregate Liabilities for related Legal Proceedings and claims after such *** period is in excess of ***;

(iii) (A) all Liabilities for any recall or post-sale warning in respect of any Product in the Territory manufactured for or by Seller or its Affiliates prior to the Closing or to the extent arising from Seller's or its Affiliates' conduct prior to the Closing and (B) except for Liabilities specified in Section 2.5(ii), all Liabilities arising out of or relating to Legal Proceedings, irrespective of the legal theory asserted, (x) to the extent commenced prior to the Closing Date, and (y) if commenced after the Closing Date to the extent relating to any period of time prior to the Closing, including in each case all lawsuits and claims relating to warranty obligations and alleged intellectual property infringement, including the Legal Proceedings set forth on Schedule 5.7 ;

(iv) subject to Section 2.4(iii), all Liabilities arising out of or relating to any Assumed Contract, to the extent relating to the period of time prior to the Closing;

(v) except as set forth in Section 7.4(f), all Liabilities with respect to Transferred Employees of the Business arising or occurring with respect to periods of service prior to the date such employee becomes a Transferred Employee;

(vi) all Liabilities to the extent related to the Excluded Assets;

(vii) all intragroup Liabilities of Seller or any Divesting Entity to any of its Affiliates;

(viii) all Liabilities with respect to any current or former employee of Seller, any Divesting Entity, or any of their Affiliates who is not a Transferred Employee;

(ix) all other Liabilities (including Environmental Liabilities but excluding Liabilities related to Taxes, which shall be governed by Section 2.5(x)) arising out of or relating to the Business or the Purchased Assets, including the use, ownership, possession, operation, sale or lease of the Purchased Assets, to the extent such Liabilities relate to the period prior to Closing, other than the Assumed Liabilities set out in Section 2.4(i) to Section 2.4(v) and Section 2.4(vii); and

(x) all Liabilities for Taxes arising out of or relating to the ownership of the Business or the Purchased Assets in any taxable period, or a portion thereof, ending on or prior to the Closing Date.

Section 2.6 Purchase Price . In consideration of the sale and transfer of the Purchased Assets, Products Purchaser and Inventory Purchaser agree to pay to Seller amounts determined in accordance with Section 2.8, representing an aggregate amount of Three Hundred and Forty-Five million dollars ($345,000,000) (the " Purchase Price "), exclusive of any Transfer Taxes, and to assume, satisfy and discharge all Assumed Liabilities. The Purchase Price shall be paid in immediately available funds by wire transfer, in accordance with written instructions given by Seller to Purchasers not less than two (2) Business Days prior to the Closing Date. The Purchase Price shall be subject to the adjustment provisions of Section 2.7 and shall be allocated as described in Section 2.8.

Section 2.7 Purchase Price Adjustment . (a) Within ninety (90) days after the Closing Date, Seller shall deliver to Inventory Purchaser an unaudited statement of its good faith estimate of the Inventories as of the Closing Date, determined in accordance with GAAP and the agreed price per unit set forth on Schedule 2.1(b) (the " Inventories Statement "). For purposes of determining the Inventories Statement only, any Inventory that is determined by Seller or Inventory Purchaser to be Damaged Inventory shall be disregarded; provided , however , that Inventory Purchaser shall notify Seller promptly in writing, but in no event later than forty-five (45) days immediately following the Closing Date, of any such Inventory that Inventory Purchaser deems to be Damaged Inventory in accordance with this Section 2.7(a) and describing with specificity the SKU and batch, the reason such Inventory is considered Damaged Inventory and such other information as reasonably requested by Seller. The failure by Inventory Purchaser to provide such notice to Seller within such forty-five (45) day period shall constitute Inventory Purchaser's acceptance of all the items reflected on the Inventories Statement as Inventory that is not Damaged Inventory. For purposes of Section 2.7(c), any such notice shall be deemed a

"Disputed Item" and shall be subject to the terms and conditions of Section 2.7(c). Inventory Purchaser and Seller shall provide the other and its representatives (including accountants), and any Person designated by Seller in writing, with reasonable access during regular business hours to the Inventories and such books and records of the Business constituting Purchased Assets as may be reasonably requested to facilitate the preparation of the Inventories Statement and the calculation of Final Inventories.

(b) During the sixty (60) day period following Inventory Purchaser's receipt of the Inventories Statement, Inventory Purchaser shall be permitted to review the working papers of Seller relating to the Inventories Statement. Inventory Purchaser may dispute the amounts or items reflected on or omitted from the Inventories Statement (each, a " Disputed Item ") in good faith; provided , however , that Inventory Purchaser shall notify Seller in writing of each Disputed Item, and specify the amount thereof in dispute and the specific basis therefor, within sixty (60) days after receipt of the Inventories Statement. The failure by Inventory Purchaser to provide a notice of Disputed Items to Seller within such sixty (60) day period shall constitute Inventory Purchaser's acceptance of all the items reflected on the Inventories Statement.

(c) If a notice of Disputed Items shall be timely delivered pursuant to Section 2.7(a) or (b), Seller and Inventory Purchaser shall, during the twenty (20) Business Day period immediately following the date of such delivery (the " Resolution Period "), negotiate to resolve the Disputed Items. If, during the Resolution Period, the Parties are unable to reach agreement, Seller and Inventory Purchaser shall refer all unresolved Disputed Items to an independent, nationally-recognized accounting firm as Seller and Inventory Purchaser shall mutually agree upon in writing (the " Independent Accountant "), or, in the case of a Disputed Item under Section 2.7(a), to the Arbitrator pursuant to Section 10.11. If the parties fail to agree on an Independent Accountant (if applicable) within twenty (20) days after the expiration of the Resolution Period, on the request of any party the American Arbitration Association shall nominate a senior partner in an independent nationally recognized accounting firm to serve as the Independent Accountant. Such referral shall be made within ten (10) Business Days of termination of the Resolution Period, whereupon the Independent Accountant or Arbitrator, as the case may be, shall make a determination with respect to each unresolved Disputed Item within thirty (30) days after such referral, or as soon thereafter as practicable, which determination shall be made in accordance with this Section 2.7; provided , that in making such determination, the Independent Accountant or Arbitrator, as the case may be, shall be limited to choosing between the calculation of Inventories last proposed in writing by Seller during the Resolution Period (or, in the absence of any such proposal, the calculation of Inventories set forth on the Inventories Statement initially delivered by Seller pursuant to this Section 2.7), on the one hand, and the calculation of Inventories last proposed in writing by Purchasers during the Resolution Period (or, in the absence of any such proposal, the calculation of Inventories set forth in Purchasers' dispute notice) on the other hand. The Independent Accountant or Arbitrator, as the case may be, shall deliver to Seller and Inventory Purchaser, within such thirty (30) day period, or as soon thereafter as practicable, a report setting forth its adjustments, if any, to the Inventories Statement and the calculations supporting such adjustments. Such report shall be final and binding on the Parties and non-appealable and conclusive in all respects and may be entered and enforced in any court having jurisdiction. The fees and expenses of the Independent Accountant and/or Arbitrator shall be borne by the Party whose calculation of Inventories is not accepted by the Independent Accountant or Arbitrator, as the case may be, which fees and expenses shall be paid (taking into account any prior payments) at the time the payment contemplated by Section 2.7(d) is made. For purposes of clarity, such costs do not include any adjustments determined by the Independent Accountant or Arbitrator hereunder. As used herein, " Final Inventories " shall mean (i) if no notice of Disputed Items is delivered by Inventory Purchaser within the periods provided in Sections 2.7(a) or (b), Inventories as shown on the Inventories Statement as prepared by Seller or (ii) if such a notice of Disputed Items is delivered by Inventory Purchaser, either (x) Inventories as agreed to in writing by Seller and Inventory Purchaser or (y) Inventories as shown in the Independent Accountant's and/or the Arbitrator's calculation delivered pursuant to this Section 2.7(c). The scope of the disputes to be resolved by the Independent Accountant or Arbitrator, as the case may be, shall be limited to the unresolved Disputed Items, and the Independent Accountant or Arbitrator, as the case may be, shall not make any other determination. Any determinations by either of the Independent Accountant or Arbitrator, respectively, and any work or analyses performed by either of the Independent Accountant or Arbitrator, respectively, in connection with its resolution of any Dispute under this Section 2.7, shall not be admissible in evidence in any suit, action or proceeding between the Parties, other than to the extent necessary to enforce payment obligations under this Section 2.7(c).

(d) If the Final Inventories are less than ***, then Seller shall, within ten (10) days after the determination of the Final Inventories, pay to Inventory Purchaser, by wire transfer of immediately available funds in accordance with written instructions given to Seller by Inventory Purchaser, the amount of such shortfall. If the Final Inventories are greater than ***, then Purchasers shall, within ten (10) days after the determination of the Final Inventories, pay to Seller, by wire transfer of immediately available funds in accordance with written instructions given by Seller to Inventory Purchaser, the amount of such excess.

(e) Notwithstanding the foregoing, in the event that, during the sixty (60) day period following Inventory Purchaser's receipt of the Inventories Statement, Inventory Purchaser discovers any latent defect in respect of any Inventories, Inventory Purchaser may submit a Disputed Item in respect of such latent defect to Seller subject to the process set forth in Section 2.7(b) and Section 2.7(c), and be entitled to an adjustment to amounts previously paid consistent with the provisions set forth in Section 2.7(d), in each case mutatis mutandis .

(f) All payments made pursuant to this Section 2.7 shall be treated for Tax purposes as an adjustment to the Purchase Price, unless otherwise required by applicable Law.

Section 2.8 Allocation of Purchase Price . (a) The Parties agree that the Purchase Price and Assumed Liabilities shall be allocated among the Purchased Assets on or after the Closing Date in the manner specified in Schedule 2.8(a) , as mutually agreed to by the Parties (the " Allocation "). Such Allocation shall be made in accordance with the principles of section 1060 of the Code. In the event of any adjustment in the Purchase Price pursuant to Section 2.7, such adjustment shall be allocated by the Parties among the Purchased Assets in accordance with the principles of section 1060 of the Code, Schedule 2.8(a) and as mutually agreed to by the Parties, and such revised allocation shall be the Allocation. The Parties each agree to (i) be bound by the Allocation, (ii) act in accordance with the Allocation in the preparation of financial statements and filing of all Tax Returns (including filing Form 8594 with its federal income Tax Return for the taxable year that includes the Closing Date) and (iii) take no position inconsistent with the Allocation for all Tax purposes.

(b) In the event that any Taxing Authority disputes the Allocation, Seller, Inventory Purchaser or Products Purchaser, as the case may be, shall promptly notify the other Party in writing of the nature of such dispute.

Section 2.9 Taxes . (a) All Transfer Taxes incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by Purchasers. Purchasers and Seller shall cooperate in timely making all Tax Returns as may be required to comply with the provisions of such Transfer Tax laws.

(b) All personal property Taxes and assessments on the Purchased Assets for any taxable period commencing prior to the Closing Date and ending after the Closing Date shall be prorated on a per diem basis between Purchasers and Seller as of the Closing Date. The amount of all such prorations payable by the Party that is not required to pay such Tax under applicable Law shall be paid to the Party required to pay such Tax under applicable Law on the Closing Date and such amount shall be remitted to the applicable Taxing Authority as soon as practicable thereafter; provided , however , that final payments with respect to prorations that are not able to be calculated as of the Closing Date shall be calculated and paid as soon as practicable after the Closing Date.

(c) Each Party shall cooperate and otherwise take commercially reasonable efforts to obtain any exemptions for or refunds of such Transfer Taxes or property Taxes and to minimize any such Transfer Taxes or property Taxes.

Section 2.10 *** . During the period from the date hereof through the date that is *** after the Closing Date, Purchasers shall enter into negotiations with the Seller for a transaction or transactions involving the acquisition by the Purchasers of assets substantially similar to the Purchased Assets relating to the business of developing, commercializing, manufacturing, packaging, marketing, distributing and selling the Products in *** and/or ***. Seller shall provide such diligence information as is reasonably requested by Purchaser and the Parties shall negotiate in good faith with each other with a goal, but without any obligation, of entering into a definitive agreement prior to the end of such period. During the period from the date hereof through the date that is *** after the Closing Date, Seller shall not negotiate with or otherwise discuss with another Person any acquisition, exclusive license or other similar arrangement for the Products in ***or ***. Such exclusivity period may be extended on mutual agreement of the Parties.

Section 2.11 Risk of Loss . Prior to the Closing, any loss or damage to the Purchased Assets from fire, casualty or otherwise shall be the sole responsibility of Seller. Thereafter, any such loss or damage shall be the sole responsibility of Purchasers.

Section 2.12 Transferred Domain Names . Notwithstanding any other term or condition set forth in this Agreement to the contrary, at the Closing, Seller shall, and shall cause the Divesting Entities to, sell, convey, assign and transfer to Purchaser "as is" and "where is", and Purchaser shall purchase, acquire and accept from Seller and such Divesting Entities any right, title and interest that Seller and such Divesting Entities have in, to and under the Transferred Domain Names set forth on Schedule 1.1(e) in the Territory as of the Closing. Seller and the Divesting Entities shall maintain the Transferred Domain Names after the Closing until the transfer of the Transferred Domain Names is effective, provided that such period shall not exceed ***. Seller shall use its commercially reasonable efforts to obtain, or cause the Divesting Entities to obtain, the consent of any other Person to the extent necessary to allow Purchaser to sell and transfer any of the Transferred Domain Names. Purchaser agrees that no representation, warranty or covenant of Seller contained herein shall be breached or deemed breached, and no condition to Purchaser's obligations to close the transactions contemplated by this Agreement shall be deemed not satisfied, solely as a result of (i) the failure to obtain any such consent or (ii) any lawsuit, action, claim, proceeding or investigation commenced or threatened by or on behalf of any Person to the extent arising out of or relating to the failure to obtain any such consent. Notwithstanding the above, Seller shall, and shall cause the Divesting Entities to, provide reasonable assistance to the Purchasers, on request, to effect the assignment or transfer of such Transferred Domain Names, including by making any necessary filings with the applicable Governmental Authorities.

ARTICLE III

CLOSING

Section 3.1 Closing . (a) The Closing shall take place at 10:00 a.m., New York City time on the third (3) Business Day after the satisfaction or waiver of the conditions precedent to Closing specified in Article IV at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New York or at such time and place as the Parties may mutually agree in writing. The date on which the Closing occurs is referred to as the " Closing Date ." Notwithstanding the foregoing, the Closing shall be deemed to occur and be effective as of the close of business in the United States on the Closing Date.

(b) At the Closing, Seller shall deliver, or cause to be delivered, to Purchasers (i) physical possession of the Inventories at the location of such Inventories at the Closing and (ii) the instruments and documents set forth on Exhibit C, each such instrument and document in a form reasonably acceptable to Purchasers.

(c) At the Closing, Purchasers shall deliver, or cause to be delivered, to Seller (i) immediately available funds in the amount of the Purchase Price, by wire transfer pursuant to Section 2.6, and (ii) the instruments and documents set forth on Exhibit D, each such instrument and document in a form reasonably acceptable to Seller.

ARTICLE IV

CONDITIONS TO CLOSING

Section 4.1 Conditions to the Obligations of Purchasers and Seller . The respective obligations of each of the Parties to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of the following conditions precedent:

(i) There shall not (i) be in effect any applicable Law that makes illegal or enjoins or prevents in any respect the consummation of the transactions contemplated by this Agreement or (ii) have been commenced and be continuing any action or proceeding by any Governmental Authority of competent jurisdiction that seeks to make illegal, enjoin or prevent in any respect the transactions contemplated by this Agreement.

(ii) All material Governmental Authorizations necessary for the consummation of the transactions contemplated hereby or by any other related agreements shall have been obtained, or the

applicable waiting periods (and any extension thereof) shall have expired, with respect to the consummation of the transactions contemplated hereby pursuant to applicable Competition Laws. Seller and Purchasers shall have received all Governmental Authorizations required to be listed on Schedules 5.4 and 6.4 and no such Governmental Authorizations shall have been revoked.

Section 4.2 Conditions to the Obligations of Purchasers . The obligation of Purchasers to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of the following additional conditions precedent:

(i) Seller shall have performed and complied in all material respects its agreements and obligations contained in this Agreement required to be performed by it at or before the Closing. The representations and warranties of Seller shall be true and correct as of the Closing, as if made as of the Closing (except for those representations and warranties that address matters as of a particular date, which shall be true in all material respects only as of such date), except for breaches of such representations and warranties (without giving effect to any limitation as to "materiality," "material adverse effect" or " Material Adverse Effect " set forth therein, but giving effect to any dollar threshold specified therein) that have not had and would not reasonably be expected to have a Material Adverse Effect; provided , that the Fundamental Reps made by Seller shall be true and correct in all respects as of the Closing Date, as though made on and as of the Closing Date.

(ii) Purchasers shall have received a certificate of Seller, dated the Closing Date and signed by a senior officer of Seller, certifying as to the fulfillment of the conditions set forth in Section 4.2(i).

(iii) Seller shall have made, or caused to be made, delivery to Purchasers of all other instruments and documents set forth on Exhibit C (other than the Transition Services Agreement, OTC Switch Agreement and the Supply Agreement, which may be executed by the Parties but shall not be deemed to be conditions precedent to Closing).

(iv) The consents of the counterparties to the agreements set forth on Schedule 4.2(iv) shall have been obtained for the benefit of Purchasers.

Section 4.3 Conditions to the Obligations of Seller . The obligation of Seller to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction of the following additional conditions precedent:

(i) Purchasers shall have performed in all material respects their agreements and obligations contained in this Agreement required to be performed by one or both of them at or before the Closing. The representations and warranties of Purchasers shall be true and correct as of the Closing, as if made as of the Closing (except for those representations and warranties that address matters as of a particular date, which shall be true in all material respects only as of such date), except for breaches of such representations and warranties (without giving effect to any limitation as to "materiality," "material adverse effect" or " Purchaser Material Adverse Effect " set forth therein, but giving effect to any dollar threshold specified therein) that have not had and would not reasonably be expected to have a Purchaser Material Adverse Effect; provided , that the Fundamental Reps made by Purchasers shall be true and correct in all respects as of the Closing Date, as though made on and as of the Closing Date.

(ii) Seller shall have received a certificate from each of the Inventory Purchaser and Products Purchaser, dated the Closing Date and signed by a senior officer of each Purchaser, certifying as to the fulfillment of the conditions set forth in Section 4.3(i).

(iii) Purchasers shall have made, or caused to be made, delivery to Seller of all other instruments and documents set forth on Exhibit D (other than the Transition Services Agreement, OTC Switch Agreement and the Supply Agreement, which may be executed by the Parties but shall not be deemed to be conditions precedent to Closing).

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

As of the date hereof and, with respect to Sections 5.1, 5.2, 5.3, 5.12, 5.16 and 5.21 only, as of the Closing Date, Seller hereby represents and warrants to Purchasers as follows:

Section 5.1 Organization . Seller is a corporation duly organized, validly existing and in good standing under the Laws of the Commonwealth of Pennsylvania. Each Divesting Entity is a corporation duly organized, validly existing and, where applicable, in good standing under the Laws of the jurisdiction of its organization. Each of Seller and the Divesting Entities is duly qualified or licensed to do business and is in good standing in each jurisdiction in which such qualification or licensing is necessary under applicable Law, except where the failure to be so qualified or licensed and to be in good standing would not have a Material Adverse Effect.

Section 5.2 Authority; Binding Effect . (a) Each of Seller and the Divesting Entities has all requisite corporate power and authority to own and operate its properties and assets, to carry on its business as it is now being conducted (including the Business) and to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by Seller of this Agreement and the Ancillary Agreements and the performance by Seller or the Divesting Entities of their obligations hereunder and thereunder have been duly authorized by all requisite corporate action on the part of Seller or the Divesting Entities, as applicable, including any requisite resolution duly adopted and not subsequently rescinded or modified in any way by the board of directors of Seller approving the execution, delivery and performance of this Agreement and all Ancillary Agreements by Seller. No approval of Seller's shareholders is necessary for Seller to execute and deliver this Agreement or any Ancillary Agreements or perform the transactions contemplated hereby or thereby.

(b) This Agreement has been, and on the Closing Date each of the Ancillary Agreements will be, duly executed and delivered by Seller and, assuming the valid execution and delivery by Purchasers, constitutes a legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar Laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law).

Section 5.3 Non-Contravention . The execution, delivery and performance of this Agreement and each of the Ancillary Agreements by Seller and the consummation of the transactions contemplated hereby and thereby do not and will not (i) violate any provision of the certificate of incorporation or bylaws of Seller and the comparable organizational documents of any Divesting Entity, (ii) subject to obtaining the consents referred to in Schedule 5.3 , conflict with, violate or result in the breach of, constitute a default under or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of Seller or any Divesting Entity under, or to a loss of any benefit of the Business to which Seller or any Divesting Entity is entitled under, any agreement, lease of real estate or license of intellectual property to which Seller or any Divesting Entity is a party or to which its properties or assets are subject and which, in each case, relates solely to, or is necessary for the conduct of, the Business, or result in the creation of any Lien (other than Permitted Liens) upon any of the Purchased Assets or (iii) assuming compliance with the matters set forth in Sections 5.4 and 6.4, materially violate or result in a material breach of, or constitute a material default under any applicable Law or other restriction of any Governmental Authority in the Territory to which Seller or any Divesting Entity is subject, except, with respect to clause (ii), for any violations, breaches, conflicts, defaults, losses, Liens, terminations, cancellations or accelerations that would not have a Material Adverse Effect.

Section 5.4 Governmental Authorization . Except as set forth on Schedule 5.4 , the execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated hereby, do not require any consent or approval of, or any notice to or other filing with, any Governmental Authority in the Territory, except for consents, approvals, notices and filings the failure of which to obtain would not be material to the Purchased Assets taken as a whole or to the conduct of the Business.

Section 5.5 Financial Information . The Financial Information has been prepared in good faith from the books and records of Seller and the Divesting Entities and fairly presents, in all material respects, as of the

dates therein specified and for the periods indicated, the net sales and product contribution (as described therein) of the Purchased Assets in accordance with the accounting principles applied by Seller and the Divesting Entities in their ordinary course of business consistent with past practices.

Section 5.6 Absence of Material Changes . Since ***, except as set forth on Schedule 5.6 , the Business has been operated in the ordinary course in a manner consistent with past practice and there has not been:

(i) any Material Adverse Effect;

(ii) any sale, lease, license, abandonment or other disposition by Seller or any Divesting Entity of any material assets used solely in the Business or necessary for the conduct of the Business, except (i) in the ordinary course of business, (ii) to Seller or another Divesting Entity or (iii) in connection with the transactions contemplated hereby;

(iii) any acquisition of any material properties or assets that constitute Purchased Assets, other than (A) in the ordinary course of business consistent with past practice or (B) for Purchased Assets that would not reasonably be expected to result in any material Assumed Liabilities;

(iv) any settlement of any material litigation or material claim or waiver of any material claims or rights of material value in a manner that constitutes an Assumed Liability or otherwise is materially adverse to the Business,

(v) any termination, cancellation, amendment, waiver or modification of any Governmental Authorizations;

(vi) any termination of any material contract, agreement or commitment pertaining to the Purchased Assets, the Products or the Business or amendment or waiver of any material provision of or material modification of any material Assumed Contract;

(vii) any abandonment of any material rights relating to any material intellectual property relating to the Purchased Assets, the Products or the Business;

(viii) any settlement of or compromise of any material Tax liability, change in any material respect any Tax election or Tax method of accounting, any new material Tax election or adoption of any material new Tax method of accounting that would affect the Tax treatment of any Purchased Asset on or after the Closing;

(ix) any material change in the level or value of the Inventories;

(x) any material change in the manner of billing of, or the credit lines made available to, any customers of the Business; or

(xi) any agreement or commitment to take any action described in this Section 5.6.

Section 5.7 No Litigation .

(a) Except as set forth on Schedule 5.7 , as of the date hereof no Legal Proceeding that (i) is material to the Business or the Purchased Assets, taken as a whole, (ii) would enjoin, restrict or prohibit the transfer of all or any part of the Purchased Assets, or the performance by Seller or any of the Divesting Entities, as contemplated by this Agreement or the Ancillary Agreements, or (iii) seeks to impose any material limitation on the ability of Seller or the Divesting Entities to operate the Business or the Purchased Assets as currently conducted, pending against or, to the Knowledge of Seller, threatened in writing against Seller or any Divesting Entity.

(b) There is no Governmental Order outstanding against Seller or any of the Divesting Entities, the Purchased Assets or the Business, that is material to the Business, taken as a whole, or imposes any material limitation on the ability of Seller or the Divesting Entities to operate the Business or the Purchased Assets as currently conducted.

Section 5.8 Compliance with Laws . Except with respect to Product Registrations (which are the subject of Section 5.9) and except as to matters set forth in Schedule 5.8 :

(i) Each of Seller and the Divesting Entities is in material compliance with all Laws applicable to the ownership of the Purchased Assets or operation of the Business, including (i) the FDCA, including the rules and regulations promulgated thereunder, (ii) federal laws and regulations governing a health care benefit program, as defined in 18 U.S.C. §24, and related state or local statutes or regulations, (iii) provincial formulary and drug pricing statutes, including the rules and regulations promulgated thereunder, (iv) federal, state or provincial criminal, civil and administrative Laws (including the federal Anti-Kickback Statute (42 U.S.C. §1320a-7(b)), False Claims Act (42 U.S.C. §1320a-7b(a)), Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. §1320d et. seq., and any comparable state, provincial or local Laws), (v) state or provincial licensing, disclosure and reporting requirements and (vi) the Foreign Corrupt Practices Act of 1977, in each case as amended and as applicable; and

(ii) Each of Seller and the Divesting Entities possesses, and is in compliance with, all Governmental Authorizations necessary for the conduct of the Business as it is currently conducted, except where the failure to possess or comply with any such Governmental Authorization would not be material to the operation of the Business.

Section 5.9 Product Registrations . Schedule 5.9 sets forth a list of all Governmental Authorizations granted to Seller or any Divesting Entity by, or applications therefor pending with, any Governmental Authority in the Territory to manufacture, market, import, distribute and/or sell any of the Products in the Territory (the " Product Registrations "), except for those Governmental Authorizations that the failure to possess would not be material to the operation of the Business taken as a whole.

Section 5.10 Material Contracts . Schedule 5.10 sets forth, as of the date of this Agreement, each contract, agreement and commitment to which Seller or any Divesting Entity is a party that relates solely to the Products and that is material to the Business (each, a " Material Assumed Contract "). Seller has made available to Purchasers true and complete copies of all Material Assumed Contracts. Seller has made available to Purchaser a redacted copy of any contract that primarily but not solely relates to the Products (a " Shared Contract "). Except as disclosed in Schedule 5.10 , (i) each Material Assumed Contract is valid and binding on Seller or the Divesting Entity that is a party thereto and, to the Knowledge of Seller, the other party thereto, and is in full force and effect, subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law), (ii) neither Seller nor any Divesting Entity or, to the Knowledge of Seller, any other party thereto is in material breach of, is in material default under, or has delivered a notice of termination of, any Material Assumed Contract, and no event has occurred that, with the giving of notice or lapse of time or both, would constitute a material breach or material default and (iii) no Assumed Contract limits the freedom of the Business to compete in any material line of business or any material geographic area that would be binding on Purchasers following the Closing.

Section 5.11 Intellectual Property . The Intellectual Property Schedules set forth, as of the date of this Agreement, all Transferred Patents, Transferred Trademark Rights (other than the Unscheduled Trademark Rights), Transferred Domain Names and Transferred Intellectual Property Licenses that are owned or held by Seller or any Divesting Entity, or to which Seller or any Divesting Entity is a party, and that, in each case, are necessary to or otherwise used or held for use in the conduct of the Business. Except as set forth on Schedule 5.11 and subject to Section 2.12, (i) the Transferred Intellectual Property is enforceable, valid and subsisting and, to the Knowledge of Seller, there is no objection or claim being asserted or threatened by any Person challenging the scope, ownership, validity or enforceability of any Transferred Intellectual Property, (ii) on the date of this Agreement, one or more of Seller or the Divesting Entities is, and at the Closing, Seller or one or more of the Divesting Entities will be, (A) the sole and exclusive beneficial and, with respect to applications and registrations, record owner of (and with respect to Transferred Intellectual Property that is licensed to it, holder of a valid right or license to use) the Transferred Intellectual Property and (B) to the Knowledge of Seller, the beneficial owner of the Licensed Know-How, (iii) no license of any kind relating to any Transferred Intellectual Property has been granted by Seller or any Divesting Entity (except for non-exclusive licenses to customers and suppliers in the ordinary course of business), and (iv) the Transferred Intellectual

Property is free and clear of any Liens, other than Permitted Liens. Except as set forth on Schedule 5.11 , (i) to the Knowledge of Seller, the Business as currently operated, and the conduct of the Business as conducted since *** (including the use of the Licensed Know-How), does not infringe, misappropriate or otherwise violate or conflict with, and has not infringed, misappropriated, or otherwise violated or conflicted with, the intellectual property of any Person and (ii) no claim, action, investigation or proceeding is pending, or, to the Knowledge of Seller, has been threatened (including in the form of offers, invitations to obtain a license or cease-and-desist letters) claiming that the Business as currently operated, or as operated since *** (including the use of the Licensed Know-How), infringes, misappropriates or otherwise violates or conflicts with, or has infringed, misappropriated or otherwise violated or conflicted with, the intellectual property of any Person. To the Knowledge of Seller, no Person is infringing, misappropriating or otherwise violating any Transferred Intellectual Property or Licensed Know-How. Each Transferred Intellectual Property License is valid and binding on Seller or the Divesting Entity that is a party thereto and, to the Knowledge of Seller, the other party thereto, and is in full force and effect, subject to bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law), and neither Seller nor any of the Divesting Entities nor, to the Knowledge of Seller, any other party to any material Transferred Intellectual Property License is in breach thereof or in default thereunder, and no event has occurred that, with the giving of notice or lapse of time or both, would constitute a breach thereof or default thereunder. The Seller, and each Divesting Entity, takes commercially reasonable measures to protect the confidentiality of trade secrets and confidential information material to the conduct of the Business and owned, used or held for use in the conduct of the Business by the Seller or any Divesting Entity, and to the actual Knowledge of Seller (without any inquiry), there has not been any disclosure of any material trade secret or confidential information owned, used or held for use in the conduct of the Business to any Person in a manner that has resulted in the loss of such trade secret or other rights in and to such information. To the Knowledge of Seller, no funding, facilities or personnel of any Governmental Authority were used to develop or create, in whole or in part, any Transferred Intellectual Property. To the Knowledge of Seller, the consummation of the transactions contemplated by this Agreement will not result in the loss or impairment of the Seller's, or any Divesting Entity's, right to own, use or hold for use any of the Licensed Know-How with respect to its use in the conduct of the Business.

Section 5.12 Title to Purchased Assets . (a) Except as set forth on Schedule 5.12 , the Seller and Divesting Entities own, lease or have the legal right to use all of the Purchased Assets. Except as disclosed on Schedule 5.12 , the Seller and Divesting Entities have good title to all the Purchased Assets free and clear of all Liens, except for Permitted Liens.

(b) This Section 5.12 does not relate to Product Registration, intellectual property or regulatory matters, which are the subject of Section 5.9, Section 5.11 and Section 5.20, respectively.

Section 5.13 Product Liability . From *** through the date hereof, no Legal Proceedings related to product liability, including those for consumer fraud and economic loss, have been initiated against Seller or any of the Divesting Entities or their agents and, to the Knowledge of Seller, no such Legal Proceedings have been threatened or filed against Seller or any of the Divesting Entities relating to any of the Products or product candidates developed, tested, manufactured, marketed, distributed or sold by Seller or any of the Divesting Entities.

Section 5.14 Inventory . Schedule 5.14 sets forth Seller's good faith estimate of the amount of Inventories that would constitute Damaged Inventory if, solely for the purposes of this Section 5.14, the Closing Date were deemed to be the date hereof.

Section 5.15 Suppliers and Customers . Schedule 5.15 sets forth, as of the date hereof (a) the top *** active pharmaceutical ingredient suppliers of the Business (determined based on aggregate purchases for the twelve (12) month period ended December 31, 2010), (b) each supplier who constitutes a sole source of supply to the Business and (c) the top *** customers of the Business (determined based on aggregate sales for the twelve (12) month period ended December 31, 2010). As of the date hereof, no such supplier or customer has canceled, otherwise terminated or, to the Knowledge of Seller, threatened to cancel, otherwise terminate or otherwise materially and adversely modify its relationship with the Business.

Section 5.16 Sufficiency of Assets . Except (w) as set forth on Schedule 5.16 , (x) for the exclusion of the Excluded Assets described in clauses (i)-(xiv) of Section 2.3, (y) for software and information technology systems and (z) for the Shared Contracts and other assets subject to Section 7.13, the Purchased Assets (including the Inventory) and Purchasers' rights under this Agreement and the Ancillary Agreements (assuming receipt of all consents required for the transfer of the Assumed Contracts necessary to conduct the Business) will constitute all of the intellectual property, rights, assets and licenses that are necessary for Purchasers to conduct the Business (assuming Purchasers provide all corporate level services of the type currently provided to the Business by Seller and its Affiliates) immediately following the Closing in a substantially similar manner as the Business was operated by Seller since ***, except in respect of the manufacture and packaging of the Products. In the event this Section 5.16 is breached because Seller or any Divesting Entity has in good faith failed to identify any assets used in the Business, such breach shall be deemed cured if Seller or the applicable Divesting Entity promptly transfers such assets to either Purchaser (or otherwise transfers the benefits and burdens of such assets) at no additional cost or expense to such Purchaser.

Section 5.17 Tax Matters .

(a) Seller and its Affiliates have paid on a timely basis all Taxes relating to the Purchased Assets and the Business that are due and payable, except for such Taxes that are being contested in good faith by appropriate proceedings and are disclosed on Schedule 5.17(a) . There are no Liens with respect to Taxes upon any of the Purchased Assets, other than statutory Liens for current Taxes not yet due and payable.

(b) There are no pending, or to the Knowledge of Seller threatened, audits, investigations, disputes, notices of deficiency, claims or other actions or proceedings for or relating to any Taxes of Seller or any of its Affiliates which could reasonably be expected to result in any Liens on any Purchased Asset or result in any liability of Purchasers or any of their Affiliates for any Tax.

Section 5.18 Employees and Employee Benefit Plans .

(a) Schedule 5.18(a) sets forth a complete list of the material Seller Compensation and Benefit Plans. Seller has made available to Purchasers or their Representatives current and complete copies of all such written Seller Compensation and Benefit Plans, as amended to date.

(b) Seller and its Affiliates have complied in all material respects with all obligations owed to the OD Employees under applicable Laws or under the terms of Seller Compensation and Benefit Plans.

(d) The consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, entitle any Transferred Employee to severance pay under the terms of any Seller Compensation and Benefit Plan.

Section 5.19 Labor Matters . Seller has not been and is not a party to or bound by any labor agreements, collective bargaining agreements, or any other labor-related agreements or arrangements with any labor union or labor organization that pertain to any of the OD Employees. To the actual Knowledge of Seller (without any inquiry), there is no labor union organizing activities with respect to any OD Employees. Seller has not incurred any liability or obligation under the Worker Adjustment and Retraining Notification Act of 1988 or any similar applicable state or local Laws requiring notice to employees in the event of a closing or layoff which remains unsatisfied with respect to any OD Employees.

Section 5.20 Regulatory Matters .

(a) Except as has not been, and would not reasonably be expected to be, materially adverse to the Business, (i) Seller and all Divesting Entities hold all Product Registrations, necessary for the lawful operation of the Business including all applicable authorizations under the Federal Food, Drug and Cosmetic Act of 1938, as amended (the " FDCA "), and the regulations promulgated thereunder, and any other the Food and Drugs Act, as amended (the " Food and Drugs Act "), and any other authorization required by Governmental Authority that is concerned with the quality, identity, strength, purity, safety, efficacy, testing, manufacturing, sale or distribution, sale, import or export, as applicable, of each of the Products in the Territory (any such

Governmental Authority, a " Regulatory Agency ") and (ii) all such Product Registrations are valid and in full force and effect. Since ***, except as set forth in Schedule 5.20(a) , there has not occurred any violation of, default (with or without notice or lapse of time or both) under, or event giving to others any right of termination, amendment or cancellation of, with or without notice or lapse of time or both, of any Product Registration, except as has not had and would not reasonably be expected to be materially adverse to the Business. Seller and each of the Divesting Entities are in compliance in all material respects with the terms of all Product Registrations, and no event has occurred that, to the Knowledge of Seller, would reasonably be expected to result in a penalty under or the revocation, cancellation, non-renewal or adverse modification of any Product Registration, except as has not been and would not reasonably be expected to be materially adverse to the Business.

(b) With respect to the Business, each of Seller and the Divesting Entities are in compliance in all material respects with the terms of the ***.

(c) Neither Seller nor any of the Divesting Entities has received any written information from the FDA which would reasonably be expected to lead to the denial of any application for marketing approval currently pending before the FDA relating to the Business.

(d) Seller and the Divesting Entities, as applicable, have completed and filed all reports, documents, claims, permits and notices required by any Regulatory Agency in order to maintain the Product Registrations, except where failure to file such reports would not have a Material Adverse Effect. To the Knowledge of Seller, all such reports, documents, claims, permits and notices were complete and accurate in all material respects on the date filed (or were corrected in or supplemented by a subsequent filing). With respect to the Business, neither Seller nor any of the Divesting Entities, nor any officer, employee, agent or distributor of Seller or any of the Divesting Entities, has made an untrue statement of a material fact or a fraudulent statement to the FDA failed to disclose a material fact required to be disclosed to the FDA or committed an act, made a statement, or failed to make a statement that, at the time such disclosure was made, would reasonably be expected to provide a basis for the FDA to invoke its policy respecting "Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities," set forth in 56 Fed. Reg. 46191 (September 10, 1991) or for the FDA, or any other Regulatory Agency to invoke any similar policy. With respect to the Business, neither Seller nor any of the Divesting Entities, nor any officer, employee, agent or distributor of Seller or any of the Divesting Entities, has been convicted of any crime or engaged in any conduct for which debarment is mandated by 21 U.S.C. § 335a(a) or any similar Law or authorized by 21 U.S.C. § 335a(b) or any similar Law. With respect to the Business, neither Seller nor any of the Divesting Entities, nor any officer, employee, agent or distributor of Seller or any of the Divesting Entities, has been convicted of any crime or engaged in any conduct for which such Person could be excluded from participating in the federal health care programs under Section 1128 of the Social Security Act of 1935, as amended, or any similar Law or program. No Regulatory Agency has commenced or, to Knowledge of Seller, threatened to initiate any action alleging any violations of any federal, state or local or any payor "fraud and abuse," consumer protection and false claims statutes and regulations or any pricing or rebate reporting requirements or to seek exclusion, whether voluntary or otherwise, of Seller, its employees, and/or Seller's Relevant Affiliates from participation in any federally or state-funded program. Neither Seller nor, to Knowledge of Seller, any employee of Seller or Divesting Entity, has received any written notice to such effect.

(e) Since ***, each of Seller and the Divesting Entities have neither voluntarily nor involuntarily initiated, conducted or issued, or caused to be initiated, conducted or issued, any recall, field alerts, field corrections, market withdrawal or replacement, safety alert, warning, "dear doctor" letter, investigator notice, safety alert, or other notice or action relating to an alleged lack of safety, efficacy or regulatory compliance of any Product. Each of Seller and the Divesting Entities are not aware of any facts which are reasonably likely to cause (i) the recall, market withdrawal or replacement of any Product sold or intended to be sold by Seller or the Divesting Entities, (ii) a change in the marketing classification or a material change in the labeling of any such Products, or (iii) a termination or suspension of the marketing of such Products.

(f) Since ***, neither Seller nor any of the Divesting Entities has received any written notice that any Regulatory Agency has (i) commenced, or threatened to initiate, any action to request the recall of any Product sold or intended to be sold by Seller or the Divesting Entity, (ii) commenced, or threatened to initiate, any action to enjoin manufacture or distribution of any Product sold or intended to be sold by Seller or the Divesting

Entities or (iii) issued any demand letter, finding of deficiency or non-compliance or adverse inspection report in respect of any Product or the Business.

(g) Since ***, except as set forth on Schedule 5.20 , neither Seller nor any of the Divesting Entities has received any warning letters from the FDA or any other Regulatory Agency regarding inappropriate advertising or marketing of a Product or any written notice of any actual or potential violation of law or regulation with respect to any Product or product candidate, except as would not, individually or in the aggregate, reasonably be expected to be materially adverse to the Business.

(h) Since ***, except as set forth on Schedule 5.20 , there have been no audits, inspections, examinations or, to the Knowledge of Seller, investigations of records by a Governmental Authority (other than in respect of Taxes) relating to the Business or the Purchased Assets.

Section 5.21 Brokers . No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Seller or any of the Divesting Entities.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF PURCHASERS

As of the date hereof and, with respect to Sections 6.1, 6.2, 6.3 and 6.7 only, as of the Closing Date, each Purchaser, severally but not jointly represents and warrants to Seller as follows:

Section 6.1 Organization . Products Purchaser is an international society with restricted liability duly organized, validly existing and in good standing under the Laws of Barbados. Inventory Purchaser is a limited liability company duly organized, validly existing and in good standing under the Laws of the State of Delaware.

Section 6.2 Authority; Binding Effect . (a) Each Purchaser has all requisite corporate power and authority to own and operate its respective properties and assets, to carry on its business as it is now being conducted and to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution and delivery by such Purchaser of this Agreement and the Ancillary Agreements and the performance by such Purchaser of its obligations hereunder and thereunder have been duly authorized by all requisite corporate action on the part of such Purchaser, including any requisite resolution duly adopted and not subsequently rescinded or modified in any way by the boards of directors of such Purchaser approving the execution, delivery and performance of this Agreement and all Ancillary Agreements by such Purchaser. No approval of such Purchaser's respective shareholders is necessary for such Purchaser to execute and deliver this Agreement or any Ancillary Agreements or perform the transactions contemplated hereby or thereby.

(b) This Agreement has been, and on the Closing Date each of the Ancillary Agreements will be, duly executed and delivered by such Purchaser and, assuming the valid execution and delivery by Seller, constitutes a legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or similar laws affecting creditors' rights generally or by general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or law).

Section 6.3 Non-Contravention . The execution, delivery and performance of this Agreement and each of the Ancillary Agreements by such Purchaser and the consummation of the transactions contemplated hereby and thereby, do not and will not (i) violate any provision of the certificates of incorporation, bylaws or other organizational documents of such Purchaser, (ii) conflict with, or result in a breach of, constitute a default under or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of such Purchaser or any of its Affiliates under, or to a loss of any benefit to which such Purchaser or any of its Affiliates is entitled under, any agreement, lease of real estate or license of intellectual property to which such Purchaser or any of its Affiliates are a party or to which its properties or assets are subject, or (iii) assuming compliance with the matters set forth in Sections 5.4 and 6.4, violate or result in a breach of or constitute a default under any Law or other restriction of any Governmental Authority to which such Purchaser is subject, except, with respect to clauses (ii) and (iii), for any violations, breaches, defaults,

conflicts, losses, Liens, terminations, cancellations or accelerations that would not, individually or in the aggregate, have a material and adverse effect on the ability of such Purchaser to consummate the transactions contemplated hereby (a " Purchaser Material Adverse Effect ").

Section 6.4 Governmental Authorization . Except as set forth on Schedule 6.4 , the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, do not require any consent or approval of, or any notice to or other filing with, any Governmental Authority, except for consents, approvals, notices and filings the failure of which to obtain or make would not be material.

Section 6.5 Financial Capability . On the Closing Date, the Purchasers, collectively, will have sufficient cash to pay the Purchase Price at the Closing on the terms and conditions contemplated by this Agreement.

Section 6.6 Condition of the Business . (a) Each Purchaser and its Representatives are knowledgeable about the industries in which Seller operates and are experienced in the acquisition and management of similarly situated businesses. Each Purchaser acknowledges and agrees that (i) it is purchasing the Purchased Assets based on the results of its own independent inspections and investigations and the representations and warranties of Seller expressly set forth in this Agreement, and not on any representation or warranty of Seller or any of its Affiliates not expressly set forth in this Agreement or the Ancillary Agreements and (ii) except as otherwise set forth in this Agreement or the Ancillary Agreements, the Purchased Assets are sold "as is, where is" and it accepts the Purchased Assets in the condition they are in and at the place where they are located on the Closing, subject to the terms and conditions hereof. In light of these inspections and investigations and the representations and warranties expressly made to Purchasers by Seller herein, Purchasers are relinquishing any right to any claim based on any representations and warranties other than those expressly set forth in this Agreement, the Ancillary Agreements and the certificates delivered pursuant hereto. Any claims Purchasers may have for breach of representation or warranty shall be based solely on the representations and warranties of Seller or the Divesting Entities expressly set forth in this Agreement, the Ancillary Agreements and the certificates delivered pursuant hereto. ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, AND ALL OTHER WARRANTIES ARISING UNDER THE UNIFORM COMMERCIAL CODE (OR SIMILAR APPLICABLE FOREIGN LAWS), ARE HEREBY WAIVED BY EACH PURCHASER. Further, each Purchaser acknowledges and agrees that, notwithstanding Section 2.1(a)(iii) but subject to Section 7.3(a), it is Purchaser's responsibility to apply for its own Product Registrations to the relevant Governmental Authorities where it is not within the power of Seller or the applicable Divesting Entity to directly transfer the existing Product Registrations (or currently pending applications therefore) directly to such Purchaser.

Section 6.7 Brokers . No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of such Purchaser or any of its Affiliates.

ARTICLE VII

COVENANTS

Section 7.1 Information and Documents . (a) From time to time prior to the Closing, upon reasonable advance notice in writing and to the extent permitted by applicable Law, Seller shall, and shall cause the Divesting Entities to, (x) permit Purchasers and their Representatives to have reasonable access, during normal business hours, to properties, assets, books, records, agreements, documents, data, files and personnel, in each case to the extent relating to the Business, as may reasonably be requested by Purchasers (it being understood that any request for direct access to Seller's computer systems shall be deemed unreasonable); provided , however , that such access shall not unreasonably interfere with Seller's or any Divesting Entity's operation of their respective businesses, including the Business; and provided , further , that Seller may restrict the foregoing access to the extent that (i) in the reasonable judgment of Seller (after consulting with counsel), such access or provision of information would result in a violation of confidentiality obligations to a third party, (ii) disclosure of any such information would result in disclosure of any proprietary information or trade secrets of Seller or any other Person (other than with respect to the Business) or (iii) disclosure of any such information would result in the loss or waiver of any attorney-client privilege; and provided , further , that Seller may redact any material provided under this Section to the extent such material relates to any assets or products other than the

Purchased Assets, the Business and the Products; and (y) furnish Purchasers and Representatives with such reasonable financial and operating data and other information that is available with respect to the Purchased Assets, the Business or sale of the Products (or consent to authorize Purchasers to obtain appropriate records from any Governmental Authority) as Purchasers may from time to time reasonably request, including arranging for interviews and meetings during normal business hours on a Business Day and upon reasonable notice.

(b) All information (including any offering or summary memorandum) received by Purchasers and given by or on behalf of Seller or any of its Affiliates in connection with this Agreement and the transactions contemplated hereby will be held by Purchasers and their Representatives as " Information ," as defined in, and pursuant to the terms of, the Confidentiality Agreement.

(c) Without limiting the foregoing, Seller shall cause the electronic dataroom relating to the Business to remain available to Purchasers at all times until the later of (x) the date on which Seller causes an electronic copy of all of the materials in such dataroom to the extent relating to the Business on compact disc media to be delivered to Purchasers and (y) the Closing Date.

Section 7.2 Conduct of Business . From and after the date hereof and until the Closing, except (i) as set forth on Schedule 7.2 or as otherwise expressly contemplated by this Agreement or (ii) as Purchasers shall otherwise consent in writing (which consent shall not be unreasonably withheld or delayed), Seller agrees that it will conduct the Business, and will cause the Business to be conducted, in the ordinary course of business consistent in all material respects with past practice and in compliance in all material respects with all applicable Laws, pay or perform all material obligations relating to the Business as they become due and owing in the ordinary course of business, and will use, and cause the Divesting Entities to use, commercially reasonable efforts to preserve intact the Business and related relationships with employees, customers, suppliers, regulators and other third parties. From and after the date hereof and to the Closing, except (i) as set forth on Schedule 7.2 or as otherwise expressly contemplated by this Agreement or (ii) as Purchasers shall otherwise consent in writing (which consent shall not be unreasonably withheld), Seller covenants and agrees that, with respect to the Business, it shall not, and shall cause the Divesting Entities not to:

(a): sell, pledge, dispose of, transfer, lease, license, encumber or authorize the sale, pledge, disposition, transfer, lease, license or encumbrance of any assets that are (or would otherwise be) Purchased Assets, other than (i) sales of Inventory in the ordinary course of business consistent in all material respects with past practice or (ii) Permitted Liens;
(b): acquire any material properties or assets that would be Purchased Assets other than in the ordinary course of business consistent with past practice and except for Purchased Assets that would not reasonably be expected to result in the assumption by Purchasers of material Assumed Liabilities at the Closing pursuant to the terms of this Agreement;
(c): settle any litigation or material claim or waive any material claims or rights of material value in a manner that would constitute an Assumed Liability or otherwise be materially adverse to the Business from and after the Closing;
(d): enter into any material new contract, agreement or commitment that would be an Assumed Contract or renew any Assumed Contract (other than renewals of (x) any agreements set forth on Schedule 7.2 , (y) any agreements having a term of less than *** and (z) any agreements that are cancelable upon *** notice without any liability);
(e): terminate, waive any material provision of, or amend or otherwise modify in any material respect any Assumed Contract;
(f): except as may be required pursuant to applicable Law or plans in effect as of the date hereof, enter into, terminate or modify *** as such plans relate to any OD Employees or grant any bonuses, salary or wage increase, or otherwise increase the compensation payable to any OD Employee, in each case other than in the ordinary course of business that are not targeted at OD Employees;

(g): terminate, reassign, transfer or otherwise materially modify the duties of any OD Employee (in each case other than for cause) or, other in the ordinary course of business, hire any individual or transfer any individual so that such individual becomes an OD Employee;
(h): fail to take any material action necessary to protect or maintain the Transferred Intellectual Property or to prosecute any pending applications for Transferred Patents and Transferred Trademark Rights or file any documents or other information or pay any maintenance or other fees related thereto;
(i): dispose of or permit to lapse any rights to any Transferred Intellectual Property;
(j): intentionally disclose or agree to disclose to any Person, other than representatives of the Purchasers or Seller, any material trade secret primarily relating to the Business owned by Seller;
(k): with respect to the Business, (i) make any change in the selling, distribution, advertising, terms of sale or collection practices that is inconsistent with past practice, (ii) enter into any material business practices, programs or long-term allowances not previously used in the ordinary course of business, or (iii) engage in the practice of "channel stuffing" or any similar program, activity or other action (including any rebate, discount, chargeback or refund policy or practice) that in each case is intended or would reasonably be expected to result in a trade buy-in that is materially in excess of normal customer purchasing patterns consistent with past course of dealing with the Business during the twelve (12) months prior to the date hereof;
(l): communicate with any OD Employees regarding the compensation, benefits or other treatment that they will receive from either of the Purchasers in connection with the transactions contemplated hereby, unless any such communications have been reviewed and approved in advance in writing by Purchasers;
(m): terminate, cancel, permit to lapse, amend, waive or modify any Governmental Authorizations, except as required by any Governmental Authority or Regulatory Agency;
(n): make any settlement of or compromise any material Tax liability, change in any material respect any Tax election or Tax method of accounting, make any new material Tax election or adopt any material new Tax method of accounting that would in each case adversely affect the Purchasers' Tax treatment of any Purchased Asset on or after the Closing; or
(o): agree, in writing or otherwise, to take or authorize the taking of any of the foregoing actions.

Section 7.3 Efforts to Consummate; Certain Governmental Matters . (a) Upon the terms and subject to the conditions herein provided (including Section 2.2), each of the Parties agrees to use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary for it to do under applicable Laws to consummate and make effective the transactions contemplated by this Agreement, including all actions and all things necessary for it (i) to comply promptly with all legal requirements that may be imposed on it with respect to this Agreement and the transactions contemplated hereby (which actions shall include furnishing all information required by applicable Law in connection with approvals of or filings with any Governmental Authority in the Territory), (ii) to satisfy the conditions precedent to the obligations of such Party, (iii) to obtain any consent, authorization, order or approval of, or any exemption by, any Governmental Authority in the Territory or other Person required to be obtained or made by either of the Purchasers, Seller or any Divesting Entity in connection with the acquisition of the Purchased Assets, the assumption of Assumed Liabilities or the taking of any other action contemplated by this Agreement, (iv) to prevent any Governmental Order or any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and (v) to effect all registrations, filings and transfers (to the extent transferable) of Governmental Authorizations necessary for the operation of the Business. Without limiting any of the Parties' obligations hereunder, Purchasers shall determine and direct the strategy by which the Parties will seek such required consents, authorizations, orders, approvals or exemptions, provided that prior to taking any strategic decisions Purchasers shall consult with Seller. Without limiting the generality of the undertakings pursuant to this Section 7.3(a), Seller and Purchasers agree to provide or cause to be provided promptly to each Governmental Authority in the Territory with regulatory jurisdiction over

enforcement of any applicable Competition Laws information and documents requested by such Governmental Authority or necessary, proper or advisable to permit consummation of the acquisition of the Purchased Assets in the Territory, the assumption of Assumed Liabilities and the other transactions contemplated by this Agreement.

(b) Subject to appropriate confidentiality protections, each Party will furnish to the other Party such necessary information and reasonable assistance as the other Party may reasonably request in connection with the foregoing and will keep the other Party reasonably informed with respect to any consent, authorization, order or approval of, or exemption by or sought from, any Governmental Authority in connection with this Agreement and the transactions contemplated hereby.

(c) At a date to be mutually agreed upon by the Parties hereto, but no later than *** Business Days after the date of this Agreement, the Parties shall make the filings required of such Party under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

(d) Any notification, filing or submission made pursuant to this Section 7.3 shall be made in a timely manner and in full compliance with applicable Law.

Section 7.4 Employee Matters .

(a) From the date of this Agreement until the Closing, Purchasers shall consult with Seller and obtain Seller's written consent before distributing any communications to any employees of Seller, including employees of OD, whether relating to employee benefits, post-Closing terms of employment or otherwise.

(b) With respect to each employee of Seller listed on Exhibit E hereto (the " OD Employees "), Exhibit E sets forth a description of such employees' respective job title, hire date and current base salary or hourly rate and target bonus. Exhibit E also lists OD Employees on inactive status, including lay-off, short-term disability leave, long-term disability leave, pregnancy and parental leave or other extended absences, or receiving benefits pursuant to workers' compensation legislation, and, if available, the expected date of return of each such OD Employee (each, an " Inactive OD Employee "). Not less than *** days after the date of this Agreement, ***. OD Employees who have accepted such offer of employment no later than the Closing Date and who are employed by the Seller or one of its Affiliates on the Closing Date (or, with respect to Inactive OD Employees, on the date such employee returns to active service), are referred to herein collectively as the " Transferred Employees ."

(i) provide to each Transferred Employee (A) ***; and

(ii) ***.

(d) Without limiting the generality of Section 7.4(c), with respect to each Transferred Employee, terminated during the *** period immediately following the Closing Date, Employer shall provide severance benefits to each Transferred Employee that are ***; provided , that if, during the *** period immediately following the Closing Date, any Transferred Employee should resign in connection with a refusal to accept a relocation prohibited by Section 7.4(c)(ii), then Employer shall be deemed to have terminated such Transferred Employee's employment, and such Transferred Employee shall be entitled to severance benefits under this Section 7.4(d). For purposes of the immediately preceding sentence, in computing any severance or termination benefits to which any Transferred Employee is entitled under this Section 7.4(d), ***.

(e) With respect to each Transferred Employee, effective following the Closing, Employer shall, and shall cause its Affiliates to, ***.

(f) Seller shall retain liability to the Transferred Employees who are sales force employees for any bonus accrued or any discretionary bonus payable to such Transferred Employee in connection with the bonus compensation plan for such Transferred Employee with respect to periods on and prior to the Closing Date and shall pay such amounts in accordance with such plan; provided , that, after Closing, Purchaser shall retain liability to all other Transferred Employees set forth on Exhibit E. Unless otherwise required by Law, in accordance with

the internal policies of Seller or any agreement applicable to any of the Transferred Employees, Seller or its Affiliates shall pay ***.

(g) For purposes of allocating Liabilities under Section 2.4 and Section 2.5, (i) Liabilities with respect to accidental death and dismemberment, disability, life and other similar benefits shall be treated as incurred when the event giving rise to such claim occurred and (ii) Liabilities with respect to medical, dental, and other similar benefits when the services with respect to such claim are rendered; provided, however, any claim above that relates to a continuous period of hospitalization shall be deemed to be incurred at the commencement of such period of hospitalization.

(h) The provisions contained in this Agreement with respect to OD Employees are included for the sole benefit of the respective Parties and shall not create any third-party beneficiary right in any other Person, including any OD Employee (or dependent or beneficiary of any of the foregoing). Nothing herein shall be deemed to create any right to employment or continued employment or to a particular term or condition of employment with either of the Purchasers, Seller or any of their respective Affiliates. Nothing in this Section 7.4 or any other provision of this Agreement (i) shall be construed to establish, amend or modify any benefit or compensation plan, program, agreement or arrangement, or (ii) shall limit the ability of either of the Purchasers or any of its Affiliates to amend, modify or terminate any benefit or compensation plan, program, agreement or arrangement at any time assumed, established, sponsored or maintained by any of them.

(i) From the date of this Agreement until the Closing Date, Seller shall cooperate with Purchasers in providing such information as Purchasers reasonably request in order to comply with their obligations under this Section 7.4 subject to applicable Law.

Section 7.5 Litigation Support . Following the Closing, Purchasers and their Affiliates, on the one hand, and Seller and the Divesting Entities and their respective Affiliates, on the other hand, will reasonably cooperate with each other in the defense or settlement of any Liabilities or lawsuits involving the Purchased Assets, the Products, this Agreement or the Ancillary Agreements, the transactions contemplated hereby or thereby or the Business for which the other Party has responsibility under this Agreement by providing the other Party and such other Party's legal counsel reasonable access to employees, records, documents, data, equipment, facilities, products, parts, prototypes and other information relating primarily to the Business and the Purchased Assets as such other Party may reasonably request, to the extent maintained or under the possession or control of the requested Party; provided , however , that such access shall not unreasonably interfere with Purchasers' or their Affiliates', or Seller or its Affiliates', as the case may be, respective businesses; and provided , further , that either Party may restrict the foregoing access to the extent that (i) such restriction is required by applicable Law, (ii) such access or provision of information would result in a violation of confidentiality obligations to a third party or (iii) disclosure of any such information would result in the loss or waiver of the attorney-client privilege. The requesting Party shall reimburse the other Party for reasonable out-of-pocket expenses paid by the other Party to third parties in performing its obligations under this Section 7.5.

Section 7.6 Trade Notification . Prior to the Closing Date, Seller and Purchasers shall agree in writing on the method and content of the notifications to customers and suppliers of the sale of the Purchased Assets to Purchasers. Purchasers and Seller shall not make any communications or other notices to customers and suppliers of the transactions contemplated herein prior to the date of, or inconsistent with the terms of, such written agreement.

Section 7.7 Use of Seller Names and Excluded Trademarks . (a) Seller grants a non-exclusive right and license to Purchasers for a period of *** to use the Seller Names, the Universal Product Codes (" UPCs ") for each of the Products, the National Drug Codes (" NDCs "), if any, for each of the Products and the Excluded Trademarks to the extent necessary to allow Purchasers and their Affiliates and their designees to market, distribute and sell the Products in the Territory, utilizing the labels and packaging, advertising, marketing, sales and promotional materials, in each case, existing on the Closing Date.

(b) Promptly upon the expiration of the period set forth in Section 7.7(a), Purchasers shall, and shall cause their Affiliates to, destroy and dispose of all labels and all packaging, advertising, marketing, sales and promotional materials, in each case in its possession or subject to its control, bearing any Seller Names, UPCs, NDCs or Excluded Trademarks; provided , however , that the *** period specified in Section 7.7(a) shall not

restrict Purchasers and their Affiliates from selling the Inventories acquired by Inventory Purchaser on the Closing Date or otherwise acquired through any Product purchase order specified in Section 2.1(a)(i) after such period.

(c) In no event shall Purchasers use any Seller Names, UPCs, NDCs or Excluded Trademarks in any manner or for any purpose different from the use of such Seller Names, UPCs, NDCs and Excluded Trademarks by Seller and its Affiliates immediately prior to the Closing Date to package, market, distribute and sell the Products in the Territory.

(d) Notwithstanding the foregoing, the Parties acknowledge that this Agreement does not, and shall not, convey, transfer or assign any right, title or interest in any trademark, name or logo of any third party.

Section 7.8 Further Assurances . From time to time after the Closing, and for no further consideration, each of the Parties shall, and shall cause its Affiliates to, execute, acknowledge and deliver such assignments, transfers, consents, assumptions and other documents and instruments and take such other commercially reasonable actions as may reasonably be requested to more effectively assign, convey or transfer to or vest in Purchasers and their designated Affiliates the Purchased Assets and the Assumed Liabilities contemplated by this Agreement to be transferred or assumed at the Closing (including transferring, at no additional cost to Purchasers, any Purchased Asset contemplated by this Agreement to be transferred to Purchasers at the Closing and that was not so transferred at the Closing); provided , however , that Purchasers shall prepare and deliver for execution any and all necessary assignments with respect to the Transferred Intellectual Property within *** after the Closing Date, which *** period may be extended for an additional reasonable period of time by Purchasers with the consent of Seller (which consent shall not be unreasonably denied). Purchasers agree that, following the Closing, they shall promptly prepare any such additional instruments or documents necessary to assign, convey or transfer the Transferred Intellectual Property. For the avoidance of doubt, Seller and the Divesting Entities shall have no obligation to maintain any of the Transferred Intellectual Property after the Closing (except to the extent that any Transferred Intellectual Property is not transferred to Purchasers on the Closing Date).

Section 7.9 Assistance in Collecting Certain Amounts . (a) For a period of *** from and after the Closing Date, Purchasers shall cooperate with Seller and its Affiliates, and Seller shall consult with Purchasers in connection with Seller's and each Divesting Entity's collection of all Accounts Receivables related to the Products, including those that are not evidenced by instruments or invoices, existing as of the Closing and relating to the Products shipped or sold by Seller or such Divesting Entity prior to the Closing, and Purchasers shall remit promptly to Seller any payments or other sums received by Purchasers that relate to any sales, shipments or other matters occurring prior to the Closing or that otherwise are Excluded Assets or property for the account of Seller or any Divesting Entity. If, after the Closing, Seller or any Divesting Entity wishes to make a claim or otherwise take action with respect to any Excluded Asset or any Retained Liability, Purchaser shall, and shall cause its Affiliates to, assist, cooperate and consult with Seller or any such Divesting Entity with respect to such actions; provided , that (i) Seller or any such Divesting Entity shall reimburse Purchaser for all reasonable out of pocket expenses incurred by Purchaser and its Affiliates in complying with this Section 7.9 and (ii) Purchasers shall not be required to take any action that is reasonably likely to materially adversely impact their relationship with their customers or suppliers, including those suppliers and customers acquired as a result of this transaction. Seller shall, and shall cause the Divesting Entities to, remit promptly to Purchaser any payments or other sums received by Seller or any Divesting Entity after the Closing and relating to the Products sold after the Closing; provided , that Purchaser shall promptly reimburse Seller for all reasonable out of pocket expenses incurred by Seller and each Divesting Entity in complying with its obligations under this Section 7.9.

(b) Payments Under Assumed Contracts

(i) If, prior to the Closing Date, Seller (or any of the Divesting Entities) receives any deposit or payment relating to obligations under any Assumed Contracts to be satisfied by Purchasers after the Closing, then Seller (or the Divesting Entity) shall pay to the applicable Purchaser, within twenty (20) Business Days from the Closing Date, an amount equal to the portion of such deposit or payment in advance that relates to the obligations to be performed by such Purchaser.

(ii) If, prior to the Closing Date, Seller (or any of the Divesting Entities) received any good or service which is billed to Purchasers, upon request and the presentation of reasonable supporting documentation, Seller shall reimburse the applicable Purchaser for the amount of such payment within thirty (30) days from the date of such request.

(iii) If, prior to the Closing Date, Seller (or any of the Divesting Entities) makes any deposit or payment in respect of supplies of goods not received prior to Closing under any Assumed Contract, the applicable Purchaser shall reimburse to Seller (or the Divesting Entity), within twenty (20) Business Days from the Closing Date, an amount equal to the portion of such deposit or payment that relates to the goods to be received after the Closing Date by Purchaser.

Section 7.10 Bulk Transfer Laws . Purchasers acknowledge that Seller and its Affiliates have not taken, and do not intend to take, any action required to comply with any applicable bulk sale or bulk transfer laws or similar laws and hereby waives compliance therewith.

Section 7.11 Non-Competition . Except in accordance with the terms and conditions of Section 2.2(b) and the Ancillary Agreements and subject to applicable Law, for a period of *** after the Closing Date, Seller shall not, and shall cause its subsidiaries and the Divesting Entities not to, *** (collectively, " Competing Business "); provided , however , that ***. Seller acknowledges that (i) the agreements in this Section 7.11 (the " Restrictive Covenants ") impose a reasonable restraint in light of the activities and business of Seller and its Affiliates on the date of this Agreement and the current business of Purchasers, Seller and their respective Affiliates; and (ii) monetary damages would not be an adequate remedy for any breach of the Restrictive Covenants and that Purchasers shall therefore be entitled to specific performance of the Restrictive Covenants in accordance with Section 10.12 (but subject to Section 10.11) to prevent any violations thereof.

Section 7.12 Insurance . From the Closing Date, the coverage under all insurance policies related to the Purchased Assets and the Business shall continue in force only for the benefit of the Seller and its Affiliates and not for the benefit of Purchasers or any of their Representatives. Purchasers agree to arrange for their own insurance policies (which may include self-insurance) with respect to the Purchased Assets and the Business covering the period after the Closing Date and agrees not to seek, through any means, to benefit from any insurance policies of Seller or any of its Affiliates that may provide coverage for claims relating in any way to the Purchased Assets or the Business.

Section 7.13 Licenses and Additional Rights .

(a) Effective as of the Closing, Seller hereby grants to Purchasers a perpetual, irrevocable, transferable, sublicensable, non-exclusive, paid-up, royalty-free right and license to use the Licensed Know-How of Seller, and any Divesting Entity, for the manufacture, distribution, marketing, use and sale of the Products in the Territory.

(b) To the extent that Seller or any Divesting Entity has any right, asset or other property, whether tangible or intangible, but excluding any contract, license, agreement or commitment, that is necessary in the conduct of the Business, and would be a Purchased Asset hereunder but for the fact such right, asset or other property does not relate solely to the Business, Products or the Purchased Assets, Seller shall, and shall cause each other applicable Divesting Entity to, use commercially reasonable efforts to (i) extract and transfer to the Purchasers, or assign to Purchasers, at the Closing as Purchased Assets all portions of such right, asset or other property that relate solely to the Business, Products or to the Purchased Assets, and (ii) if Seller and any applicable other Divesting Entity are unable to so extract or assign such right, asset or other property, and the acquisition thereof by Purchaser is necessary to conduct the Business following the Closing in a manner consistent with past practices, Seller and Purchasers shall, and Seller shall cause each other applicable Divesting Entity to, use commercially reasonable efforts to enter into an arrangement under which Purchasers are provided the benefits of such right, asset or other property and assume any related obligations; provided , however , that neither Purchasers nor any of their respective Affiliates shall have any right under any such arrangement to directly access any databases or information technology systems of Seller or any Divesting Entity.

(c) At Purchasers' request and sole cost and expense, Seller and Purchasers shall, and Seller shall cause the Divesting Entities to, use commercially reasonable efforts to cause the Shared Contracts designated in

writing by Purchasers prior to the Closing (the " Designated Shared Contracts ") to be replaced, effective as of the Closing Date or as promptly as practicable thereafter, with separate contracts that (a) have *** as the Designated Shared Contracts being replaced except that they apply only to the Business or only to Seller's other businesses and (b) provide that Purchaser shall receive such rights and assume such obligations as are substantially similar to those rights and obligations utilized in the Business under the Designated Shared Contract. The parties hereto shall cooperate and provide each other with reasonable assistance in effecting such separation of the Designated Shared Contracts prior to the Closing and for a period of *** after the Closing Date or, if earlier, until Seller and Purchasers reasonably determine in good faith that such separation cannot be obtained (with no obligation on the part of any party to pay any costs or fees with respect to such assistance). Prior to the Closing, Seller shall have the principal right at its option to negotiate the separation of Designated Shared Contracts with its third party vendors, subject to Purchasers' rights to participate in such negotiations and to approve in writing the replacement contract to which Purchaser will be a party after separation to the extent such contract does not meet the requirements in clauses (a) and (b) of the first sentence of this Section 7.13(c), such approval not to be unreasonably withheld, conditioned or delayed.

Section 7.14 Supplemental Disclosure .

(a) From the date hereof until the earlier to occur of the Closing Date or the termination of this Agreement pursuant to Article IX, Seller shall provide prompt written notice (each, a " Seller Notice ") to Purchasers of (i) the failure of any of the representations and warranties set forth in Article V to be true and correct, (ii) the occurrence or non-occurrence of any event that would reasonably be expected to result in a Material Adverse Effect, (iii) the cancellation or other termination by any supplier or customer listed on Schedule 5.15 of its relationship with the Business or (iv) other events or conditions, that in the cases of clauses (i), (ii) or (iv) would reasonably be expected to result in the conditions set forth in Article IV not being satisfied on or prior to the Outside Date.

(b) In the event Seller delivers a notice to Purchasers that (i) identifies any matter, event or fact which first arises after the date hereof and prior to Closing (a " Subsequent Event "), and (ii) contains an express affirmative statement by Seller that Purchasers have the right to terminate this Agreement pursuant to Section 9.1(iii) as a result of the conditions precedent set forth in Section 4.2(i) not being fulfilled (each such written notification, a " Termination Right Notice "), such Termination Right Notice shall also be accompanied by a supplement to the Schedules specifying such change or changes as are necessary to reflect the Subsequent Event (a " Disclosure Supplement "); provided , however that Seller shall not be permitted to deliver to Purchasers any Termination Right Notice and Disclosure Supplement less than five (5) Business Days prior to the Closing.

(c) Any notification of matters, facts or events delivered in any Seller notice pursuant to this Section 7.14 that do not rise to the level to permit Purchasers to terminate this Agreement pursuant to Section 9.1(iii) shall not permit the delivery of a Disclosure Supplement by Seller and shall not limit otherwise existing indemnification rights of the Purchaser Indemnified Parties.

(d) As of the Closing, if Purchasers shall have waived their rights to terminate this Agreement with respect to a Termination Right Notice and Disclosure Supplement, then the Schedules shall thereupon be deemed to be amended by such Disclosure Supplement and the Purchasers and all Indemnified Parties that are Affiliates of Purchasers shall be deemed to have waived any claim for indemnification pursuant to Article VIII of this Agreement based on any breach of representation or warranty that would have otherwise existed in the absence of such disclosure solely for the portion of any Subsequent Event disclosed in such Disclosure Supplement; provided , that in the event Purchasers following the Closing become aware of any additional material information that demonstrates that such Termination Right Notice and Disclosure Supplement was materially inaccurate as of the time when it was made, then the Schedules shall thereupon be deemed not to have been amended by such Disclosure Supplement and none of the Purchasers nor any Indemnified Parties shall have been deemed to waive any claim for indemnification they may have against Seller for the portion of any such Subsequent Event disclosed in such Disclosure Supplement.

Section 7.15 Transfer of Product Registrations, Related Applications and Dossiers .

(a) On the Closing Date, Seller shall deliver a letter to the FDA transferring the rights to the Product Registrations to Products Purchaser (or its designate) and a letter to the FDA, Division of Drug Marketing, Advertising and Communication, notifying it of the transfer of the Product Registrations to Products Purchaser (or its designate). On the Closing Date, Products Purchaser shall deliver a letter to the FDA assuming responsibility for the Product Registrations from Seller and a letter to the FDA, Division of Drug Marketing, Advertising and Communication, notifying of the transfer of the Product Registrations from Seller to Products Purchaser (or its designate). As soon as practical after the Closing Date and in no event more than sixty (60) days following the Closing Date, Seller shall deliver to Products Purchaser, or its Affiliate as directed by Products Purchaser, in physical and electronic form, the Registration Information.

(b) With respect to any Product that is marketed in the Territory on the basis of an existing Product Registration, the following provisions shall apply:

(i) Seller shall use, and shall cause the Divesting Entities to use, all commercially reasonable efforts to complete the transfer of the corresponding Product Registrations as promptly as practicable after the Closing Date to the benefit of Purchasers or their Affiliates or relevant third party, as proposed and approved in accordance with Section 7.15(a).

(ii) Purchasers or their Affiliates shall use all commercially reasonable efforts to assist Seller in the transfer of such Product Registrations, accept the transfer of the corresponding Product Registrations and formalize with Seller and the Divesting Entities and any applicable Governmental Authority, as promptly as practicable after the Closing Date, all necessary documents. Following the transfer of the Product Registration, Seller shall retain no rights in the Product Registration or Registration Information, including any rights to use or reference.

Section 7.16 Product Returns, Rebates and Chargebacks .

(a) NDC Numbers . Following the Closing Date, subject to Section 7.7, Purchasers shall use their reasonable best efforts to establish their own NDC numbers with respect to the Products as soon as practicable after the Closing. Purchasers shall register with the FDA to obtain their own NDC numbers with respect to the Products, and shall use all reasonable efforts to have in place as soon as reasonably practicable all resources such that sales can be accomplished under the NDC numbers of Purchasers. Thereafter, Purchasers shall use, or cause to be used, their new NDC numbers on all invoices, orders, drug labels and labeling and other communications with all customers and Governmental Authorities.

(b) Product Returns .

(i) Prior to the Closing Date, all returns labeled with Seller's lot numbers shall continue to be sent to Seller. All returns labeled with Purchasers' lot numbers shall be sent to Purchasers and all returns of Transition Lots shall be sent to Purchasers. Returns will be processed in accordance with the then-current returned goods policy of the Party that made the corresponding original sale (which policies shall be provided to the other party prior to the Closing Date).

(ii) From and after the Closing Date, Purchasers shall, or shall cause its distributor to, process and be financially responsible for all returns of Product that is labeled with Purchasers' lot numbers. Seller shall process and be financially responsible for all returns of Product that is labeled with Seller's lot numbers for lots sold prior to the Closing Date. Purchasers shall process and be financially responsible for all returns of Product that is labeled with Seller's lot numbers for lots sold on or following the Closing Date. Purchasers and Seller shall both be financially responsible for returns of the Transition Lots, on a proportional basis equal to the proportion of Product in such Transition Lots sold prior to and on or after the Closing Date (for example, if 40% of the Products in the Transition Lots were sold prior to the Closing Date and the remaining 60% were sold on or after the Closing Date, then Seller shall be responsible for 40% of the costs and expenses associated with the returns of the Transition Lots and Purchasers shall be responsible for the remaining 60% of such costs and expenses).

(iii) For any Product that is returned to one Party but is the processing responsibility of the other Party, the Party receiving the return will destroy, or cause to be destroyed, all such Product and by

the tenth (10th) Business Day of each month, provide the other Party a reporting of such Product returned, including documentation sufficient to determine any appropriate customer reimbursement or credit, which shall be processed according to the then-current returned goods policy of the Party that made the corresponding original sale. Each Party shall destroy, or cause to be destroyed, all such returned Product in a manner consistent with applicable law and the costs of such destruction shall not be reimbursed.

(i) Responsibility for rebates pursuant to any government rebate programs with respect to government claims for Products (" Government Rebates ") shall be allocated between Seller and Purchasers as follows:

(1) Seller shall be responsible for (x) all Government Rebates with respect to Products dispensed to patients on or prior to the Closing Date and (y) all Government Rebates with respect to Products dispensed to patients during the *** period following the Closing Date (such period, the " Government Rebate Tail Period ").

(2) Purchasers shall be responsible for all Government Rebates with respect to Products dispensed to patients beginning on the day following the expiration of the Government Rebate Tail Period.

(3) It is understood and agreed that Purchasers shall have the right to request through Seller any claims level data (dispense date) contained in any report from a state rebate program which shall be used for purposes of determining the date of such claim or for state rebate dispute purposes. In the event Purchasers determine an invoice or claim for a Government Rebate should be disputed, Seller shall cooperate with Purchasers to dispute such claim or invoice.

(4) To the extent that information related to Government Rebates is received with respect to the calendar quarter that includes the Government Rebate Tail Period following the end of such calendar quarter, and such information does not include a dispense date, (A) Seller shall be responsible for the amount of such Government Rebates which shall be equal to the product of (x) a fraction, the numerator of which is the sum of the number of days in such calendar quarter represented by the Government Rebate Tail Period plus the number of days in such calendar quarter prior to, and including, the Closing Date, and the denominator of which is the number of days in such calendar quarter, and (y) the amount of the Government Rebate and (B) Purchasers shall be responsible for the amount of such Government Rebates which shall be equal to the product of (x) one (1) minus the fraction determined pursuant to clause (A) above and (y) the amount of the Government Rebate.

(ii) If either Party (the " Non-Responsible Party ") receives an invoice with respect to a Government Rebate that is the responsibility of the other Party (the " Responsible Party "), such Non-Responsible Party shall promptly provide a copy of such invoice to the Responsible Party and such Responsible Party shall have fifteen (15) days following receipt of such invoice to notify the Non-Responsible Party that it intends to dispute such invoice. If the Responsible Party does not so notify the Non-Responsible Party within such fifteen (15) day period, such Non-Responsible Party shall be permitted to remit payment in respect of such invoice on the Responsible Party's behalf and the Responsible Party shall reimburse the Non-Responsible Party for such payment pursuant to the terms of Section 1.1(c)(iii). If the Responsible Party provides such notice to the Non-Responsible Party within such fifteen (15) day period then the Responsible Party shall promptly initiate a dispute of such invoice at its sole cost and expense and shall be liable for all reasonable costs and expenses (including reasonable attorney fees) of the Non-Responsible Party required to prosecute the disputed invoice. In the event that an invoice is disputed under this Section 1.1(c)(ii) by the Responsible Party, the Non-Responsible Party shall not remit payment in respect of such invoice without the Responsible Party's prior written consent; provided , that any late fees, interest or other penalties that are ultimately owing due to delayed payment on such invoice shall be satisfied by the Responsible Party and provided , further , that notwithstanding the foregoing, the Non-Responsible Party may, in its sole discretion, pay any such disputed invoice without

the consent of the Responsible Party, but in such case the Non-Responsible Party shall be entitled to reimbursement by the Responsible Party only with respect to amounts if any, that are finally owing following settlement of the related dispute.

(iii) Subject to Section 1.1(c)(ii), to the extent that a Non-Responsible Party remits payment in respect of Government Rebates which are payable by the Responsible Party, the Responsible Party shall reimburse the other Party on or before the date that is thirty (30) days following receipt of such invoices by such Non-Responsible Party, provided , that such invoices describe in reasonable detail the payments made by such Non-Responsible Party.

(d) Commercial Rebates .

(i) Responsibility for commercial rebates with respect to Products (" Commercial Rebates ") shall be allocated between Seller and Purchasers as follows:

(1) Seller shall be responsible for (x) all Commercial Rebates with respect to Products dispensed to patients on or prior to the Closing Date and (y) all Commercial Rebates with respect to Products dispensed to patients during the *** period following the Closing Date (such period, the " Commercial Rebate Tail Period ").

(2) Purchasers shall be responsible for all Commercial Rebates with respect to Products dispensed to patients beginning on the date following the expiration of the Commercial Rebate Tail Period.

(3) To the extent that information related to Commercial Rebates is received with respect to the calendar quarter that includes the Commercial Rebate Tail Period following the end of such calendar quarter, and such information does not include a dispense date, (A) Seller shall be responsible for the amount of such Commercial Rebates which shall be equal to the product of (x) a fraction, the numerator of which is the sum of the number of days in such calendar quarter represented by the Commercial Rebate Tail Period plus the number of days in such calendar quarter prior to, and including, the Closing Date, and the denominator of which is the number of days in such calendar quarter, and (y) the amount of the Commercial Rebate and (B) Purchasers shall be responsible for the amount of such Commercial Rebates which shall be equal to the product of (x) one (1) minus the fraction determined pursuant to clause (A) above and (y) the amount of the Commercial Rebate.

(ii) If a Non-Responsible Party receives an invoice with respect to a Commercial Rebate that is the responsibility of the Responsible Party, such Non-Responsible Party shall promptly provide a copy of such invoice to the Responsible Party and such Responsible Party shall have fifteen (15) days following receipt of such invoice to notify the Non-Responsible Party that it intends to dispute such invoice. If the Responsible Party does not so notify the Non-Responsible Party within such fifteen (15) day period, such Non-Responsible Party shall be permitted to remit payment in respect of such invoice on the Responsible Party's behalf and the Responsible Party shall reimburse the Non-Responsible Party for such payment pursuant to the terms of Section 7.16(d)(iii). If the Responsible Party provides such notice to the Non-Responsible Party within such 15-day period then the Responsible Party shall promptly initiate a dispute of such invoice at its sole cost and expense and shall be liable for all reasonable costs and expenses (including reasonable attorney fees) of the Non-Responsible Party required to prosecute the disputed invoice. In the event that an invoice is disputed under this Section 7.16(d)(ii) by the Responsible Party, the Non-Responsible Party shall not remit payment in respect of such invoice without the Responsible Party's prior written consent; provided that any late fees, interest or other penalties that are ultimately owing due to delayed payment on such invoice shall be satisfied by the Responsible Party and provided , further , that notwithstanding the foregoing, the Non-Responsible Party may, in its sole discretion, pay any such disputed invoice without the consent of the Responsible Party, but in such case the Non-Responsible Party shall be entitled to reimbursement by the Responsible Party only with respect to amounts if any, that are finally owing following settlement of the related dispute.

(iii) Subject to Section 7.16(d)(ii), to the extent a Non-Responsible Party remits payment in respect of Commercial Rebates which are payable by the Responsible Party, the Responsible Party shall

reimburse the Non-Responsible Party on or before the date that is thirty (30) days following receipt of such invoices by such Non-Responsible Party, provided that such invoices describe in reasonable detail the payments made by such Non-Responsible Party.

(iv) Notwithstanding the foregoing, Purchasers agree that (A) Seller's financial liability for Commercial Rebates shall be limited to those commercial customers with which the Business has a rebate obligation as of the Closing Date, and (B) any payments by Seller with respect to sales after the Closing Date shall be made in accordance with Seller's rebate obligations on the Closing Date with respect to each commercial customer and shall be solely based on the terms and conditions of Seller's agreements with the respective customer, as such terms and conditions existed as of the Closing Date.

(e) Chargeback Claims .

(i) Seller shall be financially and legally responsible for all chargeback claims (" Chargeback Claims ") related to Products sold by the wholesaler or distributor, as evidenced in the invoice date within the Chargeback Claims, prior to the Closing Date and during the *** period following the Closing Date. Purchasers shall process and be financially and legally responsible for all Chargeback Claims related to Products sold on or after the *** following the Closing Date. The date on which Products shall be deemed to have been sold pursuant to the preceding sentence shall be the date on which it was shipped by the applicable wholesaler. Notwithstanding the foregoing, the Parties acknowledge that the VA National Acquisition Center must approve the removal of Products from Seller's Federal Supply Schedule before the responsibility of processing such claims is transferred from Seller to Purchasers. Until such approval is obtained, Seller shall continue to be responsible for processing the Federal Supply Schedule Chargeback Claims on Purchasers' behalf, and Purchasers shall reimburse Seller for same. Purchasers and Seller agree that (A) Seller's financial liability for the Chargeback Claims shall be limited to those commercial customers with which Seller has chargeback obligations as of the Closing Date, and (B) any such chargebacks issued by Seller shall be made in accordance with terms and conditions of Seller's obligations as of the Closing Date with respect to each customer and shall be solely based on the terms and conditions of Seller's agreements with the respective customer, as such terms and conditions existed as of the Closing Date. Seller shall utilize records from third party rebate administrators to demonstrate which chargebacks relate to Products sold by the wholesaler or distributor, as evidenced in the invoice date within the Chargeback Claims, prior to or during the *** period following the Closing Date for purposes of determining Seller's obligation.

(ii) If a Non-Responsible Party receives a Chargeback Claim that is the responsibility of the Responsible Party, such Non-Responsible Party shall promptly provide a copy of such Chargeback Claim to the Responsible Party and such Responsible Party shall have fifteen (15) days following receipt of such Chargeback Claim to notify the Non-Responsible Party that it intends to dispute such invoice. If the Responsible Party does not so notify the Non-Responsible Party within such fifteen (15) day period, such Non-Responsible Party shall be permitted to remit payment in respect of such Chargeback Claim on the Responsible Party's behalf and the Responsible Party shall reimburse the Non-Responsible Party for such payment pursuant to the terms of Section 1.1(e)(iii). If the Responsible Party provides such notice to the Non-Responsible Party within such fifteen (15) day period then the Responsible Party shall promptly initiate a dispute of such Chargeback Claim at its sole cost and expense and shall be liable for all reasonable costs and expenses (including reasonable attorney fees) of the Non-Responsible Party required to prosecute the disputed Chargeback Claim. In the event that a Chargeback Claim is disputed under this Section 1.1(e)(ii) by the Responsible Party, the Non-Responsible Party shall not remit payment in respect of such Chargeback Claim without the Responsible Party's prior written consent; provided , that any late fees, interest or other penalties that are ultimately owing due to delayed payment on such Chargeback Claim shall be satisfied by the Responsible Party and provided , further , that notwithstanding the foregoing, the Non-Responsible Party may, in its sole discretion, pay any such disputed Chargeback Claim without the consent of the Responsible Party, but in such case the Non-Responsible Party shall be entitled to reimbursement by the Responsible Party only with respect to amounts if any, that are finally owing following settlement of the related dispute.

(iii) Subject to Section 1.1(e)(ii), to the extent a Non-Responsible Party processes Chargeback Claims which are the responsibility of Responsible Party, the Responsible Party shall reimburse the Non-Responsible Party on or before the date that is thirty (30) days following receipt of such invoices by such Non-Responsible Party, provided , that such invoices describe in reasonable detail the payments made by such Non-Responsible Party.

(f) Filings . Each Party shall use its *** efforts to file all necessary documentation with Governmental Authorities required as a result of the transactions contemplated by this Agreement (including any necessary documentation with Medicaid, Medicare Part D, PHS 340B, TriCare and VA/DOD).

(g) Tail Periods . To the extent that a wholesale inventory report shows more than six (6) weeks of inventory for the Product, the Government Rebate Tail Period and the Commercial Rebate Tail Period shall be extended by a number of days equal to the number of days in excess of six (6) weeks, as shown on the wholesale inventory report.

Section 7.17 Correspondence . From and after the Closing, (i) Seller shall use commercially reasonable efforts to cause to be delivered to Purchasers any mail or other communications received by Seller or its Affiliates from any Person (including the FDA) intended for the Business (including any mail or other communications in respect of the Products, the subject matter of this Agreement and the Ancillary Agreements) and (ii) Purchasers shall use commercially reasonable efforts to cause to be delivered to Seller any mail or other communications received by Purchasers or their Affiliates intended for Seller or its Affiliates and not related to the Business. The provisions of this Section 7.17 are not intended to, and shall not be deemed to, constitute an authorization by Seller or Purchasers to permit the other to accept service of process on its or their behalf and neither Seller nor Purchasers are or shall be deemed to be the agent of the other for service of process purposes.

Section 7.18 Assistance with Financial Reporting . During the *** period immediately succeeding the date hereof, upon reasonable written notice, the Seller shall, and shall cause each of the Divesting Entities to, furnish or cause to be furnished to the Purchasers, during normal business hours, provided that such access shall not unreasonably disrupt personnel, operations and properties of the Seller and the Divesting Entities, such information, the properties, assets, books, records, agreements, documents, data, files and personnel of, and such other information relating solely to, the Business and assistance relating to the Business, the Seller and the Divesting Entities as is necessary for any reasonable purpose relating the Business, including financial reporting (including with respect to any Report on Form 8-K, business acquisition report or other filing required in connection with this transaction) and accounting matters. In addition to the foregoing, Seller agrees to provide reasonable assistance to Purchasers, on their request, in connection with any required financial reporting in connection with this transaction, including by preparing special purpose audited financial statements of the Business.

Section 7.19 OTC Switch, Supply Agreement and Transition Services Agreement . At the Closing, Seller and Purchasers shall, or shall cause their respective Affiliates to, enter into the OTC Switch Agreement, the Supply Agreement and the Transition Services Agreement. From and after the date hereof and prior to the Closing, each of the Purchasers and Seller shall negotiate in good faith to agree to the terms of (a) the OTC Switch Agreement, (b) the Supply Agreement and (c) the Transition Services Agreement, in each case, which terms shall be mutually agreed by the Parties in good faith.

ARTICLE VIII

INDEMNIFICATION

Section 8.1 Indemnification by Seller . Subject to the provisions of this Article VIII, Seller agrees to defend, indemnify and hold harmless Purchasers and its Affiliates and, if applicable, their respective directors, officers, agents, employees, successors and assigns, from and against any and all penalties, assessments, fines, fees, suits, actions, causes of action, judgments, Taxes, awards and Liabilities, including reasonable attorneys' fees (collectively, the " Losses ") to the extent arising from or relating to (i) any Retained Liability, (ii) any breach by Seller or any Divesting Entity of any of its covenants or agreements contained in this Agreement, (iii) any breach of any warranty or representation of Seller or any Divesting Entity contained in this Agreement; or (iv) any event occurring after the Closing, to the extent relating to the period prior to the Closing, in connection

with the Products, the Business and the Purchased Assets, including the use, ownership, possession, operation, occupancy, sale or lease of any Purchased Assets prior to the Closing (other than Assumed Liabilities).

Section 8.2 Indemnification by Purchasers . Subject to the provisions of this Article VIII, Purchasers agree, severally but not jointly, to defend, indemnify and hold harmless Seller and its Affiliates and, if applicable, their respective directors, officers, agents, employees, successors and assigns, from and against any and all Losses to the extent arising from or relating to (i) any Assumed Liability, (ii) any breach by Purchasers of any of their covenants or agreements contained in this Agreement, (iii) any breach of any warranty or representation of Purchasers contained in this Agreement and (iv) any event occurring after the Closing, to the extent relating to the period after to the Closing, in connection with the Products, the Business and the Purchased Assets, including the use, ownership, possession, operation, occupancy, sale or lease of any Purchased Assets after the Closing (other than Retained Liabilities).

Section 8.3 Notice of Claims . If any of the Persons to be indemnified under this Article VIII (the " Indemnified Party ") has suffered or incurred any Loss, the Indemnified Party shall so notify the Party from whom indemnification is sought (the " Indemnifying Party ") promptly in writing, describing such Loss, the amount or estimated amount thereof, if known or reasonably capable of estimation, and the method of computation of such Loss, all with reasonable particularity and containing a reference to the provisions of this Agreement or any other agreement, instrument or certificate delivered pursuant hereto in respect of which such Loss shall have occurred. If any claim, action, suit or proceeding (in equity or at law) is instituted by a third party with respect to which the Indemnified Party intends to claim any Loss under this Article VIII, the Indemnified Party shall promptly notify (the " Third Party Claim Notice ") the Indemnifying Party of such claim, action, suit or proceeding and offer to tender to the Indemnifying Party the defense of such claim, action, suit or proceeding. A failure by the Indemnified Party to give notice and to offer to tender the defense of any claim, action, suit or proceeding in a timely manner pursuant to this Section 8.3 shall not limit the obligation of the Indemnifying Party under this Article VIII, except (i) to the extent such Indemnifying Party is actually prejudiced thereby or (ii) as provided in Section 8.5.

Section 8.4 Third Party Claims . (a) The Indemnifying Party under this Article VIII shall have the right, but not the obligation, exercisable by written notice to the Indemnified Party within thirty (30) days of receipt of a Third Party Claim Notice from the Indemnified Party with respect thereto, to assume the conduct and control, at the expense of the Indemnifying Party and through counsel of its choosing that is reasonably acceptable to the Indemnified Party, any third party claim, action, suit or proceeding (a " Third Party Claim "), and the Indemnifying Party may compromise or settle the same; provided , that the Indemnifying Party shall give the Indemnified Party advance written notice of any proposed compromise or settlement and shall not, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld), consent to or enter into any compromise or settlement that commits the Indemnified Party, to take, or to forbear to take, any action or does not provide for a full and complete written release by the applicable third party of the Indemnified Party. No Indemnified Party may compromise or settle any Third Party Claim for which it is seeking indemnification hereunder without the consent of the Indemnifying Party (which consent shall not be unreasonably withheld). No Indemnifying Party may consent to the entry of any judgment that does not relate solely to monetary damages arising from any such Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld). The Indemnifying Party shall permit the Indemnified Party to participate in, but not control, the defense of any such Third Party Claim through counsel chosen by the Indemnified Party; provided , that the fees and expenses of such counsel shall be borne by the Indemnified Party. If the Indemnifying Party elects not to control or conduct the defense of a Third Party Claim, the Indemnifying Party nevertheless shall have the right to participate in the defense of any Third Party Claim and, at its own expense, to employ counsel of its own choosing for such purpose.

(b) The Parties shall cooperate in the defense of any Third Party Claim, with such cooperation to include (i) the retention and the provision to the Indemnifying Party of records and information that are reasonably relevant to such Third Party Claim and (ii) reasonable access to employees on a mutually convenient basis for providing additional information and explanation of any material provided hereunder.

Section 8.5 Expiration . If the Closing shall have occurred, all covenants, agreements, warranties and representations made herein or in any certificate or other document delivered pursuant hereto shall survive the

Closing. Notwithstanding the foregoing, all representations, warranties, covenants and agreements made herein or in any certificate or other document delivered pursuant hereto, and all indemnification obligations under Section 8.1(ii), Section 8.1(iii), Section 8.2(ii) and Section 8.2(iii) with respect to any such representations or warranties (other than the Fundamental Reps, the indemnification rights with respect to which shall not be subject to the limitations set forth in this sentence, and the representations and warranties in Section 5.17 (Tax Matters) which shall survive until *** following the expiration of the applicable statute of limitations) or any such covenants or agreements, shall (i) in the case of any such representations or warranties, or any covenants and agreements as to which the last date on which such covenant or agreement is to be performed is on or prior to the Closing Date, terminate and expire on, and no action or proceeding seeking damages or other relief for breach of any thereof or for any misrepresentation or inaccuracy with respect thereto, shall be commenced after the date that is *** after the Closing Date ( provided , that to the extent that any such claims of breaches relate to Purchased Assets that were not transferred to the Purchasers as of the Closing Date, the date of such termination and expiration shall be *** after the date on which the applicable Purchased Assets were transferred to Purchasers), unless prior to such date a claim for indemnification with respect thereto shall have been made, with reasonable specificity, by written notice given in accordance with Section 8.3 and (ii) in the case of any such covenants or agreements as to which the last date on which such covenant or agreement is to be performed after the Closing Date, terminate and expire on, and no action or proceeding seeking damages or other relief for breach of any thereof shall be commenced after, the date occurring *** following the last date on which such covenant or agreement is to be performed, unless prior to such date a claim for indemnification with respect thereto shall have been made, with reasonable specificity, by written notice given in accordance with Section 8.3.

Section 8.6 Certain Limitations . Notwithstanding the other provisions of this Article VIII, Seller shall not have any indemnification obligations for Losses under Section 8.1(iii), (i) for any individual item or series of related items where the Loss relating thereto is less than *** and (ii) in respect of each individual item or series of related items where the Loss relating thereto is equal to or greater than ***, unless the aggregate amount of all such Losses exceeds an amount equal to *** of the Purchase Price (the " Deductible "), in which event Seller shall be required to pay only the amount of such Losses that exceed the Deductible, but only up to a maximum amount equal to *** of the Purchase Price. For purposes of determining the amount of any such Loss (but not for determining the existence of any breach, misrepresentation or inaccuracy with respect to any representation or warranty of Seller or any Divesting Entity), any qualification as to materiality or Material Adverse Effect set forth in any such representation or warranty shall be disregarded.

Section 8.7 Losses Net of Insurance, Etc. The amount of any Loss for which indemnification is provided under Section 8.1 or Section 8.2 shall be net of (i) any amounts actually recovered by the Indemnified Party pursuant to any indemnification by or indemnification agreement with any third party and (ii) any insurance proceeds actually received as an offset against such Loss. If the amount to be netted hereunder from any payment required under Section 8.1 or Section 8.2 is determined after payment by the Indemnifying Party of any amount otherwise required to be paid to an Indemnified Party pursuant to this Article VIII, the Indemnified Party shall repay to the Indemnifying Party, promptly after such determination, any amount that the Indemnifying Party would not have had to pay pursuant to this Article VIII had such determination been made at the time of such payment. The Indemnifying Party may require, as a condition to the provision of indemnification hereunder, that the Indemnified Party execute an undertaking consistent with its obligations set forth in this Section 8.7. All payments made pursuant to this Article VIII shall be treated for Tax purposes as an adjustment to the purchase price, unless otherwise required by applicable Law.

Section 8.8 Sole Remedy/Waiver . Subject to Section 10.12, each Party acknowledges and agrees that the remedies provided for in this Agreement shall be its sole and exclusive remedy with respect to the subject matter of this Agreement and the Ancillary Agreements. In furtherance of the foregoing, each of the Parties hereby waives, to the fullest extent permitted by applicable Law, any and all other rights, claims and causes of action (including rights of contributions, if any) known or unknown, foreseen or unforeseen, which exist or may arise in the future, that it may have against Seller or any of its Affiliates, or Purchasers or any of their Affiliates, as the case may be, arising under or based upon any applicable Law, except that nothing herein shall limit the liability of either Party for fraud or willful breach.

Section 8.9 Indemnity Payments . In the event that either Party agrees to or is determined to have an obligation to reimburse the other Party for Losses as provided in this Article VIII, the Indemnifying Party shall promptly pay such amount to the Indemnified Party in U.S. dollars via wire transfer of immediately available funds to the accounts specified in writing by the Indemnified Party.

Section 8.10 No Consequential Damages . NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NO PARTY TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT SHALL BE LIABLE TO OR OTHERWISE RESPONSIBLE TO THE OTHER PARTY OR ANY AFFILIATE OF THE OTHER PARTY FOR LOST REVENUES OR PROFITS OR INCIDENTAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR MULTIPLIED DAMAGES THAT ARISE OUT OF OR RELATE TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT OR THE PERFORMANCE OR BREACH HEREOF OR THEREOF OR ANY LIABILITY RETAINED OR ASSUMED HEREUNDER OR THEREUNDER, EXCEPT TO THE EXTENT THAT SUCH DAMAGES WERE ACTUALLY PAID TO A THIRD PARTY PURSUANT TO A THIRD PARTY CLAIM.

ARTICLE IX

TERMINATION

Section 9.1 Termination . This Agreement may be terminated at any time prior to the Closing:

(i) by written agreement of Purchasers and Seller;

(ii) by either the Purchasers, on the one hand, or Seller, on the other hand, by giving written notice of such termination to the other Party, if the Closing shall not have occurred on or prior to December 23, 2011 (the " Outside Date ") (unless the failure to consummate the Closing by such date shall be due to the failure of the Party seeking to terminate this Agreement to have fulfilled any of its obligations under this Agreement);

(iii) by either Party provided such Party is not then in breach of any of its respective obligations hereunder, if: (A) there has been a material misrepresentation or material breach by the other Party of a representation or warranty contained herein and such material misrepresentation or material breach is incapable of being cured or not cured within thirty (30) days after written notice thereof from such Party detailing the nature of such misrepresentation or breach; or (B) the other Party has committed a material breach of any covenant imposed upon it hereunder and fails to cure such breach within thirty (30) days after written notice thereof from such Party detailing the nature of such breach or such breach is incapable of being cured;

(iv) by either the Purchasers, on the one hand, or Seller, on the other hand, by giving written notice of such termination to the other Party, if any Governmental Authority of competent jurisdiction shall have issued a Governmental Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such Governmental Order or other action shall have become final and non-appealable; provided , that no Party may rely upon this Section 9.1(iv) to terminate this Agreement if such Party shall have failed to use its commercially reasonable efforts to prevent the entry of such Governmental Order or the taking of such other action; or

(v) by Seller, by giving notice of such termination to Purchasers, if the condition in the first sentence of Section 4.1(ii) has become incapable of being fulfilled.

Section 9.2 Effect of Termination . (a) In the event of the termination of this Agreement in accordance with Section 9.1, this Agreement shall thereafter become void and have no effect, and neither Party shall have any liability to the other Party or to such other Party's Affiliates, or their respective Representatives, except for the obligations of the Parties contained in this Section 9.2 and in Sections 7.1(b) ("Information and Documents"), 10.1 ("Notices"), 10.4 ("Entire Agreement"), 10.6 ("Parties in Interest"), 10.7 ("Public Disclosure"), 10.8(b) ("Confidentiality; Return of Information"), 10.9 ("Expenses"), 10.10 ("Governing Law; Jurisdiction; No Jury Trial"), 10.11 ("Arbitration; Mediation") and Article VIII ("Indemnification"), and except that nothing herein will relieve either Party from Liability for any breach of any covenant set forth in this Agreement prior to such termination or for fraud or intentional misconduct.

(b) In the event this Agreement shall be terminated and at such time a Party is in material breach of or default under any term or provision hereof, such termination shall be without prejudice to, and shall not affect, any and all rights to damages that the other Party may have hereunder.

ARTICLE X

MISCELLANEOUS

Section 10.1 Notices . All notices or other communications hereunder shall be deemed to have been duly given and made if in writing and if served by personal delivery upon the party for whom it is intended, delivered by registered or certified mail, return receipt requested, or by a national overnight courier service, or sent by facsimile ( provided , that notice by facsimile is promptly confirmed by telephone confirmation thereof and receipt is confirmed by the sending facsimile machine or a confirmation copy is sent by express courier within one Business Day), to the Person at the address or facsimile number set forth below, or such other address as may be designated in writing hereafter, in the same manner, by such Person:

to Seller and any Divesting Entity:

c/o Johnson & Johnson Consumer Companies, Inc.
199 Grandview Road
Skillman, New Jersey 08558
Phone: 908-874-2038
Fax: 908-874-1920
Attn: Peter Hawley
Executive Director, Business Development

with a copy to:

Johnson & Johnson
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Telephone: (732) 524-6163
Facsimile: (732) 524-1277
Attn: Office of General Counsel

to Purchasers:

Valeant Pharmaceuticals North America LLC
14 Main Street
Madison, New Jersey 07940
Facsimile: (949) 242-2840

and

Valeant International (Barbados) SRL
Welches Christ Church
Barbados, BB17154
Facsimile: (246) 420-1532
Attention: President

with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telephone: (212) 735-3000
Facsimile: (212) 735-2000
Attn: Stephen F. Arcano, Esq. and Marie L. Gibson, Esq.

All notices and other communications under this Agreement shall be deemed to have been received (i) when delivered by hand, if personally delivered, (ii) three (3) Business Days after being delivered by registered or certified mail, return receipt requested, (iii) one (1) Business Day after being delivered to a national overnight courier service or (iv) on the date of receipt, if sent by facsimile, with a telephonic acknowledgment of sending and confirmation of receipt by the sending facsimile machine or with a confirmation copy sent by express courier within one (1) Business Day.

Section 10.2 Amendment; Waiver . Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed (i) in the case of an amendment, by Purchasers and Seller and (ii) in the case of a waiver, by the Party against whom the waiver is to be effective. No failure or delay by either 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.

Section 10.3 Assignment . Neither Party to this Agreement may assign any of its rights or obligations under this Agreement, including by sale of stock, or operation of Law in connection with a merger or sale of substantially all the assets, without the prior written consent of the other Party, except that (i) Seller may, without such consent, assign its rights or obligations to an Affiliate, and (ii) Purchasers may, without such consent, assign its rights to acquire the Purchased Assets hereunder, in whole or in part, to one or more of its Affiliates; provided , however , that no such assignment by either Party shall relieve such Party of any of its obligations hereunder.

Section 10.4 Entire Agreement . This Agreement, together with the Ancillary Agreements, contains the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters, except for (i) the Confidentiality Agreement, which shall remain in full force and effect for the term provided for therein; provided , however , that effective upon the Closing, the obligations of Purchasers and their Affiliates under the Confidentiality Agreement shall terminate (subject to paragraph 16 of the Confidentiality Agreement) with respect to the Purchased Assets, and (ii) any written agreement of the Parties that expressly provides that it is not superseded by this Agreement.

Section 10.5 Fulfillment of Obligations . Any obligation of a Party to the other Party under this Agreement, which obligation is performed, satisfied or fulfilled by an Affiliate of such Party, shall be deemed to have been performed, satisfied or fulfilled by such Party.

Section 10.6 Parties in Interest . This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer upon any Person other than Purchasers, Seller and the Divesting Entities, or their successors or permitted assigns, any rights or remedies under or by reason of this Agreement.

Section 10.7 Public Disclosure . Notwithstanding anything herein to the contrary, each Party hereby agrees with the other Party, except as may be required to comply with the requirements of any applicable Laws or the rules and regulations of each stock exchange upon which the securities of such Party are listed, if any, (in which case such Party shall notify without delay the other Party and provide the other Party with a copy of the contemplated disclosure prior to submission or release, as the case may be, unless notifying is impracticable due to circumstances beyond such Party's control) that no press release or similar public announcement or communication shall, at any time, be made by it or caused to be made by it concerning the execution or performance of this Agreement unless it shall have consulted the other Party in advance with respect thereto and such other Party consents in writing to such release, announcement or communication.

Section 10.8 Confidentiality; Return of Information . (a) Seller shall keep confidential, and shall use reasonable efforts to cause its Representatives to keep confidential, (i) all information that is known by it to be confidential information regarding Purchasers, any of their Affiliates or any of their respective businesses, products, processes or financings, in each case provided to it in connection with this Agreement and the transactions contemplated hereby, and (ii) after the Closing, all confidential information relating to the Purchased Assets, or the Assumed Liabilities, except (A) as required by Law, (B) as necessary to arbitrate, defend or prosecute any indemnification claim or any litigation or dispute, including in connection with any

claim of any Divesting Entity hereunder against Purchasers, or (C) for information that is available to the public on the Closing Date, or thereafter becomes available to the public other than as a result of a breach of this Section 10.8(a), or is furnished to Seller after the Closing by a third party that, to the Knowledge of Seller, is under no obligation of confidentiality to Purchasers with respect to such Information.

(b) If for any reason whatsoever the transactions contemplated by this Agreement are not consummated, (i) Purchasers shall promptly return to Seller all books and records furnished by Seller or any of its Affiliates or their respective Representatives (including all copies, summaries and abstracts, if any, thereof) in accordance with the terms of the Confidentiality Agreement and (ii) Seller shall promptly return to Purchasers all books and records furnished by Purchasers or any of their Affiliates, agents, employees or representatives (including all copies, summaries and abstracts, if any, thereof).

Section 10.9 Expenses . Except as otherwise provided in this Agreement, whether or not the Closing takes place, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.

Section 10.10 Governing Law; Jurisdiction; No Jury Trial . (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to any conflicts of law principles thereof to the extent such principles would permit or require the application of the laws of another jurisdiction.

(b) The Parties consent to the exclusive jurisdiction of the Federal and State courts located in New York City, New York for any action to compel arbitration, in aid of arbitration or to maintain the status quo or prevent irreparable harm prior to the appointment of the Arbitrator, and to the non-exclusive jurisdiction of such courts for enforcement of any arbitral award rendered in accordance with Section 2.7(c) or 10.11 herein. Each of the Parties (i) consents to the jurisdiction of each such court in any such suit, action or proceeding, (ii) waives any objection that it may have to the laying of venue in any such suit, action or proceeding in any such court and (iii) agrees that service of any court paper may be made in such manner as may be provided under applicable Laws or court rules governing service of process. THE PARTIES HERETO HEREBY IRREVOCABLY WAIVE, AND AGREE TO CAUSE THEIR RESPECTIVE AFFILIATES TO WAIVE, THE RIGHT TO TRIAL BY JURY IN ANY SUCH ACTION PERMITTED HEREUNDER.

Section 10.11 Arbitration; Mediation . (a) Subject to Section 2.7(c) herein, any dispute, controversy or claim arising out of or relating to this Agreement or any related agreements (including any Ancillary Agreements), including any such controversy or claim involving an Affiliate of any Party (a " Dispute "), shall first be submitted to the President of the Products Purchaser and a senior business person of each of Purchaser and Seller, each with authority to resolve the Dispute for resolution. If such Persons cannot resolve the Dispute within thirty (30) days of the request to do so, either Party may submit such Dispute to mediation according to the Commercial Mediation Procedures of the American Arbitration Association (" AAA ") (see www.adr.org). Such mediation shall be attended on behalf of each Party for at least one (1) session by a senior business person with authority to resolve the Dispute. Any period of limitations that would otherwise expire between the initiation of a mediation and its conclusion shall be extended until twenty (20) days after the conclusion of the mediation.

(b) Any Dispute that cannot be resolved for any reason by mediation within forty-five (45) days of notice by one Party to the other of the existence of a Dispute (unless the Parties agree in writing to extend that period) shall be finally resolved by arbitration in accordance with the Commercial Arbitration Rules of the AAA (" AAA Rules "; see www.adr.org) and the Federal Arbitration Act, 9 U.S.C. §1 et seq. The arbitration shall be conducted in New York City, New York. If the amount in controversy is less than $3,000,000 (three million dollars) there shall be one arbitrator appointed in accordance with the AAA Rules. If the amount in controversy is equal to or more than $3,000,000 (three million dollars) there shall be three (3) Arbitrators, one appointed by Buyer and one appointed by Seller in accordance with the AAA Rules, and the third appointed by the arbitrators so appointed within twenty (20) days of the appointment of the second arbitrator or in default thereof by the AAA. The arbitrator or arbitrators designated pursuant to this Section 10.11(b) shall be deemed to be the " Arbitrator " hereunder.

(c) The Arbitrator shall follow the ICDR Guidelines for Arbitrators Concerning Exchanges of Information in managing and ruling on requests for discovery. The Arbitrator, by accepting appointment, undertakes to exert her or his best efforts to conduct the process so as to issue an award within eight (8) months of her or his appointment, but failure to meet that timetable shall not affect the validity of the award.

(d) The Arbitrator shall decide the Dispute in accordance with the substantive law of New York. THE ARBITRATOR SHALL NOT AWARD EITHER PARTY NON-COMPENSATORY, INCIDENTAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR MULTIPLIED DAMAGES, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, UNLESS SUCH PARTY WAS REQUIRED TO PAY SUCH TYPE OF DAMAGES TO A THIRD PARTY. The award of the Arbitrator may be entered in any court of competent jurisdiction.

(e) The costs of the arbitration including the fees and expenses of the Arbitrator and reasonable attorneys fees and expenses shall be borne by the non-prevailing Party and awarded by the Arbitrator in the award.

Section 10.12 Specific Performance . The Parties agree that irreparable damage may occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties may be entitled to a temporary injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court specified in Section 10.10(b), or to a permanent injunction from the arbitrators in addition to any other remedy to which they are entitled at law or in equity.

Section 10.13 Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and together shall constitute one and the same agreement and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Party, it being understood that both Parties need not sign the same counterpart.

Section 10.14 Headings . The heading references herein and the table of contents hereto are for convenience purposes only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

Section 10.15 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. If any term or other provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid, illegal or unenforceable, (a) a suitable and equitable provision shall be substituted therefore in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity, illegality or unenforceability, nor shall such invalidity, illegality or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.

Section 10.16 Guarantee . ***

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be executed as of the date first written above.


		JANSSEN PHARMACEUTICALS, INC.
		By:		/s/ JENNIFER L. TAUBERT Name: Jennifer L. Taubert Title: President
		VALEANT INTERNATIONAL (BARBADOS) SRL
		By:		/s/ GRAHAM JACKSON Name: Graham Jackson Title: VP, Commercial & Technical Operations
		VALEANT PHARMACEUTICALS NORTH AMERICA LLC
		By:		/s/ RAJIV DE SILVA Name: Rajiv de Silva Title: President and COO
		Solely with respect to Section 10.16:
		VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
		By:		/s/ RAJIV DE SILVA Name: Rajiv de Silva Title: President and COO

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ASSET PURCHASE AGREEMENT

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Exhibit 10.6

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

DIRECTORS SHARE UNIT PLAN

EFFECTIVE MAY 16, 2011

TABLE OF CONTENTS


ARTICLE 1 PREAMBLE AND DEFINITIONS
1.1	Title	1
1.2	Purpose of the Plan	1
1.3	Definitions	1
1.4	Schedules	2
ARTICLE 2 INTERPRETATION
2.1	Governing Law	2
2.2	Severability	2
2.3	References	2
ARTICLE 3 ELIGIBILITY
3.1	Automatic Participation for Directors	2
3.2	No Additional Rights	2
ARTICLE 4 SHARE UNIT GRANTS AND ACCOUNTS
4.1	Annual Grants and Other Share Unit Grants	3
4.2	Election to Participate	3
4.3	Effect of Notice	3
4.4	Termination or Change to Election	3
4.5	Timing and Recording of Share Units	3
4.6	Calculation of Number of Share Units	4
4.7	Share Unit Account	4
4.8	Dividends	4
4.9	Adjustments	4
4.10	No Price Adjustment	4
ARTICLE 5 REDEMPTION
5.1	Settlement or Redemption	4
5.2	Payment of Redeemed Amount	5
ARTICLE 6 SHAREHOLDER RIGHTS
6.1	No Shareholder Rights	5
ARTICLE 7 ADMINISTRATION
7.1	Unfunded Obligation	6
7.2	Committee to Administer Plan	6
7.3	Amendment and Termination	6
7.4	Costs of Administration	6
7.5	Tax Compliance	6
ARTICLE 8 ASSIGNMENT
8.1	Assignment	6

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

DIRECTORS SHARE UNIT PLAN

ARTICLE 1

PREAMBLE AND DEFINITIONS

1.1 Title.

The Plan herein described shall be called the "Directors Share Unit Plan" and is referred to herein as the "Plan". This Plan is effective May 16, 2011 (the " Effective Date ") and supersedes the Directors' Deferred Share Unit Plan for US Directors and the Directors' Deferred Share Unit Plan for Canadian Directors for Share Units granted after the Effective Date, provided, however, that where necessary to comply with Section 409A of the Code, the terms of the predecessor plan shall apply to deferral elections made relating to compensation paid in respect of 2011 services.

1.2 Purpose of the Plan.

The purpose of the Plan is to promote a greater alignment of interests between the directors of the Corporation who participate in the Plan and the shareholders of the Corporation.

1.3 Definitions.

" Annual Allocation " means such amount as may from time to time be determined by resolution of the Directors of the Corporation.

" Annual Payment Date " has the meaning ascribed thereto in Section 4.1.

" Annual Grants " has the meaning ascribed thereto in Section 4.1.

" Board " means the board of directors of the Corporation.

" Board Retainer " means the cash retainer payable by the Corporation to a Director in a financial year for service on the Board, but excludes other retainers and fees (including, without limitation, any Committee Retainer).

" Code " means the U.S. Internal Revenue Code of 1986, as amended, including any rules and regulations promulgated thereunder and any successor thereto.

" Committee Retainer " means the cash retainer payable by the Corporation to a Director in a financial year for serving on one or more committees of the Board.

" Corporation " means Valeant Pharmaceuticals International, Inc. and any successor corporation whether by amalgamation, merger or otherwise.

" Date of Grant " means the date on which any Share Units granted under the Plan are credited to a Director's Share Unit Account.

" Deferred Share Unit " means a Share Unit entitling a Member to cash equal to the Market Price of one Share determined in accordance with the terms of the Plan.

" Director " means a director of the Corporation other than a director who is a full-time employee of the Corporation.

" Election Notice " has the meaning ascribed thereto in Section 4.2.

" Market Price " shall mean, with respect to Shares, (i) the closing price per Share on the national securities exchange on which the Shares are principally traded (as of the Effective Date, the NYSE) for the last preceding date on which there was a sale of such Shares on such exchange, or (ii) if the Shares are not then listed on a national securities exchange but are then traded in an over-the-counter market, the average of the closing bid and asked prices for the Shares in such over-the-counter market for the last preceding date on which there was a sale of such Shares in such market, or (iii) if the Shares are not then listed on a national securities exchange or

traded in an over-the-counter market, such value as the Corporation, using any reasonable method of valuation, shall determine.

" Member " means a Director who becomes a participant in the Plan in accordance with Section 3.1.

" NYSE " means the New York Stock Exchange.

" Redemption Date " has the meaning ascribed thereto in Section 5.1.

" Restricted Share Unit " means a Share Unit granted under the terms of the Corporation's 2011 Omnibus Incentive Plan, or any successor plan. Each Restricted Share Unit shall entitle the Member to one Share in accordance with the terms of the Plan.

" Shares " means the common shares of the Corporation and such other shares as may be substituted therefor as a result of amendments to the articles of the Corporation, a reorganization of the Corporation or otherwise.

" Share Unit " means Deferred Share Units or Restricted Share Units. A Share Unit shall be designated as a Deferred Share Unit or a Restricted Share Unit at the time of grant.

" Share Unit Account " has the meaning ascribed thereto in Section 4.7.

1.4 Schedules.

Schedule: A — Election Notice
Schedule: B — Redemption Notice

ARTICLE 2

INTERPRETATION

2.1 Governing Law.

The Plan shall be governed and interpreted in accordance with the laws of the Province of Ontario and the federal laws in Canada applicable therein.

2.2 Severability.

If any provision of the Plan or part hereof is determined to be void or unenforceable in whole or in part, such determination shall not affect the validity or enforcement of any other provision or part thereof.

2.3 References.

Headings wherever used herein are for reference purposes only and do not limit or extend the meaning of the provisions herein. In the Plan, references to the singular shall include the plural and vice versa, as the context shall require.

ARTICLE 3

ELIGIBILITY

3.1 Automatic Participation for Directors.

Each Director in office at the effective date of establishment of the Plan shall, without further formality, become a Member in the Plan. Each person who becomes a Director at any time subsequent to the effective date of establishment of the Plan shall thereupon, without further or other formality, become a Member of the Plan.

3.2 No Additional Rights.

Nothing herein contained shall be deemed to give any person the right to be retained as a Director of the Corporation or as an employee of the Corporation.

ARTICLE 4

SHARE UNIT GRANTS AND ACCOUNTS

4.1 Annual Grants and Other Share Unit Grants.

Each year, within three (3) business days following the election or appointment of any Director, (each of which is referred to as an "Annual Payment Date"), such Director shall be credited, without further or other formality, with the respective number of Share Units (the "Annual Grants") as may be determined by dividing the Annual Allocation by the Market Price at the Annual Payment Date in question (rounded down to the nearest whole share). Unless otherwise determined by the Corporation prior to the Date of Grant, the Annual Grant shall be fully vested on the Date of Grant. Unless designated otherwise by the Corporation prior to the Annual Grant, the Annual Grant shall be in the form of Restricted Share Units. In addition to the Annual Grants, a Director may be granted additional Share Units in the discretion of the Corporation, in the amount and at the time that the Corporation so determines and, at the time of such grant, the Corporation shall designate the Share Units as Deferred Share Units or Restricted Share Units.

4.2 Election to Participate.

Each Director shall have, subject to the conditions stated herein, the right to elect in accordance with this Section 4.2, to be credited with Share Units without further or other formality, in addition to the Share Units granted pursuant to Section 4.1, in lieu of all or any part of the Board Retainer and all or any part of any Committee Retainer otherwise payable quarterly to such Director in cash. No such election shall be effective unless and until the Director in question shall have filed a notice of election in the form of Schedule A hereto (the "Election Notice") with the Corporation's Chief Financial Officer. An Election Notice must be filed on or before the last business day of the calendar year ending immediately before the calendar year to which the Board Retainer and/or Committee Retainer relate, except in the case of a newly elected or appointed Director, whose Election Notice is effective for the year in which such Director first becomes a Director if the Election Notice is filed on or before the earlier of (i) thirty days after the date the Director first became a Director, and (ii) the last business day of the calendar year in which the Director first became a Director and shall relate only to the portion of the Board Retainer or Committee Retainer attributable to services following the date of election. Unless otherwise determined by the Corporation, Share Units issued in accordance with this Section 4.2 shall be in the form of Restricted Share Units.

4.3 Effect of Notice.

A duly filed Election Notice shall be binding upon the Director who filed it, and upon the Corporation, unless and until such Director has filed a subsequent Election Notice to terminate or change his or her election and such subsequent Election Notice has become effective in accordance with the rules set forth in Section 4.4.

4.4 Termination or Change to Election.

(a): Each Member is entitled to terminate or change his or her election specified in any Election Notice filed with the Corporation by filing with the Chief Financial Officer of the Corporation a subsequent Election Notice, provided that no Member shall be entitled to file more than one Election Notice in any calendar year unless specifically authorized by resolution of the Directors. A subsequent Election Notice will become effective at the beginning of the calendar year following the calendar year in which the subsequent Election Notice is filed and will apply to compensation earned following such effective date.
(b): For greater certainty a Member who has filed a subsequent Election Notice to terminate an earlier election by the Member may thereafter again elect in accordance with Section 4.2.

4.5 Timing and Recording of Share Units.

(a): Each Member who has filed an Election Notice in accordance with Section 4.2 shall be credited, without further or other formality, with the respective number of Share Units (as hereinafter provided)

in respect of the Board Retainer or Committee Retainer on the date that has been set for the payment of cash in respect of the Board Retainer or Committee Retainer. Provided that a Member serves on the Board at the beginning of any quarter to which such Board Retainer or Committee Retainer relates, the Member shall be entitled to receive Share Units in lieu of the Board Retainer or Committee Retainer, as applicable, at the end of the quarter in which the separation occurs, in accordance with the Director's election and the provisions of this Section 4.5.

(b): Share Units credited to a Member in accordance with any provision of the Plan shall be recorded by the Corporation in the Member's Share Unit Account (as defined below) as soon as reasonably practicable thereafter.

4.6 Calculation of Number of Share Units.

The number of Share Units credited at any particular time with respect to any amount in respect of which a Member shall have elected pursuant to Section 4.2 will be calculated by dividing the amount of payment that the Director would have received on such date in cash had s/he not elected to receive that amount in Share Units by the Market Price on the Date of Grant (rounded down to the nearest whole share).

4.7 Share Unit Account.

A bookkeeping account, to be known as a "Share Unit Account", shall be maintained by the Corporation for each Member, in which shall be recorded all Share Units credited to a Member from time to time.

4.8 Dividends.

Whenever cash dividends are paid on the Shares, additional Share Units will be credited to the Member's Share Unit Account and redeemed in accordance with the terms of Article 5. The number of such additional Share Units will be calculated by dividing (i) the dividends that would have been paid to such Member if the Share Units in the Member's Share Unit Account on the relevant dividend record date had been Shares, by (ii) the closing price of the Shares on the TSX, the NYSE or other stock exchange where the majority of the trading volume and value of the Shares occurs on the date of payment of such dividend, and rounding down to the nearest whole share. If on such date of payment there is not a closing price of the Shares on any such exchange, then the opening price of the Shares on the TSX, the NYSE or other stock exchange where the majority of the trading volume and value of the Shares occurs on the first available date thereafter will be used for purposes of (ii) above.

4.9 Adjustments.

In the event of any stock dividend, stock split, combination or exchange of Shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of the Corporation's assets to shareholders, or any other changes affecting the Shares, such proportionate adjustments shall be made with respect to the number of Share Units outstanding under the Plan to reflect such change or changes. Any adjustments shall be made consistent with the applicable requirements of Section 409A of the Code.

4.10 No Price Adjustment.

For greater certainty, no additional Share Units will be granted to such Member to compensate for a downward fluctuation in the price of the Shares, nor will any other form of benefit be conferred upon, or in respect of, a Member for such purpose.

ARTICLE 5

REDEMPTION

5.1 Settlement or Redemption.

The Restricted Share Units credited to a Member's Share Unit Account shall be settled in Shares and the Deferred Share Units credited to a Member's Share Unit Account shall be redeemed for cash, in each case,

immediately following the earliest to occur of the following events: (i) except as otherwise designated by the Corporation prior to the Date of Grant (which such designation shall be done in accordance with applicable law), with respect to Share Units granted in accordance with Section 4.1, one year following the Member's "separation from service" (within the meaning of such term under Section 409A of the Code or, with respect to Members who are not subject to taxation in the United States, the date on which the Member ceases to serve as a Director and is not at that time an employee or officer of the Corporation or any of its affiliates) from the Corporation; (ii) except as otherwise elected by the Director under the Election Notice, with respect to Share Units granted in accordance with Section 4.2, the Member's separation from service from the Corporation; (iii) for Member's subject to taxation in the United States, the Member's disability (within the meaning of such term under Section 409A of the Code); (iv) the Member's death; or (v) with respect to Restricted Share Units only, on the occurrence of a Change of Control (as defined in the 2011 Omnibus Incentive Plan) (the applicable date of redemption hereinafter referred to as the "Redemption Date"). Notwithstanding the foregoing, with respect to Share Units being settled or redeemed by Members who are not subject to taxation in the United States, to the extent permitted by the Corporation, the Redemption Date shall be determined in accordance with a written notice of redemption in the form of Schedule B hereto filed with the Chief Financial Officer of the Corporation by the Member, specifying: (i) either one or two Redemption Dates; and (ii) the percentage of Share Units held by the Member to be settled/redeemed on each such Redemption Date (which when added together shall equal 100%). Each Redemption Date specified in the notice of redemption shall occur during the period commencing at least five (5) business days following the date on which such notice is filed with the Chief Financial Officer of the Corporation and ending not later than December 15 of the first calendar year commencing after the Member's separation from service. If no notice of redemption has been filed by December 15 of the first calendar year after the Member's separation from service, December 15 of the first calendar year after the Member's separation from service will be deemed to be the Redemption Date for all of the Member's Share Units.

5.2 Payment of Redeemed Amount.

Subject to applicable income tax and other withholdings as required by law, the value of the Deferred Share Units redeemed by or in respect of a Member shall be paid to the Member (or if the Member has died, to his or her estate, as the case may be) in the form of a lump sum cash payment within 30 days following the Redemption Date(s). The total amount cash to be paid to the Member (or if the Member has died, to his or her estate, as the case may be) on redemption, before such withholdings, shall be determined by multiplying the number of Deferred Share Units held by the Member on the Redemption Date by the Market Price on such Redemption Date. Subject to applicable income tax and other withholdings as required by law, Shares shall be delivered to the Member (or if the Member has died, to his or her estate, as the case may be) in respect of each Restricted Share Unit within 30 days following the Redemption Date(s). Notwithstanding anything herein to the contrary, for Share Units held by Members subject to taxation in the United States, Share Units shall be settled or redeemed, as applicable, no later than December 31 ^st of the year in which the Redemption Date occurs (or, if later the 15 ^th day of the third month following the Redemption Date) and, for Share Units held by Members subject to taxation in Canada, Share Units shall be settled or redeemed, as applicable, no later than December 31 ^st of the year following the year in which the Member's separation from service occurs.

ARTICLE 6

SHAREHOLDER RIGHTS

6.1 No Shareholder Rights.

Share Units are not Shares and will not entitle a Member to any shareholder rights, including, without limitation, voting rights, dividend entitlement or rights on liquidation.

ARTICLE 7

ADMINISTRATION

7.1 Unfunded Obligation.

Unless otherwise determined by the Board, the Plan shall remain an unfunded obligation of the Corporation.

7.2 Committee to Administer Plan.

The Plan shall be administered by the Board with the advice of the Compensation Committee of the Board or such other committee of the Board as the Board may, from time to time, determine to be appropriate.

7.3 Amendment and Termination.

The Plan may be amended or terminated at any time by the Board, except as to rights already accrued hereunder by the Members.

7.4 Costs of Administration.

The Corporation will be responsible for all costs relating to the administration of the Plan.

7.5 Tax Compliance

This Plan is intended to comply with applicable tax law and shall be administered in accordance with such law. To the extent that any provision of the Plan would cause the Plan to fail to satisfy applicable tax law, such provision shall be deemed null and void to the extent permitted by applicable law. In the event that a Member is subject to the tax laws of more than one jurisdiction, the more restrictive tax laws shall apply to the extent necessary to avoid violation of all applicable laws.

ARTICLE 8

ASSIGNMENT

8.1 Assignment.

A Share Unit is personal to the Member and is non-assignable. No Share Unit granted hereunder shall be pledged, hypothecated, charged, transferred, assigned or otherwise encumbered or disposed of by the Member, whether voluntarily or by operation of law, otherwise than by testate succession or the laws of descent and distribution, and any attempt to do so will cause such Share Unit to be null and void. During the lifetime of the Member, a Share Unit shall be redeemable only by the Member and, upon the death of a Member, the person to whom the rights shall have passed by testate succession or by the laws of descent and distribution may redeem any Share Units in accordance with the provisions of Article 5.

Schedule A to Directors Share Unit Plan
(the "Plan")

ELECTION NOTICE

Please complete Section 4 (Acknowledgements and Confirmations) and one of the following : Section 1 (Election Notice), Section 2 (Election to Change Participation) or Section 3 (Election to Terminate an Earlier Election), and return a signed and dated copy of this Election Notice to the Chief Financial Officer of Valeant Pharmaceuticals International, Inc. (the "Corporation").

1. ELECTION NOTICE

I hereby elect to participate in the Plan on the following basis, commencing with the first payment of the first calendar year beginning after the date hereof, ⁽¹⁾ unless and until the election is terminated or changed in accordance with a subsequently filed Election Notice, namely, to receive in Share Units % ( please insert applicable percentage ) of the amount otherwise payable to me in cash in respect of my Board Retainer and % ( please insert applicable percentage ) of the amount otherwise payable to me in cash in respect of my Committee Retainer.

2. ELECTION TO CHANGE PARTICIPATION

I hereby elect, notwithstanding any previous election in the form of this Election Notice, to change my election with respect to my participation in the Plan, commencing with the first annual payment of the first calendar year beginning after the date hereof, unless and until the election is terminated or changed in accordance with a subsequently filed Election Notice, namely, so as to receive in Share Units % ( please insert applicable percentage ) of the amount otherwise payable to me in cash in respect of my Board Retainer and % ( please insert applicable percentage ) of the amount otherwise payable to me in cash in respect of my Committee Retainer.

3. ELECTION TO TERMINATE AN ELECTION

I hereby elect, by marking the box below this paragraph with an "X", to terminate my election under Section 4.2 of the Plan and to receive my Board Retainer and my Committee Retainer in cash commencing with the first annual payment of the first calendar year beginning after the date hereof.

o YES, I WISH TO TERMINATE MY MOST RECENT ELECTION UNDER SECTION 4.2 OF THE PLAN.

4. ACKNOWLEDGEMENTS AND CONFIRMATIONS (to be completed for all elections)

I confirm that:

1.: I have received and reviewed a copy of the terms of the Plan and agreed to be bound by such terms.
2.: I understand that I will not be able to cause the Corporation to settle or redeem Share Units granted under the Plan until I am no longer a Director or an employee of the Corporation.
3.: I recognize that when Share Units credited pursuant to an election made under Section 1 or 2 of this Election Notice are redeemed in accordance with the terms of the Plan after I am no longer a Director or employee of the Corporation, income tax and other withholdings as required will arise at that time, which will be my obligation (and not the Corporation's, except as required by law). Upon settlement or redemption of the Share Units, the Corporation will make all appropriate withholdings as required by law at that time.

(1): If this is the year in which I have first become Director, my participation commences with the next annual payment in the current year if this Election Notice is filed on or before the earlier of (i) thirty days after the date I first became Director, and (ii) the last business day of this calendar year and shall relate only to the portion of the Board Retainer or Committee Retainer attributable to services following the date I complete this election.

4.: The value of the Share Units is based on the value of the common shares of the Corporation and therefore is not guaranteed.
5.: No funds will be set aside to guarantee the payment of the Share Units. Future payment of the Share Units will remain an unfunded liability recorded on the books of the Corporation.
6.: I acknowledge and agree that, as described in greater detail in the Plan, I am not permitted to assign, pledge, charge or otherwise encumber the Share Units granted to me under the Plan.
7.: An election filed pursuant to Section 1, 2 or 3 of this Election Notice is required to be filed with the Chief Financial Officer of the Corporation not later than the last business day of the calendar year ending before the particular calendar year in respect of which I am electing to receive any portion of my Board Retainer and/or my Committee Retainer in Share Units rather than cash (or in respect of which I am electing to change or terminate such election, as the case may be).

The foregoing is only a brief outline of certain key provisions of the Plan. For more complete information, reference should be made to the Plan in its entirety.


Date		(Signature of Director)
		(Name of Director)

Schedule B to Directors Share Unit Plan
for Directors of Valeant Pharmaceuticals International, Inc. (the "Plan")

REDEMPTION NOTICE

I hereby advise Valeant Pharmaceuticals International, Inc. (the "Corporation") that I wish to redeem all the Share Units credited to my account under the Plan on the following redemption date or dates, which in each case shall be at least five (5) business days following the date on which this notice is filed with the Corporation but no later than December 15 of the first calendar year commencing after the year in which the member ceased to be a director or an employee of the Corporation:

	Amount of Share Units (expressed as a percentage totaling 100%)	Redemption Date

1.
2.

	Date	(Signature of Member)

		(Name of Member)

If this Redemption Notice is signed by a beneficiary or legal representative, documents providing the authority of such signature must accompany this Redemption Notice.

QuickLinks

Exhibit 10.6

Schedule A to Directors Share Unit Plan (the "Plan") ELECTION NOTICE
Schedule B to Directors Share Unit Plan for Directors of Valeant Pharmaceuticals International, Inc. (the "Plan")
REDEMPTION NOTICE

Exhibit 10.7

DATED 29 JUNE 2011

MEDA PHARMA SARL

- and -

VALEANT INTERNATIONAL (BARBADOS) SRL

LICENCE AGREEMENT

THIS LICENSE AGREEMENT is dated as of June 29, 2011 (the “Effective Date”)

BETWEEN:

(1) MEDA PHARMA SARL a company incorporated in Luxembourg, with a principal place of business at 46 Avenue John Fitzgerald Kennedy, L-1855 Luxembourg, Grand-Duchy of Luxembourg ( “Meda” ); and

(2) VALEANT INTERNATIONAL (BARBADOS) SRL an international society with restricted liability established under the laws of Barbados and having its principal place of business at Welches, Christ Church, Barbados, West Indies BB17154 ( “Valeant” ).

Meda and Valeant are referred to from time to time in this Agreement individually as a “ Party ” or collectively as the “ Parties ”.

RECITALS

(A) Meda owns or is the licensee of certain proprietary rights, titles and interests in certain patents and patents applications know-how, trade marks and clinical data relating to: (i) topical formulations for the prevention and/or treatment of any herpes indication consisting of a combination of acyclovir and hydrocortisone as active ingredients (“ Xerese” ) and (ii) topical formulations of pimecrolimus and any metabolite, prodrug, hydrate, solvate, conjugate, salt, crystal form, ester, enantiomer, stereoisomer or polymorph of pimecrolimus ( “Elidel” ) .

(B) Valeant wishes to commercialise products using Meda’s Xerese and Elidel proprietary rights.

(C) Meda wishes to grant, and Valeant wishes to receive, a licence to commercialise products using Meda’s Xerese and Elidel proprietary rights pursuant to the terms of this licence, including to the Licensed Know How, Licensed Clinical Data and Licensed Trade Marks, which the Parties acknowledge were developed at great expense and have significant value.

(D) ***

NOW THEREFORE, in consideration of the following mutual promises and obligations, and for other good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS

In this Agreement and in the Schedules to this Agreement the following capitalised terms, whether used in the singular or plural, shall have the meanings set forth below:

1.1 ***

1.2 ***

1.3 ***

1.4 ***

1.5 ***

1.6 “Adverse Event” means any untoward medical occurrence in a patient to whom a medicinal product has been administered and which does not necessarily have to have a causal relationship with the administration of such medicinal product and includes without limitation any unfavourable and unintended sign (for example, an abnormal laboratory finding), symptom, or disease temporally associated with the use of a medicinal product, whether or not considered related to this medicinal product together, in relation to pharmacovigilance standards, policies, and procedures, with all medical device events, (including incidents, near-incidents, serious injuries, malfunctions and failures) or untoward medical events and events such as suicide or aggressive behaviour threats, overdose, abuse, misuse, medication errors and other events that may reasonably be related to biomedical research.

1.7 “Affected Party” shall have the meaning set out in Clause 23.1 .

1.8 “Affiliate” means, with respect to a given entity, any person, corporation, partnership or other entity, that Controls, is Controlled by, or is under common Control with such entity.

1.9 “Agreed Ratio” shall have the meaning set out in Clause 4.4.2.

1.10 “Agreement” means this agreement and all schedules as amended in accordance with the provisions of this Agreement.

1.11 “Business Day” means a day other than a Saturday, Sunday or a day on which banks are not open for business in Sweden or Barbados.

1.12 “Calendar Year” means a calendar year commencing on the 1 st of January and ending on the 31 st of December.

1.13 “Commercialise” shall have the meaning set out in Clause 21.1.

1.14 “ Commercially Reasonable Efforts” means the degree of effort and resources used by international pharmaceutical businesses with respect to pharmaceutical products of similar commercial potential, maturity, market size and profitability, taking into account product safety and efficacy, development and Commercialisation costs and risks, market competition, the proprietary position of the product and other technical, legal, scientific, medical or commercial factors that have direct relevance to Licensed Products.

1.15 ***

1.16 “Confidential Information” shall have the meaning set out in Clause 17.1.

1.17 “Consent” shall have the meaning set out in Clause 5.6.

1.18 “ Control, ” “ Controls, ” “ Controlled ” or “ Controlling ” shall mean;

1.1.1 in respect of any partnership, corporation or other entity, the direct or indirect ownership of more than fifty percent (50%) of the outstanding shares or other voting rights of the subject entity having the power to vote on or direct the affairs of the entity, (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction). Any other relationship which in fact results in actual control over the management, business and affairs of an entity shall also be deemed to constitute Control; and

1.1.2 in respect of any Patent Rights, Know How or other Intellectual Property Rights whether owned by or licensed to an entity, the possession of the legal right and ability to grant the respective licenses or sublicenses as provided in this Agreement without violating the terms of any agreement or other arrangement with any Third Party;

and the expressions Controlling and Controlled by shall be interpreted accordingly.

1.19 ***

1.20 “Defaulting Party” shall have the meaning set out in Clause 15.3 .

1.21 “Development Plan” shall have the meaning set out in Clause 4.1.

1.22 “Disclosing Party” shall have the meaning set out in Clause 17.1 .

1.23 “Effective Date” shall have the meaning set out at the top of this Agreement.

1.24 “Elidel” shall have the meaning set out in the recitals to this Agreement.

1.24.1 “ Elidel Drug Substance ” means the active ingredient pimecrolimus having the chemical structure set forth on Schedule 10 and any metabolite, prodrug, hydrate, solvate, conjugate, salt, crystal form, ester, enantiomer, stereoisomer or polymorph of the same.

1.25 “Elidel Field” means all dermatological applications .

1.26 “Elidel Licensed Clinical Data” means clinical data that is Controlled by Meda or its Affiliates at the Effective Date and/or during the Term that relates to Elidel Licensed Products .

1.27 “Elidel Licensed Know How” means Know How Controlled by Meda at the Effective Date and/or that is Controlled by Meda during the Term that is necessary or useful for the importation, exportation, research, development, distribution, marketing, offer for sale, use, sale or Commercialisation of an Elidel Licensed Product in the Elidel Territory.

1.28 “Elidel Licensed Patents” means those Patent Rights set out in Schedule 1 Part A and

any other Patent Rights acquired or Controlled by Meda during the Term that would be infringed by the research, development, marketing, or sale of Elidel Licensed Product in the Elidel Territory.

1.29 “Elidel Licensed Products” means a topical formulation of pimecrolimus and any metabolite, prodrug, hydrate, solvate, conjugate, salt, crystal form, ester, enantiomer, stereoisomer or polymorph of pimecrolimus including Elidel Products.

1.30 “Elidel Products” mean those products as set out in Schedule 2 Part A.

1.31 “Elidel Supply Agreement” means the Supply Agreement entered into between Meda AB and Valeant of even date herewith for the supply of Elidel Licensed Products by Meda AB to Valeant.

1.32 “Elidel Territory” means the United States (including Puerto Rico), Canada and Mexico.

1.33 “Elidel Trade Marks” means those trade marks listed in Schedule 3 Part A.

1.34 “Encumbrance” means any encumbrance, claim, charge, hypothecation, lien, mortgage, pledge, option, license, right of first refusal or security interest of any kind.

1.35 “FDA” means the United States Food and Drug Administration, or any successor agency.

1.36 “First Commercial Sale” shall mean, with respect to any Licensed Product, the first sale for end use or consumption of such Licensed Product in the Xerese Territory or Elidel Territory, as the case may be, excluding, however, any sale or other distribution for use in a clinical trial or prior to grant of a Marketing Authorization in the applicable country in the Xerese Territory or Elidel Territory, as the case may be.

1.37 “Force Majeure Event” shall have the meaning set out in Clause 23.1 .

1.38 “Good Manufacturing Practice” means the current and applicable laws and guidelines on Good Manufacturing Practice for the manufacture of pharmaceutical products for human use in force applicable to the Parties or the manufacture of the Licensed Products, including, without limitation, the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals For Human Use (ICH) Guideline Q7A Good Manufacturing Practice for Active Pharmaceutical Ingredients, European Directive 2003/94/EC (and any legislation implementing such Directive) and any further guidance as published by the European Commission in Volume IV of “The rules governing medicinal products in the European Community” (each as may be amended from time to time), the current and applicable directives and guidelines on current good manufacturing practices and standards promulgated or endorsed by the FDA, including the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 210 and 211, Part C, Division 2 of the Food and Drug Regulations, and the principles detailed in and the Good Manufacturing Guidelines published by Health Canada, in each case as they may be updated from time to time.

1.39 “Governmental Entity” means any court, agency, authority, department, legislative or regulatory body or other instrumentality of any government or country or of any national, federal, state, provincial, regional, county, city or other political subdivision of any such government or any supranational organization of which any such country is a member or quasi-governmental authority or self-regulatory organization of competent authority.

1.40 “Health Canada” shall mean Health Canada or any successor agency.

1.41 “ Improvements ” means all Know-How, inventions, improvements or discoveries (whether patentable or not) which are generated by either or both Parties and/or their Affiliates in respect of Licensed Products during the Term of this Agreement.

1.42 “IND” means an investigational new drug application filed with a Regulatory Authority in the Elidel Territory or Xerese Territory as a requirement for the initiation of human clinical trials for a Licensed Product in the Elidel Territory or Xerese Territory, as applicable, including all supplements and amendments that may be filed therewith.

1.43 “Indemnified Party” shall have the meaning set out in Clause 19.4 .

1.44 “Indemnifying Party” shall have the meaning set out in Clause 19.4 .

1.45 “Insolvent Party” shall have the meaning set out in Clause 15.4 .

1.46 “Intellectual Property Rights” means Patent Rights, utility models, and other like forms of protection, copyrights, database rights, rights in databases, trade names, trade or service marks, domain names, design rights, including any applications registration for the foregoing and all other similar proprietary rights as may exist anywhere in the world whether registered or unregistered.

1.47 “Interim Distribution Agreement” means the Interim Distribution Agreement previously entered into between the Parties on May 11, 2011, as amended.

1.48 “JSC” shall have the meaning set out in Clause 3.1.

1.49 “Know How” means unpatented technical and other information, including clinical data, of a Party that is not in the public domain, and concerning Licensed Products, including, ideas, concepts, inventions, discoveries, data, formulae, specifications, information relating to materials, models, assays, analytical processes and SOPs, materials relating to assays, analytical systems or processes, procedures for experiments and tests and results of experimentation and testing, results of research and development including laboratory records, data relating to the pharmacology of products (including data relating to toxicology, bioavailability, metabolism, metabolites and pharmacokinetics), clinical trial data, case report forms, data analyses, reports or summaries and information contained in submissions to and information from ethical committees and Regulatory Authorities. The fact that a part of a compilation of data is in the public domain shall not prevent the compilation of data as such, or any one or more of the other elements of the compilation from being Know How.

1.50 “Knowledge” means, with respect to Meda, the actual knowledge of any of the employees of Meda or its Affiliates set out in Schedule 6.

1.51 “Licensed Clinical Data” means the Elidel Licensed Clinical Data and the Xerese Licensed Clinical Data.

1.52 “Licensed Intellectual Property” means the Licensed Patents and Licensed Trade Marks.

1.53 “Licensed Know How” means the Elidel Licensed Know How and the Xerese Licensed Know How.

1.54 “Licensed Patents” means Elidel Licensed Patents and the Xerese Licensed Patents.

1.55 “Licensed Products” means Elidel Licensed Products and Xerese Licensed Products.

1.56 “Licensed Trade Marks” means Elidel Trade Marks and Xerese Trade Marks.

1.57 “Loss” shall have the meaning set out in Clause 19.2 .

1.58 “Marketing Authorisation” means any approval required from the relevant Regulatory Authority or Authorities to distribute, promote, market and sell Licensed Products in the Elidel Territory or Xerese Territory, as applicable.

1.59 “Marketing Services” means the marketing services as further described in Schedule 4 that the Parties have agreed Meda shall provide in respect of Xerese Licensed Products.

1.60 “Meda” shall have the meaning set out at the top of this Agreement.

1.61 “Meda Indemnified Party” shall have the meaning set out in Clause 19.2 .

1.62 ***

1.63 ***

1.64 “Members” shall have the meaning set out in Clause 3.2.

1.65 ***

1.66 “Non-Assignable Agreement” shall have the meaning set out in Clause 5.6.

1.67 ***

1.68 ***

1.69 ***

1.70 ***

1.71 ***

1.72 ***

1.73 “ Party ” and “ Parties ” shall have the meanings set out at the top of this Agreement.

1.74 “Patent Rights” means any patent applications, patents and any foreign counterparts thereof, including, without limitation, all provisional applications, divisions, renewals, continuations, continuations-in-part, extensions, reissues, re-examinations, substitutions, confirmations, registrations, revalidations and additions of or to them, as well as any supplementary protection certificates or patent term extension, or like form of protection, whether on file with the appropriate governmental agencies as of the Effective Date or at any time during the Term of this Agreement.

1.75 “Permitted Encumbrance” shall have the meaning set forth in the ***.

1.76 “Pharmacovigilance Agreement” means the pharmacovigilance agreement(s) for the Licensed Products to be entered into pursuant to Clause 8.

1.77 “Quarter” means each period of three consecutive calendar months commencing on 1 January, 1 April, 1 July and 1 October of the relevant calendar year.

1.78 “Receiving Party” shall have the meaning set out in Clause 17.1 .

1.79 “Regulatory Approval” means an approval, including, without limitation, a Marketing Authorisation, granted by a Regulatory Authority.

1.80 “Regulatory Authority” means any national (e.g., FDA), supranational (e.g., the European Commission, the Council of the European Union, the European Medicines Agency), regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in a given country or region responsible for granting and administering any governmental approvals (including as to price) necessary or desirable to distribute, promote, market and sell pharmaceutical products, or for pharmacovigilance of such products, in such country.

1.81 ***

1.82 ***

1.83 “ Saleable Condition ” means fit for sale and, based on sale in the normal course, shall have at least *** of remaining shelf life at the time of commercial sale by or on behalf of Valeant (in the case of Clause 9.4) and Meda (in the case of Clause 16.1.7) to a Third Party.

1.84 “Sales and Marketing Plan” means the sales and marketing plan to be created pursuant to Clause 6.2 .

1.85 “Term” shall have the meaning set out in Clause 15.1.

1.86 ***

1.87 “Terminating Party” shall have the meaning set out in Clause 15.3 .

1.88 “Territory” means the Elidel Territory or the Xerese Territory, as applicable.

1.89 “Third Party” means any entity or person other than the Parties or their respective Affiliates.

1.90 “Third Party Agreements” means those contracts, licenses and other agreements between Meda or any of its Affiliates, on the one hand, and Third Parties, on the other hand, that are listed on Schedule 7.

1.91 “Termination Date” means the effective date of termination of this Agreement pursuant to Clause 15.

1.92 “Trial Assigned Agreements” shall mean the agreements as set out in Schedule 9 Part B.

1.93 ***

1.94 “United States” means the United States of America, including the District of Columbia.

1.95 “US GAAP” means generally accepted accounting principles in the United States, as in effect from time to time.

1.96 “Valeant” shall have the meaning set out at the top of this Agreement.

1.97 “Valeant Indemnified Party” shall have the meaning set out in Clause 19.3 .

1.98 ***

1.99 “Xerese” shall have the meaning set out in the recitals to this Agreement.

1.100 “Xerese Licensed Clinical Data” means clinical data that is Controlled by Meda or its Affiliates at the Effective Date and/or during the Term that relates to Xerese Licensed Products .

1.101 “Xerese Field” means all applications for the prevention and treatment of a herpes indication .

1.102 ***

1.103 “Xerese Interim Distribution Period” shall have the meaning set out in Clause 6.5.2 .

1.104 “Xerese Licensed Know How” means Know How Controlled by Meda at the Effective Date and/or that is Controlled by Meda during the Term that is necessary or useful for the importation, exportation, research, development, distribution, marketing, offer for sale, use, sale or Commercialisation of a Xerese Licensed Product in the Xerese Territory.

1.105 “Xerese Licensed Products” means topical formulations for the prevention and/or treatment of any herpes indication consisting of a combination of acyclovir and hydrocortisone as active ingredients including Xerese Products.

1.106 “Xerese Licensed Patents” means those Patent Rights set out in Schedule 1 Part B and any other Patent Rights acquired or Controlled by Meda during the Term that would be infringed by the research, development, marketing, or sale of Xerese Licensed Product in the Xerese Territory.

1.107 “Xerese Products” means those products as set out in Schedule 2 Part B.

1.108 “Xerese Supply Agreement” shall have the meaning set out in Clause 9.1.

1.109 “Xerese Territory” means the United States, Canada and Mexico.

1.110 “Xerese Trade Marks” means those trade marks listed in Schedule 3 Part B.

1.111 This Agreement shall be interpreted and construed pursuant to the following rules of interpretation and construction:

1.111.1 all references to a particular clause or schedule shall be a reference to that clause or schedule in or to this Agreement as it may be amended from time to time pursuant to this Agreement;

1.111.2 the headings are inserted for convenience only and shall be ignored in construing this Agreement;

1.111.3 words importing the masculine gender shall include the feminine;

1.111.4 words denoting persons shall include any individual, partnership, company, corporation, joint venture, trust association, organisation or other entity, in each case whether or not having separate legal personality;

1.111.5 the words “include”, “included”, “including” and “in particular” or any similar expression are to be construed as illustrative and without limitation to the generality of the preceding words; and

1.111.6 reference to any statute or regulation includes any modification or re-enactment of that statute or regulation.

2. GRANT OF RIGHTS

2.1. Xerese Licence . Subject to the terms of this Agreement, Meda hereby grants to Valeant:

2.1.1. an exclusive license, or as applicable, sub-license under the Xerese Licensed Patents; and

2.1.2. an exclusive license (and as applicable sub-license) under the Xerese Licensed Know-how and Xerese Licensed Clinical Data;

in both instances solely for the purpose of the research, development, use, import, export, distribution, sale, offer for sale, marketing, and Commercialisation of Xerese Licensed Products in the Xerese Field in the Xerese Territory; and

2.1.3. an exclusive licence to use the Xerese Trade Marks in relation to the Xerese Licensed Products in the Xerese Territory.

2.2. Elidel United States Licences . Subject to the terms of this Agreement, Meda hereby grants to Valeant:

2.2.1. an exclusive license, or as applicable, sub-license under the Elidel Licensed Patents; and

2.2.2. an exclusive license (and as applicable sub-license) under the Elidel Licensed Know-how and Elidel Licensed Clinical Data;

in both instances solely for the purpose of the research, development, use, import, export, distribution, sale, offer for sale, marketing, and Commercialisation of Elidel Licensed Products in the Elidel Field in the United States; and

2.2.3. an exclusive licence to use the Elidel Trade Marks in relation to the Elidel Licensed Products in the United States.

2.3. Elidel Canadian and Mexican Licenses . Subject to the terms of this Agreement, without the need for further action by either Party, upon the respective commencement of the Phase 2 Period, as such term is defined and operative in the Elidel Supply Agreement, in the countries of Canada and Mexico, Meda shall and hereby does grant to Valeant in each such country:

2.3.1. an exclusive license or, as applicable, sub-license under the Elidel Licensed Patents; and

2.3.2. an exclusive license (and as applicable sub-license) under the Elidel Licensed Know-how and Elidel Licensed Clinical Data;

2.3.3. an exclusive licence to use the Elidel Trade Marks in relation to the Elidel Licensed Products in such country.

2.4. No right to manufacture . The Parties agree that the licences granted in this Agreement do not include the right to manufacture any Licensed Product; provided however that, in the event the Xerese Supply Agreement is assigned to Valeant, Meda shall grant to *** a non-exclusive license (or, as applicable, a non-exclusive sub-license) under the Xerese Licensed Patents, the Xerese Licensed Know-How and the Xerese Licensed Clinical Data solely for the purposes of *** manufacturing Xerese Licensed Product for Valeant in accordance with the terms of the Xerese Supply Agreement; provided further that, at any time after assignment of the Xerese Supply Agreement, if Valeant receives notice from *** or otherwise learns of the termination or non-renewal of the Xerese Supply Agreement, the Parties shall use Commercially Reasonable Efforts to promptly identify another Third Party manufacturer, mutually acceptable to both Parties, to be engaged by Valeant for the manufacture and supply of Xerese Licensed Product and Meda shall grant to such Third Party a non-exclusive license (or, as applicable, a non-exclusive sub-license) under the Xerese Licensed Patents, the Xerese Licensed Know-How and the Xerese Licensed Clinical Data solely for the purposes of manufacturing Xerese Licensed Product for Valeant. If the Parties are unable to identify a mutually acceptable Third Party manufacturer within sixty (60) days, then Meda shall grant to Valeant a sublicensable, non-exclusive license (or, as applicable, a non-exclusive sub-license) under the Xerese Licensed Patents, the Xerese Licensed Know-How and the Xerese Licensed Clinical Data solely for the purposes of manufacturing Xerese Licensed Product for Valeant. Meda shall transfer to Valeant or to its designee any necessary or useful know-how and technology used by *** or Meda to the extent that the same is in the possession of and Controlled by Meda and shall use its Commercially Reasonable Efforts to transfer such Know-How and technology it Controls if it is not in Meda’s possession, as applicable and the Parties shall use their Commercially Reasonable Efforts to ensure that such transfer shall be accomplished in time to enable Valeant to obtain a continued and uninterrupted supply of the Xerese Licensed Products in the event of such termination.

2.5. No Sublicense Rights . Valeant shall have no right to sublicense any of the licences and other rights granted under Clauses 2.1, 2.2 or 2.3 to a Third Party, except with Meda’s prior written consent (such consent to be in Meda’s absolute discretion); provided however that Valeant shall be entitled, in its sole discretion and without the consent of Meda, to:

2.5.1. grant sub-licences to an Affiliate provided that the sub-license shall terminate immediately upon the Affiliate ceasing to be an Affiliate; or

2.5.2. grant sub-licences to Third Party contract sales organizations and Third Party contract research organisations in relation to the promotion and development of Licensed Products.

3. MANAGEMENT OF THE RELATIONSHIP

3.1. The Joint Steering Committee . On or within thirty (30) days after the Effective Date, the

Parties shall establish the Joint Steering Committee (“ JSC ”) to oversee and manage the relationship between the Parties. In particular, the JSC shall be responsible for:

***

3.2. Membership and Governance of the JSC . The JSC shall comprise four (4) members (the “ Members ”), with Meda appointing two (2) Members and Valeant appointing two (2) Members as their respective representatives on the JSC. The initial Members of the JSC shall be notified by each Party to the other Party in writing on the Effective Date or as soon as reasonably possible thereafter.

3.2.1. Each Party shall be entitled to remove any Member appointed by it and to appoint any person to fill the vacancy arising from the removal or retirement of such Member. Each Party shall give the other Party prior written notice of any changes in the identity of its Members. The Parties shall ensure that all of their appointed Members are of a suitable level of expertise, seniority and decision-making authority to deal with the issues that may arise in connection with matters to be considered by the JSC.

3.2.2. The JSC shall exercise this authority in good faith and in accordance with the terms of this Agreement. The JSC shall have no authority to bind the Parties unless the Parties expressly delegate matters to the JSC or ratify the decision of the JSC.

3.2.3. From time to time, the JSC may establish one or more subcommittees to oversee particular projects or activities related to this Agreement, and such subcommittees will be constituted as the JSC agrees. The Parties may replace their respective subcommittee representatives at any time, with prior written notice to the other Party. Any such sub-committee shall be run on the same basis as the JSC except that any issue within the purview of such a subcommittee that is not settled or determined by the applicable subcommittee shall be submitted to the JSC for resolution. The chairperson of each subcommittee shall report on subcommittee efforts at each JSC meeting, and either Party may invite its own representatives on such subcommittee to also report on such efforts.

3.3. JSC Meetings .

3.3.1. At least twenty-one (21) days prior to each regularly scheduled meeting of the JSC, written notice shall be given to each Member by the Party convening the meeting and at least fourteen (14) days prior to each such meeting, each Party shall provide to the other all written information expected to be disclosed at such meeting. In addition, special meetings of the JSC may be called on such shorter notice period as may be agreed between the Parties.

3.3.2. Meda shall designate a Meda Member as the chairperson of the JSC. The chairperson of the JSC shall set meeting agendas for the JSC provided that the agenda shall include any matter that either Party requests to be included. Such

agendas shall be circulated to all Members at least seven (7) Business Days prior to the date of the relevant meeting. The JSC chairperson shall be responsible for recording, preparing and (within ten (10) Business Days) issuing draft minutes of the JSC meetings, which draft minutes shall be reviewed, modified and approved in writing by the Members.

3.3.3. The JSC shall have its first meeting within forty-five (45) days after the Effective Date, and thereafter shall hold Quarterly meetings by telephone or video conference. In the event that the Parties agree to hold face-to-face meetings, the venue for the meeting of the JSC shall alternate between Barbados and Luxembourg, unless the Parties mutually agree otherwise. Each Party shall bear its own costs for its Members to attend JSC meetings and, as applicable, for its obligations to host such meetings.

3.4. JSC Decision Making . All decisions by the JSC shall be made by unanimous vote of the Members present. The presence of at least one (1) Member of the JSC representing each of Meda and Valeant (i.e. a total of two Members) shall constitute a quorum. The Members shall use their reasonable efforts to reach agreement on any and all matters to be determined or resolved by the JSC.

3.5. Dispute Resolution . In the event that unanimous agreement on a matter cannot be reached:

***

4. DEVELOPMENT OF LICENSED PRODUCTS

4.1. Development Generally. Both Valeant and Meda have the right to undertake development work (whether alone or together) in respect of products that fall within the scope of the Licensed Patents, Licensed Know-How or Licensed Clinical Data, in particular on any new formulations of such products. In the event that a Party intends to undertake development work, prior to commencing such development work, the Party undertaking such development work shall notify the other Party and provide it with details of the proposed development work. *** , the JSC shall meet to agree, in accordance with the terms of Clauses 3.4 and 3.5, to the terms of a development plan in respect of the development work to be undertaken ( “Development Plan” ). Such development work shall be conducted in accordance with the Development Plan.

4.2. *** . Notwithstanding Clause 4.1, neither Party shall be required ***. Prior to the commencement of any development work, ***

4.3. ***

4.4. Research and Development Costs. If ***, where any development work is to be conducted pursuant to Clause 4 hereto, the costs of such development work as agreed pursuant to any agreed Development Plan shall be shared as follows:

4.4.1. Valeant and Meda shall each pay *** for (i) the development of Elidel Licensed Products agreed to by the Parties (including agreement as to which Party shall be responsible for conducting such development work), and (ii) ***.

4.4.2. Valeant shall pay *** and Meda shall pay *** for the development costs for the development of Xerese Licensed Products agreed to by the Parties (the “Agreed Ratio” ) and Valeant shall be responsible for conducting such development work, provided that the work is conducted in accordance with an agreed Development Plan.

4.5. Development Work Required by a Regulatory Authority. Valeant shall be responsible for and bear the cost of all development work required by a Regulatory Authority in the Elidel Territory in respect of an Elidel Licensed Product or the Xerese Territory in respect of a Xerese Licensed Product as the case may be.

4.6. ***

4.7. Rights in Developed Licensed Products. ***, in the event that the development work results in the creation of a new product or new formulation of a product that falls within the scope of the Licensed Patents or uses the Licensed Know-How or Licensed Clinical Data, then the resulting product or new formulation shall be deemed to be a Licensed Product and, subject to Valeant making the payment in accordance with Clause 4.3, shall be the subject of this Agreement within the Elidel Territory or Xerese Territory, as applicable, and Meda shall have exclusive rights outside the Elidel Territory or Xerese Territory, as applicable and each Party shall within its respective territories (being the Territory for Valeant and outside the Territory for Meda) have full rights to use and reference the data, reports, dossiers and any other useful clinical or regulatory information resulting from the development work conducted by the other Party ***.

4.8. Royalties Payable ***. If Meda ***, then Meda shall have the following payment obligations to Valeant:

4.8.1. with respect to Xerese Licensed Products, Meda shall pay to Valeant *** and

4.8.2. with respect to the Elidel Licensed Products, if the new product or new formulation requires a separate Regulatory Approval in a country outside the Elidel Territory from an Elidel Licensed Product approved at the relevant time in such country, then (i) if Meda itself or an Affiliate Commercialises such new Elidel Licensed Product or new formulation in such country outside the Elidel Territory, then Meda shall pay to Valeant *** and (ii) if a Third Party Commercialises such new Elidel Licensed Product or new formulation in such country outside the Elidel Territory, *** in connection with any license granted to such Third Party for the Commercialisation of any such Elidel Licensed Product in such country outside the Elidel Territory.

***

4.9. Development Costs . Where, in accordance with the terms of this Agreement, the Parties agree or have agreed to share or split (in any proportion) the development costs incurred in connection with development of a Licensed Product in accordance with this Clause 4, such development costs shall be limited to a Party’s reasonable external costs incurred in conducting such development.

5. REGULATORY AND CLINICAL DEVELOPMENT

5.1. The Marketing Authorisations for the Licensed Products shall be held by Valeant, in the name of Valeant or its designated Affiliate. Meda has, prior to the Effective Date, transferred the Marketing Authorisation in the United States for the Elidel Licensed Product to Valeant or its designated Affiliate and submitted all required documentation and correspondence to effect such transfer, including the required letters to the FDA. Meda shall use Commercially Reasonable Efforts to transfer to Valeant, as promptly as practicable, the ownership of the other Marketing Authorisations or applications therefor (including the Marketing Authorizations and applications therefor described in Schedule 11 hereto); provided however that (i) in the case of the Elidel Licensed Products, the Marketing Authorizations for Canada and Mexico shall be transferred to Valeant no later than the last day of the Phase 1 Period as such term is defined in the Elidel Supply Agreement, and (ii) the Marketing Authorization for the United States for the Xerese Licensed Product shall be transferred to Valeant, at Valeant’s request, at the end of the Xerese Interim Distribution Period. Notwithstanding the provisions of this Clause 5.1, Meda shall not be liable for any delay in the transfer of any Marketing Authorisation to the extent caused by a Third Party, Regulatory Authority or Government Entity. Meda shall also transfer to Valeant or its designated Affiliate any applications for Marketing Authorizations of Licensed Products existing as of the Effective Date, including all existing INDs *** and other similar regulatory filings in the Elidel Territory or Xerese Territory, as applicable, including for the Xerese Licensed Product in Canada and Mexico. Valeant shall provide Meda with such assistance as may reasonably be requested by Meda in order to effect such transfers, including by submitting all required documentation and correspondence to effect such transfer, including the required letters and documentation to the FDA, Health Canada and applicable Regulatory Authority in Mexico, as the case may be. Valeant shall act reasonably in respect of any correspondence with Regulatory Authorities pursuant to this Agreement and in any event in accordance with the standards of care and diligence it would exercise in respect of its own products. Valeant shall and shall procure that its Affiliates, sub-licensees or nominees shall assign the Marketing Authorisations so transferred to it by Meda back to Meda upon the termination of this Agreement or the expiration of the Term, unless the Parties agree otherwise or as otherwise set forth herein. Valeant may not transfer any such Marketing Authorisations to any Third Party without the prior written consent of Meda. To the extent not already provided prior to the Effective Date, Meda shall provide Valeant with full copies of the Marketing Authorizations promptly following the transfer of such Marketing Authorizations.

5.2. During the Term of this Agreement: (a) Valeant shall be responsible, at its own cost, for filing and maintaining all applications necessary to obtain and maintain the Marketing Authorisations for Licensed Products; (b) Meda shall provide Valeant with such

assistance as may reasonably be requested in order to file and maintain all Marketing Authorisations for Licensed Products; (c) Valeant shall provide Meda with copies of such applications and shall allow Meda to review and comment on material regulatory applications for Licensed Products prior to submission to any Regulatory Authority in such country; (d) Valeant shall confer with Meda regarding the preparation of such filings and communications and the registration process and any revisions to any filings or communications with the Regulatory Authorities in such country; and (e) Valeant shall keep Meda reasonably informed as to the status of its draft regulatory applications for Licensed Products in such country and shall provide copies of material communications regarding the Licensed Products with Regulatory Authorities in such country to Meda. Meda shall reasonably cooperate with Valeant, including by filing with applicable Regulatory Authorities all documents reasonably requested by Valeant and necessary to enable Valeant, prior to or after the transfer of Regulatory Approvals, to carry out Valeant’s regulatory responsibilities set forth in this Agreement.

5.3. Except as may be prohibited by law or by a Regulatory Authority, Valeant shall notify Meda of any meetings between Valeant and a Regulatory Authority relating to the Licensed Products, and allow a representative of Meda to attend any such meetings as an observer. Valeant shall provide Meda with copies of material correspondence received by Valeant from Regulatory Authorities in the Elidel Territory or Xerese Territory, as applicable, that relate to Licensed Products, and Valeant shall provide Meda an opportunity to review and comment on material correspondence with Regulatory Authorities in the Elidel Territory or Xerese Territory, as applicable, prior to submission, and shall consider in good faith the comments of Meda to such correspondence.

5.4. Valeant shall be responsible for and shall have control over all changes to the packaging of the Licensed Products in the Xerese Territory or Elidel Territory, as the case may be. Repackaging or changes to the packaging of the Licensed Products locally in the Elidel Territory or Xerese Territory, as applicable, shall meet the requirements of locally applicable Good Manufacturing Practices for pharmaceutical products. Valeant shall notify Meda of such repackaging or changes to the packaging of the Licensed Products not later than forty-five (45) days after such repackaging or changes are implemented. Valeant shall be responsible for the costs of such changes in packaging, unless requested by Meda.

5.5. ***

5.6. Assignment of Third Party Agreements . All Third Party Agreements that can be assigned to Valeant without the consent of the respective Third Parties, or for which consent has been obtained prior to the Effective Date, shall be so assigned, to the extent they relate to the Licensed Products in the Elidel Field, pursuant to the terms of this Agreement on the Effective Date. To the extent the assignment of any Third Party Agreement is prohibited by applicable law or would require any authorization, approval, consent or waiver (collectively, “Consent” ) of any governmental entity or other Third Party and such Consent shall not have been obtained prior to the Effective Date (each, a “Non-Assignable Agreement” ), neither this Agreement nor the agreement contemplated in Clause 5.7 shall constitute an assignment thereof if any of the foregoing would constitute

a breach of applicable law or the rights of any Third Party under such Non-Assignable Agreement. Following the Effective Date, the Parties shall, and shall cause their respective Affiliates to, use Commercially Reasonable Efforts in obtaining such Consents, however, Meda cannot guarantee that such Consents will be received. In the event that any such Consent is not obtained, Meda shall, upon Valeant’s request, terminate, subject to the terms and conditions set forth therein, such Third Party Agreement to the extent it relates to the Licensed Product in the Elidel Field as soon as practicable. Valeant shall, as Meda’s agent, perform and discharge all outstanding obligations and liabilities and enjoy all rights, income and benefit of Meda’s (or as applicable, Meda’s Affiliates) under the Third Party Agreement with respect to the Licensed Products in the Elidel Field from and after the Effective Date.

5.7. Assignment and Assumption Agreement . Simultaneously with the execution and delivery of this Agreement, the Parties will enter into an agreement providing for the assignment and assumption of the Third Party Agreements as contemplated in Clause 5.6, a copy of which is attached hereto as Schedule 8. In the event a Consent to any Third Party Agreement is obtained following the Effective Date pursuant to Clause 5.6, the Parties will promptly enter into an agreement substantially in the form of the agreement attached hereto as Schedule 8 providing for the assignment and assumption of such Third Party Agreement.

6. MARKETING AND DISTRIBUTION OF LICENSED PRODUCTS

6.1. Commercial Strategy; Pricing . Subject to Clause 3 and without prejudice to Valeant’s diligence obligations under this Agreement (including those set out in Clause 7), Valeant shall have the exclusive right to establish the strategy, including the price and sales strategy, for the Commercialization of the Licensed Products in the Xerese Territory and Elidel Territory. Val eant shall be solely responsible for the pricing of the Licensed Products.

6.2. Sales and Marketing Plan . Valeant shall notify Meda and shall provide the JSC, in accordance with Clause 3, with a proposed Sales and Marketing Plan(s) for the Licensed Products on or within sixty (60) days of the Effective Date. The Sales and Marketing Plan shall include, among other topics the marketing and promotional investment and promotional activities to be undertaken by Valeant in respect of the Licensed Products in the Xerese Territory or the Elidel Territory, as the case may be. Valeant shall be solely responsible for the generation of all promotional materials to be used by Valeant or its Affiliates in connection with the marketing, promotion and sale of the Licensed Products in the Xerese Territory and the Elidel Territory, provided that such promotional materials are consistent with the relevant Sales and Marketing Plan. Valeant shall provide an updated Sales and Marketing Plan for Licensed Products on each one year anniversary following the provision of the first proposed Sales and Marketing Plan.

6.3. Marketing Services by Meda . Notwithstanding Clause 6.1, Meda shall provide the Marketing Services in connection with the Xerese Licensed Products in the Xerese Territory for the period commencing on the Effective Date and ending on ***.

6.4. Promotional Materials . All promotional materials used by Valeant for Licensed Products shall comply with applicable laws, rules and regulations in the Elidel Territory or the Xerese Territory, as applicable, and shall be consistent with the Sales and Marketing Plan. A physical sample of each item of promotional material together with, where applicable, an English translation shall be provided to Meda within thirty (30) days of approval by Valeant. Meda shall provide Valeant with copies of or access to the promotional materials used by Meda in the United States in connection with the Xerese Licensed Product.

6.5. Interim Distribution Arrangements .

6.5.1. Elidel Licensed Products . The Parties acknowledge that, with respect to the Elidel Licensed Product, d uring the Phase 1 Period (as defined in the Elidel Supply Agreement) with respect to Canada and Mexico, Valeant is not authorized to distribute, sell or invoice the Elidel Licensed Product in such countries and *** or its Affiliates shall continue to distribute such Elidel Licensed Product in such countries during such period, in accordance with the terms of the Elidel Supply Agreement.

6.5.2. Xerese Licensed Products . For a period of up to *** from the Effective Date (the “ Xerese Interim Distribution Period ”), at the request of Valeant, Meda shall continue to distribute the Xerese Licensed Products in the United States on Valeant’s behalf. Meda shall continue to invoice Third Party customers for the Xerese Licensed Product in the United States in its own name and shall pay Valeant the following amount:

***

Within twenty (20) days of the end of the Xerese Interim Distribution Period, Meda shall provide Valeant with a report of Net Sales of the Xerese Licensed Product in the United States for such period, together with the amount owed by Valeant to Meda pursuant to this Clause 6.5.2.

6.6. Transition Agreement . Prior to the end of the Xerese Interim Distribution Period, the Parties shall enter into a transition agreement with respect to the Xerese Licensed Products in the United States, on terms to be agreed but substantially in accordance with the terms of the agreement which is attached hereto as Schedule 12.

7. DILIGENCE

7.1. General . The Parties shall use their Commercially Reasonable Efforts to perform their responsibilities and obligations under this Agreement. In addition, Meda agrees that it will not breach the ***Agreement or the *** Agreement or the ancillary agreements thereto applicable to the Elidel Licensed Products, so as to render it unable to fulfil its obligations under this Agreement or any agreements related hereto. Valeant agrees that it will not do anything that puts Meda in breach of the agreement between *** and Meda (to the extent that Valeant is aware of the relevant provision) or the *** Agreement and the ancillary agreements thereto applicable to the Elidel Licensed Products.

7.2. Commercialisation Diligence. Subject to Clauses 6.2 and 6.4, Valeant shall use Commercially Reasonable Efforts to market and sell Licensed Products in the countries in the Elidel Territory or Xerese Territory, as applicable, for which Marketing Authorisations have been granted to or transferred to Valeant and to comply with the terms of all Sales and Marketing Plan, as Valeant may amend such Sales and Marketing Plan from time to time. Prior to the 30 January of each calendar year, Valeant shall inform Meda of the results of its sales and marketing performance relating to Licensed Products in the Elidel Territory or Xerese Territory, as applicable, for the prior year.

7.3. Sales Data . Within fifteen (15) days after the end of each quarter, Valeant shall provide to Meda a report of all sales of Licensed Products occurring in the Elidel Territory or Xerese Territory, as applicable, such report shall include recorded sales of Licensed Products by volume and value and market share percentage by volume and value. Valeant shall use Commercially Reasonable Efforts to provide Meda with monthly reports, of gross sales, unit sales, IMS reports and its best estimate of Net Sales of Licensed Products in the Elidel Territory or Xerese Territory, as applicable, within fifteen (15) days of the end of each month.

7.4. Material Terms . Valeant’s obligations in this Clause 7 regarding diligence are material terms of this Agreement

8. ADVERSE EVENTS AND PHARMACOVIGILANCE

8.1. Pharmacovigilance . Valeant and Meda shall enter into a Pharmacovigilance Agreement for each country in the Elidel Territory or Xerese Territory or, if the Parties mutually agree, one Pharmacovigilance Agreement for all countries in the Elidel Territory and Xerese Territory within *** of the Effective Date to ensure that an appropriate system for pharmacovigilance activities is in place to assume responsibility and liability for Licensed Products in accordance with all relevant laws, directives and regulatory guidance . Meda and Valeant shall observe the procedures and notification requirements as set out in the applicable Pharmacovigilance Agreement with respect to Adverse Events and to any other regulatory and reporting matters.

8.2. Responsibilities of the Qualified Person . Each Party shall designate a suitably-qualified person responsible for compliance with its pharmacovigilance obligations. The qualified person shall be responsible for: (i) the collection of Adverse Event reports for the Licensed Product reported to Valeant and/or Meda and their respective Affiliates; (ii) notification to Meda and/or Valeant, as applicable, of such reports in accordance with the terms of the Pharmacovigilance Agreement; (iii) the timely submission of individual written reports to the relevant Regulatory Authority in compliance with applicable laws; (vi) answering pharmacovigilance related questions; and (v) all notifications and communications with any Regulatory Authority related to pharmacovigilance, as appropriate or required by Meda or Valeant, as applicable.

9. SUPPLY AND MANUFACTURE

9.1. Supply of Xerese Licensed Products . Subject to obtaining the consent of ***, as promptly as possible following the Xerese Interim Distribution Period, Meda shall assign the Xerese Licensed Product supply agreement (the “Xerese Supply Agreement” ) it entered into with *** on *** to Valeant pursuant to the assignment agreement attached hereto as Schedule 13. Prior to the assignment of the Xerese Supply Agreement, Meda shall use Commercially Reasonable Efforts to procure the supply of the Xerese Licensed Product to meet Valeant’s requirements for sales and marketing hereunder provided always that Meda shall not be obliged to procure the supply of more Xerese Licensed Product from *** than *** is obliged to supply under the Xerese Supply Agreement, provided that Meda will exercise, at Valeant’s request, any rights to additional Xerese Licensed Product it has pursuant to the Xerese Supply Agreement. If Meda is unable to obtain the consent of *** to the assignment of the Xerese Supply Agreement to Valeant, in lieu of assigning the Xerese Supply Agreement, such supply shall be undertaken by Meda pursuant to a supply agreement to be agreed between the Parties. ***

9.2. Indemnification under Xerese Supply Agreement. In the event the Xerese Supply Agreement is assigned to Valeant, Meda shall be responsible for any amounts owing to *** for Xerese Licensed Product delivered to Meda prior to such assignment or otherwise purchased by Valeant from Meda pursuant to Clause 9.3 below ***.

9.3. Initial Supply of Xerese Licensed Product . To the extent that the Xerese Supply Agreement is assigned to, and assumed by, Valeant, at the time of such assignment, Valeant shall acquire from Meda the Xerese Licensed Product then held by Meda or its Affiliates for the United States. Valeant shall deliver one or more purchase orders to Meda, for delivery on the dates and in the quantities set out in such purchase orders, for such inventory of Xerese Licensed Product. On the date of delivery, Meda shall deliver such inventory of Xerese Licensed Product , and title and risk of loss in such inventory shall transfer, FCA (as defined in INCOTERMS, 2010 edition, published by the International Chamber of Commerce, ICC Publication 560) the facilities of Meda at which such inventory is held. ***

9.4. Shelf Life of Xerese Licensed Product . All inventory of Xerese Licensed Product delivered by Meda to Valeant pursuant to this Clause 9 shall be in Saleable Condition and shall have, at the time of delivery to Valeant, a remaining shelf life of *** .

9.5. Supply of Elidel Licensed Products . As of the Effective Date, *** supplies the Elidel Products to Meda pursuant to a supply agreement with Meda entered into on May 11, 2011 and Meda shall supply such Elidel Licensed Products to Valeant on the terms of the Elidel Supply Agreement.

10. FINANCIAL TERMS

10.1. *** Payment . On the Effective Date Valeant shall pay to Meda the sum of *** in respect of ***;

10.2. *** On the Effective Date Valeant shall pay to Meda the sum of ***.

10 .3. *** Payment . Valeant shall pay to Meda***

10.4. *** Payment . On the Effective Date, Valeant shall pay to Meda ***

For greater certainty, the payment payable pursuant to this Clause 10.4 shall only be payable by Valeant once.

10.5. *** Payment . Upon Meda having *** For greater certainty, the payment payable pursuant to this Clause 10.5 shall only be payable by Valeant once.

10.6. *** Payment . Upon the *** Valeant shall pay to Meda ***. For greater certainty, the payment payable pursuant to this Clause 10.6 shall only be payable by Valeant once.

10.7. *** . Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** of *** in the Elidel Territory and Xerese Territory, as applicable ***, the payment shall be made as follows:

10.7.1. Subject to Clause 10.7.3, Valeant shall pay to Meda ***, no later than *** following ***

10.7.2. No later than the *** following *** Valeant shall pay an amount equal to *** in the Elidel Territory and Xerese Territory, as applicable, for ***.

10.7.3. The *** payable by Valeant to Meda pursuant to Clause 10.7.1 for ***

10.8. *** . Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for *** . In respect of *** the payment shall be made as follows:

10.8.1. Subject to Clause 10.8.3, Valeant shall pay to Meda ***, no later than ***

10.8.2. No later than *** following *** Valeant shall pay an amount equal to *** for ***

10.8.3. *** payable by Valeant to Meda pursuant to Clause 10.8.1 for ***

10.9. ***. Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for *** the payment shall be made as follows:

10.9.1. Subject to Clause 10.9.3, Valeant shall pay to Meda ***

10.9.2. No later than *** following *** Valeant shall pay an amount equal to *** in the Elidel Territory and Xerese Territory, as applicable, for ***.

10.9.3. The *** payable by Valeant to Meda pursuant to Clause 10.9.1 for ***

10.10. ***. Valeant shall in accordance with the provisions of Clause 11, pay to Meda *** in the Elidel Territory and Xerese Territory, as applicable, for ***.

10.11. ***

10.12. Payment Prior to the Effective Date. Any Licensed Products sold by Valeant prior the Effective Date pursuant to the Interim Distribution Agreement shall be subject to the provisions thereunder and no provisions of this Agreement shall apply to such sales. Any Licensed Products sold by Valeant after the Effective Date (including any such Licensed Products acquired, but not sold, by Valeant prior to the Effective Date) shall be subject to the provision of this Agreement and no provision of the Interim Distribution Agreement shall apply to such sales, except those provisions which by their terms survive the termination of the Interim Distribution Agreement.

10.13. ***

10.14. Failure to Pay. Any breach by Valeant of its obligation to make payments under the terms of this Clause 10 when properly due and which is not cured within the time permitted in Clause 15.3 shall be a material breach of this Agreement.

10.15. ***

11. PAYMENT

11.1. Currency and Timing of Payments . All payments due to Meda under this Agreement shall be made in US $ within the relevant period specified in this Agreement. In the case of Royalties payable under Clause 10, if no date is specified, the payment shall be made within *** days of the end of the Quarter to which such Royalties relate.

11.2. Conversion Rate . In the event that Valeant receives a payment in respect of which it is liable to make a payment pursuant to Clause 10.6 in a currency other than US dollars, the relevant payment to be made by Valeant shall be calculated in US dollars at the mid-market exchange rate as stated in the UK Financial Times on the last Business Day of *** in which the Royalties accrued.

11.3. Payment method . All payments due and payable by one Party to the other Party under this Agreement shall be made by electronic wire transfer of immediately available funds directly to the account of the receiving Party as designated in writing from time to time by such Party; provided that the Parties shall set off and net any payments due and payable hereunder or under the Elidel Supply Agreement, as applicable, prior to making any such payment.

11.4. Late Payments . Where any sums payable by one Party to the other hereunder remain unpaid after the date on which they became due, the Party in default shall pay to the other interest calculated from the date upon which the sums became due until payment thereof at *** calculated on a daily basis.

11.5. Taxes . In the event that either Party is required by law to withhold or pay any taxes on behalf of the other Party, with respect to any payments to it hereunder, the withholding Party shall furnish the other Party with proper evidence of the taxes so paid. Each Party

shall furnish the other Party with appropriate documents to secure application of the most favourable rate of withholding tax under applicable law.

11.6. Record Keeping and Audit . Valeant shall, and shall ensure that its respective Affiliates and permitted sublicensees (if any) shall, keep true and accurate records and books of account in legible form and in English accordance with US GAAP and containing all data necessary for the calculation of the amounts payable to Meda pursuant to this Agreement. Such records and books of account shall be kept for at least ***. Meda shall be entitled to have the books and records of Valeant generated pursuant to this Agreement and any statement it receives from Valeant relating to Royalties audited for the purpose of verifying Valeant’s calculation of Royalties under this Agreement. Any calculation of Royalties (and the underlying components of such calculation) may be audited and certified by an internationally recognised independent accounting firm identified by Meda and reasonably acceptable to Valeant. Meda shall provide Valeant with at least thirty (30) days prior notice of such audit, which shall be conducted during normal business hours. Valeant shall make available those books and records reasonably required for the purpose of that audit and certification, and the statements so certified shall be final and binding between the Parties. Meda shall be responsible for the cost of such independent accounting firm’s services in connection with such audit; provided that Valeant shall reimburse Meda for such costs if the results of the audit conclude that it has understated the monies payable to Meda by more than ***. Any outstanding under-payments or over-payments that are identified as a result of carrying out the audit and certification shall be payable within five (5) Business Days. There shall be no more than one such audit and certification by an internationally recognised independent accounting firm during a given calendar year, and no inspection or certification shall take place more than *** after the submission of the annual statement to which it relates.

12. OWNERSHIP OF INTELLECTUAL PROPERTY AND KNOW HOW

12.1. Excluded IP . Except for those rights expressly granted under this Agreement, nothing herein shall be construed as creating, granting or conveying to one Party any licence, right, title or other interest in or to any Intellectual Property Rights and Know How owned or controlled by the other Party or its Affiliates:

12.1.1. existing prior to the Effective Date; or

12.1.2. independently discovered and developed during the Term of this Agreement by such other Party or its Affiliates other than in performance of its obligations under this Agreement and without use of such other Party’s Intellectual Property Rights, Know How or other Confidential Information.

12.2. Improvements . Meda shall own, and Valeant hereby assigns to Meda, all Improvements arising pursuant to this Agreement that are exclusively related to a Licensed Product***. In respect of any Improvements that are not assigned to Meda pursuant to this Clause 12.2, Valeant hereby grants to Meda an irrevocable, fully paid—up, worldwide (other than in the Xerese Territory or Elidel Territory), exclusive license with the right to grant sub-licenses solely for the research, development, manufacture, use, import, export, distribution, sale,

offer for sale, marketing, and Commercialisation of Licensed Products during the Term; provided however that Meda shall be subject to the payment obligations and restrictions set out in Clause 4.8.

12.3. Licence to Use Improvements . All Improvements subject to Clause 12.2 and all Improvements made by Meda shall be included within the licence granted to Valeant by Meda pursuant to Clauses 2.1, 2.2 and 2.3.

12.4. Cooperation with Respect to Improvements . Each Party shall promptly inform the other Party in writing of all Improvements of which it is aware arising during the Term of this Agreement. Meda shall have the exclusive right and at its sole cost to file for patent protection on any Improvement, including those that it owns pursuant to Clause 12.2 and Valeant agrees to undertake such acts requested by Meda and at Meda’s sole cost and expense as may be reasonably necessary to perfect Meda’s interests in and to Improvements as provided for in Clause 12.2 (including, without limitation, any patent applications or patents filed during or after the Term of this Agreement to protect such Improvements), which shall include Commercially Reasonable Efforts to provide the filing Party with reasonable and timely access to any employees or consultants of the other Party who were involved in the research leading to such Improvements to amongst other things, establish inventorship, determine the scope and patentability of the relevant Improvements and causing the execution of any assignments or other documents necessary to perfect the Parties’ interests in such Improvements.

12.5. New Know-How . To the extent that Valeant acquires any significant new Know How regarding and relating to the quality, efficacy, or safety of any Licensed Product, it shall provide Meda with paper, and if available, electronic copies of such Know How.

13. MANAGEMENT OF PATENT RIGHTS

13.1. Prosecution, Maintenance and Defence of Meda IP . Meda shall be responsible for, bear the cost of, and undertake (whether itself, through Affiliates or Third Parties), the filing, prosecution and maintenance of the Licensed Patents and shall so prosecute and maintain all Licensed Patents.

13.2. Notification of Infringement . Each Party shall promptly notify the other Party of any actual or potential infringement of any Licensed Patents by a Third Party which comes to that Party’s attention during the Term of this Agreement. Each Party shall promptly notify the other Party upon receiving notification that any such Licensed Patents is subject to a judicial or administrative challenge alleging non-infringement, invalidity or unenforceability.

13.3. Prosecution of Infringement . Meda shall have the initial right, but not the obligation, using counsel of its choice at its own cost to enforce the Licensed Patents or defend any challenge with respect thereto. Meda shall have sole control of any decisions or other aspects of any such action; provided that, where Valeant requests to be joined as a Party, the Parties shall pursue damages for *** in any such action. Valeant shall, upon request, give to Meda such reasonable assistance as Meda may reasonably request, including by

signing or executing any necessary documents and consenting to it being named as a party to the proceedings; provided that Meda shall reimburse Valeant for any reasonable out-of-pocket expenses incurred while providing such assistance. If Meda does not institute any such action within *** of a notice from Valeant requiring such action or such shorter time as may be required to avoid loss or material prejudice to the ability to bring or sustain or prevail in such action under the circumstances, then Valeant shall have the right, but not the obligation, at its own cost, to commence proceedings regarding the infringement or challenge, Valeant shall have sole control of any decisions or other aspects of the action and Meda shall, upon request, give to Valeant such reasonable assistance as Valeant may reasonably request, including by signing or executing any necessary documents and consenting to it being named as a party to the proceedings, provided that Valeant shall reimburse Meda for any reasonable out-of-pocket expenses incurred while providing such assistance.

13.4. Infringement and Other Proceedings . In the event that any Third Party alleges infringement or other violation of its Intellectual Property Rights in the Elidel Territory or Xerese Territory, as applicable, against Valeant with respect to the Licensed Products, or that Valeant considers it desirable to seek a declaration of non-infringement with regard to Licensed Products under any Third Party patent rights, Valeant shall control the defence (or, as applicable, prosecution) of such proceeding and the cost of such proceedings shall be borne by Valeant.

13.5. Interferences and Other Proceedings . In the event that any Third Party interference or opposition proceedings are commenced against one of the Parties with respect to the Licensed Patents, or that a Party considers it desirable to contest interference proceedings with a Third Party in respect to such Licensed Patents, the Parties shall consult with each other with a view to agreeing the strategy to be adopted.

13.6. To the extent that the validity, existence, inventorship or ownership of any of the Intellectual Property Rights owned by Meda is in issue in any proceeding set forth in Clause 13.5, as between the Parties, Meda shall have the sole control of decisions and proceedings directly relating to those issues and Valeant shall give Meda such reasonable assistance as Meda may reasonably request in the defence of such claims, at Meda’s cost. In the event that Meda so assumes control of such elements of a proceeding, the costs of those elements of the proceeding which are controlled by Meda shall be borne by Meda.

13.7. Consultation; Settlements . Each Party shall consult with the other Party in respect of any action which it may take pursuant to this Clause 13.6 and shall consider in good faith any comments such other Party makes pursuant to this Clause 13.6, provided that ***.

13.8. Recovery . Any damages or award (including any award of costs) made in proceedings shall be used first to reimburse each Party for any costs or expenses that it may have incurred in connection with the infringement proceedings (including without limitation, any amounts paid by the Party bringing the action to the other Party as reimbursement for expenses related to assisting in the proceedings) and any amounts expressly awarded to Meda *** and any amounts expressly awarded in ***.

14. TRADE MARKS

14.1. Trade Marks . Valeant will market and label:

14.1.1. Elidel Licensed Products in the Elidel Territory under the Elidel Trade Marks; and

14.1.2. Xerese Licensed Products in the Xerese Territory under the Xerese Trade Marks.

14.2. Acknowledgement. Each packet containing a Licensed Product shall bear an acknowledgement that it is licensed by Meda to Valeant.

14.3. Use of Licensed Trade Marks . Valeant may use the Licensed Trade Marks solely in connection with the sale, use, marketing and promotion of the respective Royalty Products in the Elidel Territory or Xerese Territory, as applicable; provided that:

14.3.1. the Licensed Trade Marks may be used only on the Royalty Products and on no other products whatsoever; and

14.3.2. whenever a Licensed Trade Mark is affixed to Royalty Products it shall be accompanied by wording and/or clear marking by the use of the ® symbol to show where appropriate that the Licensed Trade Mark in question has been registered as a trade mark and in other cases by the suffix TM , however, the foregoing does not apply to regulatory filings or correspondence with Regulatory Authorities.

14.4. Maintaining the Licensed Trade Marks . Meda shall, at its cost, be responsible for taking all steps to prosecute and maintain the Licensed Trade Marks and Valeant shall provide all reasonable assistance with such prosecution and maintenance.

14.5. Infringement of Licensed Trade Marks . In the event that either Party becomes aware of any actual or threatened infringement or misappropriation of any Licensed Trade Mark by a Third Party in the Elidel Territory or Xerese Territory, as applicable, that Party shall promptly inform the other of such infringement, and the Parties shall consult with each other in good faith to determine jointly the best way to prevent the infringement, including, without limitation, by instituting a legal proceeding against such Third Party. Meda shall have the right, at its own cost, to defend and enforce the Licensed Trade Mark in the Elidel Territory or Xerese Territory, as applicable, and shall take such steps as it considers appropriate in the enforcement of the Licensed Trade Mark, or in respect of any actual or threatened infringement of any Licensed Trade Mark in the Elidel Territory or Xerese Territory, as applicable; provided that, where Valeant requests to be joined as a Party, the Parties shall pursue damages for *** in any such action. If Meda elects not to take any action which Valeant considers appropriate within *** of being requested in writing to do so by Valeant, Valeant shall have the right, at its own cost, to bring proceedings in its own and Meda’s name in respect of such infringement. The Party bringing proceedings in accordance with the foregoing shall have sole control of any decisions or other aspects of the action, subject to Clause 14.6, and the other Party shall, upon request, give to the prosecuting Party such reasonable assurances as the prosecuting

Party may reasonably request, including by signing or executing any necessary documents and consenting to its name being used in the proceedings; provided that the prosecuting Party shall reimburse the other Party for any reasonable out-of-pocket expenses incurred while providing such assistance. The prosecuting Party shall keep the other Party reasonably informed of the progress of the action and shall consider the comments and observations of the other Party in prosecuting the action.

14.6. Settlements . In the event that any action or suit shall be brought against Valeant in connection with the Licensed Trade Marks for alleged infringement or misappropriation of a Third Party’s trade mark, ***.

14.7. Recovery . Any damages or award (including any award of costs) made in proceedings shall be used first to reimburse each Party for any costs or expenses that it may have incurred in connection with the infringement proceedings (including without limitation, any amounts paid by the Party bringing the action to the other Party as reimbursement for expenses related to assisting in the proceedings) and any amounts expressly awarded to Meda *** and any amounts expressly awarded ***.

15. TERMINATION

15.1. Term of Agreement . This Agreement shall come into effect on the Effective Date and shall continue until terminated in accordance with this Clause 15 (the “Term” ) .

15.2. Termination for Patent Challenge or Trade Mark Challenge . Meda may terminate this A greement on *** prior written notice if:

15.2.1. Valeant challenges or contests or assists a Third Party to challenge or contest the scope, validity or ownership of any of the Licensed Patents or to claim that they are not necessary for the import, keeping, use or sale of any Licensed Products;

15.2.2. Valeant challenges or contests or assists a Third Party to challenge or contest the registration, validity or ownership of any of the Licensed Trade Marks.

provided that if Valeant so ceases such challenge, contest or assistance within ***, Meda shall have no right to terminate this Agreement on the basis of the challenge, contest or assistance set forth in such notice.

15.3. Termination for Breach . Subject to the terms of this Clause 15, either Meda on the one hand or Valeant on the other hand (the “ Terminating Party ”) shall have the right to terminate this Agreement in the event that Valeant or Meda, respectively, commits a material breach of this Agreement. The non-breaching Party shall first provide written notice to the Party that committed such material breach (the “ Defaulting Party ”) , which notice shall clearly describe the nature of the breach. The Defaulting Party shall have *** in which to cure the breach (or such longer period as is set out in the notice) . If the Defaulting Party fails to cure the breach within *** (or such longer period as is set out in the notice) then the Terminating Party may terminate this Agreement immediately on written notice.

15.4. Termination for Insolvency. Either Party shall have the right to terminate this Agreement immediately upon giving written notice of termination to the other (the “Insolvent Party” ) if the Insolvent Party suspends or threatens to suspend payment of its debts as they fall due in circumstances where the Insolvent Party is unable to pay its debts within the meaning of the relevant bankruptcy or insolvency laws, any action, or any legal proceedings are started whether by a Third Party or not , for the purpose of the winding up or dissolution of the Insolvent Party or an analogous event occurs in any jurisdiction.

16. CONSEQUENCES OF TERMINATION

16.1. Upon expiry or termination of this Agreement for any reason:

16.1.1. Termination of Rights . Subject to Clauses 16.2 and 16.4, all of the rights of Valeant under this Agreement shall terminate upon the Termination Date.

16.1.2. Termination of ***

16.1.3. Intellectual Property Infringement Proceedings . The Parties shall continue to be obliged to continue providing the support and assistance in relation to any litigation concerning infringement of Patent Rights or infringement of Licensed Trade Marks in the Elidel Territory or Xerese Territory, as applicable, that had been initiated pursuant to Clauses 13 or 14 prior to the Termination Date and not settled as of the Termination Date.

16.1.4. Return of Confidential Information After Termination . Valeant shall , at its own cost, promptly, at Meda’s option, either return to Meda all tangible Confidential Information disclosed to Valeant by or on behalf of Meda (including all copies thereof) or destroy such Confidential Information; provided that Valeant shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Clause 17. Valeant shall use reasonable endeavours to delete all electronic copies of such Confidential Information from its systems. Upon termination, Meda shall , at its own cost, at Valeant’s option, either return to Valeant all tangible Confidential Information disclosed to Meda by or on behalf of Valeant (including all copies thereof) or destroy such Confidential Information; provided that Meda shall have the right to retain one (1) copy of the Confidential Information in a secure location solely for purposes of identifying its confidentiality obligations under Clause 17. Meda shall use reasonable endeavours to delete all electronic copies of such Confidential Information from its systems.

16.1.5. Transfer of Marketing Authorisations and Other Regulatory Approvals After Termination . Valeant shall promptly take action to transfer, to Meda or to its designee, all Regulatory Approvals relating to the all Licensed Product in the Elidel Territory or Xerese Territory, as applicable, together with any applications for Regulatory Approvals of Licensed Products (including Marketing Authorisation applications or other such applications, as well as all existing INDs

and other similar regulatory filings in the Elidel Territory or Xerese Territory, as applicable, for the conduct of clinical trials with respect to Licensed Products) together with a copy of all Elidel Clinical Data and Xerese Clinical Data. All such transfers shall be completed in accordance with applicable laws, rules and regulations. In the event that such a transfer is not possible, Valeant shall maintain the existing Regulatory Approvals and applications therefor for Licensed Products in the Elidel Territory or Xerese Territory, as applicable, including, without limitation, granting Meda and/or its designees rights to cross-refer to the data and information on file with Regulatory Authorities in the Elidel Territory or Xerese Territory, as applicable, as may be necessary to facilitate the granting of separate Regulatory Approvals to Meda. The costs of compliance with this Clause 16.1.4 shall be borne by Valeant if Meda has terminated the Agreement and by Meda if Valeant has terminated the Agreement.

16.1.6. Clinical Studies. Valeant shall, upon Meda’s written request, transfer to Meda in an orderly fashion the management and sole responsibility for any clinical studies on Licensed Products that were commenced prior to the termination of this Agreement, including ***. Commencement shall mean the point at which the first study subject has been dosed with the relevant Licensed Product. The costs of such transfer shall be borne by Valeant if Meda has terminated the Agreement and by Meda if Valeant has terminated the Agreement. Valeant shall not commence any clinical study of Licensed Products at any time after it has given or received a notice of termination pursuant to Clause 15. Valeant shall not have an obligation to continue any clinical study of Licensed Products at any time after the effective date of termination.

16.1.7. Distribution Services. Upon termination of this Agreement, Valeant shall have the right, but not the obligation, for a period of *** following the effective date of termination, to sell any inventory of Licensed Product existing on the effective date of termination. On the effective date of the termination or the end of such period, whichever is later, Meda shall be required to purchase from Valeant any remaining inventory of Licensed Products that is in Saleable Condition and that has, at the time of delivery to Meda, a remaining shelf life of no less than *** of the shelf life authorized in the applicable Marketing Authorization, at Valeant’s actual cost to acquire such inventory.

16.1.8. Provision of Promotional and Marketing Materials, Information and Records After Termination . Valeant shall provide to Meda a copy of all promotional and marketing materials used in the promotion of Licensed Products and hereby grants a licence to Meda in the Elidel Territory or Xerese Territory, as applicable, effective as of the date of termination, to use and/or create any such materials, copies or derivative works thereof in Meda’s promotion of Licensed Products; provided that such license does not extend to use of any trade name, trademark or service mark of Valeant. Meda shall be entitled to sublicense the rights to any Third Party it grants the right to market the Licensed Products (or the terminated Licensed Product(s), as applicable) in the Elidel Territory or Xerese Territory, as applicable. Valeant shall not be liable for any use of

promotional and marketing materials by Meda or its sublicensee subsequent to the date of termination.

16.1.9. Third Party Agreements and *** . Promptly following termination of this Agreement, the Parties will use their best efforts to procure the assignment of ***, and any Third Party Agreements assigned to Valeant pursuant to this Agreement, from Valeant back to Meda. With respect to the Third Party Agreements that are assigned from Valeant back to Meda pursuant to this Clause 16.1.9, the Parties agree enter into an assignment and assumption agreement substantially in the form of Schedule 8 attached hereto assigning any Third Party Agreements assigned to Valeant pursuant to this Agreement back to Meda.

16.1.10. Records . Notwithstanding anything to the contrary in this Clause 16.1, each Party may retain one archival copy of any records or other materials solely for archival purposes or additional copies as required by applicable law.

16.2. Accrued Rights . The expiration or earlier termination of this Agreement for whatever reason shall not affect any rights or obligations of the Parties arising in any way out of this Agreement which are accrued prior to the date of termination, including, without limitation, the right to recover damages against the other Party for any breach of this Agreement occurring prior to such termination.

16.3. Related Agreements . The Elidel Supply Agreement shall terminate on the same date as termination of this Agreement subject to the provisions of the Elidel Supply Agreement dealing with the consequences of termination. The Pharmacovigilance Agreement shall survive pursuant to its own terms after termination of this Agreement.

16.4. Surviving Clauses . In the event of expiry or termination of this Agreement for any reason the provisions of Clauses 16 (Consequences of Termination), 17 (Confidentiality), 19 (Liability and Indemnities) and 23 (Miscellaneous) shall remain in full force and effect.

17. CONFIDENTIALITY

17.1. Confidential Information . During the Term each Party (the “Disclosing Party” ) may disclose or make available to the other Party (the “Receiving Party” ) confidential and/or proprietary information related to its products, technology, research plans, business affairs and/or finances related to the Licensed Products, including, any Know-How (the “Confidential Information” ). All Confidential Information is and shall remain the property of the Disclosing Party; provided, however, that all Improvements that are generated by or on behalf of either Party in performance of activities under this Agreement shall be deemed to be the Confidential Information of Meda.

17.2. Confidentiality Obligations . Each Party undertakes that except as expressly permitted pursuant to this Agreement it shall not, and shall ensure that its Affiliates do not, disclose or permit to be disclosed to any Third Party, or use or permit the use for any purpose other than in performance of its obligations under this Agreement, any of the other Party’s Confidential Information. Each Party may disclose Confidential Information provided by

the other Party to the extent such disclosure is reasonably necessary in the following instances:

17.2.1. disclosure to governmental or other Regulatory Authorities in order to gain or maintain approval to conduct clinical trials or to market Licensed Product, but such disclosure may be only to the extent reasonably necessary to obtain authorisations;

17.2.2. complying with applicable court orders or governmental regulations, including rules or regulations of any competent authority, Regulatory Authority or regulated securities exchange provided that the Receiving Party (i) promptly gives notice to the Disclosing Party in order to allow such Disclosing Party whatever opportunity may exist to seek confidential treatment of the Confidential Information; (ii) provides to the Disclosing Party all reasonable assistance to obtain confidentiality undertakings at the Disclosing Party’s expense; and (iii) only discloses Confidential Information to the extent required by the applicable court order or governmental regulation .

17.2.3. The obligations of each Party under this Clause 17 shall continue for the duration of this Agreement and shall survive for a period of *** from the date of termination.

If the Party required by law to disclose is unable to inform the Disclosing Party prior to disclosure, the Receiving Party shall (provided it is lawful to do so) make full disclosure as soon as possible after such disclosure .

17.3. Exclusions from Confidentiality Undertaking . The obligations of confidentiality set out in this Clause 17 shall not apply to Confidential Information which is:

17.3.1. published or becomes generally available to the public other than as a result of a breach of the undertakings hereunder by the receiving Party;

17.3.2. in the possession of the receiving Party prior to its receipt from the disclosing Party, as evidenced by contemporaneous written evidence, and is not subject to a duty of confidentiality;

17.3.3. independently developed by the receiving Party and is not subject to a duty of confidentiality; or

17.3.4. obtained by the receiving Party from a Third Party not subject to a duty of confidentiality.

17.4. Press Announcements . The Parties shall provide each other with a draft of any proposed press release concerning the entering into of this Agreement or otherwise relating to the Elidel Licensed Product or the Xerese Licensed Product and shall obtain the other Party’s agreement to its terms, such agreement not to be unreasonably withheld, delayed, or conditioned.

18. WARRANTIES

18.1. Warranties by Each Party . Each Party hereby warrants to the other Party that, as of the Effective Date:

18.1.1. it is duly organised and validly existing under the laws of its place of incorporation;

18.1.2. it has legal power, authority and right to enter into this Agreement;

18.1.3. the execution and performance by it of its obligations hereunder will not constitute a breach of, or conflict with, its organisational documents nor any other material agreement or arrangement, whether written or oral, by which it is bound;

18.1.4. it has full corporate power and authority and has taken all corporate action necessary to enter into and perform this Agreement, and that this Agreement has been duly authorised, executed, and delivered by that Party; and

18.1.5. that this Agreement is a valid, binding, and legally enforceable obligation of that Party.

18.2. Warranties by Meda with respect to the Elidel Licensed Products . Meda hereby warrants to Valeant that, as of the Effective Date:

18.2.1. Meda has not received any written notice of or threatening any material suit, legal claim, action, proceeding (other than patent oppositions), investigation against Meda or any of its Affiliates, that relates to the Elidel Licensed Products.

18.2.2. Meda has not received any written notice threatening any orders, injunctions or decrees of any Governmental Entity to undertake Measures (as defined in the Elidel Supply Agreement) in the Elidel Territory or otherwise applicable or related to the Elidel Licensed Products that in any material respect restricts the arrangements contemplated by this Agreement.

18.2.3. Meda and/or its Affiliates are (i) the beneficial owners of the Elidel Licensed Patents, Elidel Licensed Know-How, Elidel Licensed Clinical Data and Elidel Licensed Trade Marks free and clear of all Encumbrances (other than Permitted Encumbrances) or (ii) otherwise have sufficient rights to grant to Valeant the licenses and sublicenses as contemplated by this Agreement.

18.2.4. To the Knowledge of Meda, the rights granted to Valeant in Clause 2 constitute all the material rights necessary to Commercialise the Elidel Licensed Products in the Elidel Field in the Elidel Territory.

18.2.5. Neither Meda nor any of its Affiliates is a party to any license or similar agreement under which it has granted or agreed to grant a license or other rights to any Third Party to the Elidel Licensed Patents or the Elidel Trade Marks, other

than any licenses or other rights which would not conflict in any material respect with the rights being conveyed or licensed to Valeant under this Agreement.

18.2.6. To the Knowledge of Meda, the sale, offer for sale or importation of the Elidel Licensed Product in the Elidel Field as it is sold, offered for sale or imported in the Elidel Territory as of the date hereof does not infringe, misappropriate or otherwise violate in any material respect the Intellectual Property Rights of any Third Party.

18.2.7. To the Knowledge of Meda, none of the Elidel Licensed Patents or Elidel Trade Marks has been adjudged invalid or unenforceable in whole or part other than abandoned patents.

18.2.8. Meda has not received any written notice of any suit, claim, action, proceeding challenging or seeking to deny or restrict, directly or indirectly, the rights of Meda or any of its Affiliates in any Elidel Licensed Patents, Elidel Trade Marks or Elidel Licensed Know-How.

18.2.9. To the Knowledge of Meda, no Third Party is infringing or misappropriating any of the Elidel Licensed Patents, Elidel Trade Marks or Elidel Licensed Know-How.

18.2.10. Meda and its Affiliates are in compliance with *** and, to the knowledge of Meda, *** and its Affiliates are in compliance with ***.

18.3. Warranties by Meda with respect to the Xerese Licensed Products . Meda hereby warrants to Valeant that, as of the Effective Date:

18.3.1. There is no material suit, legal claim, action, proceeding (other than patent oppositions), investigation pending, or to the Knowledge of Meda, threatening in writing against Meda or any of its Affiliates, that relates to the Xerese Licensed Products.

18.3.2. To the knowledge of Meda, there are no outstanding or threatened (in writing) orders, injunctions or decrees of any Governmental Entity in the Xerese Territory or otherwise applicable or related to the Xerese Licensed Products that in any material respect restricts the arrangements contemplated by this Agreement.

18.3.3. Meda and/or its Affiliates (i) are the beneficial owners of the Xerese Licensed Patents, Xerese Licensed Know-How, Xerese Licensed Clinical Data and Xerese Licensed Trade Marks free and clear of all Encumbrances (other than Permitted Encumbrances), or (ii) otherwise have sufficient rights to grant to Valeant the licenses and sublicenses as contemplated by this Agreement.

18.3.4. To the Knowledge of Meda, the rights granted to Valeant in Clause 2 constitute all the material rights necessary to Commercialise the Xerese Licensed Products in the Xerese Field in the Xerese Territory.

18.3.5. Neither Meda nor any of its Affiliates is a party to any license or similar agreement under which it has granted or agreed to grant a license or other rights to any Third Party to the Xerese Licensed Patents or the Xerese Trade Marks, other than any licenses or other rights which would not conflict in any material respect with the rights being conveyed or licensed to Valeant under this Agreement.

18.3.6. To the Knowledge of Meda, the sale, offer for sale or importation of the Xerese Licensed Product in the Xerese Field as it is sold, offered for sale or imported in the Xerese Territory as of the date hereof does not infringe, misappropriate or otherwise violate in any material respect the Intellectual Property Rights of any Third Party.

18.3.7. To the Knowledge of Meda, none of the Xerese Licensed Patents or Xerese Trade Marks has been adjudged invalid or unenforceable in whole or part other than abandoned patents.

18.3.8. Meda has not received any written notice of any suit, claim, action, proceeding challenging or seeking to deny or restrict, directly or indirectly, the rights of Meda or any of its Affiliates in any Xerese Licensed Patents, Xerese Trade Marks or Xerese Licensed Know-How.

18.3.9. To the Knowledge of Meda, no Third Party is infringing or misappropriating any of the Xerese Licensed Patents, Xerese Trade Marks or Xerese Licensed Know-How.

18.3.10. Meda and its Affiliates are in compliance with *** and, to the Knowledge of Meda, *** and its Affiliates are in compliance with ***.

18.3.11. Meda and its Affiliates are in compliance with *** and, to the Knowledge of Meda, *** is in compliance with ***.

18.3.12. Meda or its Affiliate is the holder of the Marketing Authorization number NDA 22-436 in the United States for the Xerese Product marketed in the United States at the Effective Date.

18.4. Meda Disclosure . Valeant acknowledges that Meda has made the following disclosures and that Meda shall not be liable for any breach of warranty arising out of or in relation to the matters disclosed below:

18.4.1. ***

18.4.2. Meda has disclosed to Valeant ***.

18.5. Undertaking by Valeant . Valeant undertakes to Meda that it will comply with Meda’s obligations to ***, provided however that:

18.5.1. the undertaking with respect to ***;

18.5.2. with respect to the undertaking regarding ***; and

18.5.3. with respect to the undertaking regarding ***.

If required in order to *** under the *** Agreement by Meda to Valeant or if the Parties otherwise agree, Valeant shall provide ***.

18.6. No Implied Warranties . The warranties provided in this Clause 18 are in lieu of any other warranties, express or implied, and nothing herein shall be construed as a warranty by either Party of any kind, including without limitation, any implied warranty of fitness for a specific purpose or merchantable quality, all of which are expressly and specifically excluded.

18.7. No Warranties of Intellectual Property Rights . Nothing in this Agreement shall be construed as a warranty given by any Party (i) that any patent will issue after the Effective Date based upon any pending patent application included in the Licensed Intellectual Property, or (ii) that any granted patent which issues from such pending patent applications will be valid and enforceable, or (iii) that after the Effective Date the manufacture, use or sale of Licensed Products or the use of any Licensed Intellectual Property will not infringe the patent or proprietary rights of any Third Party.

18.8. No Further Warranties . No director, officer, employee or agent of any Party or its Affiliates is authorised to make any further warranty to the other Party which is not contained in this Agreement, and each Party acknowledges that it has not relied on any such oral or written warranties.

19. LIABILITY AND INDEMNITIES

19.1. No Consequential Damages . Subject to Clause 19.7, but otherwise notwithstanding any other provision of this Agreement, neither Party shall be liable to the other Party or to any Affiliate of the other Party for any lost profits, business opportunities, special, indirect, consequential, exemplary, or punitive damages of any nature arising under or in relation to this Agreement even if that Party was advised in advance of the possibility of such loss or damage, unless actually paid to a Third Party.

19.2. Indemnification by Valeant . Valeant shall, subject to Clause 19.1, indemnify, defend and hold harmless Meda, its Affiliates, and its and their respective directors, officers, employees and agents (collectively the “ Meda Indemnified Parties ”) against any and all claims, causes of action, demands, liabilities, losses, damages, costs or expenses, including reasonable attorneys’ fees, asserted by a Third Party (each a “ Loss ”) to the extent such Loss arose out of or was caused by: (a) the distribution, marketing, promotion or sale of Licensed Products by or on behalf of Valeant or its Affiliates or sublicensees; (b) Valeant’s breach of any of its warranties or covenants herein; (c) ***; or (d) a

negligent act or omission or wilful misconduct by Valeant, its Affiliates or sublicensees in the performance of its obligations under this Agreement; except, in all cases, to the extent that such Loss arises out of (i) the negligence or wilful misconduct of Meda; (ii) Meda’s breach of any of its warranties herein or (iii) any failure of Meda to perform or observe any provision, obligation, covenant or agreement to be performed by Meda pursuant to this Agreement.

19.3. Indemnification by Meda . Meda shall, subject to Clause 19.1, indemnify, defend and hold harmless Valeant, its Affiliates, and its and their respective, directors, officers, employees and agents (collectively the “ Valeant Indemnified Parties ”) against any and all Losses incurred or suffered by the Valeant Indemnified Parties to the extent such Loss arose out of or was caused by (a) other than by Valeant, the distribution, marketing, promotion or sale of Licensed Products by or on behalf of Meda or its Affiliates, licensees, or sublicensees or their predecessors; (b) Meda’s breach of any of its warranties or covenants herein; (c) ***; or (d) a negligent act or omission or wilful misconduct by Meda, its Affiliates or sublicensees in the performance of its obligations under this Agreement, or ***; except, in all cases, to the extent that such Loss arises out of (i) the negligence or wilful misconduct of Valeant (ii) Valeant’s breach of any of its warranties herein or (iii) any failure of Valeant to perform or observe any provision, obligation, covenant or agreement to be performed by Valeant pursuant to this Agreement. In addition, Meda shall fully indemnify and hold the Valeant Indemnified Parties harmless from any and all Losses arising out of any use by Meda or by any Third Party to which Meda grants a license or sublicense pursuant to Clause 16.1.7, of promotional and marketing materials; the foregoing indemnification shall survive termination of this Agreement indefinitely.

19.4. Notification of Liabilities/Losses . A person or entity entitled to indemnification under this Clause 19.4 (an “Indemnified Party” ) shall give prompt written notification (within twenty (20) days or less if action is required within such shorter time period) to the Party from whom indemnification is sought (the “Indemnifying Party” ) of the commencement or notice of Loss for which indemnification may be sought or, if earlier, upon the assertion of any such Loss (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Loss as provided in this Clause 19.4 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except, and only, to the extent that such Indemnifying Party is materially prejudiced as a result of such failure to give notice). The Indemnifying Party shall be liable for any reasonable legal fees and expenses subsequently incurred in connection with the defence of such Loss after receiving such notice. The Parties shall thereafter keep the other Party informed of any Losses or threatened Losses (as described in Clauses 19.2 and/or 19.3).

19.4.1. In the case of a Loss for which Meda seeks indemnification under Clause 19.2, Meda shall permit Valeant to direct and control the defence of the Loss and shall provide such reasonable assistance as is reasonably requested by Valeant (at Valeant’s cost) in the defence of the Loss; provided that nothing in this Clause 19.4.1 shall permit Valeant to make any admission on behalf of Meda, or to settle any claim or litigation which would impose any financial obligations on Meda or would result in any loss or diminution of the scope, validity or

enforceability of the Licensed Intellectual Property without the prior written consent of Meda, such consent not to be unreasonably withheld, delayed or conditioned.

19.4.2. In the case of a Loss for which Valeant seeks indemnification under Clause 19.3, Valeant shall permit Meda to direct and control the defence of the Loss and shall provide such reasonable assistance as is reasonably requested by Meda (at Meda’s cost) in the defence of the Loss, provided that nothing in this Clause 19.4.2 shall permit Meda to make any admission on behalf of Valeant, to settle any claim or litigation which would impose any financial obligations on Valeant or materially affect Valeant’s rights under or the value to Valeant of the Licensed Intellectual Property without the prior written consent of Valeant, such consent not to be unreasonably withheld, delayed or conditioned.

19.5. Supply . The indemnities in this Agreement shall not apply to the manufacture and supply of Licensed Products which shall be governed by the Elidel Supply Agreement or Clause 9.1, as applicable, which will provide for the manufacturer and supplier of Licensed Products and active pharmaceutical ingredients to bear certain liabilities on terms to be agreed for Losses for product liability claims arising out of the negligent manufacture or supply of those Licensed Products and active pharmaceutical ingredients.

19.6. Mitigation. Any Party making a claim under this Clause 19 shall take all reasonable steps to mitigate and/or minimise the Losses suffered and shall not do anything which would have the effect of increasing the Losses.

19.7. Restriction on Limitation of Liability . Neither Party limits or excludes its liability for fraud, fraudulent concealment or fraudulent misrepresentation, nor for death or personal injury arising from its negligence.

19.8. Insurance. Each Party shall maintain comprehensive general liability insurance, including broad form contractual liability and product liability coverage which is sufficient to meet its obligations pursuant to this Agreement. Each Party shall maintain such insurance during the term of this Agreement and thereafter for a period of ***. Upon request, the insured Party shall provide the other Party with a certificate of insurance as evidence of the requested coverage and shall notify the other Party within thirty (30) days of any cancellation or termination of such insurance.

20. ***

21. ***

22. NOTICES.

22.1. Address . Any notice required to be given under this agreement, shall be in writing and shall be delivered personally, or sent by pre-paid certified or registered post return receipt

requested or recorded delivery or by commercial courier, to each party required to receive the notice at its address as set out below:

Meda:

***

Valeant :

***

or as otherwise specified by the relevant Party by notice in writing to each other Party.

22.2. Deemed Delivery . Any notice shall be deemed to have been duly received:

22.2.1. if delivered personally, when left at the address and for the contact referred to in this Clause 22;

22.2.2. if sent by pre-paid recorded delivery, at 9.00 am on the fifth Business Day after posting; or

22.2.3. if delivered by commercial courier, on the date and at the time that the courier’s delivery receipt is signed.

23. MISCELLANEOUS.

23.1. Force Majeure . In the event any Party (the “Affected Party” ) is delayed or prevented from the performance of any act required under this agreement by reasons outside its reasonable control including, war or national emergency, acts of terrorism, protests, riot, fire, explosion, flood, epidemic, but not including any labour dispute (a “Force Majeure Event” ), then performance of such act will be excused for the period of such delay, provided however, that such party shall exert its reasonable efforts to overcome such Force Majeure Event and to resume performance of its obligations in a timely manner. Notice of the commencement and termination of such Force Majeure Event will be provided by the Affected Party to the other Party. Any obligations of the Affected Party will be extended for a period of time equal to the number of days of the delay, provided however, that in the event that such Affected Party is unable to overcome such Force Majeure Event within one-hundred eighty (180) days, the other Party may terminate this Agreement on written notice.

23.2. Public Statements . The Parties shall not disclose the relationship between the Parties or the existence of this Agreement to any Third Party without the consent of the other Party, except as may be required by applicable law (including without limitation, federal and local securities laws) or any listing agreement with the New York Stock Exchange, or as may be reasonably requested in connection with any proceedings before any Regulatory Authority or other governmental authority.

23.3. Independent Contractors . The Parties hereto are independent contractors and nothing contained in this Agreement shall be deemed or construed to create a partnership, joint venture, employment, franchise, agency or fiduciary relationship between the Parties.

23.4. Assignment, Subcontracting . This Agreement and each and every covenant, term and condition herein is binding upon and enures to the benefit of the Parties hereto and their respective successors. Neither Party may assign this Agreement, nor assign, sublicense, delegate or sub-contract any of its rights or obligations granted hereunder without the other Party’s prior written consent, except that a Party may (a) assign, sublicense, subcontract or delegate any or all of its rights and obligations under this Agreement to one or more of its Affiliates; and (b) assign this Agreement in its entirety to a successor to all or substantially all of its business or assets to which this Agreement relates. No permitted assignment, sublicense, subcontract or delegation shall relieve the assigning, sublicensing, subcontracting or delegating Party of its liability hereunder. Any attempted assignment in contravention of the foregoing shall be void.

23.5. Severability . If the whole or any part of this Agreement is or becomes or is declared illegal, invalid or unenforceable in any jurisdiction for any reason (including both by reason of the provisions of any legislation and also by reason of any court or competent authority which either has jurisdiction over this Agreement or has jurisdiction over any of the Parties):

23.5.1. in the case of the illegality, invalidity or un-enforceability of the whole of this Agreement it shall terminate only in relation to the jurisdiction in question; or

23.5.2. in the case of the illegality, invalidity or un-enforceability of part of this Agree ment that part shall be severed from this Agreement in the jurisdiction in question and that illegality, invalidity or un-enforceability shall not in any way whatsoever prejudice or affect the remaining parts of this Agreement which shall continue in full force and effect.

If, in the reasonable opinion of any Party, any severance under this Clause 23.5 materially affects the commercial basis of this Agreement, then the Parties shall discuss, in good faith, ways to eliminate the material effect.

23.6. Language . Except where expressly provided otherwise, all reports, plans and any other form of communication between the Parties shall be in English and where necessary Valeant shall provide an English translation of any document sent to Meda and Meda shall provide an English translation of any document sent to Valeant.

23.7. Entire Agreement . This Agreement (together with the Elidel Supply Agreement and the other agreements referenced in this Agreement), constitutes the entire understanding and agreement of the Parties with respect to the subject matter hereof and cancels and supersedes all prior agreements, whether verbal or written, between the Parties with respect to the subject matter hereof, including, specifically, the Interim Distribution Agreement, provided that any Confidential Information (as such term is defined in the Interim Distribution Agreement) shall be deemed to be Confidential Information pursuant

to this Agreement and subject to the applicable provisions hereof. No modification of any provision of this Agreement shall be effective unless made in writing and signed by a duly authorized officer of both of the Parties.

23.8. Third Party Rights . A person who is not a Party to the Agreement shall not have any rights under or in connection with it.

23.9. Waiver . No delay or failure of any Party in exercising or enforcing any of its rights or remedies under this Agreement shall operate as a waiver of those rights.

23.10. Governing Law and Dispute Resolution .

23.10.1. This Agreement (and any dispute, controversy, proceedings or claim of whatever nature arising out of or in any way relating to this Agreement including any question regarding its existence, validity, enforceability or termination) shall be governed by and construed in accordance with the laws of England, without regard to principles of choice of law or conflicts of laws that might lead to the application of laws other than the laws of England .

23.10.2. Except as otherwise provided under Clause 13.5 of this Agreement, each party hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of England located in London, England over any action, suit or proceeding arising out of or relating to this Agreement. Each of the Parties hereto irrevocably waives any right that it may have to object to an action being brought in those courts, to claim that the action has been brought in an inconvenient forum, or to claim that those courts do not have jurisdiction.

23.10.3. This Clause 23.10 shall not prevent a party hereto from enforcing any judgment obtained in the courts of England in any other jurisdiction.

23.11. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Signature Page Follows]

This Agreement has been entered into on the date stated at the beginning of this Agreement.

Signed by

State position:

By and on behalf of MEDA PHARMA SARL


Signed by

State position:

By and on behalf of VALEANT INTERNATIONAL (BARBADOS) SRL

SCHEDULE 1

PATENTS

PART A — Elidel Licensed Patents

FAMILY NUMBER

CTRY

FILING
DATE

FILING
NUMBER

GRANT
NUMBER

GRANT
DATE

STATUS

EXPIRY

***

***

***

***

***

***

***

***

FAMILY
NUMBER

CTRY

FILING
DATE

FILING NUMBER

GRANT
NUMBER

GRANT
DATE

STATUS

EXPIRY

***

FAMILY NUMBER

CTRY

FILING
DATE

FILING
NUMBER

GRANT
NUMBER

GRANT
DATE

STATUS

EXPIRY

***

***

FAMILY
NUMBER

CTRY

FILING
DATE

FILING
NUMBER

GRANT
NUMBER

GRANT
DATE

STATUS

EXPIRY

***

***

FAMILY NUMBER

CTRY

FILING DATE

FILING NUMBER

GRANT
NUMBER

GRANT
DATE

STATUS

EXPIRY

***

***

FAMILY NUMBER

CTRY

FILING DATE

FILING
NUMBER

GRANT
NUMBER

GRANT
DATE

STATUS

EXPIRY

***

***

FAMILY NUMBER

CTRY

FILING
DATE

FILING
NUMBER

GRANT
NUMBER

GRANT
DATE

STATUS

EXPIRY

***

PART B — Xerese Licensed Patents

		Filing Date/ Issue Date	Country	Title	Status and Expiration
1.	*******	*******	*******	*******	*******
2.	*******	*******	*******	*******	*******
3.	*******	*******	*******	*******	*******
4.	*******	*******	*******	*******	*******
5.	*******	*******	*******	*******	*******
6.	*******	*******	*******	*******	*******

		*******		*******		*******		*******		*******
		*******		*******		*******		*******		*******

SCHEDULE 2

PRODUCTS

PART A — Elidel Products

Product Description

Elidel Cream 1% 30g

Elidel Cream 1% 100g

Elidel Cream 1% 60g

Elidel Cream Sample 10mg/5g

PART B — Xerese Products

Product Description

Xerese 0.5 gram pouch

Xerese 2 gram tube

Xerese 5 gram tube

SCHEDULE 3

TRADE MARKS

PART A — Elidel Trade Marks

TRADEMARK

COUNTRY

FILING
DATE

FILING
NUMBER

REGISTRATION
DATE

REGISTRATION
NUMBER

NEXT
RENEWAL
DATE

***

PART B — Xerese Trade Marks

***

SCHEDULE 4

MARKETING SERVICES

The Parties will agree on a *** Plan covering the period *** wh ich includes the following or a combination of the elements listed below. The *** Services shall be provided in accordance with the *** Plan.

1. ***

***

2. ***

***

3. ***

***

4. ***

***

5. ***

***

6. ***

***

7. ***

***

8. ***

***

9. ***

***

10. ***

***

SCHEDULE 5

***

SCHEDULE 6

MEDA’S KNOWLEDGE PERSONS

***

SCHEDULE 7

THIRD PARTY AGREEMENTS

Agreement Type	Meda Party	Counter Party	Territory / Country of Business	Effective Date of Agreement / Duration and Termination Period
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******	*******	*******
*******		*******		*******
*******		*******		*******
*******		*******		*******

Agreement Type	Meda Party	Counter Party	Territory / Country of Business	Effective Date of Agreement / Duration and Termination Period
*******		*******	*******	*******
*******		*******		*******
*******		*******		*******
*******		*******	*******	*******
*******		*******	*******	*******

SCHEDULE 8

ASSIGNMENT AND ASSUMPTION OF THIRD PARTY AGREEMENTS

This ASSIGNMENT AND ASSUMPTION OF THIRD PARTY AGREEMENTS (this “ Agreement ”), is made as of the 29 th day of June, 2011, by Meda Pharma SARL, a company incorporated in Luxembourg (“ Assignor ”), and Valeant International (Barbados) SRL, an international society with restricted liability established under the laws of Barbados (“ Assignee ”). All capitalized words and terms used in this Agreement and not defined herein shall have the respective meanings ascribed to them in that certain License Agreement of even date herewith by and between Assignor and Assignee (the “ License Agreement ”).

WHEREAS, Assignor has entered into the License Agreement with Assignee, pursuant to which, among other things, Assignor agreed to assign its obligations under the Third Party Agreements to Assignee and Assignee is obligated to assume and accept the assignment of obligations for the Third Party Agreements.

NOW, THEREFORE, in order to satisfy Assignor’s and Assignee’s obligations under the License Agreement, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows:

1. Assignment . In accordance with and subject to the terms of the License Agreement, Assignor hereby transfers to Assignee, all of Assignor’s right, title and interest in, to and under the Third Party Agreements.

2. Assumption . In accordance with and subject to the terms of the License Agreement, Assignee hereby assumes and accepts Assignor’s entire right, title and interest in, to and under the Third Party Agreements and assumes and agrees to perform and discharge, in accordance with their respective terms and subject to the respective conditions thereof, all outstanding obligations and liabilities under the Third Party Agreements arising from and after the Effective Date.

3. Sub-contraction of Relevant Obligation . Notwithstanding the provisions of paragraph 2, where any obligation under any of the Third Party Agreements cannot be assigned or transferred to Assignee except by an agreement of novation, such relevant obligation shall not be assigned or transferred pursuant to paragraph 2 above but Assignee shall perform (as the sub-contractor or agent of Assignor) the relevant obligation to the extent it is to be discharged after the Effective Date unless and until such novation is effected by obtaining the consent of the counterparty to the relevant contract.

4. Governing Law . This Agreement shall be governed by the laws of England, without regard to principles of choice of law or conflicts of laws that might lead to the application of laws other than the laws of England. Each party hereto irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of England located in London, England over any action, suit or proceeding arising out of or relating to this Agreement.

5. EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

6. Conflicts . Nothing in this Agreement shall be deemed to supersede, enlarge or modify any of the provisions of the License Agreement, all of which survive the execution and delivery of this Agreement as provided and subject to the limitations set forth in the License Agreement. If any conflict exists between the terms of this Agreement and the terms of the License Agreement, the terms of the License Agreement shall govern and control.

7. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8. No Representation . This Agreement is made without recourse, representation or warranty of any kind whatsoever, express or implied, except as specifically set forth in the License Agreement.

[ No further text on this page ]

EXECUTION COPY

IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly executed as of the date first above written:

	MEDA PHARMA SARL


	By:
	Name:
	Title:


	VALEANT INTERNATIONAL (BARBADOS) SRL


	By:
	Name:
	Title:

SCHEDULE 9

PART A — ***

PART B — *** AGREEMENTS

Agreement	***** Party**	Counterparty	Date of Agreement
*******	*******	*******	*******
*******	*******	*******	*******
*******	*******	*******	*******

SCHEDULE 10

***

SCHEDULE 11

MARKETING AUTHORIZATIONS

Elidel

Country	Product Name	Approval status	Marketing Authorization Number/NDA Number
Canada	Elidel Cream 1 %	Approved	02247238
Mexico	Elidel Cream 1 %	Approved	149M2002 SSA IV
United States	Elidel Cream 1 %	Approved	21-302

Xerese

Xerese Product approved by the Food and Drug Administration of the United States Department of Health and Human Services (NDA 22-436).

SCHEDULE 12

TRANSITION AGREEMENT

U.S. TRANSITION AGREEMENT

between

MEDA PHARMA SARL

and

VALEANT INTERNATIONAL (BARBADOS) SRL

TABLE OF CONTENTS

		Page

1.	DEFINITIONS AND INTERPRETATION	20

2.	TRANSITION	23

3.	PAYMENT CLAIMS	25

4.	GOVERNMENTAL ENTITY PROGRAMS	25

5.	HEALTH CARE REFORM LEGISLATION	29

6.	PRODUCT RETURNS AND CUSTOMER SERVICE	30

7.	INDEMNIFICATION; LIMITATION ON LOSSES	30

8.	MISCELLANEOUS	31

List of Annexes and Schedules

Annex A	AMP Reporting Format
Annex B	ASP Reporting Format
Annex C	BP Reporting Format
Annex D	NFAMP Reporting Format
Annex E	Patient Transaction Data Feed and Layout
Annex F	New Mexico Price Reporting Format
Annex G	Texas Vendor Drug Program Reporting Format

Schedule 2.5 Specified Existing Discount Agreements

U.S. TRANSITION AGREEMENT

This U.S. TRANSITION AGREEMENT (“ U.S. Transition Agreement ”) is made as of this [X] day of [X], 2011, by and between Meda Pharma SARL, a company incorporated in Luxembourg (“ Meda ”), and Valeant International (Barbados) SRL, an international society with restricted liability established under the laws of Barbados (“ Valeant ”). Meda and Valeant are each referred to individually as a “Party” and together as the “Parties.”

RECITALS

WHEREAS, Meda and Valeant have entered into a Licence Agreement dated as of June 29, 2011 (“ Licence Agreement ”) pursuant to which, among other things, Meda granted a license to Valeant to commercialize the Product (as defined below) in the Territory (as defined below); and

WHEREAS, the Licence Agreement provides that Meda and Valeant will enter into this U.S. Transition Agreement contemporaneously with the Closing Date (as defined below).

NOW, THEREFORE, the Parties hereby agree as follows:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions . The capitalized terms used in this U.S. Transition Agreement shall have the meanings as defined below or, if not defined below, as defined in the Licence Agreement:

“ AMP ” means the average manufacturer price, as defined at 42 U.S.C. § 1396r-8(k)(1) and implementing regulations.

“ ASP ” means the manufacturer’s average selling price as defined at 42 U.S.C. § 1395w-3a and 42 C.F.R. § 414.800, et seq.

“ Best Price ” means the “best price” as defined at 42 U.S.C. § 1396r-8(c)(1)(C) and 42 C.F.R. § 447.500 et seq.

“ Calendar Quarter ” means any period of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31.

“ Chargeback/Rebate Termination Date ” shall have the meaning set forth in Clause 3.1(a)(ii).

“ Chargebacks ” means all chargebacks and all other credits and reimbursements, other than Rebates, to Customers with respect to the Product (whether relating to the Product sold prior to, on or after Closing Date).

“ Closing Date ” means the date hereof.

“ CMS ” means Centers for Medicare and Medicaid Services within the United States Department of Health and Human Services, or any successor organization or agency.

“ Customers ” means Third Party wholesalers, pharmacy benefit managers, managed care organizations, government buyers, group purchasing organizations or other Third Parties that contract with Meda with respect to the Product or purchase the Product from Meda as of the Closing Date in the Territory.

“ Distributor/End Purchaser Invoice Date ” means the date that a wholesaler or distributor sells a Product to an end purchaser customer, as reflected on Chargeback claims data.

“ Existing Discount Agreements ” shall have the meaning set forth in Clause 2.4.

“ FSS ” means Federal Supply Schedule administered by the United States Department of Veterans Affairs.

“ Health Care Reform Fees ” or “ HCR Fees ” means the fees described in Section 9008 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, as amended by Section 1401 of the Health Care Education Reconciliation Act of 2010, Pub. L. No. 111- 152.

“ Licence Agreement ” shall have the meaning set forth in the Recitals of this U.S. Transition Agreement.

“ Meda NDC ” shall have the meaning set forth in Clause 2.2.

“ Medicaid Rebate Program ” means the rebate program established pursuant to 42 U.S.C. §1396r-8.

“ Medicare Program ” means the program established pursuant to 42 U.S.C. Subchapter XVIII.

“ Medicare Part D Prescription Drug Plans ” means a Prescription Drug Plan as defined in 42 C.F.R.§ 423.4 or Medicare Advantage Prescription Drug plan that has been approved by CMS to offer prescription drug coverage that is integrated with health care coverage provided under Part C of the Medicare Program to enrollees, and that satisfies the definition of an “MA-PD plan” under 42 C.F.R. § 423.4.

“ Medicare Part D Coverage Gap Rebate Program ” means the rebate program pursuant to Section 3301 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148.

“ NFAMP ” means the non-federal average manufacturer price as defined in 38 U.S.C. § 8126 and the VA Master Agreement.

“ Payment Claims ” means any Rebates and/or Chargebacks, and without limiting the foregoing, includes prompt payment discounts, distribution service fees, and administrative fees charged by Customers.

“ Pharmacy Claim Payment Date ” means the date on which a pharmacy or other entity dispenses the Product as reflected on Rebate claim utilization data.

“ PHS 340B Program ” means the drug discount program, available to “covered entities,” that is administered by the Health Resources and Services Administration pursuant to 42 U.S.C. § 256b.

“ Product ” means the “Xerese Products” as defined in the Licence Agreement.

“ Proportion of Product Sales ” means the proportion of total sales of Meda and its Affiliates represented by sales of the Product that are used to calculate the HCR Fees associated with the Product, only if such proportion is expressly reported by the United States Department of Treasury when it invoices the HCR Fees to Meda and its Affiliates; provided, however, that if the United States Department of Treasury does not report such proportion as provided in the foregoing, then “ Proportion of Product Sales ” means the total dollar value of sales of the Product under the Meda NDC in the relevant calendar year to government purchasers included in the calculation of the HCR Fees divided by the total dollar value of sales of all products of Meda and its Affiliates in the relevant calendar year to government purchasers included in the calculation of the HCR Fees, based on data in Meda’s accounting system for such sales. For purposes of this definition, the term “sales” means sales, net of applicable discounts.

“ Rebates ” means any rebates, price reductions or payments to Customers, based upon the utilization of the Product in the Territory.

“ State Assistance Programs ” means any Medicaid supplemental rebate programs, state pharmaceutical assistance programs, and other state programs to provide pharmaceutical assistance for which Meda has entered into a rebate or discount agreement with a state effective prior to the Closing Date with respect to the Product.

“ Transfer Date ” means *** .

“ Transition Lots ” means those lots of a Product, with an Meda NDC, for which Product was partially sold by Meda and partially sold by Valeant.

“ Territory ” means the United States of America, including the District of Columbia and Puerto Rico.

“ TriCare Rebate Program ” means the rebate program described in the final rule published by the Department of Defense at 74 Fed. Reg. 11,279 to implement Section 703 of the National Defense Authorization Act of 2008, and includes rebates pursuant to any voluntary rebate agreement described therein.

“ VA ” means the United States Department of Veterans Affairs.

“ VA Master Agreement ” means an agreement between a pharmaceutical manufacturer and the Department of Veterans Affairs to implement the provisions of the Veterans Health Care Act of 1992, 38 U.S.C. § 8126.

“ Valeant NDC ” shall have the meaning set forth in Clause 2.2.

“ Valeant NDC Date ” shall have the meaning set forth in Clause 2.2.

1.2 Interpretation . In this U.S. Transition Agreement unless otherwise specified:

(a) “includes” and “including” shall mean respectively includes and including without limitation;

(b) a Party includes its permitted assignees and/or the respective successors in title to substantially the whole of its undertaking;

(d) references to Clauses, Schedules and Annexes are to Clauses, Schedules and Annexes of this U.S. Transition Agreement unless otherwise specified;

(e) the headings in this U.S. Transition Agreement are for information only and shall not be considered in the interpretation of this U.S. Transition Agreement;

(f) the words “hereof”, “herein” and “hereunder” and words of like import used in this U.S. Transition Agreement shall refer to this U.S. Transition Agreement as a whole and not to any particular provision of this U.S. Transition Agreement;

(g) references to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof;

(h) references to any statute or regulation include any modification or re-enactment of that statute or regulation;

(i) references to dollars or $ shall refer to United States Dollars; and

(j) the Parties agree that the terms and conditions of this U.S. Transition Agreement are the result of negotiations between the Parties and that this U.S. Transition Agreement shall not be construed in favor of or against any Party by reason of the extent to which any Party participated in its preparation.

1.3 Affiliates . The Parties acknowledge that Valeant may engage one or more of its Affiliates to distribute the Product in the Territory. In this respect, where appropriate, references to “Valeant” should be deemed to include Valeant and one or more of its Affiliates engaged by Valeant to distribute the Product in the Territory.

2. TRANSITION

2.1 Customer Notification; Order Transition . Promptly following the Transfer Date, Meda shall notify all of its then current direct purchasing Customers for the Product in the Territory that orders for the Product in the Territory after the Transfer Date should be placed with Valeant. Meda shall provide Valeant with a list of contact information for all such Customers. Unless the Parties otherwise agree, any orders held by Meda on the

Transfer Date for the purchase of the Product in the Territory by Customers which remain unfilled as of the Transfer Date or require delivery after the Transfer Date shall not be filled by Meda and shall be cancelled by Meda. Any orders for the purchase of the Product in the Territory that Meda receives after the Transfer Date or are unfilled after the Transfer Date shall be rejected by Meda and Meda shall inform any Customer placing an order after the Transfer Date that such Customer should place its order with Valeant.

2.2 NDC and Labeling Transition . As promptly as possible after the Transfer Date, but in any event no later than *** thereafter, Valeant shall initiate a change to the labeling of the Product to Valeant’s labeling. Valeant may distribute the Product under Meda’s NDC numbers (the “ Meda NDC ”)(1) and with labeling and packaging incorporating the Xerese Trade Marks(2), in each case consistent with Meda’s past practice, and in accordance with the terms and conditions of the Xerese Supply Agreement. Subject to the terms and conditions of the Xerese Supply Agreement, (i) until the date that the Valeant NDC is first utilized on Product labeling and packaging for Product sold after the Transfer Date (the “ Valeant NDC Date ”), Meda will not discontinue the use of the Meda NDC on Product labeling, and (ii) Valeant will be permitted to continue to sell any inventory of the Product that Valeant acquires from Meda that bears the Meda NDC until *** .

2.3 Patient Assistance Programs . Meda shall (i) inform its program administrator, physicians and patients receiving assistance for the Product under its patient assistance program of the discontinuance of coverage for the Product under the Meda patient assistance program (and the date thereof) and shall bear any costs associated with the termination of such program, and (ii) advise physicians and such patients that they will need to apply to Valeant’s patient assistance program to receive continuing assistance for the Product. The Parties shall cooperate in good faith with respect to the transition of patient assistance program patients.

2.4 Pricing and Sales Terms . ***

2.5 ***

2.6 From and after the Transfer Date, Valeant shall assume all responsibility for responding to any medical and customer inquiries from healthcare professionals, consumers and others relating to the Product in the Territory. As of the Transfer Date, all medical and customer inquiries from healthcare professionals, consumers and others relating to the Product received by Meda shall immediately upon receipt by Meda be transmitted to Valeant according to Clause 6.2 of this U.S. Transition Agreement.

(1) ***

(2) ***

3. PAYMENT CLAIMS

3.1 Payment Claims .

(a) Except with respect to Payment Claims relating to programs of Governmental Entities which are addressed in Clause 4 below, the Parties shall be responsible for Payment Claims with respect to Product that bears the Meda NDC as follows:

***

(b) For purposes of clarification and the avoidance of doubt, Payment Claims by Medicare Part D Prescription Drug Plans shall not be construed to be Payment Claims relating to programs of Governmental Entities and shall be handled in accordance with this Clause 3.1, but Payment Claims associated with the Medicare Part D Coverage Gap Rebate Program shall be construed to be Payment Claims relating to programs of Governmental Entities and shall be handled in accordance with Clause 4.6 below.

(d) If Meda processes, issues credits or remits payment for Payment Claims for which Valeant is financially responsible under Clause 3.1, Meda shall provide Valeant with quarterly reports within forty-five (45) calendar days after the end of the quarter in which the payment of all such Payment Claims is made for the applicable quarter setting forth in reasonable detail the amount of all such issued credits or remitted payments and any additional amounts under Clause 3.1(a)(iii), and any amounts owed by Valeant to Meda shall be paid within thirty (30) calendar days thereafter.

4. GOVERNMENTAL ENTITY PROGRAMS

4.1 Valeant Government Agreements . Valeant shall use Commercially Reasonable Efforts to appropriately list the Product bearing the Valeant NDC on its own Medicaid Rebate Program agreement, PHS 340B Program agreement, VA Master Agreement, FSS agreement, TriCare Rebate Program agreement, and Medicare Part D Coverage Gap Rebate Program agreement as soon as practicable after the Transfer Date. Meda shall bear no responsibility for Valeant’s failure to list the Product appropriately on its agreements.

4.2 State Assistance Program Agreements and Receipt of Proposals by Meda . After the Transfer Date, Meda may maintain Product bearing the Meda NDC on its existing State Assistance Program agreements. After the Transfer Date, if Meda receives a request for proposal or similar Rebate agreement proposal from a State Assistance Program or Medicaid agency for a supplemental Rebate offer relating to the Product, Meda shall provide Valeant with such request or proposal. Valeant may request that Meda propose a Rebate with respect to the Product bearing the Meda NDC on financial terms specified by Valeant; provided, however, that (i) any such proposal shall be accompanied by a statement to the State Assistance Program explaining Valeant’s interest in the Product, (ii)

Valeant shall submit a comparable proposal with respect to Product bearing the Valeant NDC, and (iii) Meda shall retain the right, in its reasonable discretion, to terminate any such agreement.

4.3 Payment Claims With Respect to the Medicaid Rebate Program, Managed Medicaid, Supplemental, ADAP and Similar State Assistance Programs .

(a) ***

(b) ***

(c) Meda shall provide Valeant with quarterly corresponding utilization summary and state payment reports within forty-five (45) calendar days after the end of the quarter in which payment of the requested Rebate payments is made for the applicable Calendar Quarter that describe the requested Rebate payments in reasonable detail, and Valeant shall reimburse Meda for such amounts within forty-five (45) calendar days.

(d) ***

4.4 Payment Claims With Respect to Discounted Sales Pursuant to the VA Master Agreement, FSS Sales and the TriCare Rebate Program .

(a) Valeant shall work with Meda to coordinate the addition of the Product to the Valeant FSS and TriCare Rebate Program agreement to coincide with Meda removing the Product from the Meda FSS and TriCare Rebate Program agreement. Meda and Valeant will coordinate the addition and removal of the Product from the FSS and TriCare Rebate Program agreement so the switch over occurs as close to Transfer Date as possible, with consideration to FSS regulations.

(b) ***

(d) Meda shall be entitled to additional reimbursement from Valeant for Payment Claim amounts associated with FSS or TriCare Rebate Program Chargebacks or Rebates for the period described in Clauses 4.4(b) and 4.4(c) which represent the incremental increase in such amounts paid by Meda attributable to any price increase taken by Valeant during such period.

(e) To the extent that Meda processes, issues credits or remits payment for Chargeback or Rebate claims in respect of the Product for which Valeant is financially responsible under this Clause 4.4, Meda shall provide Valeant with quarterly reports within forty-five (45) calendar days after the end of the quarter in which the payment of all such Chargeback and Rebate claims is made for the applicable Calendar Quarter setting forth in reasonable detail the amount of all such processed Chargeback and Rebate claims and such amounts shall be payable within thirty (30) calendar days.

4.5 Payment Claims Under the PHS 340B Program .

(a) Valeant shall work with Meda to establish a process, to be implemented as close to the Transfer Date as possible, whereby Valeant shall process Payment Claims for the Product bearing Meda’s NDC numbers associated with purchases by PHS 340B Program covered entities after the Transfer Date. Prior to the implementation of that process, to the extent that Meda processes Payment Claims with respect to such Products, Meda shall pay Chargebacks or Rebates with respect to PHS 340B Program sales. Valeant shall list the Product bearing Meda’s NDC on their PHS 340B price list the first full quarter after the Transfer Date, and every subsequent quarter thereafter until the Meda NDC has expired.

(b) ***

(d) Meda shall be entitled to additional reimbursement from Valeant for Payment Claim amounts associated with PHS 340b Program Chargebacks or Rebates for the period described in Clause 4.5(c) which represent the incremental increase in such amounts paid by Meda attributable to any price increase taken by Valeant during such period.

(e) Meda shall provide Valeant with quarterly Chargeback or Rebate information within forty-five (45) calendar days after the end of the quarter in which the payment of all such Chargebacks and Rebates is made for the applicable Calendar Quarter that describe the sales and payments in reasonable detail, and Valeant shall reimburse Meda for such amounts within thirty (30) calendar days.

4.6 Payment Claims Associated With the Medicare Part D Coverage Gap Rebate Program . The Parties acknowledge that ***. Meda shall provide Valeant with quarterly corresponding utilization summary and state payment reports within forty-five (45) calendar days after the end of the quarter in which the payment of all such Rebates is made for the applicable Calendar Quarter that described the requested Rebate payments in reasonable detail, and Valeant shall reimburse Meda for such amounts within thirty (30) calendar days. Valeant shall process and pay all Rebates due pursuant to the Medicare Part D Coverage Gap Rebate Program for the Product sold by or on behalf of Valeant in the Territory bearing the Valeant NDC.

4.7 Information and Reporting .

(a) With respect to the Product sold by or on behalf of Valeant on or after the Closing Date that bears the Meda NDC, Meda will continue to be responsible for reporting (including, where applicable, through adjustments to wholesaler contract prices to eligible purchasers) pricing information required under the applicable statutes, rules, and regulatory guidance relating to the Medicaid Rebate Program, the Medicare Program, the PHS 340B Program, the VA Master Agreement, the FSS and applicable state laws; provided, however, that Valeant will be responsible for reporting such pricing information required under the VA Master Agreement and

the FSS as of the date of the addition of the Product to Valeant’s VA contracts. Meda shall report information under this Clause 4.7(a) in accordance with Meda’s existing reporting methodologies. Valeant will be responsible for reporting pricing information required under the Medicaid Rebate Program, the PHS 340B Program, the Medicare Program, the FSS and applicable state laws with respect to the Product sold on or after the Closing Date bearing the Valeant NDC.

(b) Upon and after the Closing Date, with respect to the Parties’ reporting responsibilities designated in Clause 4.7(a) above, the Parties agree to cooperate and use Commercially Reasonable Efforts to provide on a timely basis all such documentation as may reasonably be requested by each Party of the other to report required pricing information. Without limitation, the Parties agree as follows:

(i) Within twenty (20) calendar days after the Closing Date, Meda shall provide Valeant with the Base Period AMP (as defined in 42 U.S.C. § 1396r-8) for each Product. Nothing herein shall obligate Meda to provide underlying sales or pricing data or methodologies used to calculate such Base Period AMPs, or any other AMP or Best Price data regarding periods prior to the Closing Date.

(ii) Within twenty (20) calendar days after the end of each reporting period as designated by CMS or applicable state law, with respect to sales by Valeant of the Product after the Transfer Date that bears the Meda NDC, Valeant will provide, and certify to Meda, as established by the applicable statutes, rules, and regulatory guidance relating to the Medicaid Rebate Program, the PHS 340B Program, the Federal Supply and VA Master Agreement, and applicable state laws the following information: Best Price, sales at nominal prices as defined in 42 U.S.C. § 1396r-8 and implementing regulations (reported as an aggregate dollar amount for each drug at the 9-digit NDC level as shown in Annex C), customary prompt pay discounts on a quarterly basis, the relevant components for calculating AMP as specified in Annex A on a monthly and quarterly basis, the relevant components for calculating NFAMP as specified in Annex D on a quarterly basis, the relevant components for calculating required pricing data for submission to the state of New Mexico as specified in Annex F on an annual basis, and the relevant components for calculating the required pricing data for submission to the state of Texas as specified in Appendix G within the time period required by law. The format to be used for such reporting is set forth in Annex A, Annex B, Annex C, Annex D, Annex F and Annex G. Meda shall report to Valeant within twenty-five (25) calendar days following its receipt of such report the applicable AMP, Best Price, PHS 340B Program price, and any adjustments to FSS prices, determined in accordance with Meda’s applicable methodologies and procedures.

(iii) For any Valeant patient assistance programs and patient transaction programs (e.g., coupon, savings card, or voucher programs) in effect as of the Closing Date or implemented thereafter, Valeant agrees to provide, or will arrange to provide, patient transaction data relating to the Product that bears a Meda NDC number to the extent that it is required for government pricing calculations required to be made by Meda for the Product. Such data shall be provided under pre-established data feeds and layouts as set forth in Annex E.

(iv) As soon as practicable following the execution of this U.S. Transition Agreement, Meda shall provide Valeant with its FSS “tracking customer” for the Product sold under its FSS contract. Within ten (10) calendar days after receipt of such information, Valeant shall identify any Product sold to any FSS tracking customer during the period beginning on the Transfer Date and ending on the date the Product that bears the Meda NDC is added to Valeant’s FSS contract.

(v) Within twenty (20) calendar days after the end of each reporting period as designated by CMS, with respect to sales by Meda of the Product before the Transfer Date that bear the Meda NDC, Meda will provide twelve (12) month sales and pricing data required by Valeant to calculate AMP, ASP, and NFAMP under the Valeant NDC. Meda will provide the twelve (12) month sales and pricing data for each reporting period until sales and pricing data under the Meda NDC are no longer required for such calculations under the Valeant NDC. The format to be used for such reporting is set forth in Annex A, Annex B, Annex C and Annex D.

(c) Subject to the limitations specified in Clause 4.7(b) above, the Parties agree to cooperate and provide any other documentation as each Party may reasonably request from time to time to assist in the matters described in this Clause 4.

(d) Each Party may use all information provided to it pursuant to this Clause 4 in reporting to CMS and other Governmental Entity, including under state reporting requirements. The Parties further agree that all data, including Medicaid Rebate Program pricing data, and data to be used for the programs and reporting requirements described in this Clause 4 that are included in any report to the other Party, will be calculated utilizing systems, processes, policies, practices and pricing methodologies that comply with the requirements of such programs and requirements.

5. HEALTH CARE REFORM LEGISLATION

5.1 *** The Parties acknowledge that HCR Fees invoiced to Valeant will be based in part on sales of the Product made by Meda bearing the Meda NDC. *** Within thirty (30) calendar days of Meda’s receipt of such an invoice, Meda shall provide to Valeant a calculation of the total amount of Valeant’s HCR Fees associated with its control of the Product during such year, which total amount shall be equal to the product of (x) total

invoiced Meda HCR Fees, (y) the Proportion of Product Sales and (z) the number of days of the year that the Product was controlled by Valeant including the Transfer Date divided by three hundred and sixty five (365). Within thirty (30) calendar days of its receipt of such calculation, Valeant shall pay to Meda one hundred percent (100%) of such total amount. For purposes of this Clause 5, the term “sales” means sales, net of applicable discounts.

6. PRODUCT RETURNS AND CUSTOMER SERVICE

6.1 Returns .

(a) Within forty-five (45) calendar days after the Transfer Date, Meda shall deliver to Valeant a schedule of all lots of Product sold prior to the Transfer Date that were unexpired as of the Transfer Date.

(b) ***

(d) If Valeant processes, issues credits or remits payment for returns in respect of the Products for which Meda is financially responsible under this Clause 6, Valeant shall provide Meda with monthly reports within sixty (60) calendar days after the end of the applicable month setting forth in reasonable detail the amount of all such issued credits or remitted payments for returns, and any amounts owed by Meda to Valeant shall be paid within thirty (30) calendar days thereafter. Returned Product shall be destroyed by both Parties in a manner consistent with applicable law, and the costs of such destruction shall not be reimbursed.

6.2 Customer Service . From and after the Transfer Date, Valeant shall assume all customer service responsibility and provide all customer service required by its Customers with respect to the Product. As of the Transfer Date, all customer service requests relating to the Product coming to Meda will be referred to Valeant at the following contact information:

Telephone : 1.800.321.4576

7. INDEMNIFICATION; LIMITATION ON LOSSES

7.1 Indemnification . Meda hereby indemnifies Valeant, its Affiliates and their respective successors and assignees against and agrees to hold each of them harmless from any and all Losses incurred or suffered by Valeant, its Affiliates or their respective successors and assignees arising out of any breach of covenant or agreement by Meda under this U.S. Transition Agreement; provided that Meda shall not be liable to Valeant pursuant to this Clause 7.1 in the event that any such Loss arises out of (i) the negligence or wilful misconduct of Valeant or (ii) any failure of Valeant to perform or observe any provision, obligation, covenant or agreement to be performed by Valeant pursuant to this U.S. Transition Agreement. Valeant hereby indemnifies Meda, its Affiliates and their respective successors and assignees against and agrees to hold each of them harmless

from any and all Losses incurred or suffered by Meda, its Affiliates and their respective successors and assignees arising out of any breach of covenant or agreement by Valeant under this U.S. Transition Agreement; provided that Valeant shall not be liable to Meda pursuant to this Clause 7.1 in the event that any such Loss arises out of (i) the negligence or wilful misconduct of Meda or (ii) any failure of Meda to perform or observe any provision, obligation, covenant or agreement to be performed by Meda pursuant to this U.S. Transition Agreement.

7.2 Special, Indirect and Other Losses . TO THE EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY NOR ANY OF ITS AFFILIATES WILL BE LIABLE UNDER ANY LEGAL OR EQUITABLE THEORY FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, CONSEQUENTIAL OR INDIRECT DAMAGES OR ANY SIMILAR DAMAGES OR DAMAGES BASED UPON DIMINUTION IN VALUE OR ANY VALUATION MULTIPLIER EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, UNLESS ACTUALLY PAID TO A THIRD PARTY.

8. MISCELLANEOUS(3)

8.1 Governing Law . This U.S. Transition Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of laws provisions thereof. The Parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this U.S. Transition Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York, so long as such court has subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this U.S. Transition Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the Parties hereby irrevocably consents to the exclusive jurisdiction of such court (and of the appropriate appellate courts therefrom) in any suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

8.2 Assignment, Subcontracting . This U.S. Transition Agreement and each and every covenant, term and condition herein is binding upon and ensures to the benefit of the Parties hereto and their respective successors. Neither Party may assign this U.S. Transition Agreement, nor assign, sublicense, delegate or sub-contract any of its rights or obligations granted hereunder without the other Party’s prior written consent, except that a Party may (a) assign, sublicense, subcontract or delegate any or all of its rights and obligations under this U.S. Transition Agreement to one or more of its Affiliates; and (b)

(3) ***

assign this U.S. Transition Agreement in its entirety to a successor to all or substantially all of its business or assets to which this U.S. Transition Agreement relates. No permitted assignment, sublicense, subcontract or delegation shall relieve the assigning, sublicensing, subcontracting or delegating Party of its liability hereunder. Any attempted assignment in contravention of the foregoing shall be void.

8.3 Notices . Any notice required to be given under this U.S. Transition Agreement, shall be in writing and shall be delivered personally, or sent by pre-paid certified or registered post return receipt requested or recorded delivery or by commercial courier, to each Party required to receive the notice at its address as set out below:

If to Valeant:

Valeant International (Barbados) SRL

Welches, Christ Church

Barbados, West Indies BB17154

Facsimile:	246-420-1532
Attention:	President

If to Meda:

Meda Pharma SARL

46A Avenue John Fitzgerald Kennedy

L-1855 Luxembourg

Facsimile:	+ 352 263 757 33

Attention:	Managing Director

or as otherwise specified by the relevant Party by notice in writing to each other Party. Any notice shall be deemed to have been duly received: (i) if delivered personally, when left at the address and for the contact referred to in this Clause 8.3; (ii) if sent by pre-paid recorded delivery, at 9.00 am on the fifth Business Day after posting; or (iii) if delivered by commercial courier, on the date and at the time that the courier’s delivery receipt is signed.

8.4 Waiver . No delay or failure of any Party in exercising or enforcing any of its rights or remedies under this U.S. Transition Agreement shall operate as a waiver of those rights.

8.5 Severability . If the whole or any part of this U.S. Transition Agreement is or becomes or is declared illegal, invalid or unenforceable in any jurisdiction for any reason (including both by reason of the provisions of any legislation and also by reason of any court or competent authority which either has jurisdiction over this U.S. Transition Agreement or has jurisdiction over any of the Parties): (i) in the case of the illegality, invalidity or un-enforceability of the whole of this U.S. Transition Agreement it shall terminate only in relation to the jurisdiction in question; or (ii) in the case of the illegality, invalidity or

un-enforceability of part of this U.S. Transition Agreement that part shall be severed from this U.S. Transition Agreement in the jurisdiction in question and that illegality, invalidity or un-enforceability shall not in any way whatsoever prejudice or affect the remaining parts of this U.S. Transition Agreement which shall continue in full force and effect. If, in the reasonable opinion of any Party, any severance under this Clause 8.5 materially affects the commercial basis of this U.S. Transition Agreement, then the Parties shall discuss, in good faith, ways to eliminate the material effect.

8.6 Entire Agreement . This U.S. Transition Agreement, constitutes the entire understanding and agreement of the Parties with respect to the subject matter hereof and cancels and supersedes all prior agreements, whether verbal or written, between the Parties with respect to the subject matter hereof, provided that any Confidential Information (as such term is defined in the Licence Agreement) shall be deemed to be Confidential Information pursuant to the Licence Agreement and subject to the applicable provisions thereof. No modification of any provision of this U.S. Transition Agreement shall be effective unless made in writing and signed by a duly authorized officer of both of the Parties.

8.7 Independent Contractors . The Parties hereto are independent contractors and nothing contained in this U.S. Transition Agreement shall be deemed or construed to create a partnership, joint venture, employment, franchise, agency or fiduciary relationship between the Parties.

8.8 Expenses . Except as otherwise expressly provided in this U.S. Transition Agreement, each Party shall pay the fees and expenses of its respective lawyers and other advisors and all other expenses and costs incurred by such Party incidental to the negotiation, preparation, execution and delivery of this U.S. Transition Agreement.

8.9 Language . Except where expressly provided otherwise, all reports, plans and any other form of communication between the Parties shall be in English and where necessary Valeant shall provide an English translation of any document sent to Meda and Meda shall provide an English translation of any document sent to Valeant.

8.10 Counterparts . This U.S. Transition Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

8.11 Reimbursement . If not otherwise specified herein, any amounts due pursuant to this U.S. Transition Agreement from one Party to the other shall be paid within thirty (30) calendar days of receipt of invoice therefor.

[Signature Page Follows]

IN WITNESS WHEREOF, the Parties have caused this U.S. Transition Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

	MEDA PHARMA SARL


	By:
	Name:
	Title:


	VALEANT INTERNATIONAL (BARBADOS) SRL


	By:
	Name:
	Title:

ANNEX A

AMP Reporting Format

ANNEX B

ASP Reporting Format

ANNEX C

BP Reporting Format

ANNEX D

NFAMP Reporting Format

ANNEX E

Patient Transaction Data Feed and Layout

ANNEX F

New Mexico Price Reporting Format

ANNEX G

Texas Vendor Drug Program Reporting Format

Schedule 2.5

Commercial and Medicare Part D Contracts

Contract Type	Contract Description	Removal Date

Government Contracts

Contract Type	State	Removal Date

SCHEDULE 13

***

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Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Michael Pearson, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Valeant Pharmaceuticals International, Inc. (the "Company");

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

4.

The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a.: Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.: Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.: Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.: Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.

The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

a.: All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b.: Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.


Date: August 5, 2011
/s/ J. MICHAEL PEARSON J. Michael Pearson Chairman and Chief Executive Officer (Principal Executive Officer)

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Exhibit 31.1

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Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip W. Loberg, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Valeant Pharmaceuticals International, Inc. (the "Company");

2.

3.

4.

a.: Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.: Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.: Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.: Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

5.

a.: All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and
b.: Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.


Date: August 5, 2011
/s/ PHILIP W. LOBERG Philip W. Loberg


Executive Vice President and Interim Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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Exhibit 31.2

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Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. § 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, J. Michael Pearson, Chief Executive Officer of Valeant Pharmaceuticals International, Inc. (the "Company"), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.: The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2011 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
2.: The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 5, 2011
/s/ J. MICHAEL PEARSON J. Michael Pearson Chairman and Chief Executive Officer

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the U.S. Securities and Exchange Commission or its staff upon request.

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Exhibit 32.1

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Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. § 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Philip W. Loberg, Executive Vice President and Interim Chief Financial Officer of Valeant Pharmaceuticals International, Inc. (the "Company"), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.: The Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2011 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
2.: The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: August 5, 2011
/s/ PHILIP W. LOBERG Philip W. Loberg


Executive Vice President and Interim Chief Financial Officer

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Exhibit 32.2