VALEANT PHARMACEUTICALSINTERNATIONAL, INC.

FORM 10-K(Annual Report)

Filed 02/28/14 for the Period Ending 12/31/13

Telephone 514-744-6792

CIK 0000885590Symbol VRX

SIC Code 2834 - Pharmaceutical PreparationsIndustry Biotechnology & Drugs

Sector HealthcareFiscal Year 12/31

http://www.edgar-online.com© Copyright 2014, EDGAR Online, Inc. All Rights Reserved.

Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

_____________________________

FORM 10-K

Commission file number 001-14956

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. (Exact Name of Registrant as Specified in its Charter)

Registrant's telephone number, including area code (514) 744-6792

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to section 12(g) of the Act: None

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes � No �

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes � No �

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or Section 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 � No �

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 � No �

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. �

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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

The aggregate market value of the common shares held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was $25,293,645,000 based on the last reported sale price on the New York Stock Exchange on June 28, 2013.

The number of outstanding shares of the registrant’s common stock, as of February 21, 2014 was 334,869,413.

� � � � ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

� � � � TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

BRITISH COLUMBIA, CANADA State or other jurisdiction of incorporation or organization

98-0448205 (I.R.S. Employer Identification No.)

2150 St. Elzéar Blvd. West Laval, Quebec

Canada, H7L 4A8B (Address of principal executive offices)

Title of each class Name of each exchange on which registered Common Shares, No Par Value New York Stock Exchange, Toronto Stock Exchange

Large accelerated filer � Accelerated filer � Non-accelerated filer � Smaller reporting company �

(Do not check if a smaller reporting company)

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates certain information by reference from the registrant’s proxy statement for the 2014 Annual Meeting of Shareholders. Such proxy statement will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2013.

TABLE OF CONTENTS

GENERAL INFORMATION

i

Page

PART I Item 1. Business 1

Item 1A. Risk Factors 10

Item 1B. Unresolved Staff Comments 22

Item 2. Properties 23

Item 3. Legal Proceedings 23

Item 4. Mine Safety Disclosures 23

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 24

Item 6. Selected Financial Data 27

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 76

Item 8. Financial Statements and Supplementary Data 76

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 76

Item 9A. Controls and Procedures 76

Item 9B. Other Information 76

PART III

Item 10. Directors, Executive Officers and Corporate Governance 77

Item 11. Executive Compensation 77

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 77

Item 13. Certain Relationships and Related Transactions, and Director Independence 77

Item 14. Principal Accounting Fees and Services 77

PART IV

Item 15. Exhibits and Financial Statement Schedules 78

SIGNATURES 85

Basis of Presentation

General

Except where the context otherwise requires, all references in this Annual Report on Form 10-K (“Form 10-K”) to the “Company”, “we”, “us”, “our” or similar words or phrases are to Valeant Pharmaceuticals International, Inc. and its subsidiaries, taken together. In this Form 10-K, references to “$” and “US$” are to United States dollars, references to “C$” are to Canadian dollars, references to “€” are to Euros, references to “AUD$” are to Australian dollars, references to “R$” are to Brazilian real, references to “MXN$” are to Mexican peso, references to “PLN” are to Polish zloty and references to “¥” are to Japanese yen. Unless otherwise indicated, the statistical and financial data contained in this Form 10-K are presented as of December 31, 2013 .

Trademarks

The following words are some of the trademarks in our Company’s trademark portfolio and are the subject of either registration, or application for registration, in one or more of Canada, the United States of America (the “U.S.”) or certain other jurisdictions: ACANYA®, AFEXA®, AKREOS®, AMBI®, ANTI-ANGIN®, ANTIGRIPPIN®, ARESTIN®, ATRALIN®, B&L®, B+L®, BAUSCH & LOMB® , BAUSCH + LOMB®, BEDOYECTA®, BENZACLIN®, BESIVANCE®, BIAFINE®, BIOTRUE®, BIOVAIL®, CALADRYL®, CARAC® , CARDIZEM®, CERAVE®, CESAMET®, CLEAR + BRILLIANT®, CLODERM®, COLD-FX®, COLDSORE-FX®, COMFORTMOIST®, CONDITION & ENHANCE®, CORN HUSKERS®, CORTAID®, CRYSTALENS®, DERMAGLOW®, DERMIK®, DIASTAT®, DIFFLAM®, DUROMINE®, DURO-TUSS®, EFUDEX®, ELASTIDERM®, ERTACZO®, FRAXEL®, HYPERGEL™, JUBLIA®, LACRISERT®, LIPOSONIX®, LODALIS™, LOTEMAX®, LUZU™, MEDICIS®, MEPHYTON®, METERMINE®, MOISTURESEAL™, NU-DERM®, OBAGI®, OBAGI NU-DERM®, OBAGI CLENZIDERM®, OBAGI-C®, OCUVITE®, ORTHO DERMATOLOGICS®, PERLANE®, PERLANE-L®, POTIGA®, PRESERVISION®, PROLENSA®, PUREVISION®, PURPOSE®, RENOVA®, RENU®, RENU MULTIPLUS®, RESTYLANE®, RESTYLANE-L®, RETIN-A MICRO®, RIKODEINE®, SCULPTRA®, SCULPTRA AESTHETIC®, SHOWER TO SHOWER®, SOFLENS®, SOLODYN®, SOLTA MEDICAL®, STELLARIS®, SYPRINE®, TARGRETIN®, THERMAGE®, THERMAGE CPT®, TIAZAC®, TROBALT®, VALEANT®, VALEANT V & DESIGN®, VALEANT PHARMACEUTICALS & DESIGN®, VANOS®, VICTUS®, XENAZINE®, ZIANA®, and ZYCLARA®.

WELLBUTRIN®, WELLBUTRIN® XL, WELLBUTRIN XL® and ZOVIRAX® are trademarks of The GlaxoSmithKline Group of Companies and are used by us under license. ULTRAM® is a trademark of Johnson & Johnson and is used by us under license. MVE® is a registered trademark of DFB Technology Ltd. and is used by us under license. ELIDEL® and XERESE® are registered trademarks of Meda Pharma SARL and are used by us under license. VISUDYNE® is a registered trademark of Novartis Pharma AG and is used by us under license. DYSPORT® is a registered trademark of Ipsen Biopharm Limited and is used by us under license. MONOPRIL®, CEFZIL®, DURACEF® and MEGACE® are registered trademarks of Bristol-Myers Squibb Company and are used by us under license. BENSAL HP® is a registered trademark and is used by us under license from SMG Pharmaceuticals, LLC. EMERVEL® is a registered trademark of Galderma S.A. and is used by us under license. NEOTENSIL™ is a trademark of Living Proof, Inc. and is used by us under license. OPANA® is a registered trademark of Endo Pharmaceuticals Inc. and is used by us under license.

In addition to the trademarks noted above, we have filed trademark applications and/or obtained trademark registrations for many of our other trademarks in the U.S., Canada and in other jurisdictions and have implemented, on an ongoing basis, a trademark protection program for new trademarks.

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 Annual Report on Form 10-K 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 our acquisitions and other transactions, 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; exposure to foreign currency exchange rate changes and interest rate changes; the outcome of contingencies, such as certain litigation and regulatory

ii

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”, “cou ld”, “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-K 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:

• the challenges and difficulties associated with managing the rapid growth of our Company and a larger, more complex business;

• the introduction of generic competitors of our brand products;

• 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 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;

• our ability to identify, acquire, close and integrate acquisition targets successfully and on a timely basis;

• factors relating to the integration of the companies, businesses and products acquired by the Company (including the integration relating to our recent acquisitions of Solta Medical, Inc. (“Solta Medical”), Bausch & Lomb Holdings Incorporated (“B&L”), Obagi Medical Products, Inc. (“Obagi”), and Medicis Pharmaceutical Corporation ("Medicis”)), such as the time and resources required to integrate such companies, businesses and products, the difficulties associated with such integrations (including potential disruptions in sales activities and potential challenges with information technology systems integrations), the difficulties and challenges associated with entering into new business areas and new geographic markets, the difficulties, challenges and costs associated with managing and integrating new facilities, equipment and other assets, and the achievement of the anticipated benefits from such integrations;

• factors relating to our ability to achieve all of the estimated synergies from our acquisitions, including from our recent acquisition of B&L (which we anticipate will be greater than $850 million), as a result of cost-rationalization and integration initiatives. These factors may include greater than expected operating costs, the difficulty in eliminating certain duplicative costs, facilities and functions, and the outcome of many operational and strategic decisions, some of which have not yet been made;

• our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;

• our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries;

• our substantial debt and debt service obligations and their impact on our financial condition and results of operations;

• 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;

• interest rate risks associated with our floating debt borrowings;

• the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering new geographic markets (including the challenges created by new and different regulatory regimes in those markets);

iii

• adverse global economic conditions and credit market and foreign currency exchange uncertainty in the countries in which we do business;

• 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;

• our ability to retain, motivate and recruit executives and other key employees;

• our ability to obtain and maintain sufficient intellectual property rights over our products and defend against challenge to such intellectual property;

• the outcome of legal proceedings, investigations and regulatory proceedings;

• the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits and/or withdrawals of products from the market;

• the availability of and our ability to obtain and maintain adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face;

• 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, Health Canada and other regulatory approvals, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;

• the results of continuing safety and efficacy studies by industry and government agencies;

• the availability and extent to which our products are reimbursed by government authorities and other third party payors, as well as the impact of obtaining or maintaining such reimbursement on the price of our products;

• the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price of our products in connection therewith;

• the impact of price control restrictions on our products, including the risk of mandated price reductions;

• 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, as well as factors impacting the commercial success of our currently marketed products, which could lead to material impairment charges;

• the results of management reviews of our research and development portfolio, conducted periodically and in connection with certain acquisitions, the decisions from which could result in terminations of specific projects which, in turn, could lead to material impairment charges;

• negative publicity or reputational harm to our products and business;

• 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;

• our ability to obtain components, raw materials or finished products supplied by third parties and other manufacturing and related supply difficulties, interruptions and delays;

• the disruption of delivery of our products and the routine flow of manufactured goods;

• the seasonality of sales of certain of our products;

• declines in the pricing and sales volume of certain of our products that are distributed by third parties, over which we have no or limited control;

iv

• compliance with, or the failure to comply with, health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and pricing practices, worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide environmental laws and regulation and privacy and security regulations;

• the impacts of the Patient Protection and Affordable Care Act (as amended) and other legislative and regulatory healthcare reforms in the countries in which we operate;

• interruptions, breakdowns or breaches in our information technology systems; and

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found elsewhere in this Form 10-K, under Item 1A. “Risk Factors”, 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. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect actual outcomes, except as required by law.

v

• 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.

PART I

Item 1. Business

Biovail Corporation (“Biovail”) was formed under the Business Corporations Act (Ontario) on February 18, 2000, as a result of the amalgamation of TXM Corporation and Biovail Corporation International. Biovail was continued under the Canada Business Corporations Act (the “CBCA”) effective June 29, 2005. On September 28, 2010 (the “Merger Date”), 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.”

Effective August 9, 2013, we continued from the federal jurisdiction of Canada to the Province of British Columbia, meaning that we became a company registered under the laws of the Province of British Columbia as if we had been incorporated under the laws of the Province of British Columbia.

Unless the context indicates otherwise, when we refer to “we”, “us”, “our” or the “Company” in this Annual Report on Form 10-K (“Form 10-K”), we are referring to Valeant Pharmaceuticals International, Inc. and its subsidiaries on a consolidated basis.

Introduction

We are a multinational, specialty pharmaceutical and medical device company that develops, manufactures, and markets a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices), which are marketed directly or indirectly in over 100 countries. In the Developed Markets segment, we focus most of our efforts in the eye health, dermatology, and neurology therapeutic classes. In the Emerging Markets segment, we focus primarily on branded generics, OTC products, and medical devices. We are diverse not only in our sources of revenue from our broad drug and medical device portfolio, but also among the therapeutic classes and geographic segments we serve.

Business Strategy

Our strategy is to focus the business on core geographies and therapeutic classes that offer attractive growth opportunities while maintaining our lower selling, general and administrative cost model and decentralized operating structure. We have an established portfolio of durable products with a focus in the eye health and dermatology therapeutic areas. We believe these areas are particularly attractive given that many of the products in these areas:

Another critical element of our strategy is business development. We have completed numerous transactions over the past few years to expand our portfolio offering and geographic footprint, including, among others, the acquisitions of Bausch & Lomb Holdings Incorporated (“B&L”) and Medicis Pharmaceutical Corporation (“Medicis”). We will continue to pursue value-added business development opportunities as they arise.

The growth of our business is further augmented through our lower risk research and development model. This model allows us to advance certain development programs to drive future commercial growth, while minimizing our research and development expense. This is achieved primarily as follows:

• have potential for strong operating margins and solid growth;

• are marked by a higher insured and self-pay component than other therapeutic areas and are less dependent on increasing government reimbursement pressures;

• have limited patent risk;

• have the potential for line extensions and life-cycle management opportunities; and

• are smaller on an individual basis, and therefore typically not the focus of larger pharmaceutical companies.

• focusing our efforts on niche therapeutic areas such as eye health, dermatology and podiatry, aesthetics, and dentistry, including life-cycle management programs for currently marketed products; and

1

• acquiring dossiers and registrations for branded generic products, which require limited manufacturing start-up and development activities.

In addition to selective acquisitions and product development, our strategy also involves deploying cash through debt repayments and repurchases, as well as share buybacks.

We believe this strategy will allow us to maximize both the growth rate and profitability of the Company and to enhance shareholder value.

Acquisitions

We have completed a number of transactions to expand our product portfolio including, among others, the following acquisitions of businesses and product rights in 2013: B&L, Obagi Medical Products, Inc. (“Obagi”), Natur Produkt International, JSC (“Natur Produkt”) and certain assets from Eisai Inc. (“Eisai”). In addition, in January 2014, we acquired Solta Medical Inc (“Solta Medical”).

For more information regarding our acquisitions, see note 3, note 4 and note 27 of notes to consolidated financial statements in Item 15 of this Form 10-K.

Segment Information

As a result of our acquisition strategy and continued growth, impacted by the December 2012 Medicis acquisition, our Chief Executive Officer (“CEO”), who is our Chief Operating Decision Maker (“CODM”), began to manage the business differently, which necessitated a realignment of the segment structure, effective in the first quarter of 2013. Pursuant to this change, we now have two operating and reportable segments: (i) Developed Markets, and (ii) Emerging Markets. Accordingly, we have restated prior period segment information to conform to the current period presentation. Comparative segment information for 2013, 2012, and 2011 is presented in note 26 of notes to consolidated financial statements in Item 15 of this Form 10-K.

Our current product portfolio comprises approximately 1,500 products.

Developed Markets

The Developed Markets segment consists of (i) sales in the U.S. of pharmaceutical products, OTC products, and medical device products, as well as alliance and contract service revenues, in the areas of eye health, dermatology and podiatry, aesthetics, and dentistry, (ii) sales in the U.S. of pharmaceutical 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, and (iii) pharmaceutical products, OTC products, and medical device products sold in Canada, Australia, New Zealand, Western Europe and Japan.

Pharmaceutical Products — Our principal pharmaceutical products are:

• An Acne franchise, which includes Solodyn®, a prescription oral antibiotic approved to treat only the red, pus-filled pimples of moderate to severe acne in patients 12 years of age and older, as well as Ziana®, Acanya®, and Atralin®.

• Wellbutrin XL®, an extended-release formulation of bupropion indicated for the treatment of major depressive disorder in adults.

• Xenazine® is indicated for the treatment of chorea associated with Huntington’s disease. In the U.S., Xenazine® is distributed for us by Lundbeck Inc. under an exclusive marketing, distribution and supply agreement.

• Zovirax® Cream and Zovirax® Ointment are prescription topical antivirals which are active against herpes viruses. Zovirax® Cream is indicated for the treatment of recurrent herpes labialis (cold sores) in adults and adolescents (12 years of age and older). Zovirax® Ointment is indicated for the management of initial genital herpes. See note 5 of notes to consolidated financial statements in Item 15 of this Form 10-K for information regarding the agreement with Actavis to launch the authorized generic ointment for Zovirax®.

• The Lotemax® franchise was acquired as part of the acquisition of B&L in August 2013 (the “B&L Acquisition”). Lotemax® Gel is a topical corticosteroid indicated for the treatment of post-operative inflammation and pain following ocular surgery. The gel formulation was launched in the first quarter of 2013. This new formulation is a technology that allows the drug to adhere to the ocular surface and offers dose uniformity, which eliminates the need to shake the product in order to ensure the drug is in suspension, a low concentration of preservative, and two known moisturizers.

• Arestin® (minocycline hydrochloride) is a subgingival sustained-release antibiotic. Arestin® is indicated as an adjunct to scaling and

2

root planing (SRP) procedures for reduction of pocket depth in patients with adult periodontitis. Arestin® may be used as part of a periodontal maintenance program, which includes good oral hygiene and SRP.

OTC Products — Our principal OTC products are:

Device Products — Our principal device products are:

Generic Products — Our principal branded and other generic products are:

• Prolensa®, acquired as part of the B&L Acquisition in August 2013, is a non-steroidal anti-inflammatory ophthalmic solution for the treatment of inflammation and pain following cataract surgery.

• PreserVision®, acquired as part of the B&L Acquisition in August 2013, is an antioxidant eye vitamin and mineral supplement.

• ReNu Multiplus®, acquired as part of the B&L Acquisition in August 2013, is a sterile, preserved solution used to lubricate and rewet soft (hydrophilic) contact lenses. ReNu Multiplus® product contains povidone, a lubricant that can be used with daily, overnight, and disposable soft contact lenses.

• Ocuvite®, acquired as part of the B&L Acquisition in August 2013, is a lutein eye vitamin and mineral supplement that contains lutein (an antioxidant carotenoid), a nutrient that supports macular health by helping filter harmful blue light.

• Artelac™, acquired as part of the B&L Acquisition in August 2013, is a solution in the form of eye drops to treat dry eyes caused by chronic tear dysfunction.

• CeraVe® is a range of OTC products with essential ceramides and other skin-nourishing and skin-moisturizing ingredients (humectants and emollients) combined with a unique, patented Multivesicular Emulsion (MVE®) delivery technology that, together, work to rebuild and repair the skin barrier. CeraVe® formulations incorporate ceramides, cholesterol and fatty acids, all of which are essential for skin barrier repair and are used as adjunct therapy in the management of various skin conditions.

• SofLens® Daily Disposable Contact Lenses, acquired as part of the B&L Acquisition in August 2013, use ComfortMoist® Technology (a combination of thin lens design and slow releasing packaging solution) and High Definition Optics™, an aspheric design that reduces aspheric aberration over the range of powers.

• Restylane® family of products (Restylane®/Restylane-L®/Perlane®/Perlane-L®) is a range of injectable implant dermal fillers. These products can be used individually to add volume and fullness to the skin to correct moderate to severe facial wrinkles and folds, such as nasolabial folds. Restylane® is also FDA-approved for lip enhancement in patients over 21 years of age, and is uniquely formulated to provide fullness and definition to the lips.

• PureVision®, acquired as part of the B&L Acquisition in August 2013, is a Silicone Hydrogel Frequent Replacement Contact Lens using AerGel™ material (which allows natural levels of oxygen to reach the eyes and resists protein buildup), and an aspheric optical design.

• Dysport® is a prescription injection neurotoxin (abobotulinumtoxinA) for temporary improvement in the look of moderate to severe glabellar lines in adults less than 65 years of age.

• Various ophthalmic surgical products, acquired as part of the B&L Acquisition in August 2013, including intraocular lenses such as Akreos® and Crystalens®, and surgical equipment products such as the VICTUS® femtosecond laser and the Stellaris® PC, a vitreoretinal and cataract surgery system.

• Medical device systems for aesthetic applications, acquired as part of the Solta Medical acquisition in January 2014, including the Thermage CPT® system that provides non-invasive treatment options using radiofrequency energy for skin tightening, the Fraxel® repair system for use in dermatological procedures requiring ablation, coagulation, and resurfacing of soft tissue, the Clear + Brilliant® system to improve skin texture and help prevent the signs of aging skin, and the Liposonix® system that destroys unwanted fat cells resulting in waist circumference reduction.

• Retin-A Micro® (tretinoin gel) microsphere, 0.04%/0.1% Pump, is an oil-free prescription-strength acne treatment proven to start clearing skin in as little as two weeks after the start of treatment, with full results seen after seven weeks of treatment.

3

• Tobramycin and Dexamethasone ophthalmic suspension, acquired as part of the B&L Acquisition in August 2013, is indicated for steroid responsive inflammatory ocular conditions where superficial bacterial ocular infection or a risk of bacterial ocular infection exists.

• Latanoprost, acquired as part of the B&L Acquisition in August 2013, is one of a group of medicines known as prostaglandins and is indicated to treat a type of glaucoma called open angle glaucoma and also ocular hypertension.

Alliance and Royalty, Service and Other — We generate alliance revenue and service revenue from the licensing of dermatological products and from contract services in the areas of dermatology and topical medication. Contract services are primarily focused on contract research for external development and clinical research in areas such as formulations development, in vitro drug penetration studies, analytical sciences and consulting in the areas of labeling and regulatory affairs.

Emerging Markets

The Emerging Markets segment consists of branded generic pharmaceutical products and branded pharmaceuticals, OTC products, and medical device products. Products are sold primarily in Central and Eastern Europe (primarily Poland and Russia), Asia, Latin America (Mexico, Brazil, and Argentina and exports out of Mexico to other Latin American markets), Africa and the Middle East.

Branded and Other Generic Products and Branded Pharmaceuticals — Our Central and Eastern European branded generics and branded pharmaceuticals business covers a broad range of treatments, including antibiotics, treatments for cardiovascular and neurological diseases, dermatological products, diabetic therapies, and eye health products, among many others. Our portfolio in Latin America also includes a range of branded generics.

OTC — Our principal OTC products are:

Device Products — Our principal device products are:

Collaboration Agreements

See note 5 of notes to consolidated financial statements in Item 15 of this Form 10-K for detailed information regarding various license, development and collaboration agreements.

Research and Development

• ReNu Multiplus®, acquired as part of the B&L Acquisition in August 2013, is a sterile, preserved solution used to lubricate and rewet soft (hydrophilic) contact lenses. ReNu Multiplus® product contains povidone, a lubricant that can be used with daily, overnight, and disposable soft contact lenses.

• AntiGrippin®, acquired in connection with the Natur Produkt acquisition in February 2013, is for symptomatic treatment of acute respiratory diseases, acute respiratory viral diseases, and influenza.

• Bedoyecta®, a brand of vitamin B complex (B1, B6 and B12 vitamins) products. Bedoyecta® products act as energy improvement agents for fatigue related to age or chronic diseases, and as nervous system maintenance agents to treat neurotic pain and neuropathy. Bedoyecta® is sold in an injectable form, as well as in a tablet form.

• SofLens® Daily Disposable Contact Lenses, acquired as part of the B&L Acquisition in August 2013, use ComfortMoist® Technology (a combination of thin lens design and slow releasing packaging solution) and High Definition Optics™, an aspheric design that reduces aspheric aberration over the range of powers.

• Various ophthalmic surgical products, acquired as part of the B&L Acquisition in August 2013, including intraocular lenses such as Akreos®, and surgical equipment products such as the VICTUS® femtosecond laser and the Stellaris® PC, a vitreoretinal and cataract surgery system.

• PureVision®, acquired as part of the B&L Acquisition in August 2013, is a Silicone Hydrogel Frequent Replacement Contact Lens using AerGel™ material (which allows natural levels of oxygen to reach the eyes and resists protein buildup), and an aspheric optical design.

• Medical device systems for aesthetic applications, acquired as part of the Solta Medical acquisition in January 2014, including the Thermage CPT® system that provides non-invasive treatment options using radiofrequency energy for skin tightening, the Fraxel® repair system for use in dermatological procedures requiring ablation, coagulation, and resurfacing of soft tissue, the Clear + Brilliant® system to improve skin texture and help prevent the signs of aging skin, and the Liposonix® system that destroys unwanted fat cells resulting in waist circumference reduction.

Our research and development organization focuses on the development of products through clinical trials. We currently have (or had during 2013) a number of compounds in clinical development including: the next generation silicone hydrogel lens (Bausch + Lomb Ultra) with MoistureSeal™ technology (launched in February 2014), Biotrue® ONEday lens (multi-focal version approved by the FDA in December 2013), Latanoprostene bunod, Brimonidine tartrate 0.025%, Luliconazole (approved by the FDA in November 2013), Metronidazole 1.3%, IDP-108 (efinaconazole), IDP-118 and certain life-cycle management projects.

4

Our research and development expenses for the years ended December 31, 2013, 2012 and 2011 were $156.8 million , $79.1 million and $65.7 million , respectively, excluding impairment charges.

As of December 31, 2013 , approximately 1,000 employees (including regulatory affairs and quality assurance employees) were involved in our research and development efforts.

For more information regarding our products in clinical development, see Item 7 titled “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Products in Development” of this Form 10-K.

Trademarks, Patents and Proprietary Rights

We rely on a combination of contractual provisions, confidentiality policies and procedures and patent, trademark, copyright and trade secrecy laws to protect the proprietary aspects of our technology and business. Our policy is to vigorously protect, enforce and defend our rights to our intellectual property and proprietary rights, as appropriate.

Trademarks

We believe that trademark protection is an important part of establishing product and brand recognition. We own or license a number of registered trademarks and trademark applications in the U.S., Canada and in certain other countries throughout the world. U.S. federal registrations for trademarks remain in force for 10 years and may be renewed every 10 years after issuance, provided the mark is still being used in commerce. Trademark registrations in Canada remain in force for 15 years and may be renewed every 15 years after issuance, provided that, as in the case of U.S. federal trademark registrations, the mark is still being used in commerce. Other countries generally have similar but varying terms and renewal policies with respect to trademarks registered in those countries.

Data and Patent Exclusivity

We rely on a combination of regulatory and patent rights to protect the value of our investment in the development of our products.

A patent is the grant of a property right which allows its holder to exclude others from, among other things, selling the subject invention in, or importing such invention into, the jurisdiction that granted the patent. In the U.S., Canada and the European Union, generally patents expire 20 years from the date of application. We have obtained, acquired or in-licensed a number of patents and patent applications covering key aspects of our principal products. In the aggregate, our patents are of material importance to our business taken as a whole. However, we do not consider any single patent material to our business as a whole.

In the U.S., the Hatch-Waxman Act provides non-patent regulatory exclusivity for five years from the date of the first FDA approval of a new drug compound in a New Drug Application (“NDA”). The FDA, with one exception, is prohibited during those five years from accepting for filing a generic, or ANDA, that references the NDA. In reference to the foregoing exception, if a patent is indexed in the FDA Orange Book for the new drug compound, a generic may file an ANDA four years from the NDA approval date if it also files a Paragraph IV Certification with the FDA challenging the patent. Protection under the Hatch-Waxman Act will not prevent the filing or approval of another full NDA. However, the NDA applicant would be required to conduct its own pre-clinical and adequate and well-controlled clinical trials to independently demonstrate safety and effectiveness.

A similar data exclusivity scheme exists in the European Union (“EU”), whereby only the pioneer drug company can use data obtained at the pioneer’s expense for up to eight years from the date of the first approval of a drug by the European Medicines Agency (“EMA”) and no generic drug can be marketed for ten years from the approval of the innovator product. Under both the U.S. and the EU data exclusivity programs, products without patent protection can be marketed by others so long as they repeat the clinical trials necessary to show safety and efficacy. Canada employs a similar data exclusivity regulatory regime for innovative drugs.

Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a disease or condition that affects populations of fewer than 200,000 individuals in the U.S. or a disease whose incidence rates number more than 200,000 where the sponsor establishes that it does not realistically anticipate that its product sales will be sufficient to recover its costs. The sponsor that obtains the first marketing approval for a designated orphan drug for a given rare disease is eligible to receive marketing exclusivity for use of that drug for the orphan indication for a period of seven years.

Proprietary Know-How

We also rely upon unpatented proprietary know-how, trade secrets and technological innovation in the development and manufacture of many of our principal products. We protect our proprietary rights through a variety of methods, including

5

confidentiality agreements and proprietary information agreements with vendors, employees, consultants and others who may have access to proprietary information.

Government Regulations

Government authorities in the U.S., at the federal, state and local level, in Canada, in the EU and in other countries extensively regulate, among other things, the research, development, testing, approval, manufacturing, labeling, post-approval monitoring and reporting, packaging, advertising and promotion, storage, distribution, marketing and export and import of pharmaceutical products and medical devices. As such, our products and product candidates are subject to extensive regulation both before and after approval. The process of obtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with these regulations could result in, among other things, warning letters, civil penalties, delays in approving or refusal to approve a product candidate, product recall, product seizure, interruption of production, operating restrictions, suspension or withdrawal of product approval, injunctions or criminal prosecution.

Prior to human use, FDA approval must be obtained in the U.S., approval by Health Canada must be obtained in Canada, EMA approval (drugs) or a CE Marking (devices) must be obtained for countries that are part of the EU and approval must be obtained from comparable agencies in other countries prior to manufacturing or marketing new pharmaceutical products or medical devices.

Regulation by other federal agencies, such as the Drug Enforcement Administration (“DEA”), and state and local authorities in the U.S., and by comparable agencies in certain foreign countries, is also required. In the U.S., the FTC, the FDA and state and local authorities regulate the advertising of medical devices, prescription drugs, over-the-counter drugs and cosmetics. The Federal Food, Drug and Cosmetic Act, as amended (“FDCA”) and the regulations promulgated thereunder, and other federal and state statutes and regulations, govern, among other things, the testing, manufacture, safety, effectiveness, labeling, storage, record keeping, approval, sale, distribution, advertising and promotion of our products. The FDA requires a Boxed Warning (sometimes referred to as a “Black Box” Warning) for products that have shown a significant risk of severe or life-threatening adverse events and similar warnings are also required to be displayed on the product in certain other jurisdictions.

Manufacturers of pharmaceutical products and medical devices are required to comply with manufacturing regulations, including current good manufacturing practices and quality system management requirements, enforced by the FDA and Health Canada, in the U.S. and Canada respectively, and similar regulations enforced by regulatory agencies in other countries. In addition, we are subject to price control restrictions on our pharmaceutical products in many countries in which we operate.

We are also subject to extensive U.S. federal and state health care marketing and fraud and abuse regulations, such as the federal False Claims Act, federal and provincial marketing regulation in Canada and similar regulations in foreign countries in which we may conduct our business. The federal False Claims Act imposes civil and criminal liability on individuals or entities who submit (or cause the submission of) false or fraudulent claims for payment to the government. The U.S. federal Anti-Kickback Statute prohibits persons or entities from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or indirectly, to induce either the referral of an individual, or the furnishing, recommending, or arranging for a good or service, for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs. Due to recent legislative changes, violations of the Anti-Kickback Statute also carry potential federal False Claims Act liability. In addition, in the U.S., companies may not promote drugs or medical devices for “off-label” uses - that is, uses that are not described in the product’s labeling and that differ from those that were approved or cleared by the FDA - and “off-label promotion” has also formed the predicate for False Claims Act liability resulting in significant financial settlements. These and other laws and regulations, rules and policies may significantly impact the manner in which we are permitted to market our products. If our operations are found to be in violation of any of these laws, regulations, rules or policies or any other law or governmental regulation, or if interpretations of the foregoing change, we may be subject to civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs and the curtailment or restructuring of our operations.

Environmental Regulation

Our facilities and operations are subject to national, federal, state and local environmental and occupational health and safety laws and regulations in both the U.S. and countries outside the U.S., including those governing the discharges of substances into the air, water and land, the handling, storage and disposal of hazardous wastes, wastewater and solid waste, the cleanup of properties affected by known pollutants and other environmental matters. Certain of our development and manufacturing activities involve the controlled use of hazardous materials. We believe we are in compliance in all material respects with applicable environmental laws and regulations. Existing environmental protection legislation and regulations, and compliance therewith, have had no material adverse effect on our capital expenditures, earnings or competitive position. Capital expenditures for property, facility operations and equipment for environmental control facilities were not material during fiscal year 2013, and we have no current plans to invest in material capital expenditures for environmental control facilities for the fiscal years 2014 or 2015.

6

Marketing and Customers

Our top four geographic markets by country, based on 2013 revenue, are: the U.S. and Puerto Rico, Canada, Poland and Russia, which represent 55%, 7%, 5% and 4% of our total revenue for the year ended December 31, 2013, respectively.

The following table identifies external customers that accounted for 10% or more of our total revenue during the year ended December 31, 2013 :

No other customer generated over 10% of our total revenues.

We currently promote our pharmaceutical products to physicians, hospitals, pharmacies and wholesalers through our own sales force and sell through wholesalers. In some limited markets, we additionally sell directly to physicians, hospitals and large drug store chains and we sell through distributors in countries where we do not have our own sales staff. As part of our marketing program for pharmaceuticals, we use direct mailings, advertise in trade and medical periodicals, exhibit products at medical conventions and sponsor medical education symposia.

Competition

Competitive Landscape for Products and Products in Development

The pharmaceutical and medical device industries are highly competitive. Our competitors include specialty and other large pharmaceutical companies, medical device companies, biotechnology companies, OTC companies and generic manufacturers, in the U.S., Canada, the EU and in other countries in which we market our products. The market for eye health products is very competitive, both across product categories and geographies. In addition to larger diversified pharmaceutical and medical device companies, we face competition in the eye health market from mid-size and smaller, regional and entrepreneurial companies with fewer products in niche areas or regions. The dermatology competitive landscape is highly fragmented, with a large number of mid-size and smaller companies competing in both the prescription sector and the OTC and cosmeceutical sectors.

Our competitors are pursuing the development and/or acquisition of pharmaceuticals, medical devices and OTC products that target the same diseases and conditions that we are targeting in eye health, dermatology, aesthetics, neurology and other therapeutic areas. Academic and other research and development institutions may also develop products or technologies that compete with our products, which technologies and products may be acquired or licensed by our competitors. These competitors may have greater financial, R&D or marketing resources than we do. If competitors introduce new products, delivery systems or processes with therapeutic or cost advantages, our products can be subject to progressive price reductions or decreased volume of sales, or both. Most new products that we introduce must compete with other products already on the market or products that are later developed by competitors.

We sell a broad range of products, and competitive factors vary by product line and geographic area in which the products are sold. The principal methods of competition for our products include quality, efficacy, market acceptance, price, and marketing and promotional efforts.

Generic Competition

We face increased competition from manufacturers of generic pharmaceutical products when patents covering certain of our currently marketed products expire or are successfully challenged. Generic versions are generally significantly less expensive than branded versions, and, where available, may be required in preference to the branded version under third party reimbursement programs, or substituted by pharmacies. Manufacturers of generic pharmaceuticals typically invest far less in research and development than research-based pharmaceutical companies and therefore can price their products significantly lower than branded products. Accordingly, when a branded product loses its market exclusivity, it normally faces intense price competition from generic forms of the product. To successfully compete for business with managed care and pharmacy benefits management organizations, we must often demonstrate that our products offer not only medical benefits but also cost advantages as compared with other forms of care.

A number of our products already face generic competition, including Cesamet®, BenzaClin®, Cardizem® CD and Wellbutrin XL® (both

Percentage of Total Revenue

2013

McKesson Corporation 19%

Cardinal Health, Inc. 13%

in the U.S. and Canada), all of which had generic competitors during 2013. In April 2013, a generic version

7

of Zovirax® ointment was introduced by Mylan Inc, and, in August 2013, a generic competitor to Retin-A Micro® was launched. In addition, certain of our products face the expiration of their patent and regulatory exclusivity in 2014 or in later years, following which we anticipate generic competition of these products, including Vanos® for which a generic competitor was launched in January 2014.

In addition, for a number of our products, we have commenced infringement proceedings against potential generic competitors in the U.S. and Canada. If we are not successful in these proceedings, we may face increased generic competition for these products. See note 24 of notes to consolidated financial statements in Item 15 of this Form 10-K for additional details regarding such potential infringement proceedings.

Manufacturing

We currently operat e 38 manufacturing plants worldwide. All of our manufacturing facilities that require certification from the FDA, Health Canada or foreign agenci es have obtained such approval.

We also subcontract the manufacturing of certain of our products, including products manufactured under the rights acquired from other pharmaceutical companies. Generally, acquired products continue to be produced for a specific period of time by the selling company. During that time, we integrate the products into our own manufacturing facilities or initiate toll manufacturing agreements with third parties.

Products representing the majority of our product sales are produced by third party manufacturers under toll manufacturing arrangements.

In some cases, the principal raw materials, including active pharmaceutical ingredient, used by us (or our third party manufacturers) for our various products are purchased in the open market or are otherwise available from several sources. However, some of the active pharmaceutical ingredient and other raw materials are currently available from a single source and others may in the future become available from only one source. In addition, in some cases, only a single source of such active pharmaceutical ingredient is identified in filings with regulatory agencies, including the FDA, and cannot be changed without prior regulatory approval. Any disruption in the supply of any such active pharmaceutical ingredient or other raw material or an increase in the cost of such material could adversely impact our ability to manufacture such products, the ability of our third party manufacturers to supply us with such products, or our profitability. We attempt to manage the risks associated with reliance on single sources of active pharmaceutical ingredient or other raw materials by carrying additional inventories or, where possible, developing second sources of supply.

Employees

As of December 31, 2013 , we had approximately 17,200 employees. These employees included approximately 8,100 in production, 6,400 in sales and marketing, 1,700 in general and administrative positions and 1,000 in research and development (including regulatory affairs and quality assurance). Collective bargaining exists for some employees in a number of markets. We consider our relations with our employees to be good and have not experienced any work stoppages, slowdowns or other serious labor problems that have materially impeded our business operations.

Product Liability Insurance

We have product liability insurance to cover damages resulting from the use of our products. Product liability insurance is expensive and, in the future, may be difficult to obtain or may not be available on acceptable terms, or at all. As a result of the difficulties and costs of acquiring insurance, we may reevaluate and change the types and levels of product liability insurance coverage that we purchase and we may also make the decision to self-insure some of, a significant portion of or all of our product liability risk.

Seasonality of Business

Historically, revenues from our business tend to be weighted toward the second half of the year. Sales in the fourth quarter tend to be higher based on consumer and customer purchasing patterns associated with healthcare reimbursement programs. Further, the third quarter “back to school” period impacts demand for certain of our dermatology products. H owever, as we continue our strategy of selective acquisitions to expand our product portfolio, there are no assurances that these historical trends will continue in the future.

Geographic Areas

8

A significant portion of our revenues is generated from operations or otherwise earned outside the U.S. and Canada. All of our foreign operations are subject to risks inherent in conducting business abroad, including price and currency exchange controls, fluctuations in the relative values of currencies, political and economic instability and restrictive governmental actions including possible nationalization or expropriation. Changes in the relative values of currencies may materially affect our results of operations. For a discussion of these risks, see Item 1A., Risk Factors in this Form 10-K.

See note 26 of notes to consolidated financial statements in Item 15 of this Form 10-K for detailed information regarding revenues by geographic area.

In 2013, a material portion of our revenue and income was earne d in Bermuda, Ireland, Luxembourg and Switzerland, which have low tax rates. See Item 1A., Risk Factors in this Form 10-K relating to tax rates.

Available Information

Our Internet address is www.valeant.com . We post links on our website to the following filings as soon as reasonably practicable after they are electronically filed or furnished to the SEC: annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendment to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. All such filings are available through our website free of charge. The information on our Internet website is not incorporated by reference into this Form 10-K or our other securities filings and is not a part of such filings.

We are also required to file reports and other information with the securities commissions in all provinces in Canada. You are invited to read and copy any reports, statements or other information, other than confidential filings, that we file with the provincial securities commissions. These filings are also electronically available from the Canadian System for Electronic Document Analysis and Retrieval (“SEDAR”) (http://www.sedar.com), the Canadian equivalent of the SEC’s electronic document gathering and retrieval system.

Our filings may also be read and copied at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including us, that file electronically with the SEC.

9

Item 1A. Risk Factors

Our business, operations and financial condition are subject to various risks and uncertainties. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Form 10-K, including those risks set forth under the heading entitled “Forward-Looking Statements”, and in other documents that we file with the SEC and the CSA, before making any investment decision with respect to our securities. If any of the risks or uncertainties actually occur or develop, our business, financial condition, results of operations and future growth prospects could change. Under these circumstances, the market value of our securities could decline, and you could lose all or part of your investment in our securities.

Competitive Risks

We operate in extremely competitive industries. If competitors develop or acquire more effective or less costly pharmaceutical products or medical devices for our target indications, it could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

The pharmaceutical and medical device industries are extremely competitive. Our success and future growth depend, in part, on our ability to acquire, license or develop products that are more effective than those of our competitors or that incorporate the latest technologies and our ability to effectively manufacture and market those products. Many of our competitors, particularly larger pharmaceutical and medical device companies, have substantially greater financial, technical and human resources than we do. Many of our competitors spend significantly more on research and development related activities than we do. Others may succeed in developing or acquiring products that are more effective or less costly than those currently marketed or proposed for development by us. In addition, academic institutions, government agencies and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products and may also establish exclusive collaborative or licensing relationships with our competitors. These competitors and the introduction of competing products (that may be more effective or less costly than our products) could make our products less competitive or obsolete, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We have faced generic competition in the past and expect to face additional generic competition in the future. Generic competition of our products could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Upon the expiration or loss of patent protection for our products, or upon the “at-risk” launch (despite pending patent infringement litigation against the generic product) by a generic competitor of a generic version of our products (which may be sold at significantly lower prices than our products), we could lose a significant portion of sales of that product in a very short period, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Products representing a significant amount of our revenue are not protected by patent or data exclusivity rights or are nearing the end of their exclusivity period.

A significant number of the products we sell have no meaningful exclusivity protection via patent or data exclusivity rights or are protected by patents or regulatory exclusivity periods that will be expiring in the near future. These products represent a significant amount of our revenues. Without exclusivity protection, competitors face fewer barriers in introducing competing products. The introduction of competing products could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Acquisition-related Risks

We have grown at a very rapid pace. Our inability to properly manage or support this growth could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock 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 are unable to successfully manage and support our rapid growth and the challenges and difficulties associated with managing a larger, more complex business, this could cause a material adverse effect on our business, financial position and results of operations, and the market value of our common stock could decline.

10

We may be unable to identify, acquire, close or integrate acquisition targets successfully.

Part of our business strategy includes acquiring and integrating complementary businesses, products, technologies or other assets, and forming strategic alliances, joint ventures and other business combinations, to help drive future growth. We may also in-license new products or compounds. Acquisitions or similar arrangements may be complex, time consuming and expensive. In some cases, we move very rapidly to negotiate and consummate the transaction, once we identify the acquisition target. We may not consummate some negotiations for acquisitions or other arrangements, which could result in significant diversion of management and other employee time, as well as substantial out-of-pocket costs. In addition, there are a number of risks and uncertainties relating to our closing transactions. 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 an acquisition is consummated (such as our recent acquisitions of B&L and Solta Medical), the integration of the acquired business, product or other assets into our Company may also be complex and time-consuming and, if such businesses, products and assets are not successfully integrated, we may not achieve the anticipated benefits, cost-savings or growth opportunities. Potential difficulties that may be encountered in the integration process include the following:

Furthermore, as was the case with the recent B&L Acquisition, we have incurred, and may incur in the future, restructuring and integration costs and a number of non-recurring transaction costs associated with these acquisitions, combining the operations of the Company and the acquired company and achieving desired synergies. These fees and costs may be substantial. Non-recurring transaction costs include, but are not limited to, fees paid to legal, financial and accounting advisors, filing fees and printing costs. Additional unanticipated costs may be incurred in the integration of the businesses of the Company and the acquired company. There can be no assurance that the elimination of certain duplicative costs, as well as the realization of other efficiencies related to the integration of the acquired business, will offset the incremental transaction-related costs over time. Therefore, any net benefit may not be achieved in the near term, the long term or at all.

Finally, these acquisitions and other arrangements, even if successfully integrated, may fail to further our business strategy as anticipated or to achieve anticipated benefits and success, expose us to increased competition or challenges with respect to our products or geographic markets, and expose us to additional liabilities associated with an acquired business, product, technology or other asset or arrangement. Any one of these challenges or risks could impair our ability to realize any benefit from our acquisition or arrangement after we have expended resources on them.

Our recent acquisition of B&L involved certain additional risks. We entered into a new business area in connection with the B&L Acquisition, which business may not be successful or which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

With the B&L Acquisition, we have significantly increased our involvement in the eye health industry and we have entered into a number of new business areas, including vision care and surgical eye care, and will be developing and commercializing a range of new products. We may not be successful in these new areas and business units and this could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline. In addition, B&L has a number of pipeline products that may not align with our lower-risk R&D model, which may result in increased costs, lower success rates or a rationalization of certain projects, each of which may adversely affect our financial results.

Tax-related Risks

• integrating personnel, operations and systems, while maintaining focus on selling and promoting existing and newly-acquired products;

• coordinating geographically dispersed organizations;

• distracting management and employees from operations;

• retaining existing customers and attracting new customers;

• maintaining the business relationships the acquired company has established, including with healthcare providers; and

• managing inefficiencies associated with integrating the operations of the Company.

Our effective tax rates may increase.

11

We have operations in various countries that have differing tax laws and rates. Our tax reporting is supported by current domestic tax laws in the countries in which we operate and the application of tax treaties between the various countries in which we operate. Our income tax reporting will be, and the historic tax reporting of each of Valeant and Biovail is, subject to audit by domestic and foreign authorities. Our effective tax rate may change from year to year based on changes in the mix of activities and income earned among the different jurisdictions in which we operate; changes in tax laws in these jurisdictions; changes in the tax treaties between various countries in which we operate; changes in our eligibility for benefits under those tax treaties; and changes in the estimated values of deferred tax assets and liabilities. Such changes could result in a substantial increase in the effective tax rate on all or a portion of our income.

Our provision for income taxes is based on certain estimates and assumptions made by management. Our consolidated income tax rate is affected by the amount of net income earned in our various operating jurisdictions, the availability of benefits under tax treaties, and the rates of taxes payable in respect of that income. We enter into many transactions and arrangements in the ordinary course of business in respect of which the tax treatment is not entirely certain. We therefore make estimates and judgments based on our knowledge and understanding of applicable tax laws and tax treaties, and the application of those tax laws and tax treaties to our business, in determining our consolidated tax provision. For example, certain countries could seek to tax a greater share of income than will be provided for by us. The final outcome of any audits by taxation authorities may differ from the estimates and assumptions that we may use in determining our consolidated tax provisions and accruals. This could result in a material adverse effect on our consolidated income tax provision, financial condition and the net income for the period in which such determinations are made.

Our deferred tax liabilities, deferred tax assets and any related valuation allowances are affected by events and transactions arising in the ordinary course of business, acquisitions of assets and businesses, and non-recurring items. The assessment of the appropriate amount of a valuation allowance against the deferred tax assets is dependent upon several factors, including estimates of the realization of deferred income tax assets, which realization will be primarily based on forecasts of future taxable income. Significant judgment is applied to determine the appropriate amount of valuation allowance to record. Changes in the amount of any valuation allowance required could materially increase or decrease our provision for income taxes in a given period.

Debt-related Risks

We have incurred significant indebtedness, which may restrict the manner in which we conduct business and limit our ability to implement elements of our growth strategy.

We have incurred significant indebtedness, primarily in connection with our acquisitions (including our acquisition of B&L). We may also incur additional long-term debt and working capital lines of credit to meet future financing needs, subject to certain restrictions under our indebtedness, which would increase our total debt. This additional debt may be substantial. Our indebtedness may restrict the manner in which we conduct business and limit our ability to implement elements of our growth strategy. Some restrictions could include:

Our current corporate credit rating is Ba3 for Moody’s Investors Service and BB- for Standard and Poor’s. A downgrade may increase our

• limitations on our ability to obtain additional debt financing on favorable terms or at all;

• instances in which we are unable to meet the financial covenants contained in our debt agreements or to generate cash sufficient to make required debt payments, which circumstances would have the potential of resulting in the acceleration of the maturity of some or all of our outstanding indebtedness (which we may not have the ability to pay);

• the allocation of a substantial portion of our cash flow from operations to service our debt, thus reducing the amount of our cash flow available for other purposes, including operating costs and capital expenditures that could improve our competitive position and results of operations;

• requiring us to issue debt or equity securities or to sell some of our core assets (subject to certain restrictions under our existing indebtedness), possibly on unfavorable terms, to meet payment obligations;

• compromising our flexibility to plan for, or react to, competitive challenges in our business and the pharmaceutical and medical device industries;

• the possibility that we are put at a competitive disadvantage relative to competitors that do not have as much debt as us, and competitors that may be in a more favorable position to access additional capital resources; and

• limitations on our ability to execute business development activities to support our strategies.

cost of borrowing and may negatively impact our ability to raise additional debt capital.

12

To service our debt, we will be required to generate a significant amount of cash. Our ability to generate cash depends on a number of factors, some of which are beyond our control, and any failure to meet our debt service obligations could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We have a significant amount of indebtedness. Our ability to satisfy our debt obligations will depend principally upon our future operating performance. As a result, prevailing economic conditions and financial, business and other factors, many of which are beyond our control, may affect our ability to make payments on our debt. If we do not generate sufficient cash flow to satisfy our debt service obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. Our ability to restructure or refinance our debt will depend on the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. Our inability to generate sufficient cash flow to satisfy our debt service obligations or to refinance our obligations on commercially reasonable terms could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Repayment of our indebtedness is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. Certain non-guarantor subsidiaries include non-U.S. subsidiaries that may be prohibited by law or other regulations from distributing funds to us and/or we may be subject to payment of repatriation taxes and withholdings. In the event that we do not receive distributions from our subsidiaries or receive cash via cash repatriation strategies for services rendered and intellectual property, we may be unable to make required principal and interest payments on our indebtedness.

We are exposed to risks related to interest rates.

Our senior secured credit facilities bear interest based on U.S. dollar London Interbank Offering Rates, or U.S. Prime Rate, or Federal Funds effective rate. Thus, a change in the short-term interest rate environment could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline. As of December 31, 2013, we do not have any outstanding interest rate swap contracts.

Risks related to the International Scope of our Business

Our business, financial condition and results of operations are subject to risks arising from the international scope of our operations.

We conduct a significant portion of our business outside the U.S. and Canada and, in light of our growth strategy, we anticipate continuing to expand our operations into new countries, including emerging markets. We sell our pharmaceutical and medical device products in many countries around the world. All of our foreign operations are subject to risks inherent in conducting business abroad, including, among other things:

• difficulties in coordinating and managing foreign operations, including ensuring that foreign operations comply with foreign laws as well as U.S. laws applicable to U.S. companies with foreign operations, such as export laws and the U.S. Foreign Corrupt Practices Act, or FCPA;

• price and currency exchange controls;

• credit market uncertainty;

• political and economic instability;

• compliance with multiple regulatory regimes;

• less established legal and regulatory regimes in certain jurisdictions, including as relates to enforcement of anti-bribery and anti-corruption laws and the reliability of the judicial systems;

• differing degrees of protection for intellectual property;

• unexpected changes in foreign regulatory requirements, including quality standards and other certification requirements;

13

• new export license requirements;

• adverse changes in tariff and trade protection measures;

Any of these factors, or any other international factors, could have a material adverse impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Due to the large portion of our business conducted in currency other than U.S. dollars, we have significant foreign currency risk.

We face foreign currency exposure on the translation into U.S. dollars of the financial results of our operations in Europe, Canada, Australia, Latin America, Asia and Africa. Where possible, we manage foreign currency risk by managing same currency revenue in relation to same currency expenses. As a result, both favorable and unfavorable foreign currency impacts to our foreign currency-denominated operating expenses are mitigated to a certain extent by the natural, opposite impact on our foreign currency-denominated revenue. In addition, the repurchase of principal under our U.S. dollar denominated debt may result in foreign exchange gains or losses for Canadian income tax purposes. One half of any foreign exchange gains or losses will be included in our Canadian taxable income. Any foreign exchange gain will result in a corresponding reduction in our available Canadian tax attributes.

The general business and economic conditions in those countries in which we conduct business could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We may be impacted by general economic conditions and factors over which we have no control, such as changes in inflation, interest rates and foreign currency rates, lack of liquidity in certain markets and volatility in capital markets. Similarly, adverse economic conditions impacting our customers or uncertainty about global economic conditions could cause purchases of our products to decline, which would adversely affect our revenues and operating results. Moreover, our projected revenues and operating results are based on assumptions concerning certain levels of customer spending. Any failure to attain our projected revenues and operating results as a result of adverse economic or market conditions could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Employment-related Risks

We must continue to retain, motivate and recruit executives and other key employees, and failure to do so could have a material adverse impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We must continue to retain, motivate and recruit executives, including our Chief Executive Officer, J. Michael Pearson, and other key employees. A failure by us to retain and motivate executives and other key employees could have a material adverse impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Risks related to Intellectual Property and Legal Proceedings

The Company may fail to obtain, maintain, enforce or defend the intellectual property rights required to conduct its business, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

• differing labor regulations;

• potentially negative consequences from changes in or interpretations of tax laws;

• restrictive governmental actions;

• possible nationalization or expropriation;

• restrictions on the repatriation of funds;

• differing local practices, customs and cultures, some of which may not align or comply with our company practices or U.S. laws and regulations;

• difficulties with licensees, contract counterparties, or other commercial partners; and

• differing local product preferences and product requirements.

We strive to acquire, maintain and defend patent, trademark and other intellectual property protections over our products and the processes used to manufacture these products. However, we may not be successful in obtaining such protections, or the patent, trademark and intellectual property rights we do obtain may not be sufficient in breadth and scope to fully protect our products or prevent competing products, or such patent and intellectual property rights may be susceptible to third party challenges.

14

The failure to obtain, maintain, enforce or defend such intellectual property rights, for any reason, could allow third parties to manufacture and sell products that compete with our products or may impact our ability to develop, manufacture and market our own products, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

For certain of our products and manufacturing processes, we rely on trade secrets and other proprietary information, which we seek to protect, in part, by confidentiality and nondisclosure agreements with our employees, consultants, advisors and partners. We also attempt to enter into agreements whereby such employees, consultants, advisors and partners assign to us the rights in any intellectual property they develop. These agreements may not effectively prevent disclosure of such information and disputes may still arise with respect to the ownership of intellectual property. The disclosure of such proprietary information or the loss of such intellectual property rights may impact our ability to develop, manufacture and market our own products or may assist competitors in the development, manufacture and sale of competing products, which could have a material adverse effect on our revenues, financial condition or results of operations and could cause the market value of our common stock to decline.

We may also incur substantial costs and resources in applying for and prosecuting these patent, trademark and other intellectual property rights and in defending or litigating these rights against third parties.

We may become involved in infringement actions which are uncertain, costly and time-consuming and could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

The pharmaceutical and medical device industries historically have generated substantial litigation concerning the manufacture, use and sale of products and we expect this litigation activity to continue. As a result, we expect that patents related to our products will be routinely challenged, and our patents may not be upheld. In order to protect or enforce patent rights, we may initiate litigation against third parties. If we are not successful in defending an attack on our patents and maintaining exclusive rights to market one or more of our products still under patent protection, we could lose a significant portion of sales in a very short period. We may also become subject to infringement claims by third parties and may have to defend against charges that we violated patents or the proprietary rights of third parties. If we infringe the intellectual property rights of others, we could lose our right to develop, manufacture or sell products, including our generic products, or could be required to pay monetary damages or royalties to license proprietary rights from third parties. The outcomes of infringement actions are uncertain and infringement actions are costly and divert technical and management personnel from their normal responsibilities.

In addition, in the U.S., it has become increasingly common for patent infringement actions to prompt claims that antitrust laws have been violated during the prosecution of the patent or during litigation involving the defense of that patent. Such claims by direct and indirect purchasers and other payers are typically filed as class actions. The relief sought may include treble damages and restitution claims. Similarly, antitrust claims may be brought by government entities or private parties following settlement of patent litigation, alleging that such settlements are anti-competitive and in violation of antitrust laws. In the U.S. and Europe, regulatory authorities have continued to challenge as anti-competitive so-called “reverse payment” settlements between branded and generic drug manufacturers. We may also be subject to other antitrust litigation involving competition claims unrelated to patent infringement and prosecution. A successful antitrust claim by a private party or government entity against us could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

If our products cause, or are alleged to cause, serious or widespread personal injury, we may have to withdraw those products from the market and/or incur significant costs, including payment of substantial sums in damages, and we may be subject to exposure relating to product liability claims.

We face an inherent business risk of exposure to significant product liability and other claims in the event that the use of our products caused, or is alleged to have caused, adverse effects. Furthermore, our products may cause, or may appear to have caused, adverse side effects (including death) or potentially dangerous drug interactions that we may not learn about or understand fully until the drug has been administered to patients for some time. The withdrawal of a product following complaints and/or incurring significant costs, including the requirement to pay substantial damages in personal injury cases or product liability cases, could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline. Our product liability insurance coverage may not be sufficient to cover our claims and we may not be able to obtain sufficient coverage at a reasonable cost in the future, or we may elect to self-insure.

We are involved in various legal proceedings that could have a material adverse impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We are involved in several legal proceedings and may be involved in litigation in the future. These proceedings may be complex and extended and may occupy the resources of our management and employees. These proceedings may also be costly

15

to prosecute and defend and may involve substantial awards or damages payable by us if not found in our favor. We may also be required to pay substantial amounts or grant certain rights on unfavorable terms in order to settle such proceedings. Defending against or settling such claims and any unfavorable legal decisions, settlements or orders could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline. For more information regarding legal proceedings, see note 24 of notes to consolidated financial statements in Item 15 of this Form 10-K.

Development and Regulatory Risks

The successful development of our pipeline products is highly uncertain and requires significant expenditures and time. The failure to commercialize certain of our pipeline products could have an adverse impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We currently have a number of pipeline products in development. We and our development partners, as applicable, conduct extensive preclinical studies and clinical trials to demonstrate the safety and efficacy in humans of our pipeline products in order to obtain regulatory approval for the sale of our pipeline products. Preclinical studies and clinical trials are expensive, complex, can take many years and have uncertain outcomes. Only a small number of our research and development programs may actually result in the commercialization of a product. We will not be able to commercialize our pipeline products if preclinical studies do not produce successful results or if clinical trials do not demonstrate safety and efficacy in humans. Furthermore, success in preclinical studies or early-stage clinical trials does not ensure that later stage clinical trials will be successful nor does it ensure that regulatory approval for the product candidate will be obtained. In addition, the process for the completion of pre-clinical and clinical trials and the regulatory approval submission process are lengthy and may be subject to a number of delays for various reasons, which will delay the commercialization of any successful product. If our development projects are not successful or are significantly delayed, we may not recover our substantial investments in the pipeline product and our failure to bring these pipeline products to market on a timely basis, or at all, could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Obtaining necessary government approvals is time consuming and not assured.

FDA and Health Canada approval must be obtained in the U.S. and Canada, respectively, EMA approval (drugs) and CE Marking (devices) must be obtained in countries in the EU and similar approvals must be obtained from comparable agencies in other countries, prior to marketing or manufacturing new pharmaceutical and medical device products for use by humans. Obtaining such regulatory approvals for new products and devices and manufacturing processes can take a number of years and involves the expenditure of substantial resources. Even if such products appear promising in development stages, regulatory approval may not be achieved and no assurance can be given that we will obtain approval in those countries where we wish to commercialize such products. Nor can any assurance be given that if such approval is secured, the approved labeling will not have significant labeling limitations, including limitations on the indications for which we can market a product, or require onerous risk management programs. Furthermore, from time to time, changes to the applicable legislation or regulations may be introduced that change these review and approval processes for our products, which changes may make it more difficult and costly to obtain or maintain regulatory approvals.

Our marketed drugs will be subject to ongoing regulatory review.

Following initial regulatory approval of any products we or our partners may develop or acquire, we will be subject to continuing regulatory review by various government authorities in those countries where our products are marketed or intended to be marketed, including the review of adverse drug events and clinical results that are reported after product candidates become commercially available. The research, development, testing, approval, manufacturing, labeling, post-approval monitoring and reporting, packaging, advertising and promotion, storage, distribution, marketing and export and import of pharmaceutical products and medical devices will also be subject to extensive ongoing regulatory requirements. If we fail to comply with the regulatory requirements in those countries where our products are sold, we could lose our marketing approvals or be subject to fines or other sanctions. In addition, incidents of adverse drug reactions, unintended side effects or misuse relating to our products could result in additional regulatory controls or restrictions, or even lead to the regulatory authority requiring us to withdraw the product from the market. Further, if faced with these incidents of adverse drug reactions, unintended side effects or misuse relating to our products, we may elect to voluntarily implement a recall or market withdrawal of our product. A recall or market withdrawal, whether voluntary or required by a regulatory authority, may involve significant costs to us, potential disruptions in the supply of our products to our customers and reputational harm to our products and business, all of which could harm our ability to market our products and could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline. Also, as a condition to granting marketing approval of a product, the applicable regulatory agencies may require a company to conduct additional clinical trials, the results of which could result in the subsequent loss of marketing approval, changes in product labeling or new or increased concerns about side effects or efficacy of a product.

16

Our marketing, promotional and pricing practices, as well as the manner in which sales forces interact with purchasers, prescribers and patients, are subject to extensive regulation and any material failure to comply could result in significant sanctions against us.

The marketing, promotional, and pricing practices of pharmaceutical and medical device companies, as well as the manner in which companies’ in-house or third-party sales forces interact with purchasers, prescribers, and patients, are subject to extensive regulation, enforcement of which may result in the imposition of civil and/or criminal penalties, injunctions, and/or limitations on marketing practice for our products. Many companies, including us, have been the subject of claims related to these practices asserted by federal authorities. These claims have resulted in fines and other consequences. We are now operating under a Corporate Integrity Agreement (“CIA”) that requires us to maintain a comprehensive compliance program governing our sales, marketing and government pricing and contracting functions. Material failures to comply with the CIA could result in significant sanctions against us, including monetary penalties and exclusion from federal health care programs. Companies may not promote drugs for “off-label” uses - that is, uses that are not described in the product's labeling and that differ from those approved by the FDA, Health Canada, EMA or other applicable regulatory agencies. A company that is found to have improperly promoted off-label uses may be subject to significant liability, including civil and administrative remedies as well as criminal sanctions. In addition, management's attention could be diverted from our business operations and our reputation could be damaged.

For certain of our products, we depend on reimbursement from third party payors and a reduction in the extent of reimbursement could reduce our product sales and revenue.

Sales of certain of our products are dependent, in part, on the availability and extent of reimbursement from government health administration authorities, private health insurers and other organizations of the costs of our products and our continued participation in such programs. Changes in government regulations or private third-party payors’ reimbursement policies may reduce reimbursement for our products and adversely affect our future results.

Failure to be included in formularies developed by managed care organizations and other organizations may negatively impact the utilization of our products, which could harm our market share and could negatively impact our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Managed care organizations and other third-party payors try to negotiate the pricing of medical services and products to control their costs. Managed care organizations and pharmacy benefit managers typically develop formularies to reduce their cost for medications. Formularies can be based on the prices and therapeutic benefits of the available products. Due to their lower costs, generic products are often favored. The breadth of the products covered by formularies varies considerably from one managed care organization to another, and many formularies include alternative and competitive products for treatment of particular medical conditions. Failure to be included in such formularies or to achieve favorable formulary status may negatively impact the utilization and market share of our products. If our products are not included within an adequate number of formularies or adequate reimbursement levels are not provided, or if those policies increasingly favor generic products, this could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Manufacturing and Supply Risks

If we or our third-party manufacturers are unable to manufacture our products or the manufacturing process is interrupted due to failure to comply with regulations or for other reasons, the interruption of the manufacture of our products could adversely affect our business. Other manufacturing and supply difficulties or delays may also adversely affect our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Our manufacturing facilities and those of our contract manufacturers must be inspected and found to be in full compliance with current good manufacturing practices (“cGMP”), quality system management requirements or similar standards before approval for marketing. Our failure or that of our contract manufacturers to comply with cGMP regulations, quality system management requirements or similar regulations outside of the U.S. can result in enforcement action by the FDA or its foreign counterparts, including, but not limited to, warning letters, fines, injunctions, civil or criminal penalties, recall or seizure of products, total or partial suspension of production or importation, suspension or withdrawal of regulatory approval for approved or in-market products, refusal of the government to renew marketing applications or approve pending applications or supplements, suspension of ongoing clinical trials, imposition of new manufacturing requirements, closure of facilities and criminal prosecution. These enforcement actions could lead to a delay or suspension in production, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Our manufacturing and other processes use complicated and sophisticated equipment, which sometimes requires a significant amount of time to obtain and install. Manufacturing complexity, testing requirements and safety and security processes combine to increase the overall difficulty of manufacturing these products and resolving manufacturing problems that we may encounter.

17

Although we endeavor to properly maintain our equipment (and require our contract manufacturers to properly maintain their equipment), including through on-site quality control and experienced manufacturing supervision, and have key spare parts on hand, our business could suffer if certain manufacturing or other equipment, or all or a portion of our or their facilities, were to become inoperable for a period of time. This could occur for various reasons, including catastrophic events, such as hurricanes, earthquakes or other natural disasters, explosions, environmental accidents, pandemics, quarantine, equipment failures or delays in obtaining components or replacements, construction delays or defects and other events, both within and outside of our control. We could experience substantial production delays or inventory shortages in the event of any such occurrence until we or they repair such equipment or facility or we or they build or locate replacement equipment or a replacement facility, as applicable, and seek to obtain necessary regulatory approvals for such replacement. Any interruption in our manufacture of products could adversely affect the sales of our current products or introduction of new products and could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

In addition, if we fail to properly forecast demand for, or to maintain an adequate supply of, raw materials or finished product, this could result in supply interruptions or inventory shortages, which could adversely affect the sales of our products or the effective launch of new products, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

The supply of our products to our customers (or, in some case, supply from our contract manufacturers to us) is subject to and dependent upon the use of transportation services. Disruption of transportation services (including as a result of weather conditions) could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline. In addition, any prolonged disruption in the operations of our existing distribution facilities, whether due to technical, labor or other difficulties, weather conditions, equipment malfunction, contamination, failure to follow specific protocols and procedures, destruction of or damage to any facility or other reasons, could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

For some of our finished products and raw materials, we obtain supply from one or a limited number of sources. If we are unable to obtain components or raw materials, or products supplied by third parties, our ability to manufacture and deliver our products to the market would be impeded, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Some components and raw materials used in our manufactured products, and some finished products sold by us, are currently available only from one or a limited number of domestic or foreign suppliers. In the event an existing supplier fails to supply product on a timely basis and/or in the requested amount, supplies product that fails to meet regulatory requirements, becomes unavailable through business interruption or financial insolvency or loses its regulatory status as an approved source or we are unable to renew current supply agreements when such agreements expire and we do not have a second supplier, we may be unable to obtain the required components, raw materials or products on a timely basis or at commercially reasonable prices. We attempt to mitigate these risks by maintaining safety stock of these products, but such safety stock may not be sufficient. A prolonged interruption in the supply of a single-sourced raw material, including the active pharmaceutical ingredient, could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Furthermore, we rely on these third party manufacturers to obtain and maintain the required approvals of their facilities and to maintain their facilities and equipment in compliance with applicable laws and regulations. While we attempt to build in certain contractual obligations on such third party manufacturers, we may not be able to ensure that such third parties comply with these obligations, with the result that the approval and/or production of our products may be delayed or interrupted. In addition, these third party manufacturers may have the ability to increase the supply price payable by us for the manufacture and supply of our products, in some cases without our consent. Our dependence upon others to manufacture our products may adversely affect our profit margins and our ability to obtain approval for and produce our products on a timely and competitive basis, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Commercialization and Distribution Risks

Our approved products may not achieve or maintain expected levels of market acceptance.

Even if we are able to obtain and maintain regulatory approvals for our pharmaceutical and medical device products, generic or branded, the success of these products is dependent upon achieving and maintaining market acceptance. Commercializing products is time consuming, expensive and unpredictable. There can be no assurance that we will be able to, either by ourselves or in collaboration with our partners or through our licensees or distributors, successfully commercialize new products or gain market acceptance for such products. New product candidates that appear promising in development may fail to reach the market

18

or may have only limited or no commercial success. Levels of market acceptance for our new products could be impacted by several factors, some of which are not within our control, including but not limited to the:

Further, the market perception and reputation of our products and their safety and efficacy are important to our business and the continued acceptance of our products. Any negative publicity about our products, such as the discovery of safety issues with our products, adverse events involving our products, or even public rumors about such events, may have a material adverse effect on our business. In addition, the discovery of significant problems with a product similar to one of our products that implicate (or are perceived to implicate) an entire class of products or the withdrawal or recall of such similar products could have an adverse effect on sales of our products. Accordingly, new data about our products, or products similar to our products, could cause us reputational harm and could negatively impact demand for our products due to real or perceived side effects or uncertainty regarding safety or efficacy and, in some cases, could result in product withdrawal.

If our products fail to gain, or lose, market acceptance, our revenues would be adversely impacted which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Our business may be impacted by seasonality, which may cause our operating results and financial condition to fluctuate.

Demand for certain of our products may be impacted by seasonality. Historically, revenues from our business tend to be weighted toward the second half of the year. Sales in the fourth quarter tend to be higher based on consumer and customer purchasing patterns associated with healthcare reimbursement programs. Further, the third quarter “back to school” period impacts demand for certain of our dermatology products. This seasonality may cause our operating results to fluctuate. However, as we continue our strategy of selective acquisitions to expand our product portfolio, there are no assurances that these historical trends will continue in the future.

We have entered into distribution agreements with other companies to distribute certain of our products at supply prices based on net sales. Declines in the pricing and/or volume, over which we have no or limited control, of such products, and therefore the amounts paid to us, could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Certain of our generic products and certain of our other products are the subject of various agreements, pursuant to which we manufacture and sell products to other companies, which distribute such products at a supply price typically based on net sales. Our ability to control pricing and volume of these products is limited and, in some cases, these companies make all distribution and pricing decisions independently of us. If the pricing or volume of such products declines, our revenues would be adversely impacted which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We may experience declines in sales volumes or prices of certain of our products as the result of the concentration of sales to wholesalers and the continuing trend towards consolidation of such wholesalers and other customer groups and this could have a material adverse

• safety, efficacy, convenience and cost-effectiveness of our products compared to products of our competitors;

• scope of approved uses and marketing approval;

• availability of patent or regulatory exclusivity;

• timing of market approvals and market entry;

• availability of alternative products from our competitors;

• acceptance of the price of our products;

• effectiveness of our sales forces and promotional efforts;

• the level of reimbursement of our products;

• acceptance of our products on government and private formularies;

• ability to market our products effectively at the retail level or in the appropriate setting of care; and

• the reputation of our products

impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

19

For certain of our products, a significant portion of our sales are to a relatively small number of customers. If our relationship with one or more of such customers is disrupted or changes adversely or if one or more of such customers experience financial difficulty or other material adverse change in their businesses, it could materially and adversely affect our sales and financial results, which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

In addition, wholesalers and retail drug chains have undergone, and are continuing to undergo, significant consolidation. This consolidation may result in these groups gaining additional purchasing leverage and consequently increasing the product pricing pressures facing our business. The result of these developments could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

Risks related to Specific Legislation and Regulations

We are subject to various laws and regulations, including “fraud and abuse” laws, anti-bribery laws, environmental laws and privacy and security regulations, and a failure to comply with such laws and regulations or prevail in any litigation related to noncompliance could have a material adverse impact on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Pharmaceutical and medical device companies have faced lawsuits and investigations pertaining to violations of health care “fraud and abuse” laws, such as the federal False Claims Act, the federal Anti-Kickback Statute (“AKS”) and other state and federal laws and regulations. We are subject to various federal and state laws pertaining to healthcare fraud and abuse. The AKS prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under federally financed healthcare programs. This statute has been interpreted to apply to arrangements between pharmaceutical or medical device manufacturers, on the one hand, and prescribers, purchasers, formulary managers and other health care related professionals, on the other hand. Due to recent legislative changes, the government may assert that a claim including items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for purposes of the false claims statutes. More generally, the federal False Claims Act, among other things, prohibits any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government. Pharmaceutical and medical device companies have been prosecuted or faced civil liability under these laws for a variety of alleged promotional and marketing activities, including engaging in off-label promotion that caused claims to be submitted for non-covered off-label uses.

We also face increasingly strict data privacy and security laws in the U.S. and in other countries, the violation of which could result in fines and other sanctions. The United States Department of Health and Human Services Office of Inspector General recommends and increasingly states require pharmaceutical companies to have comprehensive compliance programs. In addition, the Physician Payment Sunshine Act enacted in 2010 imposes reporting and disclosure requirements on device and drug manufacturers for any “transfer of value” made or distributed to prescribers and other healthcare providers. Failure to submit this required information may result in significant civil monetary penalties. While we have developed corporate compliance programs based on what we believe to be current best practices, we cannot assure you that we or our employees or agents are or will be in compliance with all applicable federal, state or foreign regulations and laws. If we are in violation of any of these requirements or any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant criminal and civil fines and penalties, exclusion from federal healthcare programs or other sanctions.

The U.S. Foreign Corrupt Practices Act (“FCPA”) and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining business. Our policies mandate compliance with these anti-bribery laws. We operate in many parts of the world that have experienced governmental corruption and in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices or may require us to interact with doctors and hospitals, some of which may be state controlled, in a manner that is different than in the U.S. and Canada. We cannot assure you that our internal control policies and procedures will protect us from reckless or criminal acts committed by our employees or agents. Violations of these laws, or allegations of such violations, could disrupt our business and result in criminal or civil penalties or remedial measures, any of which could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

We are subject to laws and regulations concerning the environment, safety matters, regulation of chemicals and product safety in the countries where we manufacture and sell our products or otherwise operate our business. These requirements include regulation of the handling, manufacture, transportation, use and disposal of materials, including the discharge of pollutants into the environment. In the normal course of our business, hazardous substances may be released into the environment, which could cause environmental or property damage or personal injuries, and which could subject us to remediation obligations regarding contaminated soil and groundwater or potential liability for damage claims. Under certain laws, we may be required to remediate contamination at certain of our properties regardless of whether the contamination was caused by us or by previous occupants of

20

the property or by others. In recent years, the operations of all companies have become subject to increasingly stringent legislation and regulation related to occupational safety and health, product registration and environmental protection. Such legislation and regulations are complex and constantly changing, and future changes in laws or regulations may require us to install additional controls for certain of our emission sources, to undertake changes in our manufacturing processes or to remediate soil or groundwater contamination at facilities where such cleanup is not currently required.

We are also subject to various privacy and security regulations, including but not limited to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (as amended, “HIPAA”). HIPAA mandates, among other things, the adoption of uniform standards for the electronic exchange of information in common health care transactions (e.g., health care claims information and plan eligibility, referral certification and authorization, claims status, plan enrollment, coordination of benefits and related information), as well as standards relating to the privacy and security of individually identifiable health information, which require the adoption of administrative, physical and technical safeguards to protect such information. In addition, many states have enacted comparable laws addressing the privacy and security of health information, some of which are more stringent than HIPAA. Failure to comply with these laws can result in the imposition of significant civil and criminal penalties. The costs of compliance with these laws and the potential liability associated with the failure to comply with these laws could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Legislative or regulatory reform of the healthcare system may affect our ability to sell our products profitably and could have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

In the U.S. and certain foreign jurisdictions, there have been a number of legislative and regulatory proposals to change the healthcare system in ways that could impact our ability to sell our products profitably. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (the “Health Care Reform Act”) may affect the operational results of companies in the pharmaceutical and medical device industries, including the Company and other healthcare related industries, by imposing on them additional costs. Effective January 1, 2010, the Health Care Reform Act increased the minimum Medicaid drug rebates for pharmaceutical companies, expanded the 340B drug discount program, and made changes to affect the Medicare Part D coverage gap, or "donut hole". The law also revised the definition of "average manufacturer price" for reporting purposes, which has the potential to affect the amount of our Medicaid drug rebates to states. Beginning in 2011, the law imposed a significant annual fee on companies that manufacture or import branded prescription drug products. Finally, the law imposed an annual tax on manufacturers of certain medical devices. The Health Care Reform Act also added substantial new provisions affecting compliance, some of which, such as the Physician Payments Sunshine Act, may require us to modify our business practices with health care practitioners.

We are unable to predict the future course of federal or state health care legislation. A variety of federal and state agencies are in the process of implementing the Health Care Reform Act, including through the issuance of rules, regulations or guidance that materially affect our business. The risk of our being found in violation of these rules and regulations is increased by the fact that many of them have not been fully interpreted by applicable regulatory authorities or the courts, and their provisions are open to a variety of interpretations. The Health Care Reform Act and further changes to health care laws or regulatory framework that reduce our revenues or increase our costs could also have a material adverse effect on our business, financial condition and results of operations and could cause the market value of our common stock to decline.

Other Risks

Our operating results and financial condition may fluctuate.

Our operating results and financial condition may fluctuate from quarter to quarter for a number of reasons. The following events or occurrences, among others, could cause fluctuations in our financial performance from period to period:

• development and launch of new competitive products;

• the timing and receipt of FDA approvals or lack of approvals;

• costs related to business development transactions;

• changes in the amount we spend to promote our products;

• delays between our expenditures to acquire new products, technologies or businesses and the generation of revenues from those acquired products, technologies or businesses;

21

• changes in treatment practices of physicians that currently prescribe certain of our products;

As a result, we believe that quarter-to-quarter comparisons of results from operations, or any other similar period-to-period comparisons, should not be construed as reliable indicators of our future performance. The above factors may cause our operating results to fluctuate and could have a material adverse effect on our business, financial condition and results of operations. In any quarterly period, our results may be below the expectations of market analysts and investors, which could cause the trading price of our common stock to decline.

We have significant goodwill and other intangible assets and potential impairment of goodwill and other intangibles may significantly impact our profitability.

Goodwill and intangible assets represent a significant portion of our total assets. Finite-lived intangible assets are subject to an impairment analysis whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. If an impairment exists, we would be required to take an impairment charge with respect to the impaired asset. Events giving rise to impairment are difficult to predict and are an inherent risk in the pharmaceutical and medical device industries. As a result of the significance of goodwill and intangible assets, our financial condition and results of operations in a future period could be negatively impacted should such an impairment of goodwill or intangible assets occur, which could cause the market value of our common stock to decline.

We may incur substantial costs with respect to pension and other healthcare benefits provided to B&L employees.

B&L had established certain pension and other benefits plans, pursuant to which they provided pension and current and post-retirement medical and other health and welfare benefits to their employees. Following the B&L Acquisition, we have assumed the obligations under these plans (some of which are underfunded). We will incur costs with respect to these pension and other healthcare benefits, and these costs may increase substantially in the future.

Item 1B. Unresolved Staff Comments

None.

22

• increases in the cost of raw materials used to manufacture our products;

• manufacturing and supply interruptions;

• our responses to price competition;

• expenditures as a result of legal actions (and settlements thereof), including the defense of our patents and other intellectual property;

• market acceptance of our products;

• the timing of wholesaler and distributor purchases;

• general economic and industry conditions, including potential fluctuations in foreign currency and interest rates; and

• changes in seasonality of demand for certain of our products.

Item 2. Properties

We own and lease a number of important properties. Our headquarters and one of our manufacturing facilities are located in Laval, Quebec. We also have U.S.-based manufacturing facilities in Rochester, New York; Irvine, California; Greenville, South Carolina; St. Louis, Missouri; Tampa, Florida; and Clearwater, Florida. Outside the U.S., we own or have an interest in manufacturing plants or other properties in Poland, Ireland, Germany, France, Italy, Canada, China, Mexico, Brazil, Serbia, and Vietnam.

We consider our facilities to be in satisfactory condition and are suitable for their intended use, although some limited investments to improve our manufacturing and other related facilities are contemplated, based on the needs and requirements of our business. Our administrative, marketing, research/laboratory, distribution and warehousing facilities are located in various parts of the world. We co-locate our research and development activities with our manufacturing at the plant level in a number of facilities. Our scientists, engineers, quality control and manufacturing technicians work side-by-side in designing and manufacturing products that fit the needs and requirements of our customers, regulators and business units.

We believe that we have sufficient facilities to conduct our operations during 2014. The following table lists the location, use, size and ownership interest of our principal properties by segment:

___________________

Item 3. Legal Proceedings

See note 24 of notes to consolidated financial statements in Item 15 of this Form 10-K, which is incorporated by reference herein.

Item 4. Mine Safety Disclosures

Not applicable.

23

Location Purpose

Owned or

Leased

Approximate Square Footage

Laval, Quebec, Canada Corporate headquarters, manufacturing and warehouse facility Owned 337,000 Bridgewater, New Jersey (1) Administration Leased 110,000 Developed Markets

Rochester, New York Office, R&D and manufacturing facility Owned 953,000 Waterford, Ireland R&D and manufacturing facility Owned 339,000 Greenville, South Carolina Distribution facility Leased 320,000 Greenville, South Carolina Manufacturing and distribution facility Owned 225,000 Tampa, Florida R&D and manufacturing facility Owned 171,000 St. Louis, Missouri R&D and manufacturing facility Owned 140,000 Steinbach, Manitoba, Canada Offices, manufacturing and warehouse facility Owned 250,000 Clearwater, Florida R&D and manufacturing facility Owned 102,000 Emerging Markets

Jinan, China Office and manufacturing facility Owned 416,000 Mexico City, Mexico Offices and manufacturing facility Owned 161,000 Tlalpan Mexico City, Mexico Offices and manufacturing facility Owned 146,000 San Juan del Rio, Mexico Offices and manufacturing facility Owned 816,000 Indaiatuba, Brazil Manufacturing facility Owned 178,000 Jelenia Gora, Poland Offices, R&D and manufacturing and warehouse facility Owned 601,000 Rzeszow, Poland Offices, R&D and manufacturing facility Owned 404,000 Belgrade, Serbia Offices and manufacturing facility Owned 161,000

(1) In December 2013, we signed a lease for a new facility in Bridgewater, New Jersey, and we are in the process of relocating administration functions from our current Bridgewater facility to this new facility.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common shares are traded on the New York Stock Exchange (“NYSE”) and on the Toronto Stock Exchange (“TSX”) under the symbol “VRX”. The following table sets forth the high and low per share sales prices for our common shares on the NYSE and TSX for the periods indicated.

_______________

Source: NYSEnet, TSX Historical Data Access

Market Price Volatility of Common Shares

Market prices for the securities of pharmaceutical, medical devices and biotechnology companies, including our securities, have historically been highly volatile, and the market has from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. Factors such as fluctuations in our operating results, the aftermath of public announcements by us, concern as to safety of drugs and medical devices and general market conditions can have an adverse effect on the market price of our common shares and other securities.

Holders

The approximate number of holders of record of our common shares as of February 21, 2014 i s 3,508.

Performance Graph

The following graph compares the cumulative total return on our common shares with the cumulative return on the S&P 500 Index, the TSX/S&P Composite Index and a 8-stock Custom Composite Index for the five years ended December 31, 2013 , in all cases, assuming reinvestment of dividends. The Custom Composite Index consists of Allergan, Inc.; Endo Health Solutions Inc.; Forest Laboratories, Inc.; Gilead Sciences, Inc.; Mylan Inc.; Perrigo Company; Shire plc and Actavis, Inc.

24

NYSE TSX

High

$ Low

$ High C$

Low C$

2013

First quarter 75.10 59.34 76.58 58.53

Second quarter 96.25 69.87 99.49 70.99

Third quarter 106.98 86.89 109.93 92.41

Fourth quarter 118.25 102.60 125.71 107.30

2012

First quarter 55.80 45.52 55.24 45.32

Second quarter 59.94 42.47 58.98 43.99

Third quarter 61.11 44.01 59.88 45.07

Fourth quarter 61.10 52.50 60.73 52.29

Dividends

No dividends were declared or paid in 2013, 2012 or 2011.

While our Board of Directors will review our dividend policy from time to time, we currently do not intend to pay any cash dividends in the foreseeable future. In addition, the covenants contained in the Third Amended and Restated Credit and Guaranty Agreement, as amended and our bond indentures include restrictions on the payment of dividends.

See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation — Selected Financial Information — Cash Dividends”, for additional details about our dividend payments.

Restrictions on Share Ownership by Non-Canadians

There are no limitations under the laws of Canada or in our organizational documents on the right of foreigners to hold or vote securities of our Company, except that the Investment Canada Act (Canada) (the “Investment Canada Act”) may require review and approval by the Minister of Industry (Canada) of certain acquisitions of “control” of our Company by a “non-Canadian”.

Investment Canada Act

An acquisition of control of a Canadian business by a non-Canadian is either reviewable (a “Reviewable Transaction”), in which case it is subject to both a reporting obligation and an approval process, or notifiable, in which case it is subject to only a post-closing reporting obligation. In the case of a Reviewable Transaction, the non-Canadian acquirer must submit an application for review with the prescribed information. The responsible Minister is then required to determine whether the Reviewable Transaction is likely to be of net benefit to Canada, taking into account the assessment factors specified in the Investment Canada Act and any written undertakings that may have been given by the non-Canadian acquirer.

In March 2009, the Investment Canada Act was amended to provide that any investment by a non-Canadian in a Canadian business, even where control has not been acquired, can be reviewed on grounds of whether it may be injurious to national security. Where an investment is determined to be injurious to national security, Cabinet can prohibit closing or, if closed, can order the investor to divest control. Short of a prohibition or divestment order, Cabinet can impose terms or conditions on the investment or can require the investor to provide binding

Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13

S&P 500 Index 100 126 146 149 172 228

S&P/TSX Composite Index 100 135 159 145 155 176

Valeant Pharmaceuticals International, Inc. 100 156 334 552 706 1,387

Custom Composite Index 100 128 158 191 217 349

undertakings to remove the national security concern.

Competition Act

25

Part IX of the Competition Act (Canada) (the “Competition Act”) requires that a pre-merger notification filing be submitted to the Commissioner of Competition (the “Commissioner”) in respect of certain classes of merger transactions that exceed certain prescribed thresholds. If a proposed transaction exceeds such thresholds, subject to certain exceptions, the notification filing must be submitted to the Commissioner and the statutory waiting period must expire or be terminated early or waived by the Commissioner before the transaction can be completed.

All mergers, regardless of whether they are subject to Part IX of the Competition Act, are subject to the substantive mergers provisions under Section 92 of the Competition Act. In particular, the Commissioner may challenge a transaction before the Competition Tribunal where the transaction prevents or lessens, or is likely to prevent or lessen, competition substantially in a market. The Commissioner may not make an application to the Competition Tribunal under Section 92 of the Competition Act more than one year after the merger has been substantially completed.

Exchange Controls

Canada has no system of exchange controls. There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors. There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of our securities, except as discussed in “Taxation” below.

Taxation

Canadian Federal Income Taxation

The following discussion is a summary of the principal Canadian federal income tax considerations generally applicable to a holder of our common shares who, at all relevant times, for purposes of the Income Tax Act (Canada) and the Income Tax Regulations (collectively, the “Canadian Tax Act”) deals at arm’s-length with, and is not affiliated with, our Company, beneficially owns its common shares as capital property, does not use or hold such common shares in a business carried on or deemed to be carried on in Canada, and has not entered into, with respect to their Shares, a “derivative forward agreement” as defined in the Act, and who, at all relevant times, for purposes of the application of the Canadian Tax Act and the Canada-U.S. Income Tax Convention (1980, as amended) (the “U.S. Treaty”), is resident in the U.S., is not, and is not deemed to be, resident in Canada and is eligible for benefits under the U.S. Treaty (a “U.S. Holder”). Special rules, which are not discussed in the summary, may apply to a non-resident holder that is an insurer that carries on an insurance business in Canada and elsewhere or that is an “authorized foreign bank” as defined in the Canadian Tax Act.

The U.S. Treaty includes limitation on benefits rules that restrict the ability of certain persons who are resident in the U.S. to claim any or all benefits under the U.S. Treaty. Furthermore, limited liability companies (“LLCs”) that are not taxed as corporations pursuant to the provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) do not generally qualify as resident in the U.S. for purposes of the U.S. Treaty. Under the U.S. Treaty, a resident of the U.S. who is a member of such an LLC and is otherwise eligible for benefits under the U.S. Treaty may generally be entitled to claim benefits under the U.S. Treaty in respect of income, profits or gains derived through the LLC. Residents of the U.S. should consult their own tax advisors with respect to their eligibility for benefits under the U.S. Treaty, having regard to these rules.

This summary is based upon the current provisions of the U.S. Treaty and the Canadian Tax Act and our understanding of the current administrative policies and assessing practices of the Canada Revenue Agency published in writing prior to the date hereof. This summary takes into account all specific proposals to amend the U.S. Treaty and the Canadian Tax Act publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof. This summary does not otherwise take into account or anticipate changes in law or administrative policies and assessing practices, whether by judicial, regulatory, administrative or legislative decision or action, nor does it take into account provincial, territorial or foreign tax legislation or considerations, which may differ from those discussed herein.

This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice generally or to any particular holder. Holders should consult their own tax advisors with respect to their own particular circumstances.

Gains on Disposition of Common Shares

In general, a U.S. Holder will not be subject to tax under the Canadian Tax Act on capital gains arising on the disposition of such holder’s common shares unless the common shares are “taxable Canadian property” to the U.S. Holder and are not “treaty-protected property”.

26

As long as the common shares are then listed on a “designated stock exchange”, which currently includes the NYSE and TSX, the common shares generally will not constitute taxable Canadian property of a U.S. Holder, unless (a) at any time during the 60-month period preceding the disposition, the U.S. Holder, persons not dealing at arm’s length with such U.S. Holder or the U.S. Holder together with all such persons, owned 25% or more of the issued shares of any class or series of the capital stock of the Company and more than 50% of the fair market value of the common shares was derived, directly or indirectly, from any combination of (i) real or immoveable property situated in Canada, (ii) “Canadian resource property” (as such term is defined in the Tax Act), (iii) “timber resource property” (as such terms are defined in the Tax Act), or (iv) options in respect of, or interests in, or for civil law rights in, any such properties whether or not the property exists, or (b) the common shares are otherwise deemed to be taxable Canadian property.

Common shares will be treaty-protected property where the U.S. Holder is exempt from income tax under the Canadian Tax Act on the disposition of common shares because of the U.S. Treaty. Common shares owned by a U.S. Holder will generally be treaty-protected property where the value of the common shares is not derived principally from real property situated in Canada, as defined in the U.S. Treaty.

Dividends on Common Shares

Dividends paid or credited on the common shares or deemed to be paid or credited on the common shares to a U.S. Holder that is the beneficial owner of such dividends will generally be subject to non-resident withholding tax under the Canadian Tax Act and the U.S. Treaty at the rate of (a) 5% of the amounts paid or credited if the U.S. Holder is a company that owns (or is deemed to own) at least 10% of our voting stock, or (b) 15% of the amounts paid or credited in all other cases. The rate of withholding under the Canadian Tax Act in respect of dividends paid to non-residents of Canada is 25% where no tax treaty applies.

Securities Authorized for Issuance under Equity Compensation Plans

In formation required under this Item will be included in our definitive proxy statement for the 2014 Annual Meeting of Shareholders expected to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Form 10-K (the “2014 Proxy Statement”), and such required information is incorporated herein by reference.

Purchases of Equity Securities by the Company and Affiliated Purchases

On November 19, 2012, we announced that our Board of Directors had approved a new securities repurchase program (the “2012 Securities Repurchase Program”). Under the 2012 Securities Repurchase Program, which commenced on November 15, 2012, we could make purchases of up to $1.5 billion of our senior notes, common shares and/or other future debt or shares. The 2012 Securities Repurchase Program terminated on November 14, 2013.

On November 21, 2013, our Board of Directors approved a new securities repurchase program (the “2013 Securities Repurchase Program”). Under the 2013 Securities Repurchase Program, which commenced on November 22, 2013, we may make purchases of up to $1.5 billion of our convertible notes, senior notes, common shares and/or other future debt or shares. The 2013 Securities Repurchase Program will terminate on November 21, 2014 or at such time as we complete our purchases.

During the year ended December 31, 2013, under the 2012 Securities Repurchase Program, we repurchased 507,957 of our common shares for an aggregate purchase price of $35.7 million. In the three-month period ended December 31, 2013, we did not make any purchases of our senior notes or common shares under the 2012 Securities Repurchase Program or the 2013 Securities Repurchase Program.

For more information regarding our 2012 Securities Repurchase Program and 2013 Securities Repurchase Program, see note 16 of notes to consolidated financial statements in Item 15 of this Form 10-K.

Item 6. Selected Financial Data

The following table of selected consolidated financial data of our Company has been derived from financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The data is qualified by reference to, and should be read in conjunction with the consolidated financial statements and related notes thereto prepared in accordance with U.S. GAAP (see Item 15 of this Form 10-K) as well as the discussion in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. All dollar amounts are expressed in thousands of U.S. dollars, except per share data.

27

___________________

In 2012, we wrote off an IPR&D asset of $133.4 million, relating to the IDP-107 program, which was acquired in September 2010 as part of the Merger.

In 2011, we recognized impairment charges on IPR&D assets of $105.2 million in the fourth quarter of 2011, relating to the A002, A004, and A006 programs acquired as part of the Aton acquisition in 2010, as well as the IDP-109 and IDP-115 dermatology programs.

For more information regarding these impairment charges and other impairment charges, see note 7 and note 12 of notes to consolidated financial statements in Item 15 of this Form 10-K.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

28

Years Ended December 31,

2013 (1)(2) 2012 (1)(2) 2011 (1)(2) 2010 (1) 2009

Consolidated operating data:

Revenues $ 5,769,605 $ 3,480,376 $ 2,427,450 $ 1,181,237 $ 820,430 Operating (loss) income (409,502 ) 79,685 299,959 (110,085 ) 181,154 Net (loss) income attributable to Valeant Pharmaceuticals International, Inc. (866,142 ) (116,025 ) 159,559 (208,193 ) 176,455 (Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:

Basic $ (2.70 ) $ (0.38 ) $ 0.52 $ (1.06 ) $ 1.11 Diluted $ (2.70 ) $ (0.38 ) $ 0.49 $ (1.06 ) $ 1.11

Cash dividends declared per share $ — $ — $ — $ 1.28 $ 0.65

At December 31,

2013 (1)(2) 2012 (1)(2) 2011 (1)(2) 2010 (1) 2009

Consolidated balance sheet:

Cash and cash equivalents $ 600,340 $ 916,091 $ 164,111 $ 394,269 $ 114,463 Working capital 1,373,493 954,699 433,234 327,710 93,734 Total assets 27,970,797 17,950,379 13,108,119 10,795,117 2,059,290 Long-term obligations 17,367,702 11,015,625 6,651,011 3,595,277 326,085 Common shares 8,301,179 5,940,652 5,963,621 5,251,730 1,465,004 Valeant Pharmaceuticals International, Inc. shareholders’ equity 5,118,723 3,717,398 3,929,830 4,911,096 1,354,372 Number of common shares issued and outstanding (000s) 333,037 303,861 306,371 302,449 158,311

(1) Amounts for 2013, 2012, 2011, and 2010 include the impact of several acquisitions of businesses. For more information regarding our acquisitions, see note 3 of notes to consolidated financial statements in Item 15 of this Form 10-K.

(2) In 2013, we recognized an impairment charge of $551.6 million related to ezogabine/retigabine (immediate-release formulation) which is co-developed and marketed under a collaboration agreement with GSK, and we wrote off an IPR&D asset of $93.8 million relating to a modified-release formulation of ezogabine/retigabine.

Item 7. 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 audited consolidated financial statements, and notes thereto, prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) as of December 31, 2013 and 2012 and each of the three years in the period ended December 31, 2013 (the “2013 Financial Statements”).

Additional information relating to the Company, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (the “2013 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 Februa ry 28, 2014.

All dollar amounts are expressed in U.S. dollars, unless otherwise noted.

COMPANY PROFILE

Valeant Pharmaceuticals International, Inc. (“we”, “us”, “our” or the “Company”) is a multinational, specialty pharmaceutical and medical device company that develops, manufactures, and markets a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices), which are marketed directly or indirectly in over 100 countries. In the Developed Markets segment, we focus most of our efforts in the eye health, dermatology and neurology therapeutic classes. In the Emerging Markets segment, we focus primarily on branded generics, OTC products, and medical devices. We are diverse not only in our sources of revenue from our broad drug and medical device portfolio, but also among the therapeutic classes and geographic segments we serve.

Effective August 9, 2013, we continued from the federal jurisdiction of Canada to the Province of British Columbia, meaning that we became a company registered under the laws of the Province of British Columbia as if we had been incorporated under the laws of the Province of British Columbia. As a result of this continuance, our legal domicile became the Province of British Columbia, the Canada Business Corporations Act ceased to apply to us and we became subject to the British Columbia Business Corporations Act (BCBCA).

On August 5, 2013, we acquired Bausch & Lomb Holdings Incorporated (“B&L”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) dated May 24, 2013. Subject to the terms and conditions set forth in the Merger Agreement, B&L became a wholly-owned subsidiary of Valeant Pharmaceuticals International (“Valeant”), our wholly-owned subsidiary (the “B&L Acquisition”). B&L is a global eye health company that focuses primarily on the development, manufacture and marketing of eye health products, including contact lenses, contact lens care solutions, ophthalmic pharmaceuticals and ophthalmic surgical products. We believe we will continue to grow the B&L business due primarily to the expected growth of the overall eye health market and the introduction of new products. Further, we are integrating the B&L business into our decentralized structure which will allow us to continue to realize operational efficiencies and cost synergies. For more information regarding the B&L Acquisition, see note 3 of notes to consolidated financial statements in Item 15 of this Form 10-K.

Our strategy is to focus the business on core geographies and therapeutic classes that offer attractive growth opportunities while maintaining our lower selling, general and administrative cost model and decentralized operating structure. We have an established portfolio of durable products with a focus in the eye health and dermatology therapeutic areas. We believe these areas are particularly attractive given that many of the products in these areas:

• have potential for strong operating margins and solid growth;

• are marked by a higher insured and self-pay component than other therapeutic areas and are less dependent on increasing government reimbursement pressures;

• have limited patent risk;

• have the potential for line extensions and life-cycle management opportunities; and

Another critical element of our strategy is business development. We have completed numerous transactions over the past few years to expand our portfolio offering and geographic footprint, including, among others, the acquisitions of B&L and Medicis

29

• are smaller on an individual basis, and therefore typically not the focus of larger pharmaceutical companies.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Pharmaceutical Corporation (“Medicis”). We will continue to pursue value-added business development opportunities as they arise.

The growth of our business is further augmented through our lower risk research and development model. This model allows us to advance certain development programs to drive future commercial growth, while minimizing our research and development expense. This is achieved primarily as follows:

In addition to selective acquisitions and product development, our strategy also involves deploying cash through debt repayments and repurchases, as well as share buybacks.

We believe this strategy will allow us to maximize both the growth rate and profitability of the Company and to enhance shareholder value.

We measure our success through total shareholder return and, on that basis, as of February 21, 2014, the market price of our common shares on the New York Stock Exchange (“NYSE”) has increased approximately 460%, and the market price of our common shares on the Toronto Stock Exchange (“TSX”) has increased approximately 500%, since the Company’s (then named Biovail Corporation (“Biovail”)) acquisition of Valeant on September 28, 2010 (the “Merger”), as adjusted for the post-Merger special dividend of $1.00 per common share (the “post-Merger special dividend”).

ACQUISITIONS AND DISPOSITIONS

Since 2011, we have completed several transactions to expand our product portfolio, including, among others, the following acquisitions and dispositions.

30

• focusing our efforts on niche therapeutic areas such as eye health, dermatology and podiatry, aesthetics, and dentistry, including life-cycle management programs for currently marketed products; and

• acquiring dossiers and registrations for branded generic products, which require limited manufacturing start-up and development activities.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

____________________________________

Acquisition Date Acquisitions of businesses and product rights

2014

Solta Medical, Inc. (“Solta Medical”) January 2014

2013

B&L (1) August 2013

Obagi Medical products, Inc. (“Obagi”) April 2013

Certain assets of Eisai Inc. (“Eisai”) February 2013

Natur Produkt International, JSC (“Natur Produkt”) February 2013

2012

Medicis (2) December 2012

Certain assets of Johnson & Johnson Consumer Companies, Inc. (“J&J ROW”) October 2012

Certain assets of Johnson & Johnson Consumer Companies, Inc. (“J&J North America”) September 2012

Certain assets of QLT Inc. and QLT Ophthalmics, Inc. (collectively, “QLT”) September 2012

OraPharma Topco Holdings, Inc. (“OraPharma”) June 2012

Certain assets of University Medical Pharmaceuticals Corp. (“University Medical”) May 2012

Certain assets of Atlantis Pharma (“Atlantis”) May 2012

Certain assets of Gerot Lannach March 2012

Probiotica Laboratorios Ltda. (“Probiotica”) February 2012

2011

iNova December 2011

Dermik, a dermatological unit of Sanofi in the U.S. and Canada December 2011

Ortho Dermatologics division of Janssen Pharmaceuticals, Inc. December 2011

Afexa Life Sciences Inc. (“Afexa”) October 2011

AB Sanitas (“Sanitas”) August 2011

Elidel®/Xerese® license agreement June 2011

Zovirax® February 2011/March 2011

PharmaSwiss S.A. (“PharmaSwiss”) March 2011

Disposition Date Dispositions

2013

Divestiture of certain skincare products sold in Australia October 2013

Divestiture of Buphenyl® June 2013

2012

Divestitures of 1% clindamycin and 5% benzoyl peroxide gel (“IDP-111”) and 5% fluorouracil cream (“5-FU”) February 2012

2011

Out-license product rights to Cloderm® Cream, 0.1% to Promius Pharma LLC March 2011

(1) The B&L Acquisition included acquired in-process research and development (“IPR&D”) assets of $418.3 million related to the development of (i) various vision care products, such as the next generation silicone hydrogel lens (Bausch + Lomb Ultra), (ii) various pharmaceutical products, such as latanoprostene bunod, a nitric oxide-donating prostaglandin for reduction of elevated intraocular pressure in patients with glaucoma or ocular hypertension, and (iii) various surgical products. The projected cash flows from these assets were adjusted for the probabilities of successful development and commercialization of each project. In determining fair value for latanoprostene bunod and the next generation silicone hydrogel lens (Bausch + Lomb Ultra), we assumed that material cash inflows for these products would commence in 2016 and 2014, respectively. In September 2013, the U.S. Food and Drug Administration (“FDA”) approved the next generation silicone hydrogel lens (Bausch + Lomb Ultra), and the product was launched in February 2014. As of December 31, 2013, we estimated that we will incur remaining development costs, including certain milestone payments, of approximately $90 million, in the aggregate, to complete the development of the IPR&D assets.

(2) The Medicis Acquisition (as defined below) included acquired IPR&D assets of $159.8 million related to the development of several programs, including Luliconazole Cream, Metronidazole 1.3%, and other dermatology and aesthetics programs. The projected cash flows were adjusted for the probability of successful development and commercialization of the products. In determining fair value for these assets, we assumed that significant cash inflows for these products would commence in 2015. In November 2013, the FDA approved the NDA for Luliconazole, which triggered the commencement of amortization. On April 30, 2013, the Company agreed to sell the worldwide rights in its Metronidazole 1.3% Vaginal Gel antibiotic development product, a topical antibiotic for the treatment of bacterial vaginosis, to Actavis Specialty Brands for approximately $55 million, which includes upfront and certain

31

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

milestone payments, and minimum royalties for the first three years of commercialization. As of December 31, 2013, we estimated that we will incur remaining

development costs of approximately $25 million, in the aggregate, to complete the development of these IPR&D assets.

For more information regarding our acquisitions and dispositions, see note 3, note 4 and note 27 of notes to consolidated financial statements in Item 15 of this Form 10-K.

PRODUCTS IN DEVELOPMENT

The following products, among others, are currently or were in clinical development during 2013:

B&L Acquisition

With the B&L Acquisition in August 2013, we added several ongoing projects to our research and development portfolio, including:

Medicis Acquisition

With the acquisition of Medicis in December 2012 (the “Medicis Acquisition”), we added several ongoing projects to our research and development portfolio, including:

Other

We also have a number of dermatology product candidates in development including:

• The next generation silicone hydrogel lens (Bausch + Lomb Ultra), with MoistureSeal™ technology, was approved by the FDA in September 2013 and was launched in February 2014. MoistureSeal™ is a unique combination of material chemistry and production process that has been shown to retain moisture throughout the day, which can help reduce blurriness or visual fluctuations associated with lens dryness.

• Biotrue® ONEday lens is made from the bio-inspired material HyperGel™ that mimics the actions of the natural tear film, matches the water content of the eye, and meets the oxygen needs of the eye for daily wear of contact lenses. A multi-focal version of the Biotrue® ONEday lens was approved by the FDA in December 2013 and is targeted for launch in 2014.

• Latanoprostene bunod, a nitric-oxide donating prostaglandin, is being developed for the reduction of intraocular pressure (IOP) in patients with glaucoma or ocular hypertension. The product is in Phase 3 testing.

• Brimonidine tartrate 0.025% is being developed as an ocular redness reliever. Phase 2 studies have demonstrated fast onset and long-lasting efficacy, with low potential for rebound redness. The product is in Phase 3 testing.

• Luliconazole, a new imidazole, antimycotic cream for the treatment of tinea cruris, pedis and corporis. The NDA was submitted to the FDA on December 11, 2012. The FDA approved the NDA for Luliconazole under the name Luzu™ in November 2013, and the product is targeted for launch in early 2014.

• Metronidazole 1.3%, a topical antibiotic for the treatment of bacterial vaginosis. In April 2013, we agreed to sell the worldwide rights for Metronidazole 1.3% to Actavis Specialty Brands. The rights to Metronidazole 1.3% are expected to be transferred to Actavis Specialty Brands at or shortly following the time of FDA approval of the product NDA, when and if obtained. In May 2013, we filed the NDA in the U.S. For more information see note 27 of notes to consolidated financial statements in Item 15 of this Form 10-K.

• Several unique formulation development programs focused on improving the tolerability of existing acne vulgaris treatments, as well as a number of aesthetics programs.

• IDP-108 (efinaconazole), to be marketed as Jublia ® , a novel triazole compound, is an antifungal targeted to treat onychomycosis, a fungal infection of the fingernails and toenails primarily in older adults. Valeant holds an exclusive license from Kaken Pharmaceutical Co., Ltd., to commercialize efinaconazole in North America, Central America, South America and the European Union.

32

The mechanism of antifungal activity appears similar to other antifungal triazoles, i.e., ergosterol synthesis inhibition. Jublia ® was approved in Canada in October 2013, and we are targeting a launch in Canada in the second quarter of 2014. We filed the NDA in the U.S. in July 2012. As announced in May 2013, we received a Complete Response Letter from the FDA regarding our NDA for Jublia ® . We are in the process of addressing the issues raised by the FDA in its letter.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

COLLABORATION AGREEMENTS

See note 5 of notes to consolidated financial statements in Item 15 of this Form 10-K for detailed information regarding our various license, development and collaboration agreements.

RESTRUCTURING AND INTEGRATION

In connection with the B&L and Medicis acquisitions, as well as the Merger and other smaller acquisitions, we have implemented cost-rationalization and integration initiatives to capture operating synergies and generate cost savings across the Company. These measures included:

B&L Acquisition-Related Cost-Rationalization and Integration Initiatives

The complementary nature of the Company and B&L businesses has provided an opportunity to capture significant operating synergies from reductions in sales and marketing, general and administrative expenses, and research and development. In total, we have identified greater than $850 million of cost synergies on an annual run rate basis that we expect to achieve by the end of 2014. This amount does not include potential revenue synergies or the potential benefits of incorporating B&L’s operations into the Company’s corporate structure.

We estimate that we will incur total costs that are approximately half of the estimated annual synergies of greater than $850 million in connection with these cost-rationalization and integration initiatives, which are expected to be substantially completed by the end of 2014. Since the acquisition date, total costs of $364.2 million (including (i) $181.3 million of restructuring expenses, (ii) $14.1 million of acquisition-related costs, and (iii) $168.8 million of integration expenses) have been incurred through December 31, 2013. The estimate of total costs to be incurred primarily includes: employee termination costs payable to approximately 2,500 employees of the Company and B&L who have been or will be terminated as a result of the B&L Acquisition; IPR&D termination costs related to the transfer to other parties of product-development programs that did not align with our research and development model; costs to consolidate or close facilities and relocate employees; and contract termination and lease cancellation costs. These estimates do not include charges of $48.5 million and $4.3 million recognized and paid in the third quarter of 2013 related to the previously cancelled B&L’s performance-based options and the acceleration of unvested stock options for B&L employees as a result of the B&L Acquisition, respectively.

Medicis Acquisition-Related Cost-Rationalization and Integration Initiatives

The complementary nature of the Company and Medicis businesses has provided an opportunity to capture significant operating synergies from reductions in sales and marketing, general and administrative expenses, and research and development. In total, we have realized over $300 million of cost synergies on a run rate basis as of December 31, 2013.

We estimated that we will incur total costs of less than $250 million in connection with these cost-rationalization and integration initiatives, which were substantially completed by the end of 2013. However, certain costs may still be incurred in 2014. Since the acquisition date, total costs of $181.3 million (including (i) $109.2 million of restructuring expenses, (ii) $32.2 million of acquisition-related costs, which excludes $24.2 million of acquisition-related costs recognized in the fourth quarter of 2012 related to royalties to be paid to Galderma S.A. on sales of Sculptra®, and (iii) $39.9 million of integration expenses) have been incurred through December 31, 2013. The estimated costs primarily include: employee termination costs payable to approximately 750 employees of the Company and Medicis who have been terminated as a result of the Medicis Acquisition; IPR&D termination costs related to the transfer to other parties of product-development programs that did not align with our research and development model; costs to consolidate or close facilities and relocate employees; and contract termination and lease cancellation costs. These estimates do not include a charge of $77.3 million recognized and paid in the fourth quarter of 2012 related to the

• Topical and other life-cycle management projects, including IDP-118.

• workforce reductions across the Company and other organizational changes;

• closing of duplicative facilities and other site rationalization actions company-wide, including research and development facilities, sales offices and corporate facilities;

• leveraging research and development spend; and

• procurement savings.

acceleration of unvested stock options, restricted stock awards, and share appreciation rights for Medicis employees that was triggered by the change in control.

33

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Merger-Related Cost-Rationalization and Integration Initiatives

The complementary nature of the Biovail and Valeant businesses provided an opportunity to capture significant operating synergies from reductions in research and development, sales and marketing, and general and administrative expenses. In total, we realized approximately $350 million of annual cost synergies as of December 31, 2012. Approximately $315 million of cost synergies were realized in 2011, and the full amount of $350 million was realized in 2012.

See note 6 of notes to consolidated financial statements in Item 15 of this Form 10-K for detailed information summarizing the major components of costs incurred in connection with our B&L, Medicis, and Merger acquisition-related initiatives through December 31, 2013.

U.S. HEALTHCARE REFORM

In March 2010, the Patient Protection and Affordable Care Act (the “Act”) was enacted in the U.S. The Act contains several provisions that impact our business. Provisions of the Act include: (i) an increase in the minimum Medicaid rebate to states participating in the Medicaid program from 15.1% to 23.1% on covered drugs; (ii) the extension of the Medicaid rebate to Managed Care Organizations that dispense drugs to Medicaid beneficiaries; and (iii) the expansion of the 340(B) Public Health Services drug pricing program, which provides outpatient drugs at reduced rates, to include additional hospitals, clinics, and healthcare centers.

Commencing in 2011, the legislation requires that drug manufacturers provide a 50% discount to Medicare beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap. In addition, commencing in 2011, a new fee has been assessed on prescription drug manufacturers and importers that sell branded prescription drugs to specified U.S. government programs (e.g., Medicare and Medicaid). This fee is calculated based upon each entity’s relative share of total applicable branded prescription drug sales to specified U.S. government programs for the preceding calendar year. The aggregate industry wide fee is expected to total $28.0 billion through 2019, ranging from $2.5 billion to $4.1 billion annually.

Additional provisions of the Act will be implemented in the next several years. In 2013, federal subsidies began to be phased in for brand-name prescription drugs filled in the Medicare Part D cover gap. Also in January 2013, Centers for Medicare and Medicaid Services issued final regulations to implement the physician payment disclosure provisions of the Act, which requires pharmaceutical and medical device manufacturers to disclose publicly certain payments to physicians. The law requires the medical device industry to subsidize healthcare reform in the form of a 2.3% excise tax on U.S. sales of most medical devices beginning in 2013. In 2014, the Act’s private health insurance exchanges will begin to operate along with the mandate on individuals to purchase health insurance. The Act also allows states to expand Medicaid coverage with most of the expansion’s cost paid for by the federal government. While some states have decided to pursue such expansions, others have indicated they will not do so or are still considering doing so.

The Act did not have a material impact on our financial condition or results of operation in 2013, 2012 or 2011. In 2013, 2012 and 2011, we made total payments of $2.4 million, $1.8 million and $0.6 million, respectively, related to the annual fee assessed on prescription drug manufacturers and importers that sell branded prescription drugs to specified U.S. government programs (e.g., Medicare and Medicaid). We also incurred costs of $28.8 million, $9.8 million and $6.0 million on Medicare Part D utilization incurred by beneficiaries whose prescription drug costs cause them to be subject to the Medicare Part D coverage gap (i.e., the “donut hole”) in 2013, 2012 and 2011, respectively. Under the legislation, the total cost incurred by us for the medical device excise tax during 2013 was $4.2 million.

While the Supreme Court upheld the core provisions of the Act, additional challenges to various provisions of the Act continue to work their way through the courts. We cannot predict at this time what impact these challenges will have on our business. Similarly, we cannot predict how the numerous regulations and requirements still to be proposed or finalized by the Administration and the states will impact our business.

SELECTED FINANCIAL INFORMATION

The following table provides selected financial information for each of the last three years:

34

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

____________________________________

NM — Not meaningful

Financial Performance

Changes in Revenues

Total revenues increased $2,289.2 million , or 66% , to $5,769.6 million in 2013, compared with $3,480.4 million in 2012, primarily due to:

Those factors were partially offset by:

Years Ended December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

($ in 000s, except per share data) $ $ $ $ % $ %

Revenues 5,769,605 3,480,376 2,427,450 2,289,229 66 1,052,926 43

Net (loss) income attributable to Valeant Pharmaceuticals International, Inc. (866,142 ) (116,025 ) 159,559 (750,117 ) NM (275,584 ) NM

(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:

Basic (2.70 ) (0.38 ) 0.52 (2.32 ) NM (0.90 ) NM

Diluted (2.70 ) (0.38 ) 0.49 (2.32 ) NM (0.87 ) NM

As of December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

($ in 000s) $ $ $ $ % $ %

Total assets 27,970,797 17,950,379 13,108,119 10,020,418 56 4,842,260 37

Long-term debt, including current portion 17,367,702 11,015,625 6,651,011 6,352,077 58 4,364,614 66

• incremental product sales revenue of $854.6 million, in the aggregate, from all 2012 acquisitions, primarily from the Medicis, OraPharma, and J&J North America acquisitions. We also recognized incremental product sales revenue in 2013 of $1,612.0 million, in the aggregate, from all 2013 acquisitions, primarily from the B&L, Natur Produkt, and Obagi acquisitions. The incremental product sales revenue from the 2012 and 2013 acquisitions includes a negative foreign exchange impact of $22.2 million, in the aggregate, in 2013; and

• incremental product sales revenue of $271.2 million in 2013, related to growth from the existing business, excluding the declines in Developed Markets described below. In the Developed Markets segment, the revenue increase was driven primarily by price, while volume was the main driver of growth in the Emerging Markets segment.

• decrease in product sales in the Developed Markets segment of $293.9 million, in the aggregate, in 2013, primarily related to a decline in sales of the Zovirax® franchise, Retin-A Micro®, BenzaClin® and Cesamet® due to the impact of generic competition;

• a negative impact from divestitures, discontinuations and supply interruptions of $67.8 million in 2013. The largest contributors were the discontinuation of Dermaglow® and the divestitures of certain brands sold primarily in Australia;

• a decrease in alliance and royalty revenue of $53.0 million, primarily related to the $45.0 million milestone payment received from GSK in connection with the launch of Potiga® recognized in the second quarter of 2012 that did not similarly occur in 2013;

• a negative foreign currency exchange impact on the existing business of $24.4 million in 2013; and

• a decrease in service revenue of $9.5 million in 2013, primarily due to lower contract manufacturing revenue from the Laval, Quebec facility, which was acquired as part of the acquisition of the Dermik business from Sanofi in December 2011.

Total revenues increased $1,052.9 million , or 43% , to $3,480.4 million in 2012, compared with $2,427.5 million in 2011, primarily due to:

35

• incremental product sales revenue of $709.2 million, in the aggregate, from all 2011 acquisitions, primarily from the iNova, Dermik, Ortho Dermatologics, Sanitas, PharmaSwiss, Elidel®/Xerese® and Afexa acquisitions. We also

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

recognized incremental product sales revenue in 2012 of $280.7 million, in the aggregate, from all 2012 acquisitions, primarily from the Probiotica, OraPharma, Medicis, Gerot Lannach, University Medical and Atlantis acquisitions. The incremental product sales revenue from the 2011 and 2012 acquisitions includes a negative foreign exchange impact of $33.3 million, in the aggregate, in 2012;

Those factors were partially offset by:

Changes in Earnings Attributable to Valeant Pharmaceuticals International, Inc.

Net loss attributable to Valeant Pharmaceuticals International, Inc. (basic and diluted loss per share attributable to Valeant Pharmaceuticals International, Inc. of $2.70 ) increased $750.1 million , to $866.1 million in 2013, compared with net loss attributable to Valeant Pharmaceuticals International, Inc. of $116.0 million (basic and diluted loss per share attributable to Valeant Pharmaceuticals International, Inc. of $0.38 ) in 2012, reflecting the following factors:

• incremental product sales revenue of $263.9 million in 2012, related to growth from the existing business, excluding the declines in Developed Markets described below. Slightly more than half of this increase was based on volume, and the remainder was a result of pricing actions taken during 2012 and 2011; and

• incremental service revenue of $50.3 million in 2012, primarily from the Dermik acquisition.

• decrease in product sales in the Developed Markets segment of $115.9 million, in the aggregate, primarily related to a decline in sales of Cardizem® CD, Cesamet®, Ultram® ER, Diastat® and Wellbutrin XL® due to the impact of generic competition;

• a negative impact from divestitures and discontinuations of $81.8 million in 2012, including a decrease of $42.8 million in 2012, related to IDP-111 royalty revenue as a result of the sale of IDP-111 in February 2012; and

• a negative foreign currency exchange impact on the existing business of $65.4 million in 2012.

• an increase of $973.1 million in amortization and impairments of finite-lived intangible assets, as described below under “Results of Operations — Operating Expenses — Amortization and Impairments of Finite-Lived Intangible Assets”;

• an increase of $549.1 million in selling, general and administrative expense, as described below under “Results of Operations —Operating Expenses — Selling, General and Administrative Expenses”;

• an increase of $362.7 million in interest expense, as described below under “Results of Operations — Non-Operating Income (Expense) — Interest Expense”;

• an increase of $175.1 million in other expense, as described below under “Results of Operations — Operating Expenses — Other Expense”;

• an increase of $170.4 million in restructuring, integration and other costs, as described below under “Results of Operations —Operating Expenses — Restructuring, Integration and Other Costs”;

• an increase of $77.7 million in research and development expenses, as described below under “Results of Operations — Operating Expenses — Research and Development Expenses”;

• a decrease of $56.7 million in contribution from (i) alliance and royalty revenue and (ii) service revenue (alliance and royalty revenue and service revenue less cost of alliance and service revenue) primarily due to $45.0 million recognized in 2012 related to the milestone payment received from GSK in connection with the launch of Potiga® that did not similarly occur in 2013;

• an increase of $44.9 million in loss on extinguishment of debt, as described below under “Results of Operations — Non-Operating Income (Expense) — Loss on Extinguishment of Debt”; and

• a decrease of $29.2 million in foreign exchange and other, as described below under “Results of Operations — Non-Operating Income

Those factors were partially offset by:

36

(Expense) — Foreign Exchange and Other”.

• an increase in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of finite-lived intangible assets) of $1,410.5 million , mainly related to the incremental contribution of B&L, Medicis, Natur Produkt, the Eisai assets, Obagi and OraPharma;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Net loss attributable to Valeant Pharmaceuticals International, Inc. was $116.0 million (basic and diluted loss per share attributable to Valeant Pharmaceuticals International, Inc. of $0.38 ) in 2012, compared with net income attributable to Valeant Pharmaceuticals International, Inc. of $159.6 million (basic and diluted earnings per share attributable to Valeant Pharmaceuticals International, Inc. of $0.52 and $0.49 , respectively) in 2011, reflecting the following factors:

Those factors were partially offset by:

• an increase of $172.6 million in recovery of income taxes, as described below under “Results of Operations — Income Taxes”;

• a decrease of $42.2 million in acquisition-related costs, as described below under “Results of Operations — Operating Expenses —Acquisition-Related Costs”;

• a decrease of $36.3 million in in-process research and development impairments and other charges, as described below under “Results of Operations — Operating Expenses — In-Process Research and Development Impairments and Other Charges”; and

• an increase of $24.0 million in acquisition-related contingent consideration net gains, as described below under “Results of Operations — Operating Expenses — Acquisition-Related Contingent Consideration”.

• an increase of $371.1 million in amortization and impairments of finite-lived intangible assets primarily related to (i) the acquired identifiable intangible assets of iNova, Dermik, Ortho Dermatologics, OraPharma, Sanitas, Gerot Lannach, PharmaSwiss and Medicis of $210.5 million, in the aggregate, in 2012, and (ii) higher amortization of ezogabine/retigabine of $109.8 million in 2012, which was reclassified from IPR&D to a finite-lived intangible asset in December 2011;

• an increase of $246.7 million in restructuring, integration and other costs, as described below under “Results of Operations —Operating Expenses — Restructuring, Integration and Other Costs”;

• an increase of $183.6 million in selling, general and administrative expense, as described below under “Results of Operations —Operating Expenses — Selling, General and Administrative Expenses”;

• an increase of $147.1 million in interest expense, as described below under “Results of Operations — Non-Operating Income (Expense) — Interest Expense”;

• an increase of $80.7 million in in-process research and development impairments and other charges, as described below under “Results of Operations — Operating Expenses — In-Process Research and Development Impairments and Other Charges”;

• an increase of $52.8 million in other expense, primarily due to legal settlements and related fees, as described below under “Results of Operations — Operating Expenses — Other Expense”;

• an increase of $52.3 million in cost of alliance and service revenues, as described below under “Results of Operations — Operating Expenses — Cost of Alliance and Service Revenues”;

• an increase of $45.6 million in acquisition-related costs, as described below under “Results of Operations — Operating Expenses —Acquisition-Related Costs”;

• a net realized gain of $21.3 million on the disposal of our equity investment in Cephalon, Inc. (“Cephalon”) realized in 2011 that did not similarly occur in 2012, as described below under “Results of Operations — Non-Operating Income (Expense) — Gain on Investments, Net”; and

• a $19.1 million net gain realized on foreign currency forward contracts entered in connection with the acquisitions of iNova and PharmaSwiss in 2011 that did not similarly occur in 2012, as described below under “Results of Operations — Non-Operating Income (Expense) — Foreign Exchange and Other”.

• an increase in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of finite-lived

37

intangible assets) of $812.2 million, mainly related to the incremental contribution of Dermik, iNova, Ortho Dermatologics, Sanitas, OraPharma, Zovirax®, Medicis, PharmaSwiss, Elidel®/Xerese®, Probiotica and the Gerot Lannach assets;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest was $2.5 million in 2013, primarily related to the performance of joint ventures acquired in connection with the B&L Acquisition.

Cash Dividends

No dividends were declared or paid in 2013, 2012 or 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 Third Amended and Restated Credit and Guaranty Agreement, as amended (the “Credit Agreement”) and our bond indentures include restrictions on the payment of dividends.

RESULTS OF OPERATIONS

Reportable Segments

As a result of our acquisition strategy and continued growth, impacted by the December 2012 Medicis Acquisition, our Chief Executive Officer (“CEO”), who is our Chief Operating Decision Maker (“CODM”), began to manage the business differently in 2013, which necessitated a realignment of the segment structure, effective in the first quarter of 2013. Pursuant to this change, we now have two operating and reportable segments: (i) Developed Markets, and (ii) Emerging Markets. Accordingly, we have restated prior period segment information to conform to the current period presentation. The following is a brief description of our segments as of December 31, 2013:

Revenues By Segment

Our primary sources of revenues are the sale of pharmaceutical products, OTC products, and medical devices, as well as contract services. The following table displays revenues by segment for each of the last three years, the percentage of each segment’s revenues compared with total revenues in the respective year, and the dollar and percentage change in the dollar amount of each segment’s revenues. Percentages may not sum due to rounding.

____________________________________

NM — Not meaningful

• an increase of $100.6 million in recovery of income taxes, as described below under “Results of Operations — Income Taxes”; and

• a decrease of $16.8 million in loss on extinguishment of debt, as described below under “Results of Operations — Non-Operating Income (Expense) — Loss on Extinguishment of Debt”.

• Developed Markets consists of (i) sales in the U.S. of pharmaceutical products, OTC products, and medical device products, as well as alliance and contract service revenues, in the areas of eye health, dermatology and podiatry, aesthetics, and dentistry, (ii) sales in the U.S. of pharmaceutical 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, and (iii) pharmaceutical products, OTC products, and medical device products sold in Canada, Australia, New Zealand, Western Europe and Japan.

• Emerging Markets consists of branded generic pharmaceutical products and branded pharmaceuticals, OTC products, and medical device products. Products are sold primarily in Central and Eastern Europe (primarily Poland and Russia), Asia, Latin America (Mexico, Brazil, and Argentina and exports out of Mexico to other Latin American markets), Africa and the Middle East.

Years Ended December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

($ in 000s) $ % $ % $ % $ % $ %

Developed Markets 4,293,216 74 2,502,264 72 1,762,535 73 1,790,952 72 739,729 42

Emerging Markets 1,476,389 26 978,112 28 664,915 27 498,277 51 313,197 47

Total revenues 5,769,605 100 3,480,376 100 2,427,450 100 2,289,229 66 1,052,926 43

Total revenues increased $2,289.2 million , or 66% , to $5,769.6 million in 2013, compared with $3,480.4 million in 2012, mainly attributable to the effect of the following factors:

38

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Those factors were partially offset by:

Those factors were partially offset by:

Total revenues increased $1,052.9 million , or 43% , to $3,480.4 million in 2012, compared with $2,427.5 million in 2011, mainly attributable to the effect of the following factors:

• in the Developed Markets segment:

• the incremental product sales revenue of $2,051.0 million (which includes a negative foreign currency exchange impact of $12.5 million), in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from (i) the 2012 acquisitions of Medicis (mainly driven by Solodyn®, Restylane®, Dysport®, Vanos®, Ziana® and Perlane® product sales), OraPharma (mainly driven by Arestin® product sales), certain assets of J&J North America (mainly driven by Ambi®, Shower to Shower® and Purpose® product sales) and certain assets of QLT (Visudyne® product sales); and (ii) the 2013 acquisitions of B&L (driven by Lotemax® Gel, PreserVision® and SofLens® Daily Disposable Contact Lenses product sales), and Obagi (mainly driven by Nu-Derm® and Obagi-C® product sales); and

• an increase in product sales from the existing business (excluding the declines described below) of $163.4 million, or 7%, in 2013, driven by growth of the core dermatology brands, including CeraVe® and Acanya®.

• decrease in product sales of $293.9 million in 2013, primarily related to a decline in sales of the Zovirax® franchise, Retin-A Micro®, BenzaClin® and Cesamet® due to generic competition. As a result of the approval of a generic Zovirax® ointment in April 2013, we anticipate a continuing decline in Zovirax® ointment revenues in the future, and such declines could be material. Refer to note 5 to the 2013 Financial Statements for details regarding Zovirax® agreements entered into in April 2013 with Actavis, Inc. (“Actavis”). We also anticipate a continuing decline in sales of Retin-A Micro®, BenzaClin® and Cesamet® due to continued generic erosion, however the rate of decline is expected to decrease in the future, and these brands are expected to represent a declining percentage of total revenues primarily due to anticipated growth in other parts of our business and recent acquisitions;

• a decrease in alliance and royalty revenue of $59.8 million, primarily related to the $45.0 million milestone payment received from GSK in connection with the launch of Potiga® recognized in the second quarter of 2012 that did not similarly occur in 2013;

• a negative impact from divestitures, discontinuations and supply interruptions of $44.8 million in 2013;

• a negative foreign currency exchange impact on the existing business of $19.9 million in 2013; and

• a decrease in service revenue of $5.1 million in 2013, primarily due to lower contract manufacturing revenue from the Laval, Quebec facility, which was acquired as part of the acquisition of the Dermik business from Sanofi in December 2011.

• in the Emerging Markets segment:

• the incremental product sales revenue of $415.6 million (which includes a negative foreign currency exchange impact of $9.7 million), in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from (i) the 2012 acquisitions of certain assets of Gerot Lannach and Atlantis and (ii) the 2013 acquisition of B&L (driven by ReNu Multiplus®, SofLens® and SofLens® Daily Disposable Contact Lenses product sales) and Natur Produkt; and

• an increase in product sales from the existing business of $107.8 million, or 11%, in 2013 driven by growth in Poland and Russia.

• a negative impact from divestitures, discontinuations and supply interruptions of $23.0 million in 2013; and

• a negative foreign currency exchange impact on the existing business of $4.5 million in 2013.

• in the Developed Markets segment:

39

• the incremental product sales revenue of $679.0 million, in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, primarily from (i) Dermik (mainly driven by BenzaClin®, Carac® and Sculptra® Aesthetics product sales), Ortho Dermatologics (mainly driven by Retin-A Micro® product sales), iNova (mainly driven by Duromine®, Difflam® and Duro-Tuss® product sales) and Afexa; and (ii) OraPharma, Medicis and University Medical product sales;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Those factors were partially offset by:

Those factors were partially offset by:

Segment Profit

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as restructuring and acquisition-related costs, in-process research and development impairments and other charges and other expense, are not included in the measure of segment profit, as management excludes these items in assessing segment 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 by segment for each of the last three years, the percentage of each segment’s profit compared with corresponding segment revenues in the respective year, and the dollar and percentage change in the dollar amount of each segment’s profit. Percentages may not add due to rounding.

• an increase in product sales from the existing business (excluding the declines below) of $200.0 million, or 13%, driven by growth of the core dermatology brands, including Zovirax®, Elidel®, Acanya® and CeraVe®;

• alliance revenue of $45.0 million recognized in the second quarter of 2012, related to the milestone payment received from GSK in connection with the launch of Potiga®; and

• an increase in service revenue of $28.8 million in 2012, primarily from contract manufacturing revenue from the Laval, Quebec facility, which was acquired as part of the acquisition of the Dermik business from Sanofi in December 2011.

• a decrease in product sales of $115.9 million, in the aggregate, primarily related to a decline in sales of Cardizem® CD, Cesamet®, Ultram® ER, Diastat® and Wellbutrin XL® due to the impact of generic competition;

• a negative impact from divestitures and discontinuations of $58.6 million in 2012, including a decrease of $42.8 million in 2012 related to IDP-111 royalty revenue as a result of the sale of IDP-111 in February 2012;

• alliance revenue of $40.0 million recognized in the second quarter of 2011, related to the milestone payment received from GSK in connection with the launch of Trobalt®; and

• a negative foreign currency exchange impact on the existing business of $3.5 million in 2012.

• in the Emerging Markets segment:

• the incremental product sales revenue of $310.9 million (which includes a negative foreign currency exchange impact of $32.3 million in 2012), in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, primarily from (i) the 2011 acquisitions of Sanitas, iNova (mainly driven by Duromine® and Difflam® product sales), and PharmaSwiss; and (ii) the 2012 acquisitions of Probiotica and the Gerot Lannach assets;

• an increase in product sales from the existing business of $63.9 million, or 10%, in 2012; and

• an increase in service revenue of $21.4 million.

• a negative foreign currency exchange impact on the existing business of $61.9 million in 2012; and

• a negative impact from divestitures and discontinuations of $23.2 million in 2012.

Years Ended December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

____________________________________

(1) — Represents profit as a percentage of the corresponding revenues.

NM — Not meaningful

40

($ in 000s) $ % (1) $ % (1) $ % (1) $ % $ %

Developed Markets 573,232 13 815,902 33 740,316 42 (242,670 ) (30) 75,586 10

Emerging Markets 92,995 6 68,958 7 (24,929 ) (4) 24,037 35 93,887 NM

Total segment profit 666,227 12 884,860 25 715,387 29 (218,633 ) (25) 169,473 24

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Total segment profit decreased $218.6 million , or 25% , to $666.2 million in 2013, compared with $884.9 million in 2012, mainly attributable to the effect of the following factors:

Those factors were more than offset by:

Those factors were partially offset by:

Total segment profit increased $169.5 million , or 24% , to $884.9 million in 2012, compared with $715.4 million in 2011, mainly

• in the Developed Markets segment:

• an increase in contribution of $1,278.5 million, in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from the product sales of Medicis, B&L, Obagi and OraPharma, including higher expenses for acquisition accounting adjustments related to inventory of $285.6 million, in the aggregate;

• an increase in contribution from product sales from the existing business (excluding the favorable impact related to the acquisition accounting adjustments related to inventory in 2012 that did not similarly occur in 2013 and the declines described below) of $155.2 million, driven by growth of the core dermatology brands, including CeraVe® and Acanya®; and

• a favorable impact of $54.1 million related to the existing business acquisition accounting adjustments related to inventory in 2012 that did not similarly occur in 2013.

• an increase in operating expenses (including amortization and impairments of finite-lived intangible assets) of $1,333.6 million in 2013, primarily due to an impairment charge of $551.6 million related to ezogabine/retigabine in the third quarter of 2013 and the acquisitions of new businesses within the segment. See note 7 to the 2013 Financial Statements for additional information regarding the ezogabine/retigabine impairment;

• a decrease in contribution of $286.7 million in 2013, primarily related to the lower sales of the Zovirax® franchise, Retin-A Micro®, BenzaClin® and Cesamet ® as a result of the continued impact of generic competition;

• alliance revenue of $45.0 million recognized in the second quarter of 2012, related to the milestone payment received from GSK in connection with the launch of Potiga® that did not similarly occur in 2013;

• a decrease in contribution of $39.6 million in 2013, primarily related to divestitures, discontinuations and supply interruptions; and

• a negative foreign currency exchange impact on the existing business contribution of $14.3 million in 2013.

• in the Emerging Markets segment:

• an increase in contribution of $201.5 million, in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from the sale of B&L, Natur Produkt and Gerot Lannach products, including higher expenses for acquisition accounting adjustments related to inventory of $62.1 million, in the aggregate;

• an increase in contribution from product sales from the existing business of $70.9 million in 2013; and

• an increase in alliance contribution of $6.1 million in 2013.

• an increase in operating expenses (including amortization and impairments of finite-lived intangible assets) of $240.0 million in 2013, primarily associated with the acquisitions of new businesses within the segment;

• a decrease in contribution of $12.0 million in 2013 related to divestitures, discontinuations and supply interruptions; and

• a negative foreign currency exchange impact on the existing business contribution of $2.4 million in 2013.

attributable to the effect of the following factors:

41

• in the Developed Markets segment:

• an increase in contribution of $508.9 million, in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, primarily from the product sales of Dermik, Ortho Dermatologics, iNova, OraPharma, Medicis and University Medical, including higher expenses for acquisition accounting adjustments related to inventory of $67.9 million, in the aggregate;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Those factors were partially offset by:

Those factors were partially offset by:

Operating Expenses

The following table displays the dollar amount of each operating expense category for each of the last three years, the percentage of each category compared with total revenues in the respective year, and the dollar and percentage changes in the dollar amount of each category.

• an increase in contribution from product sales from the existing business (including a favorable impact of $20.5 million related to the acquisition accounting adjustments related to inventory in 2011 that did not similarly occur in 2012 and the declines described below) of $216.2 million, driven by (i) continued growth of the core dermatology brands, including Zovirax®, Elidel®, Acanya® and CeraVe®, and the growth of these seasonal brands has increased the impact of seasonality on our business, particularly during the third quarter of 2012 “back to school” season, (ii) higher sales of Xenazine® which carries a lower margin than the rest of the neurology portfolio, and (ii) 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 to Zovirax®, such that we retain a greater share of the economic interest in the brand; and

• alliance revenue of $45.0 million recognized in the second quarter of 2012, related to the milestone payment received from GSK in connection with the launch of Potiga®.

• an increase in operating expenses (including amortization and impairments of finite-live intangible assets) of $496.1 million in 2012, primarily related to the higher amortization expense of $109.8 million in 2012 related to ezogabine/retigabine, which was reclassified from IPR&D to a finite-lived intangible asset in December 2011 and the acquisitions of new businesses within the segment;

• a decrease in contribution of $105.1 million, in the aggregate, in 2012, primarily related to lower sales of higher margin products such as Cardizem® CD, Cesamet®, Diastat®, Ultram® ER and Wellbutrin XL® as a result of the impact of generic competition;

• a decrease in contribution of $45.8 million in 2012, primarily related to divestitures and discontinuations. The largest contributor to the decrease was a reduction in IDP-111 royalty revenue of $42.8 million in 2012, as a result of the sale of IDP-111 in February 2012;

• alliance revenue of $40.0 million recognized in the second quarter of 2011, related to the milestone payment received from GSK in connection with the launch of Trobalt®; and

• a decrease in contribution from service revenue of $6.7 million in 2012.

• in the Emerging Markets segment:

• an increase in contribution of $188.3 million, in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, in 2012, primarily from the sale of Sanitas, iNova, PharmaSwiss, Probiotica and Gerot Lannach products, including lower expenses for acquisition accounting adjustments related to inventory of $21.0 million, in the aggregate, in 2012;

• an increase in contribution from product sales from the existing business of $53.1 million in 2012, including a favorable impact of $6.8 million related to the acquisition accounting adjustments related to inventory in 2011 that did not similarly occur in 2012; and

• an increase in alliance and service revenue of $6.7 million.

• an increase in operating expenses (including amortization and impairments of finite-live intangible assets) of $112.6 million in 2012, primarily associated with the acquisitions of new businesses within the segment;

• a negative foreign currency exchange impact on the existing business contribution of $31.0 million in 2012; and

• a negative impact from divestitures and discontinuations of $10.6 million in 2012.

Percentages may not sum due to rounding.

42

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

____________________________________

(1) — Represents the percentage for each category as compared to total revenues.

NM — Not meaningful

Cost of Goods Sold (exclusive of amortization and impairments of finite-lived intangible assets)

Cost of goods sold includes: manufacturing and packaging; the cost of products we purchase from third parties; royalty payments we make to third parties; depreciation of manufacturing facilities and equipment; and lower of cost or market adjustments to inventories. Cost of goods sold excludes the amortization and impairments of finite-lived intangible assets described separately below under “— Amortization and Impairments of Finite-Lived Intangible Assets”.

Cost of goods sold increased $941.2 million , or 104% , to $1,846.3 million in 2013, compared with $905.1 million in 2012. As a percentage of revenue, Cost of goods sold increased to 32% in 2013 as compared to 26% in 2012, primarily due to:

These factors were partially offset by:

Cost of goods sold increased $221.3 million , or 32% , to $905.1 million in 2012, compared with $683.8 million in 2011. As a percentage of revenue, Cost of goods sold decreased to 26% in 2012 as compared to 28% in 2011, primarily due to:

Years Ended December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

($ in 000s) $ % (1) $ % (1) $ % (1) $ % $ %

Cost of goods sold (exclusive of amortization and impairments of finite-lived intangible assets shown separately below) 1,846,314 32 905,095 26 683,750 28 941,219 104 221,345 32

Cost of alliance and service revenues 58,806 1 64,601 2 12,348 1 (5,795 ) (9) 52,253 NM

Selling, general and administrative 1,305,164 23 756,083 22 572,472 24 549,081 73 183,611 32

Research and development 156,783 3 79,052 2 65,687 3 77,731 98 13,365 20

Amortization and impairments of finite-lived intangible assets 1,901,977 33 928,885 27 557,814 23 973,092 105 371,071 67

Restructuring, integration and other costs 514,825 9 344,387 10 97,667 4 170,438 49 246,720 NM

In-process research and development impairments and other charges 153,639 3 189,901 5 109,200 4 (36,262 ) (19) 80,701 74

Acquisition-related costs 36,416 1 78,604 2 32,964 1 (42,188 ) (54) 45,640 138

Acquisition-related contingent consideration (29,259 ) (1) (5,266 ) — (10,986 ) — (23,993 ) NM 5,720 (52)

Other expense 234,442 4 59,349 2 6,575 — 175,093 NM 52,774 NM

Total operating expenses 6,179,107 107 3,400,691 98 2,127,491 88 2,778,416 82 1,273,200 60

• the impact of higher acquisition accounting adjustments of $293.6 million in 2013 (equates to 5.1% of 2013 revenue) related to acquired inventories that were sold in 2013;

• an unfavorable impact from product mix related to (i) the product portfolio acquired as part of the B&L Acquisition and (ii) decreased sales of the Zovirax® franchise, Retin-A Micro®, BenzaClin® and Cesamet ® which have a higher gross profit margin than our overall margin; and

• higher sales of Xenazine® which has a lower margin than the rest of the neurology portfolio.

• a favorable impact from product mix related to the Medicis product portfolio; and

• the benefits realized from worldwide manufacturing rationalization initiatives primarily from Latin America and Canada.

• a favorable impact from product mix and the benefits realized from worldwide manufacturing rationalization initiatives primarily from Latin America and Canada; and

These factors were partially offset by:

43

• the effect of the lower supply price for Zovirax® inventory purchased from GSK as a result of a new supply agreement that became effective with the acquisition of the U.S. rights to Zovirax®, which favorably impacted cost of goods sold during the first and second quarters of 2012 as compared to the corresponding periods in 2011.

• an unfavorable foreign exchange impact on contribution, as the foreign exchange benefit to Cost of Goods Sold was more than offset by the negative foreign exchange impact on product sales;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Cost of Alliance and Service Revenues

Cost of alliance and services revenues reflects the costs associated with providing contract services to, and generating alliance revenue from, external customers.

Cost of alliance and service revenues decreased $5.8 million , or 9% , to $58.8 million in 2013, compared with $64.6 million in 2012, primarily due to lower contract manufacturing revenue from the Laval, Quebec facility, which was acquired as part of the acquisition of the Dermik business from Sanofi in December 2011.

Cost of alliance and service revenues increased $52.3 million to $64.6 million in 2012, compared with $12.3 million in 2011, primarily due to the inclusion of cost of service revenue from Dermik of $35.7 million.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include: employee compensation costs associated with sales and marketing, finance, legal, information technology, human resources, and other administrative functions; outside legal fees and consultancy costs; product promotion expenses; overhead and occupancy costs; depreciation of corporate facilities and equipment; and other general and administrative costs.

Selling, general and administrative expenses increased $549.1 million , or 73% , to $1,305.2 million in 2013, compared with $756.1 million in 2012, primarily due to:

As a percentage of revenue, Selling, general and administrative expenses increased to 23% in 2013 as compared to 22% in 2012, primarily due to timing of costs incurred and realization of synergies from the B&L Acquisition. The increase in 2013 was also impacted by the net incremental compensation expense of $15.5 million recognized in the second quarter of 2013 (equates to 0.3% of 2013 revenue) described in the preceding paragraph.

Selling, general and administrative expenses increased $183.6 million , or 32% , to $756.1 million in 2012, compared with $572.5 million in 2011 (as a percentage of revenue, Selling, general and administrative expenses decreased to 22% in 2012 as compared to 24% in 2011), primarily due to:

This factor was partially offset by:

• increased sales of Xenazine® which has a lower margin than the rest of the neurology portfolio;

• decreased sales of Cesamet® in Canada which has a higher margin than the rest of our portfolio; and

• the impact of higher acquisition accounting adjustments of $19.5 million, to $78.8 million in 2012, compared with $59.3 million in 2011, related to acquired inventories that were subsequently sold in 2012.

• increased expenses in our Developed Markets segment ($367.8 million) primarily driven by the acquisitions of new businesses within the segment, including the B&L and Medicis acquisitions, partially offset by the realization of cost synergies;

• increased expenses in our Emerging Markets segment ($155.2 million), primarily driven by the acquisitions of new businesses within this segment, including the B&L Acquisition, partially offset by the realization of cost synergies; and

• net incremental compensation expense of $15.5 million in the second quarter of 2013 related to certain equity awards held by current non-management directors which were modified from units settled in common shares to units settled in cash. See note 17 to the 2013 Financial Statements for additional information.

• increased expenses in our Developed Markets segment ($172.9 million) and Emerging Markets segment ($51.7 million), primarily driven by the acquisitions of new businesses within these segments.

• decreases of $24.9 million in share-based compensation expense charged to selling, general and administrative expenses in 2012,

Research and Development Expenses

44

primarily due to the vesting of performance stock units as a result of achieving specified performance criteria recognized in 2011 and the impact of the stock option modification recognized in the first quarter of 2011, partially offset by an incremental charge of $4.8 million in 2012 as some of our performance-based RSU grants triggered a partial payout as a result of achieving certain share price appreciation conditions. Refer to note 17 to the 2013 Financial Statements for further details.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Expenses related to research and development programs include: employee compensation costs; overhead and occupancy costs; depreciation of research and development facilities and equipment; clinical trial costs; clinical manufacturing and scale-up costs; and other third-party development costs.

Research and development expenses increased $77.7 million , or 98% , to $156.8 million in 2013, compared with $79.1 million in 2012, primarily due to spending on programs acquired in the B&L Acquisition, including latanoprostene bunod and the next generation silicone hydrogel lens (Bausch + Lomb Ultra), partially offset by lower spending on ezogabine/retigabine reflecting the U.S. launch in the second quarter of 2012. See note 3 to the 2013 Financial Statements for additional information relating to the B&L Acquisition.

Research and development expenses increased $13.4 million, or 20%, to $79.1 million in 2012, compared with $65.7 million in 2011, primarily reflecting spending for a Phase 4 study for Wellbutrin XL® and life-cycle management programs, partially offset by lower spending on ezogabine/retigabine reflecting the U.S. launch in the second quarter of 2012 and the IDP-108 program (an antifungal targeted to treat onychomycosis, a fungal infection of the fingernails and toenails).

Amortization and Impairments of Finite-Lived Intangible Assets

Amortization and impairments of finite-lived intangible assets increased $973.1 million , or 105% , to $1,902.0 million in 2013, compared with $928.9 million in 2012, primarily due to (i) a net increase of $525.1 million for ezogabine/retigabine, as the impairment charge of $551.6 million in the third quarter of 2013 was partially offset by lower amortization for ezogabine/retigabine of $26.5 million in the fourth quarter of 2013, (ii) the amortization of the Medicis, B&L, Eisai and Obagi identifiable intangible assets of $351.9 million, in the aggregate, in 2013, (iii) impairment charges of $31.5 million related to the write-down of the carrying values of assets held for sale related to certain suncare and skincare brands sold primarily in Australia, to their estimated fair value less costs to sell in 2013, (iv) $22.2 million related to the write-off of the carrying value of the Opana® intangible asset in 2013, (v) an increase in the write-offs of $16.9 million, in the aggregate, in 2013, primarily related to the discontinuation of certain products in the Brazilian, Canadian, and Polish markets, and (vi) $10.0 million related to the write-off of certain OTC skincare products in the U.S. in 2013.

As part of our ongoing assessment of potential impairment indicators related to our finite-lived and indefinite-lived intangible assets, we will closely monitor the performance of our product portfolio. If our ongoing assessments reveal indications of impairment, we may determine that an impairment charge is necessary and such charge could be material.

Amortization and impairments of finite-lived intangible assets increased $371.1 million, or 67%, to $928.9 million in 2012, compared with $557.8 million in 2011, primarily due to (i) the amortization of the iNova, Dermik, Ortho Dermatologics, OraPharma, Sanitas, Gerot Lannach, PharmaSwiss and Medicis identifiable intangible assets of $210.5 million, in the aggregate, in 2012, (ii) higher amortization of ezogabine/retigabine of $109.8 million in 2012, which was reclassified from IPR&D to a finite-lived intangible asset in December 2011, (iii) impairment charges of $31.3 million related to the write-down of the carrying values of intangible assets related to certain suncare and skincare brands sold primarily in Australia, which were classified as assets held for sale as of December 31, 2012, to their estimated fair values less costs to sell, (iv) an $18.7 million impairment charge related to the write-down of the carrying value of the Dermaglow® intangible asset, which was classified as an asset held for sale as of December 31, 2012, to its estimated fair value less costs to sell, and (v) impairment charges of $13.3 million related to the discontinuation of certain products in the Brazilian and Polish markets.

Restructuring, Integration and Other Costs

We recognized restructuring, integration, and other costs of $514.8 million in 2013, compared with $344.4 million and $97.7 million in 2012 and 2011, respectively, primarily related to the B&L and Medicis acquisitions and other acquisitions. Refer to note 6 to the 2013 Financial Statements for further details.

In -Process Research and Development Impairments and Other Charges

In-process research and development impairments and other charges represents impairments and other costs associated with compounds, new indications, or line extensions under development that have not received regulatory approval for marketing at the time of acquisition. IPR&D acquired through an asset acquisition is written off at the acquisition date if the assets have no alternative future use. IPR&D acquired in a business combination is capitalized as indefinite-lived intangible assets (irrespective of whether these assets have an alternative future use) until completion or abandonment of the related research and development activities. Costs associated with the development of acquired IPR&D assets are expensed as incurred.

In 2013, we recorded charges of $153.6 million , primarily due to the write-off of (i) $93.8 million relating to the modified-release

formulation of ezogabine/retigabine, (ii) $27.3 million of IPR&D assets acquired by Valeant as part of Aton Pharma, Inc.

45

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

(“Aton”) acquisition in May 2010, mainly related to the termination of the A007 (Lacrisert®) development program, (iii) $14.4 million related to the termination of the Mapracorat development program, and (iv) $8.8 million related to a Xerese® life-cycle product. Refer note 12 to the 2013 Financial Statements for additional information.

In 2012, we recorded charges of $189.9 million, primarily due to (i) $133.4 million for the write-off of an acquired IPR&D asset related to the IDP-107 dermatology program, which was acquired in September 2010 as part of the Merger, (ii) an impairment charge of $24.7 million related to a Xerese® life-cycle product, (iii) $12.0 million related to a payment to terminate a research and development commitment with a third party, (iv) $5.0 million related to an upfront payment to acquire the North American rights to Emervel®, and (v) $5.0 million related to the IDP-108 program, including an upfront payment to expand our rights to IDP-108 to include additional territories as well as a milestone payment. Refer note 12 to the 2013 Financial Statements for additional information.

In 2011, we recorded charges of $109.2 million primarily related to the impairment of acquired IPR&D assets relating to the A002, A004, and A006 programs acquired as part of the Aton acquisition in 2010, as well as the IDP-109 and IDP-115 dermatology programs ($105.2 million). The impairment charges were triggered in the fourth quarter of 2011 due to unfavorable study results, feedback received from the FDA which would result in the incurrence of higher costs to perform additional studies, reassessment of risk and the probability of success, and/or pipeline prioritization decisions resulting in the re-allocation of our resources to other research and development (“R&D”) programs.

Acquisition-Related Costs

Acquisition-related costs decreased $42.2 million , or 54% , to $36.4 million in 2013, compared with $78.6 million in 2012, reflecting higher expenses incurred in 2012 related to the Medicis and OraPharma acquisitions and other 2012 acquisitions, partially offset by acquisition activities in 2013 primarily related to the B&L and Obagi acquisitions. See note 3 to the 2013 Financial Statements for additional information regarding business combinations.

Acquisition-related costs increased $45.6 million, or 138%, to $78.6 million in 2012, compared with $33.0 million in 2011, reflecting increased acquisition activity during 2012, primarily driven by costs associated with the Medicis Acquisition. The Medicis Acquisition costs included $39.2 million of expenses incurred with respect to an agreement with Galderma S.A (“Galderma”) which, among other things, resolved all claims asserted in Galderma’s pending litigation related to our acquisition of Medicis. Refer to note 3 to the 2013 Financial Statements for further details.

Acquisition-Related Contingent Consideration

In 2013, we recognized an acquisition-related contingent consideration gain of $29.3 million . The net gain was primarily driven by:

In 2012, we recognized an acquisition-related contingent consideration gain of $5.3 million, primarily driven by (1) a net gain of $10.3 million related to the iNova acquisition due to changes in the estimated probability of achieving the related milestones, partially offset by (2) a net loss of $6.5 million related to the Elidel®/Xerese®/Zovirax® agreement entered into in June 2011, due to fair value adjustments to reflect accretion for the time value of money, partially offset by changes in the projected revenue forecast. Refer to note 3 to the 2013 Financial Statements for further details.

In 2011, we recognized an acquisition-related contingent consideration gain of $11.0 million, primarily driven by the changes in fair value of acquisition-related contingent consideration as follows: (1) a gain of $13.2 million and $9.2 million related to the PharmaSwiss and Aton acquisitions, respectively, partially offset by (2) a loss of $11.2 million related to the Elidel®/Xerese®/Zovirax® agreement entered into in June 2011.

• a net gain related to the Elidel®/Xerese®/Zovirax® agreement entered into with Meda Pharma SARL (“Meda”) in June 2011. In April 2013, Mylan Inc. launched a generic Zovirax® ointment, which was earlier than we previously anticipated. Also, in April 2013, we entered into an agreement with Actavis to launch the authorized generic ointment for Zovirax®. Refer to note 5 to the 2013 Financial Statements for further information regarding the agreement with Actavis. As a result of analysis in the third quarter of 2013 of performance trends since the generic entrant, we adjusted the projected revenue forecast, resulting in an acquisition-related contingent consideration net gain of $20.0 million in 2013; and

• a net gain of $6.9 million, which resulted from the termination, in the third quarter of 2013, of the A007 (Lacrisert®) development program, which impacted the probability associated with potential milestone payments. Refer to note 7 to the 2013 Financial Statements for further information.

Other Expense

46

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Other expense includes: legal settlements and related fees and gains/losses from the sale of non-core assets.

In 2013, we recorded charges in other expense of $234.4 million , primarily due to (i) a charge of $142.5 million in the third quarter of 2013 related to a settlement agreement with Anacor Pharmaceuticals, Inc. (“Anacor”), (ii) a charge of $50.0 million in the fourth quarter of 2013 related to AntiGrippin® litigation , and (iii) a loss of $10.2 million related to the sale of certain skincare products sold primarily in Australia in the fourth quarter of 2013. Refer to note 4 and note 24 to the 2013 Financial Statements for further details related to the divestiture of certain skincare products sold in Australia, and the Anacor settlement and AntiGrippin® litigation, respectively.

In 2012, we recorded charges in other expense of $59.3 million , primarily due to legal settlement charges of $56.8 million, mainly related to a settlement of antitrust litigation and the associated legal fees. Refer to note 24 to the 2013 Financial Statements for further details.

In 2011, we recorded charges of $6.6 million , primarily due to (i) the legal settlement charges of $11.8 million primarily due to the settlement of litigation and disputes related to revenue-sharing arrangements with, or other payment obligations to, third parties, partially offset by (ii) a gain of $5.3 million on the out-license of the product rights for Cloderm® in 2011. Refer to note 4 to the 2013 Financial Statements for further details.

Non-Operating Income (Expense)

The following table displays each non-operating income or expense category for each of the last three years, and the dollar and percentage changes in the dollar amount of each category.

____________________________________

NM — Not meaningful

Interest Expense

Interest expense increased $362.7 million , or 75% , to $844.3 million in 2013, compared with $481.6 million in 2012, primarily reflecting the following:

As a result of the financing obtained in connection with the B&L Acquisition, we expect an increase in interest expense in future years. Refer to note 14 to the 2013 Financial Statements for further details.

Interest expense increased $147.1 million, or 44%, to $481.6 million in 2012, compared with $334.5 million in 2011, primarily reflecting the following:

Years Ended December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

($ in 000s; Income (Expense)) $ $ $ $ % $ %

Interest income 8,023 5,986 4,084 2,037 34 1,902 47

Interest expense (844,316 ) (481,596 ) (334,526 ) (362,720 ) 75 (147,070 ) 44

Loss on extinguishment of debt (65,014 ) (20,080 ) (36,844 ) (44,934 ) NM 16,764 (45)

Foreign exchange and other (9,465 ) 19,721 26,551 (29,186 ) (148) (6,830 ) (26)

Gain on investments, net 5,822 2,056 22,776 3,766 183 (20,720 ) (91)

Total non-operating expense (904,950 ) (473,913 ) (317,959 ) (431,037 ) 91 (155,954 ) 49

• an increase of $308.1 million, in the aggregate, in 2013, primarily related to higher debt balances, driven by the new borrowings during the period. Refer to note 14 to the 2013 Financial Statements for further details; and

• an increase of $53.1 million , in the aggregate, in 2013, related to the non-cash amortization of debt discounts and deferred financing costs, including the write-off of deferred financing costs related to the commitment letter entered into in connection with the financing of the B&L Acquisition. Refer to note 14 to the 2013 Financial Statements for further details.

• an increase of $167.9 million, in the aggregate, in 2012, related to the borrowings under our senior secured credit facilities and our

47

senior notes; and

• an increase of $9.3 million , in the aggregate, in 2012, related to the non-cash amortization of debt discounts and deferred financing costs, including the write-off of deferred financing costs related to the commitment letter entered into in

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

connection with the financing of the Medicis Acquisition. Refer to note 14 to the 2013 Financial Statements for further details.

Those factors were partially offset by:

Loss on Extinguishment of Debt

In 2013, we recognized losses of $65.0 million , related primarily due to (i) the redemption of 6.50% senior notes due 2016 (the “2016 Notes”) in December 2013, (ii) the repricing of our Series D tranche B term loan facility and our Series C of the tranche B term loan facility on February 21, 2013, and (iii) the redemption of 9.875% senior notes assumed in connection with the B&L Acquisition in the third quarter of 2013 (see note 3 to the 2013 Financial Statements for additional information). Refer to note 19 to the 2013 Financial Statements for further details.

In 2012, we recognized losses of $20.1 million, mainly on refinancing of our term loan B facility on October 2, 2012 and the settlement of the 5.375% Convertible Notes.

In 2011, we recognized losses of $36.8 million, primarily related to the repurchase of a portion of the 5.375% Convertible Notes ($31.6 million) and the share settlement of the 4.0% Convertible Notes ($4.7 million). Refer to note 16 to the 2013 Financial Statements for further details.

Foreign Exchange and Other

Foreign exchange and other decreased $29.2 million , or 148% , to a loss of $9.5 million in 2013, compared with a gain of $19.7 million in 2012, primarily due to (i) the $29.4 million gain realized in 2012 on an intercompany loan that was not designated as permanent in nature that did not similarly occur in 2013, (ii) an unrealized foreign exchange loss of $8.3 million on an intercompany financing arrangement in the first quarter of 2013, partially offset by (iii) the translation gains on intercompany loans in 2013.

Foreign exchange and other gain decreased $6.8 million, or 26%, to $19.7 million in 2012, compared with $26.6 million in 2011. The gain in 2012 was primarily due to a gain of $29.4 million related to an intercompany loan that was not designated as permanent in nature, and therefore the impact of changes in foreign currency exchange rates was recognized in our consolidated statements of (loss) income. This was partially offset by the translation losses from our European operations in 2012.

Gain on Investments, Net

In 2013, we recognized gain on investment, net of $5.8 million . The gain on investment, net was primarily driven by a realized gain of $4.0 million on the sale of an equity investment acquired as part of the Medicis Acquisition in December 2012.

In March 2011, in connection with an offer to acquire Cephalon, we 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 amount of the current and deferred provisions for income taxes for each of the last three years, and

• a decrease of $10.7 million in 2012, related to the repurchases and the settlement of 5.375% senior convertible notes due 2014 (the “5.375% Convertible Notes”);

• a decrease of $10.0 million in 2012 due to the repayment of our previous term loan A facility in the first quarter of 2011;

• a decrease of $4.8 million in 2012 due to an adjustment to amortization of debt issuance costs related to a prior period; and

• a decrease of $4.4 million in 2012 related to the redemption of 4.0% convertible subordinated notes due 2013 (the “4% Convertible Notes”) in the second quarter of 2011.

the dollar and percentage changes in the dollar amount of each provision. Percentages may not sum due to rounding.

48

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

____________________________________

NM — Not meaningful

In 2013, our effective tax rate was impacted by (i) income earned in jurisdictions with a lower statutory rate than in Canada; (ii) the increase in liabilities for uncertain tax positions; (iii) taxable losses in Canada for which no tax benefit will be recognized; (iv) non-deductible stock based compensation and realized foreign exchange gains where a full valuation allowance is recorded against tax loss carryforwards, (v) acquisitions, primarily the B&L Acquisition, which included the expansion of our business into a significant amount of new taxing jurisdictions; and (vi) losses in a jurisdiction with a higher statutory tax rate than in Canada. Our consolidated foreign rate differential reflects the net total of the tax cost or benefit of income earned or losses incurred in jurisdictions outside of Canada as compared to the net total of the tax cost or benefit of such income (on a jurisdictional basis) at the Canadian statutory rate. Tax costs below the Canadian statutory rate generate a beneficial foreign rate differential as do tax benefits generated in jurisdictions where the statutory tax rate exceeds the Canadian statutory tax rate. It is not expected that the net total of the foreign rate differentials generated in each jurisdiction in which we operate will bear a direct relationship to the net total amount of foreign income (or loss) earned outside of Canada.

In the third quarter of 2013, we assessed the realizability of the U.S. foreign tax credits based on an update to the expectations of future foreign source income in light of the B&L Acquisition. It was determined that it was more likely than not that these credits would not be realizable and as such a valuation allowance was established against them.

In each of the fourth quarters of 2012 and 2011, we assessed the realizability of a portion of our deferred tax assets related to operating loss carryforwards in the U.S. In 2011, management determined that U.S. federal losses previously subject to a valuation allowance due to limitation restrictions should be written off and the corresponding valuation allowance reversed as of December 31, 2011. In Canada, we released valuation allowance against a portion of the deferred tax assets in respect of our Canadian tax attributes recognized to the extent of deferred tax liabilities from acquisition. We do not believe, due to the purchase price paid for the B&L Acquisition, that any potential 382 limitation to be applied to the acquired B&L net operating losses will have an impact on their realizability. In determining the amount of the valuation allowance that was necessary, we considered the amount of U.S. tax loss carryforwards, Canadian tax loss carryforwards, scientific research and experimental development pool, and investment tax credits that we would more likely than not be able to utilize based on future sources of income.

SUMMARY OF QUARTERLY RESULTS (UNAUDITED)

The following table presents a summary of our unaudited quarterly results of operations and operating cash flows in 2013 and 2012:

____________________________________

Years Ended December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

($ in 000s; (Income) Expense) $ $ $ $ % $ %

Current income tax expense 83,413 63,526 39,891 19,887 31 23,635 59

Deferred income tax benefit (534,196 ) (341,729 ) (217,450 ) (192,467 ) 56 (124,279 ) 57

Total recovery of income taxes (450,783 ) (278,203 ) (177,559 ) (172,580 ) 62 (100,644 ) 57

2013 2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

($ in 000s) $ $ $ $ $ $ $ $

Revenue 1,068,355 1,095,762 1,541,731 2,063,757 789,853 820,090 884,140 986,293 Expenses (1) 951,349 954,249 2,433,229 1,840,280 728,357 733,280 854,676 1,084,378 Operating income (loss) 117,006 141,513 (891,498 ) 223,477 61,496 86,810 29,464 (98,085 )

Net (loss) income attributable to Valeant Pharmaceuticals International, Inc. (27,530 ) 10,866 (973,243 ) 123,765 (12,921 ) (21,607 ) 7,645 (89,142 )

(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:

Basic (0.09 ) 0.04 (2.92 ) 0.37 (0.04 ) (0.07 ) 0.03 (0.29 )

Diluted (0.09 ) 0.03 (2.92 ) 0.36 (0.04 ) (0.07 ) 0.02 (0.29 )

Net cash provided by operating activities 255,349 305,028 201,712 279,868 167,230 254,602 166,827 67,919

(1) In the third quarter of 2013, we recognized an impairment charge of $551.6 million related to ezogabine/retigabine (immediate-release formulation) which is co-developed and marketed under a collaboration agreement with GSK. In addition, in the third quarter of 2013, we wrote off an IPR&D asset of $93.8

49

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

million relating to a modified-release formulation of ezogabine/retigabine. See note 7 to the 2013 Financial Statements for additional information regarding these charges.

Fourth Quarter of 2013 Compared to Fourth Quarter of 2012

Results of Operations

Total revenues increased $1,077.5 million , or 109% , to $2,063.8 million in the fourth quarter of 2013, compared with $986.3 million in the fourth quarter of 2012, reflecting the following factors:

Those factors were partially offset by:

Net income attributable to Valeant Pharmaceuticals International, Inc. was $123.8 million in the fourth quarter of 2013, compared with net loss attributable to Valeant Pharmaceuticals International, Inc. of $89.1 million in the fourth quarter of 2012, reflecting the following factors:

Those factors were partially offset by:

• incremental product sales revenue of $153.4 million, in the aggregate, from all 2012 acquisitions in the fourth quarter of 2013, primarily from the Medicis Acquisition. We also recognized incremental product sales revenue of $945.0 million, in the aggregate, from all 2013 acquisitions in the fourth quarter of 2013, primarily from the B&L, Natur Produkt, and Obagi acquisitions. The incremental product sales revenue from the 2012 and 2013 acquisitions includes a negative foreign exchange impact of $12.7 million, in the aggregate, in the fourth quarter of 2013; and

• incremental product sales revenue of $92.2 million in 2013, related to growth from the existing business (excluding the declines in Developed Markets segment described below), driven by sales of (i) Elidel® and Arestin®, (ii) orphan products (Syprine® and Mephyton®), and (iii) recently launched authorized generic products.

• decrease in product sales in the Developed Markets segment of $77.7 million, in the aggregate, in the fourth quarter of 2013, primarily related to a decline in sales of the Retin-A Micro®, Zovirax® franchise and BenzaClin® due to generic competition;

• a negative impact from divestitures and discontinuations of $12.6 million in the fourth quarter of 2013;

• a decrease in alliance revenue of $10.5 million in the fourth quarter of 2013, primarily in our Developed Markets segment; and

• a negative foreign currency impact on the existing business of $11.0 million in the fourth quarter of 2013.

• an increase in contribution (product sales revenue less cost of goods sold, exclusive of amortization and impairments of finite-lived intangible assets) of $643.6 million , mainly related to the incremental contribution of B&L, Medicis, and Natur Produkt;

• a decrease of $92.9 million in restructuring, integration and other costs. Refer to note 6 to the 2013 Financial Statements for further details;

• a decrease of $40.6 million in acquisition-related costs, primarily reflecting higher costs for the Medicis Acquisition in the prior year;

• an increase in the recovery of income taxes of $17.6 million primarily due to an increased amortization addback related to large increases in the intangible book basis pursuant to various acquisitions during 2013; and

• a decrease of $15.2 million in in-process research and development impairments and other charges mainly due to charges in the prior year that did not similarly occur in the fourth quarter of 2013, including (i) an impairment charge of $24.7 million related to a Xerese® life-cycle product, (ii) $5.0 million related to an upfront payment to acquire the North American rights to Emervel®, and (iii) $5.0 million related to an upfront payment to expand our rights to IDP-108 to include additional territories. This was partially offset by a $14.4 million write-off of the Mapracorat product and an $8.8 million write-off of a Xerese® life-cycle product, both of which were recognized in the fourth quarter of 2013.

50

• an increase of $245.6 million in selling, general and administrative expenses primarily due to increased expenses in our Developed Markets segment ($176.1 million) and Emerging Markets segment ($66.6 million), primarily driven by the acquisitions of new businesses within these segments, including B&L, partially offset by the realization of cost synergies;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Cash Flows From Operations

Net cash provided by operating activities increased $211.9 million , to $279.9 million in the fourth quarter of 2013, compared with $67.9 million in the fourth quarter of 2012, primarily due to:

Those factors were partially offset by:

• an increase of $100.0 million in interest expense, primarily related to higher debt balances, driven by new borrowings during the period (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• an increase of $79.3 million in charges in other expense primarily due to (i) a charge of $50.0 million in the fourth quarter of 2013 related to AntiGrippin® litigation and (ii) a loss of $10.2 million related to the sale of certain skincare products sold primarily in Australia in the fourth quarter of 2013. Refer to note 4 and note 24 to the 2013 Financial Statements for further details related to the divestiture of certain skincare products sold in Australia and the AntiGrippin® litigation, respectively;

• an increase of $62.5 million in amortization and impairments of finite-lived intangible assets primarily related to (i) the amortization of the B&L, Medicis, Obagi and Eisai identifiable intangible assets of $139.9 million, in the aggregate, in the fourth quarter of 2013, partially offset by (ii) lower amortization of $54.8 million related to the legacy Valeant identifiable intangible assets, and (iii) lower amortization of $26.5 million related to the immediate-release formulation of ezogabine/retigabine due to the impairment of this asset in the third quarter of 2013. Refer to note 7 to the 2013 Financial Statements for additional information regarding impairment charges;

• an increase of $39.3 million in research and development expenses primarily due to spending on new programs acquired in the B&L Acquisition. See note 3 to the 2013 Financial Statements for additional information relating to the B&L acquisition;

• a decrease of $32.7 million in acquisition-related contingent consideration gain primarily driven by the contingent consideration net gain recognized in the fourth quarter of 2012 related to the iNova acquisition, primarily due to changes in the estimated probability of achieving the milestones;

• an increase of $17.8 million in loss on extinguishment of debt mainly driven by the redemption of the 2016 Notes in the fourth quarter of 2013; and

• a decrease of $11.5 million in contribution from (i) alliance and royalty revenue and (ii) service revenue (alliance and royalty revenue and service revenue less cost of alliance and service revenue) primarily due to a decrease in alliance revenue from Sculptra® in the fourth quarter of 2013.

• the inclusion of cash flows from the operations in the fourth quarter of 2013 from (i) the 2012 acquisitions, primarily the Medicis Acquisition and (ii) all 2013 acquisitions, primarily the acquisitions of B&L, Natur Produkt and Obagi;

• incremental cash flows from continued growth in the existing business;

• lower payments of $38.5 million related to restructuring, integration and other costs in the fourth quarter of 2013; and

• an increase of $31.4 million due to a correcting adjustment recorded in the fourth quarter of 2013 for the B&L acquisition related to a misclassification between cash and accounts payable. As this adjustment did not have a material impact on our previously reported consolidated financial statements, we have not retrospectively adjusted those financial statements. As such, the resulting $31.4 million understatement of cash flows from operations in the third quarter of 2013 (which was offset by a corresponding overstatement of cash flows from investing activities) was corrected in the fourth quarter of 2013.

• an increase in investment in working capital of $212.3 million primarily related to (i) an increase in accounts receivable, reflecting the growth of the business as well as the unfavorable impact from mix between geographies and businesses and (ii) the impact of the changes related to timing of payments in the ordinary course of business;

• an increase in payments of legal settlements and related fees of $163.9 million mainly related to a settlement agreement with Anacor.

51

Refer to note 24 to the 2013 Financial Statements for further details; and

• a decrease in contribution of $74.3 million, in the aggregate, in the fourth quarter of 2013, primarily related to the lower sales of Retin-A Micro®, the Zovirax® franchise and BenzaClin® as a result of generic competition.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCE S

Selected Measures of Financial Condition

The following table presents a summary of our financial condition as of December 31, 2013 and 2012 :

____________________________________

Cash and Cash Equivalents

Cash and cash equivalents decreased $315.8 million , or 34% , to $600.3 million as of December 31, 2013 compared with $916.1 million at December 31, 2012 , which primarily reflected the following uses of cash:

Those factors were partially offset by the following sources of cash:

As of December 31,

2013 2012 Change

($ in 000s; Asset (Liability)) $ $ $ %

Cash and cash equivalents 600,340 916,091 (315,751 ) (34)

Long-lived assets (1) 23,834,496 14,912,759 8,921,737 60

Long-term debt, including current portion (17,367,702 ) (11,015,625 ) (6,352,077 ) 58

Valeant Pharmaceuticals International, Inc. shareholders’ equity 5,118,723 3,717,398 1,401,325 38

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

• $5,323.2 million paid, in the aggregate, in connection with the purchases of businesses and intangible assets, mainly in respect of the B&L, Obagi, and Natur Produkt acquisitions in 2013;

• $4,198.0 million repayment of long-term debt assumed in connection with the B&L Acquisition in August 2013;

• $915.5 million paid in connection with the redemption of the 2016 Notes in December 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• $233.6 million repayment of long-term debt assumed in connection with the Medicis Acquisition in December 2012;

• contingent consideration payments within financing activities of $130.1 million primarily related to the Elidel®/Xerese®/Zovirax® agreement entered into in June 2011 and the OraPharma and Gerot Lannach acquisitions;

• $128.0 million related to debt issue costs paid (including a call premium of $29.8 million paid in connection with the redemption of the 2016 Notes in December 2013) primarily due to the issuance of senior notes and the Series E tranche B term loans in 2013, in the aggregate (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• purchases of property, plant and equipment of $115.3 million ;

• $55.6 million related to the repurchase of our common shares;

• $37.6 million repayment of short-term borrowings and long-term debt, in the aggregate, assumed in connection with the Natur Produkt acquisition; and

• $28.8 million in repayments under our Series D-2 tranche B term loan facility and Series C-2 tranche B term loan facility, in the aggregate, (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”).

• $4,076.1 million of net proceeds on the issuance of senior notes in 2013 (as described below under “Financial Condition, Liquidity and

52

Capital Resources — Financial Assets (Liabilities)”);

• $3,085.3 million of net borrowings under our Series E tranche B term loan facility in 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• the net proceeds of $2,307.4 million , primarily related to the issuance of common stock in June 2013, which were utilized to fund the B&L Acquisition;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Long-Lived Assets

Long-lived assets increased $8,921.7 million , or 60% , to $23,834.5 million as of December 31, 2013 , compared with $14,912.8 million at December 31, 2012 , primarily due to:

Those factors were partially offset by:

Long-term Debt

Long-term debt (including the current portion) increased $6,352.1 million , or 58% , to $17,367.7 million as of December 31, 2013 , compared with $11,015.6 million at December 31, 2012 , primarily due to:

• $1,042.0 million in operating cash flows;

• $330.5 million of net borrowings under our Series A-1, Series A-2 and Series A-3 of tranche A term loan facilities in 2013, in the aggregate;

• the proceeds of $41.1 million on the sale of assets primarily related to the divestiture of Buphenyl® and the divestiture of certain skincare products sold in Australia; and

• the proceeds of $17.0 million on the sale of marketable securities assumed in connection with the Medicis Acquisition.

• the inclusion of the identifiable intangible assets, goodwill and property, plant and equipment from the 2013 acquisitions of $10,881.5 million, in the aggregate, primarily related to the B&L, Obagi, Natur Produkt and Eisai acquisitions; and

• purchases of property, plant and equipment of $115.3 million .

• the amortization and depreciation of property, plant and equipment of $1,331.0 million, in the aggregate;

• the impairments of finite-lived intangible assets of $653.3 million, in the aggregate, which includes an impairment charge of $551.6 million related to ezogabine/retigabine in the third quarter of 2013. For more information regarding these impairment charges, see notes 7 and 12 to the 2013 Financial Statements;

• the write-off of acquired IPR&D assets of $153.6 million, in the aggregate, primarily due to the write-off of (i) an IPR&D asses relating to the modified-release formulation of ezogabine/retigabine, (ii) IPR&D assets acquired by Valeant as part of Aton acquisition in May 2010, mainly related to the termination of the A007 (Lacrisert®) development program, and (iii) IPR&D assets acquired as part of B&L Acquisition in August 2013 related to the termination of the Mapracorat development program. Refer note 7 to the 2013 Financial Statements for additional information; and

• a decrease from foreign currency exchange of $96.2 million.

• the inclusion of the assumed long-term debt of B&L of $4,209.9 million (as described in the note 3 to the 2013 Financial Statements);

• $4,076.1 million of net proceeds on the issuance of senior notes in 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• $3,085.3 million of net borrowings under our Series E tranche B term loan facility in 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”); and

• $330.5 million of net borrowings under our Series A-1, Series A-2 and Series A-3 of tranche A term loan facilities in 2013, in the aggregate.

Those factors were partially offset by:

53

• $4,198.0 million repayment of long-term debt assumed in connection with the B&L Acquisition in August 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• the redemption of $915.5 million principal amount of the 2016 Notes in 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• $233.6 million repayment of long-term debt assumed in connection with the Medicis Acquisition in December 2012; and

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Valeant Pharmaceuticals International, Inc. Shareholders’ Equity

Valeant Pharmaceuticals International, Inc. shareholders’ equity increased $1,401.3 million , or 38% , to $5,118.7 million as of December 31, 2013 , compared with $3,717.4 million at December 31, 2012 , primarily due to:

Those factors were partially offset by:

Cash Flows

Our primary sources of cash include: cash collected from customers, funds available from our revolving credit facility, issuances of long-term debt and issuances of equity. Our primary uses of cash include: business development transactions, funding ongoing operations, interest and principal payments, securities repurchases and restructuring activities. The following table displays cash flow information for each of the last three years:

____________________________________

NM — Not meaningful

Operating Activities

Net cash provided by operating activities increased $385.4 million , or 59% , to $1,042.0 million in 2013 , compared with $656.6 million in 2012 , primarily due to:

• $28.8 million repayments under our Series D-2 and Series C-2 of tranche B term loan facilities, in the aggregate (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”).

• an increase of $2,306.9 million , primarily related to the issuance of our common stock in June 2013 in connection with the B&L Acquisition; and

• $45.5 million of share-based compensation recorded in additional paid-in capital.

• a net loss attributable to the Company of $866.1 million ;

• a decrease of $55.6 million related to the repurchase of our common shares in 2013; and

• a negative foreign currency translation adjustment of $50.8 million to other comprehensive (loss) income, mainly due to the impact of a strengthening of the U.S. dollar relative to a number of other currencies, including the Canadian dollar, Brazilian real, Mexican peso and Australian dollar, which decreased the reported value of our net assets denominated in those currencies, partially offset by the impact of weakening of the U.S. dollar relative to the Euro.

Years Ended December 31, Change

2013 2012 2011 2012 to 2013 2011 to 2012

($ in 000s) $ $ $ $ % $ %

Net cash provided by operating activities 1,041,957 656,578 640,473 385,379 59 16,105 3

Net cash used in investing activities (5,380,386 ) (2,965,721 ) (2,808,508 ) (2,414,665 ) 81 (157,213 ) 6

Net cash provided by financing activities 4,027,752 3,057,368 1,948,165 970,384 32 1,109,203 57

Effect of exchange rate changes on cash and cash equivalents (5,074 ) 3,755 (10,288 ) (8,829 ) NM 14,043 (136)

Net (decrease) increase in cash and cash equivalents (315,751 ) 751,980 (230,158 ) (1,067,731 ) (142) 982,138 NM

Cash and cash equivalents, beginning of year 916,091 164,111 394,269 751,980 NM (230,158 ) (58)

Cash and cash equivalents, end of year 600,340 916,091 164,111 (315,751 ) (34) 751,980 NM

• the inclusion of cash flows in 2013 from all 2012 acquisitions, primarily the Medicis, OraPharma, University Medical, Atlantis, Probiotica and Gerot Lannach acquisitions, as well as all 2013 acquisitions, primarily the B&L, Natur Produkt and Obagi acquisitions;

Those factors were partially offset by:

54

and

• incremental cash flows from continued growth in the existing business.

• a decrease in contribution of $286.7 million in 2013, primarily related to the lower sales of the Zovirax® franchise, Retin-A Micro®, BenzaClin® and Cesamet® as a result of generic competition;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Net cash provided by operating activities increased $16.1 million , or 3% , to $656.6 million in 2012 , compared with $640.5 million in 2011 , primarily due to:

Those factors were partially offset by:

• higher payments of $140.7 million related to restructuring, integration and other costs in 2013, primarily driven by the B&L Acquisition;

• an increase in payments of legal settlements and related fees of $139.0 million mainly related to a settlement agreement with Anacor in 2013 ;

• an increased investment in working capital of $125.0 million in 2013, primarily related to (i) the impact of the changes related to timing of payments in the ordinary course of business and (ii) an increase in accounts receivable, reflecting the growth of the business as well as the unfavorable impact from mix between geographies and businesses; and

• the receipt of the $45.0 million milestone payment from GSK in connection with the launch of Potiga® in 2012 that did not similarly occur in 2013.

• the inclusion of cash flows in 2012 from all 2011 acquisitions, primarily Elidel®/Xerese®, Sanitas, Dermik, Ortho Dermatologics, Afexa and iNova, as well as all 2012 acquisitions, primarily Medicis, OraPharma, Probiotica and certain assets of Gerot Lannach, University Medical and Atlantis, partially offset by the negative impact of foreign exchange related to these acquisitions and the existing business;

• an increase in cash flows from the operations of PharmaSwiss due to the full year-to-date impact in 2012;

• the receipt of the $45.0 million milestone payment from GSK in connection with the launch of Potiga® in the second quarter of 2012; and

• incremental cash flows from continued growth in the existing business.

• higher payments of $236.4 million related to restructuring, integration and other costs in 2012, primarily driven by the Medicis Acquisition;

• a decrease of $173.1 million related to higher interest paid on long-term debt, mainly related to the borrowings under our senior secured credit facilities and our senior notes;

• an increased investment in working capital of $116.2 million primarily related to (i) $105.5 million of payments related to transaction-related costs (adviser fees, legal fees, and compensation-related costs including the pay-out of stock appreciation rights) incurred by legacy Medicis in connection with the acquisition, (ii) investments of $68.8 million in inventory to support growth of the business and manufacturing integration initiatives, and (iii) an increase of $54.9 million in accounts receivable, reflecting the growth of the business. These decreases in cash were partially offset by (i) an increase in liabilities of $24.2 million related to the portion of Medicis acquisition-related costs for the Galderma agreement (as described above under “Results of Operations — Operating Expenses —Acquisition-Related Costs”) that remained unpaid as of December 31, 2012, and (ii) the impact of the changes related to timing of other receipts and payments in the ordinary course of business;

• a decrease in contribution of $105.1 million, in the aggregate, from Cardizem® CD, Cesamet®, Ultram® ER, Diastat® and Wellbutrin XL® product sales in 2012;

• the receipt of the $40.0 million milestone payment from GSK in connection with the launch of Trobalt® in the second quarter of 2011;

• an increase in payments of legal settlements and related fees of $15.3 million mainly related to the settlement of antitrust litigation in the second quarter of 2012; and

Investing Activities

Net cash used in investing activities increased $2,414.7 million , or 81% , to $5,380.4 million in 2013 , compared with $2,965.7 million in 2012 , primarily due to:

55

• a $12.0 million payment related to the termination of a research and development commitment with a third party.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Net cash used in investing activities increased $157.2 million, or 6%, to $2,965.7 million in 2012, compared with $2,808.5 million in 2011, primarily due to:

Those factors were partially offset by:

Financing Activities

Net cash provided by financing activities increased $970.4 million , or 32% , to $4,027.8 million in 2013 , compared with $3,057.4 million in 2012 , primarily due to:

• an increase of $1,764.4 million in the aggregate, related to the purchases of businesses (net of cash acquired) and intangible assets in the aggregate;

• an increase of $607.8 million , mainly related to the higher proceeds received in 2012 from the sale of marketable securities acquired as part of the Medicis Acquisition; and

• an increase of $50.9 million , related to lower proceeds from sales of assets, primarily attributable to the cash proceeds of $66.3 million for the sale of the IDP-111 and 5-FU products in the first quarter of 2012, partially offset by the proceeds related to the sale of Buphenyl® in the second quarter of 2013.

• an increase of $767.2 million in the aggregate, related to the purchases of businesses (net of cash acquired) and intangible assets in the aggregate;

• an increase of $49.1 million in purchases of property, plant and equipment;

• an increase of $36.0 million related to the receipt of the up-front payment related to the out-license of Cloderm® in 2011 that did not similarly occur in 2012; and

• a net increase of $21.3 million on the disposal of the Cephalon common stock in the first nine months of 2011, representing the excess of the $81.3 million in net proceeds received over the $60.0 million paid in 2011 to acquire the shares, which did not similarly occur in 2012.

• a decrease of $615.4 million attributable to the proceeds related to the sale of marketable securities assumed in connection with the Medicis acquisition in 2012; and

• a decrease of $66.3 million attributable to the cash proceeds related to the sale of the IDP-111 and 5-FU products in the first quarter of 2012.

• an increase related to net proceeds of $4,076.1 million from the issuance of senior notes in 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• an increase of $3,085.3 million of net borrowings under our Series E tranche B term loan facility in 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• the net proceeds of $2,307.4 million primarily related to the issuance of common stock in June 2013, which were utilized to fund the B&L Acquisition;

• an increase of $606.3 million related to cash settlement of convertible debt in 2012 that did not similarly occur in 2013;

• an increase of $441.8 million in net borrowings under our Series A-1, Series A-2 and Series A-3 of tranche A term loan facilities in 2013, in the aggregate;

• an increase of $225.1 million related to lower repurchases of common shares in 2013; and

Those factors were partially offset by:

56

• an increase of $220.0 million related to lower repayments under our revolving credit facility in 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”).

• a decrease of $4,198.0 million related to the repayment of long-term debt assumed in connection with the B&L Acquisition in August 2013;

• a decrease of $2,278.0 million in net borrowings under our Series D-2 and Series C-2 of tranche B term loan facilities, in the aggregate, in 2013;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Net cash provided by financing activities increased $1,109.2 million, or 57%, to $3,057.4 million in 2012, compared with $1,948.2 million in 2011, primarily due to:

Those factors were partially offset by:

• a decrease related to net proceeds of $2,217.2 million from the issuance of senior notes in 2012;

• $915.5 million paid in connection with the redemption of the 2016 Notes in December 2013 (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• $233.6 million related to the repayment of long-term debt assumed in connection with the Medicis Acquisition in December 2012;

• a decrease of $94.9 million related to the higher debt issue costs paid (including call premium of $29.8 million paid in connection with the redemption of the 2016 Notes in December 2013), primarily due to the issuance of senior notes and the Series E tranche B term loans in 2013, in the aggregate (as described below under “Financial Condition, Liquidity and Capital Resources — Financial Assets (Liabilities)”);

• $37.6 million in repayments of short-term borrowings and long-term debt, in the aggregate, assumed in connection with the Natur Produkt acquisition; and

• a decrease due to higher contingent consideration payments of $26.1 million , in 2013, primarily due to a payment of $40.0 million and $20.1 million, related to the OraPharma and Gerot Lannach acquisitions, respectively, partially offset by (i) lower contingent consideration payments related to the Elidel®/Xerese®/Zovirax® agreement entered into with Meda in June 2011 and (ii) a contingent consideration payment in the second quarter of 2012 related to the PharmaSwiss acquisition in March 2011.

• an increase related to net proceeds of $2,217.2 million from the issuance of senior notes in the fourth quarter of 2012;

• an increase of $1,275.2 million and $974.0 million of net borrowings under our Series D-2 and Series C-2 of tranche B term loan facilities, respectively;

• an increase of $975.0 million related to the repayment of our previous term loan A facility in 2011;

• an increase of $609.5 million related to lower repurchases of the 5.375% Convertible Notes (exclusive of the payment of accreted interest reflected as an operating activity) in 2012;

• an increase of $358.5 million related to lower repurchases of common shares in 2012;

• an increase of $66.9 million related to the settlement of the written call options in 2011 that did not similarly occur in 2012;

• an increase of $52.5 million, in the aggregate, related to the acquisitions of Sanitas’ and Afexa’s noncontrolling interest in 2011 that did not similarly occur in 2012; and

• an increase of $28.6 million related to lower employee withholding taxes paid on the exercise of employee share-based awards in 2012.

• a decrease of $2,287.6 million related to net borrowings in the fourth quarter of 2011 under our senior secured term loan A facility, including a $111.3 million repayment under our senior secured term loan A facility in 2012;

• a decrease related to net proceeds of $2,139.7 million from the issuance of senior notes in the first quarter of 2011;

• $544.2 million repayment of long-term debt assumed in connection with the Medicis Acquisition;

• a decrease of $440.0 million in net borrowings under our revolving credit facility in 2012;

57

• a decrease due to higher contingent consideration payments of $72.1 million primarily related to the Elidel®/Xerese®/Zovirax® agreement entered into in June 2011 and the PharmaSwiss acquisition;

• a decrease of $62.1 million related to the settlement of the 5.375% Convertible Notes in the third quarter of 2012;

• $37.9 million repayment of long-term debt assumed in connection with the OraPharma acquisition; and

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

58

• a decrease of $32.7 million in proceeds from stock option exercises, including tax benefits, in 2012.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Financial Assets (Liabilities)

The following table displays our net financial liability position as of December 31, 2013 and 2012 :

____________________________________

NM — Not meaningful

During 2013 and 2014 (to date), the following events occurred with respect to our long-term debt structure:

As of December 31,

Maturity Date

2013 2012 Change

($ in 000s; Asset (Liability)) $ $ $ %

Financial assets:

Cash and cash equivalents 600,340 916,091 (315,751 ) (34)

Marketable securities — 11,577 (11,577 ) (100)

Total financial assets 600,340 927,668 (327,328 ) (35)

Financial liabilities:

Revolving Credit Facility (1) April 2018 — — — —

Series A-1 Tranche A Term Loan Facility (1) April 2016 (258,985 ) (2,083,462 ) 1,824,477 (88)

Series A-2 Tranche A Term Loan Facility (1) April 2016 (228,145 ) — (228,145 ) —

Series A-3 Tranche A Term Loan Facility (1) October 2018 (1,935,713 ) — (1,935,713 ) —

Series D-2 Tranche B Term Loan Facility (1) February 2019 (1,256,704 ) (1,275,167 ) 18,463 (1)

Series C-2 Tranche B Term Loan Facility (1) December 2019 (966,808 ) (973,988 ) 7,180 (1)

Series E Tranche B Term Loan Facility (1) August 2020 (3,090,506 ) — (3,090,506 ) —

Senior Notes:

6.50% (2)(3) July 2016 — (915,500 ) 915,500 (100)

6.75% (2) October 2017 (498,662 ) (498,305 ) (357 ) —

6.875% (2) December 2018 (940,178 ) (939,277 ) (901 ) —

7.00% (2) October 2020 (687,091 ) (686,660 ) (431 ) —

6.75% (2) August 2021 (650,000 ) (650,000 ) — —

7.25% (2) July 2022 (542,244 ) (541,335 ) (909 ) —

6.375% (2) October 2020 (2,221,391 ) (1,724,520 ) (496,871 ) 29

6.375% (2) October 2020 — (492,720 ) 492,720 (100)

6.75% (4) August 2018 (1,581,847 ) — (1,581,847 ) —

7.50% (4) July 2021 (1,605,879 ) — (1,605,879 ) —

5.625% (4) December 2021 (891,537 ) — (891,537 ) —

Medicis Convertible Notes Various (209 ) (233,793 ) 233,584 (100)

Other Various (11,803 ) (898 ) (10,905 ) NM

Total financial liabilities (17,367,702 ) (11,015,625 ) (6,352,077 ) 58

Net financial liabilities (16,767,362 ) (10,087,957 ) $ (6,679,405 ) 66

(1) Together, the “Senior Secured Credit Facilities” under our Credit Agreement.

(2) The senior notes issued by our wholly-owned subsidiary, Valeant.

(3) In the fourth quarter of 2013, Valeant redeemed all of the outstanding 2016 Notes for $945.3 million, including call premium of $29.8 million. In connection with this transaction, we recognized a loss on extinguishment of debt of $32.5 million in the fourth quarter of 2013.

(4) The senior notes issued by us.

59

• On January 24, 2013, we and certain of our subsidiaries as guarantors entered into Amendment No. 3 to the Credit Agreement to reprice our senior secured tranche A term loan A facility (the “Tranche A Term Loan Facility”, as so amended, the “Series A-1 Tranche A Term Loan Facility”) and our revolving credit facility (the “Revolving Credit Facility”).

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

60

• On February 21, 2013, we and certain of our subsidiaries as guarantors entered into Amendment No. 4 to the Credit Agreement to effectuate a repricing of our existing Series D tranche B term loan facility (“Series D Tranche B Term Loan Facility”) and Series C tranche B term loan facility (the “Series C Tranche B Term Loan Facility”) by the issuance of $1.3 billion and $1.0 billion in new incremental term loans (the “Series D-1 Tranche B Term Loan Facility” and “Series C-1 Tranche B Term Loan Facility”, respectively). In connection with the repricing of the Series D Tranche B Term Loan Facility and the Series C Tranche B Term Loan Facility, we paid a prepayment premium of approximately $23.0 million, equal to 1.0% of the refinanced term loans under the Series D Tranche B Term Loan Facility and Series C Tranche B Term Loan Facility. In connection with this transaction, we recognized a loss on extinguishment of debt of $21.4 million in the three-month period ended March 31, 2013.

• On June 6, 2013, we and certain of our subsidiaries, as guarantors, entered into Amendment No. 5 to the Credit Agreement to implement certain revisions in connection with the B&L Acquisition. The amendment provided for certain revisions in connection with, among other things, the formation of VPII Escrow Corp., the offering of the senior unsecured notes by VPII Escrow Corp., the equity offering, the waiver of certain closing conditions and/or requirements in connection with the incurrence of incremental term loans and/or establishment of incremental revolving commitments related to the B&L Acquisition and the consummation of the B&L Acquisition.

• On June 26, 2013, we and certain of our subsidiaries, as guarantors, entered into Amendment No. 6 to the Credit Agreement to, among other things, allow for the increase in commitments under the Revolving Credit Facility and the extension of the maturity of the Revolving Credit Facility from April 20, 2016 to April 20, 2018, and to amend certain other provisions of the Credit Agreement. On July 15, 2013, the increase in commitments and maturity extension under the Revolving Credit facility was completed, with commitments increased by $550.0 million to $1.0 billion.

• On June 27, 2013, we priced new incremental term loan facilities in the aggregate principal amount of $4,050.0 million (the “Incremental Term Loan Facilities”) under our existing Senior Secured Credit Facilities. The Incremental Term Loan Facilities consist of (1) $850.0 million of tranche A term loans, maturing on April 20, 2016 (the “Series A-2 Tranche A Term Loan Facility”), and (2) $3,200.0 million of tranche B term loans maturing on August 5, 2020 (the “Series E Tranche B Term Loan Facility”). The Incremental Term Loan Facilities closed on August 5, 2013, concurrent with the closing of the B&L Acquisition.

• On July 12, 2013, VPII Escrow Corp. (the “VPII Escrow Issuer”), our newly formed wholly-owned subsidiary, issued $1,600.0 million aggregate principal amount of the August 2018 Notes and $1,625.0 million aggregate principal amount of the July 2021 Notes in a private placement. At the time of the closing of the B&L Acquisition, (1) the VPII Escrow Issuer was voluntarily liquidated and all of its obligations were assumed by, and all of its assets were distributed to us, (2) we assumed all of the VPII Escrow Issuer’s obligations under the August 2018 Notes and July 2021 Notes and the related indenture and (3) the funds previously held in escrow were released to us and were used to finance the B&L Acquisition as described above.

• On September 17, 2013, we and certain of our subsidiaries, as guarantors, entered into Amendment No. 7 to the Credit Agreement to effectuate a repricing of the Series D-1 Tranche B Term Loan Facility and the Series C-1 Tranche B Term Loan Facility by issuance of $1,287.0 million and $990.0 million in new incremental term loans (the “Series D-2 Tranche B Term Loan Facility” and “Series C-2 Tranche B Term Loan Facility”, respectively). Term loans under the Series D-1 Tranche B Term loan Facility and Series C-1 Tranche B Term Loan Facility were either exchanged for, or repaid with the proceeds of, the Series D-2 Tranche B Term Loan Facility and Series C-2 Tranche B Term Loan Facility, respectively.

• In connection with the B&L Acquisition, we assumed B&L’s outstanding long-term debt, including current portion, of approximately $4,209.9 million at the B&L Acquisition date. Subsequent to the acquisition date, the Company settled the majority of the assumed long-term debt. As of December 31, 2013 , B&L’s outstanding long-term debt is comprised of the following debentures: (i) 7.125% senior notes, due August 1, 2028, with outstanding principal amount of $11.7 million and (ii) 6.56% senior notes, due August 12, 2026, with outstanding principal amount of less than $0.1 million. In the fourth quarter of 2013, we repaid the amounts outstanding under the Japanese yen-denominated variable-rate backed secured revolving credit facility (the “Japanese Revolving Credit Facility”) assumed in connection with the B&L Acquisition. In January 2014, the Company terminated the Japanese Revolving Credit Facility.

• On December 2, 2013, we issued $900.0 million aggregate principal amount of the 5.625% senior notes due 2021 (the “December 2021 Notes”) in a private placement. The net proceeds of the December 2021 Notes offering were used principally to finance the redemption of all of the 2016 Notes in the fourth quarter of 2013 (as described under the table above).

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

For more information regarding our long-term debt, see note 14 and note 27 of notes to consolidated financial statements in Item 15 of this Form 10-K.

The senior notes issued by us are our senior unsecured obligations and are jointly and severally guaranteed on a senior unsecured basis by each of our subsidiaries that is a guarantor under our Senior Secured Credit Facilities. The senior notes issued by our subsidiary Valeant are senior unsecured obligations of Valeant and are jointly and severally guaranteed on a senior unsecured basis by us and each of our subsidiaries (other than Valeant) that is a guarantor under our Senior Secured Credit Facilities. Certain of the future subsidiaries of the Company and Valeant may be required to guarantee the senior notes. The non-guarantor subsidiaries had total assets of $5,080.9 million and total liabilities of $3,538.0 million as of December 31, 2013, and net revenues of $1,689.1 million and net loss from operations of $632.4 million for the year ended December 31, 2013.

Our primary sources of liquidity are our cash, cash collected from customers, funds available from our Revolving Credit Facility, issuances of long-term debt and issuances of equity. We believe these sources will be sufficient to meet our current liquidity needs. We have no material commitments for expenditures related to property, plant and equipment. Since part of our business strategy is to expand through strategic acquisitions, we may be required to seek additional debt financing, issue additional equity securities or sell assets, as necessary, to finance future acquisitions or for other general corporate purposes. Our current corporate credit rating is Ba3 for Moody’s Investors Service and BB- for Standard and Poor’s. A downgrade may increase our cost of borrowing and may negatively impact our ability to raise additional debt capital.

As of December 31, 2013, we were in compliance with all of our covenants related to our outstanding debt. As of December 31, 2013, our short-term portion of long-term debt consisted of $204.8 million , in the aggregate, primarily in term loans outstanding under the Senior Secured Credit Facilities, due in quarterly installments. We believe our existing cash and cash generated from operations will be sufficient to cover these short-term debt maturities as they become due.

Securities Repurchase Programs

See note 16 of notes to consolidated financial statements in Item 15 of this Form 10-K for detailed information regarding our various securities repurchase programs.

OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLI GATIONS

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 our contractual obligations as of December 31, 2013 :

61

• On December 20, 2013, we entered into Amendment No. 8 to the Credit Agreement to allow for the extension of the maturity of all or a portion of the Series A-1 Tranche A Term Loans and Series A-2 Tranche A Term Loans outstanding from April 20, 2016 to October 20, 2018 (as extended, the “Series A-3 Tranche A Term Loan Facility”). Some of the lenders exchanged and/or converted a portion or all of their existing term loans outstanding under the Series A-1 Tranche A Term Loan Facility and Series A-2 Tranche A Term Loan Facility into the Series A-3 Tranche A Term Loan Facility. In addition, several existing lenders increased their term loans outstanding under the Series A-3 Tranche A Term Loan Facility for an aggregate amount of $33.0 million.

• On February 6, 2014, we and certain of our subsidiaries as guarantors entered into a joinder agreement to reprice and refinance the Series E Tranche B Term Loan Facility by the issuance of $2,950.0 million in new incremental term loans (the “Series E-1 Tranche B Term Loan Facility”). Term loans under the Series E Tranche B Term Loan Facility were either exchanged for, or repaid with the proceeds of, the Series E-1 Tranche B Term Loan Facility and proceeds from the additional Series A-3 Tranche A Term Loan Facility issuance described below.

• Concurrently, on February 6, 2014, we and certain of our subsidiaries as guarantors entered into a joinder agreement for the issuance of $225.6 million in incremental term loans under the Series A-3 Tranche A Term Loan Facility. Proceeds from this transaction were used to repay part of the term loans outstanding under the Series E Tranche B Term Loan Facility. In addition, on February 6, 2014, in connection with Amendment No. 8, an additional $1.5 million of the Series A-1 Tranche A Term Loan Facility was exchanged and/or converted into the Series A-3 Tranche A Term Loan Facility.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

____________________________________

The above table does not reflect (i) contingent payments related to contingent milestone payments to third parties as part of certain development, collaboration and license agreements and (ii) acquisition-related contingent consideration. See note 25 of notes to consolidated financial statements in Item 15 of this Form 10-K for additional information related to these contingent payments.

Also excluded from the above table is a liability for uncertain tax positions totaling $177.8 million . This liability has been excluded because we cannot currently make a reliable estimate of the period in which the liability will be payable, if ever.

OUTSTANDING SHARE DATA

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

On June 24, 2013, we issued 27,058,824 of our common shares. See 2013 Financial Statements for additional information relating to the equity issuance.

At February 21, 2014, we had 334,869,413 issued and outstanding common shares. In addition, we had 8,604,521 stock options and 920,974 time-based RSUs that each represent the right of a holder to receive one of the Company’s common shares, and 1,263,311 performance-based RSUs that represent the right of a holder to receive up to 300% of the RSUs granted. A maximum of 2,978,654 common shares could be issued upon vesting of the performance-based RSUs outstanding.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARK ET RISK

Our business and financial results are affected by fluctuations in world financial markets, including the impacts of foreign currency exchange rate and interest rate movements. We evaluate our exposure to such risks on an ongoing basis, and seek ways to manage these risks to an acceptable level, based on management’s judgment of the appropriate trade-off between risk, opportunity and cost. We may use derivative financial instruments from time to time as a risk management tool and not for trading or speculative purposes. Currently, we do not hold any market risk sensitive instruments whose value is subject to market price risk.

Inflation; Seasonality

We are subject to price control restriction on our pharmaceutical products in the majority of countries in which we now operate. As a result, our ability to raise prices in a timely fashion in anticipation of inflation may be limited in some markets.

Historically, revenues from our business tend to be weighted toward the second half of the year. Sales in the fourth quarter tend to be higher based on consumer and customer purchasing patterns associated with healthcare reimbursement programs. Further, the third quarter “back to school” period impacts demand for certain of our dermatology products. However, as we continue our strategy of selective acquisitions

Payments Due by Period

Total 2014 2015 and 2016 2017 and 2018 Thereafter

($ in 000s) $ $ $ $ $

Long-term debt obligations, including interest (1) 24,277,810 1,153,055 3,052,284 6,557,092 13,515,379 Acquisition-related consideration (2) 90,000 40,000 50,000 — — Lease obligations 269,336 66,123 86,616 50,914 65,683 Purchase obligations (3) 482,769 407,430 49,017 23,774 2,548

Total contractual obligations 25,119,915 1,666,608 3,237,917 6,631,780 13,583,610

(1) Expected interest payments assume repayment of the principal amount of the debt obligations at maturity.

(2) Primarily reflects the minimum guaranteed obligations related to the license agreement for Elidel® and Xerese®. These amounts do not include contingent obligations related to future milestone payments or potential royalty payments in excess of the minimum guaranteed obligations related to the Elidel® and Xerese® license agreement. Such contingent obligations are recorded at fair value in our consolidated financial statements. Refer to Note 3 “Business Combinations” to the 2013 Financial Statements for additional information.

(3) Purchase obligations consist of agreements to purchase goods and services that are enforceable and legally binding and include obligations for minimum inventory and capital expenditures, and outsourced information technology, product promotion and clinical research services.

to expand our product portfolio, there are no assurances that these hist orical trends will continue in the future.

Foreign Currency Risk

62

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

In 2013, a majority of our revenue and expense activities and capital expenditures were denominated in U.S. dollars. We have exposure to multiple foreign currencies, including, among others, the Euro, Russian ruble, Polish zloty, Canadian dollar, and Japanese yen. Our operations are subject to risks inherent in conducting business abroad, including price and currency exchange controls and fluctuations in the relative values of currencies. In addition, to the extent that we require, as a source of debt repayment, earnings and cash flows from some of our operations located in foreign countries, we are subject to risk of changes in the value of the U.S. dollar, relative to all other currencies in which we operate, which may materially affect our results of operations. Where possible, we manage foreign currency risk by managing same currency revenues in relation to same currency expenses. As of December 31, 2013, a 1% increase in foreign currency exchange rates would have impacted our shareholders’ equity by approximately $46.1 million.

In 2012 and 2011, the repurchase of $18.7 million and $205.0 million principal amount of the U.S. dollar-denominated 5.375% Convertible Notes, respectively, resulted in a foreign exchange gain for Canadian income tax purposes of approximately $1.0 million and $24.0 million, respectively. The 2012 payment represents the settlement of the 5.375% Convertible Notes outstanding balance. In 2012, the repurchase of principal amount of the U.S. dollar denominated Revolving Credit Facility resulted in a foreign exchange gain of $8.0 million. As of December 31, 2013, the aggregate unrealized foreign exchange loss on the translation of the remaining principal amount of the Senior Secured Credit Facilities and Senior Notes was approximately $377.8 million ($300.9 million and $76.9 million, respectively). Additionally, as of December 31, 2013, the unrealized foreign exchange gain on certain intercompany balances was equal to $227.9 million. One-half of any realized foreign exchange gain or loss will be included in our Canadian taxable income. Any resulting gain will result in a corresponding reduction in our available Canadian Non-Capital Losses, Scientific Research and Experimental Development Pool, and/or Investment Tax Credit carryforward balances. However, the repayment of the Senior Secured Credit Facilities and the intercompany loans denominated in U.S. dollars does not result in a foreign exchange gain or loss being recognized in our consolidated financial statements, as these statements are prepared in U.S. dollars.

Interest Rate Risk

We currently do not hold financial instruments for speculative purposes. Our financial assets are not subject to significant interest rate risk due to their short duration. The primary objective of our policy for the investment of temporary cash surpluses is the protection of principal, and accordingly, we generally invest in high quality, money market investments and time deposits with varying maturities, but typically less than three months. As it is our intent and policy to hold these investments until maturity, we do not have a material exposure to interest rate risk.

As of December 31, 2013, we had $9,721.6 million and $7,915.3 million principal amount of issued fixed rate debt and variable rate debt, respectively, that requires U.S. dollar repayment. The estimated fair value of our issued fixed rate debt as of December 31, 2013 was $10,421.3 million. If interest rates were to increase by 100 basis-points, the fair value of our long-term debt would decrease by approximately $305.0 million. If interest rates were to decrease by 100 basis-points, the fair value of our long-term debt would increase by approximately $244.0 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 increase in interest rates, based on 3-month LIBOR, would have an annualized pre-tax effect of approximately $51.7 million in our consolidated statements of (loss) income and cash flows, based on current outstanding borrowings and effective interest rates on our variable rate debt. While our variable-rate debt may impact earnings and cash flows as interest rates change, it is not subject to changes in fair value.

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 judgments due to the need to select policies from among alternatives available, and to make estimates about matters that are inherently uncertain. We base our estimates on historical experience and other factors that we believe to be reasonable under the circumstances. On an ongoing basis, we review our estimates to ensure that these estimates appropriately reflect changes in our business and new information as it becomes available. If historical experience and other factors we use to make these estimates do not reasonably reflect future activity, our results of operations and financial condition could be materially impacted.

Revenue Recognition

We recognize product sales revenue when title has transferred to the customer and the customer has assumed the risks and rewards of ownership, the timing of which is based on the specific contractual terms with each customer. In most instances, transfer of title as well as the risks and rewards of ownership occurs upon delivery of the product to the customer. Revenue from product sales is recognized net of provisions for estimated cash discounts, allowances, returns, rebates, and chargebacks, as well as

63

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

distribution fees paid to certain of our wholesale customers. We establish these provisions concurrently with the recognition of product sales revenue.

In connection with the Medicis Acquisition, which was completed in December 2012, we acquired several brands, including the following aesthetics products: Dysport®, Perlane®, and Restylane®. In 2012, consistent with legacy Medicis’ historical approach, we recognized revenue on those products upon shipment from McKesson, our primary U.S. distributor of aesthetics products, to physicians. As part of our integration efforts, we implemented new strategies and business practices in the first quarter of 2013, particularly as they relate to rebate and discount programs for these aesthetics products. As a result of these changes, the criteria for revenue recognition are achieved upon shipment of these products to McKesson, and, therefore, we began, in the first quarter of 2013, recognizing revenue upon shipment of these products to McKesson.

Under certain product manufacturing and supply agreements, we rely on estimates for future returns, rebates and chargebacks made by our commercialization counterparties. We make adjustments as needed to state these estimates on a basis consistent with our revenue recognition policy and our methodology for estimating returns, rebates, and chargebacks related to our own direct product sales.

We continually monitor our product sales provisions and evaluate the estimates used as additional information becomes available. We make adjustments to these provisions periodically to reflect new facts and circumstances that may indicate that historical experience may not be indicative of current and/or future results. We are required to make subjective judgments based primarily on our evaluation of current market conditions and trade inventory levels related to our products. This evaluation may result in an increase or decrease in the experience rate that is applied to current and future sales, or an adjustment related to past sales, or both.

Product Sales Provisions

The following table presents the activity and ending balances for our product sales provisions for each of the last three years.

Use of Information from External Sources

In the U.S., we use information from external sources to estimate our product sales provisions. We have data sharing agreements with the three largest wholesalers in the U.S. Where we do not have data sharing agreements, we use third party data to estimate the level of product inventories and product demand at wholesalers and retail pharmacies. Third party data with respect to prescription demand and inventory levels are subject to the inherent limitations of estimates that rely on information from external sources, as this information may itself rely on certain estimates and reflect other limitations.

Our inventory levels in the wholesale distribution channel do not vary substantially, as our distribution agreements with the three largest wholesalers in the U.S. limit the aggregate amount of inventory they can own to between ½ and 1½ months of supply

Discounts and

Allowances Returns Rebates Chargebacks Distribution

Fees Total

($ in 000s) $ $ $ $ $ $

Balance, January 1, 2011 7,649 110,642 79,704 10,241 14,101 222,337 Current year provision 41,004 59,804 233,050 103,249 41,279 478,386 Prior year provision — (7,843 ) 548 — — (7,295 )

Payments or credits (40,891 ) (43,539 ) (192,196 ) (98,252 ) (43,814 ) (418,692 )

Balance, December 31, 2011 7,762 119,064 121,106 15,238 11,566 274,736 Acquisition of Medicis 2,375 61,019 148,402 2,373 7,741 221,910 Current year provision 67,118 57,392 432,237 191,370 44,754 792,871 Prior year provision — (10,508 ) 1,961 — — (8,547 )

Payments or credits (58,617 ) (55,868 ) (334,367 ) (180,952 ) (50,186 ) (679,990 )

Balance, December 31, 2012 18,638 171,099 369,339 28,029 13,875 600,980 Acquisition of B&L 49,030 55,375 104,128 20,756 11,745 241,034 Current year provision 241,782 124,617 1,277,140 407,162 156,884 2,207,585 Prior year provision (553 ) 1,629 — 924 — 2,000 Payments or credits (218,213 ) (127,263 ) (1,183,952 ) (378,092 ) (136,318 ) (2,043,838 )

Balance, December 31, 2013 90,684 225,457 566,655 78,779 46,186 1,007,761

64

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

of our products. The inventory data from these wholesalers is provided to us in the aggregate by product rather than by specific lot number, which is the level of detail that would be required to determine the original sale date and remaining shelf life of the inventory.

Some European countries base their rebates on the government’s unbudgeted pharmaceutical spending and we use an estimated allocation factor against our actual invoiced sales to project the expected level of reimbursement. We obtain third party information that helps us to monitor the adequacy of these accruals. If our estimates are not indicative of actual unbudgeted spending, our results could be materially affected.

Cash Discounts and Allowances

We offer cash discounts for prompt payment and allowances for volume purchases to customers. Provisions for cash discounts are estimated at the time of sale and recorded as direct reductions to accounts receivable and revenue. Provisions for allowances are recorded in accrued liabilities. We estimate provisions for cash discounts and allowances based on contractual sales terms with customers, an analysis of unpaid invoices, and historical payment experience. Estimated cash discounts and allowances have historically been predictable and less subjective, due to the limited number of assumptions involved, the consistency of historical experience, and the fact that we generally settle these amounts within one month of incurring the liability.

Returns

Consistent with industry practice, we generally allow customers to return product within a specified period before and after its expiration date, excluding our European businesses which generally do not carry a right of return. Our product returns provision is estimated based on historical sales and return rates over the period during which customers have a right of return. We utilize the following information to estimate our provision for returns:

In determining our estimates for returns, we are required to make certain assumptions regarding the timing of the introduction of new products and the potential of these products to capture market share. In addition, we make certain assumptions with respect to the extent and pattern of decline associated with generic competition. To make these assessments, we utilize market data for similar products as analogs for our estimates. We use our best judgment to formulate these assumptions based on past experience and information available to us at the time. We continually reassess and make the appropriate changes to our estimates and assumptions as new information becomes available to us. A change of 1% in the estimated return rates would have impacted our pre-tax earnings by approximately $27 million for the year ended December 31, 2013.

Our estimate for returns may be impacted by a number of factors, but the principal factor relates to the level of inventory in the distribution channel. When we are aware of an increase in the level of inventory of our products in the distribution channel, we consider the reasons for the increase to determine if the increase may be temporary or other-than-temporary. Increases in inventory levels assessed as temporary will not differ from our original estimates of our provision for returns. Other-than-temporary increases in inventory levels, however, may be an indication that future product returns could be higher than originally anticipated, and, as a result, we may need to adjust our estimate for returns. Some of the factors that may suggest that an increase in inventory levels will be temporary include:

• historical return and exchange levels;

• external data with respect to inventory levels in the wholesale distribution channel;

• external data with respect to prescription demand for our products;

• remaining shelf lives of our products at the date of sale; and

• estimated returns liability to be processed by year of sale based on an analysis of lot information related to actual historical returns.

• recently implemented or announced price increases for our products;

• new product launches or expanded indications for our existing products; and

• timing of purchases by our wholesale customers.

Conversely, factors that may suggest that an increase in inventory levels will be other-than-temporary include:

65

• declining sales trends based on prescription demand;

• introduction of new products or generic competition;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Rebates and Chargebacks

We are subject to rebates on sales made under governmental and managed-care pricing programs in the U.S. The largest of these rebates is associated with sales covered by Medicaid. We participate in state government-managed Medicaid programs, as well as certain other qualifying federal and state government programs whereby discounts and rebates are provided to participating government entities. Medicaid rebates are generally billed 45 days after the quarter, but can be billed up to 270 days after the quarter in which the product is dispensed to the Medicaid participant. As a result, our Medicaid rebate provision includes an estimate of outstanding claims for end-customer sales that occurred but for which the related claim has not been billed and/or paid, and an estimate for future claims that will be made when inventory in the distribution channel is sold through to plan participants. Our calculation also requires other estimates, such as estimates of sales mix, to determine which sales are subject to rebates and the amount of such rebates. A change of 1% in the volume of product sold through to plan participants would have impacted our pre-tax earnings by approximately $26 million for the year ended December 31, 2013. Periodically, we adjust the Medicaid rebate provision based on actual claims paid. Due to the delay in billing, adjustments to actual claims paid may incorporate revisions of that provision for several periods.

Managed Care rebates relate to our contractual agreements to sell products to managed care organizations and pharmacy benefit managers at contractual rebate percentages in exchange for volume and/or market share. Managed Care rebates were $147.7 million, $139.1 million and $27.9 million as of December 31, 2013, 2012 and 2011, respectively.

Chargebacks relate to our contractual agreements to sell products to group purchasing organizations and other indirect customers at contractual prices that are lower than the list prices we charge wholesalers. When these group purchasing organizations or other indirect customers purchase our products through wholesalers at these reduced prices, the wholesaler charges us for the difference between the prices they paid us and the prices at which they sold the products to the indirect customers.

In estimating our provisions for rebates and chargebacks, we consider relevant statutes with respect to governmental pricing programs and contractual sales terms with managed-care providers and group purchasing organizations. We estimate the amount of our product sales subject to these programs based on historical utilization levels. Changes in the level of utilization of our products through private or public benefit plans and group purchasing organizations will affect the amount of rebates and chargebacks that we are obligated to pay. We continually update these factors based on new contractual or statutory requirements, and any significant changes in sales trends that may impact the percentage of our products subject to rebates or chargebacks.

The amount of rebates and chargebacks has become more significant as a result of a combination of deeper discounts due to the price increases we implemented in each of the last three years, changes in our product portfolio due to recent acquisitions and increased Medicaid utilization due to existing economic conditions in the U.S. Our estimate for rebates and chargebacks may be impacted by a number of factors, but the principal factor relates to the level of inventory in the distribution channel.

Rebate provisions are based on factors such as timing and terms of plans under contract, time to process rebates, product pricing, sales volumes, amount of inventory in the distribution channel and prescription trends. Accordingly, we generally assume that adjustments made to rebate provisions relate to sales made in the prior years due to the delay in billing. However, we assume that adjustments made to chargebacks are generally related to sales made in the current year, as we settle these amounts within a few months of original sale. Our adjustments to actual in 2013, 2012 and 2011 were not material to our revenues or earnings.

Consumer Rebates and Loyalty Programs are rebates we offer on many of our products. We generally account for these programs by establishing an accrual based on our estimate of the rebate and loyalty incentives attributable to a sale. We accrue our estimates on historical experience and other relevant factors. We adjust our accruals periodically throughout each quarter based on actual experience and changes in other factors, if any, to ensure the balance is fairly stated. The provision balance for consumer rebates and loyalty programs was $113.6 million, $66.8 million and $7.2 million as of December 31, 2013, 2012 and 2011, respectively. The increase in the provision balance as of December 31, 2013 was due to the launch of physician rebate incentive program for the aesthetic brands. The increase in the provision balance as of December 31, 2012 was due to the acquisition of the Medicis products. The total provision balance related to Solodyn®, Ziana®, Restylane® and Perlane® was $60.0 million as of December 31, 2012.

• increasing price competition from generic competitors; and

• recent changes to the U.S. National Drug Codes (“NDC”) of our products, which could result in a period of higher returns related to products with the old NDC, as our U.S. customers generally permit only one NDC per product for identification and tracking within their inventory systems.

Acquisitions

66

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

We have completed several acquisitions of companies, as well as acquisitions of certain assets of companies. To determine whether such acquisitions qualify as business combinations or asset acquisitions, we make certain judgments, which include assessment of the inputs, processes, and outputs associated with the acquired set of activities. If we determine that the acquisition consists of inputs, as well as processes that when applied to those inputs have the ability to create outputs, the acquisition is determined to be a business combination. In instances where the acquired set of activities does not include all of the inputs and processes used by the seller in operating the business, we make judgments as to whether market participants would be capable of acquiring the business and continuing to produce outputs, for example, by integrating the business with their own inputs and processes. If we conclude that market participants would have this capability, the acquisition is determined to be business combination.

In a business combination, we account for acquired businesses using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Transaction costs and costs to restructure the acquired company are expensed as incurred. The operating results of the acquired business are reflected in our consolidated financial statements after the date of acquisition. Amounts allocated to acquired IPR&D are recognized at fair value and initially characterized as indefinite-lived intangible assets, irrespective of whether the acquired IPR&D has an alternative future use. If the acquired net assets do not constitute a business under the acquisition method of accounting, the transaction is accounted for as an asset acquisition and no goodwill is recognized. In an asset acquisition, acquired IPR&D with no alternative future use is charged to expense at the acquisition date.

The judgments made in determining the estimated fair value assigned to each class of asset acquired and liability assumed can materially impact our results of operations. As part of our valuation procedures, we typically consult an independent advisor. There are several methods that can be used to determine fair value. For intangible assets, we typically use an excess earnings or relief from royalty method. The excess earnings method starts with a forecast of the net cash flows expected to be generated by the asset over its estimated useful life. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Some of the more significant estimates and assumptions inherent in the excess earnings method include:

The relief from royalty method involves estimating the amount of notional royalty income that could be generated if the intangible asset was licensed to a third party. The fair value of the intangible asset is the net present value of the prospective stream of the notional royalty income that would be generated over the expected useful life of the intangible asset. Values derived using the relief from royalty method are based on royalty rates observed for comparable intangible assets.

We believe the fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions, however, these assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur. We will finalize these amounts as we obtain the information necessary to complete the measurement processes. Any changes resulting from facts and circumstances that existed as of the acquisition dates may result in retrospective adjustments to the provisional amounts recognized at the acquisition dates. These changes could be significant. We will finalize these amounts no later than one year from the respective acquisition dates.

Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives. Useful life is the period over which the intangible asset is expected to contribute directly or indirectly to our future cash flows. We determine the useful lives of intangible assets based on a number of factors, such as legal, regulatory, or contractual provisions that may limit the useful life, and the effects of obsolescence, anticipated demand, existence or absence of competition, and other economic factors on useful life. We determined that the B&L corporate trademark has an indefinite useful life as there are no legal, regulatory, contractual, competitive, economic, or other factors that limit the useful life of this intangible asset.

Acquisition-Related Contingent Consideration

• the amount and timing of projected future cash flows, adjusted for the probability of technical success of products in the IPR&D stage;

• the amount and timing of projected costs to develop IPR&D into commercially viable products;

• the discount rate selected to measure the risks inherent in the future cash flows; and

• an assessment of the asset’s life-cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry.

67

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Some of the business combinations that we have consummated include contingent consideration to be potentially paid based upon the occurrence of future events, such as sales performance and the achievement of certain future development, regulatory and sales milestones. Acquisition-related contingent consideration associated with a business combination is initially recognized at fair value and then remeasured each reporting period, with changes in fair value recorded in the consolidated statements of (loss) income. The estimates of fair value contain uncertainties as they involve assumptions about the likelihood of achieving specified milestone criteria, projections of future financial performance, and assumed discount rates. Changes in the fair value of the acquisition-related contingent consideration obligations result from several factors including changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving specified milestone criteria. A change in any of these assumptions could produce a different fair value, which could have a material impact on our results of operations.

Intangible Assets

We evaluate potential impairments of amortizable intangible assets acquired through asset acquisitions or business combinations if events or changes in circumstances indicate that the carrying amounts of these assets may not be recoverable. Our evaluation is based on an assessment of potential indicators of impairment, such as:

Impairment exists when the carrying amount of an amortizable intangible asset is not recoverable and its carrying value exceeds its estimated fair value. A discounted cash flow analysis is typically used to determine fair value using estimates and assumptions that market participants would apply. Some of the estimates and assumptions inherent in a discounted cash flow model include the amount and timing of the projected future cash flows, and the discount rate used to reflect the risks inherent in the future cash flows. A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on our results of operations. In addition, an intangible asset’s expected useful life can increase estimation risk, as longer-lived assets necessarily require longer-term cash flow forecasts, which for some of our intangible assets can be up to 25 years. In connection with an impairment evaluation, we also reassess the remaining useful life of the intangible asset and modify it, as appropriate.

Indefinite-lived intangible assets, including IPR&D and the B&L corporate trademark, are tested for impairment annually, or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of their fair value to carrying value, without consideration of any recoverability test. In particular, we will continue to monitor closely the progression of our R&D programs, including IDP-108 (efinaconazole), Latanoprostene bunod and Metronidazole 1.3% (which in the aggregate represent the majority of our IPR&D asset balance), as their likelihood of success is contingent upon the achievement of future development milestones, some of which are currently expected to occur as early as 2014. Refer to “Products in Development” above for additional information regarding our R&D programs.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level. A reporting unit is the same as, or one level below, an operating segment. The fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants. We operate in two operating/reportable segments: Developed Markets and Emerging Markets. The Developed Markets segment consists of four reporting units based on geography, namely (i) U.S., (ii) Canada and Australia, (iii) Western Europe, and (iv) Japan. The Emerging Markets segment consists of three reporting units based on geography, namely (i) Central/Eastern Europe, Middle East and North Africa, (ii) Latin America, and (iii) Asia/South Africa. We conducted our annual goodwill impairment test in the fourth quarter of 2013. We estimated the fair values of our reporting units using a discounted cash flow analysis approach. These calculations contain uncertainties as they require us to make assumptions about future cash flows and the appropriate discount rate to reflect the risk inherent in the future cash flows. A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on our results of operations. We determined that none of the goodwill associated with our reporting units was impaired.

• an adverse change in legal factors or in the business climate that could affect the value of an asset. For example, a successful challenge of our patent rights resulting in earlier than expected generic competition;

• an adverse change in the extent or manner in which an asset is used or is expected to be used. For example, a decision not to pursue a product line-extension strategy to enhance an existing product due to changes in market conditions and/or technological advances; or

• current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of an asset. For example, the introduction of a competing product that results in a significant loss of market share.

68

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

The estimated fair values of each reporting unit substantially exceeded their carrying values at the date of testing. We applied a hypothetical 10% decrease to the fair values of each reporting unit, which at such date, would not have triggered additional impairment testing and analysis. The goodwill recognized for the B&L Acquisition, which to date has been recorded provisionally, will be tested for impairment within twelve months of the acquisition date.

An interim goodwill impairment test in advance of the annual impairment assessment may be required if events occur that indicate an impairment might be present. For example, a substantial decline in our market capitalization, unexpected adverse business condition, economic factors and unanticipated competitive activities may signal that an interim impairment test is needed. Accordingly, among other factors, we monitor changes in our share price between annual impairment tests to ensure that our market capitalization continues to exceed the carrying value of our consolidated net assets. We consider a decline in our share price that corresponds to an overall deterioration in stock market conditions to be less of an indicator of goodwill impairment than a unilateral decline in our share price reflecting adverse changes in our underlying operating performance, cash flows, financial condition, and/or liquidity. In the event that our market capitalization does decline below its book value, we would consider the length and severity of the decline and the reason for the decline when assessing whether potential goodwill impairment exists. We believe that short-term fluctuations in share prices may not necessarily reflect underlying values.

Contingencies

In the normal course of business, we are subject to loss contingencies, such as claims and assessments arising from litigation and other legal proceedings, contractual indemnities, product and environmental liabilities, and tax matters. We are required to accrue for such loss contingencies if it is probable that the outcome will be unfavorable and if the amount of the loss can be reasonably estimated. We disclose contingent liabilities when there is at least a reasonable possibility that a loss or an additional loss may have been incurred. We are often unable to develop a best estimate of loss, in which case the minimum amount of loss, which could be zero, is recorded. We evaluate our exposure to loss based on the progress of each contingency, experience in similar contingencies, and consultation with our legal counsel. We re-evaluate all contingencies as additional information becomes available. Given the uncertainties inherent in complex litigation and other contingencies, these evaluations can involve significant judgment about future events. The ultimate outcome of any litigation or other contingency may be material to our results of operations, financial condition, and cash flows. For a discussion of our current legal proceedings, see note 24 to the 2013 Financial Statements.

Income Taxes

We have operations in various countries that have differing tax laws and rates. Our tax structure is supported by current domestic tax laws in the countries in which we operate and the application of tax treaties between the various countries in which we operate. Our income tax reporting is subject to audit by domestic and foreign tax authorities. Our effective tax rate may change from year to year based on changes in the mix of activities and income allocated or earned among the different jurisdictions in which we operate, changes in tax laws in these jurisdictions, changes in tax treaties between various countries in which we operate, changes in our eligibility for benefits under those tax treaties, and changes in the estimated values of deferred tax assets and liabilities. Such changes could result in an increase in the effective tax rate on all or a portion of our income and/or any of our subsidiaries.

Our provision for income taxes is based on a number of estimates and assumptions made by management. Our consolidated income tax rate is affected by the amount of income earned in our various operating jurisdictions, the availability of benefits under tax treaties, and the rates of taxes payable in respect of that income. We enter into many transactions and arrangements in the ordinary course of business in which the tax treatment is not entirely certain. We must therefore make estimates and judgments based on our knowledge and understanding of applicable tax laws and tax treaties, and the application of those tax laws and tax treaties to our business, in determining our consolidated tax provision. For example, certain countries could seek to tax a greater share of income than has been provided for by us. The final outcome of any audits by taxation authorities may differ from the estimates and assumptions we have used in determining our consolidated income tax provisions and accruals. This could result in a material effect on our consolidated income tax provision, results of operations, and financial condition for the period in which such determinations are made.

Our income tax returns are subject to audit in various jurisdictions. Existing and future audits by, or other disputes with, tax authorities may not be resolved favorably for us and could have a material adverse effect on our reported effective tax rate and after-tax cash flows. We record liabilities for uncertain tax positions, which involve significant management judgment. New laws and new interpretations of laws and rulings by tax authorities may affect the liability for uncertain tax positions. Due to the subjectivity and complex nature of the underlying issues, actual payments or assessments may differ from our estimates. To the extent that our estimates differ from amounts eventually assessed and paid our income and cash flows may be materially and adversely affected.

69

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

We assess whether it is more likely than not that we will realize the tax benefits associated with our deferred tax assets and establish a valuation allowance for assets that are not expected to result in a realized tax benefit. A significant amount of judgment is used in this process, including preparation of forecasts of future taxable income and evaluation of tax planning initiatives. If we revise these forecasts or determine that certain planning events will not occur, an adjustment to the valuation allowance will be made to tax expense in the period such determination is made.

Share-Based Compensation

We recognize employee share-based compensation, including grants of stock options and RSUs, at estimated fair value. As there is no market for trading our employee stock options, we use the Black-Scholes option-pricing model to calculate stock option fair values, which requires certain assumptions related to the expected life of the stock option, future stock price volatility, risk-free interest rate, and dividend yield. The expected life of the stock option is based on historical exercise and forfeiture patterns. Effective January 1, 2012, we estimated the expected volatility of our common stock by using implied volatility in market traded options. Our decision to use implied volatility was based upon the availability of actively traded options on our common stock and our assessment that implied volatility is more representative of future stock price trends than our previously used assumption of historical volatility. The risk-free interest rate is based on the rate at the time of grant for U.S. Treasury bonds with a remaining term equal to the expected life of the stock option. Dividend yield is based on the stock option’s exercise price and expected annual dividend rate at the time of grant. Changes to any of these assumptions, or the use of a different option-pricing model, such as the lattice model, could produce a different fair value for share-based compensation expense, which could have a material impact on our results of operations.

We determine the fair value of each RSU granted based on the trading price of our common shares on the date of grant, unless the vesting of the RSU is conditional on the attainment of any applicable performance goals, in which case we use a Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that the performance condition will be achieved. Changes to any of these inputs could materially affect the measurement of the fair value of the performance-based RSUs.

Employee Benefits

Our benefits plans include defined benefit pension plans, defined contribution plans and a participatory defined benefit postretirement plan. The determination of defined benefit pension and postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate the benefits employees earn while working, as well as the present value of those benefits. Inherent in these valuations are economic assumptions including expected returns on plan assets, discount rates at which liabilities could be settled, rates of increase in healthcare costs, rates of future compensation increases as well as employee demographic assumptions such as retirement patterns, mortality and turnover. The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, higher or lower turnover rates or longer or shorter life spans of participants. Actual results that differ from the actuarial assumptions used are recorded as actuarial gains and losses. Net actuarial gains and losses that exceed 10 percent of the greater of the plan’s projected benefit obligations or the market-related value of assets are amortized to earnings over the shorter of the estimated future service period of the plan participants or the period until any anticipated final plan settlements. We review the assumptions annually (and more frequently if a significant event occurs) and make any necessary changes.

Our U.S. defined benefit pension plan recognized net actuarial gains of $11.3 million in 2013, reflecting an actual return on plan assets exceeding expected returns and a higher discount rate. Our Ireland plans recognized net actuarial gains of $11.7 million in 2013, reflecting a higher discount rate and the actual returns on plan assets exceeding expected returns.

The following is a discussion of the most significant assumptions used in connection with our employee benefit plans . The expected long-term rate of return on plan assets was developed based on a capital markets model that uses expected asset class returns, variance and correlation assumptions. The expected asset class returns were developed starting with current Treasury (for the U.S. pension plan) or Eurozone (for the Ireland pension plans) government yields and then adding corporate bond spreads and equity risk premiums to develop the return expectations for each asset class. The expected asset class returns are forward-looking. The variance and correlation assumptions are also forward-looking. They take into account historical relationships, but are adjusted to reflect expected capital market trends. The expected return on plan assets for the Company’s U.S. pension plan was 7.50% and for the postretirement benefit plan was 5.50%. The expected return for the postretirement plan is based on the expected return for the U.S. pension plan reduced by 2.00% to reflect an estimate of additional administrative expenses. The expected return on plan assets for the Company’s Ireland pension plans was 6.00%.

The 2014 expected rate of return for the U.S. pension plan and postretirement plan will remain at 7.50% and 5.50%, respectively. The 2014 expected rate of return for the Ireland pension benefit plans will also remain at 6.00%.

70

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

The discount rate reflects the current rate at which the benefit plan liabilities could be effectively settled considering the timing of expected payments for plan participants. The discount rates for the U.S. pension and postretirement benefit plans and the Ireland pension plans, which comprise approximately 89% of our benefit plan obligations, were based on models that calculate a discount rate as an average of semi-annual spot rates weighted by the estimated projected plan cash flows. The models for the U.S. pension and postretirement benefit plans were derived from pricing and yield information on high quality non-callable U.S. corporate bonds.

Due to the long-term nature of the Ireland pension plans projected cash flows and the lack of long-term high quality corporate bonds in the Eurozone, the model for the Ireland pension plans was derived from pricing and yield information on Eurozone treasury bonds. An option-adjusted spread was added to the resulting Eurozone treasury yield curve to produce a proxy to high quality corporate bonds. The discount rate used for the U.S. pension and postretirement plans at December 31, 2013 was 4.70% and 4.30%, respectively. The discount rate used for the Ireland plans at December 31, 2013 was 4.00%.

The following table illustrates the sensitivity of the U.S. pension and postretirement plan and Ireland plan obligations and expenses to changes in the above assumptions, assuming all other assumptions remain constant.

Typically, an important estimate associated with the postretirement plan is the assumed healthcare cost trend rate. Employer contributions to the postretirement plan for medical and prescription drug benefits for participants retiring after March 1, 1989 were frozen as of January 1, 2010, which significantly reduced our exposure to future healthcare costs. Additionally, the postretirement plan was amended in 2013 to eliminate medical coverage for individuals retiring on or after January 1, 2014. The

Changes in Assumption

Pre-Tax Impact on U.S. Pension Benefit

Plan Expenses (Decrease) Increase

Impact on U.S. Pension Benefit

Plan Liabilities (Decrease) Increase

($ in 000s)

Expected return on plan assets

Increase one percentage point $ (788 ) Not applicable Decrease one percentage point 788 Not applicable Discount rate

Increase one percentage point 518 $ (20,250 )

Decrease one percentage point (665 ) 22,072

Changes in Assumption

Pre-Tax Impact on Postretirement Benefit

Plan Expenses (Decrease) Increase

Impact on Postretirement Benefit

Plan Liabilities (Decrease) Increase

($ in 000s)

Expected return on plan assets

Increase one percentage point $ (58 ) Not applicable Decrease one percentage point 58 Not applicable Discount rate

Increase one percentage point 171 $ (3,834 )

Decrease one percentage point (204 ) 4,396

Changes in Assumption

Pre-Tax Impact on Ireland Plan Expenses

(Decrease) Increase

Impact on Ireland Plan Liabilities

(Decrease) Increase ($ in 000s)

Expected return on plan assets

Increase one percentage point $ (467 ) Not applicable Decrease one percentage point 467 Not applicable Discount rate

Increase one percentage point (603 ) $ (36,788 )

Decrease one percentage point 456 47,240

71

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

postretirement plan’s sensitivity to changes in healthcare cost trend rate assumptions has been significantly reduced. The pre-tax impact on the postretirement plan liabilities if the healthcare cost trend rate changes by 1% is approximately $1.0 million.

NEW ACCOUNTING STANDARDS

Adoption of New Accounting Standards

Information regarding the adoption of new accounting guidance is contained in note 2 to the 2013 Financial Statements.

Recently Issued Accounting Standards, Not Adopted as of December 31, 2013

In July 2013, the Financial Accounting Standards Board (“FASB”) issued guidance to eliminate the diversity in practice in presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. Under the new guidance, unrecognized tax benefits will be netted against all available same-jurisdiction loss or other tax carryforward that would be utilized, rather than only against carryforwards that are created by the unrecognized tax benefits. The guidance is effective prospectively, but allows optional retrospective adoption (for all periods presented), for reporting periods beginning after December 15, 2013. As this guidance relates to presentation only, the adoption of this guidance will not impact our financial position or results of operations.

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 Annual Report on Form 10-K 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 our acquisitions and other transactions, 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; 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-K 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:

• the challenges and difficulties associated with managing the rapid growth of our Company and a larger, more complex business;

• the introduction of generic competitors of our brand products;

• 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;

72

• 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;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

• our ability to identify, acquire, close and integrate acquisition targets successfully and on a timely basis;

• factors relating to the integration of the companies, businesses and products acquired by the Company (including the integration relating to our recent acquisitions of Solta Medical, B&L, Obagi, and Medicis, such as the time and resources required to integrate such companies, businesses and products, the difficulties associated with such integrations (including potential disruptions in sales activities and potential challenges with information technology systems integrations), the difficulties and challenges associated with entering into new business areas and new geographic markets, the difficulties, challenges and costs associated with managing and integrating new facilities, equipment and other assets, and the achievement of the anticipated benefits from such integrations;

• factors relating to our ability to achieve all of the estimated synergies from our acquisitions, including from our recent acquisition of B&L (which we anticipate will be greater than $850 million), as a result of cost-rationalization and integration initiatives. These factors may include greater than expected operating costs, the difficulty in eliminating certain duplicative costs, facilities and functions, and the outcome of many operational and strategic decisions, some of which have not yet been made;

• our ability to secure and maintain third party research, development, manufacturing, marketing or distribution arrangements;

• our eligibility for benefits under tax treaties and the continued availability of low effective tax rates for the business profits of certain of our subsidiaries;

• our substantial debt and debt service obligations and their impact on our financial condition and results of operations;

• 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;

• interest rate risks associated with our floating debt borrowings;

• the risks associated with the international scope of our operations, including our presence in emerging markets and the challenges we face when entering new geographic markets (including the challenges created by new and different regulatory regimes in those markets);

• adverse global economic conditions and credit market and foreign currency exchange uncertainty in the countries in which we do business;

• 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;

• our ability to retain, motivate and recruit executives and other key employees;

• our ability to obtain and maintain sufficient intellectual property rights over our products and defend against challenge to such intellectual property;

• the outcome of legal proceedings, investigations and regulatory proceedings;

• the risk that our products could cause, or be alleged to cause, personal injury and adverse effects, leading to potential lawsuits and/or withdrawals of products from the market;

• the availability of and our ability to obtain and maintain adequate insurance coverage and/or our ability to cover or insure against the total amount of the claims and liabilities we face;

• 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, Health Canada and other regulatory approvals, legal and regulatory proceedings and settlements thereof, the protection afforded by our patents and other intellectual and proprietary property, successful generic challenges to our products and infringement or alleged infringement of the intellectual property of others;

73

• the results of continuing safety and efficacy studies by industry and government agencies;

• the availability and extent to which our products are reimbursed by government authorities and other third party payors, as well as the impact of obtaining or maintaining such reimbursement on the price of our products;

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found elsewhere in this Form 10-K, under Item 1A. “Risk Factors”, 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. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this Form 10-K or to reflect actual outcomes, except as required by law.

MANAGEMENT’ S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

Disclosure Controls and Procedures

We performed an evaluation of the effectiveness of our disclosure controls and procedures that are designed to ensure that the material

• the inclusion of our products on formularies or our ability to achieve favorable formulary status, as well as the impact on the price of our products in connection therewith;

• the impact of price control restrictions on our products, including the risk of mandated price reductions;

• 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, as well as factors impacting the commercial success of our currently marketed products, which could lead to material impairment charges;

• the results of management reviews of our research and development portfolio, conducted periodically and in connection with certain acquisitions, the decisions from which could result in terminations of specific projects which, in turn, could lead to material impairment charges;

• negative publicity or reputational harm to our products and business;

• 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;

• our ability to obtain components, raw materials or finished products supplied by third parties and other manufacturing and related supply difficulties, interruptions and delays;

• the disruption of delivery of our products and the routine flow of manufactured goods;

• the seasonality of sales of certain of our products;

• declines in the pricing and sales volume of certain of our products that are distributed by third parties, over which we have no or limited control;

• compliance with, or the failure to comply with, health care “fraud and abuse” laws and other extensive regulation of our marketing, promotional and pricing practices, worldwide anti-bribery laws (including the U.S. Foreign Corrupt Practices Act), worldwide environmental laws and regulation and privacy and security regulations;

• the impacts of the Patient Protection and Affordable Care Act (as amended) and other legislative and regulatory healthcare reforms in the countries in which we operate;

• interruptions, breakdowns or breaches in our information technology systems; 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.

financial and non-financial information required to be disclosed on reports and filed or submitted with the SEC is recorded, processed, summarized, and reported in a timely manner. Based on our evaluation, our management, including the CEO and Chief Financial Officer (“CFO”), has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of December 31, 2013 are effective. Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons within the Company to disclose material information otherwise required to be set forth in our reports.

74

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS (Continued)

Internal Controls Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed 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.

Under the supervision and with the participation of management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework described in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under this framework, management concluded that our internal control over financial reporting was effective as of December 31, 2013.

The scope of management’s assessment of the effectiveness of internal control over financial reporting includes all of the Company’s consolidated operations except for the operations of B&L and Natur Produkt (together, the “Acquired Companies”), which represented approximately 25% of the Company’s consolidated revenues for the year ended December 31, 2013, and assets associated with the Acquired Companies represented approximately 9% of the Company’s consolidated total assets as of December 31, 2013.

The effectiveness of the Company’s internal controls over financial reporting as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report on page F-3 of the 2013 Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal controls over financial reporting identified in connection with the evaluation thereof by our management, including the CEO and CFO, during the quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

75

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Information relating to quantitative and qualitative disclosures about market risk is detailed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Quantitative and Qualitative Disclosures About Market Risk” and is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The information required by this Item is contained in the financial statements set forth in Item 15. “Exhibits, Financial Statement Schedules” as part of this Form 10-K and is incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this annual report (the “Evaluation Date”). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective.

Internal Control Over Financial Reporting

Item 9B. Other Information

None.

76

(a) Management’s Annual Report on Internal Control Over Financial Reporting . Management’s Annual Report on Internal Control Over Financial Reporting is incorporated herein by reference from Part II, Item 8 of this report.

(b) Report of the Registered Public Accounting Firm . The Report of the Registered Public Accounting Firm on the Company’s internal control over financial reporting is incorporated herein by reference from Part II, Item 8 of this report.

(c) Changes in Internal Control Over Financial Reporting . There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the last fiscal quarter of 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

Information required under this Item is incorporated herein by reference from information included in the 2014 Proxy Statement.

The Board of Directors has adopted a Code of Ethics that applies to our Chief Executive Officer, Chief Financial Officer, the principal accounting officer, controller, and all vice presidents and above in the finance department of the Company worldwide. A copy of the Code of Ethics can be found as an annex to our Standards of Business Conduct, which is located on our website at: www.valeant.com. We intend to satisfy the SEC disclosure requirements regarding amendments to, or waivers from, any provisions of our Code of Ethics on our website.

Item 11. Executive Compensation

Information required under this Item relating to executive compensation is incorporated herein by reference from information included in the 2014 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information required under this Item relating to securities authorized for issuance under equity compensation plans and to security ownership of certain beneficial owners and management is incorporated herein by reference from information included in the 2014 Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Information required under this Item relating to certain relationships and transactions with related parties and about director independence is incorporated herein by reference from information included in the 2014 Proxy Statement.

Item 14. Principal Accounting Fees and Services

Information required under this Item relating to the fees for professional services rendered by our independent auditors in 2013 and 2012 is incorporated herein by reference from information included in the 2014 Proxy Statement.

77

PART IV

Item 15. Exhibits, Financial Statement Schedules

Documents filed as a part of the report:

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS (All dollar amounts expressed in thousands of U.S. dollars)

For each of the years ended December 31, 2013 and December 31, 2012, the increase in the amounts charged to costs and expenses with respect to the allowance for inventory obsolescence was driven primarily by integration-related portfolio and manufacturing rationalization initiatives and growth in the business.

With respect to the allowance for inventory obsolescence, the $33.4 million in 2013 charged to other accounts represents obsolescence reserves assumed as part of acquisitions consummated during the year, with the most significant contributor being the B&L acquisition, which closed in August 2013. The $26.3 million in 2012 charged to other accounts represents obsolescence reserves assumed as part of acquisitions consummated during the year, with the most significant contributors being the QLT, Medicis, and Eyetech Inc. acquisitions, which closed on September 24, 2012, December 11, 2012, and February 13, 2012, respectively. The $2.7 million in 2011 charged to other accounts represents obsolescence reserves assumed as part of acquisitions consummated during the year, with the most significant contributor being the Sanitas acquisition, which closed on August 19, 2011. These assumed reserves were included as part of the purchase price allocations as of the respective acquisition dates, therefore, such amounts were not charged to costs and expenses.

With respect to the deferred tax valuation allowance, the $139.0 million in 2013 charged to other accounts represents valuation allowances assumed as part of acquisitions consummated during the year, with the most significant contributor being the B&L acquisition.

78

(1) The consolidated financial statements required to be filed in the Annual Report on Form 10-K are listed on page F-1 hereof.

(2) Schedule II — Valuation and Qualifying Accounts.

Balance at Beginning

of Year

Charged to Costs and Expenses

Charged to Other

Accounts Deductions

Balance at End of Year

Year ended December 31, 2013

Allowance for doubtful accounts $ 12,485 $ 5,765 $ 10,324 $ (898 ) $ 27,676 Allowance for inventory obsolescence $ 56,031 $ 62,518 $ 33,402 $ (52,106 ) $ 99,845 Deferred tax asset valuation allowance $ 124,515 $ 214,099 $ 138,959 $ — $ 477,573 Year ended December 31, 2012

Allowance for doubtful accounts $ 12,328 $ 838 $ (583 ) $ (98 ) $ 12,485 Allowance for inventory obsolescence $ 22,819 $ 22,619 $ 26,299 $ (15,706 ) $ 56,031 Deferred tax asset valuation allowance $ 128,742 $ (2,227 ) $ (2,000 ) $ — $ 124,515 Year ended December 31, 2011

Allowance for doubtful accounts $ 6,692 $ 1,467 $ 4,669 $ (500 ) $ 12,328 Allowance for inventory obsolescence $ 28,065 $ 4,051 $ 2,730 $ (12,027 ) $ 22,819 Deferred tax asset valuation allowance $ 186,399 $ (35,062 ) $ 41,517 $ (64,112 ) $ 128,742

(3) Exhibits

INDEX TO EXHIBITS

79

Exhibit

Number Exhibit Description

2.1

Agreement and Plan of Merger, dated as of June 20, 2010, among Valeant, the Company, Biovail Americas Corp. and Beach Merger Corp., originally filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on June 23, 2010, which is incorporated by reference herein.††

2.2

Stock Purchase Agreement, dated January 31, 2011, between Biovail International S.a.r.l. and the stockholders of PharmaSwiss SA, originally filed as Exhibit 2.7 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed on February 28, 2011, which is incorporated by reference herein.**††

2.3

Asset Purchase Agreement, dated February 2, 2011, between Biovail Laboratories International SRL and GlaxoSmithKline LLC, originally filed as Exhibit 2.8 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed on February 28, 2011, which is incorporated by reference herein.**††

2.4

Purchase Agreement, dated as of February 24, 2011, between the Company and ValueAct Capital Master Fund, L.P., originally filed as Exhibit 2.10 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed on February 28, 2011, which is incorporated by reference herein.††

2.5

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 for the fiscal quarter ended March 31, 2011 filed on May 10, 2010, which is incorporated by reference herein.††

2.6

Asset Purchase Agreement dated July 8, 2011 among the Company, Valeant International (Barbados) SRL and Sanofi, originally filed as Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011 filed on August 8, 2011, which is incorporated by reference herein. **††

2.7

Asset Purchase Agreement dated July 15, 2011 among the Company (as guarantor only), Valeant International (Barbados) SRL, Valeant Pharmaceuticals North America LLC and Janssen Pharmaceuticals, Inc., originally filed as Exhibit 2.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011 filed on August 8, 2011, which is incorporated by reference herein.**††

2.8

Agreement and Plan of Merger, dated as of September 2, 2012, among the Company, Valeant, Merlin Merger Sub, Inc. and Medicis Pharmaceutical Corporation, originally filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on September 4, 2012, which is incorporated by reference herein.

2.9

Asset Purchase Agreement, dated as of November 18, 2011, by and between Medicis Pharmaceutical Corporation and Graceway Pharmaceuticals, LLC and the other parties signatory thereto, originally filed as Exhibit 2.9 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on February 28, 2013, which is incorporated by reference herein.††

2.10

Agreement and Plan of Merger, dated as of March 19, 2013, by and among Valeant, Odysseus Acquisition Corp., the Company and Obagi Medical Products, Inc., originally filed as Exhibit 2.1 to Obagi Medical Products, Inc.'s Current Report on Form 8-K filed on March 20, 2013, which is incorporated by reference herein.

2.11

Amendment to Agreement and Plan of Merger, dated as of April 3, 2013, by and among Valeant, Odysseus Acquisition Corp., Obagi Medical Products, Inc. and the Company, originally filed as Exhibit 2.1 to Obagi Medical Products, Inc.'s Current Report on Form 8-K filed on April 3, 2013, which is incorporated by reference herein.

2.12

Agreement and Plan of Merger, dated as of May 24, 2013, by and among the Company, Valeant, Stratos Merger Corp. and Bausch & Lomb Holdings Incorporated, originally filed as Exhibit 2.1 to the Company's Current Report on Form 8-K filed on May 31, 2013, which is incorporated by reference herein.

2.13

Amendment No. 1, dated August 2, 2013, to the Agreement and Plan of Merger, dated as of May 24, 2013, by and among the Company, Valeant, Stratos Merger Corp. and Bausch & Lomb Holdings Incorporated, originally filed as Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013 filed on November 1, 2013, which is incorporated by reference herein.

2.14

Amendment No. 2, dated August 5, 2013, to the Agreement and Plan of Merger, dated as of May 24, 2013, by and among the Company, Valeant, Stratos Merger Corp. and Bausch & Lomb Holdings Incorporated, originally filed as Exhibit 2.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013 filed on November 1, 2013, which is incorporated by reference herein.

3.1

Certificate of Continuation, dated August 9, 2013, originally filed as Exhibit 3.1 to the Company's Current Report on Form 8-K filed on August 13, 2013, which is incorporated by reference herein.

3.2

Notice of Articles of Valeant Pharmaceuticals International, Inc., dated August 9, 2013, originally filed as Exhibit 3.2 to the Company's Current Report on Form 8-K filed on August 13, 2013, which is incorporated by reference herein.

80

3.3

Articles of Valeant Pharmaceuticals International, Inc., dated August 8, 2013, originally filed as Exhibit 3.3 to the Company's Current Report on Form 8-K filed on August 13, 2013, which is incorporated by reference herein.

4.1

Indenture, dated as of September 28, 2010, among Valeant, the Company, The Bank of New York Mellon Trust Company, N.A., as trustee, and the guarantors listed therein, originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on October 1, 2010, which is incorporated by reference herein.

4.2

Indenture, dated as of November 23, 2010, by and among Valeant, the Company, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on November 26, 2010, which is incorporated by reference herein.

4.3

Indenture, dated as of February 8, 2011, by and among Valeant, the Company, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on February 9, 2011, which is incorporated by reference herein.

4.4

Indenture, dated as of March 8, 2011, by and among Valeant, the Company, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on March 10, 2011, which is incorporated by reference herein.

4.5

Indenture, dated as of October 4, 2012 (the “Escrow Corp Indenture”), by and among VPI Escrow Corp. and The Bank of New York Mellon Trust Company, N.A., as Trustee, governing the 6.375% Senior Notes due 2020 (the “2020 Senior Notes”), originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on October 9, 2012, which is incorporated by reference herein.

4.6

Supplemental Indenture to the Escrow Corp Indenture, dated as of October 4, 2012, by and among VPI Escrow Corp., Valeant, the Company, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee governing the 2020 Senior Notes, originally filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on October 9, 2012, which is incorporated by reference herein.

4.7

Indenture, dated as of October 4, 2012, by and among Valeant, the Company, the guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as Trustee, governing the 6.375% Senior Notes due 2020 (the “6.375% Senior Notes”), originally filed as Exhibit 4.3 to the Company's Current Report on Form 8-K filed on October 9, 2012, which is incorporated by reference herein.

4.8

Indenture, dated as of July 12, 2013, between VPII Escrow Corp. and the Bank of New York Mellon Trust Company, N.A., as trustee, respecting the 6.75% Senior Notes due 2018 and the 7.50% Senior Notes due 2021, originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on July 12, 2013, which is incorporated by reference herein.

4.9

Supplemental Indenture to the Indenture, dated as of July 12, 2013, among the Company, the guarantors named therein and the Bank of New York Mellon Trust Company, N.A., as trustee, respecting the 6.75% Senior Notes due 2018 and the 7.50% Senior Notes due 2021, originally filed as Exhibit 4.2 to the Company's Current Report on Form 8-K filed on July 12, 2013, which is incorporated by reference herein.

4.10

Indenture, dated as of December 2, 2013, between the Company, the Guarantors named therein and the Bank of New York Mellon Trust Company, N.A., as trustee, respecting the 5.625% Senior Notes due 2016, originally filed as Exhibit 4.1 to the Company's Current Report on Form 8-K filed on December 2, 2013, which is incorporated by reference herein.

10.1†

Valeant Pharmaceuticals International, Inc. 2011 Omnibus Incentive Plan (the “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 by reference herein.

10.2†

Form of Stock Option Grant Agreement under the 2011 Omnibus Incentive Plan, originally filed as Exhibit 10.2 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed February 28, 2012, which is incorporated by reference herein.

10.3†

Form of Matching Restricted Stock Unit Grant Agreement under the 2011 Omnibus Incentive Plan, originally filed as Exhibit 10.3 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed February 28, 2012, which is incorporated by reference herein.

10.4†

Form of Share Unit Grant Agreement (Performance Vesting) under the 2011 Omnibus Incentive Plan, originally filed as Exhibit 10.4 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed February 28, 2012, which is incorporated by reference herein.

10.5†

Biovail Corporation 2007 Equity Compensation Plan (the “2007 Equity Compensation Plan”) dated as of May 16, 2007, originally filed as Exhibit 10.49 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.6†

Amendment No. 1 to the 2007 Equity Compensation Plan dated as of December 18, 2008, originally filed as Exhibit 10.50 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

81

10.7†

Amendment, dated April 6, 2011 and approved by the shareholders on May 16, 2011, to the 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 by reference herein.

10.8†

Form of Stock Option Grant Notice and Form of Stock Option Grant Agreement under the 2007 Equity Compensation Plan, originally filed as Exhibit 10.44 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed February 28, 2011, which is incorporated by reference herein.

10.9†

Form of Unit Grant Notice and Form of Unit Grant Agreement under the 2007 Equity Compensation Plan, originally filed as Exhibit 10.45 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed February 28, 2011, which is incorporated by reference herein.

10.10†

Form of Unit Grant Notice (Performance Vesting) and Form of Unit Grant Agreement (Performance Vesting) under the 2007 Equity Compensation Plan, originally filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed February 28, 2011, which is incorporated by reference herein.

10.11†

Valeant Pharmaceuticals International, Inc. Directors Share Unit Plan, effective May 16, 2011, originally filed as Exhibit 10.6 of the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2011 filed on August 8, 2011, which is incorporated by reference herein.

10.12†

Biovail Corporation Deferred Share Unit Plan for Canadian Directors, approved on May 3, 2005, as amended, originally filed as Exhibit 10.57 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.13†

Biovail Corporation Deferred Share Unit Plan for U.S. Directors, approved on May 3, 2005, as amended and restated, originally filed as Exhibit 10.58 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.14†

Biovail Americas Corp. Executive Deferred Compensation Plan, as amended and restated effective January 1, 2009, originally filed as Exhibit 10.60 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.15†

Employment Agreement, dated as of June 20, 2010, by and between the Company, Biovail Laboratories International SRL and J. Michael Pearson, originally filed as Exhibit 10.3 to the Company's Current Report on Form 8-K filed on June 23, 2010, which is incorporated by reference herein.

10.16†

Employment Agreement between the Company and J. Michael Pearson, dated as of March 21, 2011, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 23, 2011, which is incorporated by reference herein.

10.17†

Employment Letter between the Company and Howard Schiller, dated as of November 10, 2011, originally filed as Exhibit 10.21 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed on February 29, 2012, which is incorporated by reference herein.

10.18†* Employment Letter between the Company and Robert Chai-Onn, dated as of January 13, 2014.

10.19†* Employment Letter between the Company and Laizer Kornwasser dated as of January 2, 2013.

10.20

Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, among the Company, certain subsidiaries of the Company as Guarantors, each of the lenders named therein, J.P. Morgan Securities LLC, Goldman Sachs Lending Partners LLC (“GSLP”) and Morgan Stanley Senior Funding, Inc. (“Morgan Stanley”), as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A. (“JPMorgan”) and Morgan Stanley, as Co-Syndication Agents, JPMorgan, as Issuing Bank, GSLP, as Administrative Agent and Collateral Agent, and the other agents party thereto (the “Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc.”), originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 17, 2012, which is incorporated by reference herein.

10.21

Amendment No. 1, dated March 6, 2012, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2012 filed on November 5, 2012, which is incorporated by reference herein.

10.22

Amendment No. 2, dated September 10, 2012, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2012 filed on November 5, 2012, which is incorporated by reference herein.

10.23

Amendment No. 3, dated January 24, 2013, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on February 28, 2013, which is incorporated by reference herein.

10.24

Amendment No. 4, dated February 21, 2013, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on February 28, 2013, which is incorporated by reference herein.

82

10.25

Amendment No. 5, dated as of June 6, 2013, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 filed on August 7, 2013, which is incorporated by reference herein.

10.26

Amendment No. 6, dated June 26, 2013, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2013 filed on August 7, 2013, which is incorporated by reference herein.

10.27

Amendment No. 7, dated September 17, 2013, to the Third Amended and Restated Credit and Guaranty Agreement, originally filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2013 filed on November 1, 2013, which is incorporated by reference herein.

10.28* Amendment No.8, dated December 20, 2013, to the Third Amended and Restated Credit and Guaranty Agreement.

10.29

Joinder Agreement, dated June 14, 2012, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 15, 2012, which is incorporated by reference herein.

10.30

Joinder Agreement, dated July 9, 2012, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012 filed on August 3, 2012, which is incorporated by reference herein.

10.31

Joinder Agreement, dated as of September 11, 2012, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2012 filed on November 5, 2012, which is incorporated by reference herein.

10.32

Joinder Agreement, dated as of October 2, 2012, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 9, 2012, which is incorporated by reference herein.

10.33

Joinder Agreement, dated as of December 11, 2012, to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc. originally filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed on February 28, 2013, which is incorporated by reference herein.

10.34

Joinder Agreement dated August 5, 2013 to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., relating to the Series A-2 Tranche A Term Loans, originally filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed on August 7, 2013, which is incorporated by reference herein.

10.35

Joinder Agreement dated August 5, 2013 to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., relating to the Series E Tranche B Term Loans, originally filed as Exhibit 10.6 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed on August 7, 2013, which is incorporated by reference herein.

10.36*

Joinder Agreement dated February 6, 2014 to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., relating to the Additional Series A-3 Tranche A Term Loan Commitment.

10.37*

Joinder Agreement dated February 6, 2014 to the Third Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., relating to the Series E-1 Tranche B Term Loan Commitment.

10.38

Commitment Letter, dated as of May 24, 2013, among the Company, Valeant, Goldman Sachs Lending Partners LLC and Goldman Sachs Bank USA, originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 31, 2013, which is incorporated by reference herein.

10.39

Second Amended and Restated Credit and Guaranty Agreement, dated as of October 20, 2011, among the Company, certain subsidiaries of the Company, as Guarantors, each of the lenders named therein, GSLP and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Bookrunners, JPMorgan, as Syndication Agent and Issuing Bank, GSLP, as Administrative Agent and Collateral Agent, and the other agents party thereto (the “Second Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc.”), originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 26, 2011, which is incorporated by reference herein.

10.40

Amendment No. 1, dated as of February 13, 2012, to the Second Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, Inc., originally filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on February 17, 2012, which is incorporated by reference herein.

10.41

Amended and Restated Credit and Guaranty Agreement, dated as of August 10, 2011, among Valeant, and the Company and certain subsidiaries of the Company, as Guarantors, each of the lenders named therein, GSLP as Sole Lead Arranger, Sole Bookrunner and Syndication Agent, and GSLP, as Administrative Agent and Collateral Agent (the “Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International”), originally filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on August 15, 2011, which is incorporated by reference herein.

83

10.42

Amendment No. 1, dated as of August 12, 2011, to the Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, originally filed as Exhibit 10.3 to the Company's Current Report on Form 8-K filed on August 15, 2011, which is incorporated by reference herein.

10.43

Amendment No. 2, dated as of September 6, 2011, to the Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, originally filed as Exhibit 10.32 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011 filed on February 29, 2012, which is incorporated by reference herein.

10.44

Amendment No. 3, dated as of October 20, 2011, to the Amended and Restated Credit and Guaranty Agreement of Valeant Pharmaceuticals International, originally filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on October 26, 2011, which is incorporated by reference herein.

10.45

Credit and Guaranty Agreement, dated June 29, 2011, among Valeant, the Company and certain subsidiaries of the Company, as Guarantors, each of the lenders named therein, GSLP as Sole Lead Arranger, Sole Bookrunner and Syndication Agent, and GSLP, as Administrative Agent and Collateral Agent (the “Credit and Guaranty Agreement of Valeant Pharmaceuticals International”), 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.

10.46

Amendment No. 1, dated as of August 10, 2011, to the Credit and Guaranty Agreement of Valeant Pharmaceuticals International, originally filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on August 15, 2011, which is incorporated by reference herein.

10.47

Trademark and Domain Name License Agreement, dated as of February 22, 2011, by and between GlaxoSmithKline LLC and Biovail Laboratories International SRL, originally filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 filed on February 28, 2011, which is incorporated by reference herein.

10.48

Plea Agreement and Side Letter, dated as of May 16, 2008, between United States Attorney for the District of Massachusetts and Biovail Pharmaceuticals, Inc., originally filed as Exhibit 10.30 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.49

Corporate Integrity Agreement, dated as of September 11, 2009, between the Company and the Office of Inspector General of the Department of Health and Human Services, originally filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.50

Settlement Agreement, dated as of September 11, 2009, among the United States of America, United States Department of Justice, Office of Inspector General of the Department of Health and Human Services and the Company, originally filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K filed for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.51

Securities Litigation, Stipulation and Agreement of Settlement, dated as of April 4, 2008, between the United States District Court, Southern District of New York and the Company, originally filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.52

Settlement Agreement, dated January 7, 2009, between Staff of the Ontario Securities Commission and the Company, originally filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.53

Settlement Agreement, dated March 2008, between the U.S. Securities and Exchange Commission and the Company, originally filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed February 26, 2010, which is incorporated by reference herein.

10.54

Voting Agreement, dated as of June 20, 2010, among Valeant, the Company and ValueAct, Inc., originally filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on June 23, 2010, which is incorporated by reference herein.

21.1* Subsidiaries of Valeant Pharmaceuticals International, Inc.

23.1* Consent of PricewaterhouseCoopers LLP (US).

23.2* Consent of PricewaterhouseCoopers LLP (Canada).

31.1* Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certificate of the Chief Executive Officer of Valeant Pharmaceuticals International, Inc. pursuant to 18 U.S.C. § 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certificate of the Chief Financial Officer of Valeant Pharmaceuticals International, Inc. 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

____________________________________

* Filed herewith.

84

*101.PRE XBRL Taxonomy Extension Presentation Linkbase

*101.DEF XBRL Taxonomy Extension Definition Document

** Portions of this exhibit have been omitted pursuant to an application for, or an order with respect to, confidential treatment. Such information has been omitted and filed separately with the SEC.

† Management contract or compensatory plan or arrangement.

†† One or more exhibits or schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We undertake to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

85

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. (Registrant)

Date: February 28 , 2014 By: /s/ J. MICHAEL PEARSON

J. Michael Pearson Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

Signature Title Date

/s/ J. MICHAEL PEARSON J. Michael Pearson

Chairman of the Board and Chief Executive Officer February 28, 2014

/s/ HOWARD B. SCHILLER Howard B. Schiller

Executive Vice-President and Chief Financial Officer (Principal Financial Officer and Principal

Accounting Officer) and Director February 28, 2014

/s/ ROBERT A. INGRAM

Robert A. Ingram Lead Director February 28, 2014

/s/ RONALD H. FARMER

Ronald H. Farmer Director February 28, 2014

/s/ FRED HASSAN

Fred Hassan Director

February 28, 2014

/s/ THEO MELAS-KYRIAZI

Theo Melas-Kyriazi Director February 28, 2014

/s/ G. MASON MORFIT

G. Mason Morfit Director February 28, 2014

/s/ ROBERT N. POWER

Robert N. Power Director February 28, 2014

/s/ NORMA A. PROVENCIO

Norma A. Provencio Director February 28, 2014

/s/ LLOYD M. SEGAL

Lloyd M. Segal Director February 28, 2014

/s/ KATHARINE B. STEVENSON

Katharine B. Stevenson Director February 28, 2014

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F- 1

Page

Reports of Management on Financial Statements and Internal Control Over Financial Reporting F-2

Report of Independent Registered Public Accounting Firm F-3

Report of Independent Registered Public Accounting Firm F-4

Consolidated Balance Sheets as of December 31, 2013 and 2012 F-5

Consolidated Statements of (Loss) Income for the years ended December 31, 2013, 2012 and 2011 F-6

Consolidated Statements of Comprehensive Loss (Income) for the years ended December 31, 2013, 2012 and 2011 F-7

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2013, 2012 and 2011 F-8

Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012 and 2011 F-9

Notes to Consolidated Financial Statements F-10

REPORTS OF MANAGEMENT ON FINANCIAL STATEMENTS AND INTERNAL CONTROL OVER FINANCIAL REPORTING

Financial Statements

The Company’s management is responsible for preparing the accompanying consolidated financial statements in conformity with United States generally accepted accounting principles (“U.S. GAAP”). In preparing these consolidated financial statements, management selects appropriate accounting policies and uses its judgment and best estimates to report events and transactions as they occur. Management has determined such amounts on a reasonable basis in order to ensure that the consolidated financial statements are presented fairly, in all material respects. Financial information included throughout this Annual Report is prepared on a basis consistent with that of the accompanying consolidated financial statements.

PricewaterhouseCoopers LLP has been engaged by the Company’s shareholders to audit the consolidated financial statements.

The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements. The Board of Directors carries out this responsibility principally through its Audit and Risk Committee. The members of the Audit and Risk Committee are outside Directors. The Audit and Risk Committee considers, for review by the Board of Directors and approval by the shareholders, the engagement or reappointment of the external auditors. PricewaterhouseCoopers LLP has full and free access to the Audit and Risk Committee.

Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is a process designed 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.

Under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework described in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation under this framework, management concluded that the Company’s internal control over financial rep orting was effective as of December 31, 2013.

The scope of management’s assessment of the effectiveness of internal control over financial reporting includes all of the Company’s consolidated operations except for the operations of Bausch & Lomb Holdings Incorporated and Natur Produkt International, JSC (together, the“Acquired Companies”), which the Company acquired through purchase business combinations during the year ended December 31, 2013. The Acquired Companies represented approximately 25% of the Company’s consolidated revenues for the year ended December 31, 2013, and assets associated with the Acquired Companies represented approximatel y 9% of the Company’s consolidated total assets as of December 31, 2013.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2013 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report on page F-3 herein.

Februa ry 28, 2014

F- 2

/s/ J. MICHAEL PEARSON /s/ HOWARD B. SCHILLER

J. Michael Pearson Chairman of the Board and Chief Executive Officer

Howard B. Schiller Executive Vice President and Chief Financial Officer

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Directors of Valeant Pharmaceuticals International, Inc.

In our opinion, the consolidated balance sheets and the related consolidated statements of (loss) income, comprehensive (loss) income, shareholders’ equity, and cash flows present fairly, in all material respects, the financial position of Valeant Pharmaceuticals International, Inc. and its subsidiaries (“the Company”) at December 31, 2013 and December 31, 2012, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the year ended December 31, 2013 appearing under item 15(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013 based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in the Report of Management on Internal Control over Financial Reporting, management has excluded Bausch & Lomb Holdings Incorporated and Natur Produkt International, JSC (together, the “Acquired Companies”) from its assessment of internal control over financial reporting as of December 31, 2013 because the Acquired Companies were acquired by the Company in purchase business combinations during 2013. We have also excluded the Acquired Companies from our audit of internal control over financial reporting. The Acquired Companies are wholly-owned subsidiaries whose total assets and total revenues represent 9% and 25%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2013. /s/ PricewaterhouseCoopers LLP Florham Park, New Jersey February 28, 2014

F- 3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Directors of Valeant Pharmaceuticals International, Inc.

In our opinion, the consolidated statements of (loss) income, comprehensive (loss) income, shareholders' equity, and cash flows for the year ended December 31, 2011 present fairly, in all material respects, the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule for the year ended December 31, 2011 appearing under Item 15(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. The Company's management is responsible for these financial statements and financial statement schedule. Our responsibility is to express opinions on these financial statements and on the financial statement schedule. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Our audit of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

(except for the reclassifications described in Note 2 and segment information presented in Note 26 (which is restated to reflect a new management structure), for which the date is February 28, 2014)

F- 4

/s/ PricewaterhouseCoopers LLP

Toronto, Canada February 29, 2012

Chartered Professional Accountants Licensed Public Accountants

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS

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

On behalf of the Board:

As of December 31,

2013 2012

Assets

Current assets:

Cash and cash equivalents $ 600,340 $ 916,091 Accounts receivable, net 1,814,769 913,835 Inventories, net 882,966 531,256 Prepaid expenses and other current assets 204,958 130,279 Assets held for sale 15,942 90,983 Deferred tax assets, net 366,914 195,007 Total current assets 3,885,889 2,777,451

Property, plant and equipment, net 1,234,236 462,724 Intangible assets, net 12,848,160 9,308,669 Goodwill 9,752,100 5,141,366 Deferred tax assets, net 54,942 76,422 Other long-term assets, net 195,470 183,747

Total assets $ 27,970,797 $ 17,950,379

Liabilities

Current liabilities:

Accounts payable $ 326,970 $ 227,384 Accrued and other current liabilities 1,800,193 1,008,224 Acquisition-related contingent consideration 114,460 102,559 Current portion of long-term debt 204,756 480,182 Deferred tax liabilities, net 66,017 4,403 Total current liabilities 2,512,396 1,822,752

Acquisition-related contingent consideration 241,305 352,523 Long-term debt 17,162,946 10,535,443 Pension and other benefit liabilities 172,016 5,325 Liabilities for uncertain tax positions 169,117 103,658 Deferred tax liabilities, net 2,319,202 1,248,312 Other long-term liabilities 160,493 164,968

Total liabilities 22,737,475 14,232,981 Commitments and contingencies (notes 24, 25 and 27)

Equity

Common shares, no par value, unlimited shares authorized, 333,036,637 and

303,861,272 issued and outstanding at December 31, 2013 and 2012, respectively 8,301,179 5,940,652 Additional paid-in capital 228,853 267,118 Accumulated deficit (3,278,529 ) (2,370,976 )

Accumulated other comprehensive loss (132,780 ) (119,396 )

Total Valeant Pharmaceuticals International, Inc. shareholders’ equity 5,118,723 3,717,398 Noncontrolling interest 114,599 —

Total equity 5,233,322 3,717,398 Total liabilities and equity $ 27,970,797 $ 17,950,379

/s/ J. MICHAEL PEARSON /s/ NORMA A. PROVENCIO

J. Michael Pearson Norma A. Provencio

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

F- 5

Chairman of the Board and Chief Executive Officer Chairperson, Audit and Risk Committee

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF (LOSS) INCOME

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

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

F- 6

Years Ended December 31,

2013 2012 2011

Revenues

Product sales $ 5,640,333 $ 3,288,592 $ 2,255,050 Alliance and royalty 52,606 105,591 136,473 Service and other 76,666 86,193 35,927 5,769,605 3,480,376 2,427,450 Expenses

Cost of goods sold (exclusive of amortization and impairments of finite-lived intangible assets shown

separately below) 1,846,314 905,095 683,750 Cost of alliance and service revenues 58,806 64,601 12,348 Selling, general and administrative 1,305,164 756,083 572,472 Research and development 156,783 79,052 65,687 Amortization and impairments of finite-lived intangible assets (see Note 12) 1,901,977 928,885 557,814 Restructuring, integration and other costs 514,825 344,387 97,667 In-process research and development impairments and other charges 153,639 189,901 109,200 Acquisition-related costs 36,416 78,604 32,964 Acquisition-related contingent consideration (29,259 ) (5,266 ) (10,986 )

Other expense 234,442 59,349 6,575 6,179,107 3,400,691 2,127,491 Operating (loss) income (409,502 ) 79,685 299,959 Interest income 8,023 5,986 4,084 Interest expense (844,316 ) (481,596 ) (334,526 )

Loss on extinguishment of debt (65,014 ) (20,080 ) (36,844 )

Foreign exchange and other (9,465 ) 19,721 26,551 Gain on investments, net 5,822 2,056 22,776 Loss before recovery of income taxes (1,314,452 ) (394,228 ) (18,000 )

Recovery of income taxes (450,783 ) (278,203 ) (177,559 )

Net (loss) income (863,669 ) (116,025 ) 159,559 Less: Net income attributable to noncontrolling interest 2,473 — — Net (loss) income attributable to Valeant Pharmaceuticals International, Inc. $ (866,142 ) $ (116,025 ) $ 159,559

(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:

Basic $ (2.70 ) $ (0.38 ) $ 0.52

Diluted $ (2.70 ) $ (0.38 ) $ 0.49

Weighted-average common shares (000's)

Basic 320,996 305,446 304,655

Diluted 320,996 305,446 326,119

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INC OME

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

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

F- 7

Years Ended December 31,

2013 2012 2011

Net (loss) income $ (863,669 ) $ (116,025 ) $ 159,559 Other comprehensive (loss) income

Foreign currency translation adjustment (50,433 ) 161,011 (381,633 )

Unrealized holding gain on auction rate securities:

Arising in period — 1 — Reclassification to net (loss) income (1 ) — —

Net unrealized holding gain (loss) on available-for-sale equity securities:

Arising in period 3,584 379 22,780 Reclassification to net (loss) income (3,963 ) (1,634 ) (21,146 )

Net unrealized holding gain (loss) on available-for-sale debt securities:

Arising in period — 7 (114 )

Reclassification to net (loss) income — 197 — Acquisition of noncontrolling interest — — 2,206 (50,813 ) 159,961 (377,907 )

Pension and postretirement benefit plan adjustments:

Newly established prior service credit 27,944 — — Net actuarial gain (loss) arising during the year 24,492 (468 ) (1,046 )

Amortization or settlement recognition of net loss 519 754 448 Income tax expense (15,405 ) — — Currency impact 210 (27 ) 53

37,760 259 (545 )

Other comprehensive (loss) income (13,053 ) 160,220 (378,452 )

Comprehensive (loss) income (876,722 ) 44,195 (218,893 )

Less: Comprehensive income attributable to noncontrolling interest 2,804 — — Comprehensive (loss) income attributable to Valeant Pharmaceuticals International, Inc. $ (879,526 ) $ 44,195 $ (218,893 )

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

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

Valeant Pharmaceuticals International, Inc. Shareholders

Common Shares

Valeant Pharmaceuticals

International, Inc. Shareholders'

equity

Accumulated

Other Comprehensive

Loss

Shares (000s) Amount

Additional Paid-In Capital

Accumulated Deficit

Noncontrolling Interest

Total Equity

Balance, January 1, 2011 302,449 $ 5,251,730 $ 495,041 $ (934,511 ) $ 98,836 $ 4,911,096 $ — $ 4,911,096 Settlement of 4% Convertible Notes 17,783 892,000 (225,971 ) (440,046 ) — 225,983 — 225,983 Repurchase of equity component of 5.375% Convertible Notes — — (33,169 ) (380,834 ) — (414,003 ) — (414,003 )

Common shares issued under share-based compensation plans 4,338 121,099 (79,382 ) — — 41,717 — 41,717 Settlement of call options (2,999 ) (36,343 ) 11,072 (41,592 ) — (66,863 ) — (66,863 )

Repurchase of common shares (15,200 ) (264,865 ) — (374,377 ) — (639,242 ) — (639,242 )

Share-based compensation — — 94,023 — — 94,023 — 94,023 Employee withholding taxes related to share-based awards — — (19,211 ) (18,491 ) — (37,702 ) — (37,702 )

Tax benefits from stock options exercised — — 26,414 — — 26,414 — 26,414 Reclassification of deferred share units — — 9,271 — — 9,271 — 9,271 Noncontrolling interest from business combinations — — — — — — 58,555 58,555 Acquisition of noncontrolling interest — — (1,971 ) — — (1,971 ) (56,349 ) (58,320 )

306,371 5,963,621 276,117 (2,189,851 ) 98,836 4,148,723 2,206 4,150,929 Comprehensive loss:

Net income — — — 159,559 — 159,559 — 159,559 Other comprehensive loss — — — — (378,452 ) (378,452 ) (2,206 ) (380,658 )

Total comprehensive loss (218,893 ) (2,206 ) (221,099 )

Balance, December 31, 2011 306,371 5,963,621 276,117 (2,030,292 ) (279,616 ) 3,929,830 — 3,929,830 Settlement of 5.375% Convertible Notes — — (175 ) (43,593 ) — (43,768 ) — (43,768 )

Repurchase of equity component of 5.375% Convertible Notes — — (180 ) (2,682 ) — (2,862 ) — (2,862 )

Common shares issued under share-based compensation plans 2,747 79,371 (56,348 ) — — 23,023 — 23,023 Repurchase of common shares (5,257 ) (102,340 ) — (178,384 ) — (280,724 ) — (280,724 )

Share-based compensation — — 66,236 — — 66,236 — 66,236 Employee withholding taxes related to share-based awards — — (31,073 ) — — (31,073 ) — (31,073 )

Tax benefits from stock options exercised — — 12,541 — — 12,541 — 12,541 303,861 5,940,652 267,118 (2,254,951 ) (279,616 ) 3,673,203 — 3,673,203 Comprehensive income:

Net loss — — — (116,025 ) — (116,025 ) — (116,025 )

Other comprehensive income — — — — 160,220 160,220 — 160,220 Total comprehensive income 44,195 — 44,195

Balance, December 31, 2012 303,861 5,940,652 267,118 (2,370,976 ) (119,396 ) 3,717,398 — 3,717,398 Issuance of common stock (see Note 16) 27,562 2,306,880 — — — 2,306,880 — 2,306,880 Common shares issued under share-based compensation plans 2,339 67,865 (61,355 ) — — 6,510 — 6,510 Repurchase of common shares (see Note 16) (725 ) (14,218 ) — (41,411 ) — (55,629 ) — (55,629 )

Share-based compensation — — 45,478 — — 45,478 — 45,478 Employee withholding taxes related to share-based awards — — (46,588 ) — — (46,588 ) — (46,588 )

Tax benefits from stock options exercised — — 24,200 — — 24,200 — 24,200 Noncontrolling interest from business combinations — — — — — — 113,896 113,896 Noncontrolling interest distributions — — — — — — (2,101 ) (2,101 )

333,037 8,301,179 228,853 (2,412,387 ) (119,396 ) 5,998,249 111,795 6,110,044 Comprehensive loss:

Net loss — — — (866,142 ) — (866,142 ) 2,473 (863,669 )

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

F- 8

Other comprehensive loss — — — — (13,384 ) (13,384 ) 331 (13,053 )

Total comprehensive loss (879,526 ) 2,804 (876,722 )

Balance, December 31, 2013 333,037 $ 8,301,179 $ 228,853 $ (3,278,529 ) $ (132,780 ) $ 5,118,723 $ 114,599 $ 5,233,322

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

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

Years Ended December 31,

2013 2012 2011

Cash Flows From Operating Activities

Net (loss) income $ (863,669 ) $ (116,025 ) $ 159,559 Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization, including impairments of finite-lived intangible assets 2,015,806 986,222 612,603 Amortization and write-off of debt discounts and debt issuance costs 89,461 36,402 27,103 In-process research and development impairments and other charges 153,639 189,901 109,200 Acquisition accounting adjustment on inventory sold 372,450 78,822 59,256 Acquisition-related contingent consideration (29,259 ) (5,266 ) (10,986 )

Allowances for losses on accounts receivable and inventories 68,283 21,779 5,519 Deferred income taxes (515,884 ) (319,603 ) (222,959 )

Loss (gain) on disposal of assets and businesses 10,180 10,780 (5,314 )

Additions to accrued legal settlements 220,495 56,779 11,841 Payments of accrued legal settlements (180,849 ) (41,800 ) (26,541 )

Share-based compensation 45,478 66,236 94,023 Tax benefits from stock options exercised (24,200 ) (12,541 ) (26,533 )

Foreign exchange loss (gain) 9,783 (23,839 ) (4,829 )

Gain on sale of marketable securities (5,822 ) (2,056 ) (22,776 )

Loss on extinguishment of debt 65,014 20,080 36,844 Payment of accreted interest on contingent consideration (11,124 ) (2,322 ) — Other 466 (33,693 ) (18,418 )

Changes in operating assets and liabilities:

Accounts receivable (261,380 ) (219,431 ) (164,581 )

Inventories (122,701 ) (80,304 ) (11,521 )

Prepaid expenses and other current assets 82,338 54,827 (3,084 )

Accounts payable, accrued and other liabilities (76,548 ) (8,370 ) 42,067 Net cash provided by operating activities 1,041,957 656,578 640,473 Cash Flows From Investing Activities

Acquisition of businesses, net of cash acquired (5,253,543 ) (3,485,286 ) (2,464,108 )

Acquisition of intangible assets and other assets (69,636 ) (73,495 ) (327,437 )

Purchases of property, plant and equipment (115,319 ) (107,638 ) (58,515 )

Proceeds from sale of assets 41,092 91,996 36,000 Proceeds from sales and maturities of marketable securities 17,020 624,774 86,639 Purchases of marketable securities and other investments — (7,200 ) (81,087 )

Increase in restricted cash — (8,872 ) — Net cash used in investing activities (5,380,386 ) (2,965,721 ) (2,808,508 )

Cash Flows From Financing Activities

Issuance of long-term debt, net of discount 8,441,356 6,005,758 5,388,799 Repayments of long-term debt (6,326,219 ) (1,929,118 ) (2,004,641 )

Short-term debt borrowings 27,413 35,365 — Short-term debt repayments (75,140 ) (31,075 ) — Issuance of common stock, net 2,307,436 — — Repurchases of convertible debt — (3,975 ) (613,471 )

Repurchases of common shares (55,629 ) (280,724 ) (639,242 )

Proceeds from exercise of stock options 10,015 23,026 41,738 Tax benefits from stock options exercised 24,200 12,541 26,533 Cash settlement of convertible debt — (606,278 ) — Cash settlement of call options — — (66,863 )

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

F- 9

Acquisition of noncontrolling interest — — (52,499 )

Payment of employee withholding tax upon vesting of share-based awards (65,505 ) (31,073 ) (59,718 )

Payments of contingent consideration (130,060 ) (103,926 ) (31,800 )

Payments of debt issuance costs (128,014 ) (33,153 ) (40,671 )

Distributions to noncontrolling interest (2,101 ) — — Net cash provided by financing activities 4,027,752 3,057,368 1,948,165 Effect of exchange rate changes on cash and cash equivalents (5,074 ) 3,755 (10,288 )

Net (decrease) increase in cash and cash equivalents (315,751 ) 751,980 (230,158 )

Cash and cash equivalents, beginning of year 916,091 164,111 394,269 Cash and cash equivalents, end of year $ 600,340 $ 916,091 $ 164,111

Non-Cash Investing and Financing Activities

Acquisition of businesses, contingent consideration at fair value $ (76,064 ) $ (145,728 ) $ (443,481 )

Settlement of convertible debt, equity issued — — (892,000 )

Acquisition of businesses, debt assumed (4,264,725 ) (825,241 ) —

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Valeant Pharmaceuticals International, Inc. (the “Company”) is a multinational, specialty pharmaceutical and medical device company that develops, manufactures, and markets a broad range of branded, generic and branded generic pharmaceuticals, over-the-counter (“OTC”) products, and medical devices (contact lenses, intraocular lenses, ophthalmic surgical equipment, and aesthetics devices), which are marketed directly or indirectly in over 100 countries. Effective August 9, 2013, the Company continued from the federal jurisdiction of Canada to the Province of British Columbia, meaning that the Company became a company registered under the laws of the Province of British Columbia as if it had been incorporated under the laws of the Province of British Columbia. As a result of this continuance, the legal domicile of the Company became the Province of British Columbia, the Canada Business Corporations Act ceased to apply to the Company and the Company became subject to the British Columbia Business Corporations Act (BCBCA).

On August 5, 2013, the Company acquired Bausch & Lomb Holdings Incorporated (“B&L”), pursuant to an Agreement and Plan of Merger, as amended (the “Merger Agreement”) dated May 24, 2013, with B&L surviving as a wholly-owned subsidiary of Valeant Pharmaceuticals International (“Valeant”), a wholly-owned subsidiary of the Company (the “B&L Acquisition”).

On December 11, 2012, the Company completed the acquisition of Medicis Pharmaceutical Corporation (“Medicis”) through a wholly-owned subsidiary pursuant to an Agreement and Plan of Merger, dated as of September 2, 2012, with Medicis surviving as a wholly-owned subsidiary of the Company (the “Medicis Acquisition”).

For further information regarding the B&L Acquisition and the Medicis Acquisition, see note 3 titled “BUSINESS COMBINATIONS”.

Basis of Presentation

The 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 (“GAAP”), applied on a consistent basis.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and those of its subsidiaries. All significant intercompany transactions and balances have been eliminated.

The Company has entered into collaboration and license arrangements with other entities for various products under development. These arrangements typically include upfront and contingent milestone and royalty payments. There were no material arrangements determined to be variable interest entities.

Reclassifications

Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

In addition, the Company has made a reclassification to the 2012 and 2011 consolidated statements of (loss) income for the presentation of proceeds from the out-license or sale of non-core products to conform to the current year presentation. To enhance comparability of the Company’s revenues and expenses from period to period and to the Company’s peers, the Company no longer records the proceeds on the sale of non-core products as Alliance and royalty revenue, with the associated costs, including the carrying amount of related assets, recorded as Cost of alliance and service revenues. Rather, effective in 2013, the Company nets the proceeds with the carrying amount of related assets and records a gain/loss on sale within Other expense. As of result of this change, the Company’s 2012 and 2011 consolidated statements of (loss) income include the following reclassifications related to (i) the sale of 1% clindamycin and 5% benzoyl peroxide gel (“IDP-111”), a generic version of BenzaClin®, and 5% fluorouracil cream (“5-FU”), an authorized generic of Efudex® in February 2012 and (ii) the out-license of Cloderm Cream, 0.1% in March 2011:

F- 10

1. DESCRIPTION OF BUSINESS

2. SIGNIFICANT ACCOUNTING POLICIES

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

For further information regarding the sale of IDP-111 and 5-FU and the out-license of Cloderm Cream, 0.1%, see Note 4 titled “Acquisitions and Dispositions”. The reclassifications described above did not have a material impact on the Company’s previously reported results of operations and had no impact on the Company’s previously reported financial position and cash flows.

Acquisitions

Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions. Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. Acquired in-process research and development (“IPR&D”) is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use. If the acquired net assets do not constitute a business, the transaction is accounted for as an asset acquisition and no goodwill is recognized. In an asset acquisition, the amount allocated to acquired IPR&D with no alternative future use is charged to expense at the acquisition date.

Use of Estimates

In preparing the Company’s 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 date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management include: provisions for product returns, rebates and chargebacks; useful lives of amortizable intangible assets and property, plant and equipment; expected future cash flows used in evaluating intangible assets for impairment; reporting unit fair values in testing goodwill for impairment; provisions for loss contingencies; provisions for income taxes, uncertain tax positions and realizability of deferred tax assets; and the allocation of the purchase price of acquired assets and businesses, including the fair value of contingent consideration. Under certain product manufacturing and supply agreements, management relies on estimates for future returns, rebates and chargebacks made by the Company’s commercialization counterparties. 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 consolidated financial statements could be materially impacted.

Fair Value of Financial Instruments

The estimated fair values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying values due to their short maturity periods. The fair value of acquisition-related contingent consideration is based on estimated discounted future cash flows and assessment of the probability of occurrence of potential future events. The fair values of marketable securities and long-term debt are based on quoted market prices, if available, or estimated discounted future cash flows.

Cash and Cash Equivalents

Cash and cash equivalents include certificates of deposit, treasury bills, certain money-market funds and term deposits with maturities of three months or less when purchased.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and accounts receivable.

As Initially Recorded Reclassification As Reclassified

((Income) Expense) 2012 2011 2012 2011 2012 2011

Alliance and royalty revenue $ (66,250 ) $ (36,000 ) $ 66,250 $ 36,000 $ — $ — Cost of alliance and service revenues 68,820 30,736 (68,820 ) (30,736 ) — — Other expense — — 2,570 (5,264 ) 2,570 (5,264 )

F- 11

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The Company invests its excess cash in high-quality, money market instruments and term deposits with varying maturities, but typically less than three months. The Company maintains its cash and cash equivalents with major financial institutions. The Company has not experienced any significant losses on its cash or cash equivalents.

In 2012, the Company’s marketable securities portfolio included the investment in auction rate floating securities (student loans) and the investment in equity securities acquired in connection with the Medicis Acquisition. The investment in auction rate floating securities had a maximum term to maturity of 34 years. In 2013, the Company sold its entire investment in auction rate securities assumed in connection with the Medicis Acquisition. In 2011, the Company’s marketable securities portfolio included investment-grade corporate enterprise fixed income debt securities that matured within one year.

The Company’s accounts receivable primarily arise from product sales in the U.S. and Europe and primarily represent amounts due from wholesale distributors, retail pharmacies, government entities and group purchasing organizations. Outside of the U.S., concentrations of credit risk with respect to trade receivables, which are typically unsecured, are limited due to the number of customers using the Company’s products, as well as their dispersion across many different geographic areas. The Company performs periodic credit evaluations of customers and does not require collateral. The Company monitors economic conditions, including volatility associated with international economies, and related impacts on the relevant financial markets and its business, especially in light of sovereign credit issues. The credit and economic conditions within Italy, Portugal, Spain and Greece, among other members of the European Union, have deteriorated. These conditions have increased, and may continue to increase, the average length of time that it takes to collect on the Company’s accounts receivable outstanding in these countries. An allowance for doubtful accounts is maintained for potential credit losses based on the aging of accounts receivable, historical bad debts experience, and changes in customer payment patterns. Accounts receivables balances are written off against the allowance when it is probable that the receivable will not be collected.

As of December 31, 2013 and 2012 , the Company’s three largest U.S. wholesaler customers accounted for 47% and 42% of net trade receivables, respectively. In addition, as of December 31, 2013 and 2012 , the Company’s net trade receivable balance from Greece, Spain, Italy and Portugal amounted to $84.5 million and $5.6 million , respectively, of which the majority has been outstanding for less than 90 days. The increase in the receivables balance for such countries was driven by the B&L Acquisition, which was consummated in August 2013. The portion of the net trade receivable from these countries that is past due more than 90 days amounted to $18.3 million as of December 31, 2013 and is primarily comprised of public hospitals. Based on analysis of bad debts experience and assessment of historical payment patterns for such customers, the Company determined that the substantial majority of such balance was collectible and, as such, the reserve established on the balance was not significant. The Company has not experienced any significant losses from uncollectible accounts in the three-year period ended December 31, 2013 .

Inventories

Inventories comprise raw materials, work in process, and finished goods, which are valued at the lower of cost or market, on a first-in, first-out basis. Cost for work in process and finished goods inventories includes materials, direct labor, and an allocation of overheads. Market for raw materials is replacement cost, and for work in process and finished goods is net realizable value.

The Company evaluates the carrying value of inventories on a regular basis, taking into account such factors as historical and anticipated future sales compared with quantities on hand, the price the Company expects to obtain for products in their respective markets compared with historical cost and the remaining shelf life of goods on hand.

Property, Plant and Equipment

Property, plant and equipment are reported at cost, less accumulated depreciation. Costs incurred on assets under construction are capitalized as construction in progress. Depreciation is calculated using the straight-line method, commencing when the assets become available for productive use, based on the following estimated useful lives:

Buildings Up to 40 years

Machinery and equipment 3 - 20 years

Other equipment 3 - 10 years

Equipment on operating lease Up to 5 years

Leasehold improvements and capital leases Lesser of term of lease or 10 years

F- 12

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Intangible Assets

Intangible assets are reported at cost, less accumulated amortization. Intangible assets with finite lives are amortized over their estimated useful lives. Amortization is calculated using the straight-line method based on the following estimated useful lives:

____________________________________

Sale of Non-core Products

The Company nets the proceeds on the sale or out-license of non-core products with the carrying amount of the related assets and records a gain/loss on sale within Other expense. Any contingent payments that are potentially due to the Company as a result of these sales are recorded when realizable.

IPR&D

The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset will be assigned a useful life and amortized.

The fair value of an IPR&D intangible asset is determined using an income approach. This approach starts with a forecast of the net cash flows expected to be generated by the asset over its estimated useful life. The net cash flows reflect the asset’s stage of completion, the probability of technical success, the projected costs to complete, expected market competition, and an assessment of the asset’s life-cycle. The net cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

Impairment of Long-Lived Assets

Long-lived assets with finite lives are tested for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Indicators of potential impairment include: an adverse change in legal factors or in the business climate that could affect the value of the asset; an adverse change in the extent or manner in which the asset is used or is expected to be used, or in its physical condition; and current or forecasted operating or cash flow losses that demonstrate continuing losses associated with the use of the asset. If indicators of impairment are present, the asset is tested for recoverability by comparing the carrying value of the asset to the related estimated undiscounted future cash flows expected to be derived from the asset. If the expected cash flows are less than the carrying value of the asset, then the asset is considered to be impaired and its carrying value is written down to fair value, based on the related estimated discounted future cash flows.

Indefinite-lived intangible assets, including acquired IPR&D, are tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment losses on indefinite-lived intangible assets are recognized based solely on a comparison of the fair value of the asset to its carrying value, without consideration of any recoverability test.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level. A reporting unit is the same as, or one level below, an operating segment.

Product brands 1 - 25 years

Corporate brands (1) 4 - 20 years

Product rights 1 - 15 years

Partner relationships 2 - 9 years

Out-licensed technology and other 3 - 10 years

(1) Corporate brands useful lives shown in the table above does not include the B&L corporate trademark, which has an indefinite useful life and is not amortizable. See note 3 “BUSINESS COMBINATIONS” for further information.

F- 13

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The Company operates in the following operating/reportable segments: Developed Markets and Emerging Markets. The Developed Markets segment consists of four reporting units based on geography, namely (i) U.S., (ii) Canada and Australia, (iii) Western Europe, and (iv) Japan. The Emerging Markets segment consists of three reporting units based on geography, namely (i) Central/Eastern Europe, Middle East and North Africa, (ii) Latin America, and (iii) Asia/South Africa. The Company estimated the fair values of its reporting units using a discounted cash flow analysis approach. These calculations contain uncertainties as they require the Company to make assumptions about future cash flows and the appropriate discount rate to reflect the risk inherent in the future cash flows. A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on the Company’s results of operations. During the fourth quarter of 2013, the Company performed its annual goodwill impairment test and determined that none of the goodwill associated with its reporting units was impaired. The goodwill recognized for the B&L Acquisition, which to date has been recorded provisionally, will be tested for impairment within twelve months of the acquisition date.

Deferred Financing Costs

Deferred financing costs are reported at cost, less accumulated amortization, and are recorded in other long-term assets. Amortization expense is included in interest expense.

Derivative Financial Instruments

From time to time, the Company utilizes derivative financial instruments to manage its exposure to market risks, including foreign currency and interest rate exposures. The Company does not utilize derivative financial instruments for speculative purposes, nor does it enter into trades for which there is no underlying exposure. Derivative financial instruments are recorded as either assets or liabilities at fair value. The Company accounts for derivative financial instruments based on whether they meet the criteria for designation as hedging transactions, either as cash flow, net investment, or fair value hedges. Depending on the nature of the hedge, changes in the fair value of a hedged item are either offset against the change in the fair value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The Company did not hold any derivative financial instruments at December 31, 2013 or 2012 .

Foreign Currency Translation

The assets and liabilities of the Company’s foreign operations having a functional currency other than the U.S. dollar are translated into U.S. dollars at the exchange rate prevailing at the balance sheet date, and at the average exchange rate for the reporting period for revenue and expense accounts. The cumulative foreign currency translation adjustment is recorded as a component of accumulated other comprehensive income in shareholders’ equity.

Foreign currency exchange gains and losses on transactions occurring in a currency other than an operation’s functional currency are recognized in net income.

Revenue Recognition

Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the customer is fixed or determinable, and collectibility is reasonably assured.

Product Sales

Product sales revenue is recognized when title has transferred to the customer and the customer has assumed the risks and rewards of ownership, the timing of which is based on the specific contractual terms with each customer. In most instances, transfer of title as well as the risks and rewards of ownership occurs upon delivery of the product to the customer. Amounts received from customers as prepayments for products to be shipped in the future are recorded in deferred revenue.

Revenue from product sales is recognized net of provisions for estimated discounts, allowances, returns, rebates, chargebacks and distribution fees paid to certain of our wholesale customers. The Company offers discounts for prompt payment and other incentive allowances to customers. Provisions for discounts and allowances are estimated based on contractual sales terms with customers and historical payment experience. The Company allows customers to return product within a specified period of time before and after its expiration date. Provisions for returns are estimated based on historical return levels, taking into account additional available information on competitive products and contract changes. The Company has data sharing agreements with the three largest wholesalers in the U.S. Where

the Company does not have data sharing agreements, it uses third party data to estimate the level of product inventories and product demand at wholesalers and retail pharmacies. The Company reviews its methodology and adequacy of the provision for returns on a quarterly basis, adjusting for changes in

F- 14

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

assumptions, historical results and business practices, as necessary. The Company is subject to rebates on sales made under governmental and commercial rebate programs, and chargebacks on sales made to government agencies, retail pharmacies and group purchasing organizations. Provisions for rebates and chargebacks are estimated based on historical experience, relevant statutes with respect to governmental pricing programs, and contractual sales terms.

In connection with the Medicis Acquisition, which was completed in December 2012, the Company acquired several brands, including the following aesthetics products: Dysport®, Perlane®, and Restylane®. In 2012, consistent with legacy Medicis’ historical approach, the Company recognized revenue on those products upon shipment from McKesson, the Company’s primary U.S. distributor of aesthetics products, to physicians. As part of its integration efforts, the Company implemented new strategies and business practices in the first quarter of 2013, particularly as they relate to rebate and discount programs for these aesthetics products. As a result of these changes, the criteria for revenue recognition are achieved upon shipment of these products to McKesson, and, therefore, the Company began, in 2013, recognizing revenue upon shipment of these products to McKesson.

The Company is party to manufacturing and supply agreements with a number of commercialization counterparties in the U.S. Under the terms of these agreements, the Company’s supply prices for its products are determined after taking into consideration estimates for future returns, rebates, and chargebacks provided by each counterparty. The Company makes adjustments as needed to state these estimates on a basis consistent with this policy and its methodology for estimating returns, rebates and chargebacks related to its own direct product sales.

Alliance and Royalty

The Company earns royalties and profit share revenue as a result of the licensing of product rights to third parties. Royalties and profit share revenue are earned at the time the related product is sold by the licensee based on the terms of the specific licensing agreement and when the Company has no future obligations with respect to the royalty or profit share. The Company relies on financial information provided by licensees to estimate the amounts due to it under the related agreements.

Service and Other

Contract manufacturing service revenue is recognized when title of the manufactured products has transferred to the customer and the customer has assumed the risks and rewards of ownership.

Research and development service revenue attributable to the performance of contract services is recognized as the services are performed, under the proportionate performance method of revenue recognition. Performance is measured based on units-of-work performed relative to total units-of-work contracted. Units-of-work is generally measured based on hours spent.

Research and Development Expenses

Costs related to internal research and development programs, including costs associated with the development of acquired IPR&D, are expensed as goods are delivered or services are performed. Under certain research and development arrangements with third parties, the Company may be required to make payments that are contingent on the achievement of specific developmental, regulatory and/or commercial milestones. Before a product receives regulatory approval, milestone payments made to third parties are expensed when the milestone is achieved. Milestone payments made to third parties after regulatory approval is received are capitalized and amortized over the estimated useful life of the approved product.

Amounts due from third parties as reimbursement of development activities conducted under certain research and development arrangements are recognized as a reduction of research and development expenses.

Legal Costs

Legal fees and other costs related to litigation and other legal proceedings are expensed as incurred and included in selling, general and administrative expenses. Legal costs expensed are reported net of expected insurance recoveries. A claim for insurance recovery is recognized when the claim becomes probable of realization.

Advertising Costs

Advertising costs comprise product samples, print media and promotional materials. Advertising costs related to new product launches are expensed on the first use of the advertisement. As of December 31, 2013, advertising costs of $8.8 million were recorded in Prepaid expenses and other current assets in the Company’s consolidated balance sheet. As of December 31, 2012,

F- 15

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

advertising costs recorded in Prepaid expenses and other current assets in the Company’s consolidated balance sheet were not material.

Advertising costs expensed in 2013, 2012 and 2011 were $277.3 million , $157.6 million and $106.3 million , respectively. These costs are included in selling, general and administrative expenses.

Share-Based Compensation

The Company recognizes all share-based payments to employees, including grants of employee stock options and restricted share units (“RSUs”), at estimated fair value. The Company amortizes the fair value of stock option or RSU grants on a straight-line basis over the requisite service period of the individual stock option or RSU grant, which generally equals the vesting period. Stock option and RSU forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Share-based compensation is recorded in cost of goods sold, research and development expenses, selling, general and administrative expenses and restructuring and other costs, as appropriate.

Acquisition-Related Contingent Consideration

Acquisition-related contingent consideration, which consists primarily of potential milestone payments and royalty obligations, is recorded in the consolidated balance sheets at its acquisition date estimated fair value, in accordance with the acquisition method of accounting. The fair value of the acquisition-related contingent consideration is remeasured each reporting period, with changes in fair value recorded in the consolidated statements of (loss) income. Changes in the fair value of the acquisition-related contingent consideration obligations result from several factors including changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving specified milestone criteria. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in fair value measurement accounting.

Interest Expense

Interest expense includes standby fees and the amortization of debt discounts and deferred financing costs. Interest costs are expensed as incurred, except to the extent such interest is related to construction in progress, in which case interest is capitalized. The capitalized interest recorded in 2013 was not material. The Company did not capitalize any interest costs in 2012 and 2011 due to immateriality.

Income Taxes

Income taxes are accounted for under the liability method. Deferred tax assets and liabilities are recognized for the differences between the financial statement and income tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. A valuation allowance is provided for the portion of deferred tax assets that is more likely than not to remain unrealized. Deferred tax assets and liabilities are measured using enacted tax rates and laws.

The tax benefit from an uncertain tax position is recognized only if it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority, based on the technical merits of the position. The tax benefits recognized from such a position are measured based on the amount that is greater than 50% likely of being realized upon settlement. Liabilities associated with uncertain tax positions are classified as long-term unless expected to be paid within one year. Interest and penalties related to uncertain tax positions, if any, are recorded in the provision for income taxes and classified with the related liability on the consolidated balance sheets.

Earnings Per Share

Basic earnings per share attributable to Valeant Pharmaceuticals International, Inc. is calculated by dividing net income attributable to Valeant Pharmaceuticals International, Inc. by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per share is calculated by dividing net income attributable to Valeant Pharmaceuticals International, Inc. by the weighted-average number of common shares outstanding during the reporting period after giving effect to dilutive potential common shares for stock options, RSUs and convertible debt, determined using the treasury stock method.

Comprehensive Income

F- 16

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Comprehensive income comprises net income and other comprehensive income. Other comprehensive income includes foreign currency translation adjustments, unrealized temporary holding gains and losses on available-for-sale investments and certain pension and other postretirement benefit plan adjustments. Accumulated other comprehensive income is recorded as a component of shareholders’ equity.

Contingencies

In the normal course of business, the Company is subject to loss contingencies, such as claims and assessments arising from litigation and other legal proceedings, contractual indemnities, product and environmental liabilities, and tax matters. Accruals for loss contingencies are recorded when the Company determines that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. If the estimate of the amount of the loss is a range and some amount within the range appears to be a better estimate than any other amount within the range, that amount is accrued as a liability. If no amount within the range is a better estimate than any other amount, the minimum amount of the range is accrued as a liability. These accruals are adjusted periodically as assessments change or additional information becomes available.

If no accrual is made for a loss contingency because one of the previous two conditions are not met, the Company will disclose contingent liabilities when there is at least a reasonable possibility that a loss or an additional loss may have been incurred.

Employee Benefit Plans

The Company sponsors various retirement and pension plans, including defined benefit pension plans, defined contribution plans and a participatory defined benefit postretirement plan. The determination of defined benefit pension and postretirement plan obligations and their associated expenses requires the use of actuarial valuations to estimate the benefits employees earn while working, as well as the present value of those benefits. Inherent in these valuations are economic assumptions including expected returns on plan assets, discount rates at which liabilities could be settled, rates of increase in healthcare costs, rates of future compensation increases as well as employee demographic assumptions such as retirement patterns, mortality and turnover. The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, higher or lower turnover rates or longer or shorter life spans of participants. Actual results that differ from the actuarial assumptions used are recorded as actuarial gains and losses. Net actuarial gains and losses that exceed 10 percent of the greater of the plan’s projected benefit obligations or the market-related value of assets are amortized to earnings over the shorter of the estimated future service period of the plan participants or the period until any anticipated final plan settlements. The Company reviews the assumptions annually (and more frequently if a significant event occurs) and makes any necessary changes.

Adoption of New Accounting Standards

In July 2012, the Financial Accounting Standards Board (“FASB”) issued guidance intended to simplify indefinite-lived intangible impairment testing, by allowing an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of an asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. This guidance is effective for annual and interim tests performed for fiscal years beginning after September 15, 2012. The adoption of this guidance did not impact the Company’s financial position or results of operations.

In February 2013, the FASB issued guidance to improve the transparency of reporting reclassifications out of accumulated other comprehensive income, by requiring an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross-reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. The guidance is effective prospectively for reporting periods beginning December 15, 2012. As this guidance relates to presentation only, the adoption of this guidance did not impact on the Company’s financial position or results of operations.

In July 2013, the FASB issued guidance to eliminate the diversity in practice in presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. This new guidance requires the netting of unrecognized tax benefits against a deferred tax asset for a loss or other carryforward that would apply in settlement of the uncertain tax positions. Under the new guidance, unrecognized tax benefits will be netted against all available same-jurisdiction loss or other tax carryforward that would be utilized, rather than only against carryforwards that are created by the unrecognized tax benefits. The guidance is effective prospectively, but allows optional

F- 17

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

retrospective adoption (for all periods presented), for reporting periods beginning after December 15, 2013. As this guidance relates to presentation only, the adoption of this guidance will not impact the Company’s financial position or results of operations.

The Company’s business strategy involves selective acquisitions with a focus on core geographies and therapeutic classes.

(a) Business combinations in 2013 included the following:

B&L

Description of the Transaction

On August 5, 2013, the Company acquired B&L, pursuant to the Merger Agreement dated May 24, 2013 (as amended), among the Company, Valeant, Stratos Merger Corp., a Delaware corporation and wholly-owned subsidiary of Valeant (“Merger Sub”), and B&L. Pursuant to the terms and conditions set forth in the Merger Agreement, B&L became a wholly-owned subsidiary of Valeant. At the effective time of this merger, each share of B&L common stock, par value $0.01 per share, issued and outstanding immediately prior to such effective time, other than any dissenting shares and any shares held by B&L, Valeant, Merger Sub or any of their subsidiaries, was converted into the right to receive its pro rata share (the “Per Share Merger Consideration”), without interest, of an aggregate purchase price equal to $8.7 billion minus B&L’s existing indebtedness for borrowed money (which was paid off by Valeant in accordance with the terms of the Merger Agreement) and related fees and costs, minus certain of B&L’s transaction expenses, minus certain payments with respect to certain cancelled B&L performance-based options (which were not outstanding immediately prior to such effective time), plus the aggregate exercise price applicable to B&L’s outstanding options immediately prior to such effective time, and plus certain cash amounts, all as further described in the Merger Agreement. The B&L Acquisition was financed with debt and equity issuances (see note 14 titled “LONG-TERM DEBT” for additional information). Each B&L restricted share and stock option, whether vested or unvested, that was outstanding immediately prior to such effective time, was cancelled and converted into the right to receive the Per Share Merger Consideration in the case of restricted shares or, in the case of stock options, the excess, if any, of the Per Share Merger Consideration over the exercise price of such stock option.

B&L is a global eye health company that focuses primarily on the development, manufacture and marketing of eye health products, including contact lenses, contact lens care solutions, ophthalmic pharmaceuticals and ophthalmic surgical products.

Fair Value of Consideration Transferred

The following table indicates the consideration transferred to effect the B&L Acquisition:

___________________________________

3. BUSINESS COMBINATIONS

Fair Value

Enterprise value $ 8,700,000 Adjusted for the following:

B&L’s outstanding debt, including accrued interest (4,248,310 )

B&L’s company expenses (6,377 )

Payment in B&L’s performance-based option (a) (48,478 )

Payment for B&L’s cash balance (b) 149,000 Additional cash payment (b) 75,000 Other (3,189 )

Equity purchase price 4,617,646 Less: Cash consideration paid for B&L’s unvested stock options (c) (4,320 )

Total fair value of consideration transferred $ 4,613,326

F- 18

(a) The cash consideration paid for previously cancelled B&L’s performance-based options was recognized as a post-combination expense within Restructuring, integration and other costs in the third quarter of 2013.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

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 acquisition date. The following recognized amounts are provisional and subject to change:

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 will finalize these amounts no later than one year from the acquisition date.

________________________

(b) As defined in the Merger Agreement.

(c) The cash consideration paid for B&L stock options and restricted stock attributable to pre-combination services has been included as a component of purchase price. The remaining $4.3 million balance related to the acceleration of unvested stock options for B&L employees was recognized as a post-combination expense within Restructuring, integration and other costs in the third quarter of 2013.

• amounts for working capital, intangible assets and property, plant and equipment pending finalization of the valuation;

• amounts for income tax assets and liabilities, pending finalization of estimates and assumptions in respect of certain tax implications of the transaction; and

• amount of goodwill pending the completion of the valuation of the assets acquired and liabilities assumed.

Amounts Recognized as of Acquisition Date

(as previously reported) (a)

Measurement Period

Adjustments (b)

Amounts Recognized as of

December 31, 2013 (as adjusted)

Cash and cash equivalents $ 209,522 $ (31,410 ) $ 178,112 Accounts receivable (c) 547,873 (3,499 ) 544,374 Inventories (d) 675,818 (23,729 ) 652,089 Other current assets (e) 146,574 359 146,933 Property, plant and equipment, net (f) 761,410 4,618 766,028 Identifiable intangible assets, excluding acquired IPR&D (g) 4,316,117 26,258 4,342,375 Acquired IPR&D (h) 398,130 20,122 418,252 Other non-current assets 58,757 — 58,757 Current liabilities (i) (885,578 ) 10,257 (875,321 )

Long-term debt, including current portion (j) (4,209,852 ) — (4,209,852 )

Deferred income taxes, net (k) (1,410,931 ) 24,053 (1,386,878 )

Other non-current liabilities (l) (280,195 ) (1,068 ) (281,263 )

Total identifiable net assets 327,645 25,961 353,606 Noncontrolling interest (m) (102,300 ) (400 ) (102,700 )

Goodwill (n) 4,387,981 (25,561 ) 4,362,420

Total fair value of consideration transferred $ 4,613,326 $ — $ 4,613,326

(a) As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.

(b) The measurement period adjustments primarily reflect: (i) a decrease in the net deferred tax liability, (ii) a reclassification between cash and accounts payable, (iii) a

F- 19

reduction in the estimated fair value of inventory, and (iv) increases in the estimated fair value of intangible assets, which included a net increase to IPR&D assets driven by a higher fair value for the next generation silicone hydrogel lens (Bausch + Lomb Ultra). The measurement period adjustments 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 and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) The fair value of trade accounts receivable acquired was $544.4 million , with the gross contractual amount being $555.6 million , of which the Company expects that $11.2 million will be uncollectible.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The corporate brand represents the B&L corporate trademark and has an indefinite useful life as there are no legal, regulatory, contractual, competitive, economic, or other factors that limit the useful life of this intangible asset. The estimated fair value was determined using the relief from royalty method.

F- 20

(d) Includes an estimated fair value adjustment to inventory of $273.7 million .

(e) Includes primarily prepaid expenses.

(f) The following table summarizes the provisional amounts and useful lives assigned to property, plant and equipment:

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of Acquisition Date

(as previously reported)

Measurement Period

Adjustments

Amounts Recognized as of

December 31, 2013 (as adjusted)

Land NA $ 47,407 $ (12,660 ) $ 34,747 Buildings 24 273,180 (43,032 ) 230,148 Machinery and equipment 5 273,509 60,459 333,968 Leasehold improvements 5 22,455 (92 ) 22,363 Equipment on operating lease 3 13,792 (57 ) 13,735 Construction in progress NA 131,067 — 131,067 Total property, plant and equipment acquired $ 761,410 $ 4,618 $ 766,028

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

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of Acquisition Date

(as previously reported)

Measurement Period

Adjustments

Amounts Recognized as of

December 31, 2013 (as adjusted)

Product brands 10 $ 1,770,164 $ 13,996 $ 1,784,160 Product rights 8 855,402 5,275 860,677 Corporate brand Indefinite 1,690,551 6,987 1,697,538 Total identifiable intangible assets acquired 9 $ 4,316,117 $ 26,258 $ 4,342,375

(h) The significant components of the acquired IPR&D assets primarily relate to the development of (i) various vision care products ( $226.5 million in the aggregate), such as the next generation silicone hydrogel lens (Bausch + Lomb Ultra), (ii) various pharmaceutical products ( $171.0 million , in the aggregate), such as latanoprostene bunod, a nitric oxide-donating prostaglandin for reduction of elevated intraocular pressure in patients with glaucoma or ocular hypertension, and (iii) various surgical products ( $20.8 million , in the aggregate). See note 5 titled “COLLABORATION AGREEMENTS” for further information related to the worldwide licensing agreement with NicOx, S.A. (“NicOx”) for latanoprostene bunod. A multi-period excess earnings methodology (income approach) was used to determine the estimated fair values of the acquired IPR&D assets from market participant perspective. The projected cash flows from these assets were adjusted for the probabilities of successful development and commercialization of each project. A risk-adjusted discount rate of 10% was used to present value the projected cash flows. In September 2013, the U.S. Food and Drug Administration (“FDA”) approved the next generation silicone hydrogel lens (Bausch + Lomb Ultra), and the product was launched in February 2014.

(i) Includes accrued liabilities, including reserves for sales returns, rebates and managed care, accounts payable and accrued compensation-related liabilities.

(j) The following table summarizes the fair value of long-term debt assumed as of the acquisition date:

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

___________________________________

The provisional amount of goodwill has been allocated to the Company’s Developed Markets segment ( $3,226.7 million ) and Emerging Markets segment ( $1,135.7 million ).

Acquisition-Related Costs

The Company has incurred to date $14.1 million of transaction costs directly related to the B&L Acquisition, which includes expenditures for advisory, legal, valuation, accounting and other similar services. These costs have been expensed as acquisition-related costs.

Revenue and Net Loss of B&L

The revenues of B&L for the period from the acquisition date to December 31, 2013 were $1,345.7 million and net loss, net of tax, was

Amounts Recognized as of Acquisition Date

Holdco unsecured term loan (1) $ 707,010 U.S. dollar-denominated senior secured term loan (1) 1,915,749 Euro-denominated senior secured term loan (1) 603,952 U.S. dollar-denominated delayed draw term loan (1) 398,003 U.S. dollar-denominated revolver loan (1) 170,000 9.875% senior notes (1) 350,000 Multi-currency denominated revolver loan (1) 15,000 Japanese revolving credit facility (2) 33,835 Debentures 11,803 Other (1) 4,500 Total long-term debt assumed $ 4,209,852

(1) The Company subsequently repaid these amounts in full in the third quarter of 2013. In connection with the redemption of the 9.875% senior notes, the Company recognized a loss on extinguishment of debt of $8.2 million in the third quarter of 2013.

(2) In the fourth quarter of 2013, the Company repaid in full the amounts outstanding. In January 2014, the Company terminated this facility.

(k) Comprises current net deferred tax assets ( $77.3 million ) and non-current net deferred tax liabilities ( $1,464.2 million ).

(l) Includes $224.2 million related to the estimated fair value of pension and other benefits liabilities.

(m) Represents the estimated fair value of B&L’s noncontrolling interest related primarily to Chinese joint ventures. A discounted cash flow methodology was used to determine the estimated fair values as of the acquisition date.

(n) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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:

• the Company’s expectation to develop and market new product brands, product lines and technology;

• cost savings and operating synergies expected to result from combining the operations of B&L with those of the Company;

• the value of the continuing operations of B&L’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, B&L’s assembled workforce).

$28.1 million . The net loss, net of tax, includes the effects of the acquisition accounting adjustments and acquisition-related costs.

Other Business Combinations

Description of the Transactions

F- 21

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

In the year ended December 31, 2013 , the Company completed other business combinations, which included the acquisition of the following businesses, for an aggregate purchase price of $898.1 million . The aggregate purchase price included contingent consideration payment obligations with an aggregate acquisition date fair value of $59.1 million .

Assets Acquired and Liabilities Assumed

These transactions have been accounted for as business combinations under the acquisition method of accounting. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed related to the business combinations, in the aggregate, as of the applicable acquisition dates. The following recognized amounts related to certain smaller acquisitions, are provisional and subject to change:

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 dates may result in retrospective adjustments to the provisional amounts recognized at the acquisition dates. These changes could be significant. The Company will finalize these amounts no later than one year from the respective acquisition dates.

F- 22

• On April 25, 2013, the Company acquired all of the outstanding shares of Obagi Medical Products, Inc. (“Obagi”) at a price of $24.00 per share in cash. The aggregate purchase price paid by the Company was approximately $437.1 million . Obagi is a specialty pharmaceutical company that develops, markets, and sells topical aesthetic and therapeutic skin-health systems with a product portfolio of dermatology brands including Obagi Nu-Derm®, Condition & Enhance®, Obagi-C® Rx, ELASTIDerm® and Obagi CLENZIDerm®.

• On February 20, 2013, the Company acquired certain assets from Eisai Inc. (“Eisai”) relating to the U.S. rights to Targretin®, which is indicated for the treatment of Cutaneous T-Cell Lymphoma. The consideration includes up-front payments of $66.5 million and the Company may pay up to an additional $60.0 million of contingent consideration based on the occurrence of potential future events. The fair value of the contingent consideration was determined to be $50.8 million as of the acquisition date. As of December 31, 2013 , the assumptions used for determining fair value of the contingent consideration have not changed significantly from those used at the acquisition date.

• On February 1, 2013, the Company acquired Natur Produkt International, JSC (“Natur Produkt”), a specialty pharmaceutical company in Russia, for a purchase price of $149.9 million , including a $20.0 million contingent refund of purchase price relating to the outcome of certain litigation involving AntiGrippin® that commenced prior to the acquisition. Subsequent to the acquisition, during the three-month period ended March 31, 2013, the litigation was resolved, and the $20.0 million was refunded back to the Company. Natur Produkt’s key brand products include AntiGrippin®, Anti-Angin®, Sage™ and Eucalyptus MA™.

• During the year ended December 31, 2013 , the Company completed other smaller acquisitions which are not material individually or in the aggregate. These acquisitions are included in the aggregated amounts presented below.

• amounts for intangible assets, inventories and working capital adjustments pending finalization of the valuation;

• amounts for income tax assets and liabilities, pending finalization of estimates and assumptions in respect of certain tax implications of the transaction; and

• amount of goodwill pending the completion of the valuation of the assets acquired and liabilities assumed.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

________________________

Amounts Recognized as of Acquisition Dates

Measurement Period

Adjustments (a)

Amounts Recognized as of

December 31, 2013 (as adjusted)

Cash $ 43,071 $ — $ 43,071 Accounts receivable (b) 64,049 1,273 65,322 Inventories 33,559 2,080 35,639 Other current assets 13,965 (5 ) 13,960 Property, plant and equipment 13,950 (11 ) 13,939 Identifiable intangible assets, excluding acquired IPR&D (c) 722,942 3,784 726,726 Acquired IPR&D (d) 18,714 237 18,951 Indemnification assets 3,201 (683 ) 2,518 Other non-current assets 185 3,666 3,851 Current liabilities (36,234 ) (371 ) (36,605 )

Short-term borrowings (e) (33,321 ) 546 (32,775 )

Long-term debt (e) (24,018 ) (91 ) (24,109 )

Deferred tax liability, net (147,801 ) (4,747 ) (152,548 )

Other non-current liabilities (1,453 ) — (1,453 )

Total identifiable net assets 670,809 5,678 676,487 Noncontrolling interest (f) (11,196 ) — (11,196 )

Goodwill (g) 224,291 8,549 232,840

Total fair value of consideration transferred $ 883,904 $ 14,227 $ 898,131

(a) The measurement period adjustments primarily reflect an increase in the total fair value of consideration transferred with respect to the Natur Produkt acquisition pursuant to a purchase price adjustment. The measurement period adjustments 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 and, therefore, the Company has not retrospectively adjusted those financial statements.

(b) The fair value of trade accounts receivable acquired was $65.3 million , with the gross contractual amount being $68.3 million , of which the Company expects that $3.0 million will be uncollectible.

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

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of Acquisition Dates

Measurement Period

Adjustments

Amounts Recognized as of

December 31, 2013 (as adjusted)

Product brands 7 $ 517,232 $ 3,029 $ 520,261 Corporate brand 13 86,129 755 86,884 Patents 3 71,676 — 71,676 Royalty Agreement 5 26,466 — 26,466 Partner relationships 5 16,000 — 16,000 Technology 10 5,439 — 5,439 Total identifiable intangible assets acquired 8 $ 722,942 $ 3,784 $ 726,726

(d) The acquired IPR&D assets relate to the Obagi and Natur Produkt acquisitions. Obagi’s acquired IPR&D assets primarily relate to the development of dermatology products for anti-aging and suncare. Natur Produkt’s acquired IPR&D assets include a product indicated for the prevention of viral diseases, specifically cold and flu, and a product indicated for the treatment of inflammation and muscular disorders.

F- 23

(e) Short-term borrowings and long-term debt primarily relate to the Natur Produkt acquisition. In March 2013, the Company settled all of Natur Produkt’s outstanding third party short-term borrowings and long-term debt.

(f) Represents the estimated fair value of noncontrolling interest related to a smaller acquisition completed in the third quarter of 2013.

(g) The goodwill relates primarily to the Obagi and Natur Produkt acquisitions. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. None of Obagi’s and Natur Produkt’s

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

goodwill is expected to be deductible for tax purposes. The goodwill recorded from the Obagi and the Natur Produkt acquisitions represents primarily the cost savings,

operating synergies and other benefits expected to result from combining the operations with those of the Company.

The amount of goodwill from the Eisai acquisition has been allocated to the Company’s Developed Markets segment. The amount of goodwill from the Natur Produkt acquisition has been allocated to the Company’s Emerging Markets segment. The amount of goodwill from the Obagi acquisition has been allocated primarily to the Company’s Developed Markets segment.

Acquisition-Related Costs

The Company has incurred to date $11.3 million , in the aggregate, of transaction costs directly related to these business combinations, which includes expenditures for advisory, legal, valuation, accounting and other similar services. These costs have been expensed as acquisition-related costs.

Revenue and Earnings

The revenues of these business combinations for the period from the respective acquisition dates to December 31, 2013 were $269.4 million , in the aggregate, and earnings, net of tax, were $39.2 million , in the aggregate. The earnings, net of tax, include the effects of the acquisition accounting adjustments and acquisition-related costs.

(b) Business combinations in 2012 included the following:

Medicis

Description of the Transaction

On December 11, 2012, the Company acquired all of the outstanding common stock of Medicis for $44.00 per share (“Medicis Per Share Consideration”) for cash. Pursuant to the Agreement and Plan of Merger, dated September 2, 2012, among the Company, the Company’s subsidiary Valeant, Merlin Merger Sub, Inc. (“Merlin Merger Sub”), a Delaware corporation and wholly-owned subsidiary of Valeant, and Medicis, on December 11, 2012, Merlin Merger Sub merged with and into Medicis, with Medicis continuing as the surviving entity and wholly-owned subsidiary of Valeant. At the effective time of this merger, each share of Medicis Class A common stock, par value $0.014 per share, issued and outstanding immediately prior to such effective time, was converted into the right to receive the Medicis Per Share Merger Consideration in cash, without interest. Each Medicis stock option and stock appreciation right, whether vested or unvested, that was outstanding immediately prior to such effective time, was cancelled and converted into the right to receive the excess, if any, of the Medicis Per Share Consideration over the exercise price of such stock option or stock appreciation right, as applicable. Each Medicis restricted share, whether vested or unvested, that was outstanding immediately prior to such effective time, was cancelled and converted into the right to receive the Medicis Per Share Consideration.

Medicis is a specialty pharmaceutical company that focuses primarily on the development and marketing in the U.S. and Canada of products for the treatment of dermatological and aesthetic conditions. Medicis offers a broad range of products addressing various conditions or aesthetics improvements, including acne, actinic keratosis, facial wrinkles, glabellar lines, fungal infections, hyperpigmentation, photoaging, psoriasis, bronchospasms, external genital and perianal warts/condyloma acuminate, seborrheic dermatitis and cosmesis (improvement in the texture and appearance of skin). Medicis’ primary brands are Solodyn®, Restylane®, Perlane®, Ziana®, Dysport® and Zyclara®.

Fair Value of Consideration Transferred

The following table indicates the consideration transferred to effect the acquisition of Medicis:

(Number of shares, stock options and restricted share units in thousands)

Conversion Calculation

Fair Value

Number of common shares of Medicis outstanding as of acquisition date 57,135 Multiplied by Medicis Per Share Consideration $ 44.00 $ 2,513,946 Number of stock options of Medicis cancelled and exchanged for cash (a) 3,152 33,052 Number of outstanding restricted shares cancelled and exchanged for cash (a) 1,974 31,881

____________________________________

F- 24

Total fair value of consideration transferred $ 2,578,879

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Assets Acquired and Liabilities Assumed

The transaction has been accounted for as 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.

______________________

(a) The cash consideration paid for Medicis stock options and restricted shares attributable to pre-combination services has been included as a component of purchase price. The remaining $77.3 million balance related to the acceleration of unvested stock options, restricted stock awards, and share appreciation rights for Medicis employees that was triggered by the change in control was recognized as a post-combination expense within Restructuring, integration and other costs in the fourth quarter of 2012.

Amounts Recognized as of Acquisition Date

(as previously reported) (a)

Measurement Period

Adjustments (b)

Amounts Recognized as of

December 31, 2013 (as adjusted)

Cash and cash equivalents $ 169,583 $ — $ 169,583 Accounts receivable (c) 81,092 9,116 90,208 Inventories (d) 145,157 (7,635 ) 137,522 Short-term and long-term investments (e) 626,559 — 626,559 Income taxes receivable 40,416 — 40,416 Other current assets (f) 74,622 — 74,622 Property and equipment, net 8,239 (5,625 ) 2,614 Identifiable intangible assets, excluding acquired IPR&D (g) 1,390,724 (21,843 ) 1,368,881 Acquired IPR&D (h) 153,817 5,992 159,809 Other non-current assets 616 — 616 Current liabilities (i) (453,909 ) (12,375 ) (466,284 )

Long-term debt, including current portion (j) (777,985 ) — (777,985 )

Deferred income taxes, net (205,009 ) 12,204 (192,805 )

Other non-current liabilities (8,841 ) — (8,841 )

Total identifiable net assets 1,245,081 (20,166 ) 1,224,915 Goodwill (k) 1,333,798 20,166 1,353,964

Total fair value of consideration transferred $ 2,578,879 $ — $ 2,578,879

(a) As previously reported in the 2012 Form 10-K.

(b) The measurement period adjustments primarily reflect: (i) reductions in the estimated fair value of a product brand intangible asset and property and equipment; (ii) changes in estimated inventory reserves; (iii) changes in certain assumptions impacting the fair value of acquired IPR&D; (iv) additional information obtained with respect to the valuation of certain pre-acquisition contingent assets, as well as legal and milestone obligations; and (v) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments 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 and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) The fair value of trade accounts receivable acquired was $90.2 million , with the gross contractual amount being $90.3 million , of which the Company expects that $0.1 million will be uncollectible.

(d) Includes an estimated fair value adjustment to inventory of $104.6 million .

(e) Short-term and long-term investments consist of corporate and various government agency and municipal debt securities, investments in auction rate floating securities (student loans), and investments in equity securities. Subsequent to the acquisition date, the Company liquidated these investments for proceeds of $615.4 million , $9.0 million and $8.0 million in the fourth quarter of 2012, the first quarter of 2013, and the second quarter of 2013, respectively.

(f) Includes prepaid expenses and an asset related to a supplemental executive retirement program. The supplemental executive retirement program was settled as of

F- 25

December 31, 2012.

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

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The goodwill has been allocated to the Company’s Developed Markets segment.

OraPharma

Description of the Transaction

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of Acquisition Date

(as previously reported)

Measurement Period

Adjustments

Amounts Recognized as of

December 31, 2013 (as adjusted)

In-licensed products 11 $ 633,429 $ 2,283 $ 635,712 Product brands 8 491,627 (24,877 ) 466,750 Patents 5 224,985 1,148 226,133 Corporate brands 14 40,683 (397 ) 40,286 Total identifiable intangible assets acquired 9 $ 1,390,724 $ (21,843 ) $ 1,368,881

(h) The significant components of the acquired IPR&D assets relate to the development of dermatology products, such as Luliconazole, a new imidazole, antimycotic cream for the treatment of tinea cruris, pedis and corporis, and Metronidazole 1.3%, a topical antibiotic for the treatment of bacterial vaginosis ( $136.9 million , in the aggregate), and the development of aesthetics programs ( $22.9 million ). A New Drug Application (“NDA”) for Luliconazole was submitted to the FDA on December 11, 2012. In November 2013, the FDA approved the NDA for Luliconazole, which triggered the commencement of amortization. A multi-period excess earnings methodology (income approach) was primarily used to determine the estimated fair values of the acquired IPR&D assets. The projected cash flows from these assets were adjusted for the probabilities of successful development and commercialization of each project. Risk-adjusted discount rates of 10% - 11% were used to present value the projected cash flows. On April 30, 2013, the Company agreed to sell the worldwide rights in its Metronidazole 1.3% Vaginal Gel antibiotic development product, a topical antibiotic for the treatment of bacterial vaginosis, to Actavis Specialty Brands for approximately $55 million , which includes upfront and certain milestone payments, and minimum royalties for the first three years of commercialization. For further details, see note 27 titled “SUBSEQUENT EVENTS AND PENDING TRANSACTIONS”.

(i) Includes accounts payable, a liability for a supplemental executive retirement program, a liability for stock appreciation rights, deferred revenue, accrued liabilities, and reserves for sales returns, rebates, managed care and Medicaid. The supplemental executive retirement program was settled as of December 31, 2012.

(j) The following table summarizes the fair value of long-term debt assumed as of the acquisition date:

Amounts Recognized as of Acquisition Date

1.375% Convertible Senior Notes (1) $ 546,668 2.50% Contingent Convertible Senior Notes (1) 231,111 1.50% Contingent Convertible Senior Notes (1) 206 Total long-term debt assumed $ 777,985

(1) During the period from the acquisition date to December 31, 2013, the Company redeemed the 2.50% Contingent Convertible Senior Notes, the 1.50% Contingent Convertible Senior Notes and a portion of the 1.375% Convertible Senior Notes. For further details, see note 14 titled “LONG-TERM DEBT”.

(k) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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 Medicis with those of the Company;

• the value of the continuing operations of Medicis’ 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, Medicis’ assembled workforce).

On June 18, 2012, the Company acquired all of the outstanding common stock and preferred stock of OraPharma Topco Holdings, Inc. (“OraPharma”), a specialty oral health company located in the U.S. that develops and commercializes products that improve and maintain oral health. Pursuant to the Agreement and Plan of Merger, dated June 14, 2012, by and among Valeant, Orange Acquisition, Inc. (“Orange Merger Sub”), a Delaware corporation and wholly-owned subsidiary of Valeant, OraPharma and a representative of the shareholder of Orapharma, Orange Merger Sub merged with and into OraPharma with

F- 26

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

OraPharma continuing as the surviving entity and wholly-owned subsidiary of Valeant. The Company made an up-front payment of $289.3 million , and the Company may pay a series of contingent consideration payments of up to $114.0 million based on certain milestones, including certain revenue targets. The fair value of the contingent consideration was determined to be $99.2 million as of the acquisition date, for a total fair value of consideration transferred of $388.5 million . As of December 31, 2013 , the assumptions used for determining fair value of the contingent consideration have not changed significantly from those used at the acquisition date. The Company also repaid at the closing $37.9 million of assumed debt. During the year ended December 31, 2013 , the Company made contingent consideration payments of $40.0 million , in the aggregate.

OraPharma’s lead product is Arestin®, a locally administered antibiotic for the treatment of periodontitis that utilizes an advanced controlled-release delivery system and is indicated for use in conjunction with scaling and root planing for the treatment of adult periodontitis.

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.

______________________

Amounts Recognized as of Acquisition Date

(as previously reported) (a)

Measurement Period

Adjustments (b)

Amounts Recognized as of

December 31, 2012 (as adjusted) (a)

Cash $ 14,119 $ — $ 14,119 Accounts receivable (c) 10,348 — 10,348 Inventories 3,222 (685 ) 2,537 Other current assets 4,063 22 4,085 Property and equipment 8,181 — 8,181 Identifiable intangible assets, excluding acquired IPR&D (d) 466,408 (64,095 ) 402,313 Acquired IPR&D (e) 15,464 13,151 28,615 Other non-current assets 1,862 — 1,862 Current liabilities (9,675 ) (395 ) (10,070 )

Long-term debt, including current portion (f) (37,868 ) — (37,868 )

Deferred income taxes, net (173,907 ) 18,386 (155,521 )

Other non-current liabilities (158 ) — (158 )

Total identifiable net assets 302,059 (33,616 ) 268,443 Goodwill (g) 86,802 33,255 120,057

Total fair value of consideration transferred $ 388,861 $ (361 ) $ 388,500

(a) As previously reported in the 2012 Form 10-K. The Company has not recognized any measurement period adjustments in 2013 to the amounts previously reported in the 2012 Form 10-K.

(b) The measurement period adjustments primarily reflect: (i) changes in the estimated fair value of the Arestin® product brand; (ii) the reclassification of intangible assets from product brands to IPR&D; (iii) a decrease in the total fair value of consideration transferred due to a working capital adjustment; and (iv) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments 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 and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) Both the fair value and gross contractual amount of trade accounts receivable acquired were $10.3 million , as the Company expects that the amount to be uncollectible is negligible.

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

F- 27

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The amount of goodwill has been allocated to the Company’s Developed Markets segment.

Other Business Combinations

Description of the Transactions

In the year ended December 31, 2012, the Company completed other business combinations, which included the following businesses, as well as other smaller acquisitions, for an aggregate purchase price of $807.5 million . The aggregate purchase price included contingent consideration obligations with an aggregate acquisition date fair value of $44.2 million .

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of Acquisition Date

(as previously reported)

Measurement Period

Adjustments

Amounts Recognized as of

December 31, 2012 (as adjusted)

Product brand 12 $ 446,958 $ (62,450 ) $ 384,508 Corporate brand 15 19,450 (1,645 ) 17,805 Total identifiable intangible assets acquired 12 $ 466,408 $ (64,095 ) $ 402,313

(e) The IPR&D assets primarily relate to the development of Arestin® ER, which is indicated for oral hygiene use and Arestin® Peri-Implantitis, which is indicated for anti-inflammatory and anti-bacterial use.

(f) Effective June 18, 2012, the Company terminated the credit facility agreement, repaid the assumed debt outstanding and cancelled the undrawn credit facilities.

(g) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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 OraPharma with those of the Company;

• the value of the continuing operations of OraPharma’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, OraPharma’s assembled workforce).

• On October 2, 2012, the Company acquired certain assets from Johnson & Johnson Consumer Companies, Inc. (“J&J ROW”) for a purchase price of $41.7 million , relating to the rights in various ex-North American territories to the OTC consumer brands Caladryl® and Shower to Shower®.

• On September 28, 2012, the Company acquired certain assets from Johnson & Johnson Consumer Companies, Inc. (“J&J North America”) for a purchase price of $107.3 million , relating to the U.S. and Canadian rights to the OTC consumer brands Ambi®, Caladryl®, Corn Huskers®, Cortaid®, Purpose® and Shower to Shower®.

• On September 24, 2012, the Company acquired certain assets from QLT Inc. and QLT Ophthalmics, Inc. (collectively, “QLT”) relating to Visudyne®, which is used to treat abnormal growth of leaky blood vessels in the eye caused by wet age-related macular degeneration. The consideration paid included up-front payments of $62.5 million for the assets related to the rights to the product in the U.S. and $50.0 million for the assets related to the rights to the product outside the U.S. The Company may pay a series of contingent payments of up to $20.0 million relating to non-U.S. royalties and development milestones for QLT’s laser program in the U.S. In addition, the Company will pay royalties on sales of potential new indications for Visudyne® in the U.S. The fair value of the contingent consideration was determined to be $7.9 million as of the acquisition date. During 2013, the assumptions used for determining the fair value of the contingent consideration have been adjusted to reflect a lower estimated probability of achieving the milestones, which resulted in a net gain of $7.5 million which was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income.

F- 28

• On May 23, 2012, the Company acquired certain assets from University Medical Pharmaceuticals Corp. (“University Medical”), a specialty pharmaceutical company located in the U.S. focused on skincare products, including the rights to University Medical’s main brand AcneFree™, a retail OTC acne treatment. The consideration includes up-front payments of $65.0 million , and the Company may pay a series of contingent consideration payments of up to $40.0 million if certain net sales milestones are achieved. The fair value of the contingent consideration was determined to be $1.5 million as of the acquisition date. As of December 31, 2013 , the assumptions used for determining fair value of the contingent consideration have not changed significantly from those used at the acquisition date.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Assets Acquired and Liabilities Assumed

These transactions have been accounted for as business combinations under the acquisition method of accounting. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed related to the other business combinations, in the aggregate, as of the acquisition dates.

F- 29

• On May 2, 2012, the Company acquired certain assets from Atlantis Pharma (“Atlantis”), a branded generics pharmaceutical company located in Mexico, for up-front payments of $65.5 million (MXN $847.3 million ), and the Company placed an additional $8.9 million (MXN $114.7 million ) into an escrow account. The amounts in escrow will be paid to the sellers only if certain regulatory milestones are achieved and therefore such amounts were treated as contingent consideration. The fair value of the contingent consideration was determined to be $7.6 million as of the acquisition date. As of December 31, 2013 , the assumptions used for determining fair value of the contingent consideration have not changed significantly from those used at the acquisition date. Since the acquisition date, certain amounts have been released from escrow to the sellers, reducing the escrow balance to $8.2 million as of December 31, 2013 . The escrow balance is treated as restricted cash and is included in Prepaid expenses and other current assets and Other long-term assets, net in the Company’s consolidated balance sheets. Atlantis has a broad product portfolio, including products in gastro, analgesics and anti-inflammatory therapeutic categories.

• On March 13, 2012, the Company acquired certain assets from Gerot Lannach, a branded generics pharmaceutical company based in Austria. The Company made an up-front payment of $164.0 million ( €125.0 million ), and the Company may pay a series of contingent consideration payments of up to $19.7 million ( €15.0 million ) if certain net sales milestones are achieved. The fair value of the contingent consideration was determined to be $16.8 million as of the acquisition date. As of December 31, 2013 , the assumptions used for determining fair value of the contingent consideration have not changed significantly from those used at the acquisition date. During the year ended December 31, 2013 , the Company made contingent consideration payments of $20.1 million ( €15.0 million ), in the aggregate. There are no remaining contingent consideration payments under this arrangement. As part of the transaction, the Company also entered into a ten -year exclusive supply agreement with Gerot Lannach for the acquired products. Approximately 90% of sales relating to the acquired assets are in Russia, with sales also made in certain Commonwealth of Independent States (CIS) countries including Kazakhstan and Uzbekistan. Gerot Lannach’s largest product is acetylsalicylic acid, a low dose aspirin.

• On February 1, 2012, the Company acquired Probiotica Laboratorios Ltda. (“Probiotica”), which markets OTC sports nutrition products and other food supplements in Brazil, for a purchase price of $90.5 million (R $158.0 million ).

• During the year ended December 31, 2012, the Company completed other smaller acquisitions which are not material individually or in the aggregate. These acquisitions are included in the aggregated amounts presented below.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

________________________

Amounts Recognized as of Acquisition Dates

(as previously reported) (a)

Measurement Period

Adjustments (b)

Amounts Recognized as of

December 31, 2013 (as adjusted)

Cash and cash equivalents $ 7,255 $ (258 ) $ 6,997 Accounts receivable (c) 29,846 (17 ) 29,829 Assets held for sale (d) 15,566 — 15,566 Inventories 64,819 (8,091 ) 56,728 Other current assets 2,524 — 2,524 Property, plant and equipment 9,027 — 9,027 Identifiable intangible assets, excluding acquired IPR&D (e) 666,619 1,527 668,146 Acquired IPR&D 1,234 — 1,234 Indemnification assets (f) 27,901 — 27,901 Other non-current assets 21 — 21 Current liabilities (32,146 ) (350 ) (32,496 )

Long-term debt (920 ) — (920 )

Liability for uncertain tax position (6,682 ) 6,682 — Other non-current liabilities (f) (28,523 ) — (28,523 )

Deferred income taxes, net (10,933 ) 373 (10,560 )

Total identifiable net assets 745,608 (134 ) 745,474 Goodwill (g) 70,600 (8,587 ) 62,013

Total fair value of consideration transferred $ 816,208 $ (8,721 ) $ 807,487

(a) As previously reported in the 2012 Form 10-K.

(b) The measurement period adjustments primarily relate to the Probiotica acquisition and primarily reflect: (i) the elimination of the liability for uncertain tax positions; (ii) the changes in the estimated fair value of the corporate brand intangible asset; and (iii) a decrease in the total fair value of consideration transferred due to a working capital adjustment. The measurement period adjustments 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 and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) The fair value of trade accounts receivable acquired was $29.8 million , with the gross contractual amount being $31.1 million , of which the Company expects that $1.3 million will be uncollectible.

(d) Assets held for sale relate to a product brand acquired in the Atlantis acquisition. Subsequent to that acquisition, the plan of sale changed, and the Company no longer intends to sell the asset. Consequently, the product brand was not classified as an asset held for sale as of December 31, 2012 .

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

F- 30

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of Acquisition Date

(as previously reported)

Measurement Period

Adjustments

Amounts Recognized as of

December 31, 2013 (as adjusted)

Product brands 10 $ 456,720 $ (1,325 ) $ 455,395 Corporate brands 12 31,934 3,725 35,659 Product rights 10 109,274 (873 ) 108,401 Royalty agreement 9 36,277 — 36,277 Partner relationships 5 32,414 — 32,414 Total identifiable intangible assets acquired 10 $ 666,619 $ 1,527 $ 668,146

(f) Other non-current liabilities, and the corresponding indemnification assets, primarily relate to certain asserted and unasserted claims against Probiotica, which include potential tax-related obligations that existed at the acquisition date. The Company is indemnified by the sellers in accordance with indemnification provisions under its contractual arrangements. Indemnification assets and contingent liabilities were recorded at the same amount and classified in the same manner, as components of the purchase price, representing our best estimates of these amounts at the acquisition date, in accordance

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

with guidance for loss contingencies and uncertain tax positions. Under the Company’s contractual arrangement with Probiotica, there is no limitation on the amount or

value of indemnity claims that can be made by the Company; however there is a time restriction of either two or five years, depending on the nature of the claim.

Approximately $12.9 million (R $22.5 million ) of the purchase price for the Probiotica transaction from the date of acquisition had been placed in escrow in accordance

with the indemnification provisions, of which 50% was released to the sellers in February 2013. The Company expects the total amount of such indemnification assets to

be collectible from the sellers.

The amount of the goodwill from the J&J North America, QLT and University Medical acquisitions has been allocated to the Company’s Developed Markets segment. The amount of goodwill from the J&J ROW, Probiotica, Atlantis and Gerot Lannach acquisitions has been allocated to the Company’s Emerging Markets segment.

(c) Business combinations in 2011 included the following:

iNova

Description of the Transaction

On December 21, 2011, the Company acquired iNova from Archer Capital, Ironbridge Capital and other minority management shareholders. The Company made upfront payments of $656.7 million (AUD $657.9 million ) and the Company may pay a series of potential milestones of up to $59.9 million (AUD $60.0 million ) based on the success of pipeline activities, product registrations and overall revenue. The fair value of the contingent consideration was determined to be $44.5 million as of the acquisition date, for a total fair value of consideration transferred of $701.2 million . For the years ended December 31, 2013 and 2012, the Company recognized a net gain of $5.5 million and $10.3 million , respectively, primarily due to changes in the estimated probability of achieving the milestones. The net gain was recognized as Acquisition-related contingent consideration in the consolidated statement of (loss) income.

In connection with the transaction, in November and December 2011, the Company entered into foreign currency forward-exchange contracts to buy AUD $625.0 million , which were settled on December 20, 2011. The Company recorded a $16.4 million foreign exchange gain on the settlement of these contracts, which was recognized in Foreign exchange and other in the consolidated statements of (loss) income for the year ended December 31, 2011.

iNova sells and distributes a range of prescription and OTC products in Australia, New Zealand, Asia and South Africa, including leading therapeutic weight management brands such as Duromine®/Metermine®, as well as leading OTC brands in the cold and cough area, such as Difflam®, Duro-Tuss® and Rikodeine®.

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.

F- 31

(g) The goodwill relates primarily to the Probiotica acquisition. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. The Company expects that the Probiotica’s goodwill will be deductible for tax purposes. The goodwill recorded from the J&J ROW, J&J North America, QLT, University Medical, Atlantis and Gerot Lannach acquisitions represents primarily the cost savings, operating synergies and other benefits expected to result from combining the operations with those of the Company. Probiotica’s goodwill recorded represents the following:

• the Company’s expectation to develop and market new product brands and product lines in the future;

• the value associated with the Company’s ability to develop relationships with new customers;

• the value of the continuing operations of Probiotica’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, Probiotica’s assembled workforce).

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The goodwill has been allocated to the Company’s Developed Markets segment ( $119.5 million ) and the Company’s Emerging Markets segment ( $82.4 million ).

Dermik

Description of the Transaction

On December 16, 2011, the Company acquired Dermik, a dermatological unit of Sanofi in the U.S. and Canada, as well as the worldwide

Amounts Recognized as of

December 31, 2012 (as adjusted) (a)

Cash and cash equivalents $ 8,792 Accounts receivable (b) 30,525 Inventories 41,987 Property, plant and equipment (c) 14,508 Identifiable intangible assets (d) 421,762 Deferred income taxes, net 15,893 Current liabilities (34,213 )

Total identifiable net assets 499,254 Goodwill (e) 201,927

Total fair value of consideration transferred $ 701,181

(a) Includes amounts recognized as of December 31, 2011 and insignificant measurement period adjustments recorded in 2012, as previously reported in the 2012 Form 10-K. The measurement period adjustments 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.

(b) The fair value of trade accounts receivable acquired was $30.5 million , with the gross contractual amount being $31.5 million , of which the Company expects that $1.0 million will be uncollectible.

(c) Property, plant and equipment includes a manufacturing facility, included in the Developed Markets segment, which was subsequently sold during the third quarter of 2012 for $10.2 million , which equaled its carrying amount.

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

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of

December 31, 2012 (as adjusted)

Product brands 8 $ 416,064 Corporate brands 4 5,698 Total identifiable intangible assets acquired 8 $ 421,762

(e) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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 iNova with those of the Company;

• the value of the continuing operations of iNova’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, iNova’s assembled workforce).

rights to Sculptra® and Sculptra® Aesthetic, for a total cash purchase price of approximately $421.6 million . The acquisition includes Dermik’s inventories and manufacturing facility located in Laval, Quebec. In connection with the acquisition of Dermik, the Company was required by the Federal Trade Commission (“FTC”) to divest IDP-111, a generic version of BenzaClin®, and 5-FU, an authorized generic of Efudex®. For further details, see note 4 titled “ACQUISITIONS AND DISPOSITIONS”.

F- 32

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Dermik is a leading global medical dermatology business focused on the manufacturing, marketing and sale of therapeutic and aesthetic dermatology products.

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.

____________________________________

Ortho Dermatologics

Description of the Transaction

On December 12, 2011, the Company acquired assets of the Ortho Dermatologics division of Janssen Pharmaceuticals, Inc. (“Janssen”), for a total cash purchase price of approximately $345.2 million . The assets acquired included prescription brands Retin-A Micro®, Ertaczo®, Renova® and Biafine®.

Ortho Dermatologics is a leader in the field of dermatology and, over the years, has developed several products to treat skin disorders and dermatologic conditions.

Assets Acquired and Liabilities Assumed

Amounts Recognized as of

December 31, 2012 (as adjusted) (a)

Inventories $ 28,568 Property, plant and equipment 39,581 Identifiable intangible assets (b) 343,649 Deferred tax liability (1,262 )

Total identifiable net assets 410,536 Goodwill (c) 11,076

Total fair value of consideration transferred $ 421,612

(a) Includes amounts recognized as of December 31, 2011 and insignificant measurement period adjustments recorded in 2012, as previously reported in the 2012 Form 10-K. The measurement period adjustments 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.

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

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of

December 31, 2012 (as adjusted)

Product brands 9 $ 294,288 Product rights 5 34,084 Manufacturing agreement 5 15,277 Total identifiable intangible assets acquired 9 $ 343,649

(c) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. The Company expects that $6.4 million of the goodwill will be deductible for tax purposes in Canada. The goodwill recorded represents primarily the value of Dermik’s assembled workforce. The goodwill has been allocated to the Company’s Developed Markets segment.

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.

F- 33

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

Afexa

Description of the Transaction

On October 17, 2011, the Company acquired 73.8% ( 80,929,921 common shares) of the outstanding common shares of Afexa Life Sciences Inc. (“Afexa”) for cash consideration of $67.7 million . The acquisition date fair value of the 26.2% noncontrolling interest in Afexa of $23.8 million was estimated using quoted market prices on such date, for a total fair value of consideration transferred of $91.5 million . In December 2011, the Company acquired the remaining outstanding common share of Afexa. Consequently, as of December 31, 2011, the Company owned 100% of Afexa.

Afexa, currently markets several consumer brands, such as Cold-FX®, an OTC cold and flu treatment, and Coldsore-FX®, a topical OTC cold sore treatment.

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.

F- 34

Amounts Recognized as of

December 31, 2012 (as adjusted) (a)

Inventories $ 6,169 Property, plant and equipment 206 Identifiable intangible assets, excluding acquired IPR&D (b) 333,599 Acquired IPR&D (c) 4,318 Deferred tax liability (1,690 )

Total identifiable net assets 342,602 Goodwill (d) 2,592

Total fair value of consideration transferred $ 345,194

(a) Includes amounts recognized as of December 31, 2011 and insignificant measurement period adjustments recorded in 2012, as previously reported in the 2012 Form 10-K. The measurement period adjustments 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.

(b) The identifiable intangible assets acquired relate to product brands intangible assets with an estimated weighted-average useful life of approximately nine years.

(c) The acquired IPR&D asset relates to the development of the MC5 program, a topical treatment for acne vulgaris. In the second quarter of 2012, the Company terminated the MC5 program and recognized a charge of $4.3 million to write off the related IPR&D asset. This charge was recognized as In-process research and development impairments and other charges in the Company’s consolidated statements of (loss) income.

(d) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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 primarily the cost savings, operating synergies and other benefits expected to result from combining the operations of Ortho Dermatologics with those of the Company. The goodwill has been allocated to the Company’s Developed Markets segment.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The goodwill has been allocated to the Company’s Developed Markets segment.

Sanitas

Description of the Transaction

On August 19, 2011 (the “Sanitas Acquisition Date”), the Company acquired 87.2% of the outstanding shares of AB Sanitas (“Sanitas”) for cash consideration of $392.3 million . Prior to the Sanitas Acquisition Date, the Company acquired 1,502,432 shares of Sanitas, which represented approximately 4.8% of the outstanding shares. As a result, as of the Sanitas Acquisition Date, the Company held a controlling financial interest in Sanitas of 92% , or 28,625,025 shares. The acquisition date fair value of the 8% noncontrolling interest in Sanitas of

Amounts Recognized as of

December 31, 2012 (as adjusted) (a)

Cash $ 1,558 Accounts receivable (b) 7,912 Inventories 22,489 Other current assets 5,406 Property and equipment 8,766 Identifiable intangible assets (c) 74,730 Current liabilities (18,104 )

Deferred income taxes, net (19,071 )

Other non-current liabilities (1,138 )

Total identifiable net assets 82,548 Goodwill (d) 8,982

Total fair value of consideration transferred $ 91,530

(a) Includes amounts recognized as of December 31, 2011 and insignificant measurement period adjustments recorded in 2012, as previously reported in the 2012 Form 10-K. The measurement period adjustments 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.

(b) Both the fair value and gross contractual amount of trade accounts receivable acquired were $7.9 million , as the Company expects that the amount to be uncollectible is negligible.

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

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of

December 31, 2012 (as adjusted)

Product brands 11 $ 59,344 Patented technology 7 15,386 Total identifiable intangible assets acquired 10 $ 74,730

(d) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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 Afexa with those of the Company; and

• intangible assets that do not qualify for separate recognition (for instance, Afexa’s assembled workforce).

$34.8 million , and the acquisition date fair value of the previously-held 4.8% equity interest of $21.1 million , were estimated using quoted market prices on such date.

On September 2, 2011, the Company announced a mandatory non-competitive tender offer (the “Tender Offer”) to purchase the remaining outstanding ordinary shares of Sanitas from all public shareholders at €10.06 per share. The Tender Offer closed on September 15, 2011, on which date the Company purchased an additional 1,968,631 shares ( 6.4% of the outstanding shares

F- 35

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

of Sanitas) for approximately $27.4 million . As a result of this purchase, the Company owned 30,593,656 shares or approximately 98.4% of Sanitas as of September 15, 2011.

On September 22, 2011, the Company received approval from the Securities Commission of the Republic of Lithuania to conduct the mandatory tender offer through squeeze out procedures (the “Squeeze Out”) at a price per one ordinary share of Sanitas equal to €10.06 , which requested that all minority shareholders sell to the Company the ordinary shares of Sanitas owned by them ( 512,264 ordinary shares, or 1.6% of Sanitas).

As the Company maintained a controlling financial interest in Sanitas during the Tender Offer, the additional ownership interest of 6.4% acquired in Sanitas was accounted for as an equity transaction between owners. The noncontrolling interest in Sanitas of approximately 1.6% to be acquired through the Squeeze Out procedures was classified as a liability in the Company’s consolidated balance sheet as it was mandatorily redeemable. The outstanding balance as of December 31, 2013 was immaterial.

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, hospital injectables and ophthalmology, and a pipeline of internally developed and acquired dossiers.

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 Sanitas Acquisition Date.

____________________________________

F- 36

Amounts Recognized as of

Acquisition Date (a)

Cash and cash equivalents $ 5,607 Accounts receivable (b) 25,645 Inventories 22,010 Other current assets 3,166 Property, plant and equipment 83,288 Identifiable intangible assets, excluding acquired IPR&D (c) 247,127 Acquired IPR&D 747 Other non-current assets 2,662 Current liabilities (30,428 )

Long-term debt, including current portion (d) (67,134 )

Deferred income taxes, net (43,269 )

Other non-current liabilities (6,049 )

Total identifiable net assets 243,372 Goodwill (e) 204,791

Total fair value of consideration transferred $ 448,163

(a) As previously reported in the 2011 Form 10-K. The Company has not recognized any measurement period adjustments to the amounts previously reported in the 2011 Form 10-K.

(b) The fair value of trade accounts receivable acquired was $25.6 million , with the gross contractual amount being $27.8 million , of which the Company expects that $2.2 million will be uncollectible.

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

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The goodwill has been allocated to the Company’s Emerging Markets segment.

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 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 with an obligation to pay a series of potential milestone payments 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® from GlaxoSmithKline (“GSK”) 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 minimum and variable royalty payments, was determined to be $437.7 million as of the acquisition date. As the majority of the contingent consideration relates to future royalty payments, the amount ultimately to be paid under this arrangement will be dependent on the future sales levels of Elidel®, Xerese®, and Zovirax®. In accordance with the acquisition method of accounting, the royalty payments associated with this transaction are treated as part of the consideration paid for the business, and therefore the Company will not recognize royalty expense in the consolidated statements of (loss) income for these products. The royalty payments are being recorded as a reduction to the acquisition-related contingent consideration liability. During the year ended December 31, 2013, 2012 and 2011, the Company made $44.5 million , $88.0 million and $28.5 million , respectively, of acquisition-related contingent consideration payments, including royalties and milestones, related to this transaction. In January 2014, the Company made additional royalty payments totaling $10.0 million .

In April 2013, Mylan Inc. launched a generic Zovirax® ointment, which was earlier than we previously anticipated. Also, in April 2013, we entered into an agreement with Actavis, Inc. (“Actavis”) to launch the authorized generic ointment for Zovirax®. Refer to note 5 titled “COLLABORATION AGREEMENTS” for further information regarding the agreement with Actavis. As a result of analysis in the third quarter of 2013 of performance trends since the generic entrant, the Company adjusted the projected revenue forecast, resulting in an acquisition-related contingent consideration net gain of $20.0 million for the year ended December 31, 2013 . For the year ended December 31, 2012, the Company recognized a net loss of $6.5 million primarily driven by fair value adjustments to reflect accretion for the time value of money, partially offset by changes in the projected revenue forecast. For the year ended December 31, 2011, the Company recognized a

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of Acquisition Date

Product brands 7 $ 164,823 Product rights 7 43,027 Corporate brands 15 25,227 Partner relationships 7 14,050 Total identifiable intangible assets acquired 8 $ 247,127

(d) Effective December 1, 2011, Sanitas terminated its Facility Agreement and Revolving Credit Line Agreement, repaid the amounts outstanding under its credit facilities and cancelled the undrawn credit facilities.

(e) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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 Sanitas with those of the Company;

• the value of the continuing operations of Sanitas’ 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, Sanitas’ assembled workforce).

loss of $11.2 million primarily due to accretion to reflect the time value of money. The net gain for the year ended December 31, 2013 and the net loss for the year ended December 31, 2012 and 2011 were recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income.

F- 37

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The total fair value of the consideration transferred was assigned 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 asset relates to the development of a Xerese® life-cycle product. The projected cash flows from the acquired IPR&D asset were adjusted for the probability of successful development and commercialization of the product. In determining the fair value of this asset, we used a risk-adjusted discount rate of 13% to present value the projected cash flows. In the fourth quarter of 2012, the Company recognized an IPR&D impairment charge of $24.7 million related to this asset due to higher projected development spend and revised timelines for potential commercialization. See note 12 titled “INTANGIBLE ASSETS AND GOODWILL” for further information regarding IPR&D asset impairments recognized in 2012.

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 OTC pharmaceutical company based in Zug, Switzerland. As of the acquisition date, 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 consideration payments of up to $41.7 million ( €30.0 million ) if certain net sales milestones of PharmaSwiss were 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. For the year ended December 31, 2011, the Company recognized a gain of $13.2 million due to changes in the fair value of acquisition-related contingent consideration. The gain was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income. In May 2012, the Company made a contingent consideration payment of $12.4 million ( €10.0 million ) based on the net sales results for the 2011 calendar year. There are no remaining contingent consideration payments under this arrangement.

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 Foreign exchange and other in the consolidated statement of income for the year ended December 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 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.

F- 38

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

____________________________________

Amounts Recognized as of

December 31, 2011 (as adjusted) (a)

Cash and cash equivalents $ 43,940 Accounts receivable (b) 61,629 Inventories (c) 70,319 Other current assets 14,429 Property, plant and equipment 9,737 Identifiable intangible assets (d) 209,240 Other non-current assets 3,122 Current liabilities (46,040 )

Deferred income taxes, net (6,608 )

Other non-current liabilities (720 )

Total identifiable net assets 359,048 Goodwill (e) 159,660

Total fair value of consideration transferred $ 518,708

(a) Includes amounts recognized as of December 31, 2011, as previously reported in the 2011 Form 10-K. The measurement period adjustments in 2011 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.

(b) 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.

(c) Includes $18.2 million to record PharmaSwiss inventory at its estimated fair value.

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

Weighted- Average

Useful Lives (Years)

Amounts Recognized as of

December 31, 2011 (as adjusted)

Partner relationships (1) 7 $ 130,183 Product brands 9 79,057 Total identifiable intangible assets acquired 7 $ 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.

(e) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the 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 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 assembled workforce).

The goodwill has been allocated to the Company’s Emerging Markets segment.

Pro Forma Impact of Business Combinations

The following table presents unaudited pro forma consolidated results of operations for the years ended December 31, 2013 and 2012 , as if the 2013 acquisitions had occurred as of January 1, 2012 and the 2012 acquisitions had occurred as of January 1, 2011.

F- 39

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The decline in pro forma revenues in the year ended December 31, 2013 as compared to the year ended December 31, 2012 was primarily due to (i) lower sales of the Zovirax® franchise, Retin-A Micro®, BenzaClin® and Cesamet® due to generic competition and (ii) lower alliance and royalty revenue resulting from a milestone payment recognized in the second quarter of 2012 from GSK in connection with the launch of Potiga® (see note 5 titled “COLLABORATION AGREEMENTS” for further information). These declines were partially offset by growth from the remaining business.

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 and the acquired businesses described above. Except to the extent realized in the year ended December 31, 2013, 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 these acquisitions, or the costs necessary to achieve these cost savings, operating synergies and other benefits. In addition, except to the extent recognized in the year ended December 31, 2013, the unaudited pro forma information does not reflect the costs to integrate the operations of the Company with those of the acquired businesses.

The unaudited pro forma information is not necessarily indicative of what the Company’s consolidated results of operations actually would have been had the 2013 acquisitions and the 2012 acquisitions been completed on January 1, 2012 and January 1, 2011, 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 the following adjustments:

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

Divestiture of certain skincare products sold in Australia

In October 2013, the Company sold certain skincare products, sold primarily in Australia, for up-front proceeds of $13.7 million , plus potential additional earn-out payments based on sales and margin performance during the twelve -month period following the sale transaction.

In connection with the sale of these products, the Company realized $13.7 million of cash proceeds in the fourth quarter of 2013. The Company recognized a loss on sale of $10.2 million in the fourth quarter of 2013, which was included in Other expense in the consolidated statements of (loss) income, since the Company will not recognize income from the potential earn-out payments until realizable. For further

Unaudited

2013 2012

Revenues $ 7,665,850 $ 7,700,624 Net loss attributable to Valeant Pharmaceuticals International, Inc. (821,147 ) (709,592 )

Loss per share attributable to Valeant Pharmaceuticals International, Inc.:

Basic and diluted $ (2.47 ) $ (2.14 )

• elimination of historical intangible asset amortization expense of these acquisitions;

• additional amortization expense related to the fair value of identifiable intangible assets acquired;

• additional depreciation expense related to fair value adjustment to property, plant and equipment acquired;

• additional interest expense associated with the financing obtained by the Company in connection with the various acquisitions; and

• the exclusion from pro forma earnings in the year ended December 31, 2013 of the acquisition accounting adjustments on these acquisitions’ inventories that were sold subsequent to the acquisition date of $369.9 million , in the aggregate, and the exclusion of $25.3 million of acquisition-related costs, in the aggregate, incurred primarily for these acquisitions in the year ended December 31, 2013, and the inclusion of those amounts in pro forma earnings for the corresponding comparative periods.

4. ACQUISITIONS AND DISPOSITIONS

information regarding this transaction, see note 7 titled “FAIR VALUE MEASUREMENTS”.

Divestiture of Buphenyl®

F- 40

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

In connection with the Company’s acquisition of Medicis in December 2012, the Company assumed an agreement with Hyperion Therapeutics, Inc. (“Hyperion”). Under the terms of this agreement, Hyperion exercised an option in the second quarter of 2013 to acquire worldwide rights to Buphenyl® from the Company for cash proceeds of $19.0 million . There was no gain or loss associated with this transaction.

Divestitures of IDP-111 and 5-FU

In connection with the acquisition of the Dermik, the Company was required by the FTC to divest IDP-111, a generic version of BenzaClin®, and 5-FU, an authorized generic of Efudex®.

In February 2012, the Company sold the IDP-111 and 5-FU products. In the fourth quarter of 2011, the Company recognized $7.9 million and $19.8 million of impairment charges related to the write-down of the carrying values of the IDP-111 and 5-FU intangible assets, respectively, to their estimated fair values, less costs to sell. In connection with the sale of the IDP-111 and 5-FU, the Company realized $66.3 million of cash proceeds in the first quarter of 2012, which resulted in a loss on sale of $2.6 million . The loss on sale was included in Other expense in the consolidated statements of (loss) income. See Reclassifications under note 2 titled “Significant Accounting Policies”for further information related to the presentation in the consolidated statements of (loss) income of the proceeds received.

Cloderm®

In March 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 up-front payment, which was received in early April 2011, and future royalty payments. As a result of this transaction, the Company recognized a gain on sale of $5.3 million , which was included in Other expense in the consolidated statements of (loss) income. See Reclassifications under note 2 titled “Significant Accounting Policies” for further information related to the presentation in the consolidated statements of (loss) income of the proceeds received. The Company recognizes the royalty payments as alliance revenue as they are earned.

Zovirax®

In February 2011 and March 2011, the Company acquired the U.S. and Canadian rights, respectively, to non-ophthalmic topical formulations of Zovirax® from 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.

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.

See note 5 titled “COLLABORATION AGREEMENTS” for information regarding the agreement with Actavis to launch the authorized generic ointment for Zovirax®.

License and Collaboration Agreement with Living Proof, Inc.

On December 20, 2013, the Company entered into a license and collaboration agreement with Living Proof, Inc. (“Living Proof”), whereby Living Proof licensed to the Company worldwide rights to commercialize, in specific fields, Neotensil™, a topical aesthetic product which reduces the appearance of under-eye bags based on the Living Proof’s Strateris Platform Technology. The agreement also involves a profit sharing arrangement and the potential development and commercialization of new products. Under the terms of the agreement, the Company made an up-front payment of $15.0 million to Living Proof in the fourth quarter of 2013, and may be required to make potential sales-based milestone payments over time up to $62.5 million , in the aggregate.

5. COLLABORATION AGREEMENTS

License Agreement with SMG Pharmaceuticals, LLC

F- 41

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

On October 29, 2013, the Company entered into a license agreement with SMG Pharmaceuticals, LLC (“SMG”) whereby SMG licensed to the Company rights to commercialize, in the U.S., Bensal HP®, a topical medication to treat skin irritations and infection. The license includes the fields of dermatology, podiatry, dentistry, plastic surgery, and eye health professionals. Under the terms of the agreement, the Company made an up-front payment of $5.0 million to SMG in the fourth quarter of 2013, and may be required to make potential sales-based milestone payments over time up to $80.0 million , in the aggregate, as well as royalties on future sales.

Collaboration Agreements Assumed in Connection with the B&L Acquisition

In connection with the B&L Acquisition in August 2013, the Company assumed several research and development licensing and collaboration agreements, including, among others, the arrangements described below. As part of the Company’s integration efforts, these agreements will be evaluated, which could result in future contract termination costs incurred by the Company.

Worldwide Licensing Agreement for Latanoprostene Bunod

In March 2010, B&L entered into a development and licensing agreement with NicOx, which granted B&L exclusive worldwide rights to develop and commercialize, for certain indications, products containing latanoprostene bunod, a nitric oxide donating compound for the treatment of glaucoma and ocular hypertension. In January 2013, B&L initiated a global phase 3 development program for latanoprostene bunod. Under the terms of the agreement, the Company may be required to make potential regulatory, commercialization and sales success-based milestones payments over time up to $162.5 million , in the aggregate. In addition, NicOx will receive royalties on sales of latanoprostene bunod products and will have the option to co-promote latanoprostene bunod products in the U.S.

Development Collaboration and Exclusive Option Agreement with Mimetogen

In July 2013, B&L entered into a Development Collaboration and Exclusive Option Agreement (the “Agreement”) with Mimetogen Pharmaceuticals Inc. (“Mimetogen”), whereby Mimetogen granted B&L an exclusive option to obtain a worldwide exclusive license to the MIM- D3 compound for development and commercialization of products for the treatment and/or prevention of ocular conditions, disorders and/or diseases. Under the terms of the Agreement, depending on the results of clinical trials, the Company will have either the right or the obligation to exercise the option, which would trigger an initial license fee payment by the Company to Mimetogen of up to $95.0 million , plus additional potential regulatory, commercialization and sales-based milestones of up to $345.0 million and royalty payments on the future sales under the license agreement.

Zovirax Authorized Generic Agreement and Co-Promotion Agreements

On April 4, 2013, the Company entered into an agreement with Actavis for Actavis to be the exclusive marketer and distributor of an authorized generic of the Company’s Zovirax® ointment product (the “Zovirax® ointment agreement”). In addition, on April 4, 2013, the Company granted Actavis the exclusive right to co-promote Zovirax® cream to obstetricians and gynecologists in the U.S., and Actavis granted the Company the exclusive right to co-promote Actavis Specialty Brands’ Cordran® Tape product in the U.S. Under the terms of the exclusive Zovirax® ointment agreement, the Company is supplying Actavis with a generic version of the Company’s Zovirax® ointment product and Actavis is marketing and distributing the product in the U.S. and the Company receives a share of the economics. Under the terms of the agreement related to the co-promotion of Zovirax® cream, Actavis is utilizing its existing Specialty Brands sales and marketing structure to promote the product and receives a co-promotion fee from sales generated by prescriptions written by its targeted physician group. Under the terms of the Cordran® Tape co-promotion agreement, the Company is utilizing its existing dermatology sales and marketing structure to promote the product, and receives a co-promotion fee on sales.

Bristol-Myers Collaboration and Option Agreements

On October 1, 2012, the Company entered into collaboration and option agreements with Bristol-Myers Squibb Company (“Bristol-Myers”) whereby Bristol-Myers granted the Company additional rights for approximately two years in several European countries to promote, market and sell a variety of products, including Monopril®, Cefzil®, Duracef® and Megace®. Prior to these agreements, the Company was selling many of these products in other territories. The collaboration agreement expires January 1, 2015, at which time the Company may exercise an option to acquire all rights, and associated intellectual property, to the products in both the previous and new territories. As consideration for the rights under the collaboration and option agreements, including a reduced supply price on the products sold by the Company prior to these agreements and the purchase of inventory on hand, the Company made payments to Bristol-Myers in the fourth

quarter of 2012 totaling $83.3

F- 42

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

million . If the Company elects to exercise the option to acquire the incremental rights described above, the Company will make an additional payment to Bristol-Myers in an amount to be determined based on net sales performance of the products. The majority of the $83.3 million in payments was allocated, based on relative fair values, to the value of the option, which is included in other long-term assets on the Consolidated Balance Sheets. The remaining portion was allocated to intangible assets, other current assets, and inventory.

Development and License Agreement with a specialty pharmaceutical company

On March 30, 2012, Medicis entered into a Development and License Agreement with a specialty pharmaceutical company pursuant to which Medicis obtained exclusive worldwide rights for the development and commercialization of an investigational drug targeted at certain topical skin applications. Under the terms of the agreement, the Company may pay up to $80.0 million upon the achievement of certain research, development and regulatory milestones and up to $120.0 million upon the achievement of certain sales-based milestones, as well as royalties on future sales.

GSK License and Collaboration Agreement

In October 2008, Valeant closed the worldwide License and Collaboration Agreement (the “Collaboration Agreement”) with GSK to develop and commercialize a first-in-class neuronal potassium channel opener for treatment of adult epilepsy patients with refractory partial onset seizures and its backup compounds, with a generic name of ezogabine in the U.S. and retigabine in all other countries. Pursuant to the terms of the Collaboration Agreement, Valeant granted co-development rights and worldwide commercialization rights to GSK.

Valeant agreed to share equally with GSK the development and pre-commercialization expenses of ezogabine/retigabine in the U.S., Australia, New Zealand, Canada and Puerto Rico (the “Collaboration Territory”). Following the launch of an ezogabine/retigabine product, the Company will share equally in the profits of ezogabine/retigabine in the Collaboration Territory. In addition, Valeant granted GSK an exclusive license to develop and commercialize retigabine in countries outside of the Collaboration Territory and certain backup compounds to ezogabine/retigabine worldwide. GSK is responsible for all expenses outside of the Collaboration Territory and will solely fund the development of any backup compound. The Company receives up to a 20% royalty on net sales of retigabine outside of the Collaboration Territory. In addition, if backup compounds are developed and commercialized by GSK, GSK will pay the Company royalties of up to 20% of net sales of products based upon such backup compounds.

In connection with the first sale of Potiga® in the U.S. (which occurred in April 2012), GSK paid 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®. In addition, 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 pays up to a 20% royalty on net sales of the product. 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 second quarter of 2012 and 2011, the Company recorded $45.0 million and $40.0 million of milestone payments from GSK in connection with the launches of Potiga® and Trobalt®, respectively.

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 the third quarter of 2013, the Company recognized an impairment charge of $551.6 million related to ezogabine/retigabine (immediate-release formulation) and fully impaired an IPR&D asset relating to a modified-release formulation of ezogabine/retigabine, which resulted in a charge of $93.8 million . For further information regarding asset impairment charges related to ezogabine/retigabine, see note 7 titled “FAIR VALUE MEASUREMENTS”.

6. RESTRUCTURING, INTEGRATION AND OTHER CHARGES

F- 43

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

In connection with the B&L and Medicis acquisitions as well as the Company’s (then named Biovail Corporation (“Biovail”)) acquisition of Valeant on September 28, 2010 (the “Merger”) and other smaller acquisitions, the Company has implemented cost-rationalization and integration initiatives to capture operating synergies and generate cost savings across the Company. These measures included:

B&L Acquisition-Related Cost-Rationalization and Integration Initiatives

The Company estimates that it will incur total costs that are approximately half of the estimated annual synergies of greater than $850 million in connection with these cost-rationalization and integration initiatives, which are expected to be substantially completed by the end of 2014. Since the acquisition date, total costs of $364.2 million (including (i) $181.3 million of restructuring expenses, (ii) $14.1 million of acquisition-related costs, and (iii) $168.8 million of integration expenses) have been incurred through December 31, 2013 . The estimate of total costs to be incurred primarily includes: employee termination costs payable to approximately 2,500 employees of the Company and B&L who have been or will be terminated as a result of the B&L Acquisition; IPR&D termination costs related to the transfer to other parties of product-development programs that did not align with our research and development model; costs to consolidate or close facilities and relocate employees; and contract termination and lease cancellation costs. These estimates do not include charges of $48.5 million and $4.3 million recognized and paid in the third quarter of 2013 related to B&L’s previously cancelled performance-based options and the acceleration of unvested stock options for B&L employees as a result of the B&L Acquisition, respectively.

The following table summarizes the major components of restructuring costs incurred in connection with B&L Acquisition-related initiatives through December 31, 2013 :

___________________________________

Medicis Acquisition-Related Cost-Rationalization and Integration Initiatives

The Company estimated that it will incur total costs of less than $250 million in connection with these cost-rationalization and integration initiatives, which were substantially completed by the end of 2013. However, certain costs may still be incurred in 2014. Since the acquisition date, total costs of $181.3 million (including (i) $109.2 million of restructuring expenses, (ii) $32.2 million of acquisition-related costs, which excludes $24.2 million of acquisition-related costs recognized in the fourth quarter of 2012 related to royalties to be paid to Galderma S.A. on sales of Sculptra®, and (iii) $39.9 million of integration expenses) have been incurred through December 31, 2013 . The estimated costs primarily include: employee termination costs payable to approximately 750 employees of the Company and Medicis who have been terminated as a result of the Medicis Acquisition; IPR&D termination costs related to the transfer to other parties of product-development programs that did not align with our research and development model; costs to consolidate or close facilities and relocate employees; and contract termination and lease cancellation costs. These estimates do not include a charge of $77.3 million recognized and

• workforce reductions across the Company and other organizational changes;

• closing of duplicative facilities and other site rationalization actions company-wide, including research and development facilities, sales offices and corporate facilities;

• leveraging research and development spend; and

• procurement savings.

Employee Termination Costs IPR&D

Termination Costs

Contract Termination,

Facility Closure and Other Costs

Severance and

Related Benefits Share-Based

Compensation (1) Total

Balance, January 1, 2013 $ — $ — $ — $ — $ — Costs incurred and/or charged to expense 155,734 52,798 — 25,528 234,060 Cash payments (77,774 ) (52,798 ) — (7,760 ) (138,332 )

Non-cash adjustments 11,366 — — (6,791 ) 4,575

Balance, December 31, 2013 $ 89,326 $ — $ — $ 10,977 $ 100,303

(1) Relates to B&L’s previously cancelled performance-based options and the acceleration of unvested stock options for B&L employees as a result of the B&L Acquisition.

paid in the

F- 44

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

fourth quarter of 2012 related to the acceleration of unvested stock options, restricted stock awards, and share appreciation rights for Medicis employees that was triggered by the change in control.

The following table summarizes the major components of restructuring costs incurred in connection with Medicis Acquisition-related initiatives through December 31, 2013 :

____________________________________

Merger-Related Cost-Rationalization and Integration Initiatives

In connection with these cost-rationalization and integration initiatives, the Company has incurred costs including: employee termination costs (including related share-based payments) payable to approximately 500 employees of Biovail and Valeant who have been terminated as a result of the Merger; IPR&D termination costs related to the transfer to other parties of product-development programs that did not align with the Company’s research and development model; costs to consolidate or close facilities and relocate employees, asset impairments 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 Merger-related initiatives through December 31, 2012:

Employee Termination Costs IPR&D

Termination Costs

Contract Termination,

Facility Closure and Other Costs

Severance and

Related Benefits Share-Based

Compensation (1) Total

Balance, January 1, 2012 $ — $ — $ — $ — $ — Costs incurred and/or charged to expense 85,253 77,329 — 370 162,952 Cash payments (77,975 ) (77,329 ) — (5 ) (155,309 )

Non-cash adjustments 4,073 — — (162 ) 3,911 Balance, December 31, 2012 11,351 — — 203 11,554 Costs incurred and/or charged to expense 20,039 — — 3,550 23,589 Cash payments (31,409 ) — — (3,575 ) (34,984 )

Non-cash adjustments 275 — — (178 ) 97

Balance, December 31, 2013 $ 256 $ — $ — $ — $ 256

(1) Relates to the acceleration of unvested stock options, restricted stock awards, and share appreciation rights for Medicis employees that was triggered by the change in control.

Employee Termination Costs IPR&D Termination

Costs

Contract

Termination, Facility Closure and Other Costs

Severance and

Related Benefits Share-Based

Compensation 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 14,548 3,455 — 28,938 46,941 Cash payments (38,168 ) (2,033 ) — (15,381 ) (55,582 )

Non-cash adjustments 989 (741 ) — (4,913 ) (4,665 )

Balance, December 31, 2011 2,158 681 — 10,314 13,153 Costs incurred and charged to expense 1,654 — — 12,769 14,423 Cash payments (3,873 ) — — (22,767 ) (26,640 )

F- 45

Non-cash adjustments 268 (681 ) — 227 (186 )

Balance, December 31, 2012 (1) $ 207 $ — $ — $ 543 $ 750

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

With respect to the Merger, facility closure costs included in the table above included charges of $10.2 million and $9.8 million for the years ended December 31, 2012 and December 31, 2011, respectively, for the remaining operating lease obligations related to the Company’s vacated Mississauga, Ontario corporate office facility.

As described in note 26, restructuring costs are not recorded in the Company’s reportable segments.

Other Restructuring and Integration-Related Costs

In the year ended December 31, 2013 , in addition to restructuring costs associated with the Company’s B&L and Medicis Acquisition-related initiatives shown in the tables above, the Company incurred an additional $257.1 million of other restructuring, integration-related and other costs including (i) $190.1 million of integration consulting, duplicate labor, transition service, and other costs, (ii) $39.1 million of facility closure costs, (iii) $15.1 million of severance costs and (iv) $12.8 million of other costs, including non-personnel manufacturing integration costs. These costs primarily related to (i) B&L and Medicis integration costs, as well as integration and restructuring costs for other smaller acquisitions, (ii) intellectual property migration and the global consolidation of the Company’s manufacturing facilities, and (iii) systems integration initiatives. The Company made payments of $296.8 million during the year ended December 31, 2013 (in addition to the $138.3 million and $35.0 million of payments related to B&L and Medicis restructuring, respectively, shown in the tables above).

In the year ended December 31, 2012 , in addition to restructuring costs associated with the Company’s Medicis Acquisition-related and Merger-related initiatives shown in the tables above, the Company incurred an additional $167.0 million of other restructuring, integration-related and other costs, in the aggregate, including (i) $73.5 million of integration consulting, duplicate labor, transition service, and other, (ii) $57.6 million of severance costs, (iii) $18.3 million of other costs, including non-personnel manufacturing integration costs and (iv) $17.6 million of facility closure costs. The Company also made payments of $147.5 million during the year ended December 31, 2012 (in addition to the $155.3 million and $26.6 million of payments related to Medicis and Merger restructuring, respectively, shown in the tables above). In the year ended December 31, 2011, in addition to restructuring costs associated with the Company’s Merger-related initiatives shown in the table above, the Company incurred $50.8 million of integration-related costs, of which $37.5 million had been paid as of December 31, 2011 (in addition to the $55.6 million of payments related to the Merger restructuring, shown in the table above). The costs in 2012 and 2011 were primarily related to the acquisitions of Medicis, Dermik, iNova, Sanitas, OraPharma, Ortho Dermatologics, Afexa, PharmaSwiss, and a U.S. restructuring in 2012 focused primarily on a reduction in the prescription dermatology field force, the global consolidation of the Company’s manufacturing facilities, and systems integration initiatives.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents the components and classification of the Company’s financial assets and liabilities measured at fair value as of December 31, 2013 and 2012 :

F- 46

(1) The outstanding restructuring costs as of December 31, 2012 were paid in 2013. The Company has not recognized any restructuring charges in 2013 with respect to the Merger.

7. FAIR VALUE MEASUREMENTS

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

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

If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

There were no transfers between Level 1 and Level 2 during the year ended December 31, 2013 .

Assets and Liabilities Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

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. Significant increases (decreases) in any of those inputs in isolation could result in a significantly lower (higher) fair value measurement.

The following table presents a reconciliation of contingent consideration obligations measured on a recurring basis using significant unobservable inputs (Level 3) for the years ended December 31, 2013 and 2012 :

F- 47

2013 2012

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:

Money market funds $ 171,339 $ 171,339 $ — $ — $ 306,604 $ 306,604 $ — $ — Available-for-sale equity securities — — — — 4,410 4,410 — — Available-for-sale debt securities:

Auction rate floating securities — — — — 7,167 — — 7,167 Total financial assets $ 171,339 $ 171,339 $ — $ — $ 318,181 $ 311,014 $ — $ 7,167

Cash equivalents $ 171,339 $ 171,339 $ — $ — $ 306,604 $ 306,604 $ — $ — Marketable securities — — — — 11,577 4,410 — 7,167 Total financial assets $ 171,339 $ 171,339 $ — $ — $ 318,181 $ 311,014 $ — $ 7,167

Liabilities: Acquisition-related contingent consideration $ (355,765 ) $ — $ — $ (355,765 ) $ (455,082 ) $ — $ — $ (455,082 )

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

• Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using discounted cash flow methodologies, pricing models, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

For the year ended December 31, 2012, a net gain of $5.3 million was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income. The Acquisition-related contingent consideration net gain was primarily driven by (i) a net gain of $10.3 million related to the iNova acquisition, primarily due to changes in the estimated probability of achieving the milestones, partially offset by (ii) a net loss of $6.5 million related to the Elidel®/Xerese®/Zovirax® agreement, primarily driven by fair value adjustments to reflect accretion for the time value of money, partially offset by changes in the projected revenue forecast.

During the year ended December 31, 2013 , the Company sold its entire investment in auction rate floating securities assumed in connection with the Medicis Acquisition in December 2012 (as described in note 3) and realized a gain of $1.9 million .

As of December 31, 2012 , the Company also held investments in auction rate floating securities assumed in connection with the Medicis Acquisition, which were classified as available-for-sale securities and reflected at fair value (Level 3).

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

As of December 31, 2013 , the Company’s assets measured at fair value on a non-recurring basis subsequent to initial recognition included:

(i) an intangible asset within the Company’s Developed Markets segment, related to ezogabine/retigabine (immediate-release formulation) which is co-developed and marketed under a collaboration agreement with GSK. The Company recognized an impairment charge of $551.6 million in the third quarter of 2013 in Amortization and impairments of finite-lived intangible assets in the consolidated statements of (loss) income. In addition, the Company fully impaired an IPR&D asset, within the Company’s Developed Markets segment, relating to a modified-release formulation of ezogabine/retigabine, which resulted in a charge of $93.8 million . The $93.8 million write-off was recognized in the third quarter of 2013 in In-process research and development impairments and other charges in the consolidated statements of (loss) income. These impairment charges were driven by analysis of expected future cash flows based on the communication

2013 2012

Balance, beginning of year $ (455,082 ) $ (420,084 )

Total unrealized gains:

Included in net (loss) income:

Arising during the year (1) 29,259 5,266 Reclassification from other comprehensive income (loss) — —

Included in other comprehensive income (loss):

Arising during the year 4,938 (784 )

Acquisition-related contingent consideration:

Issuances (2) (76,064 ) (145,728 )

Payments (3) 141,184 106,248

Balance, end of year $ (355,765 ) $ (455,082 )

(1) For the year ended December 31, 2013 , a net gain of $29.3 million was recognized as Acquisition-related contingent consideration in the consolidated statements of (loss) income. The acquisition-related contingent consideration net gain was primarily driven by a net gain related to the Elidel®/Xerese®/Zovirax® agreement entered into with Meda in June 2011 (the “Elidel®/Xerese®/Zovirax® agreement”). In April 2013, Mylan Inc. launched a generic Zovirax® ointment, which was earlier than we previously anticipated. Also, in April 2013, we entered into an agreement with Actavis to launch the authorized generic ointment for Zovirax®. Refer to note 5 titled “COLLABORATION AGREEMENTS” for further information regarding the agreement with Actavis. As a result of analysis in the third quarter of 2013 of performance trends since the generic entrant, the Company adjusted the projected revenue forecast, resulting in an acquisition-related contingent consideration net gain of $20.0 million in the year ended December 31, 2013 . Also contributing to the acquisition-related contingent consideration net gain was a net gain of $6.9 million which resulted from the termination, in the third quarter of 2013, of the A007 (Lacrisert®) development program acquired by Valeant as part of Aton Pharma, Inc. (“Aton”) acquisition in May 2010, which impacted the probability associated with potential milestone payments. The termination of this program also resulted in an IPR&D impairment charge in the third quarter of 2013, as described in note 12 titled “INTANGIBLE ASSETS AND GOODWILL” .

(2) Relates to the 2013 acquisitions, primarily the Eisai acquisition and other smaller acquisitions, and the 2012 acquisitions, primarily the OraPharma, Gerot Lannach, QLT, and Atlantis acquisitions, as described in note 3 titled “BUSINESS COMBINATIONS” .

(3) Relates primarily to payments of acquisition-related contingent consideration related to the Elidel®/Xerese®/Zovirax® agreement and the OraPharma and the Gerot Lannach acquisitions. See note 3 titled “BUSINESS COMBINATIONS” .

received from the FDA in September 2013 regarding labeling changes and a required modification of the approved risk evaluation and mitigation strategy (REMS), which includes restrictions on distribution and additional patient monitoring. Further, as a result of this feedback received from the FDA, GSK decided that all sales force promotion for the product will be eliminated in the United States, and they

F- 48

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

will not launch the product in certain other planned territories. Per the terms of the collaboration agreement, GSK controls all sales force promotion for the product. Such changes are expected to have a significant impact on future cash flows of ezogabine/retigabine. The adjusted carrying amount of the ezogabine/retigabine (immediate-release formulation) of $45.1 million was equal to its estimated fair value, which was determined using discounted cash flows and represents Level 3 inputs. As a result of the events noted above, the Company believes that the value of the modified-release formulation of ezogabine/retigabine to a market participant would be zero.

(ii) assets held for sale within the Company’s Developed Markets segment, related to certain suncare and skincare brands, including inventory on hand, sold primarily in Australia. The Company recognized additional impairment charges of $31.5 million in 2013 for these brands in Amortization and impairments of finite-lived intangible assets in the consolidated statements of (loss) income. The additional impairment charges, which were recognized primarily in the first quarter, were driven by assessment of offers received and analysis of updated market data. During the fourth quarter of 2013, the Company sold the skincare brands that were classified as held for sale (see note 4 titled “ACQUISITIONS AND DISPOSITIONS” for further information). With respect to the remaining suncare brands, the plan of sale changed in the fourth quarter of 2013, and the Company no longer intends to sell these assets. Consequently, the carrying amount of $5.6 million , in the aggregate, for the remaining brands, is no longer classified as held for sale as of December 31, 2013; and

(iii) an intangible asset within the Company’s Developed Markets segment, related to Cortaid®, a dermatological product sold in the U.S. The Company recognized an impairment charge of $5.7 million in 2013 for this brand in Amortization and impairments of finite-lived intangible assets in the consolidated statements of (loss) income. The impairment charge was driven by discontinuations of the product by certain retailers. The adjusted carrying amount of $1.0 million for this asset was equal to its estimated fair value, which was determined using discounted cash flows and represents Level 3 inputs.

As of December 31, 2012 , the Company’s assets measured at fair value on a non-recurring basis subsequent to initial recognition included:

(i) an IPR&D asset related to a Xerese® life-cycle product. The Company recognized an impairment charge in 2012 of $24.7 million in In-process research and development impairments and other charges related to this asset due to higher projected development spend and revised timelines for potential commercialization. The adjusted carrying amount of $8.8 million as of December 31, 2012 for this asset was equal to its estimated fair value, which was determined using discounted cash flows and represents Level 3 inputs;

(ii) intangible assets related to certain suncare and skincare brands sold primarily in Australia, which are classified as held for sale on the consolidated balance sheet. The Company recognized impairment charges in 2012 of $31.3 million for these brands in Amortization and impairments of finite-lived intangible assets in the consolidated statements of (loss) income. These charges included an allocation of goodwill of $12.8 million based on the relative fair value of these brands as compared to the total fair value of the Australia reporting unit. The adjusted carrying amount of $60.5 million for these assets as of December 31, 2012, in the aggregate, was equal to their estimated fair values less costs to sell, which was determined using discounted cash flows and represents Level 3 inputs; and

(iii) intangible asset related to the Dermaglow® product classified as held for sale on the consolidated balance sheet. The Company recognized impairment charges in 2012 of $18.7 million for the Dermaglow® product in Amortization and impairments of finite-lived intangible assets in the consolidated statements of (loss) income. The adjusted carrying amount of $2.2 million for this asset as of December 31, 2012 was equal to its estimated fair value less costs to sell, which was determined using discounted cash flows and represents Level 3 inputs.

For further information regarding asset impairment charges, see note 12 titled “INTANGIBLE ASSETS AND GOODWILL”.

The following table summarizes the estimated fair values of the Company’s financial instruments as of December 31, 2013 and 2012 :

F- 49

8. FAIR VALUE OF FINANCIAL INSTRUMENTS

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The following table summarizes the Company’s marketable securities by major security type as of December 31, 2013 and 2012 :

Gross gains and losses realized on the sale of marketable debt securities were not material in the years ended December 31, 2013 , 2012 or 2011 .

The components of accounts receivable as of December 31, 2013 and 2012 were as follows:

The increase in accounts receivable primarily reflects acquisitions during 2013 , including the addition of B&L’s, Natur Produkt’s and Obagi’s revenues in 2013 , as well as revenue growth from the existing business.

The components of inventories as of December 31, 2013 and 2012 were as follows:

2013 2012

Carrying

Value Fair

Value Carrying

Value Fair

Value

Cash equivalents $ 171,339 $ 171,339 $ 306,604 $ 306,604 Marketable securities (1) — — 11,577 11,577 Long-term debt (as described in note 14) (2) (17,367,702 ) (18,375,289 ) (11,015,625 ) (11,691,338 )

(1) Marketable securities are classified within Prepaid expenses and other current assets and Other long-term assets, net in the consolidated balance sheets.

(2) Fair value measurement of long-term debt was estimated using the quoted market prices for the Company’s debt issuances.

2013 2012

Cost Basis

Fair Value

Gross Unrealized Cost Basis

Fair Value

Gross Unrealized

Gains Losses Gains Losses

Auction rate floating securities $ — $ — $ — $ — $ 7,166 $ 7,167 $ 1 $ — Equity securities — — — — 4,031 4,410 379 —

$ — $ — $ — $ — $ 11,197 $ 11,577 $ 380 $ —

9. ACCOUNTS RECEIVABLE

2013 2012

Trade $ 1,704,015 $ 781,954 Less allowance for doubtful accounts (27,676 ) (12,485 )

1,676,339 769,469 Royalties 21,145 15,606 Other 117,285 128,760

$ 1,814,769 $ 913,835

10. INVENTORIES

2013 2012

Raw materials $ 221,762 $ 120,885 Work in process 104,744 60,384

F- 50

Finished goods 656,305 406,018 982,811 587,287 Less allowance for obsolescence (99,845 ) (56,031 )

$ 882,966 $ 531,256

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

In the year ended December 31, 2013 , the increase in inventories was primarily driven by (i) the 2013 acquisitions of businesses, primarily from the $652.1 million of inventory acquired in the B&L Acquisition, and (ii) investments in inventory to support growth of the business, partially offset by $372.5 million of acquisition related adjustments included in cost of goods sold, primarily related to B&L and Medicis inventories that were sold in the year ended December 31, 2013 .

For further details regarding the 2013 acquisitions, see note 3 titled “BUSINESS COMBINATIONS”.

The major components of property, plant and equipment as of December 31, 2013 and 2012 were as follows:

The increase in the gross carrying value primarily reflects the acquisition of B&L’s property, plant and equipment, which were recorded at fair value (as described in note 3 titled “BUSINESS COMBINATIONS”).

Depreciation expense amounted to $113.8 million , $54.8 million , and $45.6 million in the years ended December 31, 2013 , 2012 and 2011 , respectively.

Intangible Assets

The major components of intangible assets as of December 31, 2013 and 2012 were as follows:

11. PROPERTY, PLANT AND EQUIPMENT

2013 2012

Land $ 76,940 $ 42,920 Buildings 607,056 220,039 Machinery and equipment 1,062,746 262,226 Other equipment and leasehold improvements 108,227 55,207 Equipment on operating lease 28,566 — Construction in progress 189,543 55,840 2,073,078 636,232 Less accumulated depreciation (838,842 ) (173,508 )

$ 1,234,236 $ 462,724

12. INTANGIBLE ASSETS AND GOODWILL

____________________________________

F- 51

Weighted- Average Useful Lives

(Years)

2013 2012

Gross Carrying Amount

Accumulated Amortization,

Including Impairments

Net Carrying Amount

Gross Carrying Amount

Accumulated Amortization,

Including Impairments

Net Carrying Amount

Finite-lived intangible assets:

Product brands 9 $ 10,554,160 $ (2,729,118 ) $ 7,825,042 $ 7,968,318 $ (1,345,367 ) $ 6,622,951 Corporate brands 15 365,617 (44,372 ) 321,245 284,287 (25,336 ) 258,951 Product rights 8 3,020,996 (876,877 ) 2,144,119 2,110,350 (525,186 ) 1,585,164 Partner relationships 4 194,035 (83,221 ) 110,814 187,012 (44,230 ) 142,782 Out-licensed technology and other 6 263,911 (93,820 ) 170,091 209,452 (57,507 ) 151,945 Total finite-lived intangible assets (1) 9 14,398,719 (3,827,408 ) 10,571,311 10,759,419 (1,997,626 ) 8,761,793

Indefinite-lived intangible assets:

Acquired IPR&D (2) NA 579,311 — 579,311 546,876 — 546,876 Corporate brand (3) NA 1,697,538 — 1,697,538 — — —

$ 16,675,568 $ (3,827,408 ) $ 12,848,160 $ 11,306,295 $ (1,997,626 ) $ 9,308,669

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

In addition, in the third quarter of 2013, the Company recognized a write-off of $10.0 million related to certain OTC skincare products in the U.S. (included in the Company’s Developed Markets segment) due to the discontinuation of the products. The Company does not believe these programs have value to a market participant.

In the first quarter of 2013, the Company recognized a write-off of $22.2 million related to Opana®, a pain relief medication approved in Canada (included in the Company’s Developed Markets segment), due to production issues arising in the first quarter of 2013. These production issues resulted in higher spending projections and delayed commercialization timelines which, in turn, triggered the Company’s decision to suspend its launch plans. The Company does not believe this program has value to a market participant.

These impairment charges were recognized in Amortization and impairments of finite-lived intangible assets in the consolidated statements of (loss) income.

In the third quarter of 2013, the Company wrote off an IPR&D asset of $93.8 million relating to a modified-release formulation of ezogabine/retigabine. For further information regarding this write-off, see note 7 titled “FAIR VALUE MEASUREMENTS”.

In addition, in the third quarter of 2013, the Company wrote-off IPR&D assets of $27.3 million , in the aggregate, due to the write-off of IPR&D assets acquired by Valeant as part of Aton acquisition in May 2010, mainly related to the termination of the A007 (Lacrisert®) development program (Developed Markets segment) in the third quarter of 2013. The Company does not believe these programs have value to a market participant.

In the fourth quarter of 2012, the Company recognized an IPR&D impairment charge of $24.7 million related to a Xerese® life-cycle product (Developed Markets segment) due to higher projected development spend and revised timelines for potential commercialization. In the third quarter of 2012, the Company wrote off an IPR&D asset of $133.4 million , relating to the IDP-107 program (Developed Markets segment), which was acquired in September 2010 as part of the Merger. Through discussion with various internal and external Key Opinion Leaders, the Company completed its analysis of the Phase 2 study results for IDP-107 during the third quarter of 2012. This led to the Company’s decision in the third quarter of 2012 to terminate the program and fully impair the asset. As attempts to identify a partner for the program were not successful, the Company continues to not believe the program has value to a market participant. In addition, in the second quarter of 2012, the Company wrote off $4.3 million relating to the termination of the MC5 program (Developed Markets segment) acquired as part of the Ortho Dermatologics acquisition in 2011 described in note 3.

The write offs of the IPR&D assets were recorded in In-process research and development impairments and other charges in the consolidated statements of (loss) income.

In addition, a $12.0 million payment in the third quarter of 2012 to terminate a research and development commitment with a third party was included in In-process research and development impairments and other charges in the consolidated statements of (loss) income.

For further information regarding asset impairment charges, see note 7 titled “FAIR VALUE MEASUREMENTS”.

The increase in intangible assets, net in 2013 primarily reflects the acquisition of the B&L, Obagi, Eisai and Natur Produkt identifiable intangible assets (as described in note 3) partially offset by amortization, the intangible impairments described above and the negative impact of foreign currency exchange.

For the years ended December 31, 2013 , 2012 and 2011 , amortization and impairments of finite-lived intangible assets were recorded as follows:

(1) In the third quarter of 2013, the Company recognized an impairment charge of $551.6 million related to ezogabine/retigabine (immediate-release formulation) which is co-developed and marketed under a collaboration agreement with GSK. For further information regarding this asset impairment charge, see note 7 titled “FAIR VALUE MEASUREMENTS”.

(2) In the fourth quarter of 2013, the Company wrote-off (i) an IPR&D asset of $14.4 million related to the termination of the Mapracorat development program (included in both the Emerging Markets and Developed Markets segments), acquired by the Company as part of B&L Acquisition, resulting from analysis of Phase 3 study results and (ii) an IPR&D asset of $8.8 million related to a Xerese® life-cycle product (Developed Markets segment) due to assessment of market data and evaluation of development risk. The Company does not believe these programs have value to a market participant.

(3) Represents the B&L corporate trademark, which has an indefinite useful life and is not amortizable. See note 3 “BUSINESS COMBINATIONS” for further information.

2013 2012 2011

Alliance and royalty revenue $ — $ — $ 1,072 Cost of goods sold — 2,557 8,103 Amortization and impairments of finite-lived intangible assets 1,901,977 928,885 557,814

$ 1,901,977 $ 931,442 $ 566,989

Amortization and impairments of finite-lived intangible assets for the year ended December 31, 2013 includes the $551.6 million impairment charge related to ezogabine/retigabine (described above), the $31.5 million of impairment charges related to suncare and skincare brands sold primarily in Australia (see note 7 titled “FAIR VALUE MEASUREMENTS” for additional information), the $22.2 million Opana® write-off (described above), $38.0 million of write-offs, in the aggregate, primarily

F- 52

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

related to the discontinuation of certain products in the Brazilian, Canadian, and Polish markets, and the $10.0 million write-off related to certain OTC skincare products in the U.S. (described above).

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

____________________________________

Goodwill

The changes in the carrying amount of goodwill for years ended December 31, 2013 and 2012 were as follows:

____________________________________

As described in note 3, the allocation of the goodwill balance associated with the B&L Acquisition is provisional and subject to the completion of the valuation of the assets acquired and liabilities assumed.

2014 2015 2016 2017 2018

Amortization expense (1) $ 1,406,660 $ 1,368,548 $ 1,278,275 $ 1,213,345 $ 1,088,496

(1) Estimated amortization expense shown in the table above does not include potential future impairments of finite-lived intangible assets, if any.

Developed Markets

Emerging Markets Total

Balance, December 31, 2011 (1) $ 2,530,976 $ 1,050,536 $ 3,581,512 Additions (2) 1,466,684 49,908 1,516,592 Adjustments (3) (14,631 ) — (14,631 )

Foreign exchange and other (4) 9,959 47,934 57,893 Balance, December 31, 2012 (1) 3,992,988 1,148,378 5,141,366 Additions (5) 3,395,656 1,199,528 4,595,184 Adjustments (6) 28,468 (316 ) 28,152 Foreign exchange and other 11,627 (24,229 ) (12,602 )

Balance, December 31, 2013 $ 7,428,739 $ 2,323,361 $ 9,752,100

(1) Effective in the first quarter of 2013, the Company has two reportable segments: Developed Markets and Emerging Markets. Accordingly, the Company has restated prior period segment information to conform to the current period presentation. For further details, see note 26 titled “SEGMENT INFORMATION”.

(2) Primarily relates to the Medicis, OraPharma, Probiotica and Gerot Lannach acquisitions (as described in note 3).

(3) Primarily reflects the impact of measurement period adjustments related to the iNova, Dermik and Afexa acquisitions (as described in note 3).

(4) Includes an impairment charge of $12.8 million related to the allocation of goodwill to the carrying amounts of certain suncare and skincare brands primarily sold in Australia, which were classified as held for sale as of December 31, 2012. Refer to note 7 titled “FAIR VALUE MEASUREMENTS”, for additional details regarding these impairment charges.

(5) Primarily relates to the B&L, Obagi and Natur Produkt acquisitions (as described in note 3).

(6) Primarily reflects the impact of measurement period adjustments related to the Medicis acquisition (as described in note 3).

13. ACCRUED AND OTHER CURRENT LIABILITIES

The major components of accrued and other current liabilities as of December 31, 2013 and 2012 were as follows:

F- 53

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The increase in accruals for capital expenditures is driven by the B&L business, which the Company acquired in August 2013.

A summary of the Company’s consolidated long-term debt as of December 31, 2013 and 2012 , respectively, is outlined in the table below:

F- 54

2013 2012

Product returns $ 225,457 $ 171,099 Product rebates 566,655 369,339 Interest 227,423 131,462 Employee costs 201,223 69,345 Professional fees 46,271 29,950 Restructuring, integration and other costs (as described in note 6) 111,972 32,798 Royalties 37,590 24,523 Legal settlements and related fees (as described in note 24) 55,925 16,279 Liabilities for uncertain tax positions 8,667 14,395 Value added tax 25,872 12,892 Short-term borrowings 12,081 10,548 Deferred income 19,487 7,032 Income taxes payable 39,097 19,910 Capital expenditures 27,197 959 Advertising 8,507 11,432 Other 186,769 86,261

$ 1,800,193 $ 1,008,224

14. LONG-TERM DEBT

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The Company’s Senior Secured Credit Facilities and indentures related to its senior notes contain customary covenants, including, among other things, and subject to certain qualifications and exceptions, covenants that restrict the Company’s ability and the ability of its subsidiaries to: incur or guarantee additional indebtedness; create or permit liens on assets; pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; make certain investments and other restricted payments; engage in mergers, acquisitions, consolidations and amalgamations; transfer and sell certain assets; and engage in transactions with affiliates.

The Company’s Senior Secured Credit Facilities also contain specified financial covenants (consisting of a secured leverage ratio and an interest coverage ratio), various customary affirmative covenants and specified events of default. The Company’s indentures also contain certain customary affirmative covenants and specified events of default.

The total fair value of the Company’s long-term debt, with carrying values of $17.4 billion and $11.0 billion at December 31, 2013 and 2012 , was $18.4 billion and $11.7 billion , respectively. The fair value of the Company’s long-term debt is estimated using the quoted market prices for the Company’s debt issuances.

Maturity Date 2013 2012

Revolving Credit Facility (1) April 2018 $ — $ — Series A-1 Tranche A Term Loan Facility, net of unamortized debt discount (2013 — $3,635; 2012 — $30,288) (1) April 2016 258,985 2,083,462 Series A-2 Tranche A Term Loan Facility, net of unamortized debt discount of $6,205 (1) April 2016 228,145 — Series A-3 Tranche A Term Loan Facility, net of unamortized debt discount of $35,412 (1) October 2018 1,935,713 — Series D-2 Tranche B Term Loan Facility, net of unamortized debt discount of (2013 — $27,046; 2012 — $24,833) (1) February 2019 1,256,704 1,275,167 Series C-2 Tranche B Term Loan Facility, net of unamortized debt discount of (2013 — $20,692; 2012 — $26,012) (1) December 2019 966,808 973,988 Series E Tranche B Term Loan Facility, net of unamortized debt discount of $85,493 (1) August 2020 3,090,506 — Senior Notes:

6.50% July 2016 — 915,500 6.75%, net of unamortized debt discount (2013 — $1,338; 2012 — $1,695) October 2017 498,662 498,305 6.875%, net of unamortized debt discount (2013 — $4,402; 2012 — $5,303) December 2018 940,178 939,277 7.00%, net of unamortized debt discount (2013 — $2,909; 2012 — $3,340) October 2020 687,091 686,660 6.75% August 2021 650,000 650,000 7.25%, net of unamortized debt discount (2013 — $7,756; 2012 — $8,665) July 2022 542,244 541,335 6.375%, net of unamortized discount (2013 — $28,609; 2012 — $25,480) October 2020 2,221,391 1,724,520 6.375%, net of unamortized discount (2012 — $7,280) October 2020 — 492,720 6.75%, net of unamortized discount (2013 — $18,153) August 2018 1,581,847 — 7.50%, net of unamortized discount (2013 — $19,121) July 2021 1,605,879 — 5.625%, net of unamortized discount (2013 — $8,463) December 2021 891,537 —

Medicis Convertible Notes (2) Various 209 233,793 Other (3) Various 11,803 898 17,367,702 11,015,625 Less current portion (204,756 ) (480,182 )

Total long-term debt $ 17,162,946 $ 10,535,443

(1) Together, the “Senior Secured Credit Facilities” under the Company’s Third Amended and Restated Credit and Guaranty Agreement (the “Credit Agreement”).

(2) Represents obligations assumed from Medicis.

(3) Relates to the obligations assumed from B&L (discussed below).

Aggregate maturities of our long-term debt for each of the five succeeding years ending December 31 and thereafter are as follows:

F- 55

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Senior Secured Credit Facilities

On February 13, 2012, the Company and certain of its subsidiaries as guarantors entered into the Credit Agreement with a syndicate of financial institutions and investors. Between February 13, 2012 and December 31, 2012, the Company and certain of its subsidiaries as guarantors entered into a series of joinder agreements to, among other things, (i) increase the existing tranche B term loan facility (the “Tranche B Term Loan Facility”) through new incremental term loans, (ii) reprice and refinance the Tranche B Term Loan Facility (such repriced Tranche B Term Loan Facility, the “Series D Tranche B Term Loan Facility”), and (iii) increase the amount of commitments under the revolving credit facility provided under the Credit Agreement (the “Revolving Credit Facility”). In connection with the repricing and refinancing of the Tranche B Term Loan Facility, the Company recognized a loss on extinguishment of debt of $17.6 million in the three-month period ended December 31, 2012. In addition, in connection with the Medicis acquisition, the Company on December 11, 2012, issued $1.0 billion in a new Series C of the Tranche B Term Loans (the “Series C Tranche B Term Loan Facility”). As of December 31, 2012, the Credit Agreement provided for a $450.0 million Revolving Credit Facility, including a sublimit for the issuance of standby and commercial letters of credit and a sublimit for swing line loans, a $2.225 billion senior secured tranche A term loan facility (the “Tranche A Term Loan Facility”), a $1.3 billion senior secured Series D Tranche B Term Loan Facility and a $1.0 billion senior secured Series C Tranche B Term Loan Facility.

On January 24, 2013, the Company and certain of its subsidiaries as guarantors entered into Amendment No. 3 to the Credit Agreement to reprice the Tranche A Term Loan Facility, (as so amended, the “Series A-1 Tranche A Term Loan Facility”) and the Revolving Credit Facility. Borrowings under the Revolving Credit Facility and the Series A-1 Tranche A Term Loan Facility bore interest at a rate per annum equal to, at the Company’s option, either (a) a base rate or (b) a LIBO rate, in each case plus an applicable margin. The initial applicable margin for borrowings under the Revolving Credit Facility and the Tranche A Term Loan Facility was 1.75% with respect to base rate borrowings and 2.75% with respect to LIBO rate borrowings. As amended, the applicable margins for the Tranche A Term Loan Facility and the Revolving Credit Facility each were reduced by 0.75% . Interest rates for the Revolving Credit Facility and the Series A-1 Tranche A Term Loan Facility are subject to increase or decrease quarterly based on leverage ratios. For the year ended December 31, 2013, the effective rate of interest on the Company’s borrowings under the Series A-1 Tranche A Term Loan Facility was 2.46% per annum. In 2013, the Company made a voluntary prepayment of the scheduled March 2014 amortization payment applicable to the Series A-1 Tranche A Term Loan Facility, resulting in a principal reduction of $106.3 million .

On February 21, 2013, the Company and certain of its subsidiaries as guarantors entered into Amendment No. 4 to the Credit Agreement to effectuate a repricing of the Series D Tranche B Term Loan Facility and Series C Tranche B Term Loan Facility by the issuance of $1.3 billion and $1.0 billion in new incremental term loans (the “Series D-1 Tranche B Term Loan Facility” and “Series C-1 Tranche B Term Loan Facility”, respectively). Term loans under the Series D Tranche B Term Loan Facility and Series C Tranche B Term Loan Facility were either exchanged for, or repaid with the proceeds of, the Series D-1 Tranche B Term Loan Facility and Series C-1 Tranche B Term Loan Facility, respectively. The applicable margins for borrowings under the Series D-1 Tranche B Term Loan Facility and Series C-1 Tranche B Term Loan Facility are 1.75% with respect to base rate borrowings and 2.75% with respect to LIBO rate borrowings, subject to a 0.75% LIBO rate floor and a 1.75% base rate floor. The term loans under the Series D-1 Tranche B Term Loan Facility and the Series C-1 Tranche B Term Loan Facility mature on February 13, 2019 and December 11, 2019, respectively, began amortizing quarterly on March 31, 2013 at an annual rate of 1.0% and have terms consistent with the Series D Tranche B Term Loan Facility and Series C Tranche B Term Loan Facility, respectively. In connection with the repricing of the Series D Tranche B Term Loan Facility and the Series C Tranche B Term Loan Facility, the Company paid a prepayment premium of approximately $23.0 million , equal to 1.0% of the refinanced term loans under the Series D Tranche B Term Loan Facility and Series C Tranche B Term Loan Facility. In connection with this transaction, the Company recognized a loss on extinguishment of debt of $21.4 million in the three-month period ended March 31, 2013.

2014 $ 204,756 2015 372,534 2016 744,814 2017 954,215 2018 3,497,814 Thereafter 11,862,803 Total gross maturities 17,636,936 Unamortized discounts (269,234 )

Total long-term debt $ 17,367,702

F- 56

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

On June 6, 2013, the Company and certain of its subsidiaries, as guarantors, entered into Amendment No. 5 to the Credit Agreement to implement certain revisions in connection with the B&L Acquisition. The amendment provided for certain revisions in connection with, among other things, the formation of VPII Escrow Corp., the offering of the senior unsecured notes by VPII Escrow Corp., the equity offering, the waiver of certain closing conditions and/or requirements in connection with the incurrence of incremental term loans and/or establishment of incremental revolving commitments related to the consummation of the B&L Acquisition.

On June 26, 2013, the Company and certain of its subsidiaries, as guarantors, entered into Amendment No. 6 to the Credit Agreement to, among other things, allow for the increase in commitments under the Revolving Credit Facility and the extension of the maturity of the Revolving Credit Facility from April 20, 2016 to April 20, 2018, and to amend certain other provisions of the Credit Agreement. On July 15, 2013, the increase in commitments and maturity extension under the Revolving Credit Facility was completed, with commitments increased by $550.0 million to $1.0 billion . For the year ended December 31, 2013, the effective rate of interest on the Company’s borrowings under the Revolving Credit Facility was 2.40% per annum.

On June 27, 2013, the Company priced new incremental term loan facilities in an aggregate principal amount of $4,050.0 million (the “Incremental Term Loan Facilities”) under its existing Senior Secured Credit Facilities. The Incremental Term Loan Facilities consist of (1) $850.0 million of tranche A term loans, maturing on April 20, 2016 (the “Series A-2 Tranche A Term Loan Facility”), bearing interest at a rate per annum equal to, at the election of the Company, (i) the base rate plus 1.25% or (ii) LIBO rate plus 2.25% and having terms that are consistent with the Company’s existing Series A-1 Tranche A Term Loan Facility, and (2) $3,200.0 million of tranche B term loans maturing on August 5, 2020 (the “Series E Tranche B Term Loan Facility”), bearing interest at a rate per annum equal to, at the election of the Company, (i) the base rate plus 2.75% , subject to a 1.75% base rate floor or (ii) LIBO rate plus 3.75% , subject to a 0.75% LIBO rate floor and having terms that are consistent with the Company’s Series D-1 Tranche B Term Loan Facility. The Incremental Term Loan Facilities closed on August 5, 2013, concurrent with the closing of the B&L Acquisition. Pursuant to the Credit Agreement, in connection with the funding of the Incremental Term Loan Facilities, the interest margins under the Series D-1 Tranche B Term Loan Facility and Series C-1 Tranche B Term Loan Facility increased by 0.875% per annum. For the year ended December 31, 2013, the effective rate of interest on the Company’s borrowings under the Series A-2 Tranche A Term Loan Facility and Series E Tranche B Term Loan Facility were 2.43% and 4.50% per annum, respectively. In 2013, the Company made a voluntary prepayment of the scheduled March 2014 amortization payment applicable to the Series A-2 Tranche A Term Loan Facility and Series E Tranche B Term Loan Facility, resulting in a principal reduction of $42.5 million and $8.0 million , respectively.

On September 17, 2013, the Company and certain of its subsidiaries, as guarantors, entered into Amendment No. 7 to the Credit Agreement to effectuate a repricing of the Series D-1 Tranche B Term Loan Facility and the Series C-1 Tranche B Term Loan Facility by issuance of $1,287.0 million and $990.0 million in new incremental term loans (the “Series D-2 Tranche B Term Loan Facility” and “Series C-2 Tranche B Term Loan Facility”, respectively). Term loans under the Series D-1 Tranche B Term Loan Facility and Series C-1 Tranche B Term Loan Facility were either exchanged for, or repaid with the proceeds of the Series D-2 Tranche B Term Loan Facility and Series C-2 Tranche B Term Loan Facility, respectively. The applicable margins for borrowings under the Series D-2 Tranche B Term Loan Facility and Series C-2 Tranche B Term Loan Facility are 2.0% with respect to base rate borrowings and 3.0% with respect to LIBO rate borrowings, subject to a 1.75% base rate floor and a 0.75% LIBO rate floor. The Series D-2 Tranche B Term Loan Facility and Series C-2 Tranche B Term Loan Facility have terms consistent with the Series D-1 Tranche B Term Loan Facility and Series C-1 Tranche B Term Loan Facility, respectively. For the year ended December 31, 2013, the effective rate of interest on the Company’s borrowings under both the Series D-2 Tranche B Term Loan Facility and Series C-2 Tranche B Term Loan Facility was 3.87% per annum. In 2013, the Company made a voluntary prepayment of the scheduled March 2014 amortization payment applicable to the Series D-2 Tranche B Term Loan Facility and Series C-2 Tranche B Term Loan Facility, resulting in a principal reduction of $3.3 million and $2.5 million , respectively.

On December 20, 2013, the Company entered into Amendment No. 8 to the Credit Agreement to allow for the extension of the maturity of all or a portion of the Series A-1 Tranche A Term Loans and Series A-2 Tranche A Term Loans outstanding from April 20, 2016 to October 20, 2018 (as extended, the “Series A-3 Tranche A Term Loan Facility”). Some of the lenders exchanged and/or converted a portion or all of their existing term loans outstanding under the Series A-1 Tranche A Term Loan Facility and Series A-2 Tranche A Term Loan Facility into the Series A-3 Tranche A Term Loan Facility. In addition, several existing lenders increased their term loans outstanding under the Series A-3 Tranche A Term Loan Facility for an aggregate amount of $33.0 million . For the year ended December 31, 2013, the effective rate of interest on the Company’s borrowings under the Series A-3 Tranche A Term Loan Facility was 2.42% per annum. On December 31, 2013, the Company made a voluntary prepayment of the scheduled March 2014 amortization payment applicable to the Series A-3 Tranche A Term Loan Facility, resulting in a principal reduction of $25.0 million .

F- 57

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The Revolving Credit Facility matures on April 20, 2018 and does not amortize. The Series A-1 Tranche A Term Loans mature on April 20, 2016 and began amortizing quarterly on March 31, 2012 at an initial annual rate of 5.0% . The amortization schedule under the Series A-1 Tranche A Term Loans increased to 10.0% annually commencing March 31, 2013 and following the closing of Amendment No. 8, will amortize at an annual rate of approximately 25% beginning June 30, 2014. The Series A-2 Tranche A Term Loans mature on April 20, 2016 and began amortizing quarterly on September 30, 2013 at an initial annual rate of 10.0% and, following the closing of Amendment No. 8, will amortize at an annual rate of approximately 22% beginning June 30, 2014. The Series A-3 Tranche A Term Loans mature on October 20, 2018 and will begin amortizing on March 31, 2014 at an initial annual rate of 5.0% increasing to 10.0% annually commencing March 31, 2015, increasing again to 20.0% annually commencing March 31, 2016. The Series D-2 Tranche B Term Loan Facility matures on February 13, 2019 and amortizes quarterly at an annual rate of 1.0% . The Series C-2 Tranche B Term Loan Facility matures on December 11, 2019, and amortizes quarterly at an annual rate of 1.0% . The Series E Tranche B Term Loan Facility matures on August 5, 2020, and amortizes quarterly at an annual rate of 1.0% .

The loans under the Senior Secured Credit Facilities may be made to, and the letters of credit under the Revolving Credit Facility may be issued on behalf of, the Company. All borrowings under the Senior Secured Credit Facilities are subject to the satisfaction of customary conditions, including the absence of a default or an event of default and the accuracy in all material respects of representations and warranties.

In addition to paying interest on outstanding principal under the Senior Secured Credit Facilities, the Company is required to pay commitment fees of 0.50% per annum in respect of the unutilized commitments under the Revolving Credit Facility, payable quarterly in arrears. The Company also is required to pay letter of credit fees on the maximum amount available to be drawn under all outstanding letters of credit in an amount equal to the applicable margin on LIBO rate borrowings under the Revolving Credit Facility on a per annum basis, payable quarterly in arrears, as well as customary fronting fees for the issuance of letters of credit and agency fees.

Subject to certain exceptions and customary baskets set forth in the Credit Agreement, the Company is required to make mandatory prepayments of the loans under the Senior Secured Credit Facilities under certain circumstances, including from (a) 100% of net cash proceeds from asset sales outside the ordinary course of business (subject to reinvestment rights), (b) 100% of the net cash proceeds of insurance and condemnation proceeds for property or asset losses (subject to reinvestment rights and net proceeds threshold), (c) 50% of the net cash proceeds from the issuance of equity securities subject to decrease based on leverage ratios, (d) 100% of the net cash proceeds from the incurrence of debt (other than permitted debt as defined in the Credit Agreement) and (e) 50% of Consolidated Excess Cash Flow (as defined in the Credit Agreement) subject to decrease based on leverage ratios.

The Company is permitted to voluntarily reduce the unutilized portion of the revolving 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. As of December 31, 2013, the Company is permitted to voluntarily repay outstanding loans under the Tranche A Term Loan Facility at any time without premium or penalty, other than customary “breakage” costs with respect to LIBO rate loans. Any repayment of the Series D-2 Tranche B Term Loan Facility or the Series C-2 Tranche B Term Loan Facility in connection with certain refinancings on or prior to March 17, 2014 requires a prepayment premium of 1.0% of such loans prepaid. As of December 31, 2013, any repayment of the Series E Tranche B Term Loan Facility in connection with certain refinancings on or prior to February 5, 2014 required a prepayment premium of 1.0% of such loans prepaid. As a result of the Series E Tranche B Term Loan Facility refinancing launched on December 5, 2013, which closed on February 6, 2014 (see note 27 titled “SUBSEQUENT EVENTS AND PENDING TRANSACTIONS”), any repayment of the repriced Series E Tranche B Term Loan Facility in connection with certain refinancings on or prior to August 6, 2014 will require a prepayment premium of 1.0% of such loans prepaid.

The Company’s obligations and the obligations of the guarantors under the Senior Secured Credit Facilities and certain hedging arrangements and cash management arrangements entered into with lenders under the Senior Secured Credit Facilities (or affiliates thereof) are secured by first-priority security interests in substantially all tangible and intangible assets of the Company and the guarantors, including 100% of the capital stock of Valeant and each material subsidiary of the Company (other than Valeant’s foreign subsidiaries) and 65% of the capital stock of each foreign subsidiary of Valeant that is directly owned by Valeant or a guarantor that is a domestic subsidiary of Valeant, in each case subject to certain exclusions set forth in the credit documentation governing the Senior Secured Credit Facilities.

As of December 31, 2013, the Company was in compliance with all covenants associated with the Senior Secured Credit Facilities.

6.50% Senior Notes due 2016 and 7.25% Senior Notes due 2022

F- 58

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

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 had a maturity date of July 15, 2016, accrued interest at the rate of 6.50% per year, and were issued at par. The 2022 Notes will mature on July 15, 2022 and 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 2022 Notes were issued at 98.125% of par for an effective annual yield of 7.50% . The 2016 Notes and 2022 Notes were and are, respectively, senior unsecured obligations of Valeant and 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 the Senior Secured Credit Facilities. Certain of the future subsidiaries of the Company may be required to guarantee the 2022 Notes.

In the fourth quarter of 2011, Valeant redeemed $34.5 million of principal amount of the 2016 Notes for $34.2 million through open-market purchases. In the fourth quarter of 2013, Valeant redeemed all $915.5 million of the outstanding principal amount of the 2016 Notes for $945.3 million , including a call premium of $29.8 million , plus accrued and unpaid interest, and satisfied and discharged the 2016 Notes indenture, solely with respect to the 2016 Notes. In connection with this transaction, the Company recognized a loss on extinguishment of debt of $32.5 million in the three-month period ended December 31, 2013.

Valeant may redeem the 2022 Notes at any time prior to July 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 July 15, 2016, Valeant may redeem all or a portion of the 2022 Notes, at the redemption prices applicable to the 2022 Notes, as set forth in the 2022 Notes indenture, plus accrued and unpaid interest to the date of redemption of the 2022 Notes, as applicable. In addition, prior to July 15, 2014, Valeant may redeem up to 35% of the aggregate principal amount of the 2022 Notes, at redemption prices of 107.250% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, with the net proceeds of certain equity offerings.

6.75% Senior Notes due 2017 and 7.00% Senior Notes due 2020

Concurrent with the closing of the Merger in September 2010 (the “Merger Date”), Valeant issued $500.0 million aggregate principal amount of 6.75% senior notes due 2017 (the “2017 Notes”) and $700.0 million aggregate principal amount of 7.00% senior notes due 2020 (the “October 2020 Notes”) in a private placement. The 2017 Notes mature on October 1, 2017 and the October 2020 Notes mature on October 1, 2020. Interest on the 2017 Notes and October 2020 Notes accrues at the rate of 6.75% and 7.00% , respectively, and is payable semi-annually in arrears on each April 1 and October 1, commencing on April 1, 2011. The 2017 Notes were issued at a discount of 99.5% for an effective annual yield of 6.84% and the October 2020 Notes were issued at a discount of 99.375% for an effective annual yield of 7.09% . The 2017 Notes and October 2020 Notes are the 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 the Senior Secured Credit Facilities. Certain of the future subsidiaries of the Company may be required to guarantee the 2017 Notes and 2020 Notes.

Valeant may redeem all or a portion of the 2017 Notes at any time prior to October 1, 2014, and Valeant may redeem all or a portion of the October 2020 Notes at any time prior to October 1, 2015, 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, as set forth in the 2017 Notes and October 2020 Notes indenture. In the fourth quarter of 2011, Valeant redeemed $10.0 million of principal amount of the October 2020 Notes for $9.5 million through open-market purchases. On or after October 1, 2014, Valeant may redeem all or a portion of the 2017 Notes, and on or after October 1, 2015, Valeant may redeem all or a portion of the October 2020 Notes, in each case at the redemption prices applicable to the 2017 Notes or the October 2020 Notes, as set forth in the 2017 Notes and October 2020 Notes indenture, plus accrued and unpaid interest to the date of redemption.

6.875% Senior Notes due 2018

On November 23, 2010, Valeant issued $1.0 billion aggregate principal amount of 6.875% senior notes due 2018 (the “December 2018 Notes”) in a private placement. The December 2018 Notes mature on December 1, 2018. Interest on the December 2018 Notes accrues at a rate of 6.875% and is payable semi-annually in arrears on each June 1 and December 1, commencing on June 1, 2011. The December 2018 Notes were issued at a discount of 99.24% for an effective annual yield of 7.0% . The December 2018 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 the Senior Secured Credit Facilities. Certain of the future subsidiaries of the Company may be required to guarantee the December 2018 Notes.

Valeant may redeem all or a portion of the December 2018 Notes at any time prior to December 1, 2014, 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”

F- 59

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

premium, as set forth in the December 2018 Notes indenture. In the fourth quarter of 2011, Valeant redeemed $55.4 million of principal amount of the December 2018 Notes for $54.9 million . On or after December 1, 2014, Valeant may redeem all or a portion of the December 2018 Notes at the redemption prices applicable to the December 2018 Notes, as set forth in the December 2018 Notes indenture, plus accrued and unpaid interest to the date of redemption.

6.75% Senior Notes due 2021

On February 8, 2011, Valeant issued at par $650.0 million aggregate principal amount of 6.75% senior notes due 2021 (the “August 2021 Notes”) in a private placement. Interest on the August 2021 Notes accrues at the rate of 6.75% per year and is payable semi-annually in arrears on each February 15 and August 15, commencing on August 15, 2011. The August 2021 Notes mature on August 15, 2021. The August 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 the Senior Secured Credit Facilities. Certain of the future subsidiaries of the Company may be required to guarantee the August 2021 Notes.

The net proceeds of the August 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 August 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 August 2021 Notes at the redemption prices applicable to the August 2021 Notes as set forth in the August 2021 Notes indenture, plus accrued and unpaid interest to the date of redemption of the August 2021 Notes. In addition, prior to February 15, 2014, Valeant may redeem up to 35% of the aggregate principal amount of the August 2021 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.

6.375% Senior Notes due 2020

On October 4, 2012, VPI Escrow Corp. (the “VPI Escrow Issuer”), a newly formed wholly owned subsidiary of Valeant, issued $1,750.0 million aggregate principal amount of 6.375% senior notes due 2020 (the “6.375% Notes”) in a private placement. The 6.375% Notes mature on October 15, 2020. The 6.375% Notes accrue interest at the rate of 6.375% per year, which is payable semi-annually in arrears on April 15 and October 15, which commenced on April 15, 2013. In connection with the issuance of the 6.375% Notes, the Company incurred approximately $26.3 million in underwriting fees, which are recognized as debt issue discount, which resulted in the net proceeds of $1,723.7 million . At the time of the closing of the Medicis Acquisition, (1) the VPI Escrow Issuer merged with and into Valeant, with Valeant continuing as the surviving corporation, (2) Valeant assumed all of the VPI Escrow Issuer’s obligations under the 6.375% Notes and the related indenture and (3) the funds previously held in escrow were released to the Company and were used to finance the Medicis Acquisition.

The 6.375% Notes 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 the Senior Secured Credit Facilities. Certain of the future subsidiaries of the Company may be required to guarantee the 6.375% Notes.

The indenture governing the terms of the 6.375% Notes provides that the 6.375% Notes are redeemable at the option of Valeant, in whole or in part, at any time on or after October 15, 2016, at the specified redemption prices, plus accrued and unpaid interest, if any, to the redemption date. In addition, Valeant may redeem some or all of the 6.375% Notes prior to October 15, 2016, in each case at a price equal to 100% of the principal amount thereof, plus a make-whole premium. Prior to October 15, 2015, Valeant may also redeem up to 35% of the aggregate principal amount of the 6.375% Notes using the proceeds from certain equity offerings at a redemption price equal to 106.375% of the principal amount of the 6.375% Notes, plus accrued and unpaid interest to the date of redemption.

Concurrently with the offering of the 6.375% Notes on October 4, 2012, Valeant issued $500.0 million aggregate principal amount of 6.375% senior notes due 2020 (the “Exchangeable Notes”) in a private placement, the form and terms of such notes being substantially identical to the form and terms of the 6.375% Notes, as described above. In connection with the issuance of the Exchangeable Notes, the Company incurred approximately $7.5 million in underwriting fees, which are recognized as debt issue discount, which resulted in the net proceeds of $492.5 million .

On March 29, 2013, the Company announced that Valeant commenced an offer to exchange (the “Exchange Offer”) any and all of its Exchangeable Notes into the previously outstanding 6.375% Notes. Valeant conducted the Exchange Offer in order to satisfy its obligations under the indenture governing the Exchangeable Notes with the anticipated result being that some or all of such notes would be part of a single series of 6.375% senior notes under one indenture. The Exchange Offer, which did

F- 60

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

not result in any changes to existing terms or to the total amount of the Company’s debt outstanding, expired on April 26, 2013. $497.7 million of aggregate principal amount of the Exchangeable Notes was exchanged as of such date. In the third quarter of 2013, Valeant executed a private exchange of the remaining $2.3 million of aggregate principal amount of the Exchangeable Notes into the previously outstanding 6.375% Notes.

6.75% Senior Notes due 2018 and 7.50% Senior Notes due 2021

On July 12, 2013, VPII Escrow Corp. (the “VPII Escrow Issuer”), a newly formed wholly-owned subsidiary of the Company, issued $1,600.0 million aggregate principal amount of the 6.75% senior notes due 2018 (the “August 2018 Notes”) and $1,625.0 million aggregate principal amount of the 7.50% senior notes due 2021 (the “July 2021 Notes”) in a private placement. The August 2018 Notes mature on August 15, 2018 and bear interest at the rate of 6.75% per annum, payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2014. The July 2021 Notes mature on July 15, 2021 and bear interest at the rate of 7.50% per annum, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2014. In connection with the issuances of the August 2018 Notes and the July 2021 Notes, the Company incurred approximately $20.0 million and $20.3 million in underwriting fees, respectively, which are recognized as debt issue discount and which resulted in net proceeds of $1,580.0 million and $1,604.7 million , respectively. At the time of the closing of the B&L Acquisition, (1) the VPII Escrow Issuer was voluntarily liquidated and all of its obligations were assumed by, and all of its assets were distributed to the Company, (2) the Company assumed all of the VPII Escrow Issuer’s obligations under the August 2018 Notes and July 2021 Notes and the related indenture and (3) the funds previously held in escrow were released to the Company and were used to finance the B&L Acquisition.

The August 2018 Notes and July 2021 Notes are jointly and severally guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that is a guarantor under the Senior Secured Credit Facilities.

The indenture governing the terms of the August 2018 Notes and July 2021 Notes provides that the August 2018 Notes and the July 2021 Notes are redeemable at the option of the Company, in whole or in part, at any time on or after August 15, 2015 and July 15, 2016, respectively, plus accrued and unpaid interest, if any, to the applicable redemption date. In addition, the Company may redeem some or all of the August 2018 Notes prior to August 15, 2015 and some or all of the July 2021 Notes prior to July 15, 2016, in each case at a price equal to 100% of the principal amount thereof, plus a make-whole premium. Prior to August 15, 2015, the Company may redeem up to 35% of the aggregate principal amount of the August 2018 Notes and prior to July 15, 2016, the Company may redeem up to 35% of the aggregate principal amount of the July 2021 Notes, in each case using the proceeds of certain equity offerings at the respective redemption price equal to 106.75% and 107.50% of the principal amount of the August 2018 Notes and July 2021 Notes, respectively, plus accrued and unpaid interest to the applicable date of redemption.

5.625% Senior Notes due 2021

On December 2, 2013, the Company issued $900.0 million aggregate principal amount of the 5.625% senior notes due 2021 (the “December 2021 Notes”) in a private placement. The December 2021 Notes mature on December 1, 2021 and bear interest at the rate of 5.625% per annum, payable semi-annually on June 1 and December 1 of each year, commencing on June 1, 2014. In connection with the issuances of the December 2021 Notes, the Company incurred approximately $8.5 million in underwriting fees, respectively, which are recognized as debt issue discount and which resulted in net proceeds of $891.5 million .

The net proceeds of the December 2021 Notes offering were used principally to finance the redemption of all of the 2016 Notes in the fourth quarter of 2013 (as described above).

The December 2021 Notes are jointly and severally guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that is a guarantor under the Senior Secured Credit Facilities.

The indenture governing the terms of the December 2021 Notes provides that the December 2021 Notes are redeemable at the option of the Company, in whole or in part, at any time on or after December 1, 2016, plus accrued and unpaid interest, if any, to the applicable redemption date. In addition, the Company may redeem some or all of the December 2021 Notes prior to December 1, 2016, in each case at a price equal to 100% of the principal amount thereof, plus a make-whole premium. Prior to December 1, 2016, the Company may redeem up to 35% of the aggregate principal amount of the December 2021 Notes using the proceeds of certain equity offerings at the redemption price equal to 105.625% of the principal amount of the December 2021 Notes, plus accrued and unpaid interest to the redemption date.

If the Company experiences a change in control, the Company may be required to repurchase each of the senior notes issuances discussed above, as applicable, in whole or in part, at a purchase price equal to 101% of the aggregate principal amount of

F- 61

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

the senior notes repurchased, plus accrued and unpaid interest to, but excluding the applicable purchase date of the senior notes.

Medicis Convertible Notes

In connection with the acquisition of Medicis, the Company assumed Medicis’ outstanding long-term debt, including current portion, of approximately $778.0 million at the Medicis Acquisition date. As described in note 3, the Medicis long-term debt, including current portion, was comprised of the following: (i) 1.375% convertible senior notes due June 1, 2017 (the “1.375% Convertible Notes”), (ii) 2.50% contingent convertible senior notes due June 4, 2032 (the “2.50% Convertible Notes”) and (iii) 1.50% contingent convertible senior notes due June 4, 2033 (the “1.50% Convertible Notes”).

During the year ended December 31, 2013 , $228.4 million principal amount of the 1.375% Convertible Notes were converted by holders and settled 100% in cash. On February 11, 2013, all of the outstanding 2.50% Convertible Notes and 1.50% Convertible Notes were converted by holders and settled 100% in cash in the aggregate amount of $5.1 million and $0.1 million , respectively.

Other

In connection with the B&L Acquisition, the Company assumed B&L’s outstanding long-term debt, including current portion, of approximately $4,209.9 million at the B&L Acquisition date. As described in note 3, subsequent to the acquisition date, the Company settled the majority of the assumed long-term debt. As of December 31, 2013 , B&L’s outstanding long-term debt is comprised of the following debentures: (i) 7.125% senior notes, due August 1, 2028, with outstanding principal amount of $11.7 million and (ii) 6.56% senior notes, due August 12, 2026, with outstanding principal amount of less than $0.1 million . In the fourth quarter of 2013, the Company repaid the amounts outstanding under the Japanese yen-denominated variable-rate backed secured revolving credit facility (the “Japanese Revolving Credit Facility”) assumed in connection with the B&L Acquisition. In January 2014, the Company terminated the Japanese Revolving Credit Facility.

Commitment Letters

In connection with the B&L Acquisition, the Company and its subsidiary, Valeant, entered into a commitment letter dated as of May 24, 2013 (as amended and restated as of June 4, 2013, the “Commitment Letter”), with Goldman Sachs Lending Partners LLC, Goldman Sachs Bank USA and other financial institutions to provide up to $9.275 billion of unsecured bridge loans. In connection with the effectiveness of Amendment No. 5, $4.3 billion of the commitments under the Commitment Letter were reallocated from unsecured bridge loans to a commitment in respect of incremental term loans under the Company’s Senior Secured Credit Facilities and were not subject to a commitment fee. Subsequently, the Company obtained $9.575 billion in financing through a syndication of the Incremental Term Loan Facilities under the Company’s existing Senior Secured Credit Facilities of $4.05 billion , the issuance of the August 2018 Notes in an aggregate principal amount of $1.6 billion , the issuance of the July 2021 Notes in an aggregate principal amount of $1.625 billion , and the issuance of new equity of approximately $2.3 billion . The proceeds from the issuance of the Incremental Term Loan Facilities, the August 2018 Notes, the July 2021 Notes and the equity were utilized to fund (i) the transactions contemplated by the Merger Agreement, (ii) B&L’s obligation to repay all outstanding loans under certain of its existing credit facilities, (iii) B&L’s tender offer for or discharge or irrevocable call for redemption and deposit of cash to effect such discharge or redemption of B&L’s 9.875% Senior Notes due 2015 and (iv) certain transaction expenses. In connection with the Commitment Letter, the Company incurred approximately $37.3 million in fees, which were recognized as deferred financing costs. In the second quarter of 2013, the Company expensed $24.2 million of deferred financing costs associated with the Commitment Letter to Interest expense in the consolidated statements of (loss) income. The remaining $13.1 million of deferred financing costs was expensed to Interest expense in the third quarter of 2013 upon closing of the August 2018 Notes and July 2021 Notes on July 12, 2013.

In connection with the acquisition of Medicis, the Company and its subsidiary, Valeant, entered into a commitment letter, dated as of September 2, 2012, with JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC to provide up to $2.75 billion through a bridge loan facility. On September 11, 2012, the Company and Valeant entered into an amended and restated commitment letter with JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC and other financial institutions. Subsequently, the Company obtained $2.75 billion in financing through a syndication of $1.0 billion in the Series C Tranche B Term Loan Facility under the Company’s Senior Secured Credit Facilities and the issuance of the 6.375% Notes in the aggregate principal amount of $1.75 billion . Consequently, the commitment under the commitment letter to provide the bridge loan facility was not utilized and terminated on December 11, 2012, concurrently with the closing of the Medicis Acquisition. As a result, the Company wrote off of $8.0 million of deferred financing costs in the year ended December 31, 2012 .

5.375% Convertible Notes

F- 62

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

On June 10, 2009, the Company issued $350.0 million principal amount of 5.375% senior convertible notes due August 1, 2014 (the “5.375% Convertible Notes”).

On June 29, 2012, the Company distributed a notice of redemption to holders of the Company’s 5.375% Convertible Notes to redeem all of the outstanding 5.375% Convertible Notes on August 2, 2012 (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. On August 1, 2012, all of the outstanding 5.375% Convertible Notes were converted by holders, and on September 5, 2012, they were settled 100% in cash in the aggregate amount of $62.1 million .

Immediately prior to settlement, the carrying amount of the liability component of the 5.375% Convertible Notes was $16.0 million and the estimated fair value of the liability component was $18.3 million . The difference of $2.3 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 September 30, 2012. The difference of $43.8 million between the estimated fair value of the liability component of $18.3 million and the aggregate purchase price of $62.1 million resulted in charges to additional paid-in capital and accumulated deficit of $0.2 million and $43.6 million , respectively.

During the year ended December 31, 2012 and 2011, the Company repurchased $1.1 million and $205.0 million aggregate principal amount of the 5.375% Convertible Notes, respectively, for an aggregate purchase price of $4.0 million and $623.3 million , respectively.

4.0% Convertible Notes

In connection with the Merger in September 2010, the Company assumed $225.0 million aggregate outstanding principal amount of Valeant’s 4.0% Convertible Notes and call option agreements in respect of the shares underlying the conversion of $200.0 million principal amount of the 4.0% Convertible Notes.

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 $221.3 million and the estimated fair value of the liability component was $226.0 million . The difference of $4.7 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 matured on August 18, 2011. As of the Merger Date, these call options were 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.

In September 2011, Valeant amended the written call option agreements so that Valeant could elect to settle all or some of the written call options in cash. In the third quarter of 2011, Valeant paid $66.9 million in cash and issued 7,518,595 of its common shares on a net-share basis to settle the written call options. In October 2011, 961,461 common shares were issued on a net-share basis to complete the settlement of the written call options.

In connection with the B&L Acquisition completed on August 5, 2013, the Company assumed all of B&L’s benefit obligations and related plan assets. This includes defined benefit plans and a participatory defined benefit postretirement medical and life insurance plan, which covers a closed grandfathered group of legacy B&L U.S. employees and employees in certain other countries. The U.S. defined benefit accruals were frozen as of December 31, 2004 and benefits that were earned up to December 31, 2004 were preserved. Participants continue to earn interest credits on their cash balance. The most significant non-U.S. plans are two defined benefit plans in Ireland, which comprise approximately 80% of the benefit obligations of the non-U.S. defined benefit pension plans as of the B&L Acquisition date. Both Ireland plans were closed to future service benefit accruals in 2011. All of the pension benefits that were earned prior to the closure of the plans

15. EMPLOYEE BENEFIT PLANS

were preserved; however, the only additional benefits that accrue are annual salary and inflation increases. The postretirement benefit plan was amended effective

F- 63

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

January 1, 2005 to eliminate employer contributions after age 65 for participants who did not meet the minimum requirements of age and service on that date. The employer contributions for medical and prescription drug benefits for participants retiring after March 1, 1989 were frozen effective January 1, 2010.

In addition, outside of the U.S., a limited group of Valeant employees are covered by defined benefit pension plans. The Company assumed all of Valeant’s defined benefit obligations and related plan assets in connection with the Merger.

The Company uses December 31 as the year-end measurement date for all of its defined benefit pension plans and the postretirement benefit plan.

Accounting for Pension Benefit Plans and Postretirement Benefit Plan

The Company recognizes on its balance sheet an asset or liability equal to the over- or under-funded benefit obligation of each defined benefit pension plans and other postretirement benefit plan. Actuarial gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost are recognized, net of tax, as a component of other comprehensive income.

Included in accumulated other comprehensive loss as of December 31, 2013 are unrecognized actuarial gains of $11.2 million and $12.7 million related to the Company’s U.S. pension benefit plan and the non-U.S. pension benefit plans, respectively. Also included in accumulated other comprehensive loss at December 31, 2013 are unrecognized prior service credits of $27.9 million , resulting from a negative plan amendment, as discussed below, and unrecognized actuarial gains of $1.0 million related to the U.S. postretirement benefit plan. Of the December 31, 2013 amounts, the Company expects to recognize $2.5 million of unrecognized prior service credits in net periodic benefit cost during 2014.

Net Periodic Benefit Cost

The following table provides the components of net periodic benefit cost for the Company’s defined benefit pension plans and postretirement benefit plan for the year ended December 31, 2013 :

For the years ended December 31, 2012 and 2011 , the net periodic cost, which relates to the legacy Valeant defined benefit plans in Mexico, was not material to the Company’s results of operations.

Benefit Obligation, Change in Plan Assets and Funded Status

The table below presents components of the change in projected benefit obligation, change in plan assets and funded status at December 31, 2013 and 2012 :

F- 64

Pension Benefit Plans Postretirement Benefit Plan U.S. Plan Non-U.S. Plans

2013

Service cost $ 132 $ 2,200 $ 877 Interest cost 4,513 3,721 1,610 Expected return on plan assets (5,913 ) (3,082 ) (316 )

Amortization of net loss — 3 — Settlement (gain) loss recognized (100 ) 617 — Net periodic (benefit) cost $ (1,368 ) $ 3,459 $ 2,171

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The increase in pension and other benefit liabilities was driven by the plans assumed as part of the B&L Acquisition, as described above.

Pension Benefit Plans Postretirement Benefit Plan (2) U.S. Plan Non-U.S. Plans

2013 2012 (1) 2013 2012 2013

Change in Projected benefit Obligation

Projected benefit obligation, beginning of year $ — $ — $ 6,967 $ 5,991 $ — Service cost 132 — 2,200 869 877 Interest cost 4,513 — 3,721 437 1,610 Acquisition of B&L 244,184 — 223,965 — 87,565 Employee contributions — — 11 — 370 Plan amendments (3) — — — — (27,945 )

Settlements (4) (5,280 ) — (119 ) (860 ) — Benefits paid (4,272 ) — (3,558 ) (556 ) (2,995 )

Actuarial (gains) losses (4,571 ) — (10,135 ) 571 (265 )

Currency translation adjustments — — 6,666 515 — Other — — (6 ) — — Projected benefit obligation, end of year 234,706 — 229,712 6,967 59,217

Change in Plan Assets

Fair value of plan assets, beginning of year $ — $ — $ 1,306 $ 693 $ — Actual return on plan assets 12,676 — 5,063 163 1,094 Employee contributions — — 11 — 370 Company contributions 3,270 — 6,955 1,795 — Acquisition of B&L 190,946 — 125,643 — 16,095 Settlements (4) (5,280 ) — (119 ) (860 ) — Benefits paid (4,272 ) — (3,558 ) (556 ) (2,995 )

Currency translation adjustments — — 3,844 71 — Other — — (6 ) — — Fair value of plan assets, end of year 197,340 — 139,139 1,306 14,564 Funded Status at end of year $ (37,366 ) $ — $ (90,573 ) $ (5,661 ) $ (44,653 )

Recognized as:

Other long-term assets, net $ — $ — $ 1,471 $ — $ — Accrued and other current liabilities — — (2,047 ) (336 ) — Pension and other benefit liabilities (37,366 ) — (89,997 ) (5,325 ) (44,653 )

(1) In 2012, the Company did not have U.S pension benefit plans.

(2) Assumed in connection with the B&L Acquisition, as described above.

(3) In the fourth quarter of 2013, the Company announced that effective January 1, 2014, B&L will no longer offer medical and life insurance coverage to new retirees. The reduction in medical benefits was accounted for as a negative plan amendment resulting in an accumulated postretirement benefit obligation reduction of $27.9 million that was recognized as a component of accumulated other comprehensive loss and will be amortized into income over approximately 11.3 years.

(4) The 2013 plan settlements primarily reflect lump sum benefit payments made to terminating employees of the U.S. pension benefit plan. The 2012 plan settlements reflect lump sum benefit payments made to terminating employees of the legacy Valeant defined benefit pension plans.

The balances at December 31, 2012 relate to legacy Valeant defined benefit pension plans which cover certain employees in Mexico.

A number of the Company’s pension benefit plans were underfunded at December 31, 2013, having accumulated benefit obligations exceeding the fair value of plan assets. Information for the underfunded plans is presented in the following table:

F- 65

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Information for the pension benefit plans that are underfunded on a projected benefit obligation basis (versus underfunded on an accumulated benefit basis as in the table above) is presented in the following table:

The Non-U.S. Plans’ accumulated benefit obligation for both the funded and underfunded pension benefit plans was $201.5 and $5.1 at December 31, 2013 and December 31, 2012, respectively.

The Company’s policy for funding its pension benefit plans is to make contributions that meet or exceed the minimum statutory funding requirements. These contributions are determined based upon recommendations made by the actuary under accepted actuarial principles. In 2014, the Company expects to contribute $10.8 million and $8.5 million to the U.S and Non-U.S. pension benefit plans, respectively.

The Company plans to use postretirement benefit plan assets to fund postretirement benefit plan benefit payments in 2014.

Estimated Future Benefit Payments

Future benefit payments over the next 10 years for the pension benefit plans and the postretirement benefit plan, which reflect expected future service, as appropriate, are expected to be paid as follows:

Assumptions

The weighted-average assumptions used to determine net periodic benefit costs and benefit obligations at December 31, 2013 were as follows:

F- 66

Pension Benefit Plans

U.S. Plan Non-U.S. Plans

2013 2012 2013 2012

Projected benefit obligation $ 234,706 $ — $ 224,059 $ 6,967 Accumulated benefit obligation 234,706 — 196,255 5,134 Fair value of plan assets 197,340 — 132,172 1,306

Pension Benefit Plans

U.S. Plan Non-U.S. Plans

2013 2012 2013 2012

Projected benefit obligation $ 234,706 $ — $ 225,468 $ 6,967 Fair value of plan assets 197,340 — 133,424 1,306

Pension Benefit Plans Postretirement Benefit Plan U.S. Plan Non-U.S. Plans

2014 $ 12,629 $ 6,461 $ 7,358 2015 19,434 4,986 6,800 2016 19,142 4,741 6,284 2017 19,277 4,745 5,738 2018 18,398 4,971 5,256 2019-2023 88,639 35,921 20,361

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The expected long-term rate of return on plan assets was developed based on a capital markets model that uses expected asset class returns, variance and correlation assumptions. The expected asset class returns were developed starting with current Treasury (for the U.S. pension plan) or Eurozone (for the Ireland pension plans) government yields and then adding corporate bond spreads and equity risk premiums to develop the return expectations for each asset class. The expected asset class returns are forward-looking. The variance and correlation assumptions are also forward-looking. They take into account historical relationships, but are adjusted to reflect expected capital market trends. The expected return on plan assets for the Company’s U.S. pension plan for 2013 was 7.50% and for the postretirement benefit plan was 5.50% . The expected return for the postretirement plan is based on the expected return for the U.S. pension plan reduced by 2.0% to reflect an estimate of additional administrative expenses. The expected return on plan assets for the Company’s Ireland pension plans was 6.0% .

The discount rate used to determine benefit obligations represents the current rate at which the benefit plan liabilities could be effectively settled considering the timing of expected payments for plan participants.

The 2014 expected rate of return for the U.S. pension benefit plan and the U.S. postretirement benefit plan will remain at 7.50% percent and 5.50% , respectively. The 2014 expected rate of return for the Ireland pension benefit plans will also remain at 6.0% .

Plan Assets

Pension and postretirement benefit plan assets are invested in several asset categories. The following presents the actual asset allocation as of December 31, 2013 :

F- 67

Pension Benefit Plans Postretirement Benefit Plan (1)

For Determining Net Periodic Benefit Cost

U.S. Plans:

Discount rate 4.50 % 4.50 %

Expected rate of return on plan assets 7.50 % 5.50 %

Rate of compensation increase — — Non-U.S. Plans:

Discount rate 3.61 %

Expected rate of return on plan assets 5.59 %

Rate of compensation increase 2.80 %

For Determining Benefit Obligation

U.S. Plans:

Discount rate 4.70 % 4.30 %

Rate of compensation increase — — Non-U.S. Plans:

Discount rate 3.85 %

Rate of compensation increase 2.88 %

(1) The Company does not have non-U.S. postretirement benefit plans.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The investment strategy underlying pension plan asset allocation is to manage the assets of the plan to provide for the long-term liabilities while maintaining sufficient liquidity to pay current benefits. Pension plan assets are diversified to protect against large investment losses and to reduce the probability of excessive performance volatility. Diversification of assets is achieved by allocating funds to various asset classes and investment styles within asset classes, and retaining investment management firm(s) with complementary investment philosophies, styles and approaches.

The Company’s pension plan assets are managed by outside investment managers using a total return investment approach, whereby a mix of equity and debt securities investments are used to maximize the long-term rate of return on plan assets. A significant portion of the assets of the U.S. and Ireland pension plans have been invested in equity securities, as equity portfolios have historically provided higher returns than debt and other asset classes over extended time horizons. Correspondingly, equity investments also entail greater risks than other investments. Equity risks are balanced by investing a significant portion of plan assets in broadly diversified fixed income securities.

Fair Value of Plan Assets

The Company measured the fair value of plan assets based on the prices that would be received to sell an asset or paid to transfer a liability in an olderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy described in note 7 titled “FAIR VALUE MEASUREMENTS”.

The table below presents total plan assets by investment category as of December 31, 2013 and the classification of each investment category within the fair value hierarchy with respect to the inputs used to measure fair value:

Pension Benefit

Plans Postretirement

Benefit Plan

2013 2013

U.S. Plan

Equity securities 60.00 % 63.00 %

Fixed income securities 40.00 % 24.00 %

Cash —% 13.00 %

Non-U.S. Plans

Equity securities 43.02 %

Fixed income securities 46.67 %

Other 10.31 %

Pension Benefit Plans - U.S. Plans

As of December 31, 2013

Assets

Quoted Prices in Active

Markets for Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant Unobservable

Inputs (Level 3) Total

Cash & cash equivalents (1) $ 442 $ — $ — $ 442 Commingled funds: (2)(3)

Equity securities:

U.S. broad market — 72,651 — 72,651 Emerging markets — 16,551 — 16,551 Non-U.S. developed markets — 27,896 — 27,896

Fixed income securities:

Investment grade — 58,962 — 58,962 Global high yield — 20,838 — 20,838

$ 442 $ 196,898 $ — $ 197,340

F- 68

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

There were no transfers between Level 1 and Level 2 during the year ended December 31, 2013 .

Health Care Cost Trend Rate

Pension Benefit Plans - Non-U.S. Plans

As of December 31, 2013

Assets

Quoted Prices in Active

Markets for Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant Unobservable

Inputs (Level 3) Total

Cash & cash equivalents (1) $ 9,332 $ — $ — $ 9,332 Commingled funds: (2)(3)

Equity securities:

Emerging markets — 945 — 945 Worldwide developed markets — 59,153 — 59,153

Fixed income securities:

Investment grade — 21,351 — 21,351 Global high yield — 651 — 651 Government bond funds — 42,535 — 42,535

Other assets — 5,172 — 5,172 $ 9,332 $ 129,807 $ — $ 139,139

Postretirement Benefit Plan

As of December 31, 2013

Assets

Quoted Prices in Active

Markets for Identical Assets

(Level 1)

Significant Other

Observable Inputs

(Level 2)

Significant Unobservable

Inputs (Level 3) Total

Cash $ 1,853 $ — $ — $ 1,853 Insurance policies (4) — 12,711 — 12,711 $ 1,853 $ 12,711 $ — $ 14,564

(1) Cash equivalents consisted primarily of term deposits and money market instruments. The fair value of the term deposits approximates their carrying amounts due to their short term maturities. The money market instruments also have short maturities and are valued using a market approach based on the quoted market prices of identical instruments.

(2) Commingled funds are not publicly traded. The underlying assets in these funds are publicly traded on the exchanges and have readily available price quotes. The Ireland pension plans held approximately 85% of the non-U.S. commingled funds in 2013. The commingled funds held by the U.S. and Ireland pension plans are primarily invested in index funds.

(3) The underlying assets in the fixed income funds are generally valued using the net asset value per fund share, which is derived using a market approach with inputs that include broker quotes, benchmark yields, base spreads and reported trades.

(4) The insurance policies held by the postretirement benefit plan consist of variable life insurance contracts whose fair value is their cash surrender value. Cash surrender value is the amount currently payable by the insurance company upon surrender of the policy. The cash surrender value is based principally on the net asset values of the underlying trust funds, adjusted by annuity factors incorporating mortality, plan expenses and income reinvestment. The trust funds are commingled funds that are not publicly traded. The underlying assets in these funds are primarily publicly traded on exchanges and have readily available price quotes.

The health care cost trend rate assumptions for the postretirement benefit plan assumed in connection with the B&L Acquisition are as follows:

F- 69

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

A one percentage point change in health care cost trend rate would have had the following effects:

Defined Contribution Plans

The Company sponsors defined contribution plans in the U.S., Ireland and certain other countries. Under these plans, employees are allowed to contribute a portion of their salaries to the plans, and the Company matches a portion of the employee contributions. The Company contributed $16.4 million , $2.8 million and $2.1 million to these plans in the years ended December 31, 2013, 2012 and 2011, respectively. The increase in the Company’s costs associated with the defined contribution plans in 2013 was driven by the plans assumed as part of the B&L Acquisition.

Securities Repurchase Programs

On November 4, 2010, the Company announced that its Board of Directors had approved a securities repurchase program, pursuant to which the Company could 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. On August 29, 2011, the Company announced that its Board of Directors had approved an increase of $300.0 million under its securities repurchase program (the “2010 Securities Repurchase Program”). As a result, under the 2010 Securities Repurchase Program, the Company was able to repurchase up to $1.8 billion of its convertible notes, senior notes, common shares and/or other notes or shares that were issued prior to the completion of the program. The 2010 Securities Repurchase Program terminated on November 7, 2011.

On November 3, 2011, the Company announced that its Board of Directors had approved a new securities repurchase program (the “2011 Securities Repurchase Program”). Under the 2011 Securities Repurchase Program, which commenced on November 8, 2011, the Company could make purchases of up to $1.5 billion of its convertible notes, senior notes, common shares and/or other future debt or shares. The 2011 Securities Repurchase Program terminated on November 7, 2012.

On November 19, 2012, the Company announced that its Board of Directors had approved a new securities repurchase program (the “2012 Securities Repurchase Program”). Under the 2012 Securities Repurchase Program, which commenced on November 15, 2012, the Company could make purchases of up to $1.5 billion of senior notes, common shares and/or other future debt or shares, subject to any restrictions in the Company’s financing agreements and applicable law. The 2012 Securities Repurchase Program terminated on November 14, 2013.

On November 21, 2013, the Company’s Board of Directors approved a new securities repurchase program (the “2013 Securities Repurchase Program”). Under the 2013 Securities Repurchase Program, which commenced on November 22, 2013, the Company may make purchases of up to $1.5 billion of its convertible notes, senior notes, common shares and/or other future debt or shares, subject to any restrictions in the Company’s financing agreements and applicable law. The 2013 Securities Repurchase Program will terminate on November 21, 2014 or at such time as the Company completes its purchases. The amount of securities to be purchased and the timing of purchases under the 2013 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 and applicable law. The securities to be repurchased will be funded using our cash resources.

2013

Health care cost trend rate assumed for next year 7.57 %

Rate to which the cost trend rate is assumed to decline 4.50 %

Year that the rate reaches the ultimate trend rate 2029

One Percentage Point

Increase Decrease

Effect on benefit obligations $ 1,009 $ 933

16. SECURITIES REPURCHASES AND SHARE ISSUANCE

The Board of Directors also approved a sub-limit under the 2013 Securities Repurchase Program for the repurchase of an amount of common shares equal to the greater of 10% of the Company’s public float or 5% of the Company’s issued and outstanding common shares, in each case calculated as of the date of the commencement of the 2013 Securities Repurchase

F- 70

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Program. The Company is permitted to make purchases of up to 16,648,739 common shares on the open market through the facilities of the NYSE, representing approximately 5% of the Company’s issued and outstanding common shares on the date of the commencement of the 2013 Securities Repurchase Program. Subject to completion of appropriate filings with and approval by the TSX, the Company may also make purchases of its common shares over the facilities of the TSX. Purchases of common shares will be made at prevailing market prices of such shares on the NYSE or the TSX, as the case may be, at the time of the acquisition and shall be made in accordance with the respective rules and guidelines of the NYSE and the TSX. All common shares purchased under the 2013 Securities Repurchase Program will be cancelled.

Repurchase of 5.375% Convertible Notes

During the year ended December 31, 2012, under the 2011 Securities Repurchase Program, the Company repurchased $1.1 million principal amount of the 5.375% Convertible Notes for a purchase price of $4.0 million . The carrying amount of the 5.375% Convertible Notes purchased was $1.0 million (net of related unamortized deferred financing costs) and the estimated fair value of the 5.375% Convertible Notes exclusive of the conversion feature was $1.1 million . The difference of $0.1 million between the net carrying amount and the estimated fair value was recognized as a loss on extinguishment of debt (as described in note 19). The difference of $2.9 million between the estimated fair value of $1.1 million and the purchase price of $4.0 million resulted in charges to additional paid-in capital and accumulated deficit of $0.2 million and $2.7 million , respectively. The portion of the purchase price attributable to accreted interest on the debt discount amounted to $0.1 million , and is included as an operating activity in the consolidated statements of cash flows. The remaining portion of the payment of $3.9 million is presented in the consolidated statement of cash flows as an outflow from financing activities.

During the year ended December 31, 2011, under the 2010 Securities Repurchase Program and the 2011 Securities Repurchase Program, the Company repurchased $203.8 million and $1.2 million aggregate principal amount of the 5.375% Convertible Notes, respectively, for an aggregate purchase price of $619.4 million and $3.9 million , respectively. The carrying amount of the 5.375% Convertible Notes purchased was $177.6 million (net of $5.6 million of related unamortized deferred financing costs) and the estimated fair value of the 5.375% Convertible Notes exclusive of the conversion feature was $209.2 million . The difference of $31.6 million between the net carrying amount and the estimated fair value was recognized as a loss on extinguishment of debt (as described in note 19). The difference of $414.1 million between the estimated fair value of $209.2 million and the purchase price of $623.3 million resulted in charges to additional paid-in capital and accumulated deficit of $33.2 million and $380.9 million , respectively. The portion of the purchase price attributable to accreted interest on the debt discount amounted to $9.8 million , and is included as an operating activity in the consolidated statements of cash flows. The remaining portion of the payment of $613.5 million is presented in the consolidated statements of cash flows as an outflow from financing activities.

Share Repurchases

In the year ended December 31, 2013, under the 2012 Securities Repurchase Program, the Company repurchased 507,957 of its common shares for an aggregate purchase price of $35.7 million . The excess of the purchase price over the carrying value of the common shares repurchased of $25.8 million was charged to the accumulated deficit. These common shares were subsequently cancelled. No common shares were repurchased in the year ended December 31, 2013 under the 2013 Securities Repurchase Program.

In the year ended December 31, 2012, under the 2011 Securities Repurchase Program, the Company repurchased 5,257,454 of its common shares for an aggregate purchase price of $280.7 million . The excess of the purchase price over the carrying value of the common shares repurchased of $178.4 million was charged to the accumulated deficit. These common shares were subsequently cancelled.

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 December 31, 2012, the Company had recorded a $21.8 million receivable from ValueAct in relation to withholding taxes on the March 2011 repurchase, and the Company received payment of this amount in January 2013 from ValueAct to resolve this matter. 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.

F- 71

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

In addition to the ValueAct repurchases, in the year ended December 31, 2011, under the 2010 Securities Repurchase Program and the 2011 Securities Repurchase Program, the Company repurchased 1,800,000 and 1,534,857 of its common shares, respectively, for an aggregate purchase price of $74.5 million and $65.1 million , respectively. These common shares were subsequently cancelled. As a result, in 2011, under the 2010 Securities Repurchase Program and 2011 Securities Repurchase Program, the Company repurchased, in the aggregate, 13,664,599 and 1,534,857 of its common shares, respectively, for an aggregate purchase price of $574.1 million and $65.1 million , respectively. The excess of the cost of the common shares repurchased over their assigned value of $374.4 million was charged to accumulated deficit.

Redemption of Senior Notes

During the year ended December 31, 2011, under the 2010 Securities Repurchase Program and 2011 Securities Repurchase Program, the Company also redeemed $10.0 million and $89.9 million aggregate principal amount of the Company’s senior notes, respectively, for an aggregate purchase price of $9.9 million and $88.7 million , respectively.

Total Repurchases

In connection with the 2010 Securities Repurchase Program, through the termination date of November 7, 2011, the Company repurchased approximately $1.5 billion , in the aggregate, of its convertible notes, senior notes and common shares.

During 2011, the Company repurchased approximately $157.7 million , in the aggregate, of its convertible notes, senior notes and common shares under the 2011 Securities Repurchase Program.

During 2012, under the 2011 Securities Repurchase Program, through the termination date of November 7, 2012, the Company repurchased approximately $284.7 million , in the aggregate, of its convertible notes and common shares.

During 2013, the Company had repurchased approximately $35.7 million , in the aggregate, of its common shares under the 2012 Securities Repurchase Program through the termination date of November 14, 2013.

During 2013, the Company did not make any purchases of our senior notes or common shares under the 2013 Securities Repurchase Program.

Additional Repurchases outside the 2012 Securities Repurchase Program

In addition to the repurchases made under the 2012 Securities Repurchase Program, during the second quarter of 2013, the Company repurchased an additional 217,294 of its common shares on behalf of certain members of the Company’s Board of Directors, in connection with the share settlement of certain deferred stock units and restricted stock units held by such directors following the termination of the applicable equity program. These common shares were subsequently transferred to such directors. These common shares were repurchased for an aggregate purchase price of $19.9 million . The excess of the purchase price over the carrying value of the common shares repurchased of $15.6 million was charged to the accumulated deficit. As the common shares were repurchased on behalf of certain of the Company’s directors, these repurchases were not made under the 2012 Securities Repurchase Program.

Issuance of Common Stock

On June 24, 2013, the Company completed, pursuant to an Underwriting Agreement with Goldman Sachs & Co. and Goldman Sachs Canada, Inc., a public offering for the sale of 27,058,824 of its common shares, no par value, at a price of $85.00 per share, or aggregate gross proceeds of approximately $2.3 billion . In connection with the issuance of these new common shares, the Company incurred approximately $30.7 million of issuance costs, which has been reflected as reduction to the gross proceeds from the equity issuance.

In May 2011, shareholders approved the Company’s 2011 Omnibus Incentive Plan (the “2011 Plan”) which replaced the Company’s 2007 Equity Compensation Plan for future equity awards granted by the Company. The Company transferred the shares available under the Company’s 2007 Equity Compensation Plan to the Plan under which the Company is authorized to grant up to 6,846,310 shares of its

17. SHARE-BASED COMPENSATION

common stock and approximately 160,817 shares were available for future grants as of December 31, 2013. The Company uses reserved and unissued common shares to satisfy its obligation under its share-based compensation plan.

F- 72

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The following table summarizes the components and classification of share-based compensation expense related to stock options and RSUs:

____________________________________

In the second quarter of 2013, certain equity awards held by current non-management directors were modified from units settled in common shares to units settled in cash, which changed the classification from equity awards to liability awards. The resulting reduction in share-based compensation expense of $5.8 million was more than offset by incremental compensation expense of $21.3 million recognized in the second quarter of 2013, which represents the fair value of the awards settled in cash. As the modified awards were fully vested and paid out, no additional compensation expense will be recognized in subsequent periods.

The decrease in share-based compensation expense for the year ended December 31, 2013 was also driven by the impact of forfeitures and the accelerated vesting that was triggered in the prior year related to certain performance-based RSU awards.

The Company recognized $24.2 million , $12.5 million , and $26.5 million of tax benefits from stock options exercised in the year ended December 31, 2013 , 2012 and 2011 respectively.

Stock Options

All stock options granted by the Company under its 2007 Equity Compensation Plan expire on the fifth anniversary of the grant date. The exercise price of any stock option granted under its 2007 Equity Compensation Plan is not to be less than the volume-weighted average trading price of the Company’s common shares for the five trading days immediately preceding the date of grant (or, for participants subject to U.S. taxation, on the single trading day immediately preceding the date of grant, whichever is greater). All stock options granted by the Company under the 2011 Plan expire on the tenth anniversary of the grant date. The exercise price of any stock option granted under the 2011 Plan will not be less than the closing price per common share on the national securities exchange on which the common shares are principally traded (currently, the NYSE) for the last preceding date on which there was a sale of such common shares on such exchange. Stock options granted will vest 25% on each of the first, second, third and fourth anniversaries from the date of grant.

The fair values of all stock options granted during the years ended December 31, 2013 , 2012 and 2011 were estimated as of the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

F- 73

2013 2012 2011

Stock options (1) $ 17,317 $ 21,739 $ 45,465 RSUs 28,161 44,497 48,558 Share-based compensation expense $ 45,478 $ 66,236 $ 94,023

Cost of goods sold (1) $ — $ — $ 1,330 Research and development expenses (1) — 764 1,329 Selling, general and administrative expenses (1)(2) 45,478 65,472 90,379 Restructuring, integration and other costs (as described in note 6) — — 985

Share-based compensation expense $ 45,478 $ 66,236 $ 94,023

(1) 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.

(2) During 2013 and 2012, the Company recorded an incremental charge of $4.3 million and $4.8 million , respectively, to selling, general and administrative expenses as some of the Company’s performance-based RSU grants triggered a partial payout as a result of achieving certain share price appreciation conditions.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The Black-Scholes option-pricing model used by the Company to calculate stock option values was developed to estimate the fair value of freely tradeable, fully transferable stock options without vesting restrictions, which significantly differ from the Company’s stock option awards. This model also requires highly subjective assumptions, including future stock price volatility and expected time until exercise, which greatly affect the calculated values.

The following table summarizes stock option activity during the year ended December 31, 2013 :

The weighted-average fair values of all stock options granted in 2013, 2012 and 2011 were $30.47 , $19.57 and $13.65 , respectively. The total intrinsic values of stock options exercised in 2013, 2012 and 2011 were $30.4 million , $25.1 million and $31.7 million , respectively. Proceeds received on the exercise of stock options in 2013, 2012 and 2011 were $10.0 million , $23.0 million and $41.7 million , respectively.

As of December 31, 2013 , the total remaining unrecognized compensation expense related to non-vested stock options amounted to $61.8 million , which will be amortized over the weighted-average remaining requisite service period of approximately 3.2 years. The total fair value of stock options vested in 2013 was $26.0 million ( 2012 — $36.1 million ; 2011 — $35.4 million ).

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2013 :

F- 74

2013 2012 2011

Expected stock option life (years) (1) 4.0 4.0 4.0 Expected volatility (2) 40.1 % 44.9 % 42.8 %

Risk-free interest rate (3) 1.0 % 0.5 % 1.4 %

Expected dividend yield (4) —% —% —%

(1) Determined based on historical exercise and forfeiture patterns.

(2) Effective January 1, 2012, expected volatility was determined based on implied volatility in the market traded options of the Company’s common stock. Prior to 2012, expected volatility was determined based on historical volatility of the Company’s common shares over the expected life of the stock option.

(3) Determined based on the rate at the time of grant for zero-coupon U.S. or Canadian government bonds with maturity dates equal to the expected life of the stock option.

(4) Determined based on the stock option’s exercise price and expected annual dividend rate at the time of grant.

Options (000s)

Weighted- Average Exercise

Price

Weighted- Average

Remaining Contractual

Term (Years)

Aggregate Intrinsic

Value

Outstanding, January 1, 2013 8,506 $ 18.97 Granted 1,582 93.60 Exercised (478 ) 20.76 Expired or forfeited (983 ) 39.74 Outstanding, December 31, 2013 8,627 $ 30.19 5.5 $ 754,356

Vested and exercisable, December 31, 2013 5,174 $ 11.68 4.5 $ 547,033

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

RSUs

RSUs vest on the third anniversary date from the date of grant, unless provided otherwise in the applicable unit agreement, subject to the attainment of any applicable performance goals specified by the Board of Directors. If the vesting of the RSUs is conditional upon the attainment of performance goals, any RSUs that do not vest as a result of a determination that a holder of RSUs has failed to attain the prescribed performance goals will be forfeited immediately upon such determination. RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on the Company’s common shares. Such additional RSUs will have the same vesting dates and will vest under the same terms as the RSUs in respect of which such additional RSUs are credited.

To the extent provided for in a RSU agreement, the Company may, in lieu of all or a portion of the common shares which would otherwise be provided to a holder, elect to pay a cash amount equivalent to the market price of the Company’s common shares on the vesting date for each vested RSU. The amount of cash payment will be determined based on the average market price of the Company’s common shares on the vesting date. The Company’s current intent is to settle vested RSUs through the issuance of common shares.

Time-Based RSUs

Each vested RSU without performance goals (“time-based RSU”) represents the right of a holder to receive one of the Company’s common shares. The fair value of each RSU granted is estimated based on the trading price of the Company’s common shares on the date of grant.

The following table summarizes non-vested time-based RSU activity during the year ended December 31, 2013 :

____________________________________

Range of Exercise Prices Outstanding

(000s)

Weighted- Average

Remaining Contractual

Life (Years)

Weighted- Average Exercise

Price Exercisable

(000s)

Weighted- Average Exercise

Price

$4.20 - $6.30 3,222 4.1 $ 4.29 3,222 $ 4.29 $6.39 - $9.59 139 3.2 6.61 139 6.61 $10.54 - $15.81 1,959 5.2 12.97 1,032 12.99 $16.71 - $25.07 12 6.6 19.71 2 20.42 $25.42 - $38.13 442 1.9 25.42 310 25.42 $39.35 - $59.03 1,415 6.6 51.06 459 51.86 $59.15 - $88.73 384 7.5 69.35 10 59.15 $91.12 - $136.68 1,054 9.8 104.21 — —

8,627 5.5 $ 30.19 5,174 $ 11.68

Time-Based RSUs (000s)

Weighted- Average

Grant-Date Fair Value

Non-vested, January 1, 2013 1,310 $ 33.43 Granted 129 84.01 Vested (1) (446 ) 34.11 Forfeited (109 ) 44.40

Non-vested, December 31, 2013 884 $ 39.11

(1) In the second quarter of 2013, 204,034 vested time-based RSUs held by current non-management directors were modified from units settled in common shares to units settled in cash, which changed the classification from equity awards to liability awards.

As of December 31, 2013 , the total remaining unrecognized compensation expense related to non-vested time-based RSUs amounted to $13.0 million , which will be amortized over the weighted-average remaining requisite service period of

F- 75

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

approximately 1.4 years. The total fair value of time-based RSUs vested in 2013 was $15.2 million ( 2012 — $18.0 million ; 2011 — $16.2 million ).

Performance-Based RSUs

Each vested RSU with performance goals (“performance-based RSU”) represents the right of a holder to receive a number of the Company’s common shares up to a specified maximum. For performance-based RSUs issued prior to the Merger, performance was measured based on shareholder return relative to an industry comparator group. For performance-based RSUs issued subsequent to the Merger, performance is determined based on the achievement of certain share price appreciation conditions. If the Company’s performance is below a specified performance level, no common shares will be paid.

The fair value of each performance-based RSU granted during the years ended December 31, 2013 , 2012 and 2011 was estimated using a Monte Carlo simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved.

The fair values of performance-based RSUs granted during the years ended December 31, 2013 , 2012 and 2011 were estimated with the following assumptions:

____________________________________

The following table summarizes non-vested performance-based RSU activity during the year ended December 31, 2013 :

As of December 31, 2013 , the total remaining unrecognized compensation expense related to the non-vested performance-based RSUs amounted to $76.8 million , which will be amortized over the weighted-average remaining requisite service period of approximately 2.7 years. A maximum of 2,832,187 common shares could be issued upon vesting of the performance-based RSUs outstanding as of December 31, 2013 .

DSUs

Prior to May 2011, non-management directors received non-cash compensation in the form of DSUs, which entitled non-management directors to receive a lump-sum cash payment in respect of their DSUs either following the date upon which they cease to be a director of

2013 2012 2011

Contractual term (years) 2.8-4.3 2.9-4.3 3.0

Expected Company share volatility (1) 36.1% - 44.4% 42.5% - 52.3% 34.6% - 60.8%

Risk-free interest rate (2) 0.5% - 1.3% 0.6% - 1.0% 1.0% - 1.9%

(1) Determined based on historical volatility over the contractual term of the performance-based RSU.

(2) Determined based on the rate at the time of grant for zero-coupon U.S. government bonds with maturity dates equal to the contractual term of the performance-based RSUs.

Performance- Based RSUs

(000s)

Weighted- Average

Grant-Date Fair Value

Non-vested, January 1, 2013 1,696 $ 43.40 Granted 567 140.55 Vested (884 ) 22.85 Forfeited (334 ) 80.47

Non-vested, December 31, 2013 1,045 $ 102.22

the Company or, with respect to DSUs granted after the Merger Date as part of the annual retainer, one year after such date. The amount of compensation deferred was converted into DSUs based on the volume-weighted average trading price of the Company’s common shares for the five trading days immediately preceding the date of grant (for directors subject to U.S. taxation, the calculation may be based on the greater of the five -day or one -day volume-weighted trading price). The Company recognizes compensation expense throughout the deferral period to the extent that the trading price of its common shares increases, and reduces compensation expense throughout the deferral period to the extent that the trading price of its common shares decreases. Following the Merger, the DSUs previously granted to non-management directors

F- 76

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

who did not remain on the Board of Directors of the Company have been redeemed, entitling each departing director to a payment of the cash value of his DSUs.

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 were to continue to be cash settled. During the year ended December 31, 2011, the Company recognized $0.8 million of compensation expense in restructuring and integration costs related to the change in the fair value of DSUs still held by former directors of Biovail. As of December 31, 2012, there were 17,219 DSUs still held by former directors of Biovail. The remaining 17,219 DSUs were redeemed for cash in February 2013.

The following table summarizes DSU activity during the year ended December 31, 2013 :

____________________________________

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 stock units, 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 additional units, 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).

Effective May 30, 2012, the Company changed the vesting and settlement features of stock units granted to non-management directors, such that, for all new stock units granted to non-management directors after such date, such stock units will vest on the one year anniversary of the date of grant and will be settled in common shares of the Company upon vesting. In addition, for stock units awarded to non-management directors prior to May 30, 2012 in connection with such directors’ annual equity compensation, the settlement date was changed and such stock units will now be settled in common shares of the Company.

The components of accumulated other comprehensive loss income as of December 31, 2013, 2012 and 2011 were as follows:

F- 77

DSUs (000s)

Weighted- Average

Grant-Date Fair Value

Outstanding, January 1, 2013 148 $ 16.78 Granted — — Settled (1) (145 ) 16.08

Outstanding, December 31, 2013 3 $ 50.56

(1) In the second quarter of 2013, 70,110 vested DSUs held by current non-management directors were modified from units settled in common shares to units settled in cash, which changed the classification from equity awards to liability awards.

18. ACCUMULATED OTHER COMPREHENSIVE LOSS

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

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. Income taxes allocated to other components of other comprehensive income (loss), including reclassification adjustments, were not material, with the exception of the pension adjustment in 2013 which is presented net of tax.

The components of loss on extinguishment of debt for the years ended December 31, 2013, 2012 and 2011 were as follows:

F- 78

Foreign Currency

Translation Adjustment

Unrealized Holding

Gain (Loss) on Auction

Rate Securities

Net Unrealized

Holding Gain (Loss)

on Available- For-Sale Equity

Securities

Net Unrealized

Holding Gain (Loss)

on Available- For-Sale

Debt Securities

Acquisition of Noncontrolling

Interest Pension

Adjustment Total

Balance, January 1, 2011 $ 98,926 $ — $ — $ (90 ) $ — $ — $ 98,836 Foreign currency translation adjustment (381,633 ) — — — — — (381,633 )

Net unrealized holding gain on available-for-sale equity securities — — 22,780 — — — 22,780 Reclassification to net income (1) — — (21,146 ) — — — (21,146 )

Net unrealized holding gain on available-for-sale debt securities — — — (114 ) — — (114 )

Acquisition of noncontrolling interest — — — — 2,206 — 2,206 Pension adjustment (2) — — — — — (545 ) (545 )

Balance, December 31, 2011 (282,707 ) — 1,634 (204 ) 2,206 (545 ) (279,616 )

Foreign currency translation adjustment 161,011 — — — — — 161,011 Unrealized holding gain on auction rate securities — 1 — — — — 1 Net unrealized holding gain on available-for-sale equity securities — — 379 — — — 379 Reclassification to net loss (1) — — (1,634 ) 197 — — (1,437 )

Net unrealized holding gain on available-for-sale debt securities — — — 7 — — 7 Pension adjustment (2) — — — — — 259 259 Balance, December 31, 2012 (121,696 ) 1 379 — 2,206 (286 ) (119,396 )

Foreign currency translation adjustment (50,764 ) — — — — — (50,764 )

Reclassification to net (loss) income (1) — (1 ) (3,963 ) — — — (3,964 )

Net unrealized holding gain on available-for-sale equity securities — — 3,584 — — — 3,584 Pension adjustment, net of tax (2) — — — — — 37,760 37,760 Balance, December 31, 2013 $ (172,460 ) $ — $ — $ — $ 2,206 $ 37,474 $ (132,780 )

(1) Included in gain on investments, net (as described in note 20).

(2) Reflects changes in defined benefit obligations and related plan assets of the Company’s defined benefit pension plans and the U.S. postretirement benefit plan (as described in note 15).

19. LOSS ON EXTINGUISHMENT OF DEBT

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The components of gain on investments, net for the years ended December 31, 2013, 2012 and 2011 were as follows:

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 second quarter of 2011.

The components of loss before recovery of income taxes were as follows:

The components of recovery of income taxes were as follows:

F- 79

2013 2012 2011

Extinguishment of liability component of 5.375% Convertible Notes (as described in note 14 and note 16) $ — $ 2,455 $ 31,629 Extinguishment of liability component of 4.0% Convertible Notes (as described in note 14) — — 4,708 Refinancing of the Tranche B Term Loan Facility (as described in note 14) — 17,625 — Repricing of the Series D Tranche B Term Loan Facility and the Series C Tranche B Term Loan Facility (as described in note 14) 21,379 — — Redemption of 9.875% senior notes assumed in connection with the B&L Acquisition (as described in note 3) 8,161 — — Redemption of senior notes (as described in note 14) 32,526 — (148 )

Exchange of the Series A-1 Tranche A Term Loans and Series A-2 Tranche A Term Loans 2,948 — — Repayment of the senior secured term loan facility — — 655

$ 65,014 $ 20,080 $ 36,844

20. GAIN ON INVESTMENTS, NET

2013 2012 2011

Gain on auction rate floating securities (as described in note 7) $ 1,859 $ — $ — Gain on disposal of investments 3,963 2,056 22,776

$ 5,822 $ 2,056 $ 22,776

21. INCOME TAXES

2013 2012 2011

Domestic $ (574,527 ) $ (205,612 ) $ (41,374 )

Foreign (739,925 ) (188,616 ) 23,374

$ (1,314,452 ) $ (394,228 ) $ (18,000 )

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The reported net book recovery of income taxes differs from the expected amount calculated by applying the Company’s Canadian statutory rate to income before recovery of income taxes. The reasons for this difference and the related tax effects are as follows:

The tax effect of major items recorded as deferred tax assets and liabilities is as follows:

F- 80

2013 2012 2011

Current:

Domestic $ 3,403 $ 7,189 $ 3,554 Foreign 80,010 56,337 36,337

83,413 63,526 39,891 Deferred:

Domestic — (11,886 ) (21,763 )

Foreign (534,196 ) (329,843 ) (195,687 )

(534,196 ) (341,729 ) (217,450 )

$ (450,783 ) $ (278,203 ) $ (177,559 )

2013 2012 2011

Loss before recovery of income taxes $ (1,314,452 ) $ (394,228 ) $ (18,000 )

Expected Canadian statutory rate 26.9 % 26.9 % 28.3 %

Expected recovery of income taxes (353,588 ) (106,047 ) (5,085 )

Non-deductible amounts:

Amortization — 6,173 22,251 Share-based compensation 13,096 6,258 14,045 Merger and acquisition costs 1,090 24,210 — In-process research and development — 3,228 — Non-taxable gain on disposal of investments — (3,056 ) (15,384 )

Changes in enacted income tax rates 6,555 (4,459 ) (18,313 )

Canadian dollar foreign exchange gain for Canadian tax purposes 635 9,098 40,667 Change in valuation allowance related to foreign tax credits and net operating losses 70,154 — — Change in valuation allowance on Canadian deferred tax assets and tax rate changes 143,945 (34,245 ) (57,249 )

Change in uncertain tax positions — 15,433 (8,568 )

Foreign tax rate differences (407,604 ) (226,764 ) (180,301 )

Unrecognized income tax benefit of losses — 32,019 22,187 Withholding taxes on foreign income 3,393 7,954 5,473 Alternative minimum and other taxes — (4,528 ) 2,513 Taxable foreign income 55,350 10,675 — Deferred intercompany profit (5,726 ) (10,371 ) — Other 21,917 (3,781 ) 205

$ (450,783 ) $ (278,203 ) $ (177,559 )

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

____________________________________

The realization of deferred tax assets is dependent on the Company generating sufficient domestic and foreign taxable income in the years that the temporary differences become deductible. A valuation allowance has been provided for the portion of the deferred tax assets that the Company determined is more likely than not to remain unrealized based on estimated future taxable income and tax planning strategies. In 2013, the valuation allowance increased by $353.1 million . The net increase in valuation allowance resulted from an increase in valuation allowance associated with historic foreign tax credits generated by the Company’s U.S. subsidiaries and acquired valuation allowance from B&L. In 2012, the valuation allowance decreased by $4.2 million . The net decrease in valuation allowance resulted from an increase in deferred tax liabilities arising from acquisitions and unrealized foreign exchange gains on intercompany loans, offset by an increase in the valuation allowance for Canadian tax loss carryforwards for the year ended December 31, 2012. Given the Company’s history of pre-tax losses and expected future losses in Canada, the Company determined there was insufficient objective evidence to release the remaining valuation allowance against Canadian tax loss carryforwards, International Tax Credits (“ITC”) and pooled Scientific Research and Experimental Development Tax Incentive (“SR&ED”) expenditures.

As of December 31, 2013, the Company had accumulated losses of approximately $717.9 million (2012 - $397.5 million ) available for federal and provincial tax purposes in Canada. As of December 31, 2013, the Company had approximately $42.3 million (2012 - $44.9 million ) of unclaimed Canadian ITCs, which expire from 2017 to 2032. These losses and ITCs can be used to offset future years’ taxable income and federal tax, respectively. In addition, as of December 31, 2013, the Company had pooled SR&ED expenditures amounting to approximately $232.1 million (2012 - $255.6 million ) available to offset against future years’ taxable income from its Canadian operations, which may be carried forward indefinitely. As in past years, a full valuation allowance has been maintained against the net Canadian deferred tax assets of $253.6 million (2012 - $122.0 million ).

As of December 31, 2013, the Company has accumulated tax losses of approximately $1,955.1 million (2012 - $1,011.7 million ) for federal purposes in the U.S. which expire from 2021 to 2034. While the losses are subject to multiple annual loss limitations restrictions, the Company believes that the recoverability of the deferred tax assets associated with those losses is more likely than not to be realized. As of December 31, 2013, the Company had approximately $60.3 million (2012 - $21.3 million ) of U.S. research and development credits, which

2013 2012

Deferred tax assets: Tax loss carryforwards $ 957,703 $ 293,547 Tax credit carryforwards 126,415 77,426 Scientific Research and Experimental Development pool 62,883 65,718 Research and development tax credits 83,669 67,683 Provisions 577,509 211,486 Plant, equipment and technology 38,339 7,478 Deferred revenue 12,549 60,850 Deferred financing and share issue costs — 118,369 Share-based compensation 42,987 19,828 Other 76,464 23,453 Total deferred tax assets 1,978,518 945,838 Less valuation allowance (477,573 ) (124,515 )

Net deferred tax assets 1,500,945 821,323 Deferred tax liabilities:

Intangible assets 2,884,288 1,610,386 Unremitted earnings 563,775 191,129 Deferred financing and share issue costs (1) 16,598 — Prepaid expenses (353 ) 1,094 Total deferred tax liabilities 3,464,308 1,802,609

Net deferred income taxes $ (1,963,363 ) $ (981,286 )

(1) The equivalent prior year liability balance of $36.3 million is offset in the assets line: Deferred financing and share issue costs.

expire from 2021 to 2034. As of December 31, 2013, the Company

F- 81

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

had approximately $136.4 million in foreign tax credits recognized on tax returns which are not expected to be utilized before their expirations due to a lack of foreign source income and therefore a full valuation allowance has been maintained. The Company’s accumulated losses are subject to annual limitations as a result of previous ownership changes that have occurred. Included in the $1,955.1 million of tax losses is approximately $22.5 million of losses related to the exercise of non-qualified stock options and restricted stock awards.

The Company accrues for U.S. tax on the unremitted earnings of the foreign subsidiaries owned by the Company’s U.S. subsidiaries. In addition, the Company provides for the tax on the unremitted earnings of its direct foreign affiliates except for its direct U.S. subsidiaries. The Company continues to assert that the unremitted earnings of its U.S. subsidiaries will be permanently reinvested and not repatriated to Canada. As of December 31, 2013, the Company estimates there would be no Canadian tax liability attributable to the permanently reinvested U.S. earnings.

As of December 31, 2013, the total amount of unrecognized tax benefits (including interest and penalties) was $247.5 million (2012 - $128.0 million ), of which $153.4 million (2012 - $88.8 million ) would affect the effective tax rate. In the year ended December 31, 2013, the Company recognized a $132.4 million (2012 - $29.1 million ) increase and a $12.8 million (2012 - $3.4 million ) net decrease in the amount of unrecognized tax benefits related to tax positions taken in the current and prior years, respectively.

The Company recognizes interest accrued related to unrecognized tax benefits and penalties in the provision for income taxes. As of December 31, 2013, approximately $46.4 million (2012 - $24.3 million ) was accrued for the payment of interest and penalties. In the year ended December 31, 2013, the Company recognized approximately $5.7 million (2012 - $1.3 million ) interest and penalties.

The Company and one or more of its subsidiaries file federal income tax returns in Canada, the U.S., and other foreign jurisdictions, as well as various provinces and states in Canada and the U.S. The Company and its subsidiaries have open tax years primarily from 2005 to 2012 with significant taxing jurisdictions including Canada, and the U.S. These open years contain certain matters that could be subject to differing interpretations of applicable tax laws and regulations, and tax treaties, as they relate to the amount, timing, or inclusion of revenues and expenses, or the sustainability of income tax positions of the Company and its subsidiaries. Certain of these tax years are expected to remain open indefinitely.

In 2012, Valeant and its subsidiaries closed the Internal Revenue Service (“IRS”) audits through the 2010 tax year. Additionally, Valeant closed the examination by the Australian Tax Office for the 2010 tax year. Valeant remains under examination for various state tax audits in the U.S. for years 2002 to 2010. The Company is currently under examination by the Canada Revenue Agency for years 2005 to 2006 and remains open to examination for years 2005 and later. In February 2013 the Company has received a proposed audit adjustment for the years 2005 through 2007. The Company disagrees with the adjustments and has filed a Notice of Objection. The total proposed adjustment will result in a loss of tax attributes which are subject to a full valuation allowance and will not result in material change to the provision for income taxes.

The following table presents a reconciliation of the beginning and ending amounts of unrecognized tax benefits:

F- 82

Jurisdiction: Open Years

United States - Federal 2011 - 2012

Canada 2005 - 2012

Brazil 2006 - 2012

Germany 2011 - 2012

France 2011 - 2012

China 2009 -2012

Ireland 2008 - 2012

Netherlands 2011 - 2012

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

The Company estimates approximately $8.7 million of the above unrecognized tax benefits will be realized during the next 12 months.

Certain unrecognized tax benefits have been recorded as a reduction of deferred tax assets. In addition, certain unrecognized tax benefits are fully offset by tax attributes for which a full valuation allowance exists.

The Company effected an internal reorganization in December 2013 to streamline and integrate certain aspects of its operations. As part of this internal reorganization, the Company migrated certain of its intellectual property to Luxembourg. This is consistent with the evolution of the Company’s business and leverages the Company’s prior reorganization.

The Company effected an internal reorganization in July 2012 to streamline certain aspects of its operations. As part of this internal reorganization, the Company migrated certain of its intellectual property from Barbados to Bermuda and moved certain of its operational and managerial functions from Barbados to certain European jurisdictions (including Ireland). This is consistent with the evolution of the Company’s business and the Company expects that this internal reorganization will enable the Company to better leverage its existing and future resources on a worldwide basis and support the Company’s international expansion.

(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc. for the years ended December 31, 2013, 2012 and 2011 were calculated as follows:

In 2013 and 2012, all stock options, RSUs and Convertible Notes were excluded from the calculation of diluted loss per share, as the effect of including them would have been anti-dilutive, as it would have reduced the loss per share. The potential dilutive effect of stock options, RSUs and Convertible Notes on the weighted-average number of common shares outstanding was as follows:

F- 83

2013 2012 2011

Balance, beginning of year $ 127,978 $ 102,290 $ 110,857 Acquisition of B&L 52,183 — — Acquisition of Medicis — 6,556 — Additions based on tax positions related to the current year 60,678 3,492 2,701 Additions for tax positions of prior years 19,543 19,036 — Reductions for tax positions of prior years (10,801 ) (1,396 ) (11,268 )

Lapse of statute of limitations (2,045 ) (2,000 ) —

Balance, end of year $ 247,536 $ 127,978 $ 102,290

22. (LOSS) EARNINGS PER SHARE

2013 2012 2011

Net (loss) income attributable to Valeant Pharmaceuticals International, Inc. $ (866,142 ) $ (116,025 ) $ 159,559 Basic weighted-average number of common shares outstanding (000s) 320,996 305,446 304,655 Dilutive effect of stock options and RSUs (000s) — — 8,484 Dilutive effect of convertible debt (000s) — — 12,980 Diluted weighted-average number of common shares outstanding (000s) 320,996 305,446 326,119

(Loss) earnings per share attributable to Valeant Pharmaceuticals International, Inc.:

Basic $ (2.70 ) $ (0.38 ) $ 0.52

Diluted $ (2.70 ) $ (0.38 ) $ 0.49

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

In 2013, 2012 and 2011 , stock options to purchase approximately 1,090,000 , 1,093,000 and 271,000 weighted-average common shares, respectively, were not included in the computation of diluted earnings per share because the exercise prices of the options were greater than the average market price of the Company’s common shares and, therefore, the effect would have been anti-dilutive.

Interest and income taxes paid during the years ended December 31, 2013 , 2012 and 2011 were as follows:

From time to time, the Company becomes involved in various legal and administrative proceedings, which include product liability, intellectual property, commercial, 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.

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. (“BPI”), 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 pay 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 the Company 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 annual independent review of these obligations. Failure to comply with the obligations under the CIA could result in financial penalties.

2013 2012

Basic weighted-average number of common shares outstanding (000s) 320,996 305,446 Dilutive effect of stock options and RSUs (000s) 6,470 7,158 Dilutive effect of Convertible Notes (000s) — 520

Diluted weighted-average number of common shares outstanding (000s) 327,466 313,124

23. SUPPLEMENTAL CASH FLOW DISCLOSURES

2013 2012 2011

Interest paid $ 652,910 $ 421,019 $ 247,879 Income taxes paid 65,072 41,425 45,399

24. LEGAL PROCEEDINGS

Securities

Medicis Shareholder Class Actions

F- 84

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Prior to the Company’s acquisition of Medicis, several purported holders of then public shares of Medicis filed putative class action lawsuits in the Delaware Court of Chancery and the Arizona Superior Court against Medicis and the members of its Board of Directors, as well as one or both of Valeant and Merlin Merger Sub (the wholly-owned subsidiary of Valeant formed in connection with the Medicis Acquisition). The Delaware actions (which were instituted on September 11, 2012 and October 1, 2012, respectively) were consolidated for all purposes under the caption In re Medicis Pharmaceutical Corporation Stockholders Litigation, C.A. No. 7857-CS (Del. Ch.). The Arizona action (which was instituted on September 11, 2012) bears the caption Swint v. Medicis Pharmaceutical Corporation, et. al., Case No. CV2012-055635 (Ariz. Sup. Ct.). The actions all alleged, among other things, that the Medicis directors breached their fiduciary duties because they supposedly failed to properly value Medicis and caused materially misleading and incomplete information to be disseminated to Medicis’ public shareholders, and that Valeant and/or Merlin Merger Sub aided and abetted those alleged breaches of fiduciary duty. The actions also sought, among other things, injunctive and other equitable relief, and money damages. On November 20, 2012, Medicis and the other named defendants in the Delaware action signed a memorandum of understanding (“MOU”) to settle the Delaware action and resolve all claims asserted by the purported class. The parties executed a Stipulation and Agreement of Compromise and Settlement on November 25, 2013. The settlement is subject to court approval. Defendants have provided notice of the settlement to members of the proposed class and the Delaware Court of Chancery scheduled a settlement hearing for February 26, 2014. In connection with the proposed settlement, the plaintiffs intend to seek an award of attorneys’ fees and expenses incurred in connection with the Delaware action. Plaintiffs’ request for attorneys’ fees and expenses will be considered by the Delaware Court of Chancery at the settlement hearing. The plaintiff in the Arizona action agreed to dismiss her complaint. On January 15, 2013, the Arizona Superior Court issued an order granting the parties' joint stipulation to dismiss the Arizona action.

Obagi Shareholder Class Actions

Prior to the acquisition of all of the outstanding common stock of Obagi, the following complaints were filed: (i) a complaint in the Court of Chancery of the State of Delaware, dated March 22, 2013, and amended on April 1, 2013 and on April 8, 2013, captioned Michael Rubin v. Obagi Medical Products, Inc., et al.; (ii) a complaint in the Superior Court of the State of California, County of Los Angeles, dated March 22, 2013, and amended on March 27, 2013, captioned Gary Haas v. Obagi Medical Products, Inc., et al.; and (iii) a complaint in the Superior Court of the State of California, County of Los Angeles, dated March 27, 2013, captioned Drew Leonard v. Obagi Medical Products, Inc., et al. Each complaint is a purported shareholder class action and names as defendants Obagi and the members of the Obagi Board of Directors. The two complaints filed in California also name Valeant and Odysseus Acquisition Corp. (the wholly-owned subsidiary of Valeant formed in connection with the Obagi acquisition) as defendants. The plaintiffs’ allegations in each action are substantially similar. The plaintiffs allege that the members of the Obagi Board of Directors breached their fiduciary duties to Obagi’s stockholders in connection with the sale of the company, and the California complaints further allege that Obagi, Valeant and Odysseus Acquisition Corp. aided and abetted the purported breaches of fiduciary duties. In support of their purported claims, the plaintiffs allege that the proposed transaction undervalued Obagi, involved an inadequate sales process and included preclusive deal protection devices. The plaintiffs in the Rubin case in Delaware and in the Haas case in California also filed amended complaints, which added allegations challenging the adequacy of the disclosures concerning the transaction. The plaintiffs sought damages and to enjoin the transaction, and also sought attorneys’ and expert fees and costs. On April 12, 2013, the defendants entered into an MOU with the plaintiffs in the actions pending in the Court of Chancery of the State of Delaware and the Superior Court of the State of California, pursuant to which Obagi and such parties agreed in principle, and subject to certain conditions, to settle those stockholder lawsuits. not to exceed a specified sum. After receiving notice that the parties had reached an agreement to settle the litigation, the Superior Court of the State of California scheduled a “Hearing on Order to Show Cause Re Dismissal”. On January 29, 2014, the court continued that hearing until May 1, 2014, pending completion of definitive documentation and approval proceedings in the Court of Chancery of the State of Delaware. On February 6, 2014, the Court of Chancery of the State of Delaware issued an Order for Notice and Scheduling of Hearing on Settlement, preliminarily certifying the Rubin case as a non-opt out class action for settlement purposes, directing notice of the proposed settlement to members of the class, and setting a hearing to consider final approval of the settlement for April 30, 2014. In connection with the proposed settlement, the plaintiffs intend to seek an award of attorneys’ fees and expenses in an amount not to exceed a specified sum. Such amount will not be material to the Company's consolidated financial statements. If the proposed settlement is not approved or the applicable conditions are not satisfied, the defendants will continue to vigorously defend these actions.

Solta Shareholder Class Actions

Prior to the Company’s completion of the acquisition of Solta, several purported holders of then public shares of Solta filed putative class action lawsuits in the Delaware Court of Chancery and the Superior Court of the State of California, County of Alameda, against Solta and the members of its board of directors, as well as the Company, Valeant, and Sapphire Subsidiary

F- 85

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Corp. (the wholly-owned subsidiary of Valeant formed in connection with the Solta acquisition). The Delaware actions were consolidated for all purposes under the caption In re Solta Medical, Inc. Stockholders Litigation, C.A. No. 9170-CS (Del. Ch.). The California actions were filed under the captions Lathrop v. Covert, et al., Case No. HG13-707363 (Cal. Super.); Walter, et al. v. Solta Medical, Inc., et al., Case No. RG13-707659 (Cal. Super.); and Bushansky v. Solta Medical, Inc., et al., Case No. RG13-707997 (Cal. Super.). The plaintiffs’allegations in each action were substantially similar. The actions all alleged, among other things, that the directors of Solta breached their fiduciary duties to the stockholders of Solta in connection with the Company's proposed acquisition of Solta. In support of their purported claims, the plaintiffs alleged that the proposed transaction did not appropriately value Solta, was the result of an inadequate process and included preclusive deal protection devices. The plaintiffs also alleged that the Schedule 14D-9 filed by Solta on December 23, 2013, in connection with the proposed transaction contained material omissions and misstatements. The complaints claimed that Solta, the Company, Valeant, and Sapphire Subsidiary Corp. aided and abetted the purported breaches of fiduciary duty. The actions sought, among other things, injunctive and other equitable relief, and money damages. The plaintiffs also sought attorneys’ and expert fees and costs. While the defendants believed that each of the aforementioned lawsuits were without merit and that they had valid defenses to all claims, in an effort to minimize the cost and expense of any litigation relating to the lawsuits, on January 11, 2014, following arms-length negotiations, Solta and the other named defendants signed a memorandum of understanding to settle the actions and resolve all claims asserted by the purported stockholder classes. The settlement, which is subject to court approval and further definitive documentation, provides for a release and settlement by Solta’s stockholders of all claims against Solta and the other defendants and their respective affiliates and agents in connection with the Company's acquisition of Solta. In connection with the proposed settlement, the plaintiffs intend to seek an award of attorneys’ fees and expenses in an amount to be determined by the Delaware Court of Chancery.

Antitrust

Wellbutrin XL® Antitrust Class Actions

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, its subsidiary Biovail Laboratories International SRL (“BLS”) (now Valeant International Bermuda), GlaxoSmithKline plc, and SmithKline Beecham Inc. (the latter two of which are referred to here as “GSK”) seeking damages and alleging that Biovail, BLS and GSK took actions to improperly delay FDA approval for generic forms of Wellbutrin XL®. In late May and early June 2008, additional direct and indirect purchaser class actions were also filed against Biovail, BLS and GSK in the Eastern District of Pennsylvania, all making similar allegations. After motion practice, the complaints were consolidated, resulting in a lead direct purchaser and a lead indirect purchaser action, and the Court ultimately denied defendants’ motion to dismiss the consolidated complaints.

The Court granted direct purchasers’ motion for class certification, and certified a class consisting of all persons or entities in the United States and its territories who purchased Wellbutrin XL® directly from any of the defendants at any time during the period of November 14, 2005 through August 31, 2009. Excluded from the class are defendants and their officers, directors, management, employees, parents, subsidiaries, and affiliates, and federal government entities. Further excluded from the class are persons or entities who have not purchased generic versions of Wellbutrin XL® during the class period after the introduction of generic versions of Wellbutrin XL®. The Court granted in part and denied in part the indirect purchaser plaintiffs’ motion for class certification.

After extensive discovery, briefing and oral argument, the Court granted the defendants’ motion for summary judgment on all but one of the plaintiffs’ claims, and deferred ruling on the remaining claim. Following the summary judgment decision, the Company entered into binding settlement arrangements with both plaintiffs’ classes to resolve all existing claims against the Company. The total settlement amount payable was $49.25 million . In addition, the Company agreed to pay up to $500,000 toward settlement notice costs. These charges were recognized in the second quarter of 2012 within Other expense in the consolidated statements of (loss) income, the majority of which was paid in 2012 with the remainder paid in 2013. The settlements required Court approval. The direct purchaser class filed its motion for preliminary approval of its settlement on July 23, 2012. The hearing on final approval of that settlement took place on November 7, 2012, with the Court granting final approval to the settlement on that day. The hearing on final approval of the settlement with the indirect purchasers took place in June 2013, with the Court granting final approval to the settlement on July 22, 2013.

Solodyn® Antitrust Class Actions

On July 22, 2013, United Food and Commercial Workers Local 1776 & Participating Employers Health and Welfare Fund, filed a civil antitrust class action complaint in the United States District Court for the Eastern District of Pennsylvania, Case No. 2:13-CV-04235-JCJ, against Medicis, the Company and various manufacturers of generic forms of Solodyn®, alleging

F- 86

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

that the defendants engaged in an anticompetitive scheme to exclude competition from the market for minocycline hydrochloride extended release tablets, a prescription drug for the treatment of acne marketed by Medicis under the brand name, Solodyn®. The plaintiff further alleges that the defendants orchestrated a scheme to improperly restrain trade, and maintain, extend and abuse Medicis' alleged monopoly power in the market for minocycline hydrochloride extended release tablets to the detriment of plaintiff and the putative class of end-payor purchasers it seeks to represent, causing them to pay overcharges. Plaintiff alleges violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and of various state antitrust and consumer protection laws, and further alleges that defendants have been unjustly enriched through their alleged conduct. Plaintiff seeks declaratory and injunctive relief and, where applicable, treble, multiple, punitive and/or other damages, including attorneys' fees. Additional class action complaints making similar allegations against all defendants, including Medicis and the Company have been filed in various courts by other private plaintiffs purporting to represent certain classes of similarly-situated direct or end-payor purchasers of Solodyn® ( Rochester Drug Co-Operative, Inc. , Case No. 2:13-CV-04270-JCJ (E.D. Pa. filed July 23, 2013); Local 274 Health & Welfare Fund , Case No. 2:13-CV-4642-JCJ (E.D.Pa. filed Aug. 9, 2013); Sheet Metal Workers Local No. 25 Health & Welfare Fund , Case No. 2:13-CV-4659-JCJ (E.D. Pa. filed Aug. 8, 2013); Fraternal Order of Police, Fort Lauderdale Lodge 31, Insurance Trust Fund , Case No. 2:13-CV-5021-JCJ (E.D. Pa. filed Aug. 27, 2013); Heather Morgan , Case No. 2:13-CV-05097 (E.D. Pa. filed Aug. 29, 2013); Plumbers & Pipefitters Local 176 Health & Welfare Trust Fund , Case No. 2:13-CV-05105 (E.D. Pa. filed Aug. 30, 2013); Ahold USA, Inc. , Case No. 1:13-cv-12225 (D. Mass. filed Sept. 9, 2013); City of Providence, Rhode Island , Case No. 2:13-cv-01952 (D. Ariz. filed Sept. 24, 2013); International Union of Operating Engineers Stationary Engineers Local 39 Health & Welfare Trust Fund , Case No. 1:13-cv-12435 (D. Mass. filed Oct. 2, 2013); Painters District Council No. 30 Health and Welfare Fund et al. , Case No. 1:13-cv-12517 (D. Mass. filed Oct. 7, 2013); Man-U Service Contract Trust Fund , Case No. 13-cv-06266-JCJ (E.D. Pa. filed Oct. 25, 2013)). On August 29, 2013, International Union of Operating Engineers Local 132 Health and Welfare Fund voluntarily dismissed the class action complaint it had originally filed on August 1, 2013, in the United States District Court for the Northern District of California, and on August 30, 2013, re-filed its class action complaint in the United States District Court for the Eastern District of Pennsylvania (Case No. 2:13-cv-05108). The International Union of Operating Engineers Local 132 Health and Welfare Fund complaint makes similar allegations against all defendants, including Medicis and the Company, and seeks similar relief, to the other end-payor plaintiff complaints. On October 11, 2013, Medicis and the Company filed a motion with the Judicial Panel for Multidistrict Litigation ("JPML") seeking an order transferring and consolidating the thirteen putative class action cases for coordinated pretrial proceedings. The motion has been fully briefed and oral arguments before the JPML were heard on February 6, 2014. On February 25, 2014, the JPML ordered that the cases pending outside the District of Massachusetts be transferred to the District of Massachusetts, with the consent of that court, for coordinated or consolidated pretrial proceedings with the actions already pending in that district. We are in the process of evaluating the claims and plan to vigorously defend these actions.

Intellectual Property

Watson APLENZIN® Litigation

On or about January 5, 2010, the Company's subsidiary, Valeant International (Barbados) SRL (now Valeant International Bermuda) ("VIB"), received a Notice of Paragraph IV Certification dated January 4, 2010 from Watson Laboratories, Inc.-Florida (“Watson”), related to Watson’s Abbreviated New Drug Application (“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 alleged these patents are invalid or not infringed. 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 dismissed without prejudice and the litigation proceeded in the Florida Court. VIB received a third Notice of Paragraph IV Certification from Watson dated March 5, 2010, seeking to market its products 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 were consolidated into the first-filed case before the same judge. In the course of discovery, the issues were narrowed and only five of the patents remained in the litigation. Mandatory mediation was completed unsuccessfully on December 17, 2010. The trial in this matter was held in June 2011 and closing arguments were heard in September 2011. A judgment in this matter was issued on November 8, 2011. The Court found that Watson had failed to prove that VIB’ s patents at suit were invalid and granted judgment in favor of VIB. On February 23, 2012, the Court

F- 87

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

granted VIB’s request for declaratory injunctive relief under 35 U.S.C. 271(e)(4)(A). On July 9, 2012, the Court denied VIB’s request for further injunctive relief under 35 U.S.C. 271(e)(4)(B) and/or 35 U.S.C. 283. Watson appealed the judgment. Oral arguments on the appeal were held on October 10, 2013. On October 16, 2013, the United States Court of Appeals for the Federal Circuit affirmed the decision of the District Court that Watson failed to prove that VIB’s patents were invalid.

Cobalt TIAZAC® XC Litigation

On or about August 17, 2012, VIB and Valeant Canada received a Notice of Allegation from Cobalt Pharmaceuticals Company (“Cobalt”) with respect to diltiazem hydrochloride 180 mg, 240 mg, 300 mg and 360 mg tablets, marketed in Canada by Valeant Canada as TIAZAC® XC. The patents in issue are Canadian Patent Nos. 2,242,224, and 2,307,547. Cobalt alleged that its generic form of TIAZAC® XC 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 of Health from issuing a Notice of Compliance to Cobalt was issued in the Federal Court of Canada on September 28, 2012 (Case No. T-1805-12). A motion to declare Cobalt’s Notice of Allegation to be null and void due to a conflict of interest on the part of Cobalt’s legal counsel was heard by a judge of the Federal Court on December 17, 2012. A decision was issued on June 12, 2013 dismissing the motion in part. In particular, VIB and Valeant were successful on their motion to disqualify Cobalt’s counsel; however, a declaration that Cobalt’s Notice of Allegation is null and void was not granted. Both parties appealed the decision (Case No. A-221-13) and the appeal and cross-appeal were heard on November 13, 2013 and, in a decision rendered on February 24, 2014, the Court of Appeal dismissed both the appeal and the cross-appeal. Cobalt brought a motion to dismiss the application in respect of Canadian Patent No. 2,242,224, but the motion was dismissed. Cobalt has filed an appeal (Case No. A-434-13), but no hearing date has been set. Cobalt also brought a motion to dismiss the application in respect of Canadian Patent No. 2,307,547. That motion is expected to be heard in June 2014, with the main application. Otherwise, the application is proceeding in the ordinary course. Cross-examinations are ongoing. A hearing in this matter is expected to take place in June 2014.

Banner TARGRETIN® Litigation

On or about August 26, 2011, Eisai received a Notice of Paragraph IV Certification dated August 25, 2011 from Banner Pharmacaps Inc. (“Banner”), related to Banner’s ANDA filing with the FDA for bexarotene capsules, 75 mg, which correspond to the Targretin® capsules. In the notice, Banner asserted that U.S. Patent Nos. 5,780,676 C1 (the “'676 Patent”) and 5,962,731 (the “'731 Patent”), which are listed in the FDA’s Orange Book for Targretin®, are either invalid, unenforceable and/or will not be infringed by Banner’s manufacture, use, sale or offer to sell of Banner’s generic product for which the ANDA was submitted. At that time, Eisai held the U.S. rights to the Targretin® product, including the '676 patent and the '731 patent and the NDA for the Targretin® product. Eisai filed suit pursuant to the Hatch-Waxman Act against Banner on October 4, 2011, in the U.S. District Court for the District of Delaware (Case No. 1:11-cv-901(GMS)), thereby triggering a 30 -month stay of the approval of Banner’s ANDA. In the suit, Eisai alleged infringement by Banner of one or more claims of the '676 Patent and the '731 Patent. On December 18, 2012, Mylan Pharmaceuticals Inc. (“Mylan”) was added as a defendant in the proceedings after Eisai was informed that Mylan had acquired certain rights in the ANDA. On February 20, 2013, the Company acquired from Eisai the U.S. rights to the Targretin® product, including the '676 patent and the '731 patent and the NDA for the Targretin® product, which were, in turn, transferred to the Company’s indirect wholly-owned subsidiary, Valeant Pharmaceuticals Luxembourg S.a.r.l. (“Valeant Luxembourg”). On April 24, 2013, the parties entered into a stipulation to add Valeant Luxembourg as a plaintiff in the proceedings. Fact discovery closed in June 2013. Document production with respect to Eisai was completed on April 11, 2013. Expert discovery, which began in July 2013, has been completed. On December 13, 2013, the parties executed a settlement agreement in this matter. Under the terms of the settlement agreement, the pending litigation was dismissed, and Mylan and Banner will receive a license to begin selling their generic version of the product on July 9, 2015, or earlier under certain circumstances.

AntiGrippin® Litigation

Two suits have been brought against the Company's subsidiary, Natur Produkt, seeking lost profits in connection with the registration by Natur Produkt of its AntiGrippin trademark. The plaintiffs in these matters allege that Natur Produkt violated Russian competition law by preventing plaintiffs from producing and marketing their products under certain brand names. The first matter (Case No. A-56-23056/2013, Arbitration Court of St. Petersburg) was accepted for proceedings on June 24, 2013 and a hearing was held on November 28, 2013. In a decision dated December 4, 2013, the court found in favor of the plaintiff (AnviLab) and awarded the plaintiff lost profits in the amount of approximately $50 million . The $50 million charge was recognized in the fourth quarter of 2013 in Other expense in the consolidated statements of (loss) income. Natur Produkt has appealed this decision. A hearing in the appeal proceeding is scheduled for March 16, 2014.

F- 88

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Natur Produkt was served with a claim in the second matter (Case No. A-56-38592/2013, Arbitration Court of St. Petersburg) on July 16, 2013 by the plaintiff in that matter (ZAO Tsentr Vnedreniya PROTEK ("Protek")). A hearing was held in this matter on September 29, 2013 and, on October 18, 2013, the court found in favor of Natur Produkt. Protek filed an appeal of the decision on November 26, 2013. A hearing in the appeal proceeding was held on January 30, 2014 and the appeal court also found in favour of Natur Produkt. Protek has the right to appeal that decision to the cassation court. Natur Produkt intends to vigorously defend both of these matters.

Watson ACANYA® Litigation

On or about September 10, 2013, the Company’s subsidiary, Dow Pharmaceuticals Sciences, Inc. (“Dow”), received a Notice of Paragraph IV Certification dated September 9, 2013 from Watson Laboratories, Inc. (“Watson”), related to Watson’s ANDA filing with the FDA for Clindamycin Phosphate and Benzoyl Peroxide Gel, 1.2%/2.5%, for topical use, which corresponds to the Company’s Acanya® Gel product. In the notice, Watson asserted that U.S. Patent No. 8,288,434 (the “'434 Patent”), which is listed in the FDA’s Orange Book for Acanya® Gel, is either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Watson’s generic products for which the ANDA was submitted. Dow holds the NDA for Acanya® Gel and is owner of the ‘434 Patent. Dow and the Company’s subsidiary, Valeant Pharmaceuticals North America LLC (“VPNA”), filed suit pursuant to the Hatch-Waxman Act against Watson on October 24, 2013, in the U.S. District Court for the District of New Jersey (Case No. 2:33-av-00001), thereby triggering a 30 -month stay of the approval of Watson’s ANDA. In the suit, Dow and VPNA allege infringement by Watson of one or more claims of the '434 Patent. This matter is proceeding in the ordinary course.

Perrigo ACANYA® Litigation

On October 3, 2013, Dow received a Notice of Paragraph IV Certification dated October 2, 2013 from Perrigo Israel Pharmaceuticals Ltd. (“Perrigo”), related to Perrigo’s ANDA filing with the FDA for Clindamycin Phosphate and Benzoyl Peroxide Gel, 1.2%/2.5%, which corresponds to the Company’s Acanya® Gel product. In the notice, Perrigo asserted that U.S. Patent No. 8,288,434 (the “'434 Patent”), which is listed in the FDA’s Orange Book for Acanya® Gel, is either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use, sale or importation of Perrigo’s generic product for which the ANDA was submitted. Dow holds the NDA for Acanya® Gel and is the owner of the ‘434 Patent. Dow and VPNA filed suit pursuant to the Hatch-Waxman Act against Perrigo on November 15, 2013, in the U.S. District Court for the District of New Jersey (Case No. 2:33-av-00001), thereby triggering a 30 -month stay of the approval of Perrigo’s ANDA. In the suit, Dow and VPNA allege infringement by Perrigo of one or more claims of the '434 Patent. This matter is proceeding in the ordinary course.

Allergan Patent Infringement Proceeding - Restylane-L® and Perlane-L®

On September 13, 2013, Allergan USA, Inc. and Allergan Industrie, SAS (collectively, “Allergan”) filed a Complaint for Patent Infringement in the United States District Court for the Central District of California (Case No. SACV13-1436 AG (JPRX)) against the Company and certain of its affiliates, including Medicis. The complaint alleges that the Company and its affiliates named in the complaint have infringed Allergan’s US Patent No. 8,450,475 (the “‘475 Patent”) by selling, offering to sell and importing in and into the United States the Company’s Restylane-L® and Perlane-L® dermal filler products. Allergan is seeking a permanent injunction and unspecified damages. The Company filed an Answer in this matter on November 18, 2013. The matter is proceeding in the ordinary course. The Company and the licensor of the ‘475 patent are vigorously defending this matter.

PROLENSA® Litigation

On or about December 20, 2013, the Company and B&L received a Notice of Paragraph IV Certification dated December 19, 2013 from Lupin, Ltd. (“Lupin”), related to Lupin’s ANDA filing with the FDA for bromfenac ophthalmic solution 0.07%, which corresponds to the Company’s Prolensa® product. In the notice, Lupin asserted that U.S. Patent No. 8,129,431 (the “'431 Patent”), which is listed in the FDA’s Orange Book for Prolensa®, is either invalid, unenforceable and/or will not be infringed by the commercial manufacture, use or sale of Lupin’s generic product for which the ANDA was submitted. B&L holds the NDA for Prolensa® and Bausch & Lomb Pharma Holdings is the exclusive licensee of Senju Pharmaceutical Co., Ltd. (“Senju”) of the ‘431 Patent. B&L, Bausch & Lomb Phama Holdings and Senju (collectively, the “Plaintiffs”) filed suit pursuant to the Hatch-Waxman Act against Lupin on January 31, 2014, in the U.S. District Court for the District of New Jersey (Case No. 2:33-av-00001), thereby triggering a 30 -month stay of the approval of Lupin’s ANDA. In the suit,

the

F- 89

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Plaintiffs allege infringement by Lupin of one or more claims of the ‘431 Patent. This matter is proceeding in the ordinary course.

General Civil Actions

AWP Complaints

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 BPI, 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 BPI and certain others of the named defendants on a without prejudice basis. Similarly, the State of Mississippi voluntarily dismissed its claim against BPI and a number of defendants on a without prejudice basis.

In the case brought by the State of Alabama, the Company answered the State’s Amended Complaint. On October 16, 2009, the Supreme Court of Alabama issued an opinion reversing judgments in favor of the State in the first three cases that were tried against co-defendant companies. The Alabama Supreme Court also rendered judgment in favor of those defendants, finding that the State’s fraud-based theories failed as a matter of law. The court ordered all parties to this proceeding to attend mediation in December 2011. In February 2012, the matter settled for an all-inclusive payment in the amount of less than $0.1 million .

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. In August 2013, the parties agreed to settle this matter for an all-inclusive payment in the amount of less than $0.3 million .

Afexa Class Action

On March 9, 2012, a Notice of Civil Claim was filed in the Supreme Court of British Columbia which seeks an order certifying a proposed class proceeding against the Company and a predecessor, Afexa (Case No. NEW-S-S-140954). The proposed claim asserts that Afexa and the Company made false representations respecting Cold-FX® to residents of British Columbia who purchased the product during the applicable period and that the proposed class has suffered damages as a result. The Company filed its certification materials on February 6, 2013 and a hearing on certification was held on September 3 to 6, 2013. An additional hearing day was scheduled for January 16, 2014. On November 8, 2013, the Plaintiff served an amended notice of civil claim which seeks to re-characterize the representation claims and broaden them from what was originally claimed. As a result, the hearing date scheduled for January 16, 2014 was cancelled and the parties are making submissions to address the impact of the amendments. Following the court’s determination, a revised certification hearing schedule will be set. The Company denies the allegations being made and is vigorously defending this matter.

Anacor Breach of Contract Proceeding

On or about October 29, 2012, the Company received notice from Anacor Pharmaceuticals, Inc. (“Anacor”) seeking to commence arbitration of a breach of contract dispute under a master services agreement dated March 26, 2004 between Anacor and Dow Pharmaceuticals (“Dow”) related to certain development services provided by Dow in connection with Anacor’s efforts to develop its onychomycosis nail-penetrating anti-fungal product. Anacor has asserted claims for breach of contract, breach of fiduciary duty, intentional interference with prospective business advantage and unfair competition. Anacor is seeking injunctive relief (for a certain period ending after the approval of the Company's pending new drug application for efinaconazole, its topical product candidate for the treatment of onychomycosis) and damages of at least $215.0 million . Following a hearing in July 2013 on a motion brought by the Company, the Arbitrator dismissed Anacor's claim for breach of fiduciary duty. Prior to the hearing on that motion, Anacor voluntarily agreed to dismiss its claims for conversion and interference with prospective business advantage.

A motion for a preliminary injunction was filed and a hearing for such motion had been set to begin on May 6, 2013. However, as announced on May 2, 2013, the Company agreed that the launch of efinaconazole, would not occur until after the September 2013

arbitration hearing and, as a result, the preliminary injunction hearing was canceled.

F- 90

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

A hearing in the arbitration was held in September 2013. On October 17, 2013, the arbitrator issued an interim final award providing for the Company to make a one-time payment of $100.0 million in damages plus costs and fees to Anacor. Subsequently, on October 27, 2013, the Company and Anacor entered into a settlement agreement to resolve all outstanding disputes between them, including this arbitration with Dow and the arbitration and litigation with Medicis disclosed below. As part of the settlement agreement, Anacor and the Company agreed that the Company would pay Anacor a one-time payment of $142.5 million to settle all existing and future claims related to Anacor's intellectual property, confidential information and contractual rights. The $142.5 million charge was recognized in the third quarter of 2013 in Other expense in the consolidated statements of (loss)/income. The Company made such payment to Anacor in the fourth quarter of 2013 and, as a result, the arbitration has been withdrawn and the interim final award ordered by the arbitrator has been vacated. Nothing in the settlement agreement prevents the launch of efinaconazole (Jublia®).

Legacy Medicis Litigation

Anacor Arbitration and Litigation

On November 28, 2012, Anacor filed a claim for arbitration, alleging that Medicis had breached the research and development agreement between the parties relating to the discovery and development of boron-based small molecule compounds directed against a target for the potential treatment of acne (the “Agreement”). Under the terms of the Agreement, Anacor is responsible for discovering and conducting the early development of product candidates which utilize Anacor’s proprietary boron chemistry platform, and Medicis will have an option to obtain an exclusive license for products covered by the Agreement. Anacor alleges in its claim that it is entitled to a milestone payment from Medicis due to its identification and development of a suitable compound to be advanced in the research collaboration. Medicis believed Anacor failed to meet the milestone requirements and, on May 18, 2012, provided notice to Anacor that Anacor has breached the Agreement. On December 11, 2012, Medicis filed a suit against Anacor in the Delaware Chancery Court (Case No. 8095-VCP) seeking declaratory and equitable relief, including specific performance under the Agreement, as well as a motion for preliminary injunction of the arbitration proceedings. Anacor filed a motion to dismiss this matter and a hearing was held on the motion on April 24, 2013. The Chancery Court rejected Anacor’s motion on August 12, 2013. As indicated above (under “- General Civil Actions - Anacor Breach of Contract Proceeding”), on October 27, 2013, the Company and Anacor entered into a settlement agreement to resolve all outstanding disputes between them, including these proceedings with Medicis. As further described above, as part of the settlement agreement, Anacor and the Company agreed to settle all existing and future claims related to Anacor's intellectual property, confidential information and contractual rights in exchange for a one-time payment by the Company to Anacor. The Company made such payment to Anacor and, as a result, the arbitration and litigation between Medicis and Anacor has been withdrawn.

Alkem Laboratories Limited Paragraph IV Patent Certification for Generic Versions of SOLODYN®

On October 29, 2012, Medicis received a Notice of Paragraph IV Patent Certification from Alkem Laboratories Limited (“Alkem”) advising that Alkem had filed an ANDA with the FDA for generic versions of SOLODYN® (minocycline HCl, USP) Extended Release Tablets in 45mg, 65mg, 90mg, 115mg and 135mg strengths. Alkem’s Paragraph IV Patent Certification alleges that Medicis’ U.S. Patent Nos. 5,908,838, 7,541,347, 7,544,373, 7,790,705, 7,919,483, 8,252,776 and 8,268,804 are invalid, unenforceable and/or will not be infringed by Alkem’s manufacture, use or sale of the products for which the ANDA was submitted. On December 5, 2012, Medicis filed suit against Alkem in the United States District Court for the District of Delaware (Case No. 12-1663(LPS)). On December 7, 2012, Medicis filed suit against Alkem in the United States District Court for the District of New Jersey. The suits seek an adjudication that Alkem has infringed one or more claims of Medicis’ U.S. Patent Nos. 5,908,838, 7,790,705 and 8,268,804 (the “Patents”) by submitting to the FDA an ANDA for generic versions of SOLODYN® (minocycline HCl, USP) Extended Release Tablets in 45mg, 65mg, 90mg, 115mg and 135mg strengths. The relief requested includes requests for a permanent injunction preventing Alkem from infringing the asserted claims of the Patents by engaging in the manufacture, use, offer to sell, sale, importation or distribution of generic versions of SOLODYN before the expiration of the Patents. On November 7, 2013, Medicis and Alkem entered into a settlement agreement in this matter. Under the terms of the settlement agreement, Alkem received a royalty-bearing license under the Patents from Medicis on entry dates terms that are consistent with those previously provided to generics.

Civil Investigative Demand from the U.S. Federal Trade Commission

On May 2, 2012, Medicis received a civil investigative demand from the FTC requiring that Medicis provide to the FTC information and documents relating to various settlement and other agreements with makers of generic SOLODYN® products following patent infringement claims and litigation, each of which was previously filed with the FTC and the Antitrust Division of the Department of Justice, and other efforts principally relating to SOLODYN®. On June 7, 2013, Medicis received an

F- 91

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

additional civil investigative demand relating to such settlements, agreements and efforts. Medicis is cooperating with this investigative process. If, at the conclusion of this process, the FTC believes that any of the agreements or efforts violates antitrust laws, it could challenge Medicis through a civil administrative or judicial proceeding. If the FTC ultimately challenges the agreements, we would expect to vigorously defend in any such action.

Employment Matter

In September, 2011, Medicis received a demand letter from counsel purporting to represent a class of female sales employees alleging gender discrimination in, among others things, compensation and promotion as well as claims that the former management group maintained a work environment that was hostile and offensive to female sales employees. Related charges of discrimination were filed prior to the end of 2011 by six former female sales employees with the Equal Employment Opportunity Commission (the “EEOC”). Three of those charges have been dismissed by the EEOC and the EEOC has made no findings of discrimination. Medicis engaged in mediation with such former employees. On March 19, 2013, Medicis and counsel for the former employees signed an MOU to settle this matter on a class-wide basis and resolve all claims with respect thereto. In connection with the agreed-upon settlement, Medicis would pay a specified sum and would pay the costs of the claims administration up to an agreed-upon fixed amount. Medicis would also implement certain specified programmatic relief. The parties have signed a definitive settlement agreement in this matter. On September 5, 2013, a putative class action was filed in U.S. District Court for the District of Columbia in the matter of Brown et al. v. Medicis Pharmaceutical Corporation (No. 1:13-cv-01345-RJL) based on the allegations described above. Simultaneously with the filing of the Complaint, the parties filed a motion for preliminary approval of the class action settlement. Among other things, the settlement agreement, if approved, will resolve all of the remaining related EEOC charges. No hearing on the motion for preliminary approval of the class action settlement has been set.

Legacy B&L Litigation

MoistureLoc ™ Product Liability Lawsuits

Currently, B&L has been served or is aware that it has been named as a defendant in approximately 324 currently active product liability lawsuits (some with multiple plaintiffs) pending in a New York State Consolidated Proceeding described below as well as certain other U.S. state courts on behalf of individuals who claim they suffered personal injury as a result of using a contact lens solution with MoistureLoc™. Two consolidated cases were established to handle MoistureLoc™ claims. First, on August 14, 2006, the Federal Judicial Panel on Multidistrict Litigation created a coordinated proceeding in the Federal District Court for the District of South Carolina. Second, on January 2, 2007, the New York State Litigation Coordinating Panel ordered the consolidation of cases filed in New York State, and assigned the coordination responsibilities to the Supreme Court of the State of New York, New York County. There are approximately 320 currently active non-fusarium cases pending in the New York Consolidated Proceeding. On July 15, 2009, the New York State Supreme Court overseeing the New York Consolidated Proceeding granted B&L’s motion to exclude plaintiffs’ general causation testimony with regard to non-fusarium infections, which effectively excluded plaintiffs from testifying that MoistureLoc™ caused non-fusarium infections. On September 15, 2011, the New York State Appellate Division, First Department, affirmed the Trial Court’s ruling. On February 7, 2012, the New York Court of Appeals denied plaintiffs’ additional appeal. Plaintiffs subsequently filed a motion to renew the trial court’s ruling, and B&L cross-filed a motion for summary judgment to dismiss all remaining claims. On May 31, 2013, the Trial Court denied Plaintiffs’motion to renew, and granted B&L’s motion for summary judgment, dismissing all remaining non-fusarium claims. On June 28, 2013, Plaintiffs filed a Notice of Appeal to the Trial Court’s ruling. A scheduling order for briefs and oral argument has not been issued by the court yet.

All matters under jurisdiction of the coordinated proceedings in the Federal District Court for the District of South Carolina have been dismissed, including individual actions for personal injury and a class action purporting to represent a class of consumers who suffered economic claims as a result of purchasing a contact lens solution with MoistureLoc™.

Currently B&L has settled approximately 629 cases in connection with MoistureLoc™ product liability suits. All but one U.S. based fusarium claims have now been resolved and there are less than five active fusarium claims involving claimants outside of the United States that remain pending. The parties in these active matters are involved in settlement discussions.

Subpoenas from the New York Office of Inspector General for the U.S. Department of Health and Human Services

On June 29, 2011, B&L received a subpoena from the New York Office of Inspector General for the U.S. Department of Health and Human Services regarding payments and communications between B&L and medical professionals related to its pharmaceutical products Lotemax® and Besivance®. The government has indicated that the subpoena was issued in connection with a civil investigation, and B&L is cooperating fully with the government’s investigation. B&L has heard of no additional

F- 92

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

activity at this time, and whether the government’s investigation is ongoing or will result in further requests for information is unknown. B&L and the Company will continue to work with the Office of Inspector General regarding the scope of the subpoena and any additional specific information that may be requested.

Lease Commitments

The Company leases certain facilities, vehicles and equipment principally under operating leases. Rental expense related to operating lease agreements amounted to $51.9 million , $22.9 million and $18.1 million in 2013 , 2012 and 2011 , respectively. The increase in rental expense for the year ended December 31, 2013 was driven primarily by new acquisitions during the year, including the B&L Acquisition.

Minimum future rental payments under non-cancelable operating leases for each of the five succeeding years ending December 31 and thereafter are as follows:

Other Commitments

The Company has commitments related to capital expenditures of approximately $53.0 million as of December 31, 2013 , primarily related to new manufacturing lines to support the growth of the contact lens business.

Under certain research and development agreements, the Company may be required to make payments contingent upon the achievement of specific developmental, regulatory, or commercial milestones. The Company may make contingent consideration payments of up to $200 million related to Valeant’s acquisition of Aton. However, these potential payments are based on further progression of the A007 (Lacrisert®) development program which was terminated during 2013. The Company could also pay contingent consideration related to business combinations of up to $74.0 million , $60.0 million , $59.9 million and $40.0 million related to acquisitions of OraPharma, Eisai, iNova and University Medical, respectively. Each of these arrangements is further described in note 3. In addition, as of December 31, 2013, the Company may pay potential milestone payments of up to $1,159.6 million, in the aggregate, to third-parties, primarily due to certain development, collaboration and license agreements as further described in note 5 titled “COLLABORATION AGREEMENTS”.

Indemnification Provisions

In the normal course of business, the Company enters into agreements that include indemnification provisions for product liability and other matters. These provisions are generally subject to maximum amounts, specified claim periods, and other conditions and limits. As of December 31, 2013 or 2012 , no material amounts were accrued for the Company’s obligations under these indemnification provisions. In addition, the Company is obligated to indemnify its officers and directors in respect of any legal claims or actions initiated against them in their capacity as officers and directors of the Company in accordance with applicable law. Pursuant to such indemnities, the Company is indemnifying certain former officers and directors in respect of certain litigation and regulatory matters.

Reportable Segments

As a result of the Company’s acquisition strategy and continued growth, impacted by the December 2012 Medicis Acquisition, the Company’s Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), began to manage the business differently in 2013, which necessitated a realignment of the segment structure, effective in the first quarter of 2013. Pursuant to this change, the Company now has two operating and reportable segments: (i) Developed Markets, and (ii) Emerging Markets. Accordingly, the Company has restated prior period segment information to conform to the current period presentation. The following is a brief description of the Company’s segments:

25. COMMITMENTS AND CONTINGENCIES

Total 2014 2015 2016 2017 2018 Thereafter

Lease obligations $ 269,336 $ 66,123 $ 48,534 $ 38,082 $ 28,122 $ 22,792 $ 65,683

26. SEGMENT INFORMATION

• Developed Markets consists of (i) sales in the U.S. of pharmaceutical products, OTC products, and medical device products, as well as

F- 93

alliance and contract service revenues, in the areas of eye health, dermatology and podiatry, aesthetics, and dentistry, (ii) sales in the U.S. of pharmaceutical products indicated for the treatment of neurological and other

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

diseases, as well as alliance revenue from the licensing of various products we developed or acquired, and (iii) pharmaceutical products, OTC products, and medical device products sold in Canada, Australia, New Zealand, Western Europe and Japan.

Segment profit is based on operating income after the elimination of intercompany transactions. Certain costs, such as restructuring and acquisition-related costs and other expense and in-process research and development impairments and other charges, are not included in the measure of segment profit, as management excludes these items in assessing financial performance.

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.

F- 94

• Emerging Markets consists of branded generic pharmaceutical products and branded pharmaceuticals, OTC products, and medical device products. Products are sold primarily in Central and Eastern Europe (primarily Poland and Russia), Asia, Latin America (Mexico, Brazil, and Argentina and exports out of Mexico to other Latin American markets), Africa and the Middle East.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Segment Revenues and Profit

Segment revenues and profit for the years ended December 31, 2013 , 2012 and 2011 were as follows:

____________________________________

2013 2012 2011

Revenues:

Developed Markets (1) $ 4,293,216 $ 2,502,264 $ 1,762,535 Emerging Markets (2) 1,476,389 978,112 664,915

Total revenues 5,769,605 3,480,376 2,427,450 Segment profit:

Developed Markets (3) 573,232 815,902 740,316 Emerging Markets (4) 92,995 68,958 (24,929 )

Total segment profit 666,227 884,860 715,387 Corporate (5) (165,666 ) (138,200 ) (180,008 )

Restructuring, integration and other costs (514,825 ) (344,387 ) (97,667 )

In-process research and development impairments and other charges (153,639 ) (189,901 ) (109,200 )

Acquisition-related costs (36,416 ) (78,604 ) (32,964 )

Acquisition-related contingent consideration 29,259 5,266 10,986 Other expense (234,442 ) (59,349 ) (6,575 )

Operating (loss) income (409,502 ) 79,685 299,959 Interest income 8,023 5,986 4,084 Interest expense (844,316 ) (481,596 ) (334,526 )

Loss on extinguishment of debt (65,014 ) (20,080 ) (36,844 )

Foreign exchange and other (9,465 ) 19,721 26,551 Gain on investments, net 5,822 2,056 22,776

Loss before recovery of income taxes $ (1,314,452 ) $ (394,228 ) $ (18,000 )

(1) Developed Markets segment revenues reflect incremental product sales revenue of $2,051.0 million in 2013 , in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from the B&L, Medicis, Obagi, OraPharma, J&J North America and QLT acquisitions. Developed Markets segment revenues reflect incremental product sales revenue $679.0 million in 2012 , in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, primarily from Dermik, Ortho Dermatologics, iNova, OraPharma and Medicis acquisitions.

(2) Emerging Markets segment revenues reflect incremental product sales revenue of $415.6 million in 2013 , in the aggregate, from all 2012 acquisitions and all 2013 acquisitions, primarily from the B&L, Natur Produkt, Gerot Lannach and Atlantis acquisitions. Emerging Markets segment revenues reflect incremental product sales revenue of $310.9 million in 2012 , in the aggregate, from all 2011 acquisitions and all 2012 acquisitions, primarily from Sanitas, iNova, Probiotica, PharmaSwiss,and Gerot Lannach acquisitions.

(3) Developed Markets segment profit in 2013 reflects (i) the addition of operations from all 2012 acquisitions and all 2013 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $1,080.4 million in 2013 , in the aggregate, primarily from B&L, legacy Valeant and Medicis operations and (ii) an impairment charge of $551.6 million related to ezogabine/retigabine in the third quarter of 2013 (see note 7 titled “FAIR VALUE MEASUREMENTS”). Developed Markets segment profit in 2012 reflects the addition of operations from all 2011 acquisitions and all 2012 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $506.4 million in 2012 , in the aggregate, primarily from legacy Valeant, Dermik, Ortho Dermatologics, iNova, Medicis and OraPharma operations. Developed Markets segment profit in 2011 reflects the addition of operations from all 2010 acquisitions and all 2011 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $144.8 million in 2011 , in the aggregate, primarily from legacy Valeant, Dermik, iNova and Ortho Dermatologics operations.

(4) Emerging Markets segment profit in 2013 reflects the addition of operations from all 2012 acquisitions and all 2013 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $320.5 million in 2013 , in the aggregate, primarily from B&L, legacy Valeant and Medicis operations. Emerging Markets segment profit in 2012 reflects the addition of operations from all 2011 acquisitions and all 2012 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $180.5

F- 95

million in 2012 , in the aggregate, primarily from legacy Valeant, PharmaSwiss, Sanitas, iNova and Gerot Lannach operations. Emerging Markets segment profit in 2011 reflects the addition of operations from all 2010 acquisitions and all 2011 acquisitions, including the impact of acquisition accounting adjustments related to the fair value adjustments to inventory and identifiable intangible assets of $136.8 million in 2011 , in the aggregate, primarily from legacy Valeant, PharmaSwiss and Sanitas operations.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Segment Assets

Total assets by segment as of December 31, 2013 , 2012 and 2011 were as follows:

____________________________________

Capital Expenditures, and Depreciation and Amortization, including Impairments of Finite-Lived Intangi ble Assets

Capital expenditures, and depreciation and amortization, including impairments of finite-lived intangible assets by segment for the years ended December 31, 2013 , 2012 and 2011 were as follows:

(5) Corporate reflects non-restructuring-related share-based compensation expense of $45.5 million , $66.2 million and $93.0 million in 2013 , 2012 and 2011 , respectively. The non-restructuring-related share-based compensation expense includes the effect of the fair value increment on Valeant stock options and RSUs converted into the Company awards of $58.6 million in 2011 .

2013 2012 2011

Assets (1) : Developed Markets (2) $ 20,473,356 $ 12,893,726 $ 9,171,332 Emerging Markets (3) 6,441,678 4,022,039 3,270,476

26,915,034 16,915,765 12,441,808 Corporate 1,055,763 1,034,614 666,311

Total assets $ 27,970,797 $ 17,950,379 $ 13,108,119

(1) The segment assets as of December 31, 2012 and 2011 contain reclassifications between segments to conform to the current year management structure.

(2) Developed Markets segment assets as of December 31, 2013 reflect (i) the provisional amounts of identifiable intangible assets and goodwill of B&L of $3,977.9 million and $3,226.7 million , respectively, (ii) the amounts of identifiable intangible assets and goodwill of Obagi of $335.5 million and $158.5 million , respectively, and (iii) the amounts of identifiable intangible assets acquired from Eisai of $112.0 million . Developed Markets segment assets as of December 31, 2013 reflect the amounts of identifiable intangible assets and goodwill acquired from Medicis, OraPharma, QLT, J&J North America, and University Medical of $2,227.0 million and $1,481.0 million , in the aggregate, respectively.

(3) Emerging Markets segment assets as of December 31, 2013 reflect (i) the provisional amounts of identifiable intangible assets and goodwill of B&L of $782.7 million and $1,135.7 million , respectively, (ii) the amounts of identifiable intangible assets and goodwill of Natur Produkt of $104.8 million and $40.9 million , respectively, and (iii) the amount of Obagi’s goodwill of $21.6 million . Emerging Markets segment assets as of December 31, 2012 reflect the provisional amounts of identifiable intangible assets and goodwill of Probiotica, J&J ROW, Atlantis and Gerot Lannach of $303.6 million and $47.5 million , in the aggregate, respectively.

2013 2012 2011

Capital expenditures:

Developed Markets $ 54,126 $ 12,270 $ 3,700 Emerging Markets 51,922 61,607 33,989

106,048 73,877 37,689 Corporate 9,271 33,761 20,826

Total capital expenditures $ 115,319 $ 107,638 $ 58,515

Depreciation and amortization, including impairments of finite-lived intangible assets (1) :

Developed Markets $ 1,687,705 $ 755,108 $ 447,420 Emerging Markets 313,659 224,544 159,039

2,001,364 979,652 606,459 Corporate 14,442 6,570 6,144

Total depreciation and amortization, including impairments of finite-lived intangible assets $ 2,015,806 $ 986,222 $ 612,603

____________________________________

The increase in capital expenditures in Emerging Markets segment in 2012 was driven primarily by the construction of two manufacturing facilities in Serbia and Mexico.

F- 96

(1) Depreciation and amortization, including impairments of finite-lived intangible assets in 2013 reflects the impact of acquisition accounting adjustments related to the fair value adjustment to identifiable intangible assets as follows: Developed Markets — $773.0 million ; and Emerging Markets — $255.4 million . In addition, depreciation and amortization, including impairments of finite-lived intangible assets in 2013 also reflects (i) an impairment charge

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

of $551.6 million related to ezogabine/retigabine (immediate-release formulation) which is co-developed and marketed under a collaboration agreement with GSK, (ii)

impairment charges of $31.5 million related to the write-down of the carrying values of intangible assets related to certain suncare and skincare brands sold primarily in

Australia, and (iii) a write-off of $22.2 million related to Opana®, a pain relief medication approved in Canada.

Depreciation and amortization, including impairments of finite-lived intangible assets in 2012 reflects the impact of acquisition accounting adjustments related to the fair value adjustment to identifiable intangible assets as follows: Developed Markets — $430.5 million ; and Emerging Markets — $177.5 million . In addition, depreciation and amortization, including impairments of finite-lived intangible assets in 2012 also reflects (i) impairment charges of $31.3 million related to the write-down of the carrying values of intangible assets related to certain suncare and skincare brands sold primarily in Australia, which were classified as assets held for sale as of December 31, 2012, (ii) an $18.7 million impairment charge related to the write-down of the carrying value of the Dermaglow® intangible asset, which was classified as an asset held for sale as of December 31, 2012, and (iii) impairment charges of $13.3 million related to the discontinuation of certain products in the Brazilian and Polish markets.

Depreciation and amortization, including impairments of finite-lived intangible assets in 2011 reflects the impact of acquisition accounting adjustments related to the fair value adjustment to identifiable intangible assets as follows: Developed Markets — $116.3 million ; and Emerging Markets — $106.0 million . In addition, depreciation and amortization, including impairments of finite-lived intangible assets in 2011 also reflects impairment charges of $7.9 million and $19.8 million related to the write-down of the carrying values of the IDP-111 and 5-FU intangible assets, respectively.

For further information regarding asset impairment charges, see note 12 titled “INTANGIBLE ASSETS AND GOODWILL”.

Revenues by Product Category

Revenues by product category for the years ended December 31, 2013 , 2012 and 2011 were as follows:

Geographic Information

Revenues and long-lived assets by geographic region for the years ended and as of December 31, 2013 , 2012 and 2011 were as follows:

2013 2012 2011

Pharmaceuticals $ 2,640,364 $ 1,978,960 $ 1,471,810 Devices 842,244 77,037 995 OTC 704,706 209,280 140,144 Branded and Other Generics 1,453,019 1,023,315 642,101 Alliance and Royalty, Service and Other 129,272 191,784 172,400

$ 5,769,605 $ 3,480,376 $ 2,427,450

Revenues (1) Long-Lived Assets (2)

2013 2012 2011 2013 2012 2011

U.S. and Puerto Rico $ 3,194,531 $ 1,885,842 $ 1,361,636 $ 592,045 $ 60,432 $ 22,619 Canada 387,389 349,137 256,820 87,722 109,728 129,510 Poland 268,788 199,278 179,501 110,035 110,890 106,743 Russia 202,840 71,181 8,720 7,048 228 — Mexico 200,890 167,445 151,948 82,491 73,894 53,500 Australia 178,204 184,073 79,204 3,391 4,402 16,636 Brazil 155,577 135,114 87,190 41,371 45,959 49,231 Germany 130,938 1,931 22,396 83,805 — — Japan 104,902 12,164 — 1,336 — — Serbia 91,930 90,768 81,867 39,981 32,057 10,039 China 90,988 552 — 44,334 — — France 86,916 2,532 — 40,472 — — Other (3) 675,712 380,359 198,168 100,205 25,134 25,964

$ 5,769,605 $ 3,480,376 $ 2,427,450 $ 1,234,236 $ 462,724 $ 414,242

____________________________________

F- 97

(1) Revenues are attributed to countries based on the location of the customer.

(2) Long-lived assets consist of property, plant and equipment, net of accumulated depreciation, which is attributed to countries based on the physical location of the assets.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

Major Customers

External customers that accounted for 10% or more of the Company’s total revenues for the years ended December 31, 2013 , 2012 and 2011 were as follows:

Subsequent Events

Series E Tranche B Term Loan Facility Repricing and Additional Series A-3 Tranche A Term Loan Borrowings

On February 6, 2014, the Company and certain of its subsidiaries as guarantors entered into a joinder agreement to reprice and refinance the Series E Tranche B Term Loan Facility by the issuance of $2.95 billion in new incremental term loans (the “Series E-1 Tranche B Term Loan Facility”). Term loans under the Series E Tranche B Term Loan Facility were either exchanged for, or repaid with the proceeds of, the Series E-1 Tranche B Term Loan Facility and proceeds of the additional Series A-3 Tranche A Term Loan Facility issuance described below. The applicable margins for borrowings under the Series E-1 Tranche B Term Loan Facility are 2.0% with respect to base rate borrowings and 3.0% with respect to LIBO rate borrowings, subject to a 1.75% base rate floor and a 0.75% LIBO rate floor. The Series E-1 Tranche B Term Loan Facility has terms consistent with the Series E Tranche B Term Loan Facility. Any prepayment of the Series E-1 Tranche B Term Loan Facility in connection with certain repricings or refinancings on or prior to August 6, 2014 will require a prepayment premium of 1.0% of such loans prepaid.

Concurrently, on February 6, 2014, the Company and certain of its subsidiaries as guarantors entered into a joinder agreement for the issuance of $225.6 million in incremental term loans under the Series A-3 Tranche A Term Loan Facility. Proceeds from this transaction were used to repay part of the term loans outstanding under the Series E Tranche B Term Loan Facility.

In addition, on February 6, 2014, in connection with Amendment No.8 an additional $1.5 million of the Series A-1 Tranche A Term Loan Facility was exchanged and/or converted into the Series A-3 Tranche A Term Loan Facility.

Solta Medical, Inc.

On January 23, 2014, the Company acquired all of the outstanding common stock of Solta Medical, Inc. (“Solta Medical”) for $2.92 per share in cash, or approximately $250 million , in the aggregate. All outstanding shares of common stock of Solta Medical, other than (i) shares owned, directly or indirectly, by the Company or Valeant or any direct or indirect wholly-owned subsidiary of the Company or Valeant immediately prior to the effective time of the merger or held by Solta Medical (other than on behalf of third parties) or any direct or indirect wholly-owned subsidiary of Solta Medical immediately prior to the effective time of the merger, all of which was cancelled and ceased to exist and (ii) shares that were held by stockholders of Solta Medical who properly exercised their appraisal rights under Delaware law, were canceled and converted into the right to receive cash equal to the $2.92 price per share, without interest (less any applicable withholding taxes). As a result of the completion of the merger, Solta Medical has become a wholly-owned subsidiary of Valeant.

Solta Medical designs, develops, manufactures, and markets energy-based medical device systems for aesthetic applications. Solta Medical’s products include the Thermage CPT system that provides non-invasive treatment options using radiofrequency energy for skin tightening, the Fraxel repair system for use in dermatological procedures requiring ablation, coagulation, and resurfacing of soft tissue, the Clear + Brilliant® system to improve skin texture and help prevent the signs of aging skin, and the Liposonix® system that destroys unwanted fat cells resulting in waist circumference reduction.

(3) Other consists primarily of countries in Europe, the Middle East, Africa, and Asia.

2013 2012 2011

McKesson Corporation 19% 20% 23%

Cardinal Health, Inc. 13% 20% 21%

AmerisourceBergen Corporation 7% 8% 10%

27. SUBSEQUENT EVENTS AND PENDING TRANSACTIONS

The transaction will be accounted for as a business combination under the acquisition method of accounting. The Company will record the assets acquired and liabilities assumed at their fair values as of the respective acquisition date. Due to the limited time since the closing of the acquisition, the valuation efforts and related acquisition accounting are incomplete at the time of filing of the consolidated financial statements. As a result, the Company is unable to provide amounts recognized as

F- 98

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continu ed) (All tabular dollar amounts expressed in thousands of U.S. dollars, except per share data)

of the acquisition date for major classes of assets and liabilities acquired, including goodwill. In addition, because the acquisition accounting is incomplete, the Company is unable to provide the supplemental pro forma revenue and earnings for the combined entity, as the pro forma adjustments are expected to primarily consist of estimates for the amortization of identifiable intangible assets acquired and related income tax effects, which will result from the purchase price allocation and determination of the fair values for the assets acquired and liabilities assumed.

Pending Transactions

PreCision Dermatology, Inc.

On January 31, 2014, the Company entered into an agreement to acquire PreCision Dermatology, Inc. (“PreCision”) for $475 million in cash, plus an additional $25 million payable upon the achievement of a sales-based milestone. PreCision develops and markets a wide range of medical dermatology products, treating a number of topical disease states such as acne and atopic dermatitis with products such as Locoid®, Hylatopic®, Clindagel®, and BenzEFoam®. The transaction is expected to close in the first half of 2014.

Sale of Metronidazole 1.3%

On April 30, 2013, the Company agreed to sell the worldwide rights in its Metronidazole 1.3% Vaginal Gel antibiotic development product, a topical antibiotic for the treatment of bacterial vaginosis, to Actavis Specialty Brands for approximately $55 million , which includes upfront and certain milestone payments, and minimum royalties for the first three years of commercialization. In addition, royalties are payable to the Company beyond the initial 3 -year commercialization period. In the event of generic competition on Metronidazole 1.3%, should Actavis Specialty Brands choose to launch an authorized generic product, Actavis Specialty Brands would share the gross profits of the authorized generic with the Company. The rights to Metronidazole 1.3% are expected to be transferred to Actavis Specialty Brands at or shortly following the time of FDA approval of the product NDA, when and if obtained. The Company acquired Metronidazole 1.3% as part of the acquisition of Medicis in December 2012, and the carrying amount of the related IPR&D asset is $66.6 million as of December 31, 2013. Upon consummation of the transaction, the Company will recognize a loss within Other expense in the consolidated statement of (loss) income, as the Company will not recognize income from the contingent payments until such amounts are realizable.

F- 99

Exhibit 10.18

Valeant Pharmaceuticals International, Inc.

January 13, 2014

Dear Robert:

This letter agreement outlines the details of your continuing employment with Valeant Pharmaceuticals International, Inc. (the “Company”), and your Company assignment during the Employment Term (as defined below).

1. Effect on Other Agreements .

(a) Except as specifically described in Section 1(b) and referenced in Section 11(k), the terms of this letter agreement constitute the entire agreement between the Company and you with respect to the subject matter hereof, and supersede all prior agreements and negotiations, including, without limitation, the terms of the letter agreement between you and the Company, dated November 11, 2010.

(b) For the avoidance of doubt, except as specifically set forth herein, the terms of any equity awards held by you with respect to the

Company and those granted in conjunction with the execution of this letter agreement shall continue to be governed exclusively by the terms set forth in the plan and award agreement governing each such award.

2. Employment Term; Title: Duties .

(a) Employment Term . Your employment term (the “Employment Term”) under this letter agreement shall be for the period commencing on January 10, 2014 (the “Effective Date”) and ending on the sixth anniversary of such date, unless the Employment Term is terminated earlier pursuant to Section 6 hereof. For the avoidance of doubt, you shall not be entitled to payments pursuant to Section 8 of this letter agreement upon the termination of your employment upon or following the expiration of the Employment Term.

(b) Title . During the Employment Term, you shall serve as Executive Vice President, General Counsel and Chief Legal Officer, Head of Corporate and Business Development and will report to the Company’s Chief Executive Officer. If, during the Employment Term, you do not serve as the Corporate Secretary of the Company (or ultimate parent entity of the Company), then the individual serving such function shall report to you. Your principal place of employment will be in Orange County, California, provided that you satisfy the travel requirements necessary for the performance of your duties (which travel requirements you acknowledge will be consistent with the travel required of you prior to the date hereof and will include performing services at other Company offices consistent with current practices).

(c) At-Will Employment; Duties . Your employment with the Company is “at-will.” This means that you or the Company have the option to terminate your

January 13, 2014 Mr. Robert Chai-Onn Page 2 of 12

employment at any time, with or without advance notice, and with or without cause. The at-will nature of your employment can be altered only by a written agreement specifying the altered status of your employment. Such written agreement must be signed by both you and the Chief Executive Officer. During the Employment Term, you shall devote your full business time, energy and best efforts to the performance of your duties hereunder and shall not engage, directly or indirectly, in any other business, profession, occupation or investment, for compensation or otherwise, which would conflict or interfere with the rendition of such services.

3. Annual Compensation .

(a) Base Salary . Your base salary during the Employment Term shall be $750,000 per year, and the Company, in its sole discretion, may increase such amount from time to time.

(b) Annual Incentive . You will be eligible to participate in the Company’s management bonus plan as in effect from time to time for each calendar year during the Employment Term, with a target bonus of 120% commencing January 1, 2014, with the potential of 240% of your base pay. The terms of any such plan will be determined in the discretion of the Company’s Board of Directors (the “Board”) (or a committee thereof), which will retain the discretion to amend or terminate any such plan at any time in its sole discretion. Any annual incentive to which you become entitled shall be payable at the time management bonuses are paid generally. Except as otherwise set forth herein in Section 8, to be eligible for any bonus payment, you must be employed by the Company, and not have given or received notice of the termination of your employment, on the day on which the applicable bonus is paid to other members of the Company management.

4. Equity Awards; Equity Ownership; Matching Grants .

(a) Equity Awards . On or prior to the Effective Date, subject to any required shareholder approval of a proposal to increase the number of shares available for grant under the Company’s 2011 Omnibus Incentive Plan (the “Plan”), which shall be submitted by the Company to shareholders at the Company’s next annual meeting, the Board (or a committee thereof) will take such action as to grant to you 180,000 options to acquire shares of Company common stock and 90,000 performance-based restricted share units under the Plan, pursuant to award agreements which shall contain the terms approved on the date of grant. During the Employment Term, you shall be considered for additional long-term incentive awards. Any such award (and the terms thereof) shall be determined by the Company’s Board (or a committee thereof) in its sole discretion.

(b) Share Ownership Commitment . You also agree to comply with any applicable share ownership requirements adopted by the Company, as may be amended from time to time, which shall require you to hold Company shares to the extent that

January 13, 2014 Mr. Robert Chai-Onn Page 3 of 12

share ownership is required for similarly situated executives of the Company; provided, however, you hereby agree that, notwithstanding such requirements, you hereby agree that your minimum share ownership requirement, determined in accordance with the Company’s share ownership requirements and held by you or any Permitted Transferee (as defined in the award agreement applicable to your 2014 performance-based restricted share unit grant) shall be $10,000,000.

(c) Matching Grants for Share Purchases . In connection with such share ownership, you shall also be eligible to receive matching share

units to the extent such a program is established or maintained by the Company for similarly situated executives of the Company, in accordance with the terms of any such program as may be in effect from time to time.

5. Benefits; Tax Equalization .

(a) Employee and Executive Benefits . During the Employment Term, you will be eligible to participate in the Company’s employee benefit plans and programs generally made available to similarly situated employees of the Company on the terms and conditions applicable generally to such employees. In addition, the Company shall reimburse you for incremental taxes incurred by you outside of the United States because of any services you provide to the Company outside of the United States or any business that the Company conducts outside of the United States, if such incremental amount during any tax year exceeds 1% or more of your base salary earned during such tax year; provided that you shall be required to participate in any tax equalization program the Company may have in effect from time to time in order to qualify for the benefit described in the preceding sentence. You will be entitled to vacation and paid time off during the Employment Term in accordance with the applicable policies of the Company in place from time to time.

(b) Business Expense Reimbursement . Upon submission of proper invoices in accordance with the Company’s normal procedures, you

shall be entitled to receive prompt reimbursement of all reasonable out-of-pocket business, entertainment and travel expenses incurred by you in connection with the performance of your duties hereunder.

6. Termination . Your employment and the Employment Term may be terminated under the circumstances described in paragraphs (a)-(f) of this Section 6. The effective date of any such termination is referred to herein as the “Termination Date.”

(a) Death . Your employment shall be terminated as of the date of your death and your beneficiaries shall be entitled to the Accrued

Obligations described in Section 7 hereof.

(b) Disability . The Company may terminate your employment, on written notice to you after having established your Disability and while you remain Disabled, and you shall be entitled to the Accrued Obligations described in Section 7 and any

January 13, 2014 Mr. Robert Chai-Onn Page 4 of 12

benefits to which you may be entitled under any applicable disability plan of the Company. For purposes of this letter, “Disability” shall have the meaning assigned to such term the Plan.

(c) Without Cause . The Company may terminate your employment without Cause and you shall be entitled to the Accrued Obligations described in Section 7 and the benefits described in Section 8.

(d) For Cause . The Company may terminate your employment for “Cause,” and you shall be entitled to the Accrued Obligations described in Section 7. “Cause” shall mean, for purposes of this letter, “cause” shall be defined as (1) conviction of any felony or indictable offense (other than one related to a vehicular offense) or other criminal act involving fraud; (2) willful misconduct that results in a material economic detriment to the Company; (3) material violation of Company policies and directives, which is not cured after written notice and an opportunity for cure; (4) continued refusal by you to perform your duties after written notice identifying the deficiencies and an opportunity for cure; and (5) a material violation by you of any material covenants to the Company. No action or inaction shall be deemed willful if not demonstrably willful and if taken or not taken by you in good faith and with the understanding that such action or inaction was not adverse to the best interests of the Company. Reference in this paragraph to the Company shall also include direct and indirect subsidiaries of the Company, and materiality shall be measured based on the action or inaction and the impact upon the Company taken as a whole. The Company may suspend you from employment (without pay) upon your indictment for the commission of a felony or indictable offense as described under clause (1) above. Such suspension may remain effective until such time as there has been a final adjudication with respect to the offense in question. If such final adjudication does not result in a conviction, as soon as practicable following such final adjudication, the Company will pay you the base salary and target bonus amount that you would have received for the period during which you were suspended without pay (with interest from the date such amounts would otherwise have been paid at the short-term applicable federal rate, compounded semi-annually, as determined under Section 1274 of the Internal Revenue Code of 1986, as amended, for the month in which payment would have been made but for the delay) and you will receive vesting credit for purposes of your outstanding equity awards.

(e) For Good Reason . You may terminate your employment for Good Reason (as defined below) by delivering to the Company a Notice of Termination (as defined below) not less than thirty (30) days prior to the termination of your employment for Good Reason and you shall be entitled to the Accrued Obligations described in Section 7 and the benefits described in Section 8. The Company shall have the option of terminating your duties and responsibilities prior to the expiration of such thirty-day notice period. For purposes of this letter, Good Reason shall mean the occurrence of any of the events or conditions described in clauses (i) through (iii) immediately below which are not cured by the Company (if curable) within

January 13, 2014 Mr. Robert Chai-Onn Page 5 of 12

thirty (30) days after the Company has received written notice from you which notice must be provided by you within ninety (90) days of the initial existence of the event or condition constituting Good Reason specifying the particular events or conditions which constitute Good Reason and the specific cure requested by you.

(i) Diminution of Responsibility . (A) any material reduction in your duties or responsibilities as in effect as of the date hereof, (B) removal of you from the positions of Executive Vice President, General Counsel and Chief Legal Officer, or Head of Corporate and Business Development of the Company (and, following a Change in Control, removal from any of these positions of the ultimate parent company of the resulting entity), (C) your ceasing to be the most senior legal officer of the Company (and, following a Change in Control, ceasing to be the most senior legal officer of the ultimate parent company of the resulting entity), or (D) your ceasing to report directly to the Chief Executive Officer of the Company (and, following a Change in Control, ceasing to report directly to the Chief Executive Officer of the ultimate parent company of the resulting entity). For the avoidance of doubt, the provisions of this Section 6(e)(i) shall not be triggered upon any event or circumstance resulting from your promotion, your death or Disability, the termination of your employment for Cause, or your termination of your employment other than for Good Reason;

(ii) Compensation Reduction . Any reduction in your base salary or target bonus opportunity which is not comparable to reductions in the base salary or target bonus opportunity of all other similarly-situated senior executives at the Company; or

(iii) Company Breach . Any other material breach by the Company of any material provision of this letter; it being agreed that a directive to you by the Company that you relocate your principal place of employment shall constitute a material breach by the Company of a material provision of this letter agreement (Section 2(b)) unless such directive is made to relocate to the Company’s U.S. corporate headquarters either (i) on or following the date, if any, when the Company attains an aggregate market capitalization exceeding $250 billion or (ii) because you fail to satisfy the travel requirements set forth in Section 2(b) of this letter agreement.

(f) Without Good Reason . You may terminate your employment without Good Reason by delivering to the Company a Notice of

Termination not less than thirty (30) days prior to the termination of your employment and you shall be entitled to the Accrued Obligations described in Section 7.

(g) Upon or Following Expiration of Employment Term . For the avoidance of doubt, no payments shall be due to you under this letter agreement upon a termination of your employment for any or no reason upon or at any time following the Employment Term.

January 13, 2014 Mr. Robert Chai-Onn Page 6 of 12

(h) Notice of Termination . With the exception of a termination described in Section 6(a), any termination of your employment by the Company or by you shall be communicated by written Notice of Termination to the other party hereto. For purposes of this letter agreement, a “Notice of Termination” shall mean a notice which indicates a termination date, the specific termination provision in this letter agreement relied upon and sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated. For purposes of this letter agreement, no such termination of your employment hereunder shall be effective without such Notice of Termination (unless waived by the party entitled to receive such notice).

7. Accrued Obligations . Upon any termination of your employment during the Employment Term, you will be entitled to (i) payment of the earned and unpaid base salary and accrued and unpaid vacation time through the date of termination; (ii) reimbursement, within sixty (60) days following submission by you to the Company of appropriate supporting documentation, for any unreimbursed business expenses properly incurred by you in accordance with Company policy prior to the date of your termination; provided claims for such reimbursement (accompanied by appropriate supporting documentation) are submitted to the Company within ninety (90) days following the date of your termination of employment; and (iii) such employee benefits, if any, to which you are entitled under the employee benefit plans of the Company under the terms of such plans (the amounts described in clauses (i) through (iii) hereof being referred to as the “Accrued Obligations”). The treatment of any deferred compensation or equity or equity-based award held by you upon termination shall be governed by the terms of the applicable plan and/or agreement (as modified by this letter agreement, if applicable).

8. Severance Benefits . If your employment is terminated by the Company without Cause or by you for Good Reason, the Company shall have the following obligations:

(a) The Company will pay you an amount equal to two times the sum of your annual salary and target bonus, in each case as of the date

of your termination (without giving effect to any reduction thereto constituting Good Reason).

(b) In addition, the Company will pay you any bonus earned but unpaid in respect of any fiscal year preceding the Termination Date. The Company will also pay you a bonus in respect of the fiscal year in which the Termination Date occurs, as though you had continued in employment until the payment of bonuses by the Company to its executives for such fiscal year, in an amount equal to the product of (A) the lesser of (x) the bonus that you would have been entitled to receive based on actual achievement against the stated performance objectives or (y) the bonus that you would have been entitled to receive assuming that the applicable performance objectives for such fiscal year were achieved at “target”, and (B) a fraction (i) the numerator of which is the number of days in such fiscal year

January 13, 2014 Mr. Robert Chai-Onn Page 7 of 12

through Termination Date and (ii) the denominator of which is 365; provided that, if your termination occurs at any time within twelve (12) months following a Change in Control (or during the six months prior to a Change in Control if such termination was in contemplation of, and directly related to, the Change in Control), then in the foregoing calculation the amount under (A) shall be equal to (y). Any bonus payable to you under this Section 8(b) shall be paid in no event later than March 15 of the calendar year following the calendar year in which the Termination Date occurs.

(c) The Company will provide you (and your dependents) with continued coverage under any health, medical, dental or vision program or policy in which you were eligible to participate at the time of your employment termination for 12 months following such termination on payment terms no less favorable to you and your dependents (including with respect to payment for the costs thereof) than those in effect immediately prior to such termination (it being understood that such programs or policies shall remain subject to change from time to time);

(d) The Company shall provide outplacement services through one or more outside firms of your choosing up to an aggregate of

$20,000, which services shall extend until the earlier of (i) 12 months following the termination of your employment or (ii) the date that you secure full time employment.

(e) Notwithstanding anything to the contrary in the applicable award agreement, each of your options to acquire shares of Company

common vested and outstanding as of the Termination Date shall remain exercisable for one year following the Termination Date (but in no event beyond the expiration of the original term).

(f) Notwithstanding anything herein to the contrary, the Company shall have no obligation to pay or provide any of the severance benefits provided for by Section 8 of this letter agreement and shall have no obligations to you in respect of the termination of your employment save and except for obligations that are expressly established by applicable employment standards legislation unless you execute and deliver, within 60 days of the date of your termination, and do not revoke, a general release in a form reasonably satisfactory to the Company and any revocation period set forth in the release has lapsed. Subject to the provisions of Section 11(b), the Company shall pay all cash severance benefits due within 10 business days following the satisfaction of all of the conditions set forth in the preceding sentence. You shall not be required to mitigate the amount of any severance payment provided for under this letter by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to you in any subsequent employment, except that the benefit continuation described in Section 8(c) may be reduced by the Company to the extent that you obtain replacement coverage following the Date of Termination.

January 13, 2014 Mr. Robert Chai-Onn Page 8 of 12

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities is acquired by (i) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained

(g) Notwithstanding anything herein to the contrary, in no event shall the timing of your execution of the general release, directly or

indirectly, result in you designating the calendar year of payment, and if a payment that is subject to execution of the general release could be made in more than one taxable year, payment shall be made in the later taxable year.

9. Change in Control . For purposes of each equity award outstanding as of the date hereof, (notwithstanding anything to the contrary in the applicable award agreement), a “Change in Control” shall be deemed to occur if and when the first of the following occurs:

(a) the acquisition (other than from the Company), by any person (as such term is defined in Section 13(c) or 14(d) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities;

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

(c) the closing of an amalgamation or similar business combination (each, an “Amalgamation”) involving the Company if (i) the shareholders of the Company, immediately before such Amalgamation, do not, as a result of such Amalgamation, own, directly or indirectly, more than fifty percent (50%) of the combined voting power of the then outstanding voting securities of the entity resulting from such Amalgamation in substantially the same proportion as their ownership of the combined voting power of the voting securities of the Company outstanding immediately before such Amalgamation or (ii) immediately following the Amalgamation, the individuals who comprised the Board immediately prior thereto do not constitute at least a majority of the board of directors of the entity resulting from such Amalgamation (or, if the entity resulting from such Amalgamation is then a subsidiary, the ultimate parent thereof);

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

January 13, 2014 Mr. Robert Chai-Onn Page 9 of 12

by the Company or any of its subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is owned directly or indirectly by the shareholders of the Company in the same proportion as their ownership of shares in the Company immediately prior to such acquisition. In addition, notwithstanding the foregoing, solely to the extent required by Section 409A of the Internal Revenue Code of 1986 (“Section 409A”), a Change of Control shall be deemed to have occurred only if a change in the ownership or effective control of the Company or a change in ownership of a substantial portion of the assets of the Company shall also be deemed to have occurred under Section 409A.

10. Covenant Not to Solicit .

(a) Covenant . To protect the confidential information and other trade secrets of the Company and its affiliates, you agree, during your employment with the Company or any of its affiliates and for a period of twelve (12) months after your cessation of employment with the Company or any of its affiliates, not to solicit, attempt to solicit, or participate in or assist in any way in the solicitation or attempted solicitation of any employees or independent contractors of the Company or any its affiliates. For purposes of this covenant, “solicit” or “solicitation” means directly or indirectly influencing or attempting to influence employees of the Company or any of its affiliates to become employed with any other person, partnership, firm, corporation or other entity. You agree that the covenants contained in this paragraph are reasonable and necessary to protect the confidential information and other trade secrets of the Company and its affiliates, provided, that solicitation through general advertising or the provision of references shall not constitute a breach of such obligations.

(b) Remedies for Breach of Obligations Under the Covenants Not to Solicit Above . It is the intent and desire of you and the Company (and its affiliates) that the restrictive provisions of Section 10(a) above be enforced to the fullest extent permissible under the laws and public policies as applied in each jurisdiction in which enforcement is sought. If any particular provision in such paragraph shall be determined to be invalid or unenforceable, such covenant shall be amended, without any action on the part of either party hereto, to delete therefrom the portion so determined to be invalid or unenforceable, such deletion to apply only with respect to the operation of such covenant in the particular jurisdiction in which such adjudication is made. Your obligations under Section 10(a) shall survive the termination of your employment with or any other employment arrangement with the Company or any of its affiliates. You acknowledge that the Company or its affiliates will suffer irreparable injury, not readily susceptible of valuation in monetary damages, if you breach your obligations under Section 10(a). Accordingly, you agree that the Company and its affiliates will be entitled, in addition to any other available remedies, to obtain injunctive relief against any breach or prospective breach by you of your obligations under Section 10(a) in any Federal or state court sitting in the State of New Jersey, or, at the Company’s (or its affiliate’s) election, in any other state or jurisdiction in which you maintain

January 13, 2014 Mr. Robert Chai-Onn Page 10 of 12

your principal residence or your principal place of business. You agree that the Company or its affiliates may seek the remedies described in the preceding sentence notwithstanding any arbitration or mediation agreement that you may enter into with the Company or any of its affiliates. You hereby submit to the non-exclusive jurisdiction of all those courts for the purposes of any actions or proceedings instituted by the Company or its affiliates to obtain that injunctive relief, and you agree that process in any or all of those actions or proceedings may be served by registered mail, addressed to the last address provided by you to the Company or its affiliates, or in any other manner authorized by law.

11. Miscellaneous .

(a) Indemnification . You shall be indemnified by the Company as provided in its articles or, if applicable, pursuant to an

indemnification agreement with the Company if such agreements are provided to similarly-situated executives.

(b) Section 409A . The parties intend for the payments and benefits under this letter agreement to be exempt from Section 409A or, if not so exempt, to be paid or provided in a manner which complies with the requirements of such section, and intend that this letter agreement shall be construed and administered in accordance with such intention. Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this letter agreement shall be treated as a separate payment of compensation. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this letter during the six-month period immediately following your separation from service shall instead be paid on the first business day after the date that is six months following your Termination Date (or death, if earlier), with interest from the date such amounts would otherwise have been paid at the short-term applicable federal rate, compounded semi-annually, as determined under Section 1274 of the Internal Revenue Code of 1986, as amended, for the month in which payment would have been made but for the delay in payment required to avoid the imposition of an additional rate of tax on you under Section 409A. With respect to reimbursements from the Company to which you are entitled (pursuant to Section 5(b) or otherwise) (i) the amount of reimbursements (or in-kind benefits) to which you may become entitled in any one calendar year shall not affect the amount of expenses eligible for reimbursement (or in-kind benefits) hereunder in any other calendar year; (ii) each reimbursement to which you become entitled shall be made by the Company as soon as administratively practicable following your submission of the supporting documentation, but in no event later than the close of business of the calendar year following the calendar year in which the reimbursable expense is incurred and (iii) your right to reimbursement (or in-kind benefits) cannot be liquidated or exchanged for any other benefit or payment.

January 13, 2014 Mr. Robert Chai-Onn Page 11 of 12

(c) Recovery of Incentive Compensation . You acknowledge and agree that incentive compensation granted to you following the Effective Date relating to your employment with the Company shall be subject to the terms of the Company’s policies on the recovery of incentive cash compensation (sometimes referred to as “clawback”) as in effect from time to time; provided that all of your incentive compensation, whenever granted, shall be subject to such additional clawback provisions as required by law and applicable listing rules.

(d) Withholding . The Company shall be entitled to withhold the amount, if any, of all taxes of any applicable jurisdiction required to be

withheld by an employer with respect to any amount paid to you hereunder. The Company, in its sole and absolute discretion, shall make all determinations as to whether it is obligated to withhold any taxes hereunder and the amount hereof.

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

(f) Assignmen t . This letter agreement, and all of your rights and duties hereunder, shall not be assignable or delegable by you. This letter agreement may be assigned by the Company to a person or entity which is an affiliate or a successor in interest to substantially all of the assets or business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or successor person or entity.

(g) Notice . For the purposes of this letter agreement, notices and all other communications provided for in the letter agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to each other party; provided that all notices to you shall be directed to you at your primary home address on file with the Company; and provided that all notices to the Company shall be directed to the attention of the Chief Executive Officer of the Company with a copy to the Chair of the Talent and Compensation Committee of the Board. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the mailing thereof, except that notice of change of address shall be effective only upon receipt.

January 13, 2014 Mr. Robert Chai-Onn Page 12 of 12

As confirmation of acceptance of this employment offer, please sign this letter agreement indicating your agreement and acceptance of the terms and conditions of employment. In addition, please mail the original signed letter agreement in the envelope provided. A duplicate copy of this letter agreement is included for your records.

(h) Counterparts . This letter agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

(i) Governing Law . This letter agreement is governed by the laws of the State of New Jersey.

(j) Currency . All currency amounts set forth in the letter agreement refer to U.S. dollars.

(k) Policies . You acknowledge and agree that the policies of the Company as in effect from time to time will govern any other matter not specifically covered by this letter agreement. Without limiting the foregoing, you agree that during your employment by the Company, you will not engage in any activities that constitute a conflict of interest with the interests of the Company, as outlined in the Company’s conflict of interest policies for employees and executives in effect from time to time.

Sincerely,

Valeant Pharmaceuticals International, Inc.

By: /s/ J. Michael Pearson J. Michael Pearson Chief Executive Officer

/s/ Robert Chai-Onn Robert Chai-Onn

Exhibit 10.19

January 2, 2013

Dear Laizer:

This letter outlines the details of your employment with Valeant Pharmaceuticals International, Inc. or its applicable subsidiary, (the “Company”), and your Company assignment.

Equity Awards : Valeant will recommend to the Talent and Compensation Committee of the Company’s Board of Directors (the “Committee”) the following equity awards, valued at approximately $4,800,000:

• Title : Executive Vice President; you will report to the Chief Executive Officer.

• Office Location : Your principal place of employment will be in New Jersey.

• Base Salary : Your base salary will be $45,833.34 per month ($550,000 annualized).

• Annual Incentive : You will be eligible to participate in the Company’s management bonus plan including for the 2012 calendar year on a pro rata basis. Your target bonus will be 80%, with the potential of 160%, of your base salary. This plan, and therefore your participation, is subject to change at the discretion of the Board of Directors. Bonuses are payable at the time the other management bonuses are paid. To be eligible for any bonus payment, you must be employed by the Company, and you must not have given or received notice of the termination of your employment, on the day on which the applicable bonus is paid to other members of the Company management.

1) 85,000 Stock Options, which vest 25% on each of the 4 anniversaries following the date of grant and have a ten year maximum term

2) 45,000 Performance Stock Units (PSUs), which vest between 0-300%, based on meeting certain company performance criteria, as measured approximately three years from the grant date. The triggers for 1x, 2x and 3x vesting shall be based on attaining a 10%, 20% and 30% 3-year Compound Annual Growth Rate respectively, with measurements governed by the award agreement

3) These equity awards are contingent upon your acceptance of the offer and approval of the Committee and will be made pursuant to the terms of the Company’s 2011 Omnibus Incentive Plan and governed by such plan and applicable grant agreements. The grant date for the equity awards set forth above shall be on the date that is the later of the date you commence employment with the Company or the date that the Talent and Compensation Committee approves such awards, provided that if such later date is during a trading blackout period under the Company’s Blackout Policy, the grant date shall be the first trading day after the trading blackout is no longer in effect.

January 2, 2013 Mr. Laizer Kornwasser Page 2 of 8

• Share Ownership Commitment . You also agree to comply with any share ownership requirements adopted by the Company applicable to you, which shall be on the same terms as similarly situated executives of the Company.

• Matching Grants for Share Purchases . In connection with such share ownership, you shall also be eligible to receive matching

share units under the Company’s matching share unit program in accordance with its terms as applied for similarly situated executives of the Company.

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

(i) Diminution of Responsibility. (A) any material reduction in your duties or responsibilities as in effect immediately prior thereto, or (B) removal of you from the position of Executive Vice President. For the avoidance of doubt, the term “Diminution of Responsibility” shall not include (X) any such removal resulting from a promotion (assuming such promotion was at least equivalent in terms of stature and compensation immediately before such promotion), your death or Disability, the termination of your employment for Cause, or your termination of your employment other than for Good Reason, (Y) the reduction of or change in any particular duties or responsibilities provided you are given other duties or responsibilities such that your overall duties and responsibilities remain substantially comparable to your overall duties and responsibilities prior to the reduction or change or (Z) any change with respect to the person or persons to whom you report resulting in you not reporting to the Chief Executive Officer.;

(ii) Compensation Reduction. Any reduction in your base salary or target bonus opportunity which is not comparable to reductions in the

base salary or target bonus opportunity of other similarly-situated senior executives at the Company; or

(iii) Company Breach. Any other material breach by the Company of any material provision of this letter.

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

January 2, 2013 Mr. Laizer Kornwasser Page 3 of 8

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to this letter agreement, solely because fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities is acquired by (i) a trustee or other fiduciary holding securities under one or more employee benefit plans maintained by the Company or any of its subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is owned directly or indirectly by the stockholders of the Company in the same proportion as their ownership of stock in the Company immediately prior to such acquisition. For the avoidance of doubt, the Merger shall not be deemed to be a Change in Control.

(i) the acquisition (other than from the Company), by any person (as such term is defined in Section 13(c) or 14(d) of the Securities

Exchange Act of 1934, as amended (the “1934 Act”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty percent (50%) or more of the combined voting power of the Company’s then outstanding voting securities;

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

(iii) the closing of:

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

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

• Disability . The Company may terminate your employment, on written notice to you after having established your Disability and while you remain Disabled, subject to the payment by the Company to you of the applicable compensation and benefits provided pursuant to this letter agreement. For purposes of this letter agreement, “Disability” shall have the meaning assigned to such term in the 2011 Omnibus Incentive Plan.

• Cause . The Company may terminate your employment for “Cause”, subject to the payment by the Company to you of the applicable compensation and benefits provided in this letter agreement. “Cause” shall mean, for purposes of this letter, “cause” as defined by applicable common law and (1) conviction of any felony or indictable offense (other than one related to a vehicular offense) or other criminal act involving fraud; (2) willful misconduct that results in a material economic detriment to the Company; (3) material

January 2, 2013 Mr. Laizer Kornwasser Page 4 of 8

violation of Company policies and directives, which is not cured after written notice and a reasonable opportunity for cure; (4) continued refusal by you to perform your duties after written notice identifying the deficiencies and a reasonable opportunity for cure; or (5) a material violation by you of any material covenants to the Company. No action or inaction shall be, or be deemed to be, willful if not demonstrably willful and if taken or not taken by you in good faith and with the understanding that such action or inaction was not adverse to the best interests of the Company. Reference in this paragraph to the Company shall also include direct and indirect subsidiaries of the Company, and materiality shall be measured based on the action or inaction and the impact upon the Company taken as a whole. The Company may suspend you, with pay, upon your indictment for the commission of a felony or indictable offense as described under clause (1) above. Such suspension may remain effective until such time as the indictment is either dismissed or a verdict of not guilty has been entered.

• Employee and Executive Benefits . You will be eligible to participate in the employee benefit plans and programs generally made available to similarly situated employees of the Company on the terms and conditions applicable generally to all employees. In addition, the Company shall reimburse you for incremental taxes incurred by you outside of the United States because of any services you provide to the Company outside of the United States or any business that the Company conducts outside of the United States, if such incremental amount during any tax year exceeds 1% or more of your average base salary for such tax year. You shall be required to participate in any tax equalization program the Company may have in effect from time to time in order to qualify for the benefit described in the preceding sentence.

• Reimbursement of Certain Expenses . The Company shall fully reimburse the reasonable fees of your counsel and financial

advisor incurred in connection with the development and implementation of the terms of your employment.

• Conditions to Reimbursement . The following provisions shall be in effect for any reimbursements (and in-kind benefits) to which

you otherwise may become entitled under this letter, in order to assure that such reimbursements (and in-kind benefits) do not create a deferred compensation arrangement subject to Section 409A of the Internal Revenue Code (“Section 409A”):

(i) The amount of reimbursements (or in-kind benefits) to which you may become entitled in any one calendar year shall not affect the amount of expenses eligible for reimbursement (or in-kind benefits) hereunder in any other calendar year.

(ii) Each reimbursement to which you become entitled shall be made by the Company as soon as administratively practicable following

your submission of the supporting documentation, but in no event later than the close of business of the calendar year following the calendar year in which the reimbursable expense is incurred.

(iii) Your right to reimbursement (or in-kind benefits) cannot be liquidated or exchanged for any other benefit or payment.

• At-Will Employment . Your employment with the Company is “at will”. This means that you or the Company have the option to terminate your employment at any time, with or

January 2, 2013 Mr. Laizer Kornwasser Page 5 of 8

without advance notice, and with or without Cause or with or without Good Reason. This offer of employment does not constitute an express or implied agreement of continuing or long term employment. The at will nature of your employment can be altered only by a written agreement specifying the altered status of your employment. Such written agreement must be signed by both you and the Chief Executive Officer.

• Severance Benefits . Notwithstanding the immediately preceding bullet paragraph, if your employment is terminated by the Company without Cause or by you for Good Reason, the Company shall have the following obligations:

(i) The Company will pay you an amount equal to the sum of (A) your annual salary as of the Termination Date, plus (B) your annual target bonus as of the Termination Date, provided that, if your termination occurs either in contemplation of a Change in Control or at any time within twelve (12) months following a Change in Control, the Company shall instead pay you an amount equal to two times the sum of (A) your annual salary as of the Termination Date, plus (B) your annual target bonus as of the Termination Date. The “Termination Date” shall be the date specified as the effective date of the termination of your employment in any notice of termination of employment provided by the Company to you or accepted by the Company in the event of your giving notice of the termination of your employment.

(ii) The Company will pay you any accrued but unpaid salary or vacation pay and any deferred compensation. In addition, the Company will pay you any bonus earned but unpaid in respect of any fiscal year preceding the Termination Date. The Company will also pay you a bonus in respect of the fiscal year in which the Termination Date occurs, as though you had continued in employment until the payment of bonuses by the Company to its executives for such fiscal year, in an amount equal to the product of (A) the lesser of (x) the bonus that you would have been entitled to receive based on actual achievement against the stated performance objectives or (y) the bonus that you would have been entitled to receive assuming that the applicable performance objectives for such fiscal year were achieved at “target”, and (B) a fraction (i) the numerator of which is the number of days in such fiscal year through Termination Date and (ii) the denominator of which is 365; provided that, if your termination occurs either in contemplation of a Change in Control or at any time within twelve (12) months following a Change in Control, then in the foregoing calculation the amount under (A) shall be equal to (y). Any bonus payable to you under this bullet shall be paid in no event later than March 15 of the calendar year following the calendar year in which the Termination Date occurs.

(iii) The Company will provide you with continued coverage under any health, medical, dental or vision program or policy in which you

were eligible to participate at the Termination Date for 12 months following such termination on terms no less favorable to you and your dependents (including with respect to payment for the costs thereof) than those in effect immediately prior to such termination.

(iv) The Company shall provide outplacement services through one or more outside firms of your choosing up to an aggregate of

$20,000, which services shall extend until the earlier of (i) 12 months following the Termination Date or (ii) the date that you secure full time employment.

January 2, 2013 Mr. Laizer Kornwasser Page 6 of 8

Notwithstanding anything herein to the contrary, the Company shall have no obligation to pay or provide any of the severance benefits referenced or set forth in this letter and shall have no obligations to you in respect of the termination of your employment save and except for obligations that are expressly established by applicable employment standards legislation unless you execute and deliver, and do not revoke, a general release in form satisfactory to the Company and any revocation period set forth in the release has lapsed within 60 days of the date of your termination. Subject to compliance with Section 409A, the Company shall pay all cash severance benefits due within 10 business days following the satisfaction of all of the conditions set forth in the preceding sentence (but in no event later than March 5 th of the calendar year following the year in which the termination occurs, subject to the satisfaction of all of the conditions set forth in the preceding sentence). You shall not be required to mitigate the amount of any severance payment provided for under this letter by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to you in any subsequent employment.

Notwithstanding anything herein to the contrary, in no event shall the timing of your execution of the general release, directly or indirectly, result in you designating the calendar year of payment, and if a payment that is subject to execution of the general release could be made in more than one taxable year, payment shall be made in the later taxable year.

It is understood that, during your employment by the Company, you will not engage in any activities that constitute a conflict of interest with the interests of the Company, as outlined in the Company’s conflict of interest policies for employees and executives in effect from time to time.

• Covenant Not to Solicit . To protect the confidential information and other trade secrets of the Company and its affiliates, you agree, during your employment with the Company or any of its affiliates and for a period of twelve (12) months after your cessation of employment with the Company or any of its affiliates, not to solicit, attempt to solicit, or participate in or assist in any way in the solicitation or attempted solicitation of any employees or independent contractors of the Company or any of its affiliates. For purposes of this covenant, “solicit” or “solicitation” means directly or indirectly influencing or attempting to influence employees of the Company or any of its affiliates to become employed with any other person, partnership, firm, corporation or other entity. You agree that the covenants contained in this paragraph are reasonable and necessary to protect the confidential information and other trade secrets of the Company and its affiliates, provided, that solicitation through general advertising or the provision of references shall not constitute a breach of such obligations. For purposes of this paragraph, an “affiliate” shall mean any direct or indirect subsidiary of the Company or any joint venture or collaboration in which any such entity or the Company participates.

• Remedies for Breach of Obligations Under the Covenants Not to Solicit Above . It is the intent and desire of you and the Company (and its affiliates) that the restrictive provisions in the paragraph captioned “Covenant Not to Solicit” above be enforced to the fullest extent permissible under the laws and public policies as applied in each jurisdiction in which enforcement is sought. If any particular provision in such paragraph shall be determined to be invalid or unenforceable, such covenant shall be amended,

January 2, 2013 Mr. Laizer Kornwasser Page 7 of 8

without any action on the part of either party hereto, to delete therefrom the portion so determined to be invalid or unenforceable, such deletion to apply only with respect to the operation of such covenant in the particular jurisdiction in which such adjudication is made. Your obligations under the two preceding paragraphs shall survive the termination of your employment with or any other employment arrangement with the Company or any of its affiliates. You acknowledge that the Company or its affiliates will suffer irreparable injury, not readily susceptible of valuation in monetary damages, if you breach your obligations under the paragraph captioned “Covenant Not to Solicit” above. Accordingly, you agree that the Company and its affiliates will be entitled, in addition to any other available remedies, to obtain injunctive relief against any breach or prospective breach by you of your obligations under either such paragraph in any Federal or state court sitting in the State of New Jersey, or, at the Company’s (or its affiliate’s) election, in any other state or jurisdiction in which you maintain your principal residence or your principal place of business. You agree that the Company or its affiliates may seek the remedies described in the preceding sentence notwithstanding any arbitration or mediation agreement that you may enter into with the Company or any of its affiliates. You hereby submit to the non-exclusive jurisdiction of all those courts for the purposes of any actions or proceedings instituted by the Company or its affiliates to obtain that injunctive relief, and you agree that process in any or all of those actions or proceedings may be served by registered mail, addressed to the last address provided by you to the Company or its affiliates, or in any other manner authorized by law.

• Indemnification . You shall be indemnified by the Company as provided in its by-laws or, if applicable, pursuant to an indemnification agreement with the Company if such agreements are provided to similarly situated executives.

• Section 409A . The parties intend for the payments and benefits under this letter to be exempt from Section 409A or, if not so exempt, to be paid or provided in a manner which complies with the requirements of such section, and intend that this letter shall be construed and administered in accordance with such intention. Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A shall be paid under the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A, each payment of compensation under this letter shall be treated as a separate payment of compensation. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this letter during the six-month period immediately following your separation from service shall instead be paid on the first business day after the date that is six months following your Termination Date (or death, if earlier), with interest from the date such amounts would otherwise have been paid at the short-term applicable federal rate, compounded semi-annually, as determined under Section 1274 of the Internal Revenue Code of 1986, as amended, for the month in which payment would have been made but for the delay in payment required to avoid the imposition of an additional rate of tax on you under Section 409A.

• Withholding Taxes . All payments to you or your beneficiary under this letter agreement shall be subject to withholding on account of federal, state and local taxes as required by law.

January 2, 2013 Mr. Laizer Kornwasser Page 8 of 8 You acknowledge that you have, reviewed, agreed, signed and returned the Company’s customary on-boarding documentation.

Policies of the Company will govern any other matter not specifically covered by this letter. Except as specifically described in the following sentence, the terms of this letter constitute the entire agreement between the Company and you with respect to the subject matter hereof, superseding all prior agreements and negotiations This letter is governed by the laws of the State of New Jersey. All currency amounts set forth in the letter agreement refer to U.S. dollars.

As confirmation of acceptance of this employment offer, please sign this letter indicating your agreement and acceptance of the terms and conditions of employment. In addition, please mail the original signed offer letter in the envelope provided. A duplicate copy of this offer letter is included for your records.

Sincerely,

Valeant Pharmaceuticals International, Inc.

By: /s/ J. Michael Pearson J. Michael Pearson Chief Executive Officer

/s/ Laizer Kornwasser Laizer Kornwasser

Exhibit 10.28

AMENDMENT NO. 8 TO THIRD AMENDED AND RESTATED CREDI T AND GUARANTY AGREEMENT

AMENDMENT NO. 8 TO THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT, dated as of December 20, 2013 (this “ Amendment No. 8 ”), by and among VALEANT PHARMACEUTICALS INTERNATIONAL, INC., a corporation continued under the laws of the Province of British Columbia (“ Borrower ”), the Guarantors, Goldman Sachs Lending Partners LLC, as Administrative Agent (“ Administrative Agent ”) and Collateral Agent under the Credit Agreement (as defined below) and each of the financial institutions set forth on Schedule A annexed hereto (each a “ New Term Loan Lender ” and collectively, the “ New Term Loan Lenders ”) and each of the other Lenders that is a signatory hereto.

W I T N E S S E T H:

WHEREAS, the Borrower, the Administrative Agent, the Guarantors party thereto from time to time and each lender from time to time party thereto (the “ Lenders ”) have entered into a Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, as amended by Amendment No. 1, dated as of March 6, 2012, by Amendment No. 2, dated as of September 10, 2012, by Amendment No. 3, dated as of January 24, 2013, by Amendment No. 4, dated as of February 21, 2013, by Amendment No. 5, dated as of June 6, 2013, by Amendment No. 6, dated as of June 26, 2013, by Amendment No. 7, dated as of September 17, 2013, as further supplemented by the Joinder Agreement, dated as of June 14, 2012, by the Joinder Agreement, dated as of July 9, 2012, by the Joinder Agreement, dated as of September 11, 2012, by the Joinder Agreement dated as of October 2, 2012, by the Joinder Agreement, dated as of December 11, 2012 and by the Joinder Agreements, each dated as of August 5, 2013 (as the same may be further amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”) (capitalized terms not otherwise defined in this Amendment No. 8 have the same meanings as specified in the Credit Agreement);

WHEREAS, on the date hereof, the Borrower, the Administrative Agent, the New Term Loan Lenders and the Lenders party hereto (constituting no less than the Requisite Lenders (determined immediately prior to giving effect to this Amendment No. 8) and each Extending Tranche A Term Loan Lender (as defined below)), desire to amend the Credit Agreement as described in this Amendment No. 8, (i) to extend the maturity of all or a portion of the Borrower’s Existing Series A-1 Tranche A Term Loans (as defined below) and Existing Series A-2 Tranche A Term Loans (as defined below), (ii) to amend certain other provisions of the Credit Agreement as set forth herein and (iii) to make certain other modifications as set forth herein;

WHEREAS, the Borrower may repay (the “ Tranche A Repayment ”) in cash, Existing Series A-1 Tranche A Term Loans and/or Existing Series A-2 Tranche A Term Loans, in each case other than any Existing Series A-1 Tranche A Term Loans and Existing Series A-2 Tranche A Term Loans that are exchanged and/or converted pursuant to a Lender Consent and Election (as defined below) or a Subsequent Lender Election (as defined below), as applicable, for Exchanged Series A-3 Tranche A Term Loans (as defined below), from the proceeds, if any, to the Borrower of the Series A-3 Tranche A Term Loans (as defined below) (other than Exchanged Series A-3 Tranche A Term Loans) made on the Amendment No. 8 Effective Date (as defined below), it being understood that (x) the Tranche A Repayment is expected to be made on or after the Subsequent Tranche A Term Loan Extension Effective Date (as defined below), (y) the Borrower may direct the application of the Tranche A Repayment to the Existing Series A-1 Tranche A Term Loans or to the Existing Series A-2 Tranche A Term Loans as the Borrower shall determine in its sole discretion and/or (z) the Borrower may, in its sole discretion, use proceeds of the Series A-3 Tranche A Term Loans (other than the Exchanged Series A-3 Tranche A Term Loans) for any other purpose not prohibited by the Credit Agreement, including repayment of other outstanding Indebtedness of the Borrower;

WHEREAS, subject to the terms and conditions of the Credit Agreement, the Borrower may obtain New Term Loan Commitments by entering into one or more amendments with the New Term Loan Lenders;

WHEREAS, pursuant to Section 10.5 of the Credit Agreement, the consent of the Requisite Lenders is required for the effectiveness of this Amendment No. 8;

WHEREAS, the Administrative Agent, the Collateral Agent, the Borrower, the Guarantors, the New Term Loan Lenders, the Requisite Lenders and the Extending Tranche A Term Loan Lenders signatory hereto are willing to so agree, subject to the conditions set forth herein;

WHEREAS, each Lender with a Series A-1 Tranche A Term Loan (each such Lender, a “ Series A-1 Tranche A Term Loan Lender ”) and Series A-2 Tranche A Term Loan (each such Lender, a “ Series A-2 Tranche A Term Loan Lender ” and, collectively the “ Initial Extending Tranche A Term Loan Lenders ”) that executes and delivers a lender consent and election to this Amendment No. 8 substantially in the form of Exhibit A-1 hereto (a “ Lender Consent and Election ”) shall be deemed, upon effectiveness of this Amendment No. 8, to have exchanged and/or converted all or a portion of its existing Series A-1 Tranche A Term Loans (the “ Existing Series A-1 Tranche A Term Loans ”) and/or existing Series A-2 Tranche A Term Loans (the “ Existing Series A-2 Tranche A Term Loans ” and together with the Existing Series A-1 Tranche A Term Loans, the “ Existing Tranche A Term Loans ”), as applicable, for or into, as the case may be, new Series A-3 Tranche A Term Loans (each a “ Series A-3 Tranche A Term Loan ”) and commitments thereunder (each a “ Series A-3 Tranche A Term Loan Commitment ”) made pursuant to this Amendment No. 8 (such exchanged and/or converted Series A-1 Tranche A Term Loans and such exchanged and/or converted Series A-2 Tranche A Term Loans, “ Initial Exchanged Series A-3 Tranche A Term Loans ”);

WHEREAS, each Series A-1 Tranche A Term Loan Lender and Series A-2 Tranche A Term Loan Lender (such Lenders, collectively the “ Subsequent Extending Tranche A Term Loan Lenders ” and, together with the Initial Extending Tranche A Term Loan Lenders, the “ Extending Tranche A Term Loan Lenders ”) that, not later than 30 days after the Amendment No. 8 Effective Date (such date, the “ Subsequent Tranche A Term Loan Extension Date ”), executes and delivers a subsequent lender election to this Amendment No. 8 substantially in the form of Exhibit A-2 hereto (a “ Subsequent Lender Election ”) shall be deemed, upon satisfaction of the conditions set forth in Section 5(b) to this Amendment No. 8, to have exchanged and/or converted all or a portion of its Existing Series A-1 Tranche A Term Loans and/or Existing Series A-2 Tranche A Term Loans, as applicable, for or into, as the case may be, Series A-3 Tranche A Term Loans and Series A-3 Tranche A Term Loan Commitments thereunder made pursuant to this Amendment No. 8 (such exchanged and/or converted Series A-1 Tranche A Term Loans and such exchanged and/or converted Series A-2 Tranche A Term Loans, “ Subsequent Exchanged Series A-3 Tranche A Term Loans ” and, collectively with the Initial Exchanged Series A-3 Tranche A Term Loans, the “ Exchanged Series A-3 Tranche A Term Loans ” ); and

NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the sufficiency and receipt of all of which is hereby acknowledged, the parties hereto hereby agree as follows:

Subject to the terms and conditions set forth in this Amendment No. 8 and in the Credit Agreement, as of the Amendment No. 8 Effective Date:

a. Series A-3 Tranche A Term Loan Commitments . Each New Term Loan Lender hereby commits to provide its respective Series A-3 Tranche A Term Loan Commitment on the terms and subject to the conditions set forth in Exhibit B hereto, and such Series A-3 Tranche A Term Loan Commitment (other than with respect to the Exchanged Series A-3 Tranche A Term Loans) for each Series A-3 Tranche A Term Loan Lender is set forth on Schedule A annexed hereto. The Series A-3 Tranche A Term Loan Commitments and Series A-3 Tranche A Term Loans made pursuant thereto shall be subject to the provisions of the Credit Agreement and the other Credit Documents, and shall constitute “Term Loan Commitments” and “Tranche A Term Loans”, respectively, thereunder.

b. New Term Loan Lenders . Each New Term Loan Lender (other than any New Term Loan Lender, that, immediately prior to the execution of this Amendment No. 8, is a “Lender” under the Credit Agreement) acknowledges and agrees that upon its execution of this Amendment No. 8 its New Term Loan Commitments shall be effective and that such New Term Loan Lender shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Credit Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.

c. Each New Term Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Credit Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Amendment No. 8; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Administrative Agent and each other Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Credit Documents as are delegated to the Administrative Agent or such other Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

The Credit Agreement is, effective as of the Amendment No. 8 Effective Date, hereby amended pursuant to Section 10.5 of the Credit Agreement, to delete the stricken text (indicated textually in the same manner as the following example: stricken text ) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the Credit Agreement attached as Exhibit B hereto.

I. Series A-3 Tranche A Term Loans .

II. Amendment .

Each Series A-1 Tranche A Term Loan Lender and Series A-2 Tranche A Term Loan Lender that executes a Lender Consent and Election or a Subsequent Lender Election hereby waives any right to any voluntary payment under Section 2.17 of the Credit Agreement in connection with the Tranche A Repayment.

Each Party hereto hereby agrees to waive or reduce the notice requirements set forth in Sections 2.13(a)(ii) and 2.13(b)(i) of the Credit Agreement in connection with the Tranche A Repayment in a manner satisfactory to the Administrative Agent.

(a) this Amendment No. 8 has been duly authorized, executed and delivered by it and constitutes a legal, valid and binding obligation of each Credit Party hereto, enforceable against such Credit Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other Laws affecting creditors’ rights generally and by general principles of equity;

(b) the execution, delivery and performance by the Credit Parties of this Amendment No. 8 and the other Credit Documents to which they are parties and the consummation of the transactions contemplated by this Amendment No. 8 and the other Credit Documents do not and will not (i) violate (A) any provision of any Applicable Law, (B) any of the Organizational Documents of the Borrower or any of its Subsidiaries, or (C) any order, judgment or decree of any court or other agency of government binding on the Borrower or any of its Subsidiaries, except with respect to clauses (A) and (C) to the extent that such violation could not reasonably be expected to have a Material Adverse Effect; (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of the Borrower or any of its Subsidiaries, except to the extent that such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of the Borrower or any of its Subsidiaries (other than any Liens created under any of the Credit Documents in favor of Collateral Agent, on behalf of the Secured Parties); or (iv) require any approval of stockholders, members or partners or any approval or consent of any Person under any Contractual Obligation of the Borrower or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Amendment No. 8 Effective Date and disclosed in writing to the Lenders and except for any such approval or consent the failure of which to obtain could not reasonably be expected to have a Material Adverse Effect;

(c) each of the representations and warranties contained in Article 4 of the Credit Agreement is true and correct in all material respects as of the Amendment No. 8 Effective Date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties are true and correct in all material respects on and as of such earlier date (provided that representations and warranties that are qualified by materiality shall be true and correct in all respects); and

(d) no Default or Event of Default exists, or will result from the execution of this Amendment No. 8 and the transactions contemplated hereby as of the Amendment No. 8 Effective Date.

III. Waiver .

IV. Representations and Warranties . By its execution of this Amendment No. 8, each Credit Party hereby represents and warrants to the Agents and the Lenders that:

a. This Amendment No. 8 shall become effective on and as of the date (such date the “ Amendment No. 8 Effective Date ”) on which:

i. this Amendment No. 8 shall have been executed and delivered by (A) the Borrower, (B) the Guarantors, (C) the New Term Loan Lenders, (D) the Lenders constituting the Requisite Lenders under Section 10.5 of the Credit Agreement (the “ Existing Lenders ”), (E) each Initial Extending Tranche A Term Loan Lender and (F) the Administrative Agent;

ii. the Administrative Agent shall have received from the Borrower reimbursement for all reasonable and invoiced out-of-pocket fees and expenses owed to the Administrative Agent in connection with this Amendment No. 8 and the transactions contemplated hereby, including the reasonable fees, charges and disbursements of counsel;

iii. the Administrative Agent shall have received an officers’ certificate from the Borrower including a representation by a Responsible Officer that (A) no Default or Event of Default exists and is continuing on the date hereof and (B) all representations and warranties contained in the Credit Agreement and in this Amendment No. 8 are true and correct in all material respects on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date (provided that representations and warranties that are qualified by materiality shall be true and correct in all respects);

iv. the Administrative Agent shall have received the following legal opinions and documents: originally executed copies of the favorable written opinions of (A) Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel to the Credit Parties, (B) Chancery Chambers, special Barbados counsel to the Credit Parties, (C) Norton Rose Fulbright Canada LLP, special Canadian counsel to the Credit Parties, (D) Baker & McKenzie, special Luxembourg counsel to the Credit Parties, (E) Conyers Dill & Pearman Limited, special Bermuda counsel to the Credit Parties, (F) Arthur Cox, special Ireland counsel to the Credit Parties, (G) Baker & McKenzie, special Switzerland counsel to the Credit Parties, (H) Venable LLP, special Maryland counsel to the Credit Parties, (I) Souza, Cescon, Barrieu & Flesch Advogados, special Brazil counsel to the Credit Parties, (J) Squire Sanders Święcicki Krześniak sp.k., special Poland counsel to the Credit Parties, and (K) Tark Grunte Sutkiene, special Lithuania counsel to the Credit Parties together with all other legal opinions and other documents reasonably requested by Administrative Agent in connection with this Amendment No. 8;

v. the Administrative Agent shall have received for the ratable account of (A) each Initial Extending Tranche A Term Loan Lender a fee equal to 0.15% of the aggregate principal amount (or such lesser fee as such Initial Extending Tranche A Term Loan Lender and the Borrower shall have agreed as of the date of this Amendment No. 8) of the Initial Exchanged Series A-3 Tranche A Term Loans to be made by such Initial Extending Tranche A Term Loan Lender as of the Amendment No. 8 Effective Date and (B) each New Term Loan Lender a fee equal to 0.25% of the aggregate principal amount (or such lesser fee as such New Term Loan Lender and the Borrower shall have agreed as of the date of this Amendment No. 8) of the Series A-3 Tranche A Term Loans (which for the avoidance of doubt shall not include any Exchanged Series A-3 Tranche A Term Loans) to be made by such New Term Loan Lender as of the Amendment No. 8 Effective Date; and

vi. the Administrative Agent shall have received an executed Funding Notice from the Borrower by not later than 12:00 p.m. (New York City time) two Business Days prior to the Amendment No. 8 Effective Date with respect to the Series A-3 Tranche A Term Loans.

V. Effectiveness .

b. The Subsequent Lender Election of each Subsequent Extending Tranche A Term Loan Lender shall become effective on and as of the date (such date the “ Subsequent Tranche A Term Loan Extension Effective Date ”) on which:

i. the Administrative Agent shall have received the executed Subsequent Lender Election of each Subsequent Extending Tranche A Term Loan Lender;

ii. the Administrative Agent shall have received from the Borrower reimbursement for all reasonable and invoiced out-of-pocket fees and expenses owed to the Administrative Agent in connection with the incurrence of the Subsequent Exchanged Series A-3 Tranche A Term Loans and the transactions contemplated hereby, including the reasonable fees, charges and disbursements of counsel;

iii. the Administrative Agent shall have received an officers’ certificate from the Borrower including a representation by a Responsible Officer that (A) no Default or Event of Default exists and is continuing on the Subsequent Tranche A Term Loan Extension Effective Date and (B) all representations and warranties contained in the Credit Agreement and in this Amendment No. 8 are true and correct in all material respects on and as of the Subsequent Tranche A Term Loan Extension Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects as of such earlier date (provided that representations and warranties that are qualified by materiality shall be true and correct in all respects);

iv. the Administrative Agent shall have received the following legal opinions and documents: originally executed copies of the favorable written opinions of Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel to the Credit Parties, opinions of counsel in such jurisdictions as the Administrative Agent shall reasonably request and other documents reasonably requested by Administrative Agent in connection with the Subsequent Exchanged Series A-3 Tranche A Term Loans;

v. the Administrative Agent shall have received for the ratable account of each Subsequent Extending Tranche A Term Loan Lender a fee equal to 0.15% of the aggregate principal amount (or such lesser fee as such Subsequent Extending Tranche A Term Loan Lender and the Borrower shall have agreed as of the Subsequent Tranche A Term Loan Extension Effective Date) of the Subsequent Exchanged Series A-3 Tranche A Term Loans of such Subsequent Extending Tranche A Term Loan Lender; and

vi. the Administrative Agent shall have received an executed Funding Notice from the Borrower by not later than 12:00 p.m. (New York City time) two Business Days prior to the Subsequent Tranche A Term Loan Extension Effective Date with respect to the Series A-3 Tranche A Term Loans.

This Amendment No. 8 may not be amended, modified or waived except in accordance with Section 10.5 of the Credit Agreement.

On and after the Amendment No. 8 Effective Date, each reference in the Credit Agreement or any other Credit Document to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by this Amendment No. 8.

VI. Amendment, Modification and Waiver .

VII. Reference to and Effect on the Credit Agreement and the Credit Documents .

This Amendment No. 8, the Credit Agreement and the other Credit Documents constitute the entire agreement among the parties hereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties hereto with respect to the subject matter hereof. Except as expressly set forth herein, this Amendment No. 8 shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of any party under, the Credit Agreement, nor alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect. It is understood and agreed that each reference in each Credit Document to the Credit Agreement, whether direct or indirect, shall hereafter be deemed to be a reference to the Credit Agreement as amended hereby and that this Amendment No. 8 is a Credit Document.

a. Each Credit Party hereby expressly acknowledges the terms of this Amendment No. 8 and affirms or reaffirms, as applicable, as of the date hereof and as of the Subsequent Tranche A Term Loan Extension Effective Date, the covenants and agreements contained in each Credit Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Amendment No. 8 and the transactions contemplated hereby.

b. Each Credit Party, by its signature below, hereby affirms and confirms (1) its obligations under each of the Credit Documents to which it is a party, and (2) the pledge of and/or grant of a security interest in its assets as Collateral to secure such Obligations, all as provided in the Collateral Documents as originally executed, and acknowledges and agrees that such guarantee, pledge and/or grant continue in full force and effect in respect of, and to secure, such Obligations under the Credit Agreement and the other Credit Documents.

THIS AMENDMENT NO. 8 AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. SECTIONS 10.15 and 10.16 OF THE CREDIT AGREEMENT ARE HEREBY INCORPORATED BY REFERENCE INTO THIS AMENDMENT NO. 8 AND SHALL APPLY HERETO.

In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

VIII. Entire Agreement .

IX. Reaffirmation .

X. Governing Law and Waiver of Jury Trial .

XI. Severability .

This Amendment No. 8 may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart to this Amendment No. 8 by facsimile transmission or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Amendment No. 8.

Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

Each Lender that signs a signature page to this Amendment (including, for the avoidance of doubt, by executing the Lender Consent and Election) shall be deemed to have approved this Amendment No. 8 with respect to any and all Loans of such Lender. Each Series A-1 Tranche A Term Loan Lender and Series A-2 Tranche A Term Loan Lender that executes a Lender Consent and Election hereby exchanges and/or converts, upon effectiveness of this Amendment No. 8, all or a portion of its Existing Series A-1 Tranche A Term Loans and/or Existing Series A-2 Tranche A Term Loans for or into, as the case may be, Series A-3 Tranche A Term Loans. Each Series A-1 Tranche A Term Loan Lender and Series A-2 Tranche A Term Loan Lender that executes a Subsequent Lender Election hereby exchanges and/or converts, upon the Subsequent Tranche A Term Loan Extension Effective Date, all or a portion of such Series A-1 Tranche A Term Loan Lenders and Series A-2 Tranche A Term Loan Lenders for or into, as the case may be, Series A-3 Tranche A Term Loans. Each Lender signatory to this Amendment No. 8 agrees that such Lender shall not be entitled to receive a copy of any other Lender’s signature page to this Amendment No. 8, but agrees that a copy of such signature page may be delivered to the Borrower and the Administrative Agent.

[Remainder of page intentionally left blank]

XII. Counterparts .

XIII. Headings .

XIV. Lender Signatures .

IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Amendment No. 8 as of the date first written above.

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. as Borrower

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Senior Vice President and Treasurer

VALEANT PHARMACEUTICALS INTERNATIONAL as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President and Chief Financial Officer

BAUSCH & LOMB INCORPORATED as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President and Chief Financial Officer

BAUSCH & LOMB HOLDINGS INCORPORATED as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

ATON PHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President and Chief Financial Officer

CORIA LABORATORIES, LTD. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President and Chief Financial Officer

DOW PHARMACEUTICAL SCIENCES, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President and Chief Financial Officer

OBAGI MEDICAL PRODUCTS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

OMP, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

MEDICIS PHARMACEUTICAL CORPORATION. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President, Chief Financial Officer and Treasurer

DR. LEWINN’S PRIVATE FORMULA INTERNATIONAL, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

OCEANSIDE PHARMACEUTICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

PRINCETON PHARMA HOLDINGS, LLC as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

PRIVATE FORMULA CORP. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

RENAUD SKIN CARE LABORATORIES, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

VALEANT BIOMEDICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

VALEANT PHARMACEUTICALS NORTH AMERICA LLC as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President and Chief Financial Officer

BIOVAIL AMERICAS CORP. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

ORAPHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President, Chief Financial Officer and Treasurer

ORAPHARMA TOPCO HOLDINGS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President, Chief Financial Officer and Treasurer

PRESTWICK PHARMACEUTICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

IOLAB CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

TECHNOLAS PERFECT VISION, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB PHARMA HOLDINGS CORP. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

BAUSCH & LOMB CHINA, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB SOUTH ASIA, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB TECHNOLOGY CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

RHC HOLDINGS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

SIGHT SAVERS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB INTERNATIONAL INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB REALTY CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

ISTA PHARMACEUTICALS, LLC as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

VRX HOLDCO INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Chief Financial Officer and Treasurer

VALEANT INTERNATIONAL BERMUDA as Guarantor

By: /s/ Peter J. McCurdy Name: Peter J. McCurdy Title: President and Assistant Secretary

VALEANT PHARMACEUTICALS NOMINEE BERMUDA as Guarantor

By: /s/ Peter J. McCurdy Name: Peter J. McCurdy Title: President and Assistant Secretary

HYTHE PROPERTY INCORPORATED as Guarantor

By: /s/ Mauricio Zavala Name: Mauricio Zavala Title: Assistant Secretary

VALEANT CANADA GP LIMITED as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn

Title:

Executive Vice President and General Counsel

VALEANT CANADA LP by its sole general partner, VALEANT CANADA GP LIMITED as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn

Title:

Executive Vice President and General Counsel

V-BAC HOLDING CORP. as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn Title: Vice President

VALEANT PHARMACEUTICALS IRELAND as Guarantor

By: /s/ Graham Jackson Name: Graham Jackson Title: Director

BIOVAIL INTERNATIONAL S.À R.L. as Guarantor

By: /s/ Kuy Ly Ang Name: Kuy Ly Ang Title: Manager

VALEANT PHARMACEUTICALS LUXEMBOURG S.À R.L. as Guarantor

By: /s/ Kuy Ly Ang Name: Kuy Ly Ang Title: Manager

PHARMASWISS SA as Guarantor

By: /s/ Matthias Courvoisier Name: Matthias Courvoisier Title: Director

Signed by Valeant Holdco 2 Pty Ltd (ACN 154 341 367) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Wirra Holdings Pty Limited (ACN 122 216 577) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Wirra Operations Pty Limited (ACN 122 250 088) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by iNova Pharmaceuticals (Australia) Pty Limited (ACN 000 222 408) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Wirra IP Pty Limited (ACN 122 536 350) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by iNova Sub Pty Limited (ACN 134 398 815) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Valeant Pharmaceuticals Australasia Pty Limited (ACN 001 083 352 ) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Linda A. LaGorga Signature of director Signature of director/secretary

Robert R. Chai-Onn Linda A. LaGorga Name of director (please print) Name of director/secretary (please print)

Signed by DermaTech Pty Limited (ACN 003 982 161) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

Signed by Private Formula International Holdings Pty Ltd (ACN 095 450 918 ) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

Signed by Private Formula International Pty Ltd (ACN 095 451 442 ) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

Signed by Ganehill Pty Ltd (ACN 065 261 538) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

UCYCLYD PHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller

Title:

Executive Vice President, Chief Financial Officer

VALEANT EUROPE B.V. as Guarantor

By: /s/ Rob Meijer Name: Rob Meijer Title: Managing Director A

PRZEDSIEBIORSTWO FARMACEUTYCZNE JELFA S.A. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VALEANT SP. ZOO as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VP VALEANT SP. Z.O.O.SP.J. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VALEANT SPOLKA Z ORGANICZONA ODPOWIEDZIALNOSCIA SP.J. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

LABENNE PARTICIPACOES LTDA as Guarantor

By: /s/ Marcelo Noll Barboza Name: Marcelo Noll Barboza Title: Officer

By: /s/ Mauricio Santos da Luz Name: Mauricio Santos da Luz Title: Officer

PROBIOTICA LABORATORIES LTDA. as Guarantor

By: /s/ Marcelo Noll Barboza Name: Marcelo Noll Barboza Title: Officer

By: /s/ Mauricio Santos da Luz Name: Mauricio Santos da Luz Title: Officer

AB SANITAS as Guarantor

By: /s/ Saulius Žemaitis Name: Saulius Žemaitis Title: General Manager

GOLDMAN SACHS LENDING PARTNERS LLC , individually as Administrative Agent and Collateral Agent

By: /s/ Elizabeth Fischer Name: Elizabeth Fischer Title: Authorized Signatory

GOLDMAN SACHS LENDING PARTNERS LLC , as a “New Term Loan Lender”

By: /s/ Elizabeth Fischer Name: Elizabeth Fischer Title: Authorized Signatory

SCHEDULE A TO AMENDMENT NO. 8

Name of Lender Type of Commitment Amount [ ]

Series A-3 Tranche A Term Loan Commitment

Series A-3 Tranche A Term Loan Commitment Total: $[ ]

EXHIBIT A- 1 TO AMENDMENT NO. 8

LENDER CONSENT AND ELECTION

LENDER CONSENT AND ELECTION (this “ Lender Consent and Election ”) pursuant to Amendment No. 8 ( “Amendment No. 8” ) to that certain Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, as amended by Amendment No. 1, dated as of March 6, 2012, by Amendment No. 2, dated as of September 10, 2012, by Amendment No. 3, dated as of January 24, 2013, by Amendment No. 4, dated as of February 21, 2013, by Amendment No. 5, dated as of June 6, 2013, by Amendment No. 6, dated as of June 26, 2013, by Amendment No. 7, dated as of September 17, 2013, as further supplemented by the Joinder Agreement, dated as of June 14, 2012, by the Joinder Agreement, dated as of July 9, 2012, by the Joinder Agreement, dated as of September 11, 2012, by the Joinder Agreement dated as of October 2, 2012, by the Joinder Agreement, dated as of December 11, 2012 and by the Joinder Agreements, each dated as of August 5, 2013 (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement , the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Borrower, certain Subsidiaries of Borrower, as Guarantors, the Lenders party thereto from time to time, Goldman Sachs Lending Partners LLC, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc. (“ Morgan Stanley ”), as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A. (“ JPMorgan ”) and Morgan Stanley, as Co-Syndication Agents, JPMorgan, as Issuing Bank, GSLP, as Administrative Agent and Collateral Agent, and the other Agents party thereto.

(A) Existing Series A-1 Tranche A Term Loans.

The undersigned Series A-1 Tranche A Term Loan Lender hereby irrevocably and unconditionally consents as follows:

Cashless Roll

I. The undersigned signatory, in its capacity as a Lender, hereby consents to Amendment No. 8 with respect to any and all Loans of such Lender; and

II. Series A-1 Tranche A Term Loan Lenders and/or Series A-2 Tranche A Term Loan Lenders (check applicable option(s)) 1

� to exchange 100% OR $ of the outstanding principal amount of the Series A-1 Tranche A Term Loans held by such

Lender (or such lesser amount allocated to such lender by GSLP) into Series A-3 Tranche A Term Loans in a like principal amount on a dollar for dollar basis.

1 If the amount indicated for any Series to be extended is greater than the amount recorded in the Administrative Agent’s Register, the

Lender shall be deemed to have extended all Term Loans of such Series. If the amount indicated is for any Series in which the Lender does not hold Loans, such requests shall be disregarded. A Lender who executes this signature page but does not make an election to extend Term Loans shall be deemed to have declined to extend any of its Term Loans.

(B) Existing Series A-2 Tranche A Term Loans.

The undersigned Series A-2 Tranche A Term Loan Lender hereby irrevocably and unconditionally consents as follows:

Cashless Roll

� to exchange 100% OR $ of the outstanding principal amount of the Series A-2 Tranche A Term Loans held by such

Lender (or such lesser amount allocated to such lender by GSLP) into Series A-3 Tranche A Term Loans in a like principal amount on a dollar for dollar basis.

IN WITNESS WHEREOF, the undersigned has caused this Lender Consent and Election to be executed and delivered by a duly authorized officer.

Date: ___________, 2013

, as a “Lender” and a “New Term Loan Lender” (type name of the legal entity)

By:

Name: Title:

If a second signature is necessary:

By:

Name: Title:

EXHIBIT A- 2 TO AMENDMENT NO. 8

SUBSEQUENT LENDER ELECTION

SUBSEQUENT LENDER ELECTION (this “ Subsequent Lender Election ”) pursuant to Amendment No. 8 ( “Amendment No. 8” ) to that certain Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, as amended by Amendment No. 1, dated as of March 6, 2012, by Amendment No. 2, dated as of September 10, 2012, by Amendment No. 3, dated as of January 24, 2013, by Amendment No. 4, dated as of February 21, 2013, by Amendment No. 5, dated as of June 6, 2013, by Amendment No. 6, dated as of June 26, 2013, by Amendment No. 7, dated as of September 17, 2013, as further supplemented by the Joinder Agreement, dated as of June 14, 2012, by the Joinder Agreement, dated as of July 9, 2012, by the Joinder Agreement, dated as of September 11, 2012, by the Joinder Agreement dated as of October 2, 2012, by the Joinder Agreement, dated as of December 11, 2012 and by the Joinder Agreements, each dated as of August 5, 2013 (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement , the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among Borrower, certain Subsidiaries of Borrower, as Guarantors, the Lenders party thereto from time to time, Goldman Sachs Lending Partners LLC, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc. (“ Morgan Stanley ”), as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A. (“ JPMorgan ”) and Morgan Stanley, as Co-Syndication Agents, JPMorgan, as Issuing Bank, GSLP, as Administrative Agent and Collateral Agent, and the other Agents party thereto.

(A) Existing Series A-1 Tranche A Term Loans.

The undersigned Series A-1 Tranche A Term Loan Lender hereby irrevocably and unconditionally consents as follows:

Cashless Roll

XV. Series A-1 Tranche A Term Loan Lenders and/or Series A-2 Tranche A Term Loan Lenders (check applicable option(s)) 2

� to exchange 100% OR $______________ of the outstanding principal amount of the Series A-1 Tranche A Term Loans held by such

Lender (or such lesser amount allocated to such lender by GSLP) into Series A-3 Tranche A Term Loans in a like principal amount on a dollar for dollar basis.

2 If the amount indicated for any Series to be extended is greater than the amount recorded in the Administrative Agent’s Register, the

Lender shall be deemed to have extended all Term Loans of such Series. If the amount indicated is for any Series in which the Lender does not hold Loans, such requests shall be disregarded. A Lender who executes this signature page but does not make an election to extend Term Loans shall be deemed to have declined to extend any of its Term Loans.

(B) Existing Series A-2 Tranche A Term Loans.

The undersigned Series A-2 Tranche A Term Loan Lender hereby irrevocably and unconditionally consents as follows:

Cashless Roll

� to exchange 100% OR $______________ of the outstanding principal amount of the Series A-2 Tranche A Term Loans held by such

Lender (or such lesser amount allocated to such lender by GSLP) into Series A-3 Tranche A Term Loans in a like principal amount on a dollar for dollar basis.

IN WITNESS WHEREOF, the undersigned has caused this Subsequent Lender Election to be executed and delivered by a duly authorized officer.

Date: ___________, 2013

, as a “Lender” and a “New Term Loan Lender” (type name of the legal entity)

By:

Name: Title:

If a second signature is necessary:

By:

Name: Title:

EXHIBIT B TO AMENDMENT NO. 8

[Attached]

THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGRE EMENT 3

dated as of February 13, 2012

among

VALEANT PHARMACEUTICALS INTERNATIONAL, INC., as Borrower,

CERTAIN SUBSIDIARIES OF VALEANT PHARMACEUTICALS INT ERNATIONAL, INC., as Guarantors,

VARIOUS LENDERS FROM TIME TO TIME PARTY HERETO,

GOLDMAN SACHS LENDING PARTNERS LLC, J.P. MORGAN SEC URITIES LLC and MORGAN STANLEY SENIOR FUNDING, INC., as Joint Lead Arrangers and Joint Bookrunners,

JPMORGAN CHASE BANK, N.A., and MORGAN STANLEY SENIO R FUNDING, INC. as Co-Syndication Agents

JPMORGAN CHASE BANK, N.A., as Issuing Bank

MARKED VERSION REFLECTING CHANGES PURSUANT TO AMENDMENT NO. 8 ADDED TEXT SHOWN UNDERSCORED DELETED TEXT SHOWN STRIKETHROUGH

3 Conformed to reflect Amendment No. 1, dated as of March 6, 2012, Amendment No. 2, dated as of September 10, 2012, Amendment

No. 3, dated as of January 24, 2013, Amendment No. 4, dated as of February 21, 2013, Amendment No. 5, dated as of June 6, 2013, Amendment No. 6, dated as of June 26, 2013, Amendment No. 7, dated as of September 17, 2013, Amendment No. 8, dated as of December 20, 2013, the Joinder Agreement, dated as of June 14, 2012, the Joinder Agreement, dated as of July 9, 2012, the Joinder Agreement, dated as of September 11, 2012, the Joinder Agreement, dated as of October 2, 2012, the Joinder Agreement, dated as of December 11, 2012 and the Joinder Agreements, each dated as of August 5, 2013. This document is provided for convenience only. In the event of any conflict between this document and the Third Amended and Restated Credit Agreement, Amendment No. 1, dated as of March 6, 2012, Amendment No. 2, dated as of September 10, 2012, Amendment No. 3, dated as of January 24, 2013, Amendment No. 4, dated as of February 21, 2013, Amendment No. 5, dated as of June 6, 2013, Amendment No. 6, dated as of June 26, 2013, Amendment No. 7, dated as of September 17, 2013, Amendment No. 8, dated as of December 20, 2013, the Joinder Agreement, dated as of June 14, 2012, the Joinder Agreement, dated as of July 9, 2012, the Joinder Agreement, dated as of September 11, 2012, the Joinder Agreement, dated as of October 2, 2012, the Joinder Agreement, dated as of December 11, 2012 or the Joinder Agreements, each dated as of August 5, 2013, the Third Amended and Restated Credit Agreement, Amendment No. 1, dated as of March 6, 2012, Amendment No. 2, dated as of September 10, 2012, Amendment No. 3, dated as of January 24, 2013, Amendment No. 4, dated as of February 21, 2013, Amendment No. 5, dated as of June 6, 2013, Amendment No. 6, dated as of June 26, 2013, Amendment No. 7, dated as of September 17, 2013, Amendment No. 8, dated as of December 20, 2013, the Joinder Agreement, dated as of June 14, 2012, the Joinder Agreement, dated as of July 9, 2012, the Joinder Agreement, dated as of September 11, 2012, the Joinder Agreement, dated as of October 2, 2012, the Joinder Agreement, dated as of December 11, 2012 and the Joinder Agreements, each dated as of August 5, 2013, shall control.

GOLDMAN SACHS LENDING PARTNERS LLC, as Administrative Agent and Collateral Agent,

and

RBC CAPITAL MARKETS, DNB BANK ASA, THE BANK OF NOVA SCOTIA and SUNTRUST BANK,

as Co-Documentation Agents

MARKED VERSION REFLECTING CHANGES PURSUANT TO AMENDMENT NO. 8 ADDED TEXT SHOWN UNDERSCORED DELETED TEXT SHOWN STRIKETHROUGH

$9,575,000,000 Senior Secured Credit Facilities

TABLE OF CONTENTS

Page

-i-

SECTION 1. DEFINITIONS AND INTERPRETATION 2

1.1 Definitions 2 1.2 Accounting Terms 51 1.3 Interpretation, etc. 51 1.4 Currency Matters 52 1.5 Pro Forma Transactions; Covenant Calculations 52 1.6 Effect of This Agreement on the Second Amended and Restated Credit Agreement and Other Credit Documents 53 1.7 Medicis Transactions 53 1.8 Bausch & Lomb Transactions 53 1.9 Acquisition Escrow Debt Transactions 54

SECTION 2. LOANS AND LETTERS OF CREDIT 54

2.1 Term Loans 54 2.2 Revolving Loans 55 2.3 Swing Line Loans 56 2.4 Issuance of Letters of Credit and Purchase of Participations Therein 58 2.5 Pro Rata Shares; Availability of Funds 62 2.6 Use of Proceeds 62 2.7 Evidence of Debt; Register; Lenders’ Books and Records; Notes 63 2.8 Interest on Loans 63 2.9 Conversion/Continuation 65 2.10 Default Interest 66 2.11 Fees 66 2.12 Scheduled Payments/Commitment Reductions 68 2.13 Voluntary Prepayments/Commitment Reductions 70 2.14 Mandatory Prepayments 73 2.15 Application of Prepayments 75 2.16 General Provisions Regarding Payments 76 2.17 Ratable Sharing 77 2.18 Making or Maintaining Eurodollar Rate Loans 77 2.19 Increased Costs; Capital Adequacy 79 2.20 Taxes; Withholding, etc. 80 2.21 Obligation to Mitigate 82 2.22 Defaulting Lenders 83 2.23 Removal or Replacement of a Lender 83 2.24 Interest Act (Canada) 84 2.25 Incremental Facilities 84 2.26 Extensions of Loans and Commitments 88

SECTION 3. CONDITIONS PRECEDENT 90

3.1 Third Restatement Date 90 3.2 Prior Credit Dates 93 3.3 Conditions to Each Credit Extension 93

Page

-ii -

SECTION 4. REPRESENTATIONS AND WARRANTIES 94

4.1 Organization; Requisite Power and Authority; Qualification 94 4.2 Equity Interests and Ownership 94 4.3 Due Authorization 94 4.4 No Conflict 94 4.5 Governmental Consents 95 4.6 Binding Obligation 95 4.7 Historical Financial Statements 95 4.8 Projections 95 4.9 No Material Adverse Change 95 4.10 Adverse Proceedings, etc. 95 4.11 Payment of Taxes 96 4.12 Properties 96 4.13 Environmental Matters 97 4.14 No Defaults 97 4.15 Governmental Regulation 97 4.16 Federal Reserve Regulations 97 4.17 Employee Matters 98 4.18 Employee Benefit Plans 98 4.19 Canadian Employee Benefit Plans 99 4.20 Solvency 99 4.21 Compliance with Statutes, etc. 99 4.22 Disclosure 99 4.23 PATRIOT Act and PCTFA 100 4.24 Creation, Perfection, etc. 100 4.25 OFAC Matters 100

SECTION 5. AFFIRMATIVE COVENANTS 100

5.1 Financial Statements and Other Reports 100 5.2 Existence 104 5.3 Payment of Taxes and Claims 104 5.4 Maintenance of Properties 105 5.5 Insurance 105 5.6 Books and Records; Inspections 105 5.7 Lenders Meetings 105 5.8 Compliance with Laws 106 5.9 Environmental 106 5.10 Subsidiaries 107 5.11 Additional Material Real Estate Assets 108 5.12 Interest Rate Protection 109 5.13 Further Assurances 109 5.14 Maintenance of Ratings 109 5.15 Post-Closing Matters 109 5.16 Canadian Employee Benefit Plans 109

SECTION 6. NEGATIVE COVENANTS 109

6.1 Indebtedness 110

Page

-iii -

6.2 Liens 113 6.3 No Further Negative Pledges 115 6.4 Restricted Junior Payments 116 6.5 Restrictions on Subsidiary Distributions 117 6.6 Investments 118 6.7 Financial Covenants 119 6.8 Fundamental Changes; Disposition of Assets; Acquisitions 119 6.9 Disposal of Subsidiary Interests 122 6.10 Sales and Leasebacks 122 6.11 Transactions with Shareholders and Affiliates 122 6.12 Conduct of Business 123 6.13 Amendments or Waivers with Respect to Subordinated Indebtedness 123 6.14 Amendments or Waivers of Organizational Documents 123 6.15 Fiscal Year 123 6.16 Specified Subsidiary Dispositions 123 6.17 Biovail Insurance 123 6.18 Establishment of Defined Benefit Plan 123

SECTION 7. GUARANTY 123

7.1 Guaranty of the Obligations 123 7.2 Contribution by Guarantors 123 7.3 Payment by Guarantors 124 7.4 Liability of Guarantors Absolute 124 7.5 Waivers by Guarantors 126 7.6 Guarantors’ Rights of Subrogation, Contribution, etc 127 7.7 Subordination of Other Obligations 127 7.8 Continuing Guaranty 127 7.9 Authority of Guarantors or Borrower 128 7.10 Financial Condition of Borrower 128 7.11 Bankruptcy, etc. 128 7.12 Discharge of Guaranty upon Sale of Guarantor 129 7.13 Swiss Guarantee Limitations 129

SECTION 8. EVENTS OF DEFAULT 131

8.1 Events of Default 131

SECTION 9. AGENTS 133

9.1 Appointment of Agents 133 9.2 Powers and Duties 134 9.3 General Immunity 134 9.4 Agents Entitled to Act as Lender 135 9.5 Lenders’ Representations, Warranties and Acknowledgment 135 9.6 Right to Indemnity 136 9.7 Successor Administrative Agent, Collateral Agent and Swing Line Lender 136 9.8 Collateral Documents and Guaranty 138 9.9 Withholding Taxes 139 9.10 Quebec Security 140

Page

-iv-

SECTION 10. MISCELLANEOUS 140

10.1 Notices 140 10.2 Expenses 142 10.3 Indemnity 142 10.4 Set-Off 143 10.5 Amendments and Waivers 143 10.6 Successors and Assigns; Participations 146 10.7 Independence of Covenants 149 10.8 Survival of Representations, Warranties and Agreements 149 10.9 No Waiver; Remedies Cumulative 150 10.10 Marshalling; Payments Set Aside 150 10.11 Severability 150 10.12 Obligations Several; Independent Nature of Lenders’ Rights 150 10.13 Headings 150 10.14 APPLICABLE LAW 150 10.15 CONSENT TO JURISDICTION 151 10.16 WAIVER OF JURY TRIAL 151 10.17 Confidentiality 152 10.18 Usury Savings Clause 152 10.19 Counterparts 153 10.20 Effectiveness; Entire Agreement 153 10.21 PATRIOT Act; PCTFA 153 10.22 Electronic Execution of Assignments 153 10.23 No Fiduciary Duty 153 10.24 Judgment Currency 154 10.25 Joint and Several Liability 154 10.26 Advice of Counsel; No Strict Construction 155 10.27 Day Not a Business Day 155 10.28 Limitations Act, 2002 155 10.29 Parallel Debt. 155

APPENDICES: A-1 Revolving Commitments A-2 Tranche B Term Loan Commitments B Notice Addresses

SCHEDULES: 1.1(b) Third Restatement Date Guarantors 2.11(c) Closing Fee 3.1(e)(i) Mortgaged Properties 4.1 Jurisdictions of Organization and Qualification 4.2 Equity Interests and Ownership 4.12 Real Estate Assets 4.18 Certain Defined Benefit Plans 5.10(a) Barbados Security Documents 5.10(b) Quebec Security Documents 5.10(c) Luxembourg Security Documents 5.10(d) Swiss Security Documents 5.15 Post-Closing Matters 6.1 Certain Indebtedness 6.2 Certain Liens

-v-

6.3 Certain Negative Pledges 6.5 Certain Restrictions on Subsidiary Distributions 6.6 Certain Investments 6.11 Certain Affiliate Transactions

EXHIBITS: A-1 Funding Notice A-2 Conversion/Continuation Notice B-1 Revolving Loan Note B-2 Swing Line Note B-3 Tranche A Term Loan Note B-4 Tranche B Term Loan Note C Compliance Certificate D Assignment Agreement E [Reserved] F-1 Third Restatement Date Certificate F-2 Solvency Certificate G Counterpart Agreement H-1 Canadian Guarantee H-2 Barbados Guarantee I-1 Second Amended and Restated Pledge and Security Agreement I-2 Canadian Pledge and Security Agreement J-1 Intercompany Note J-2 Subordination Agreement K Joinder Agreement L Contribution Agreement M Collateral Questionnaire

THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGRE EMENT

This THIRD AMENDED AND RESTATED CREDIT AND GUARANTY AGRE EMENT , dated as of February 13, 2012, is entered into by and among VALEANT PHARMACEUTICALS INTERNATIONAL, INC. , a corporation continued under the laws of the Province of British Columbia (“ Borrower ”), CERTAIN SUBSIDIARIES OF BORROWER , as Guarantors, the Lenders party hereto from time to time, GOLDMAN SACHS LENDING PARTNERS LLC (“ GSLP ”), J.P. MORGAN SECURITIES LLC (“ J.P. Morgan ”) and MORGAN STANLEY SENIOR FUNDING, INC. (“ Morgan Stanley ”), as Joint Lead Arrangers and Joint Bookrunners, JPMORGAN CHASE BANK, N.A. and Morgan Stanley as Co-Syndication Agents (in such capacity, the “ Co-Syndication Agents ”), JPMorgan Chase Bank, N.A., as Issuing Bank, GSLP, as Administrative Agent (together with its permitted successors in such capacity, “ Administrative Agent ”) and as Collateral Agent (together with its permitted successors in such capacity, “ Collateral Agent ”), and RBC CAPITAL MARKETS , DNB BANK ASA, THE BANK OF NOVA SCOTIA and SUNTRUST BANK , as Co-Documentation Agents (in such capacity, Co-Documentation Agents ”).

RECITALS:

WHEREAS , capitalized terms used in these Recitals and not defined shall have the respective meanings set forth for such terms in Section 1.1 hereof.

WHEREAS , Valeant Pharmaceuticals International, a Delaware corporation (“ VPI ”), Borrower, the guarantors party thereto, the lenders party thereto, and GSLP, as administrative agent and collateral agent for the lenders party thereto, originally entered into the Credit and Guaranty Agreement dated as of June 29, 2011 (the “ Original Credit Agreement ”), subsequently entered into the Amended and Restated Credit and Guaranty Agreement dated as of August 10, 2011, as further amended by Amendment No. 1 dated as of August 12, 2011, as further amended by Amendment No. 2 dated as of September 7, 2011 (collectively, the “ First Amended and Restated Credit Agreement ”), and subsequently entered into the Second Amended and Restated Credit and Guaranty Agreement, dated as of October 20, 2011, as amended by the Joinder Agreement, dated as of December 19, 2011 (collectively, the “ Second Amended and Restated Credit Agreement ”).

WHEREAS , on the Second Restatement Date, the Lenders extended certain credit facilities to Borrower, in an aggregate principal amount not to exceed $2,000,000,000, consisting of (a) up to $275,000,000 aggregate principal amount of Revolving Commitments, the proceeds of which were or will be used (i) to finance a portion of the Acquisitions and pay related fees and expenses, (ii) for permitted capital expenditures and permitted acquisitions, (iii) to provide for the ongoing working capital requirements of Borrower and its Subsidiaries, (iv) for general corporate purposes of Borrower and its Subsidiaries and (v) to fund original issue discount and closing fees with respect to the Loans made on the Second Restatement Date, (b) an aggregate principal amount of $1,225,000,000 of Initial Draw Tranche A Term Loans, the proceeds of which were or will be used (i) on the Second Restatement Date to fund the repayment of a loan from VPI to Borrower followed by a use of the repayment proceeds by VPI to fund the repayment in full of all loans outstanding under the First Amended and Restated Credit Agreement and the payment of all fees and expenses related thereto (the “ Refinancing ”) and (ii) for general corporate purposes of Borrower and its Subsidiaries and (c) an aggregate principal amount of $500,000,000 of Delayed Draw Term Loans, the proceeds of which were or will be used (i) to finance a portion of the Acquisitions and pay related fees and expenses and (ii) for general corporate purposes of Borrower and its Subsidiaries. On the Second Amendment and Restatement Joinder Date, the Lenders extended an additional aggregate principal amount of $500,000,000 of Series A New Term Loans, the proceeds of which were or will be used for general corporate purposes of Borrower and its Subsidiaries, including acquisitions.

WHEREAS , the Lenders have agreed to extend an aggregate principal amount of $600,000,000 of Tranche B Term Loan Commitments, the proceeds of which will be used to (i) repay a portion of the Revolving Loans outstanding as of the Third Restatement Date (but not to permanently reduce Revolving Commitments with respect thereto) and (ii) for general corporate purposes of Borrower and its Subsidiaries, including acquisitions.

WHEREAS, Borrower, the lenders party hereto and the other parties hereto desire to amend and restate, without novation, the Second Amended and Restated Credit Agreement on and subject to the terms and conditions set forth herein and in Amendment No. 1 to Second Amended and Restated Credit and Guaranty Agreement, dated as of the date hereof (the “ Amendment Agreement ”), among Borrower, the lenders party thereto, the Administrative Agent, the Collateral Agent and the other parties thereto.

NOW, THEREFORE , in consideration of the premises and the agreements, provisions and covenants herein contained, the Second Amended and Restated Credit Agreement is hereby amended and restated, without novation, to read in its entirety as follows and, accordingly, the parties hereto agree as follows:

SECTION 1. DEFINITIONS AND INTERPRETATION

1.1 Definitions . The following terms used herein, including in the preamble, recitals, exhibits, appendices and schedules hereto, shall have the following meanings:

“ 2010 Merger ” means the merger of VPI with and into Beach Merger Corp. pursuant to the 2010 Merger Agreement.

“ 2010 Merger Agreement ” means the Agreement and Plan of Merger, dated as of June 20, 2010, among VPI, Borrower, Biovail Americas Corp. and Beach Merger Corp., together with all exhibits, schedules, documents, agreements, and instruments executed and delivered in connection therewith, as the same has been amended, or modified in accordance with the terms and provisions thereof.

“ 2010 Transactions ” means, collectively, (i) the redemption of VPI’s 8.375% Senior Notes due 2016, issued under that certain indenture dated as of June 9, 2009, among VPI, the guarantors party thereto and The Bank of New York Mellon Trust Company, Inc., as trustee, and VPI’s 7.625% Senior Notes due 2020, issued under that certain indenture dated as of April 9, 2010, among VPI, the guarantors party thereto and The Bank of New York Mellon Trust Company, Inc., as trustee, (ii) the repayment in full and termination of that certain credit and guaranty agreement, dated as of May 26, 2010, among VPI, the guarantors party thereto, Goldman Sachs Lending Partners L.P., as sole lead arranger, and Goldman Sachs Bank USA, as administrative agent and collateral agent, (iii) the repayment in full and termination of that certain credit agreement, dated as of June 9, 2009, among Borrower, the lenders party thereto and JPMorgan Chase Bank, N.A., Toronto Branch, as Administrative Agent, (iv) the payment of the Pre-Merger Special Dividend (as such term is defined in the 2010 Merger Agreement) made on September 27, 2010, immediately prior to the consummation of the 2010 Merger, pro rata to VPI’s shareholders on the record date of such for such dividend, (v) the consummation of the 2010 Merger, (vi) the issuance of the Senior Notes and (vii) the payment of all fees and expenses related thereto.

“ Acquisition Debt Additional Escrow Amount ” means an amount equal to (a) all interest that could accrue on the applicable Acquisition Escrow Debt from and including the date of issuance or incurrence thereof to and including the Escrow Acquisition Termination Date and (b) all fees and expenses that are incurred in connection with the issuance or incurrence of such Acquisition Escrow Debt and all premium, fees, expenses or other amounts payable in connection with the Acquisition Escrow Debt Redemption.

-2-

“ Acquisition Debt Escrow Account ” means a deposit or securities account at a financial institution (such institution, the “ Acquisition Debt Escrow Agent ”) into which any Acquisition Debt Escrowed Funds are deposited.

“ Acquisition Debt Escrow Agent ” has the meaning given to such term in the definition of the term “ Acquisition Debt Escrow Account .”

“ Acquisition Debt Escrow Debt Documents ” means the definitive documentation governing any applicable Acquisition Escrow Debt, including the applicable Acquisition Debt Escrow Documents and any other documents entered into by the Borrower, VPI and/or Acquisition Debt Escrow Issuer in connection with any Acquisition Escrow Debt; provided that such documents shall require that (a) if the applicable Escrow Acquisition shall not be consummated on or before the corresponding Escrow Acquisition Termination Date, such Acquisition Escrow Debt shall be redeemed in full (the “ Acquisition Escrow Debt Redemption ”) no later than the third Business Day after the Escrow Acquisition Termination Date and (b) the Acquisition Debt Escrowed Funds shall be released from the Acquisition Debt Escrow Account on or before three Business Days after the Escrow Acquisition Termination Date (A) upon the consummation of the Escrow Acquisition and applied to finance a portion of such Escrow Acquisition or (B) to effectuate the Acquisition Escrow Debt Redemption.

“ Acquisition Debt Escrow Documents ” means the agreement(s) governing the Acquisition Debt Escrow Account and any other documents entered into in order to provide the Acquisition Debt Escrow Agent (or its designee) a Lien on the Acquisition Debt Escrowed Funds.

“ Acquisition Debt Escrow Issuer ” means a newly-formed, wholly-owned direct or indirect subsidiary of Borrower or VPI, which, prior to the consummation of any Escrow Acquisition, shall have no operations, assets or activities, other than the entering into of the Acquisition Debt Escrow Debt Documents, the issuance or incurrence of the Acquisition Escrow Debt, and activities incidental thereto, including the deposit of the Acquisition Debt Escrowed Funds in the Acquisition Debt Escrow Account.

“ Acquisition Debt Escrowed Funds ” means an amount, in cash or Eligible Escrow Investments, not to exceed the sum of (a) the issue price of the applicable Acquisition Escrow Debt, plus (b) the Acquisition Debt Additional Escrow Amount, plus (c) so long as they are retained in the Acquisition Debt Escrow Account, any income, proceeds or products of the foregoing.

“ Acquisition Escrow Debt ” means Indebtedness (which may be in the form of loans or notes) issued or incurred after the Amendment No. 5 Effective Date of an Acquisition Debt Escrow Issuer to finance any Permitted Acquisition (each, an “ Escrow Acquisition ”) consummated after the Amendment No. 5 Effective Date (excluding, for the avoidance of doubt, any Indebtedness issued or incurred in connection with the Bausch & Lomb Acquisition); provided that (x) the net proceeds of such Indebtedness are deposited into an Acquisition Debt Escrow Account upon the issuance thereof and (y) at the time of the issuance or incurrence thereof, Administrative Agent shall have received a certificate from the chief executive officer or the chief financial officer (or the equivalent thereof) of Borrower certifying that subject to and upon the consummation of such Escrow Acquisition, such Acquisition Escrow Debt shall, on a Pro Forma Basis, be permitted under the Credit Documents.

“ Acquisition Escrow Debt Redemption ” shall have the meaning given to such term in the definition of the term “ Acquisition Debt Escrow Debt Documents .”

“ Acquisitions ” means, collectively, the Orthodermatologics Acquisition and the Dermik Acquisition.

-3-

“ Additional Credit Party ” means any Credit Party, as of the Third Restatement Date, that was not a Credit Party as of the Second Restatement Date.

“ Additional Escrow Amount ” means an amount equal to (a) all interest that could accrue on the New Senior Notes from and including the date of issuance thereof to and including the Termination Date and (b) all fees and expenses that are incurred in connection with the issuance of the New Senior Notes and all fees, expenses or other amounts payable in connection with the New Senior Notes Redemption.

“ Adjusted Eurodollar Rate ” means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/100 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate which appears on the page of the Reuters Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being LIBOR01 page) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on any such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to a major bank in the London interbank market by JPMorgan Chase Bank, N.A. for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan, for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement; provided , however , that notwithstanding the foregoing, the Adjusted Eurodollar Rate in respect of the Tranche B Term Loans shall at no time be less than 0.75%.

“ Administrative Agent ” as defined in the preamble hereto.

“ Adverse Proceeding ” means any action, suit, claim, proceeding, hearing (in each case, whether administrative, judicial or otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of Borrower or any of its Subsidiaries) pursuant to any statute, regulation, ordinance, common law, equity or any other legal principle or process, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Borrower or any of its Subsidiaries, threatened against or affecting Borrower or any of its Subsidiaries or any property of Borrower or any of its Subsidiaries.

“ Affected Lender ” as defined in Section 2.18(b).

“ Affected Loans ” as defined in Section 2.18(b).

“ Affiliate ” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) solely for purposes of Section 6.11, to vote 10% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

-4-

“ Agent ” means each of (a) the Administrative Agent, (b) each Co-Syndication Agent, (c) the Collateral Agent, (d) each Co-Documentation Agent, (e) each Senior Managing Agent and (f) any other Person appointed under the Credit Documents to serve in an agent or similar capacity.

“ Agent Affiliates ” as defined in Section 10.1(b)(3).

“ Aggregate Amounts Due ” as defined in Section 2.17.

“ Agreement ” means this Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Amendment Agreement ” as defined in the recitals.

“ Amendment No. 2 Effective Date ” means September 10, 2012.

“ Amendment No. 3 ” means Amendment No. 3 to Third Amended and Restated Credit and Guaranty Agreement, dated as of January 24, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent, the New Term Loan Lenders party thereto, the New Revolving Loan Lenders party thereto and the Requisite Lenders party thereto.

“ Amendment No. 3 Effective Date ” means January 24, 2013.

“ Amendment No. 4 ” means Amendment No. 4 to Third Amended and Restated Credit and Guaranty Agreement, dated as of February 21, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent, the New Term Loan Lenders party thereto and the Requisite Lenders party thereto.

“ Amendment No. 4 Delivery Date ” as defined in the definition of “Applicable Margin.”

“ Amendment No. 4 Effective Date ” means February 21, 2013.

“ Amendment No. 5 ” means Amendment No. 5 to Third Amended and Restated Credit and Guaranty Agreement, dated as of June 6, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent and the Requisite Lenders party thereto.

“ Amendment No. 5 Effective Date ” means June 6, 2013.

“ Amendment No. 6 ” means Amendment No. 6 to Third Amended and Restated Credit and Guaranty Agreement, dated as of June 26, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent, the Requisite Lenders and the other Lenders party thereto.

“ Amendment No. 6 Effective Date ” means June 26, 2013.

“ Amendment No. 6 Revolving Loan Upsize and Extension Effective Date ” means July 15, 2013.

-5-

“ Amendment No. 7 ” means Amendment No. 7 to Third Amended and Restated Credit and Guaranty Agreement, dated as of September 17, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent, the Requisite Lenders and the other Lenders party thereto.

“ Amendment No. 7 Effective Date ” means September 17, 2013.

“ Amendment No. 8 ” means Amendment No. 8 to Third Amended and Restated Credit and Guaranty Agreement, dated as of December 20, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent, the Requisite Lenders and the other Lenders party thereto.

“ Amendment No. 8 Effective Date ” means December 20, 2013

“ Applicable Law ” means any and all current and future applicable laws (including common law and equity), statutes, by-laws, rules, regulations, orders, ordinances, protocols, codes, treaties, policies, directions, directives, decrees, restrictions, judgments, decisions, in each case, of, from or required by any Governmental Authority and, in each case, whether having the force of law or not.

“ Applicable Margin ” means

(a) (i) with respect to Tranche B Term Loans that are Eurodollar Rate Loans, (x) for the period commencing on the Third Restatement Date until (but not including) the Series A Tranche B Term Loan Funding Date, 2.75% per annum, (y) for the period commencing on the Series A Tranche B Term Loan Funding Date until (but not including) the Series D Tranche B Term Loan Funding Date, 3.75% per annum, and (z) for the period commencing on the Series D Tranche B Term Loan Funding Date until (but not including) the Amendment No. 4 Effective Date, 3.25% per annum,

(ii) with respect to Tranche B Term Loans that are Base Rate Loans, (x) for the period commencing on the Third Restatement Date until (but not including) the Series A Tranche B Term Loan Funding Date, 1.75% per annum, (y) for the period commencing on the Series A Tranche B Term Loan Funding Date until (but not including) the Series D Tranche B Term Loan Funding Date, 2.75% per annum, and (z) for the period commencing on the Series D Tranche B Term Loan Funding Date until (but not including) the Amendment No. 4 Effective Date, 2.25% per annum,

(iii) for the period commencing on the Amendment No. 4 Effective Date until (but not including) the Series E Tranche B Term Loan Funding Date, (w) with respect to Series C-1 Tranche B Term Loans that are Eurodollar Rate Loans, 2.75% per annum, (x) with respect to Series C-1 Tranche B Term Loans that are Base Rate Loans, 1.75% per annum, (y) with respect to Series D-1 Tranche B Term Loans that are Eurodollar Rate Loans, 2.75% per annum, and (z) with respect to Series D-1 Tranche B Term Loans that are Base Rate Loans, 1.75% per annum,

(iv) for the period commencing on the Series E Tranche B Term Loan Funding Date until (but not including) the Amendment No. 7 Effective Date, (w) with respect to Series C-1 Tranche B Term Loans that are Eurodollar Rate Loans, 3.625% per annum, (x) with respect to Series C-1 Tranche B Term Loans that are Base Rate Loans, 2.625% per annum, (y) with respect to Series D-1 Tranche B Term Loans that are Eurodollar Rate Loans, 3.625% per annum, and (z) with respect to Series D-1 Tranche B Term Loans that are Base Rate Loans, 2.625% per annum,

(v) (x) until delivery of financial statements of Borrower and a related Compliance Certificate for the first full Fiscal Quarter commencing on or after the Amendment No. 7 Effective Date pursuant to Section 5.1(c), (A) with respect to Series C-2 Tranche B Term Loans that are Eurodollar Rate Loans, 3.00% per annum, (B) with respect to Series C-2 Tranche B Term Loans that are Base Rate Loans, 2.00% per

-6-

annum, (C) with respect to Series D-2 Tranche B Term Loans that are Eurodollar Rate Loans, 3.00% per annum, and (D) with respect to Series D-2 Tranche B Term Loans that are Base Rate Loans, 2.00% per annum, and (y) thereafter, the percentages per annum set forth in the table below, based upon the Secured Leverage Ratio of Borrower, as of the last day of the most recently ended Fiscal Quarter for which financial statements were required to have been delivered pursuant to Section 5.1(a) or (b):

and (vi) (x) with respect to Series E Tranche B Term Loans that are Eurodollar Rate Loans, 3.75% per annum, and (y) with respect to Series E Tranche B Term Loans that are Base Rate Loans, 2.75% per annum, and

(b) (i) until delivery of financial statements of Borrower and a related Compliance Certificate for the first full Fiscal Quarter commencing on or after the Second Restatement Date pursuant to Section 5.1(c) (the “Delivery Date” ), (A) with respect to Revolving Loans and Tranche A Term Loans that are Eurodollar Rate Loans, 2.75% per annum, (B) with respect to Revolving Loans, Swing Line Loans and Tranche A Term Loans that are Base Rate Loans, 1.75% per annum,

(ii) for the period commencing on the Delivery Date until (but not including) the Amendment No. 3 Effective Date, the percentages per annum set forth in the table below, based upon the Leverage Ratio of Borrower, as of the last day of the most recently ended Fiscal Quarter for which financial statements were required to have been delivered pursuant to Section 5.1(a) or (b):

and (iii) thereafter, the percentages per annum set forth in the table below, based upon the Leverage Ratio of Borrower, as of the last day of the most recently ended Fiscal Quarter for which financial statements were required to have been delivered pursuant to Section 5.1(a) or (b):

Any increase or decrease in the Applicable Margin resulting from a change in the Secured Leverage Ratio or Leverage Ratio, as applicable, shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 5.1 (including, for the avoidance of doubt, the latest delivery under the Second Amended and Restated Credit Agreement); provided that Pricing Level I shall apply (x) as of the first Business Day after the date on which a Compliance Certificate was required to have been delivered but was not delivered, and shall continue to so apply to and including the date on which such Compliance Certificate is so delivered (and thereafter the Pricing

-7-

Pricing Level Secured Leverage Ratio

Eurodollar

Rate Loans

Base Rate

Loans

I > 1.75 to 1.0 3.00% 2.00% II ≤ 1.75 to 1.0 2.75% 1.75%

Pricing Level Leverage Ratio

Eurodollar

Rate Loans

Base Rate

Loans

I > 4.0 to 1.0 3.00% 2.00% II ≤ 4.0 to 1.0 but > 3.25 to 1.0 2.75% 1.75% III ≤ 3.25 to 1.0 2.50% 1.50%

Pricing Level Leverage Ratio

Eurodollar

Rate Loans

Base Rate

Loans

I > 4.0 to 1.0 2.25% 1.25% II ≤ 4.0 to 1.0 but > 3.25 to 1.0 2.00% 1.00% III ≤ 3.25 to 1.0 1.75% 0.75%

Level otherwise determined in accordance with this definition shall apply) and (y) as of the first Business Day after an Event of Default shall have occurred and be continuing, and shall continue to so apply to but excluding the date on which such Event of Default is cured or waived (and thereafter the Pricing Level otherwise determined in accordance with this definition shall apply).

In the event that Administrative Agent and Borrower determine that any financial statements previously delivered were incorrect or inaccurate (regardless of whether this Agreement or the Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a higher Applicable Margin for any period (an “ Applicable Period ”) than the Applicable Margin applied for such Applicable Period, then (i) Borrower shall as soon as practicable deliver to Administrative Agent the corrected financial statements for such Applicable Period, (ii) the Applicable Margin shall be determined as if the Pricing Level for such higher Applicable Margin were applicable for such Applicable Period and (iii) Borrower shall within three (3) Business Days thereof by Administrative Agent pay to Administrative Agent the accrued additional amount owing as a result of such increased Applicable Margin for such Applicable Period, which payment shall be promptly applied by Administrative Agent in accordance with this Agreement. This paragraph shall not limit the rights of Administrative Agent and Lenders with respect to Section 2.8 and Section 8.

“ Applicable Reserve Requirement ” means, at any time, for any Eurodollar Rate Loan, the maximum rate, expressed as a decimal, at which reserves (including, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained by member banks of the United States Federal Reserve System (or any successor thereto) with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted Eurodollar Rate is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Rate Loans shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.

“ Approved Electronic Communications ” means any notice, demand, communication, information, document or other material that any Credit Party provides to an Agent pursuant to any Credit Document or the transactions contemplated therein which is distributed to the Agents or to the Lenders by means of electronic communications pursuant to Section 10.1(b).

“ Arrangers ” J.P. Morgan, GSLP and Morgan Stanley, each in its capacity as a joint lead arranger.

“ Asset Sale ” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, exclusive license (as licensor or sublicensor), transfer or other disposition to, or any exchange of property with, any Person (other than Borrower or any Guarantor Subsidiary), in one transaction or a series of transactions, of all or any part of Borrower’s or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible, whether now owned or hereafter acquired, leased or licensed, including, the Equity Interests of any of Borrower’s Subsidiaries, other than:

-8-

(1) inventory (or other assets, including, for greater certainty, Intellectual Property) sold, leased or licensed out in the ordinary course of business (excluding any such sales, leases or licenses out by operations or divisions discontinued or to be discontinued);

(2) an issuance of Equity Interests by a Subsidiary of Borrower to Borrower or to another Subsidiary (so long as such issuance would otherwise be permitted under Section 6.6) or the issuance of directors’ qualifying shares or of other nominal amounts of other Equity Interests that are required to be held by specified Persons under Applicable Law;

(3) the sale or other disposition of cash or Cash Equivalents;

(4) a Restricted Junior Payment that is permitted by Section 6.4 or Investment that is permitted by Section 6.6;

(5) the license of Intellectual Property to third persons in the ordinary course of business;

(6) the sale, exchange or other disposition of accounts receivable in connection with the compromise, settlement or collection thereof consistent with past practice;

(7) leases or subleases entered into in the ordinary course of business, to the extent that they do not materially interfere with the business of Borrower or any of its Subsidiaries;

(8) the sale or other disposition of Investments under clause (c)(i) and (k) of Section 6.6;

(9) sales, leases, licenses or other dispositions of other assets for aggregate consideration not to exceed $100,000,000 for all such sales, leases or licenses in any Fiscal Year;

(10) sales, leases, licenses or other dispositions of assets to Borrower or any of its respective Subsidiaries; provided that, if any such disposition involves a Credit Party and a Subsidiary that is not a Credit Party, then such disposition shall be made in compliance with Section 6.11; and

(11) the disposition of assets resulting in Cash proceeds satisfying the definition of “Net Insurance/Condemnation Proceeds” and applied in accordance with Section 2.14(b).

For purposes of clarity, “Asset Sale” shall not include the issuance of any Equity Interests of Borrower (including the issuance by any other Person of any warrant, right or option to purchase or other arrangements or rights to acquire any Equity Interests of Borrower).

“ Assignment Agreement ” means an Assignment and Assumption Agreement substantially in the form of Exhibit D, with such amendments or modifications as may be approved by Administrative Agent.

“ Assignment Effective Date ” as defined in Section 10.6(b).

“ Australian Collateral ” means: (a) all Collateral Documents governed by the laws of any state or territory of Australia, and (b) all other Liens in respect of Collateral located in any state or territory of Australia (or taken to be located in any state or territory of Australia for the purposes of any stamp duty law).

-9-

“ Authorized Officer ” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, vice president (or the equivalent thereof), chief financial officer (or the equivalent thereof) or treasurer of such Person; provided that the secretary or assistant secretary of such Person shall have delivered an incumbency certificate to the Administrative Agent as to the authority of such Authorized Officer.

“ Bankruptcy Code ” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.

“ Barbados Credit Party ” means each of Valeant Holdings (Barbados) SRL, Valeant International (Barbados) SRL, Biovail Laboratories International (Barbados) SRL, Hythe Property Incorporated and each other Credit Party that is organized under the laws of Barbados.

“ Barbados Guarantee ” means the Barbados Guarantee Agreement, dated as of the Third Restatement Date, by each Barbados Credit Party substantially in the form of Exhibit H-2, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ Barbados Security Documents ” means each of the documents set forth on Schedule 5.10(a), dated as of the Third Restatement Date, as each of such documents may be amended, restated, supplemented or otherwise modified from time to time and additional analogous agreements as may be entered into from time to time in accordance with Section 5.10 and as required by the Collateral Documents.

“ Base Rate ” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 1 ⁄ 2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively; provided , however , that notwithstanding the foregoing, the Base Rate in respect of Tranche B Term Loans shall at no time be less than 1.75% per annum. On any day that Base Rate Loans are outstanding, in no event shall the Base Rate be less than the sum of (i) the Adjusted Eurodollar Rate (after giving effect to the Adjusted Eurodollar Rate “floor” set forth in the definition thereof in the case of Tranche B Term Loans) that would be payable on such day for a Eurodollar Rate Loan with a one-month interest period plus (ii) the difference between the Applicable Margin for Eurodollar Rate Loans and the Applicable Margin for Base Rate Loans.

“ Base Rate Loan ” means a Loan bearing interest at a rate determined by reference to the Base Rate.

“ Bausch & Lomb Acquisition ” means the acquisition of Bausch & Lomb Holdings Incorporated pursuant to the Bausch & Lomb Acquisition Agreement.

“ Bausch & Lomb Acquisition Agreement ” means the Agreement and Plan of Merger (together with all exhibits and schedules thereto, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, collectively, the “ Bausch & Lomb Acquisition Agreement ”), dated as of May 24, 2013, among the Borrower, VPI, one of VPI’s wholly owned U.S. domiciled subsidiaries and Bausch & Lomb Holdings Incorporated.

“ Bausch & Lomb Additional Escrow Amount ” means an amount equal to (a) all interest that could accrue on the Bausch & Lomb New Senior Notes from and including the date of issuance thereof to and including the Bausch & Lomb Termination Date and (b) all fees and expenses that are incurred in connection with the issuance of the Bausch & Lomb New Senior Notes and all premium, fees, expenses or other amounts payable in connection with the Bausch & Lomb New Senior Notes Redemption.

-10-

“ Bausch & Lomb Equity Financing ” means the issuance and/or sale of equity or equity-linked securities of the Borrower issued and/or sold, as applicable, to (i) finance a portion of the Bausch & Lomb Transactions or (ii) finance the repayment or prepayment of any outstanding Bausch & Lomb Interim Loans incurred to finance the Bausch & Lomb Acquisition.

“ Bausch & Lomb Escrow Account ” means a deposit or securities account at a financial institution (such institution, the “ Bausch & Lomb Escrow Agent ”) into which the Bausch & Lomb Escrowed Funds are deposited.

“ Bausch & Lomb Escrow Agent ” shall have the meaning given to such term in the definition of the term “ Bausch & Lomb Escrow Account .”

“ Bausch & Lomb Escrow Issuer ” means a newly-formed, wholly-owned subsidiary of Borrower, which, prior to the consummation of the Bausch & Lomb Acquisition, shall have no operations, assets or activities, other than the entering into of the Bausch & Lomb New Senior Notes Documents, the issuance of the Bausch & Lomb New Senior Notes, and activities incidental thereto, including the deposit of the Bausch & Lomb Escrow Funds in the Bausch & Lomb Escrow Account.

“ Bausch & Lomb Escrowed Funds ” means an amount, in cash or Eligible Escrow Investments, not to exceed the sum of (a) the issue price of the Bausch & Lomb New Senior Notes, plus (b) the Bausch & Lomb Additional Escrow Amount, plus (c) so long as they are retained in the Bausch & Lomb Escrow Account, any income, proceeds or products of the foregoing.

“ Bausch & Lomb Interim Loans ” means, collectively, the Bausch & Lomb Series A Interim Loans and the Bausch & Lomb Series B Interim Loans incurred pursuant to the Bausch & Lomb Senior Interim Loan Documents.

“ Bausch & Lomb New Senior Notes ” means debt securities issued after the Amendment No. 5 Effective Date of the Bausch & Lomb Escrow Issuer to finance a portion of the Bausch & Lomb Transactions; provided that the net proceeds of such debt securities are deposited into the Bausch & Lomb Escrow Account upon the issuance thereof.

“ Bausch & Lomb New Senior Notes Documents ” means the Bausch & Lomb New Senior Notes Indenture, the Bausch & Lomb New Senior Notes Escrow Documents and any other documents entered into by the Borrower, VPI and/or Bausch & Lomb Escrow Issuer in connection with the Bausch & Lomb New Senior Notes; provided that such documents shall require that (a) if the Bausch & Lomb Acquisition shall not be consummated on or before the Bausch & Lomb Termination Date, the Bausch & Lomb New Senior Notes shall be redeemed in full (the “ Bausch & Lomb New Senior Notes Redemption ”) no later than the third Business Day after the Bausch & Lomb Termination Date and (b) the Bausch & Lomb Escrowed Funds shall be released from the Bausch & Lomb Escrow Account before the Bausch & Lomb Termination Date or within three Business Days after the Bausch & Lomb Termination Date (A) upon the consummation of the Bausch & Lomb Transactions and applied to finance a portion of the Bausch & Lomb Acquisition or (B) to effectuate the Bausch & Lomb New Senior Notes Redemption.

“ Bausch & Lomb New Senior Notes Escrow Documents ” means the agreement(s) governing the Bausch & Lomb Escrow Account and any other documents entered into in order to provide the Bausch & Lomb Escrow Agent (or its designee) a Lien on the Bausch & Lomb Escrowed Funds.

“ Bausch & Lomb New Senior Notes Indenture ” means the indenture pursuant to which the Bausch & Lomb New Senior Notes shall be issued.

-11-

“ Bausch & Lomb New Senior Notes Redemption ” shall have the meaning given to such term in the definition of the term “ Bausch & Lomb New Senior Notes Documents ”.

“ Bausch & Lomb Refinancing ” shall have the meaning given to such term in the definition of the term “ Bausch & Lomb Transactions .”

“ Bausch & Lomb Senior Interim Loan Documents ” means customary documentation for interim unsecured bridge loans; provided , that the Bausch & Lomb Interim Loans (i) are not guaranteed by any Subsidiary of the Borrower that is not a Guarantor, (ii) are not secured by a Lien on any assets of the Borrower or any of its Subsidiaries, (iii) have a final maturity date not prior to the date that is at least 180 days after the latest Term Loan Maturity Date and (iv) the terms of such Bausch & Lomb Interim Loans do not provide for any scheduled repayment, mandatory redemption or sinking fund obligations prior to the latest Term Loan Maturity Date (other than mandatory prepayments with any Cash proceeds from any Bausch & Lomb Equity Financing or from the issuance of Bausch & Lomb New Senior Notes).

“ Bausch & Lomb Series A Interim Loans ” means senior unsecured interim loans incurred by the Borrower or VPI in an aggregate principal amount not to exceed $3,275,000,000 to finance a portion of the Bausch & Lomb Transactions.

“ Bausch & Lomb Series B Interim Loans ” means senior unsecured interim loans incurred by the Borrower or VPI in an aggregate principal amount not to exceed $1,700,000,000 to finance a portion of the Bausch & Lomb Transactions.

“ Bausch & Lomb Termination Date ” means 5:00 pm New York time on the sixth-month anniversary of the date of the Bausch & Lomb Acquisition Agreement.

“ Bausch & Lomb Transactions ” means collectively, (a) the Bausch & Lomb Acquisition and other related transactions contemplated by the Bausch & Lomb Acquisition Agreement; (b) the incurrence of new Term Loans hereunder pursuant to a Joinder Agreement in accordance with Section 2.25 to be entered into after the Amendment No. 5 Effective Date; (c) the issuance of the Bausch & Lomb New Senior Notes; (d) the incurrence of the Bausch & Lomb Interim Loans, if any; (e) the issuance and/or sale of the Bausch & Lomb Equity Financing; (f) the refinancing, repayment, termination and discharge of certain Indebtedness of Bausch & Lomb Holdings Incorporated (the “ Bausch & Lomb Refinancing ”); and (g) the payment of all fees and expenses owing in connection with the foregoing.

“ Bausch & Lomb Unsecured Debt ” means, collectively, the Bausch & Lomb New Senior Notes and the Bausch & Lomb Interim Loans.

“ Beneficiary ” means each Agent, Issuing Bank, Lender and Lender Counterparty.

“ BIA ” means the Bankruptcy and Insolvency Act (Canada).

“ Biovail Insurance ” means Biovail Insurance Incorporated, a company organized under the laws of Barbados.

“ Biovail Insurance Trust Indenture ” means the trust indenture dated as of June 25, 2003, entered into among Biovail Insurance, Zurich Insurance Company and the other parties thereto.

“ Board of Governors ” means the Board of Governors of the United States Federal Reserve System, or any successor thereto.

-12-

“ Borrower ” as defined in the preamble hereto.

“ Borrower Convertible Notes ” means Borrower’s 5.375% Senior Convertible Notes due 2014, issued under that certain indenture dated as of June 10, 2009, among Borrower, The Bank of New York Mellon, as trustee, and BNY Trust Company of Canada, as co-trustee.

“ Business Day ” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or the Province of Ontario or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” means any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.

“ Canadian Confirmation of Guarantee and Security ” means the Confirmation of Guarantee and Security to be executed as of the Third Restatement Date by each Canadian Credit Party, as it may be amended, restated, supplemented or otherwise modified form time to time.

“ Canadian Credit Party ” means Borrower and each other Credit Party that (i) is organized under the laws of Canada or any province or territory thereof, (ii) carries on business in Canada, or (iii) has any title or interest in or to material property in Canada.

“ Canadian Dollars ” and the sign “ CDN$ ” mean the lawful money of Canada.

“ Canadian Employee Benefit Plans ” means 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 to which a Canadian Credit Party is a party or bound or in which their employees participate or under which a Canadian Credit Party has, or will have, any liability or contingent liability, or pursuant to which payments are made, or benefits are provided to, or an entitlement to payment or benefits may arise with respect to any of their employees or former employees, directors or officers, individuals working on contract with a Canadian Credit Party or other individuals providing services to a Canadian Credit Party of a kind normally provided by employees (or any spouses, dependants, survivors or beneficiaries of any such person), but does not include the Canada Pension Plan that is maintained by the Government of Canada or any Employee Benefit Plan.

“ Canadian Guarantee ” means the Canadian Guarantee, dated as of June 29, 2011, by each Canadian Credit Party satisfying clause (i) of the definition thereof substantially in the form of Exhibit H-1, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ Canadian Pension Plan ” means all Canadian Employee Benefit Plans that are required to be registered under Canadian provincial or federal pension benefits standards legislation.

“ Canadian Pension Plan Termination Event ” means an event which would entitle a Person (without the consent of a Canadian Credit Party) to wind up or terminate a Canadian Pension Plan in full or in part, or the institution of any steps by any Person to withdraw from, terminate participation in, wind up or order the termination or wind-up of, in full or in part, any Canadian Pension Plan, or the receipt by a Canadian Credit Party of correspondence from a Governmental Authority relating to a potential or actual, partial or full, termination or wind-up of any Canadian Pension Plan, or an event respecting any Canadian Pension Plan which would result in the revocation of the registration of such Canadian Pension Plan or which could otherwise reasonably be expected to adversely affect the tax status of any such Canadian Pension Plan.

-13-

“ Canadian Pledge and Security Agreement ” means the Canadian Pledge and Security Agreement, dated as of June 29, 2011, by each Canadian Credit Party (satisfying clause (i) of the definition thereof) substantially in the form of Exhibit I-2, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ Capital Lease ” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.

“ Cash ” means money, currency or a credit balance in any demand or Deposit Account.

“ Cash Equivalents ” means, as at any date of determination, any of the following: (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or the Government of Canada, or (b) issued by any agency of the United States Government or the Government of Canada, the obligations of which are backed by the full faith and credit of such government, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any province of Canada or any political subdivision of any such state or province or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than 270 days from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by (a) any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (x) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (y) has Tier 1 capital (as defined in such regulations) of not less than $500,000,000, or (b) any bank listed on Schedule I of the Bank Act (Canada) that has Tier 1 capital (as defined in OSFI Guideline A-1 on Capital Adequacy Requirements) of not less than CDN$500,000,000; (v) shares of any money market mutual fund that (a) has substantially all of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $5,000,000,000, and (c) has the highest rating obtainable from either S&P or Moody’s; (vi) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (i) above and entered into with a financial institution satisfying the criteria described in clause (iv) above; and (vii) other short-term investments utilized by Foreign Subsidiaries in accordance with normal investment practices for cash management in investments of the type analogous to the foregoing.

“ Cash Management Agreement ” means any agreement or arrangement to provide treasury, depository, overdraft, credit or debit card, purchase card, electronic funds transfer (including automated clearing house fund transfer services) and other cash management services.

“ CBCA ” means the Canada Business Corporations Act .

“ CCAA ” means the Companies’ Creditors Arrangement Act (Canada).

“ Change of Control ” means, at any time, (i) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act or Part XX of the Securities Act (Ontario)) (a) shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting and/or economic interest in the Equity Interests of Borrower or (b) shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Borrower; (ii) Borrower shall cease, directly or indirectly, to beneficially own and control 100% on a fully diluted basis of the economic and voting interest in the Equity Interests of VPI; or (iii) the majority of the seats

-14-

(other than vacant seats) on the board of directors (or similar governing body) of Borrower shall cease to be occupied by Persons who either (a) were members of the board of directors (or similar governing body) of Borrower immediately following the Third Restatement Date or (b) were nominated for election by the board of directors (or similar governing body) of Borrower, a majority of whom were members of the board of directors (or similar governing body) of Borrower immediately following the Third Restatement Date or whose election or nomination for election was previously approved by a majority of such members.

“ Class ” means (i) with respect to Lenders, each of the following classes of Lenders: (a) Lenders having Tranche A Term Loan Exposure, (b) Lenders having Tranche B Term Loan Exposure, (c) Lenders (including Swing Line Lender) having Revolving Exposure and (d) Lenders having New Term Loan Exposure of each applicable Series and (ii) with respect to Loans, each of the following classes of Loans: (a) Tranche A Term Loans, (b) Tranche B Term Loans, (c) Revolving Loans (including Swing Line Loans) and (d) each additional Series of New Term Loans.

“ CNI Growth Amount ” means, on any date of determination, (a) 50% of Cumulative Consolidated Net Income minus (b) (1) the aggregate amount at the time of determination of Restricted Junior Payments made since the Third Restatement Date using the CNI Growth Amount pursuant to Section 6.4(h) and (2) Investments made since the Third Restatement Date using the CNI Growth Amount pursuant to Section 6.6(i).

“ Co-Syndication Agents ” as defined in the preamble hereto.

“ Collateral ” means, collectively, all of the real, personal and mixed property (including Equity Interests) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations; provided that the Collateral shall not include any Acquisition Debt Escrowed Funds, the Escrowed Funds, the Bausch & Lomb Escrowed Funds, any Acquisition Debt Escrow Account, the Escrow Account, the Bausch & Lomb Escrow Account, any Acquisition Debt Escrow Debt Documents, any of the New Senior Notes Documents, any of the Bausch & Lomb Senior Interim Loan Documents or any of the Bausch & Lomb New Senior Notes Documents.

“ Collateral Agent ” as defined in the preamble hereto.

“ Collateral Documents ” means the Second Amended and Restated Pledge and Security Agreement, the Canadian Pledge and Security Agreement, the Barbados Security Documents, the U.S. Mortgages, the Canadian Mortgages, the Quebec Security Documents, the Luxembourg Security Documents, the Swiss Security Documents, the Intellectual Property Security Agreements and all other instruments, documents and agreements delivered by or on behalf or at the request of any Credit Party pursuant to this Agreement, the Original Credit Agreement, the First Amended and Restated Credit Agreement, the Second Amended and Restated Credit Agreement or any of the other Credit Documents in order to grant to, or perfect, preserve or protect in favor of, Collateral Agent, for the benefit of Secured Parties, a Lien on any real, personal or mixed property of that Credit Party as security for the Obligations or to protect or preserve the interest of the Collateral Agent or the Secured Parties therein.

“ Collateral Questionnaire ” means a certificate substantially in the form of Exhibit M.

“ Commitment ” means any Revolving Commitment or Term Loan Commitment.

“ Compliance Certificate ” means a Compliance Certificate substantially in the form of Exhibit C.

-15-

“ Consolidated Adjusted EBITDA ” means, for any period, an amount determined for Borrower and its Subsidiaries on a consolidated basis equal to Consolidated Net Income for such period, plus , (i) to the extent deducted in determining Consolidated Net Income for such period, the sum, without duplication of amounts for:

(a) Consolidated Interest Expense;

(b) provisions for taxes based on income;

(c) total depreciation expense;

(d) total amortization expense;

(e) fees and expenses incurred in connection with the Transactions or the 2010 Transactions;

(f) non-cash non-recurring expenses or charges;

(g)(i) restructuring charges (which, for the avoidance of doubt, shall include retention, severance, systems establishment costs, excess pension charges, contract termination costs and costs to consolidate facilities and relocate employees) not to exceed (x) $100,000,000 in any twelve-month period ending on or prior to December 31, 2013 and (y) $125,000,000 in any twelve-month period ending after December 31, 2013 (in each case, other than such charges contemplated by the following clause (ii)) and (ii) (x) in any twelve-month period ending on or prior to December 31, 2013, any restructuring charges (which, for the avoidance of doubt, shall include retention, severance, systems establishment costs, excess pension charges, contract termination costs and costs to consolidate facilities and relocate employees and charges in connection with the termination or settlement of employee stock options, restricted stock units and performance stock units) in connection with the Medicis Acquisition, (y) on or prior to December 31, 2014, any restructuring charges (which, for the avoidance of doubt, shall include retention, severance, systems establishment costs, excess pension charges, contract termination costs and costs to consolidate facilities and relocate employees and charges in connection with the termination or settlement of employee stock options, restricted stock units and performance stock units) in connection with the Bausch & Lomb Acquisition and (z) any restructuring charges (which, for the avoidance of doubt, shall include retention, severance, systems establishment costs, excess pension charges, contract termination costs and costs to consolidate facilities and relocate employees and charges in connection with the termination or settlement of employee stock options, restricted stock units and performance stock units, in each case in existence as of the Original Closing Date) in connection with the Sanitas Acquisition, the Transactions or the 2010 Transactions;

(h) any extraordinary gain or loss and any expense or charge attributable to the disposition of discontinued operations;

(i)(i) fees and expenses in connection with any proposed or actual issuance of any Indebtedness or Equity Interests, or any proposed or actual acquisitions, investments, asset sales or divestitures permitted hereunder, in an aggregate amount not to exceed $75,000,000 in any twelve month period (in each case, other than such fees and expenses contemplated by the following clause) and (ii) (x) fees and expenses in connection with the Medicis Acquisition and (y) fees and expenses in connection with the Bausch & Lomb Acquisition;

-16-

(j) other non-Cash charges (including impairment charges and other write offs of intangible assets and goodwill but excluding any such non-Cash charge to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash charge that was paid in a prior period); and

(k) the amount of costs savings and synergies projected by Borrower in good faith to be realized on or prior to September 30, 2012 as a result of the 2010 Transactions, net of the amount of actual cost savings and synergies realized during such period as a result of the 2010 Transactions; provided that (i) such cost savings and synergies are (A) reasonably identifiable, (B) factually supportable and (C) certified by the chief financial officer (or the equivalent thereof) of Borrower and (ii) the aggregate amount of such cost savings and synergies increasing Consolidated Adjusted EBITDA pursuant to this clause (k) shall not exceed $140,000,000; minus

(ii) non-Cash gains increasing Consolidated Net Income for such period (excluding any such non-Cash gain to the extent it represents the reversal of an accrual or reserve for potential Cash items in any prior period and any such non-Cash gain relating to Cash received in a prior period (or to be received in a future period)).

“ Consolidated Capital Expenditures ” means, for any period, the aggregate of all expenditures of Borrower and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “purchase of property and equipment” or similar items reflected in the consolidated statement of cash flows of Borrower and its Subsidiaries; provided that Consolidated Capital Expenditures shall not include any expenditures (i) for replacements and substitutions for fixed assets, capital assets or equipment to the extent made with Net Insurance/Condemnation Proceeds invested pursuant to Section 2.14(b) or with Net Asset Sale Proceeds invested pursuant to Section 2.14(a), (ii) which constitute a Permitted Acquisition permitted under Section 6.8, (iii) made by Borrower or any of its Subsidiaries to effect leasehold improvements to any property leased by Borrower or such Subsidiary as lessee, to the extent that such expenses have been reimbursed by the landlord or (iv) made with the proceeds from the issuance of Equity Interests of Borrower permitted hereunder that are Not Otherwise Applied.

“ Consolidated Current Assets ” means, as at any date of determination with respect to any Person, the total assets of such Person and its Subsidiaries on a consolidated basis that may properly be classified as current assets in conformity with GAAP, excluding Cash and Cash Equivalents.

“ Consolidated Current Liabilities ” means, as at any date of determination with respect to any Person, the total liabilities of such Person and its Subsidiaries on a consolidated basis that may properly be classified as current liabilities in conformity with GAAP, excluding the current portion of long term debt.

“ Consolidated Excess Cash Flow ” means, for any period, an amount (if positive) equal to:

(i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, plus , (b) to the extent reducing Consolidated Net Income, the sum, without duplication, of amounts for non Cash charges reducing Consolidated Net Income (including for depreciation and amortization and impairment charges and other write offs of intangible assets and goodwill but excluding any such non Cash charge to the extent that it represents an accrual or reserve for a potential Cash charge in any future period or amortization of a prepaid Cash charge that was paid in a prior period), plus (c) the Consolidated Working Capital Adjustment, minus

-17-

(ii) the sum, without duplication, of (a) the amounts for such period paid from Internally Generated Cash of (1) scheduled repayments of Indebtedness for borrowed money (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments) and scheduled repayments of obligations under Capital Leases (excluding any interest expense portion thereof), (2) Consolidated Capital Expenditures and (3) the aggregate amount of any premium, make-whole or penalty payments actually paid in Cash by the Borrower or any of its Subsidiaries during such period that are required to be made in connection with any prepayment of Indebtedness, plus (b) other non Cash gains increasing Consolidated Net Income for such period (excluding any such non Cash gain to the extent it represents the reversal of an accrual or reserve for a potential Cash charge in any prior period), plus (c) the aggregate amount of Restricted Junior Payments made in Cash by Borrower or any of its Subsidiaries during such period pursuant to clauses (d) and (g) of Section 6.4 using Internally Generated Cash, except to the extent that such Restricted Junior Payments are made to fund expenditures that reduce Consolidated Net Income, plus (d) the aggregate amount of Investments or other acquisitions made in cash by Borrower or any of its Subsidiaries during such period pursuant to clauses (g), (h), (i), (j), (k) and (l) of Section 6.6 (other than any intercompany Investments) or clause (h) of Section 6.8, in each case, using Internally Generated Cash. As used in this clause (ii), “scheduled repayments of Indebtedness” do not include mandatory prepayments or voluntary prepayments thereof.

“ Consolidated Interest Expense ” means, for any period, (a) total interest expense (including imputed interest expense in respect of obligations under Capital Leases as determined in accordance with GAAP as well as interest required to be capitalized in accordance with GAAP) of Borrower and its Subsidiaries on a consolidated basis for such period with respect to all outstanding Indebtedness of Borrower and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and the net effect of Interest Rate Agreements, but excluding, however, any amount not payable in Cash during such period and any amounts referred to in Section 2.11(c) payable on or before the Third Restatement Date, minus (b) total interest income of Borrower and its Subsidiaries on a consolidated basis for such period.

“ Consolidated Net Income ” means, for any period, the net income (or loss) of Borrower and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, provided that there will be excluded (a) the income (or loss) of any Person (other than a Subsidiary of Borrower) in which any other Person (other than Borrower or any of its Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid to Borrower or any of its Subsidiaries by such Person during such period, (b) except as otherwise expressly provided herein, the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of Borrower or is merged into or consolidated with Borrower or any of its Subsidiaries or the income (or loss) in respect of the assets of any Person accrued prior to the date such assets are acquired by Borrower or any of its Subsidiaries, (c) the income of any Subsidiary of Borrower (other than any such Subsidiary that is a Credit Party) during such period to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that income is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (d) any after tax gains or losses attributable to Asset Sales and casualty or condemnation events (of the type described in the definition of “Net Insurance/Condemnation Proceeds”) or returned surplus assets of any Pension Plan, in each case accrued during such period, (e) (to the extent not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary losses accrued during such period, (f) the cumulative effect of a change in accounting principles and (g) solely for purposes of calculating the CNI Growth Amount for such period, amortization or depreciation expense incurred during such period with respect to assets that are used or useful in the business or lines of business in which Borrower and/or its Subsidiaries are engaged as of the Third Restatement Date or similar or

-18-

related or ancillary businesses; provided further that, without duplication of amounts included in clause (a) of the preceding proviso, the net income of a Specified Joint Venture for such period shall be included in the calculation of Consolidated Net Income in proportion to Borrower and its Subsidiaries’ Equity Interests in such Specified Joint Venture ( provided that the net income of all Specified Joint Ventures included pursuant to this proviso for any period shall not exceed 10% of the aggregate Consolidated Net Income for Borrower and its Subsidiaries for such period); provided , further , that, without duplication of any amounts that may be eligible to be included in clause (a) of the first proviso, the net income of a Permitted Majority Investment for such period shall be included in the calculation of Consolidated Net Income in proportion to Borrower and its Subsidiaries’ Equity Interests in such Permitted Majority Investment.

“ Consolidated Secured Indebtedness ” means, as of any date of determination, Consolidated Total Debt that is secured by a Lien on any assets of Borrower and its Subsidiaries.

“ Consolidated Total Assets ” means, as of any date of determination, the total assets of Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP.

“ Consolidated Total Debt ” means, as at any date of determination, the aggregate principal amount of all Indebtedness of Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP (net of unrestricted and unencumbered Cash and Cash Equivalents of Borrower and its Subsidiaries as of such date in an amount not to exceed $350,000,000), provided that the term “Indebtedness” (for purposes of this definition) shall not include any letter of credit, except to the extent of unreimbursed amounts thereunder, provided that Consolidated Total Debt shall not include (x) any unreimbursed amount under commercial letters of credit until one (1) day after such amount is drawn and (y) the Net Mark-to-Market Exposure of any Hedge Agreement, provided further that, for purposes of the definition of “Consolidated Total Debt” the Indebtedness in respect of convertible debt securities shall be deemed to be the aggregate principal amount thereof outstanding as of such date of determination.

“ Consolidated Working Capital ” means, as at any date of determination, the Consolidated Current Assets of Borrower minus the Consolidated Current Liabilities of Borrower, in each case as of such date. Consolidated Working Capital at any date may be a positive or negative number.

“ Consolidated Working Capital Adjustment ” means, for any period on a consolidated basis, the Consolidated Working Capital as of the beginning of such period minus the Consolidated Working Capital as of the end of such period. The Consolidated Working Capital Adjustment for any period may be a positive or negative number. In calculating the Consolidated Working Capital Adjustment there shall be excluded the effect of reclassification during such period of current assets to long term assets and current liabilities to long term liabilities and the effect of any Permitted Acquisition during such period.

“ Contractual Obligation ” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“ Contribution Agreement ” means a contribution agreement substantially in the form of Exhibit L among the Credit Parties and Administrative Agent.

“ Conversion/Continuation Date ” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.

-19-

“ Conversion/Continuation Notice ” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.

“ Counterpart Agreement ” means a Counterpart Agreement substantially in the form of Exhibit G delivered by a Credit Party pursuant to Section 5.10 or a similar agreement, in form and substance reasonably acceptable to the Administrative Agent, pursuant to which any Credit Party becomes a Guarantor hereunder. Such Counterpart Agreement may, if reasonably requested by Borrower, include limitations on guarantees applicable to such Subsidiary and required under Applicable Law.

“ Credit Date ” means the date of a Credit Extension.

“ Credit Document ” means any of this Agreement, the Notes, if any, the Canadian Guarantee, the Barbados Guarantee, the Counterpart Agreements, if any, the Collateral Documents, the Canadian Confirmation of Guarantee and Security, any documents or certificates executed by Borrower in favor of Issuing Bank relating to Letters of Credit, and all other documents, instruments or agreements executed and delivered by or on behalf of or at the request of a Credit Party (or any officer of a Credit Party pursuant to the terms hereof) for the benefit of any Agent, Issuing Bank or any Lender in connection herewith on or after the date hereof and all annexes, appendices, schedules and exhibits to any of the foregoing, as may be amended, restated, supplemented or otherwise modified from time to time.

“ Credit Extension ” means the making of a Loan or the issuing of a Letter of Credit.

“ Credit Party ” means Borrower and each Guarantor.

“ Cumulative Consolidated Net Income ” means, as of any date of determination, Consolidated Net Income of Borrower and its Subsidiaries for the period (taken as one accounting period) commencing on the first day of the Fiscal Quarter of Borrower ending on September 30, 2011 and ending on the last day of the most recently ended Fiscal Quarter or Fiscal Year, as applicable, for which financial statements required to be delivered pursuant to Section 5.1(a) or Section 5.1(b), and the related Compliance Certificate required to be delivered pursuant to Section 5.1(c), have been received by Administrative Agent.

“ Currency Agreement ” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with Borrower’s and its Subsidiaries’ operations and not for speculative purposes.

“ Default ” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

“ Default Excess ” means, with respect to any Funds Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Funds Defaulting Lenders (including such Funds Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Funds Defaulting Lender.

“ Default Period ” means, (x) with respect to any Funds Defaulting Lender, the period commencing on the date that such Lender became a Funds Defaulting Lender and ending on the earliest of: (i) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable, (ii) the date on which (a) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non pro rata application of any voluntary or

-20-

mandatory prepayments of the Loans in accordance with the terms of Section 2.13 or Section 2.14 or by a combination thereof) or such Defaulting Lender shall have paid all amounts due under Section 9.6, as the case may be, and (b) such Defaulting Lender shall have delivered to Borrower and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments, and (iii) the date on which Borrower, Administrative Agent and Requisite Lenders waive all failures of such Defaulting Lender to fund or make payments required hereunder in writing; and (y) with respect to any Insolvency Defaulting Lender, the period commencing on the date such Lender became an Insolvency Defaulting Lender and ending on the earliest of the following dates: (i) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable and (ii) the date that such Defaulting Lender ceases to hold any portion of the Loans or Commitments.

“ Defaulted Loan ” means any Revolving Loan or portion of any unreimbursed payment under Section 2.3(b)(v) or 2.4(e) not made by any Lender when required hereunder.

“ Defaulting Lender ” means any Funds Defaulting Lender or Insolvency Defaulting Lender.

“ Defined Benefit Plan ” means any Canadian Employee Benefit Plan which contains a “defined benefit provision,” as defined in subsection 147.1(1) of the Income Tax Act (Canada).

“ Delayed Draw Commitment ” as defined in the Second Amended and Restated Credit Agreement.

“ Delayed Draw Term Loan ” means a Tranche A Term Loan made by a Lender pursuant to Section 2.1(a)(ii) of the Second Amended and Restated Credit Agreement.

“ Deposit Account ” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.

“ Dermik Acquisition ” means the acquisition of certain assets and rights, and assumption of certain liabilities, relating to Dermik, a business unit of Sanofi, by Borrower and certain of its wholly-owned Subsidiaries pursuant to that certain asset purchase agreement, dated as of July 8, 2011, by and among Sanofi, Borrower and Valeant International (Barbados) SRL, including the disclosure letter, schedules, annexes and exhibits attached thereto and all material documents related to the consummation of the transactions contemplated thereby, as amended, modified and supplemented.

“ Designated Noncash Consideration ” means non-Cash consideration received by Borrower or any of its Subsidiaries in connection with an Asset Sale that is designated by Borrower as Designated Noncash Consideration, less the amount of Cash received in connection with a subsequent sale of such Designated Noncash Consideration, which Cash shall be considered Net Asset Sale Proceeds received as of such date and shall be applied pursuant to Section 2.14(a).

“ Disqualified Equity Interests ” means any Equity Interest which, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (i) matures or is mandatorily redeemable (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), pursuant to a sinking fund obligation or otherwise, (ii) is redeemable at the option of the holder thereof (other than solely for Equity Interests which are not otherwise Disqualified Equity Interests), in whole or in part, (iii) provides for scheduled payments or dividends in cash, or (iv) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case,

-21-

prior to the date that is 91 days after the latest Term Loan Maturity Date, except, in the case of clauses (i) and (ii), if as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of such a change of control or asset sale event are subject to the prior payment in full of all Obligations (other than contingent amounts not yet due), the cancellation or expiration of all Letters of Credit and the termination of the Commitments).

“ Dollars ” and the sign “ $ ” mean the lawful money of the United States of America.

“ Domestic Subsidiary ” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

“ Eligible Assignee ” means any Person other than a natural Person that is (i) a Lender, an Affiliate of any Lender or a Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof) or (ii) a commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act or as defined under the Canadian Securities Administrators National Instrument 45-106, as amended, supplemented, replaced or otherwise modified from time to time) and which extends credit or buys loans in the ordinary course of business; provided , neither any Credit Party nor any Affiliate thereof shall be an Eligible Assignee.

“ Eligible Escrow Investments ” means (x)(1) securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (provided, that the full faith and credit of the U.S. is pledged in support thereof) having repricings or maturities of not more than one year from the date of acquisition; (2) certificates of deposit and time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any United States commercial bank having capital and surplus in excess of $500,000,000 and a Thomson Bank Watch Rating of “B” or better; (3) repurchase obligations with a term of not more than 14 days for underlying securities of the types described in clauses (1) and (2) above entered into and (y) money market funds that invest solely in investments of the kinds described in clauses (1) through (3) of subclause (x) above.

“ Employee Benefit Plan ” means, in respect of any Credit Party, any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Borrower, any of its Subsidiaries or any of its ERISA Affiliates in each case other than any Canadian Employee Benefit Plan.

“ Environmental Claim ” means any notice of violation, claim, legal charge, action, suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise), by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of or liability under any Environmental Law; (ii) in connection with any Hazardous Material or any actual or alleged Release or threat of Release of any Hazardous Materials; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.

“ Environmental Laws ” means the common law, any and all foreign or domestic, federal, state or provincial (or any subdivision of either of them) statutes, ordinances, by-laws, orders, rules, codes, guidelines, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) the generation, use, storage, treatment, presence, handling, abatement, remediation, transportation or Release or threat of Release of Hazardous Materials; (ii) as it relates to exposure to Hazardous Materials, occupational safety and health and industrial hygiene; or (iii) land use or the protection of the environment, natural resources, or human, plant or animal safety, health or welfare, in each of cases (i) through (iii), in any manner applicable to Borrower or any of its Subsidiaries or any Facility.

-22-

“ Equity Interests ” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing (excluding convertible securities to the extent constituting “Indebtedness” for purposes of this Agreement).

“ Equivalent Amount ” means, at any time, (a) with respect to Dollars or an amount denominated in Dollars, such amount and (b) with respect to an amount denominated in a currency other than Dollars, the equivalent amount thereof in Dollars at such time on the basis of the Spot Rate as of such time for the purchase of Dollars with such currency.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.

“ ERISA Affiliate ” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Borrower or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Borrower or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Borrower or such Subsidiary and with respect to liabilities arising after such period for which Borrower or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

“ ERISA Event ” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30 day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(c) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 430(j) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefore, or the receipt by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of fines,

-23-

penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien on the assets of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 430(k) of the Internal Revenue Code or ERISA or a violation of Section 436 of the Internal Revenue Code by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates.

“ Escrow Account ” means a deposit or securities account at a financial institution (such institution, the “ Escrow Agent ”) into which the Escrowed Funds are deposited.

“ Escrow Acquisition ” has the meaning given to such term in the definition of the term “ Acquisition Escrow Debt .”

“ Escrow Acquisition Termination Date ” means the agreed “termination date” of any Escrow Acquisition.

“ Escrow Agent ” shall have the meaning given to such term in the definition of the term “ Escrow Account .”

“ Escrow Issuer ” means a newly-formed, wholly-owned subsidiary of Borrower, which, prior to the consummation of the Medicis Acquisition, shall have no operations, assets or activities, other than the entering into of the New Senior Notes Documents, the issuance of the New Senior Notes, and activities incidental thereto, including the deposit of the Escrow Funds in the Escrow Account.

“ Escrowed Funds ” means an amount, in cash or Eligible Escrow Investments, not to exceed the sum of (a) the issue price of the New Senior Notes, plus (b) the Additional Escrow Amount, plus (c) so long as they are retained in the Escrow Account, any income, proceeds or products of the foregoing.

“ Eurodollar Rate Loan ” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate.

“ Event of Default ” means each of the conditions or events set forth in Section 8.1.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.

“ Excluded Subsidiary ” means (a) any Subsidiary that is not a wholly-owned Subsidiary and (b) any Immaterial Subsidiary.

“ Excluded Taxes ” means, with respect to any Agent, any Lender (including each Swing Line Lender and Issuing Bank) or any other recipient of any payment to be made by or on account of any obligation of any Credit Party hereunder or under any other Credit Document, (a) any Taxes imposed on (or measured by) its net income or profits (or any franchise or similar Taxes in lieu thereof) or, in the case of Canada, capital, by a jurisdiction as a result of (i) the recipient being organized, resident or, in the case of any Lender, having its lending office located or (ii) the recipient carrying on or being engaged in or being

-24-

deemed to carry on or be engaged in a trade or business (including having a permanent establishment) for Tax purposes (other than any trade or business arising or deemed to arise from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transactions pursuant to, or enforced, any Credit Documents), in such jurisdiction (including any political subdivision of such jurisdiction), (b) any branch profits tax within the meaning of section 884(a) of the Internal Revenue Code or similar Tax imposed by any jurisdiction described in clause (a) and (c) any withholding tax (including U.S. federal backup withholding tax) that is attributable to a Lender’s failure to comply with Section 2.20(d) .

“ Existing Revolving Loans ” as defined in Section 2.26(b).

“ Existing Revolving Tranche ” as defined in Section 2.26(b).

“ Existing Term Loan Tranche ” as defined in Section 2.26(a).

“ Existing Tranche ” shall mean any Existing Term Loan Tranche or Existing Revolving Tranche, as applicable.

“ Extended Revolving Commitments ” as defined in Section 2.26(b).

“ Extended Revolving Loans ” as defined in Section 2.26(b).

“ Extended Revolving Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Extended Revolving Loans of such Lender.

“ Extended Term Loans ” as defined in Section 2.26(a).

“ Extended Term Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Extended Term Loans of such Lender.

“ Extending Lender ” as defined in Section 10.5(d) 2.26(c).

“ Extension Amendment ” as defined in Section 2.26(d).

“ Extension Date ” means any date on which any Existing Term Loan Tranche or Existing Revolving Tranche is modified to extend the related scheduled maturity date(s) in accordance with Section 2.26 (with respect to the Lenders under such Existing Term Loan Tranche or Existing Revolving Tranche which agree to such modification).

“ Extension Election ” as defined in Section 2.26(c).

“ Extension Request ” means any Term Loan Extension Request or Revolving Extension Request.

“ Extension Tranche ” means all Extended Term Loans of the same tranche or Extended Revolving Commitments of the same tranche that are established pursuant to the same Extension Amendment (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that the Extended Term Loans or Extended Revolving Commitments, as applicable, provided for therein are intended to be a part of any previously established Extension Tranche).

“ Facility ” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Borrower or any of its Subsidiaries or any of their respective predecessors or Affiliates.

-25-

“ Federal Funds Effective Rate ” means, for any day, the rate per annum (expressed as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that, (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average (rounded upwards, if necessary, to the next higher 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.

“ Financial Officer Certification ” means, with respect to the financial statements for which such certification is required, the certification of the chief financial officer (or the equivalent thereof) of Borrower that such financial statements fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year end adjustments.

“ Financial Plan ” as defined in Section 5.1(i).

“ First Amended and Restated Credit Agreement ” as defined in the recitals.

“ First Restatement Date ” means August 10, 2011.

“ First Priority ” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.

“ Fiscal Quarter ” means a fiscal quarter of any Fiscal Year.

“ Fiscal Year ” means the fiscal year of Borrower and its Subsidiaries ending on December 31 of each calendar year.

“ Flood Hazard Property ” means any Real Estate Asset subject to a Mortgage in favor of Collateral Agent, for the benefit of the Secured Parties, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.

“ Foreign Security Agreements ” as defined in Section 10.29.

“ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.

“ Funding Notice ” means a notice substantially in the form of Exhibit A-1.

“ Funds Defaulting Lender ” means any Lender who (i) defaults in its obligation to fund any Revolving Loan or its portion of any unreimbursed payment under Section 2.3(b)(v) or 2.4(e) or its Pro Rata Share of any payment under Section 9.6, (ii) has notified Borrower or Administrative Agent in writing, or has made a public statement, that it does not intend to comply with its obligation to fund any Revolving Loan or its portion of any unreimbursed payment under Section 2.3(b)(v) or 2.4(e) or its Pro Rata Share of any payment under Section 9.6, (iii) has failed to confirm that it will comply with its obligation to fund any Revolving Loan or its portion of any unreimbursed payment under Section 2.3(b)(v) or 2.4(e) or its Pro Rata Share of any payment under Section 9.6 within five Business Days after written request for such confirmation from Administrative Agent (which request may only be made after all conditions to funding

-26-

have been satisfied); provided that such Lender shall cease to be a Funds Defaulting Lender upon receipt of such confirmation by Administrative Agent, or (iv) has failed to pay to Administrative Agent or any other Lender any amount (other than its portion of any Revolving Loan or amounts required to be paid under Section 2.3(b)(v), 2.4(e) or 9.6 or any other amount that is de minimis) due under any Credit Document within five Business Days of the date due, unless such amount is the subject of a good faith dispute.

“ GAAP ” means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles in effect as of the date of determination thereof.

“ Governmental Acts ” means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority.

“ Governmental Authority ” means any federal, state, provincial, territorial, municipal, national or other government, governmental department, commission, board, bureau, court, agency, organization, central bank, tribunal or instrumentality or political subdivision thereof or any other entity, officer or examiner exercising executive, legislative, judicial, regulatory, governmental (quasi-governmental) or administrative functions of or pertaining to any government or any court or central bank, in each case whether associated with a state of the United States, the United States, a province or territory of Canada, Canada, Barbados, or a foreign entity or government.

“ Governmental Authorization ” means any permit, license, approval, authorization, plan, directive, direction, certificate, accreditation, registration, notice, agreement, consent order or consent decree or other like instrument of, from or required by any Governmental Authority.

“ Grantor ” means Borrower and each of its Subsidiaries, in each case granting a Lien to Collateral Agent to secure any Obligations.

“ GSLP ” as defined in the preamble hereto.

“ Guarantee ” of or by any Person (the “ guarantor ”) means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation, provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” as a verb has a corresponding meaning.

“ Guaranteed Obligations ” as defined in Section 7.1.

“ Guarantor ” means, (i) on the Third Restatement Date, each of Borrower’s Subsidiaries listed on Schedule 1.1(b) and (ii) thereafter, any Person that executes a Counterpart Agreement, pursuant to Section 5.10.

“ Guarantor Subsidiary ” means each Guarantor other than Borrower.

-27-

“ Guaranty ” means the guaranty of each Guarantor set forth in Section 7.

“ Hazardous Materials ” means any chemical, material or substance: (i) that is prohibited, limited, restricted or otherwise regulated under Environmental Laws, (ii) that may or could reasonably be expected to pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment, or (iii) that are included in the definition of “hazardous substances,” “waste,” “hazardous waste,” “hazardous materials,” “toxic substances,” “pollutants,” “polluting substance,” “contaminants,” “contamination,” “dangerous goods,” “deleterious substances” or words of similar import under any Environmental Law.

“ Hedge Agreement ” means any agreement with respect to any swap, forward, future or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value, any Interest Rate Agreement or any similar transaction or combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of Borrower or any of its Subsidiaries shall be a Hedge Agreement.

“ Highest Lawful Rate ” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such Applicable Law which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than Applicable Law now allows.

“ Historical Financial Statements ” means as of the Third Restatement Date, (i) the audited consolidated financial statements of Borrower and its Subsidiaries, for the immediately preceding three Fiscal Years ended more than 90 days prior to the Third Restatement Date, consisting of consolidated balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years, and (ii) the unaudited consolidated financial statements of Borrower and its Subsidiaries as of the most recent ended Fiscal Quarter after the date of the most recent audited consolidated financial statements and ended at least 45 days prior to the Third Restatement Date, consisting of a consolidated balance sheet and the related consolidated statements of income and cash flows for the three-, six- or nine-month period, as applicable, ending on such date, and, in each case, certified by the chief financial officer of Borrower that they fairly present, in all material respects, the financial condition of Borrower and its Subsidiaries, respectively, as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject to changes resulting from audit and normal year end adjustments and the absence of footnotes in the case of the unaudited consolidated financial statements.

“ Immaterial Subsidiary ” means any Subsidiary of Borrower, designated in writing to Administrative Agent by Borrower as an “Immaterial Subsidiary,” that, individually and collectively with all other Immaterial Subsidiaries as of the relevant date of determination, has (i) total assets as of such date of less than 7.5% of Consolidated Total Assets as of such date and (ii) total revenues for the ended four-fiscal-quarter period most recently ended prior to such date of less than 7.5% of the consolidated total revenues of Borrower and its Subsidiaries for such period. It is understood and agreed that Borrower may, from time to time, redesignate any Immaterial Subsidiary as a non-Immaterial Subsidiary to the extent that the requirements set forth in Section 5.10 are satisfied with respect to such Subsidiary at or prior to the date of such redesignation.

“ Increased Amount Date ” as defined in Section 2.25.

“ Increased Cost Lender ” as defined in Section 2.23.

-28-

“ Indebtedness ” means, as applied to any Person, without duplication, (i) all indebtedness of such Person for borrowed money (including for the avoidance of doubt, convertible debt securities); (ii) that portion of obligations of such Person with respect to Capital Leases that is properly classified as a liability on a balance sheet of such Person in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit to such Person whether or not representing obligations for borrowed money; (iv) any obligation of such Person owed for all or any part of the deferred purchase price of property or services including any earn out obligations to the extent required to be reflected on a consolidated balance sheet of Borrower prepared in accordance with GAAP (excluding any such obligations incurred under ERISA), which purchase price is (a) due more than twelve months from the date of incurrence of the obligation in respect thereof or (b) evidenced by a note or similar written instrument; (v) all indebtedness of such Person secured by any Lien on any property or asset owned or held by such Person regardless of whether the indebtedness secured thereby shall have been assumed by such Person or is nonrecourse to the credit of such Person; (vi) the face amount of any letter of credit issued for the account of such Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) Disqualified Equity Interests issued by such Person; (viii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co making, discounting with recourse or sale with recourse by such Person of the obligation of another Person to the extent such obligation would constitute Indebtedness pursuant to any of clauses (i) through (vii) or clause (xi) hereof; (ix) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation constituting Indebtedness pursuant to clauses (i) through (vii) or (xi) hereof of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (x) any liability of such Person for an obligation constituting Indebtedness pursuant to clauses (i) through (vii) or (xi) hereof of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (x), the primary purpose or intent thereof is as described in clause (ix) above; and (xi) the Net Mark-to-Market Exposure of any Hedge Agreement. The amount of Indebtedness of any Person for purposes of clause (v) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (i) the aggregate unpaid amount of such Indebtedness and (ii) the fair market value of the property encumbered thereby as determined by such Person in good faith.

“ Indemnified Liabilities ” means, collectively, any and all liabilities, obligations, losses, damages (expectation, reliance or otherwise, and including natural resource damages), penalties, claims (including Environmental Claims), fines, orders, actions, judgments, suits, costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Release or threat of Release of Hazardous Materials) and expenses (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding or hearing commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any Applicable Law or on contract or otherwise, that may be issued to, imposed on, incurred or suffered by, or asserted against any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make Credit Extensions (including, for the avoidance of doubt, any Issuing Bank agreement to issue Letters of Credit), the syndication of the credit facilities provided for herein or the use or intended use of the proceeds thereof, or any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)) or (ii) any Environmental Claim or any Release or threat of

-29-

Release of Hazardous Materials related to Borrower or any of its Subsidiaries, including such claims or activities relating to or arising from, directly or indirectly, any past or present activity, operation, land ownership, occupation or use, or practice by or of Borrower or any of its Subsidiaries.

“ Indemnified Taxes ” means any Taxes other than Excluded Taxes and Other Taxes.

“ Indemnitee ” as defined in Section 10.3(a).

“ Indemnitee Agent Party ” as defined in Section 9.6.

“ Initial Draw Tranche A Term Loan ” means a Tranche A Term Loan made by a Lender to Borrower pursuant to Section 2.1(a)(i) of the Second Amended and Restated Credit Agreement.

“ Insolvency Defaulting Lender ” means any Lender with a Revolving Commitment or Term Loan Commitment who (i) has been adjudicated as, or determined by any Governmental Authority having regulatory authority over such Person or its assets to be, insolvent, (ii) becomes the subject of an insolvency, bankruptcy, dissolution, liquidation or reorganization proceeding, or (iii) becomes the subject of an appointment of a receiver, intervenor or conservator under any Insolvency Laws now or hereafter in effect; provided that a Lender shall not be an Insolvency Defaulting Lender solely by virtue of the ownership or acquisition by a Governmental Authority or an instrumentality thereof of any Equity Interest in such Lender or a parent company thereof.

“ Insolvency Laws ” means any of the Bankruptcy Code, the BIA, the CCAA, the WURA and the CBCA, and any other applicable insolvency, corporate arrangement or restructuring or other similar law of any jurisdiction including any law of any jurisdiction permitting a debtor to obtain a stay or a compromise of the claims of its creditors against it.

“ Installment ” as defined in Section 2.12.

“ Installment Date ” as defined in Section 2.12.

“ Intellectual Property ” as defined in the Second Amended and Restated Pledge and Security Agreement, the Canadian Pledge and Security Agreement, the Quebec Security Documents, the Barbados Security Documents, the Luxembourg Security Documents and the Swiss Security Documents, as applicable.

“ Intellectual Property Security Agreements ” has the meaning assigned to that term in the Second Amended and Restated Pledge and Security Agreement and the Canadian Pledge and Security Agreement, as applicable.

“ Intercompany Note ” means a promissory note substantially in the form of Exhibit J-1 evidencing Indebtedness owed among Credit Parties and their Subsidiaries.

“ Interest Coverage Ratio ” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Adjusted EBITDA for the four Fiscal Quarter period then ended to (ii) Consolidated Interest Expense for such four Fiscal Quarter period.

“ Interest Payment Date ” means with respect to (i) any Loan that is a Base Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Third Restatement Date, and the final maturity date of such Loan; and (ii) any Loan that is a Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided that, in the case of each Interest Period of longer than three months “Interest Payment Date” shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period.

-30-

“ Interest Period ” means, in connection with a Eurodollar Rate Loan, an interest period of one, two, three or six months (or interest periods of nine or twelve months if mutually agreed upon by Borrower and the applicable Lenders), as selected by Borrower in the applicable Funding Notice or Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the day on which the immediately preceding Interest Period expires; provided that, (a) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of a calendar month; (c) no Interest Period with respect to any portion of any Class of Term Loans shall extend beyond such Class’s Term Loan Maturity Date; and (d) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Commitment Termination Date.

“ Interest Rate Agreement ” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement.

“ Interest Rate Determination Date ” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.

“ Internal Revenue Code ” means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, and any successor statute.

“ Internally Generated Cash ” means, with respect to any period, any cash of Borrower and its Subsidiaries generated during such period, excluding Net Asset Sale Proceeds, Net Insurance/Condemnation Proceeds and any cash that is received from an incurrence of Indebtedness, an issuance of Equity Interests or a capital contribution.

“ Investment ” means (i) any direct or indirect purchase or other acquisition by Borrower or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than a Guarantor Subsidiary); (ii) any direct or indirect purchase or other acquisition for value, by any Subsidiary of Borrower from any Person (other than Borrower or any other Credit Party), of any Equity Interests of such Person; (iii) any direct or indirect loan, advance (other than advances to employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contributions by Borrower or any of its Subsidiaries to any other Person (other than Borrower or any other Credit Party), including all indebtedness and accounts receivable from that other Person that are not current assets or did not arise from sales to that other Person in the ordinary course of business and (iv) all investments consisting of any exchange traded or over the counter derivative transaction, including any Interest Rate Agreement and Currency Agreement, whether entered into for hedging or speculative purposes. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write ups, write downs or write offs with respect to such Investment, less an amount equal to any returns of capital or sale proceeds actually received in cash in respect of any such Investment (which amount shall not exceed the amount of such Investment valued at cost at the time such Investment was made).

“ Issuance Notice ” means an Issuance Notice in form and substance reasonably satisfactory to Issuing Bank.

-31-

“ Issuing Bank ” means JPMorgan Chase Bank, N.A., including its affiliates and branches, in its capacity as Issuing Bank hereunder, together with its permitted successors and assigns in such capacity.

“ Joinder Agreement ” means an agreement substantially in the Form of Exhibit K.

“ Joint Venture ” means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form and, for the avoidance of doubt, includes a Specified Joint Venture.

“ Judgment Conversion Date ” as defined in Section 10.24(a).

“ Judgment Currency ” as defined in Section 10.24(a).

“ Lender ” means each financial institution listed on the signature pages hereto as a Lender, and any other Person that becomes a party hereto pursuant to an Assignment Agreement or a Joinder Agreement.

“ Lender Counterparty ” means, at any time, each Person that is a counterparty to a Hedge Agreement or Cash Management Agreement, provided that such Person is a Lender, an Agent, or an Affiliate of a Lender or Agent at such time or was a Lender, an Agent or an Affiliate of a Lender or Agent, at the time such Hedge Agreement or Cash Management Agreement was entered into or, in the case of any such Hedge Agreement or Cash Management Agreement in effect as of the Third Restatement Date, Second Restatement Date, First Restatement Date, Original Closing Date or any time prior thereto, is a Lender, an Agent or an Affiliate of a Lender or an Agent as of the Third Restatement Date, Second Restatement Date, First Restatement Date or Original Closing Date.

“ Letter of Credit ” means a commercial or standby letter of credit issued or to be issued by Issuing Bank pursuant to this Agreement.

“ Letter of Credit Sublimit ” means, as of any date of determination, the lesser of (i) $100,000,000 and (ii) the aggregate unused amount of the Revolving Commitments then in effect.

“ Letter of Credit Usage ” means, as of any date of determination, the sum of (i) the maximum aggregate amount which is, or at any time thereafter may become, available for drawing under all Letters of Credit then outstanding, and (ii) the aggregate amount of all drawings under Letters of Credit honored by Issuing Bank and not theretofore reimbursed by or on behalf of Borrower.

“ Leverage Ratio ” means the ratio as of the last day of any Fiscal Quarter of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending on such date.

“ Lien ” means (i) any lien, mortgage, hypothecation, deed of trust, pledge, assignment, security interest, charge, deposit arrangement or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease or license in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing and (ii) in the case of Securities, any purchase option, call or similar right of a third party with respect to such Securities.

“ Loan ” means any of a Tranche A Term Loan, a Tranche B Term Loan, a New Term Loan, a Revolving Loan and a Swing Line Loan.

-32-

“ Luxembourg Guarantor ” means Biovail International, S.à r.l., a private limited liability company ( société à responsabilité limitée ) organized under the laws of Luxembourg, and each other Guarantor that is organized under the laws of Luxembourg.

“ Luxembourg Security Documents” means each of the documents set forth on Schedule 5.10(c), dated as of the Second Restatement Date, as each of such documents may be amended, restated, supplemented or otherwise modified from time to time and additional analogous agreements as may be entered into from time to time in accordance with Section 5.10 and as required by the Collateral Documents.

“ Margin Stock ” as defined in Regulation U.

“ Material Adverse Effect ” means a material adverse effect on (i) the business, operations, properties, assets or condition (financial or otherwise) of Borrower and its Subsidiaries taken as a whole, (ii) the ability of any Credit Party to fully and timely pay its Obligations when due or (iii) the rights, remedies and benefits available to, or conferred upon, any Agent and any Lender or any Secured Party under any Credit Document.

“ Material Real Estate Asset ” means any fee owned Real Estate Asset having a fair market value in excess of $20,000,000; provided that in no event shall Material Real Estate Assets include the Real Estate Assets of Borrower and its Subsidiaries owned as of the Original Closing Date and located in (a) Carolina, Puerto Rico and (b) Christ Church, Barbados.

“ Maximum Amount ” as defined in 7.13(a).

“ Medicis Acquisition ” means the acquisition of Medicis Pharmaceutical Corporation pursuant to the Medicis Acquisition Agreement.

“ Medicis Acquisition Agreement ” means the Agreement and Plan of Merger (together with all exhibits and schedules thereto, as the same may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, collectively, the “ Medicis Acquisition Agreement ”), dated as of September 2, 2012, among the Borrower, VPI, one of Borrower’s other wholly owned U.S. domiciled subsidiaries and Medicis Pharmaceutical Corporation.

“ Medicis Transactions ” means collectively, (a) the Medicis Acquisition and other related transactions contemplated by the Medicis Acquisition Agreement; (b) the incurrence of new Term Loans hereunder pursuant to a Joinder Agreement in accordance with Section 2.25 to be entered into after the Amendment No. 2 Effective Date; (c) the issuance of the New Senior Notes; and (d) the payment of all fees and expenses owing in connection with the foregoing.

“ Merger Agreement ” means the Agreement and Plan of Merger, dated as of June 20, 2010, among Borrower, VPI, Biovail Americas Corp. and Beach Merger Corp., together with all exhibits, schedules, documents, agreements, and instruments executed and delivered in connection therewith, as the same may be amended or modified in accordance with the terms thereof.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Mortgage ” means a mortgage, deed of trust, debenture or similar document creating a Lien on real property, in form and substance reasonably satisfactory to the Collateral Agent, as it may be amended, restated, supplemented or otherwise modified from time to time.

-33-

“ Multiemployer Plan ” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA.

“ Narrative Report ” means, with respect to the financial statements for which such narrative report is required, a narrative report describing the operations of Borrower and its Subsidiaries that complies with the applicable requirements under the Exchange Act for a “Management Discussion and Analysis” for the applicable Fiscal Quarter or Fiscal Year and for the period from the beginning of the then current Fiscal Year to the end of such period to which such financial statements relate.

“ Net Asset Sale Proceeds ” means, with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise (including by way of milestone payment), but only as and when so received) received by Borrower or any of its Subsidiaries from such Asset Sale, minus (ii) any reasonable fees and out-of-pocket expenses and bona fide direct costs incurred in connection with such Asset Sale, including (a) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, (c) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s indemnities, contributions, cost sharings and representations and warranties to purchaser or any advisor in respect of such Asset Sale undertaken by Borrower or any of its Subsidiaries in connection with such Asset Sale and (d) fees paid for legal and financial advisory services in connection with such Asset Sale; provided that proceeds from Asset Sales permitted under clause (e) of Section 6.8, shall not be included in the calculation of proceeds for purposes of this definition except as expressly set forth in such clause.

“ Net Insurance/Condemnation Proceeds ” means an amount equal to: (i) any Cash payments or proceeds received by Borrower or any of its Subsidiaries (a) under any property damage or casualty insurance policies in respect of any covered loss thereunder or (b) as a result of the taking of any assets of Borrower or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (a) any actual and reasonable costs incurred by Borrower or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Borrower or such Subsidiary in respect thereof, and (b) any reasonable fees and out-of-pocket expenses and bona fide direct costs incurred in connection with any sale of such assets as referred to in clause (i)(b) of this definition, including income taxes payable as a result of any gain recognized in connection therewith.

“ Net Mark-to-Market Exposure ” of a Person means, as of any date of determination, the excess (if any) of all unrealized losses over all unrealized profits of such Person arising from Hedge Agreements. As used in this definition, “unrealized losses” means the fair market value of the cost to such Person of replacing such Hedge Agreement as of the date of determination (assuming the Hedge Agreement were to be terminated as of that date), and “unrealized profits” means the fair market value of the gain to such Person of replacing such Hedge Agreement as of the date of determination (assuming such Hedge Agreement were to be terminated as of that date).

“ New Revolving Loan Commitment Effective Date ” means September 11, 2012.

“ New Revolving Loan Lender ” as defined in Section 2.25.

“ New Revolving Loan Commitments ” as defined in Section 2.25.

-34-

“ New Revolving Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the New Revolving Loans of such Lender.

“ New Revolving Loan Maturity Date ” means the date on which New Revolving Loans of a Series shall become due and payable in full hereunder, as specified in the applicable Joinder Agreement, including by acceleration or otherwise.

“ New Revolving Loans ” as defined in Section 2.25.

“ New Senior Notes ” means debt securities issued after the Amendment No. 2 Effective Date of the Escrow Issuer to finance a portion of the Medicis Transactions; provided that the net proceeds of such debt securities are deposited into the Escrow Account upon the issuance thereof.

“ New Senior Notes Documents ” means the New Senior Notes Indenture, the New Senior Notes Escrow Documents and any other documents entered into by the Borrower, VPI and/or Escrow Issuer in connection with the New Senior Notes; provided that such documents shall require that (a) if the Medicis Acquisition shall not be consummated on or before the Termination Date, the New Senior Notes shall be redeemed in full (the “ New Senior Notes Redemption ”) no later than the third Business Day after the Termination Date and (b) the Escrowed Funds shall be released from the Escrow Account before the Termination Date or within three Business Days after the Termination Date (A) upon the consummation of the Medicis Transactions and applied to finance a portion of the Medicis Acquisition or (B) to effectuate the New Senior Notes Redemption.

“ New Senior Notes Escrow Documents ” means the agreement(s) governing the Escrow Account and any other documents entered into in order to provide the Escrow Agent (or its designee) a Lien on the Escrowed Funds.

“ New Senior Notes Indenture ” means the indenture pursuant to which the New Senior Notes shall be issued.

“ New Senior Notes Redemption ” shall have the meaning given to such term in the definition of the term New Senior Notes Documents.

“ New Term Loan Commitments ” as defined in Section 2.25.

“ New Term Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the New Term Loans of such Lender.

“ New Term Loan Lender ” as defined in Section 2.25.

“ New Term Loan Maturity Date ” means the date on which New Term Loans of a Series shall become due and payable in full hereunder, as specified in the applicable Joinder Agreement, including by acceleration or otherwise.

“ New Term Loans ” as defined in Section 2.25.

“ Non-Consenting Lender ” as defined in Section 2.23.

“ Non-Public Information ” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation FD.

-35-

“ Not Otherwise Applied ” means, with reference to any amount of any transaction or event, that such amount (i) was not required to be applied to prepay the Loans pursuant to Section 2.14, and (ii) was not previously applied in determining the permissibility of a transaction under the Credit Documents where such permissibility was (or may have been) contingent on the receipt or availability of such amount.

“ Note ” means a Tranche A Term Loan Note, a Tranche B Term Loan Note, a Revolving Loan Note or a Swing Line Note.

“ Notice ” means a Funding Notice, an Issuance Notice, or a Conversion/Continuation Notice.

“ Obligation Currency ” as defined in Section 10.24(a).

“ Obligations ” means all obligations of every nature of each Credit Party (and, with respect to any obligations in respect of Hedge Agreements and Cash Management Agreements, any Subsidiary of a Credit Party) owing to any Secured Party (including former Agents) (but limited, in the case of obligations in respect of Hedge Agreement and Cash Management Agreements, to those obligations owing to Lender Counterparties) under any Credit Document, Hedge Agreement or Cash Management Agreement whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party (or, with respect to any obligations in respect of Hedge Agreements and Cash Management Agreements, any Subsidiary of a Credit Party) for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Hedge Agreements or Cash Management Agreements, fees, expenses, indemnification or otherwise.

“ Obligee Guarantor ” as defined in Section 7.7.

“ OFAC ” as defined in Section 4.25.

“ Organizational Documents ” means (i) with respect to any corporation or company or society with restricted liability, its certificate, memorandum or articles of incorporation, organization, association or amalgamation or other constituting documents, in each case, as amended, and its by laws, as amended, (ii) with respect to any limited partnership, its certificate or declaration of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a Governmental Authority, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such Governmental Authority.

“ Original Closing Date ” means June 29, 2011.

“ Original Credit Agreement ” as defined in the recitals.

“ Orthodermatologics Acquisition ” means the acquisition of certain assets and rights, and assumption of certain liabilities, relating to the Ortho Dermatologics Division of Janssen Pharmaceuticals, Inc., a Subsidiary of Johnson & Johnson, by certain wholly-owned Subsidiaries of Borrower, pursuant to that certain asset purchase agreement, dated as of July 15, 2011, by and among Janssen Pharmaceuticals, Inc., Valeant Pharmaceuticals North America LLC, Valeant International (Barbados) SRL and, solely for the purposes set forth therein, Valeant Pharmaceuticals International, Inc., including all schedules,

-36-

annexes and exhibits attached thereto and all material documents related to the consummation of the transactions contemplated thereby, as amended, modified and supplemented.

“ Other Taxes ” as defined in Section 2.20(e).

“ Parallel Debt ” means in relation to an Underlying Debt an obligation to pay to the Administrative Agent an amount equal to (and in the same currency as) the amount of the Underlying Debt.

“ PATRIOT Act ” means the Uniting and Strengthening America by providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001).

“ PBGC ” means the Pension Benefit Guaranty Corporation or any successor thereto.

“ PCTFA ” as defined in Section 4.23.

“ Pension Plan ” means, in respect of any Credit Party, any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

“ Permitted Acquisition ” means any acquisition by Borrower or any of its wholly owned Subsidiaries, whether by purchase, merger, amalgamation or otherwise, of all or substantially all of the assets of, all of the Equity Interests of, or a business line or unit or a division of, or a product or a product candidate of, any Person; provided that:

(i) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(ii) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all Applicable Law and in conformity with all applicable Governmental Authorizations;

(iii) in the case of the acquisition of Equity Interests, (a) all of the Equity Interests (except for any such Securities in the nature of directors’ qualifying shares required pursuant to Applicable Law) acquired or otherwise issued by such Person or any newly formed Subsidiary of Borrower in connection with such acquisition shall be owned 100% by Borrower or a Guarantor Subsidiary, and (b) Borrower shall have taken, or shall promptly cause to be taken and, in any event, shall cause to be taken within 60 days of such acquisition (or such longer period as shall be reasonably acceptable to the Administrative Agent), each of the applicable actions set forth in Section 5.10 (including causing such Subsidiary, other than an Excluded Subsidiary, to become a Guarantor and subject to the Collateral Documents), it being understood that the acquisition of Equity Interests shall constitute a Permitted Acquisition during such period if it satisfies all conditions of the definition of Permitted Acquisition other than those set forth in this clause (iii)(b);

(iv) Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.7 on a Pro Forma Basis after giving effect to such acquisition as of the last day of the Fiscal Quarter most recently ended for which financial statements are required to have been delivered pursuant to Section 5.1(a) or 5.1(b), as applicable (as determined in accordance with Section 1.5);

-37-

(v) in the case of an acquisition involving aggregate consideration in excess of $300,000,000, Borrower shall have delivered to Administrative Agent at least two (2) Business Days prior to the consummation of such proposed acquisition, (i) a Compliance Certificate evidencing compliance with Section 6.7 as required under clause (iv) above and (ii), all other relevant material financial information with respect to such acquired assets, including the aggregate consideration for such acquisition and any other information required to demonstrate compliance with Section 6.7; and

(vi) any Person or assets or division as acquired in accordance herewith shall be in same business or lines of business in which Borrower and/or its Subsidiaries are engaged as of the Third Restatement Date or similar or related or ancillary businesses.

“ Permitted Interim Investment ” means any acquisition by Borrower or any of its wholly owned Subsidiaries of any Equity Interests of any Person, which acquisition has been designated by Borrower in writing to the Administrative Agent as a Permitted Interim Investment; provided that:

(i) such acquisition complies with each of the conditions set forth in clauses (i), (ii), (iv), (v) and (vi) of the definition of Permitted Acquisition;

(ii) at the time of any such acquisition of Equity Interests, the Administrative Agent shall have received a certificate from the chief executive officer or the chief financial officer (or the equivalent thereof) of Borrower certifying that such acquisition is pursuant to a transaction or series of transactions in which Borrower or a wholly owned Subsidiary of Borrower intends to acquire all remaining Equity Interests of such Person such that it becomes a wholly owned Subsidiary of Borrower;

(iii) within 180 days following the initial acquisition of Equity Interests of such Person, Borrower or a wholly owned Subsidiary of Borrower shall have either (x) commenced and have outstanding a tender offer for all remaining Equity Interests of such Person or (y) entered into and have in effect a binding merger or similar agreement with such Person (it being understood and agreed that the satisfaction of the condition contained in this clause (iii) shall be satisfied only if and for so long as any such tender offer remains open and/or such merger or similar agreement remains in effect);

(iv) except as otherwise agreed by the Administrative Agent as a result of any applicable rules and regulations of the Board of Governors, all Equity Interests of such Person owned by Borrower or any of its Subsidiaries shall be pledged, or credited to a securities account at the Collateral Agent, as collateral for the Obligations; and

(v) upon the acquisition of the remaining Equity Interests of such Person such that such Person thereafter becomes a wholly owned Subsidiary of Borrower or any of its Subsidiaries the aggregate Investment represented by the acquisition of Equity Interests in such Person shall either (x) comply with and satisfy the requirements of clause (iii) of the definition of Permitted Acquisition or (y) be made pursuant to and in compliance with Section 6.6(d)(ii) or 6.6(i).

“ Permitted Liens ” means each of the Liens permitted pursuant to Section 6.2.

“ Permitted Majority Investments ” shall have the meaning given to such term in Section 6.6(o).

“ Permitted Secured Notes ” means debt securities of any Credit Party that are secured by a Lien ranking pari passu with or junior to the Liens securing the Obligations; provided that (a) the terms of

-38-

such debt securities do not provide for any scheduled repayment, mandatory redemption or sinking fund obligations prior to the latest Term Loan Maturity Date (other than customary offers to repurchase upon a change of control, asset sale or event of loss and customary acceleration rights after an event of default), (b) the covenants, events of default, guarantees, collateral and other terms of which (other than interest rate and redemption premiums), taken as a whole, are not more restrictive to Borrower or any of its Subsidiaries than those in this Agreement, (c) Borrower will cause the collateral agent or representatives for the holders of Permitted Secured Notes to enter into an intercreditor agreement with Collateral Agent in form and substance usual and customary for transactions of this type and otherwise satisfactory to Collateral Agent in its sole discretion, (d) at the time that any such Permitted Secured Notes are issued (and after giving effect thereto) no Default or Event of Default shall exist, be continuing or result therefrom, (e) on a Pro Forma Basis after giving effect to the incurrence of such Permitted Secured Notes (and the use of proceeds thereof), Borrower shall be in compliance with the covenants set forth in Section 6.7 as of the last day of the most recently ended Fiscal Quarter for which financial statements were required to have been delivered pursuant to Section 5.1(a) or (b), as applicable, in each case, as if such Permitted Secured Notes had been outstanding on the last day of such Fiscal Quarter and (f) no Subsidiary of Borrower (other than a Guarantor) shall be an obligor and no Permitted Secured Notes shall be secured by any collateral other than the Collateral.

“ Person ” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, unlimited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.

“ Platform ” as defined in Section 5.1(n).

“ Post Merger Special Dividend ” as defined in the Merger Agreement.

“ PPSA ” means the Personal Property Security Act (Ontario); provided , however , if the validity, attachment, perfection (or opposability), effect of perfection or of non-perfection or priority of Collateral Agent’s security interest in any Collateral are governed by the personal property security laws or laws relating to personal or movable property of any jurisdiction other than Ontario, PPSA shall also include those personal property security laws or laws relating to movable property in such other jurisdiction for the purpose of the provisions hereof relating to such validity, attachment, perfection (or opposability), effect of perfection or of non-perfection or priority and for the definitions related to such provisions.

“ Pre-Merger Special Dividend ” as defined in the Merger Agreement.

“ Prescription Drug Business ” means the business or businesses comprising Borrower’s and/or its Subsidiaries’ businesses in Europe and Latin America as of the Third Restatement Date.

“ Prime Rate ” means the rate of interest quoted in the print edition of The Wall Street Journal , Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty (30) largest banks), as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Any Agent or any other Lender may otherwise make commercial loans or other loans at rates of interest at, above or below the Prime Rate.

“ Principal Office ” means, for each of Administrative Agent, Swing Line Lender and Issuing Bank, such Person’s “Principal Office” as set forth on Appendix B, or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to Borrower, Administrative Agent and each Lender.

-39-

“ Projections ” as defined in Section 4.8.

“ Pro Forma Basis ” means, with respect to the calculation of the covenants contained in Section 6.7 or for purposes of determining the Interest Coverage Ratio, Leverage Ratio or Secured Leverage Ratio as of any date, that such calculation shall give pro forma effect to all Permitted Acquisitions, Acquisitions, Investments that result in a Person becoming a Subsidiary of Borrower, and all sales, transfers or other dispositions of any material assets outside the ordinary course of business that have occurred during (or, if such calculation is being made for the purpose of determining whether any proposed acquisition will constitute (or will be permitted as) a Permitted Acquisition, or any Indebtedness (including New Term Loans) or Liens may be incurred, since the beginning of) the four consecutive Fiscal Quarter period most-recently ended on or prior to such date as if they occurred on the first day of such four consecutive Fiscal Quarter period (including expected cost savings (without duplication of actual cost savings) to the extent (a) such cost savings would be permitted to be reflected in pro forma financial information complying with the requirements of GAAP and Article 11 of Regulation S-X under the Securities Act as interpreted by the Staff of the Securities and Exchange Commission, and as certified by a financial officer of Borrower or (b) Borrower in good faith believes that such cost savings will be realized within one year after the applicable Permitted Acquisition, Acquisition, Investment or sale, transfer or other disposition of material assets outside the ordinary course of business and all steps necessary for the realization of such cost savings have been taken as certified by a financial officer of Borrower. Notwithstanding the foregoing, for all purposes under this Agreement, other than as permitted by clause (k) of the definition of “Consolidated Adjusted EBITDA,” no cost savings or synergies relating to the 2010 Transactions shall be included for purposes of calculating the covenants (including New Term Loans) contained in Sections 6.1 and 6.7 or for purposes of determining the Interest Coverage Ratio, Leverage Ratio or Secured Leverage Ratio until actually realized. Notwithstanding the foregoing, for all purposes under this Agreement, the amount of cost savings or synergies related to any Permitted Majority Investment that may be included for the purposes of calculating the covenants contained in Sections 6.1 and 6.7 or for purposes of determining the Interest Coverage Ratio, Leverage Ratio or Secured Leverage Ratio shall not exceed the portion of the cost savings or synergies related to the Permitted Majority Investment equal to the percentage of the capital stock of such Permitted Majority Investment owned by the Borrower or any of its Subsidiaries.

“ Pro Rata Share ” means (i) with respect to all payments, computations and other matters relating to the Tranche A Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche A Term Loan Exposure of that Lender by (b) the aggregate Tranche A Term Loan Exposure of all Lenders; (ii) with respect to all payments, computations and other matters relating to the Tranche B Term Loan Commitment or Tranche B Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche B Term Loan Exposure of that Lender by (b) the aggregate Tranche B Term Loan Exposure of all Lenders; (iii) with respect to all payments, computations and other matters relating to the Revolving Commitment or Revolving Loans of any Lender or any Letters of Credit issued or participations purchased therein by any Lender or any participations in any Swing Line Loans purchased by any Lender, the percentage obtained by dividing (a) the Revolving Exposure of that Lender by (b) the aggregate Revolving Exposure of all Lenders (exclusive of the Revolving Exposure of the Swing Line Lender and the Issuing Bank in their capacities as such) and (iv) with respect to all payments, computations, and other matters relating to New Term Loan Commitments or New Term Loans of a particular Series, the percentage obtained by dividing (a) the New Term Loan Exposure of that Lender with respect to that Series by (b) the aggregate New Term Loan Exposure of all Lenders with respect to that Series. For all other purposes with respect to each Lender, “Pro Rata Share” means the percentage obtained by dividing (A) an amount equal to the sum of the Tranche A Term Loan Exposure, the Tranche B Term Loan Exposure, the Revolving Exposure and the New Term Loan Exposure of that Lender, by (B) an amount equal to the sum of the aggregate Tranche A Term Loan Exposure, the Tranche B Term Loan Exposure, the aggregate Revolving Exposure and the aggregate New Term Loan Exposure of all Lenders (exclusive of the Revolving Exposure of the Swing Line Lender and the Issuing Bank in their capacities as such).

-40-

“ Public Lenders ” means Lenders that do not wish to receive material non-public information with respect to Borrower, its Subsidiaries or their respective Securities.

“ Quebec Security Documents ” means each of the documents set forth on Schedule 5.10(b), as each such document may be amended, restated, supplemented or otherwise modified from time to time and additional analogous agreements as may be entered into from time to time in accordance with Section 5.10 and as required by the Collateral Documents.

“ Real Estate Asset ” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by any Credit Party in any real property.

“ Refinancing ” as defined in the recitals.

“ Refinancing Indebtedness ” as defined in Section 6.1(r).

“ Refunded Swing Line Loans ” as defined in Section 2.3(b)(iv).

“ Register ” as defined in Section 2.7(b).

“ Regulation D ” means Regulation D of the Board of Governors, as in effect from time to time.

“ Regulation FD ” means Regulation FD as promulgated by the U.S. Securities and Exchange Commission under the Securities Act and Exchange Act as in effect from time to time.

“ Regulation T ” means Regulation T of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

“ Regulation U ” means Regulation U of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

“ Regulation X ” means Regulation X of the Board of Governors, as in effect from time to time and all official rulings and interpretations thereunder or thereof.

“ Reimbursement Date ” as defined in Section 2.4(d).

“ Related Fund ” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

“ Release ” means any release, spill, emission, emanation, leaking, pumping, pouring, injection, spraying, escaping, deposit, disposal, discharge, dispersal, dumping, abandonment, placing, exhausting, leaching or migration of any Hazardous Material into the indoor or outdoor environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.

“ Replacement Lender ” as defined in Section 2.23.

-41-

“ Repricing Transaction ” means the prepayment or refinancing of all or a portion of the Tranche B Term Loans with the incurrence by any Credit Party of any long-term bank debt financing having an effective interest cost or weighted average yield (excluding any arrangement or commitment fees in connection therewith) that is less than the effective interest cost for or weighted average yield of the Tranche B Term Loans, including without limitation, as may be effected through any amendment to this Agreement relating to the effective interest cost for, or weighted average yield of, the Tranche B Term Loans.

“ Required Prepayment Date ” as defined in Section 2.15(d).

“ Requisite Lenders ” means one or more Lenders having or holding Tranche A Term Loan Exposure, Tranche B Term Loan Exposure, New Term Loan Exposure and/or Revolving Exposure and representing more than 50% of the sum of (i) the aggregate Tranche A Term Loan Exposure of all Lenders, (ii) the aggregate Tranche B Term Loan Exposure of all Lenders, (iii) the aggregate Revolving Exposure of all Lenders and (iv) the aggregate New Term Loan Exposure of all Lenders.

“ Responsible Officer ” means, as applied to any Person, any individual holding the position of chairman of the board (if an officer), chief executive officer, president, vice president (or the equivalent thereof), chief financial officer (or the equivalent thereof) or treasurer of such Person.

“ Restricted Junior Payment ” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Borrower or any of its Subsidiaries (or any direct or indirect parent of Borrower or any of its Subsidiaries) now or hereafter outstanding, except a dividend payable solely in shares of that class of stock (or, in the case of preferred stock, in shares of that class of stock or in common stock) to the holders of that class; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Borrower or any of its Subsidiaries (or any direct or indirect parent thereof) now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Borrower or any of its Subsidiaries (or any direct or indirect parent of Borrower) now or hereafter outstanding; and (iv) any payment or prepayment of principal of, premium, if any, or interest on, or redemption, purchase, retirement, defeasance (including in substance or legal defeasance), sinking fund or similar payment with respect to, any Subordinated Indebtedness owed to a Person that is not Borrower or a Guarantor (other than (x) regularly scheduled payments of interest and principal in respect of any Subordinated Indebtedness and (y) the conversion of convertible securities to common stock of Borrower, in each case in accordance with the terms of, and only to the extent required by, and subject to the subordination provisions contained in, the indenture or other agreement pursuant to which such Subordinated Indebtedness was issued); provided , that in no event shall any payment or other distribution (including, without limitation, upon conversion to common stock of Borrower) in respect of Borrower Convertible Notes or the VPI Convertible Notes and the issuer written call option transactions relating thereto be deemed a Restricted Junior Payment.

“ Restricted Obligations ” as defined in Section 7.13(a).

“ Revolving Commitment ” means the commitment of a Lender to make or otherwise fund any Revolving Loan and to acquire participations in Letters of Credit and Swing Line Loans hereunder and “Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Revolving Commitment, if any, is set forth on Appendix A-1, Schedule A to the Joinder Agreement, dated as of September 11, 2012, Schedule B to Amendment No. 3, Schedule B to Amendment No. 6 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Commitments as of the Amendment No. 6 Revolving Loan Upsize and Extension Effective Date is $1,000,000,000.

-42-

“ Revolving Commitment Period ” means the period from and including the Second Restatement Date to but excluding the Revolving Commitment Termination Date.

“ Revolving Commitment Termination Date ” means (x) with respect to the Revolving Commitments and Revolving Loans outstanding as of the Amendment No. 8 Effective Date, the earliest to occur of (i) April 20, 2018, (ii) the date the such Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14 and (iii) the date of the termination of the such Revolving Commitments pursuant to Section 8.1, and (y) with respect to any other Class of Revolving Commitments and Revolving Loans hereunder created pursuant to an Extension Amendment or Joinder Amendment, the maturity set forth therefor in the applicable Extension Amendment or Joinder Agreement .

“ Revolving Exposure ” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Revolving Commitments, that Lender’s Revolving Commitment as of such date; and (ii) after the termination of the Revolving Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender, (b) in the case of Issuing Bank, the aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of any participations by Lenders in such Letters of Credit), (c) the aggregate amount of all participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing under any Letter of Credit, (d) in the case of Swing Line Lender, the aggregate outstanding principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and (e) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line Loans, in each case as of such date.

“ Revolving Extension Request ” as defined in Section 2.26(b).

“ Revolving Loan ” means a Loan denominated in Dollars made by a Lender to Borrower pursuant to Section 2.2(a), as such Loan (x) may be increased, if applicable, by any New Revolving Loans Commitments, in accordance with Section 2.25 and/or (y) extended, if applicable, by any Extended Revolving Commitment, in accordance with Section 2.26 .

“ Revolving Loan Commitment Increase Joinder Agreement ” means the Joinder Agreement, dated as of September 11, 2012, by and among the Borrower, the Administrative Agent and the New Revolving Loan Lenders party thereto.

“ Revolving Loan Note ” means a promissory note in the form of Exhibit B-1, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ S&P ” means Standard & Poor’s, a Division of The McGraw Hill Companies, Inc.

“ Sanitas Acquisition ” means the acquisition of all of the outstanding shares of AB Sanitas and assumption of certain liabilities of AB Sanitas, to be implemented by acquisition of a controlling interest in AB Sanitas followed by a mandatory tender offer to acquire the remaining shares, pursuant to that certain Share Sale and Purchase Agreement, dated as of May 23, 2011, by and between certain shareholders of AB Sanitas, AB Sanitas and Borrower, including all schedules, annexes and exhibits attached thereto and all material documents related to the consummation of the transactions contemplated thereby, as amended, modified and supplemented, together with subsequent actions to obtain any shares that remain outstanding thereafter.

“ SEC ” means the U.S. Securities and Exchange Commission.

“ Second Amended and Restated Credit Agreement ” as defined in the recitals.

-43-

“ Second Amended and Restated Pledge and Security Agreement ” means the Second Amended and Restated Pledge and Security Agreement, dated as of the Third Restatement Date, among each of the Grantors party thereto and the Collateral Agent, substantially in the form of Exhibit I-1, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ Second Amendment and Restatement Joinder Date ” means December 19, 2011.

“ Second Restatement Date ” means October 20, 2011.

“ Secured Leverage Ratio ” means, as of any date of determination, the ratio, on a Pro Forma Basis, of (a) Consolidated Secured Indebtedness as of such date to (b) Consolidated Adjusted EBITDA for the four Fiscal Quarter period ending on such date.

“ Secured Parties ” has the meaning assigned to that term in the Second Amended and Restated Pledge and Security Agreement, the Canadian Pledge and Security Agreement, the Quebec Security Documents, the Barbados Security Documents, the Luxembourg Security Documents and the Swiss Security Documents, in each case as applicable.

“ Securities ” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.

“ Securities Act ” means the Securities Act of 1933, as amended from time to time, and any successor statute.

“ Senior Notes ” means, collectively, the 6.500% Senior Notes due 2016 of VPI, the 6.750% Senior Notes due 2017 of VPI, the 6.750% Senior Notes due 2021 of VPI, the 6.875% Senior Notes due 2018 of VPI, the 7.000% Senior Notes due 2020 of VPI and the 7.250% Senior Notes due 2022 of VPI.

“ Series ” as defined in Section 2.25.

“ Series A New Term Loan ” means a Series A New Term Loan made by a Lender to Borrower pursuant to the Joinder Agreement dated December 19, 2011.

“ Series A Tranche B Term Loan Funding Date ” means June 14, 2012.

“ Series A Tranche B Term Loan Joinder Agreement ” means the Joinder Agreement, dated as of June 14, 2012, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent and the New Term Loan Lenders party thereto.

“ Series A Tranche B Term Loans ” means a Series A Tranche B Term Loan made pursuant to Section 6 of the Series A Tranche B Term Loan Joinder Agreement.

“ Series A-1 Tranche A Term Loans ” means a Series A-1 Tranche A Term Loan made by a Lender to Borrower pursuant to Amendment No. 3.

“ Series A-2 Tranche A Term Loan Funding Date ” means August 5, 2013.

-44-

“ Series A-2 Tranche A Term Loan Joinder Agreement ” means the Joinder Agreement, dated as of August 5, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent and the New Term Loan Lenders party thereto.

“ Series A-2 Tranche A Term Loans ” means a Series A-2 Tranche A Term Loan made pursuant to Section 6 of the Series A-2 Tranche A Term Loan Joinder Agreement.

“ Series A-3 Tranche A Term Loans ” means a Series A-3 Tranche A Term Loan made and/or converted from existing Loans pursuant to Amendment No. 8.

“ Series B Tranche B Term Loan Funding Date ” means July 9, 2012.

“ Series B Tranche B Term Loan Joinder Agreement ” means the Joinder Agreement, dated as of July 9, 2012, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent and the New Term Loan Lenders party thereto.

“ Series B Tranche B Term Loans ” means a Series B Tranche B Term Loan made pursuant to Section 6 of the Series B Tranche B Term Loan Joinder Agreement.

“ Series C Tranche B Term Loan Funding Date ” means December 11, 2012.

“ Series C Tranche B Term Loan Joinder Agreement ” means the Joinder Agreement, dated as of December 11, 2012, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent and the New Term Loan Lenders party thereto.

“ Series C Tranche B Term Loans ” means a Series C Tranche B Term Loan made pursuant to Section 7 of the Series C Tranche B Term Loan Joinder Agreement.

“ Series C-1 Tranche B Term Loan Funding Date ” means February 21, 2013.

“ Series C-1 Tranche B Term Loans ” means a Series C-1 Tranche B Term Loan made pursuant to Amendment No. 4.

“ Series C-2 Tranche B Term Loan Funding Date ” means September 17, 2013.

“ Series C-2 Tranche B Term Loans ” means a Series C-2 Tranche B Term Loan made pursuant to Amendment No. 7.

“ Series D Tranche B Term Loan Funding Date ” means October 2, 2012.

“ Series D Tranche B Term Loan Joinder Agreement ” means the Joinder Agreement, dated as of October 2, 2012, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent and the New Term Loan Lenders party thereto.

“ Series D Tranche B Term Loans ” means a Series D Tranche B Term Loan made pursuant to Section 5 of the Series D Tranche B Term Loan Joinder Agreement.

“ Series D-1 Tranche B Term Loan Funding Date ” means February 21, 2013.

“ Series D-1 Tranche B Term Loans ” means a Series D-1 Tranche B Term Loan made pursuant to Amendment No. 4.

-45-

“ Series D-2 Tranche B Term Loan Funding Date ” means September 17, 2013.

“ Series D-2 Tranche B Term Loans ” means a Series D-2 Tranche B Term Loan made pursuant to Amendment No. 7.

“ Series E Tranche B Term Loan Funding Date ” means August 5, 2013.

“ Series E Tranche E Term Loan Joinder Agreement ” means the Joinder Agreement, dated as of August 5, 2013, by and among the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent and the New Term Loan Lenders party thereto.

“ Series E Tranche B Term Loans ” means a Series E Tranche B Term Loan made pursuant to Section 7 of the Series E Tranche B Term Loan Joinder Agreement.

“ Solvency Certificate ” means a Solvency Certificate of the chief financial officer (or the equivalent thereof) of Borrower substantially in the form of Exhibit F-2.

“ Solvent ” means, with respect to any Credit Party, that as of the date of determination (after giving effect to all rights of reimbursement, contribution and subrogation under Applicable Law and the Credit Documents), if subject to the Insolvency Laws of (a) any jurisdiction other than Canada or any political subdivision thereof, (i) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Credit Party’s present assets; (ii) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on the Third Restatement Date and reflected in the Projections or with respect to any transaction contemplated to be undertaken after the Third Restatement Date; and (iii) such Credit Party has not incurred and does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (b) Canada or any political subdivision thereof, (i) the property of such Credit Party is sufficient, if disposed of at a fairly conducted sale under legal process, to enable payment of all its obligations, due and accruing due, (ii) the property of such Credit Party is, at a fair valuation, greater than the total amount of liabilities, including contingent liabilities, of such Credit Party; and (iii) such Credit Party has not ceased paying its current obligations in the ordinary course of business as they generally become due. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5 or any other analogous criteria in any jurisdiction).

“ Specified Asset Disposition ” means the sale, transfer or other disposition of Retigabine (and for the avoidance of doubt, Intellectual Property related thereto) in accordance with Section 6.8.

“ Specified Joint Venture ,” with respect to any Person, means a Joint Venture (a) in which such Person, directly or indirectly (i) owns more than 50% of the Equity Interests (or owns at least 50% of the Equity Interests if such Joint Venture is consolidated in the financial statements of such Person) and (ii) with respect to any Joint Venture in which such Person owns more than 50% of the Equity Interests, exercises control (as defined in the definition of “Affiliate”) and (b) that is designated in writing by the Board of Directors (or equivalent governing body) of such Person as a “Specified Joint Venture” for purposes of this Agreement.

“ Spot Rate ” means, on any day, for purposes of determining the Equivalent Amount of any currency, the rate at which such currency may be exchanged into Dollars at the time of determination on such day appearing on the Reuters Currencies page for such currency. In the event that such rate does not

-46-

appear on the Reuters Currencies page, the Spot Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by Administrative Agent and Borrower or, in the absence of such an agreement, the Spot Rate shall instead be the arithmetic average of the spot rates of exchange of Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about such time as Administrative Agent shall elect after determining that such rates shall be the basis for determining the Spot Rate on such date for the purchase of Dollars for delivery two Business Days later; provided that if at the time of any such determination, for any reason, no such spot rate is being quoted, Administrative Agent may use any reasonable method it deems appropriate to determine such rate, and such determination shall be conclusive absent manifest error.

“ Subordinated Indebtedness ” means Indebtedness that, by its terms, is subordinated in right and time of payment to the Obligations on terms reasonably satisfactory to Administrative Agent and containing such terms and conditions that are market terms and conditions on the date of issuance.

“ Subsidiary ” means, with respect to any Person, any corporation, company, partnership, limited liability company, unlimited liability company, association, society with restricted liability, Joint Venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, legally or beneficially, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof; provided , in no event shall any Specified Joint Venture with respect to which such Person is party be considered to be a Subsidiary. Notwithstanding the foregoing (and except for purposes of Sections 4.11, 4.13, 4.18, 4.19, 4.23, 4.25, 5.3, 5.8, 5.9, 8.1(j) and 8.1(k), and the definition of Unrestricted Subsidiary contained herein), an Unrestricted Subsidiary shall be deemed not to be a Subsidiary of the Borrower or any of its Subsidiaries for all purposes of this Agreement.

“ Subsidiary Redesignation ” shall have the meaning provided in the definition of “Unrestricted Subsidiary” contained in this Section 1.1.

“ Swing Line Lender ” means GSLP in its capacity as the lender of Swing Line Loans hereunder, together with its permitted successors and assigns in such capacity.

“ Swing Line Loan ” means a Loan made by Swing Line Lender to Borrower pursuant to Section 2.3.

“ Swing Line Note ” means a promissory note in the form of Exhibit B-2, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ Swing Line Sublimit ” means, as of any date of determination, the lesser of (i) $25,000,000, and (ii) the aggregate unused amount of Revolving Commitments then in effect.

“ Swiss Federal Tax Administration ” means the Swiss authority responsible for levying Swiss Federal Withholding Tax.

“ Swiss Federal Withholding Tax ” means taxes imposed under the Swiss Withholding Tax Act.

-47-

“ Swiss Withholding Tax Act ” means the Swiss Federal Act on Withholding Tax of 13 October 1965 ( Bundesgesetz über die Verrechnungssteuer ), together with the related ordinances, regulations and guidelines, all as amended and applicable from time to time.

“ Swiss Guarantor ” means PharmaSwiss SA, in Zug, Switzerland (CH-170.3.023.567-7), a company limited by shares ( Aktiengesellschaft ), organized under the laws of Switzerland and any other Guarantor that is organized under the laws of Switzerland.

“ Swiss Security Documents ” means each of the documents set forth on Schedule 5.10(d), dated as of the Second Restatement Date, as each of such documents may be amended, restated, supplemented or otherwise modified from time to time and additional analogous agreements as may be entered into from time to time in accordance with Section 5.10 and as required by the Collateral Documents.

“ Tax ” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature and whatever called, including any interest, additions to tax or penalties thereto, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed.

“ Terminated Lender ” as defined in Section 2.23.

“ Termination Date ” means June 3, 2013.

“ Term Loan ” means a Tranche A Term Loan, a Tranche B Term Loan, an Extended Term Loan and/or a New Term Loan, as the context requires.

“ Term Loan Commitment ” means the Tranche B Term Loan Commitment or the New Term Loan Commitment of a Lender, and “ Term Loan Commitments ” means such commitments of all Lenders.

“ Term Loan Commitment Termination Date ” means with respect to the Tranche B Term Loans, the date which is the earlier to occur of (x) the date which is seven years after the Third Restatement Date and (y) the first date on which all undrawn Term Loan Commitments have been terminated or reduced to zero pursuant to the terms hereof.

“ Term Loan Extension Request ” as defined in Section 2.26(a).

“ Term Loan Maturity Date ” means (i) with respect to the Tranche A Term Loans, the Tranche A Term Loan Maturity Date, (ii) with respect to the Tranche B Term Loans, the Tranche B Term Loan Maturity Date, and (iii) with respect to any Extended Term Loans, the maturity set forth therefor in the applicable Extension Amendment, and (iv) with respect to the New Term Loans of a Series, the New Term Loan Maturity Date of such Series of New Term Loans.

“ Third Restatement Date ” means February 13, 2012.

“ Third Restatement Date Certificate ” means a Third Restatement Date Certificate of Borrower substantially in the form of Exhibit F-1.

“ Total Utilization of Revolving Commitments ” means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing Issuing Bank for any amount drawn under any Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding Swing Line Loans and (iii) the Letter of Credit Usage.

-48-

“Tranche A New Term Loans” means New Term Loans with required annual principal repayments greater than 1% of the original principal amount of such New Term Loans and otherwise with terms similar to the Tranche A Term Loans.

“ Tranche A Term Loan ” means an Initial Draw Tranche A Term Loan, a Delayed Draw Term Loan, a Series A New Term Loan, a Series A-1 Tranche A Term Loan, a Series A-2 Tranche A Term Loan and a Series A-3 Tranche A Term Loan .

“ Tranche A Term Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche A Term Loans of such Lender as of such date.

“ Tranche A Term Loan Maturity Date ” means (a) with respect to Series A-1 Tranche A Term Loans and Series A-2 Tranche A Term Loans , the earlier of (i) April 20, 2016 and (ii) the date on which all Tranche A Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise and (b) with respect to the Series A-3 Tranche A Term Loans, the earlier of (i) October 20, 2018 (the “ Series A-3 Tranche A Term Loan Maturity Date ” ) and (ii) the date on which all Tranche A Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.

“ Tranche A Term Loan Note ” means a promissory note in the form of Exhibit B-3, as it may be amended, restated, supplemented or otherwise modified from time to time.

“Tranche B New Term Loans” means New Term Loans with required annual principal repayments not greater than 1% of the original principal amount of such New Term Loans and otherwise with terms similar to the Tranche B Term Loans.

“ Tranche B Term Loan ” means a Tranche B Term Loan made by a Lender to Borrower pursuant to Section 2.1(a), a Series A Tranche B Term Loan made pursuant to the Series A Tranche B Term Loan Joinder Agreement (except as expressly set forth herein, including for purposes of Section 2.13(a)), a Series B Tranche B Term Loan made pursuant to the Series B Tranche B Term Loan Joinder Agreement (except as expressly set forth herein, including for purposes of Section 2.13(a)), a Series C Tranche B Term Loan made pursuant to the Series C Tranche B Term Loan Joinder Agreement (except as expressly set forth herein, including for purposes of Section 2.13(a)), a Series D Tranche B Term Loan made pursuant to the Series D Tranche B Term Loan Joinder Agreement (except as expressly set forth herein, including for purposes of Section 2.13(a)), a Series C-1 Tranche B Term Loan made pursuant to Amendment No. 4 (except as expressly set forth herein, including for purposes of Section 2.13(a)), a Series D-1 Tranche B Term Loan made pursuant to Amendment No. 4 (except as expressly set forth herein, including for purposes of Section 2.13(a)), a Series E Tranche B Term Loan made pursuant to the Series E Tranche B Joinder Agreement (except as expressly set forth herein, including for purposes of Section 2.13(a)), a Series C-2 Tranche B Term Loan made pursuant to Amendment No. 7 (except as expressly set forth herein, including for purposes of Section 2.13(a)) and a Series D-2 Tranche B Term Loan made pursuant to Amendment No. 7 (except as expressly set forth herein, including for purposes of Section 2.13(a)).

“ Tranche B Term Loan Commitment ” means the commitment of a Lender to make or otherwise fund a Tranche B Term Loan on the Third Restatement Date and “ Tranche B Term Loan Commitments ” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Tranche B Term Loan Commitment, if any, is set forth on Appendix A-2 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Tranche B Term Loan Commitments as of the Third Restatement Date is $600,000,000.

-49-

“ Tranche B Term Loan Exposure ” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche B Term Loans of such Lender.

“ Tranche B Term Loan Maturity Date ” means (a) with respect to Tranche B Term Loans (other than Series C Tranche B Term Loans, Series C-1 Tranche B Term Loans, Series C-2 Tranche B Term Loans and Series E Tranche B Term Loans) the earlier of (i) the date which is seven years after the Third Restatement Date and (ii) the date on which all Tranche B Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise, (b) with respect to Series C Tranche B Term Loans, Series C-1 Tranche B Term Loans and Series C-2 Tranche B Term Loans, December 11, 2019 (the “ Series C Tranche B Term Loan Maturity Date ”) and (c) with respect to Series E Tranche B Term Loans, August 5, 2020 (the “ Series E Tranche B Term Loan Maturity Date ”).

“ Tranche B Term Loan Note ” means a promissory note in the form of Exhibit B-4, as it may be amended, restated, supplemented or otherwise modified from time to time.

“ Transactions ” means the entry into this Agreement, the Original Credit Agreement, the First Amended and Restated Credit Agreement, the Second Amended and Restated Credit Agreement and the Credit Documents and the making of the Loans hereunder and thereunder and the consummation of the Acquisitions on and after the Second Restatement Date, and the payment of all fees and expenses related thereto.

“ Type of Loan ” means (i) with respect to Tranche A Term Loans, a Base Rate Loan or a Eurodollar Rate Loan, (ii) with respect to Tranche B Term Loans, a Base Rate Loan or a Eurodollar Rate Loan and (iii) with respect to Revolving Loans, a Base Rate Loan or a Eurodollar Rate Loan and (iv) with respect to Swing Line Loans, a Base Rate Loan.

“ UCC ” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

“ Underlying Debt ” means in relation to a Credit Party and at any time, each obligation (whether present or future, actual or contingent) owing by that Credit Party to a Secured Party under the Credit Documents (including for the avoidance of doubt any change or increase in those obligations pursuant to or in connection with any amendment or supplement or restatement or novation of any Credit Document, in each case whether or not anticipated as of the date of this Agreement) excluding that Credit Party’s Parallel Debts.

“ Unrestricted Subsidiary ” means any Subsidiary of the Borrower designated by the Borrower after the Amendment No. 6 Effective Date as an Unrestricted Subsidiary hereunder by written notice to the Administrative Agent so long as (i) no Default or Event of Default has occurred and is continuing or would result therefrom, (ii) immediately after giving effect to such designation (as well as all other such designations theretofore consummated after the first day of such applicable period), Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.7 on a Pro Forma Basis as of the last day of the Fiscal Quarter most recently ended for which financial statements are required to have been delivered pursuant to Section 5.1(a) or 5.1(b), as applicable (as determined in accordance with Section 1.5), (iii) such Unrestricted Subsidiary shall be capitalized (to the extent capitalized by the Borrower or any of its Subsidiaries) through Investments as permitted by, and in compliance with, Section 6.6(i), and any prior or concurrent Investments in such Subsidiary by the Borrower or any of its Subsidiaries shall be deemed to have been made under Section 6.6(i), (iv) without duplication of clause (iii), any assets owned by such Unrestricted Subsidiary at the time of the initial designation thereof shall be treated as Investments pursuant to Section 6.6(i), (v) such Subsidiary shall have been designated an “unrestricted subsidiary” (or otherwise not be subject to the covenants and defaults) under any other

-50-

Indebtedness permitted to be incurred hereunder (to the extent the concept of unrestricted subsidiaries exists in the documents governing such Indebtedness) and all Refinancing Indebtedness in respect of any of the foregoing and all Disqualified Equity Interests and (vi) without duplication of clause (iii) and (iv), such designation shall constitute an Investment by the Borrower therein at the date of such designation in an amount equal to the net book value of the Borrower’s or its Subsidiary’s (as applicable) investment therein (and such designation shall only be permitted to the extent such Investment is permitted under Section 6.6(i)). The Borrower may designate any Unrestricted Subsidiary to be a Subsidiary for purposes of this Agreement (each, a “ Subsidiary Redesignation ”); provided , that (i) such Unrestricted Subsidiary, both before and after giving effect to such designation, shall be a wholly owned Subsidiary of the Borrower, (ii) no Default or Event of Default has occurred and is continuing or would result therefrom, (iii) immediately after giving effect to such Subsidiary Redesignation (as well as all other Subsidiary Redesignations theretofore consummated after the first day of such applicable period), Borrower and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.7 on a Pro Forma Basis as of the last day of the Fiscal Quarter most recently ended for which financial statements are required to have been delivered pursuant to Section 5.1(a) or 5.1(b), as applicable (as determined in accordance with Section 1.5), and (iv) the Borrower shall have delivered to the Administrative Agent an officer’s certificate executed by a Responsible Officer of such Borrower, certifying to the best of such officer’s knowledge, compliance with the requirements of preceding clauses (i) through (iii), inclusive, and containing the calculations and information required by the preceding clause (iii).

“ VPI ” as defined in the recitals hereto.

“ VPI Convertible Notes ” means VPI’s 4.0% Convertible Subordinated Notes due 2013, issued under that certain indenture dated as of November 19, 2003, among VPI, Ribapharm Inc. and The Bank of New York Mellon, as trustee.

“ Waivable Mandatory Prepayment ” as defined in Section 2.15(d).

“ WURA ” means the Winding-Up and Restructuring Act (Canada).

1.2 Accounting Terms . Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP; provided that, if Borrower notifies the Administrative Agent that Borrower requests an amendment to any provision (including any definition) hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies Borrower that the Requisite Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. Financial statements and other information required to be delivered by Borrower to Lenders pursuant to Sections 5.1(a) and 5.1(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.1(d), if applicable).

1.3 Interpretation, etc . Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including,” when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non limiting language (such as “without limitation” or “but not

-51-

limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The terms lease and license shall include sub lease and sub license, as applicable. A reference to a statute includes all regulations made pursuant to such statute and, unless otherwise specified, the provisions of any statute or regulation which amends, revises, restates, supplements or supersedes any such statute or any such regulation. In this Agreement, where the terms “continuing,” “continuance” or words to similar effect are used in relation to a Default or an Event of Default, the terms shall mean only, in the case of a Default, that the applicable event or circumstance has not been waived or, if capable of being cured, cured, prior to the event becoming or resulting in an Event of Default, and in the case of an Event of Default, that such event or circumstance has not been waived.

For purposes of any assets, liabilities or entities located in the Province of Québec or charged by any deed of hypothec (or any other Credit 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 the UCC or PPSA 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 a hypothec which is “opposable” or can be “set up” 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,” (j) “tort” shall include “extracontractual liability,” (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 in favour of persons having taken part in the construction or renovation of an immovable,” (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” and “legal title” shall include holding title on behalf of an owner as mandatary or prete-nom”; (r) “easement” shall include “servitude,” (s) “priority” shall include “prior claim” or “rank,” as applicable; (t) “survey”shall include “certificate of location and plan,” (u) “state” shall include “province,” (v) “fee simple title” shall include “ownership,” (w) “accounts” shall include “claims,” (x) “conditional sale” shall include “instalment sale,” (y) “purchase money financing” or “purchase money lien” shall include “instalment sales, reservations of ownership, contracts of lease, leasing contracts and vendor’s hypothecs.” The parties hereto confirm that it is their wish that this Agreement and any other document executed in connection with the transactions contemplated herein be drawn up in the English language only and that all other documents contemplated thereunder or relating thereto, including notices, may also be drawn up in the English language only. Les parties aux présentes confirment que c’est leur volonté que cette convention et les autres documents de crédit soient rédigés en langue anglaise seulement et que tous les documents, y compris tous avis, envisagés par cette convention et les autres documents peuvent être rédigés en langue anglaise seulement.

1.4 Currency Matters . All Obligations of each Credit Party under the Credit Documents shall be payable in Dollars, and all calculations, comparisons, measurements or determinations under the Credit Documents shall be made in Dollars. For the purpose of such calculations, comparisons, measurements or determinations, amounts denominated in other currencies shall be converted into the Equivalent Amount of Dollars on the date of calculation, comparison, measurement or determination.

1.5 Pro Forma Transactions; Covenant Calculations . (a) With respect to any period during which any Permitted Acquisition or any sale, transfer or other disposition of any material assets

-52-

outside the ordinary course of business occurs, for purposes of determining compliance with the covenants contained in Sections 6.1 and 6.7, or for purposes of determining the Leverage Ratio as of any date, calculations with respect to such period shall be made on a Pro Forma Basis. (b) All Indebtedness that has been defeased, satisfied and discharged or irrevocably called for redemption in accordance with the terms of the agreements governing such Indebtedness with such Cash sufficient to satisfy such defeasance, satisfaction and discharge or redemption irrevocably deposited with the appropriate entity for such purpose will be deemed not to be outstanding for purposes of calculating the amount of Indebtedness outstanding at any time under the covenants and financial or other calculations under this Agreement; provided , that all such Cash and other assets deposited pursuant to the foregoing will not be included in any such covenant or financial or other calculation under this Agreement which are calculated on a basis net of Cash.

1.6 Effect of This Agreement on the Second Amended and Restated Credit Agreement and Other Credit Documents . Upon satisfaction of the conditions precedent to the effectiveness of this Agreement set forth in Section 3.1 hereof, this Agreement shall be binding on Borrower, the Agents, the Lenders and the other parties hereto, and the Second Amended and Restated Credit Agreement and the provisions thereof shall be replaced in their entirety by this Agreement and the provisions hereof, with the parties hereby agreeing that there is no novation of the Second Amended and Restated Credit Agreement; provided that the Collateral and the Credit Documents shall continue to secure, guarantee, support and otherwise benefit the Obligations of Borrower and the other Credit Parties under this Agreement and the other Credit Documents. Upon the effectiveness of this Agreement, each Credit Document that was in effect immediately prior to the date of this Agreement shall continue to be effective and, unless the context otherwise requires, any reference to the Credit Agreement contained therein shall be deemed to refer to this Agreement.

1.7 Medicis Transactions . Notwithstanding anything to the contrary in any Credit Document, nothing contained in any Credit Document shall prevent (a) the granting or existence of any Liens on the Escrow Account, the Escrowed Funds or any New Senior Notes Documents or pursuant to any New Senior Notes Escrow Documents, in each case, in favor of the Escrow Agent or the trustee under the New Senior Notes Indenture (or their designees), (b) the making of any Restricted Junior Payment in connection with the consummation of the Medicis Acquisition and the other Medicis Transactions, (c) the holding of the Escrowed Funds in the Escrow Account or (d) any other transaction contemplated by the New Senior Notes Documents (it being understood, for the avoidance of doubt, that any such granting of Liens, making of Restricted Junior Payments and other transactions shall be deemed made exclusively in reliance upon this Section 1.7 and not any other exception or basket under any other provision of any Credit Document). In addition, prior to the consummation of the Medicis Acquisition, Escrow Issuer shall not be deemed a Subsidiary for purposes of this Agreement or any other Credit Document, and, for the avoidance of doubt, shall not be subject to the (i) requirements of Section 5 (including, for the avoidance of doubt, Section 5.10) or Section 6 hereof, (ii) representations and warranties in Section 4 hereof or (iii) Events of Default in Section 8 hereof. The Lenders, the Issuing Bank and their respective Affiliates hereby agree that none of the Administrative Agent, the Collateral Agent or any Affiliate thereof shall have any liability or obligation to the Lenders, in their capacities as such, with respect to any transactions contemplated by the New Senior Notes Documents.

1.8 Bausch & Lomb Transactions . Notwithstanding anything to the contrary in any Credit Document, nothing contained in any Credit Document shall prevent (a) the granting or existence of any Liens on the Bausch & Lomb Escrow Account, the Bausch & Lomb Escrowed Funds or any Bausch & Lomb New Senior Notes Documents or pursuant to any Bausch & Lomb New Senior Notes Escrow Documents, in each case, in favor of the Bausch & Lomb Escrow Agent or the trustee under the Bausch & Lomb New Senior Notes Indenture (or their designees), (b) the making of any Restricted Junior Payment in connection with the consummation of the Bausch & Lomb Acquisition and the other Bausch & Lomb Transactions, (c) the holding of the Bausch & Lomb Escrowed Funds in the Bausch & Lomb

-53-

Escrow Account or (d) any other transaction contemplated by the Bausch & Lomb New Senior Notes Documents (it being understood, for the avoidance of doubt, that any such granting of Liens, making of Restricted Junior Payments and other transactions shall be deemed made exclusively in reliance upon this Section 1.8 and not any other exception or basket under any other provision of any Credit Document). In addition, prior to the consummation of the Bausch & Lomb Acquisition, Bausch & Lomb Escrow Issuer shall not be deemed a Subsidiary for purposes of this Agreement or any other Credit Document, and, for the avoidance of doubt, shall not be subject to the (i) requirements of Section 5 (including, for the avoidance of doubt, Section 5.10) or Section 6 hereof, (ii) representations and warranties in Section 4 hereof or (iii) Events of Default in Section 8 hereof. The Lenders, the Issuing Bank and their respective Affiliates hereby agree that none of the Administrative Agent, the Collateral Agent or any Affiliate thereof shall have any liability or obligation to the Lenders, in their capacities as such, with respect to any transactions contemplated by the Bausch & Lomb New Senior Notes Documents.

1.9 Acquisition Escrow Debt Transaction . Notwithstanding anything to the contrary in any Credit Document, nothing contained in any Credit Document shall prevent (a) the incurrence of Acquisition Escrow Debt, (b) the granting or existence of any Liens on any Acquisition Debt Escrow Account, any Acquisition Debt Escrowed Funds or any Acquisition Debt Escrow Debt Documents, in each case, in favor of any Acquisition Debt Escrow Agent or the agent or trustee under any Acquisition Debt Escrow Debt Documents (or any designee thereof), (c) the holding of any Acquisition Debt Escrowed Funds in an Acquisition Debt Escrow Account or (d) any other transaction contemplated by any Acquisition Debt Escrow Debt Document (it being understood, for the avoidance of doubt, that any such incurrence of Acquisition Escrow Debt, granting of Liens and other transactions shall, prior to the consummation of the applicable Escrow Acquisition be deemed made exclusively in reliance upon this Section 1.8 and not any other exception or basket under any other provision of any Credit Document). In addition, prior to the consummation of the applicable Escrow Acquisition, the applicable Acquisition Debt Escrow Issuer shall not be deemed a Subsidiary for purposes of this Agreement or any other Credit Document, and, for the avoidance of doubt, shall not be subject to the (i) requirements of Section 5 (including, for the avoidance of doubt, Section 5.10) or Section 6 hereof, (ii) representations and warranties in Section 4 hereof or (iii) Events of Default in Section 8 hereof. It is understood, for the avoidance of doubt, that from and after the date of the consummation of the applicable Escrow Acquisition, any Indebtedness incurred to finance such Permitted Acquisition, the granting or existing of any Liens in connection with such Indebtedness (or otherwise) or any other transaction in connection with such Permitted Acquisition shall be subject to the applicable (i) covenants in Section 5 and Section 6 hereof, and (ii) Events of Default in Section 8 hereof. The Lenders, the Issuing Bank and their respective Affiliates hereby agree that none of the Administrative Agent, the Collateral Agent or any Affiliate thereof shall have any liability or obligation to the Lenders, in their capacities as such, with respect to any transactions contemplated by any Acquisition Debt Escrow Debt Documents.

SECTION 2. LOANS AND LETTERS OF CREDIT

2.1 Term Loans.

(a) Loan Commitments . Subject to the terms and conditions hereof, each Lender severally agrees to make, on the Third Restatement Date, Tranche B Term Loans in Dollars to Borrower in an amount equal to such Lender’s Tranche B Term Loan Commitment.

Any amount borrowed under this Section 2.1(a) and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.13(a) and 2.14, all amounts owed hereunder with respect to the Tranche A Term Loans and the Tranche B Term Loans shall be paid in full no later than the Tranche A Term Loan Maturity Date and the Tranche B Term Loan Maturity Date, respectively. Each Lender’s Tranche B Term Loan Commitment shall terminate immediately and without further action on the Third

-54-

Restatement Date after giving effect to the funding of such Lender’s Tranche B Term Loan Commitment on such date.

(b) Borrowing Mechanics for Tranche B Term Loans on the Third Restatement Date .

(i) Borrower shall deliver to Administrative Agent a fully executed Funding Notice for Tranche B Term Loans no later than three days prior to the Third Restatement Date. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative Agent shall notify each Lender of the proposed borrowings.

(ii) Each Lender shall make its Tranche B Term Loan available to Administrative Agent not later than 11:00 a.m. (New York City time) on the Third Restatement Date, by wire transfer of same day funds in Dollars at the Principal Office designated by Administrative Agent.

Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Tranche B Term Loans available to Borrower on the Third Restatement Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent from Lenders to be credited to the account of Borrower, at the Principal Office designated by Administrative Agent or to such other account as may be designated in writing to Administrative Agent by Borrower.

2.2 Revolving Loans.

(a) Revolving Commitments . During the Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Revolving Loans in Dollars to Borrower in an aggregate amount up to but not exceeding such Lender’s Revolving Commitment; provided , that after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.2(a) may be repaid and reborrowed, only in the currency borrowed, during the Revolving Commitment Period. Each Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Commitments shall be paid in full no later than such date.

(b) Borrowing Mechanics for Revolving Loans .

(i) Except pursuant to Section 2.4(d), Revolving Loans that are Base Rate Loans shall be made in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount, Revolving Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount.

(ii) Subject to Section 3.3(b), whenever Borrower desires that Lenders make Revolving Loans, Borrower shall deliver to Administrative Agent a fully executed and delivered Funding Notice no later than 1:00 p.m. (New York City time) at least three Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan and at least one Business Day in advance of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan.

(iii) Notice of receipt of each Funding Notice in respect of Revolving Loans, together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by Administrative Agent to each applicable Lender by telefacsimile

-55-

with reasonable promptness, but ( provided Administrative Agent shall have received such notice by 1:00 p.m. (New York City time)) not later than 2:00 p.m. (New York City time) on the same day as Administrative Agent’s receipt of such Notice from Borrower.

(iv) Each Lender shall make the amount of its Revolving Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at the Principal Office designated by Administrative Agent. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Revolving Loans available to Borrower on the applicable Credit Date by causing an amount of same day funds in Dollars, equal to the proceeds of all such Revolving Loans received by Administrative Agent from Lenders to be credited to the account of Borrower at the Principal Office designated by Administrative Agent or such other account as may be designated in writing to Administrative Agent by Borrower.

2.3 Swing Line Loans .

(a) Swing Line Loans Commitments . During the Revolving Commitment Period, subject to the terms and conditions hereof, Swing Line Lender shall make Swing Line Loans in Dollars to Borrower in the aggregate amount up to but not exceeding the Swing Line Sublimit; provided , that after giving effect to the making of any Swing Line Loan, in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.3 may be repaid and reborrowed during the Revolving Commitment Period. Swing Line Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans and the Revolving Commitments shall be paid in full no later than such date.

(b) Borrowing Mechanics for Swing Line Loans .

(i) Swing Line Loans shall be made in an aggregate minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount.

(ii) Subject to Section 3.3(b), whenever Borrower desires that Swing Line Lender make a Swing Line Loan, Borrower shall deliver to Administrative Agent a Funding Notice no later than 12:00 p.m. (New York City time) on the proposed Credit Date.

(iii) Swing Line Lender shall make the amount of its Swing Line Loan available to Administrative Agent not later than 2:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at the Principal Office designated by Administrative Agent. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Swing Line Loans available to Borrower on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Swing Line Loans received by Administrative Agent from Swing Line Lender to be credited to the account of Borrower at the Principal Office designated by Administrative Agent, or to such other account as may be designated in writing to Administrative Agent by Borrower.

(iv) With respect to any Swing Line Loans which have not been voluntarily prepaid by Borrower pursuant to Section 2.13, Swing Line Lender may at any time in its sole and absolute discretion, deliver to Administrative Agent (with a copy to Borrower), no later than 1:00 p.m. (New York City time) at least one Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Funding Notice given by Borrower) requesting that each Lender

-56-

holding a Revolving Commitment make Revolving Loans that are Base Rate Loans to Borrower on such Credit Date in an amount equal to the amount of such Swing Line Loans (the “ Refunded Swing Line Loans ”) outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line Lender (and not to Borrower) and applied to repay a corresponding portion of the Refunded Swing Line Loans and (2) on the day such Revolving Loans are made, Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans (determined by reference to Swing Line Lender’s Revolving Commitment, if any) shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender to Borrower, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute part of Swing Line Lender’s outstanding Revolving Loans to Borrower and shall be due under the Revolving Loan Note issued by Borrower to Swing Line Lender. Borrower hereby authorizes Administrative Agent and Swing Line Lender to charge Borrower’s accounts with Administrative Agent and Swing Line Lender (up to the amount available in each such account) in order to immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent of the proceeds of such Revolving Loans made by Lenders, including the Revolving Loans deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Borrower from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so recovered shall be ratably shared among all Lenders in the manner contemplated by Section 2.17.

(v) If for any reason Revolving Loans are not made pursuant to Section 2.3(b)(iv) in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by Swing Line Lender, each Lender holding a Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans, and in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one Business Day’s notice from Swing Line Lender, each Lender holding a Revolving Commitment shall deliver to Swing Line Lender an amount equal to its respective participation in the applicable unpaid amount in same day funds at the Principal Office of Swing Line Lender. In order to evidence such participation each Lender holding a Revolving Commitment agrees to enter into a participation agreement at the request of Swing Line Lender in form and substance reasonably satisfactory to Swing Line Lender. In the event any Lender holding a Revolving Commitment fails to make available to Swing Line Lender the amount of such Lender’s participation as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Swing Line Lender for the correction of errors among banks and thereafter at the Base Rate, as applicable.

(vi) Notwithstanding anything contained herein to the contrary, (1) each Lender’s obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to the second preceding paragraph and each Lender’s obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, any Credit Party or any other Person for any reason whatsoever; (B) the occurrence or continuation of a Default or Event of Default; (C) any adverse change in the business,

-57-

operations, properties, assets, condition (financial or otherwise) or prospects of any Credit Party; (D) any breach of this Agreement or any other Credit Document by any party thereto; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that such obligations of each Lender are subject to the condition that Swing Line Lender had not received prior notice from Borrower or the Requisite Lenders that any of the conditions under Section 3.3 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, were not satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made; and (2) Swing Line Lender shall not be obligated to make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during the continuation of a Default or Event of Default, (B) it does not in good faith believe that all conditions under Section 3.3 to the making of such Swing Line Loan have been satisfied or waived by the Requisite Lenders or (C) at a time when any Lender is a Defaulting Lender unless Swing Line Lender has entered into arrangements reasonably satisfactory to it and Borrower to eliminate Swing Line Lender’s risk with respect to the Defaulting Lender’s participation in such Swing Ling Loan, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the outstanding Swing Line Loans.

(c) Resignation and Removal of Swing Line Lender . Swing Line Lender may resign as Swing Line Lender upon 30 days’ prior written notice to Administrative Agent, Lenders and Borrower. Swing Line Lender may be replaced at any time by written agreement among Borrower, Administrative Agent, the replaced Swing Line Lender ( provided that no consent will be required if the replaced Swing Line Lender has no Swing Line Loans outstanding) and the successor Swing Line Lender. Administrative Agent shall notify the Lenders of any such replacement of Swing Line Lender. At the time any such replacement or resignation shall become effective, (i) Borrower shall prepay any outstanding Swing Line Loans made by the resigning or removed Swing Line Lender, (ii) upon such prepayment, the resigning or removed Swing Line Lender shall surrender any Swing Line Note held by it to Borrower for cancellation, and (iii) Borrower shall issue, if so requested by the successor Swing Line Lender, a new Swing Line Note to the successor Swing Line Lender, in the principal amount of the Swing Line Sublimit then in effect and with other appropriate insertions. From and after the effective date of any such replacement or resignation, (x) any successor Swing Line Lender shall have all the rights and obligations of a Swing Line Lender under this Agreement with respect to Swing Line Loans made thereafter and (y) references herein to the term “Swing Line Lender” shall be deemed to refer to such successor or to any previous Swing Line Lender, or to such successor and all previous Swing Line Lenders, as the context shall require.

2.4 Issuance of Letters of Credit and Purchase of Participations Therein.

(a) Letters of Credit . During the Revolving Commitment Period, subject to the terms and conditions hereof, Issuing Bank agrees to issue Letters of Credit for the account of Borrower; provided , (i) the stated amount of each Letter of Credit shall not be less than $100,000 (or the Equivalent Amount thereof in any alternative currency) or such lesser amount as is acceptable to Issuing Bank; (ii) after giving effect to such issuance, in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect; (iii) after giving effect to such issuance, in no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit then in effect; (iv) in no event shall any standby Letter of Credit have an expiration date later than the earlier of (1) the Revolving Commitment Termination Date and (2) the date which is 30 months from the date of issuance of such standby Letter of Credit; (v) in no event shall any Letter of Credit have an expiration date later than the earlier of (1) the Revolving Commitment Termination Date and (2) the date which is 30 months from the date of issuance of such commercial Letter of Credit; and (vi) Issuing Bank shall be under no obligation to issue any Letter of Credit if the issuance of such Letter of Credit would violate one or more policies of Issuing Bank applicable to letters of credit generally and not solely to letters of credit issuable to Borrower. Subject to the foregoing, Issuing Bank may agree that a standby Letter of Credit will automatically be extended for one

-58-

or more successive periods not to exceed one year each, unless Issuing Bank elects not to extend for any such additional period, and so notifies the beneficiary thereof 30 days in advance that such standby Letter of Credit will not be so extended; provided that Issuing Bank shall not extend any such Letter of Credit if it has received written notice that an Event of Default has occurred and is continuing at the time Issuing Bank must elect to allow such extension; provided , further , that if any Lender is a Defaulting Lender, Issuing Bank shall not be required to issue any Letter of Credit unless Issuing Bank has entered into arrangements reasonably satisfactory to it and Borrower to eliminate Issuing Bank’s risk with respect to the participation in Letters of Credit of the Defaulting Lender, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage.

(b) Notice of Issuance . Subject to Section 3.3(b), whenever Borrower desires the issuance, amendment or modification of a Letter of Credit, it shall deliver to Administrative Agent an Issuance Notice no later than 12:00 p.m. (New York City time) at least three Business Days (in the case of standby letters of credit) or five Business Days (in the case of commercial letters of credit), or in each case such shorter period as may be agreed to by Issuing Bank in any particular instance, in advance of the proposed date of issuance, amendment or modification. Upon satisfaction or waiver of the conditions set forth in Section 3.3, Issuing Bank shall issue, amend or modify the requested Letter of Credit only in accordance with Issuing Bank’s standard operating procedures. Upon the issuance of any Letter of Credit or amendment or modification to a Letter of Credit, Issuing Bank shall promptly notify each Lender with a Revolving Commitment of such issuance, which notice shall be accompanied by a copy of such Letter of Credit or amendment or modification to a Letter of Credit and the amount of such Lender’s respective participation in such Letter of Credit pursuant to Section 2.4(e).

(c) Responsibility of Issuing Bank with Respect to Requests for Drawings and Payments . In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, Issuing Bank shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. As between Borrower and Issuing Bank, Borrower assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by Issuing Bank, by the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, Issuing Bank shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of Issuing Bank, including any Governmental Acts; none of the above shall affect or impair, or prevent the vesting of, any of Issuing Bank’s rights or powers hereunder. Without limiting the foregoing and in furtherance thereof, any action taken or omitted by Issuing Bank under or in connection with the Letters of Credit or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not give rise to any liability on the part of Issuing Bank to Borrower. Notwithstanding anything to the contrary contained in this Section 2.4(c), Borrower shall retain any and all rights it may have against Issuing Bank for any liability arising solely out of the gross negligence or willful misconduct of Issuing Bank.

-59-

(d) Reimbursement by Borrower of Amounts Drawn or Paid Under Letters of Credit . In the event Issuing Bank has determined to honor a drawing under a Letter of Credit, it shall immediately notify Borrower and Administrative Agent, and Borrower shall reimburse Issuing Bank on or before the Business Day immediately following the date on which Borrower was notified by Issuing Bank that such drawing was honored (the “ Reimbursement Date ”) in an Equivalent Amount in Dollars and in same day funds equal to the amount of such honored drawing; provided that anything contained herein to the contrary notwithstanding, (i) unless Borrower shall have notified Administrative Agent and Issuing Bank prior to 10:00 a.m. (New York City time) on the date such drawing is honored that Borrower intends to reimburse Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Revolving Loans, Borrower shall be deemed to have given a timely Funding Notice to Administrative Agent requesting Lenders with Revolving Commitments to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an Equivalent Amount in Dollars equal to the amount of such honored drawing, and (ii) subject to satisfaction or waiver of the conditions specified in Section 3.3, Lenders with Revolving Commitments shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall be applied directly by Administrative Agent to reimburse Issuing Bank for the amount of such honored drawing; and provided , further , that if for any reason proceeds of Revolving Loans are not received by Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, Borrower shall reimburse Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of proceeds of such Revolving Loans, if any, which are so received. Nothing in this Section 2.4(d) shall be deemed to relieve any Lender with a Revolving Commitment from its obligation to make Revolving Loans on the terms and conditions set forth herein, and Borrower shall retain any and all rights it may have against any such Lender resulting from the failure of such Lender to make such Revolving Loans under this Section 2.4(d).

(e) Lenders’ Purchase of Participations in Letters of Credit . Immediately upon the issuance of each Letter of Credit, each Lender having a Revolving Commitment shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from Issuing Bank a participation in such Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder. In the event that Borrower shall fail for any reason to reimburse Issuing Bank as provided in Section 2.4(d), Issuing Bank shall promptly notify Administrative Agent of the unreimbursed amount of such honored drawing and Administrative Agent shall notify each Lender with a Revolving Commitment of such Lender’s respective participation therein based on such Lender’s Pro Rata Share of the Revolving Commitments. Each Lender with a Revolving Commitment shall make available to Administrative Agent for the account of the Issuing Bank an amount equal to its respective participation, in an Equivalent Amount in Dollars and in same day funds, at the office of Administrative Agent specified in such notice, not later than 12:00 p.m. (New York City time) on the first business day (under the laws of the jurisdiction in which such office of Issuing Bank is located) after the date notified by Administrative Agent. The Administrative Agent shall remit the funds so received to the Issuing Bank. In the event that any Lender with a Revolving Commitment fails to make available to Administrative Agent for the account of the Issuing Bank on such business day the amount of such Lender’s participation in such Letter of Credit as provided in this Section 2.4(e), Issuing Bank (acting through the Administrative Agent) shall be entitled to recover such amount on demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Issuing Bank for the correction of errors among banks and thereafter at the Base Rate. Nothing in this Section 2.4(e) shall be deemed to prejudice the right of any Lender with a Revolving Commitment to recover from Issuing Bank any amounts made available by such Lender to Issuing Bank pursuant to this Section in the event that the payment with respect to a Letter of Credit in respect of which payment was made by such Lender constituted gross negligence or willful misconduct on the part of Issuing Bank. In the event Issuing Bank (acting through the Administrative Agent) shall have been reimbursed by other Lenders pursuant to this Section 2.4(e) for all

-60-

or any portion of any drawing honored by Issuing Bank under a Letter of Credit, the Issuing Bank (acting through the Administrative Agent) shall distribute to each Lender which has paid all amounts payable by it under this Section 2.4(e) with respect to such honored drawing such Lender’s Pro Rata Share of all payments subsequently received by Issuing Bank from Borrower in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Lender at its primary address set forth below its name on Appendix B or at such other address as such Lender may request.

(f) Obligations Absolute . The obligation of Borrower to reimburse Issuing Bank for drawings honored under the Letters of Credit issued by it and to repay any Revolving Loans made by Lenders pursuant to Section 2.4(d) and the obligations of Lenders under Section 2.4(e) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Borrower or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), Issuing Bank, Lender or any other Person or, in the case of a Lender, against Borrower, whether in connection herewith, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between Borrower or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by Issuing Bank under any Letter of Credit against presentation of a draft or other document which does not substantially comply with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Borrower or any of its Subsidiaries; (vi) any breach hereof or any other Credit Document by any party thereto; (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the fact that an Event of Default or a Default shall have occurred and be continuing; provided , in each case, that payment by Issuing Bank under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of Issuing Bank under the circumstances in question.

(g) Indemnification . Without duplication of any obligation of Borrower under Section 10.2 or 10.3, in addition to amounts payable as provided herein, Borrower hereby agrees to protect, indemnify, pay and save harmless Issuing Bank from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct of Issuing Bank or (2) the wrongful dishonor by Issuing Bank of a proper demand for payment made under any Letter of Credit issued by it, or (ii) the failure of Issuing Bank to honor a drawing under any such Letter of Credit as a result of any Governmental Act, other than any Governmental Act resulting from the gross negligence or willful misconduct of Issuing Bank.

(h) Resignation and Removal of Issuing Bank . An Issuing Bank may resign as Issuing Bank upon 60 days prior written notice to Administrative Agent, Lenders and Borrower. An Issuing Bank may be replaced at any time by written agreement among Borrower, Administrative Agent, the replaced Issuing Bank ( provided that no consent will be required if the replaced Issuing Bank has no Letters of Credit or reimbursement Obligations with respect thereto outstanding) and the successor Issuing Bank. Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement or resignation shall become effective, Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank. From and after the effective date of any such replacement or resignation, (i) any successor Issuing Bank shall have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to

-61-

such successor and all previous Issuing Banks, as the context shall require. After the replacement or resignation of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto to the extent that Letters of Credit issued by it remain outstanding and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement or resignation, but shall not be required to issue additional Letters of Credit.

2.5 Pro Rata Shares; Availability of Funds.

(a) Pro Rata Shares . All Loans shall be made, and all participations shall be purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Term Loan Commitment or Revolving Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby.

(b) Availability of Funds . Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Borrower a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Borrower and Borrower shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans for such Class of Loans. Nothing in this Section 2.5(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments and Revolving Commitments hereunder or to prejudice any rights that Borrower may have against any Lender as a result of any default by such Lender hereunder.

2.6 Use of Proceeds.

(a) The proceeds of the Loans shall be used as follows:

(i) the proceeds of the Revolving Loans, Swing Line Loans and Letters of Credit made after the Third Restatement Date shall be applied by Borrower, as applicable, to (A) finance a portion of any Acquisition and pay related fees and expenses, (B) fund permitted capital expenditures and permitted acquisitions, (C) provide for the ongoing working capital requirements of Borrower and its Subsidiaries and (D) provide for general corporate purposes of Borrower and its Subsidiaries; and

(ii) the proceeds of the Tranche B Term Loans made on the Third Restatement Date shall be applied by Borrower, as applicable, to (A) repay a portion of the Revolving Loans outstanding as of the Third Restatement Date (but not to permanently reduce Revolving Commitments with respect thereto), (B) fund permitted capital expenditures and permitted acquisitions, (C) provide for general corporate purposes of Borrower and its Subsidiaries and (D) pay all fees

-62-

and expenses in connection with the incurrence of the Tranche B Term Loans and the repayment of Revolving Loans (including fees and expenses in connection with the amendment and restatement of the Second Amended and Restated Credit Agreement).

(b) No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other regulation thereof.

2.7 Evidence of Debt; Register; Lenders’ Books and Records; Notes.

(a) Lenders’ Evidence of Debt . Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Borrower, absent manifest error; provided , that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Borrower’s Obligations in respect of any applicable Loans; and provided further that, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.

(b) Register . Administrative Agent (or its agent or sub-agent appointed by it) shall maintain at the Principal Office designated by Administrative Agent a register for the recordation of the names and addresses of Lenders and the Revolving Commitments and Loans of each Lender from time to time (the “ Register ”). The Register shall be available for inspection by Borrower or any Lender (with respect to any entry relating to such Lender’s Loans) at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record, or shall cause to be recorded, in the Register the Revolving Commitments and the Loans in accordance with the provisions of Section 10.6, and each repayment or prepayment in respect of the principal amount of the Loans, and any such recordation shall be conclusive and binding on Borrower and each Lender, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Borrower’s Obligations in respect of any Loan. Borrower hereby designates Administrative Agent to serve as Borrower’s agent solely for purposes of maintaining the Register as provided in this Section 2.7, and Borrower hereby agrees that, to the extent Administrative Agent serves in such capacity, Administrative Agent and its officers, directors, employees, agents, sub-agents and affiliates shall constitute “Indemnitees.”

(c) Notes . If so requested by any Lender by written notice to Borrower (with a copy to Administrative Agent) at least two Business Days prior to the Third Restatement Date, or at any time thereafter, Borrower shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Third Restatement Date (or, if such notice is delivered after the Third Restatement Date, as promptly as practicable after Borrower’s receipt of such notice) a Note or Notes to evidence such Lender’s Tranche A Term Loans, Tranche B Term Loans, New Term Loans, Revolving Loan or Swing Line Loan, as the case may be.

2.8 Interest on Loans.

(a) Except as otherwise set forth herein, each Class of Loans shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows:

(i) in the case of Tranche A Term Loans and Revolving Loans:

-63-

(ii) in the case of Swing Line Loans, at the Base Rate plus the Applicable Margin; and

(iii) in the case of Tranche B Loans:

(b) The basis for determining the rate of interest with respect to any Loan (except a Swing Line Loan which can be made and maintained as a Base Rate Loan only), and the Interest Period with respect to any Eurodollar Rate Loan, shall be selected by Borrower and notified to Administrative Agent and Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be; provided that, until the date on which Administrative Agent notifies Borrower that the primary syndication of the Loans and Revolving Commitments has been completed, as determined by Administrative Agent (but in no event to exceed 90 days after the Third Restatement Date), the Tranche B Term Loans shall be maintained as either (1) Eurodollar Rate Loans having an Interest Period of no longer than three months or (2) Base Rate Loans. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan.

(c) In connection with Eurodollar Rate Loans there shall be no more than seven (7) Interest Periods outstanding at any time. In the event Borrower fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on the last day of then current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Borrower fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Borrower shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Borrower and each Lender.

(d) Interest payable pursuant to Section 2.8(a) shall be computed (i) in the case of Base Rate Loans (other than Base Rate Loans for which the Base Rate has been calculated pursuant to the third sentence of the definition thereof), on the basis of a 365 day or 366 day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans and Base Rate Loans for which the Base Rate has been calculated pursuant to the third sentence of the definition thereof, on the basis of a 360 day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Term Loan, the last Interest Payment Date with respect to such Term Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar

-64-

• if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or

• if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin; and

• if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or

• if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin.

Rate Loan to such Base Rate Loan shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan shall be excluded; provided that, if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.

(e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such payment date; (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of that Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity of the Loans, including final maturity of the Loans; provided , however , with respect to any voluntary prepayment of a Revolving Loan that is a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.

(f) Borrower agrees to pay to Issuing Bank, with respect to drawings honored under any Letter of Credit, interest on the amount paid by Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of Borrower at a rate equal to (i) for the period from the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans, and (ii) thereafter, the rate of interest required pursuant to Section 2.10.

(g) Interest payable pursuant to Section 2.8(f) shall be computed on the basis of a 365/366 day year for the actual number of days elapsed in the period during which it accrues, and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. Promptly upon receipt by Issuing Bank of any payment of interest pursuant to Section 2.8(g), Issuing Bank shall distribute to each Lender, out of the interest received by Issuing Bank in respect of the period from the date such drawing is honored to but excluding the date on which Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of any Revolving Loans), the amount that such Lender would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period if no drawing had been honored under such Letter of Credit. In the event Issuing Bank shall have been reimbursed by Lenders for all or any portion of such honored drawing, Issuing Bank shall distribute to each Lender which has paid all amounts payable by it under Section 2.4(e) with respect to such honored drawing such Lender’s Pro Rata Share of any interest received by Issuing Bank in respect of that portion of such honored drawing so reimbursed by Lenders for the period from the date on which Issuing Bank was so reimbursed by Lenders to but excluding the date on which such portion of such honored drawing is reimbursed by Borrower.

2.9 Conversion/Continuation.

(a) Subject to Section 2.18 and so long as no Default or Event of Default shall have occurred and then be continuing, Borrower shall have the option:

(i) to convert at any time all or any part of any Term Loan or Revolving Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of that amount from one Type of Loan to another Type of Loan; provided that a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless Borrower shall pay all amounts due under Section 2.18 in connection with any such conversion;

-65-

(ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of that amount as a Eurodollar Rate Loan;

(b) Subject to Section 3.3(b), Borrower shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 10:00 a.m. (New York City time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan), at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan).

2.10 Default Interest . Upon the occurrence and during the continuance of an Event of Default, any overdue amounts shall thereafter bear interest (including post petition interest in any proceeding under Insolvency Laws) payable on demand at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans (or, in the case of any fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable hereunder for Base Rate Loans). Payment or acceptance of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender.

2.11 Fees.

(a) Borrower agrees to pay to Lenders having Revolving Exposure (for purposes of clarity, excluding the Issuing Bank, in its capacity as such):

(i) commitment fees accruing at 0.50% per annum on the average of the daily difference between (a) the Revolving Commitments, and (b) the aggregate principal amount of (x) all outstanding Revolving Loans (for the avoidance of doubt, excluding Swing Line Loans) plus (y) the Letter of Credit Usage; and

(ii) letter of credit fees accruing at the Applicable Margin for Revolving Loans that are Eurodollar Rate Loans on the average aggregate daily maximum amount available to be drawn under all such Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination).

Notwithstanding the foregoing, any commitment fee which accrued with respect to the Revolving Commitment of a Defaulting Lender during the period prior to the time such Lender became a Defaulting Lender and unpaid at such time shall not be payable by Borrower so long as such Lender shall be a Defaulting Lender except to the extent that such commitment fee shall otherwise have been due and payable by Borrower prior to such time; and provided , further , that no such commitment fee shall accrue on the Revolving Commitment of a Defaulting Lender so long as such Lender shall be a Defaulting Lender. All fees referred to in this Section 2.11(a) shall be paid to Administrative Agent at its Principal Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata Share thereof.

(b) Borrower agrees to pay directly to Issuing Bank, for its own account, the following fees:

(i) a fronting fee accruing at 0.125% per annum on the average aggregate daily maximum amount available to be drawn under all Letters of Credit (determined as of the close of business on any date of determination); and

(ii) such documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with Issuing Bank’s standard schedule for such charges and as in effect at the time of such issuance, amendment, transfer or payment, as the case may be.

-66-

(c) Borrower agrees to pay on the Third Restatement Date to Administrative Agent, for the account of each Lender party to this Agreement as a Lender on Third Restatement Date, as fee compensation for the funding of such Lender’s Tranche B Term Loans, a closing fee in an amount equal to the percentage of the stated principal amount of such Lender’s Tranche B Term Loans set forth in Schedule 2.11(c) payable to such Lender from the proceeds of its Tranche B Term Loan as and when funded on the Third Restatement Date. Such closing fee will be in all respects fully earned, due and payable on the Third Restatement Date and non-refundable and non-creditable thereafter.

(d) All fees referred to in Section 2.11(a) and 2.11(b)(i) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year during the Revolving Commitment Period, commencing on March 31, 2012, and on the Revolving Commitment Termination Date.

(e) In addition to any of the foregoing fees, Borrower agrees to pay to Agents such other fees in the amounts and at the times separately agreed upon.

(f) Borrower agrees to pay on the Series A Tranche B Term Loan Funding Date to Administrative Agent, for the account of each New Term Loan Lender party to the Series A Tranche B Term Loan Joinder Agreement, as fee compensation for the funding of such New Term Loan Lender’s Series A Tranche B Term Loans, a closing fee in an amount equal to 2.50% of the aggregate principal amount of such New Term Loan Lender’s Series A Tranche B Term Loans funded as of the Series A Tranche B Term Loan Funding Date.

(g) Borrower agrees to pay on the Series B Tranche B Term Loan Funding Date to Administrative Agent, for the account of each New Term Loan Lender party to the Series B Tranche B Term Loan Joinder Agreement, as fee compensation for the funding of such New Term Loan Lender’s Series B Tranche B Term Loans, a closing fee in an amount equal to 2.00% of the aggregate principal amount of such New Term Loan Lender’s Series B Tranche B Term Loans funded as of the Series B Tranche B Term Loan Funding Date.

(h) Borrower agrees to pay on New Revolving Loan Commitment Effective Date to Administrative Agent, for the account of each New Revolving Loan Lender party to the Revolving Loan Commitment Increase Joinder Agreement, as fee compensation for the commitments of such New Revolving Loan Lender’s New Revolving Loan Commitments (as defined in the Revolving Loan Commitment Increase Joinder Agreement), a closing fee in an amount equal to 1.00% of the aggregate principal amount of such New Revolving Loan Lender’s New Revolving Loan Commitments as of the New Revolving Loan Commitment Effective Date.

(i) Borrower agrees to pay on the Series C Tranche B Term Loan Funding Date to Administrative Agent, for the account of each New Term Loan Lender party to the Series C Tranche B Term Loan Joinder Agreement, (1) as fee compensation for the funding of such New Term Loan Lender’s Series C Tranche B Term Loans, a closing fee in an amount equal to 0.50% of the aggregate principal amount of such New Term Loan Lender’s Series C Tranche B Term Loans funded as of the Series C Tranche B Term Loan Funding Date, and (2) a nonrefundable ticking fee on the amount of such New Term Loan Lender’s respective New Term Loan Commitment (as in effect on such date), for the period from October 4, 2012 to but excluding the Series C Tranche B Term Loan Funding Date, at a rate per annum, calculated on the basis of a year of 360 days and the actual number of days expired during the applicable period, equal to 3.25%.

-67-

(j) Borrower agrees to pay on the Amendment No. 3 Effective Date to the Administrative Agent, for the account of (i) each New Term Loan Lender (as defined in Amendment No. 3) party to Amendment No. 3, as fee compensation for the funding of such New Term Loan Lender’s Series A-1 Tranche A Term Loans, a closing fee in an amount equal to 0.10% of the aggregate principal amount of such New Lender’s Series A-1 Tranche A Term Loans funded on the Amendment No. 3 Effective Date, and (ii) each New Revolving Loan Lender (as defined in Amendment No. 3) party to Amendment No. 3, as fee compensation for the establishment of the New Revolving Loan Commitments (as defined in Amendment No. 3) of such New Revolving Loan Lender, a closing fee in an amount equal to 0.10% of the aggregate principal amount of the New Revolving Commitments of such New Revolving Loan Lender established as of the Amendment No. 3 Effective Date; provided that, notwithstanding the foregoing, (x) the closing fee payable to any New Term Loan Lender in respect of Exchanged Series A-1 Tranche A Term Loans (as defined in Amendment No. 3) shall be 0.10% of the aggregate principal amount of such Exchanged Series A-1 Tranche A Term Loans, and (y) with respect to any New Revolving Loan Lender that had outstanding Revolving Commitments immediately prior to the Amendment No. 3 Effective Date, the closing fee payable to such New Revolving Loan Lender in respect of the aggregate principal amount of its New Revolving Loan Commitments that are equal to or less than the aggregate principal amount of its Revolving Commitments that were outstanding immediately prior to the Amendment No. 3 Effective Date shall be 0.10% of the aggregate principal amount of its New Revolving Loan Commitments established as of the Amendment No. 3 Effective Date.

(k) Borrower agrees to pay: (i) on the Series A-2 Tranche A Term Loan Funding Date to the Administrative Agent, for the account of each New Term Loan Lender party to the Series A-2 Tranche A Term Loan Joinder Agreement, (1) as fee compensation for the funding of such New Term Loan Lender’s Series A-2 Tranche A Term Loans, a closing fee in an amount equal to 1.50% of the aggregate principal amount of such New Term Loan Lender’s Series A-2 Tranche A Term Loans funded as of the Series A-2 Tranche A Term Loan Funding Date and (2) a nonrefundable ticking fee on the aggregate principal amount of such New Term Loan Lender’s Series A-2 Tranche A Term Loan Commitment as of June 28, 2013, for the period from July 29, 2013, to but excluding the Series A-2 Tranche A Term Loan Funding Date, at a rate per annum, calculated on the basis of a year of 360 days and the actual number of days expired during the applicable period, equal to 2.25%; and (ii) (i) on the Series E Tranche B Term Loan Funding Date to the Administrative Agent, for the account of each New Term Loan Lender party to the Series E Tranche B Term Loan Joinder Agreement, (1) as fee compensation for the funding of such New Term Loan Lender’s Series E Tranche B Term Loans, a closing fee in an amount equal to 1.50% of the aggregate principal amount of such New Term Loan Lender’s Series E Tranche B Term Loans funded as of the Series E Tranche B Term Loan Funding Date and (2) a nonrefundable ticking fee on the aggregate principal amount of such New Term Loan Lender’s Series E Tranche B Term Loan Commitment as of June 28, 2013, for the period from July 29, 2013, to but excluding the Series E Tranche B Term Loan Funding Date, at a rate per annum, calculated on the basis of a year of 360 days and the actual number of days expired during the applicable period, equal to 3.75%.

2.12 Scheduled Payments/Commitment Reductions.

(a) Scheduled Installments . The principal amounts of the Tranche A Term Loans and Tranche B Term Loans shall be repaid in consecutive quarterly installments (each, an “ Installment ”) equal to (i) the amount of Series A-1 Tranche A Term Loans or Series A-2 Tranche A Term Loans, as applicable, set forth below or (ii) the percentage set forth below of, initially, an amount equal to the aggregate principal amount of Tranche A Term Loans and Tranche B Term Loans, as applicable, outstanding on the Third Restatement Date (or the Amendment No. 8 Effective Date in the case of Series A-3 Tranche A Term Loans (as increased by the principal amount of any Subsequent Exchanged Series A-3 Tranche A Term Loans (as defined in Amendment No. 8))) on the four quarterly scheduled Interest Payment Dates (each such date, an “ Installment Date ”), commencing March 31, 2012:

-68-

Amortization Date

Series A-1 Tranche A Term Loan Installments

Series A-2 Tranche A Term Loan Installments

Series A-3 Tranche A Term Loan Installments

Series C-2 Tranche B Term Loan Installments

Series D-2 Tranche B Term Loan Installments

Series E Tranche B Term Loan Installments

March 31, 2012 1.25% - - - June 30, 2012 1.25% - - - September 30, 2012 1.25% - - - December 31, 2012 1.25% - - - March 31, 2013 1.25% - - - June 30, 2013 1.25% - - - September 30, 2013 1.25% - - 0.25% December 31, 2013 2.5% — — — — — 0.25% — March 31, 2014 5.0% — — 1.25% 0.25% — 0.25% — 0.25% — June 30, 2014 5.0% $16,462,074.09 $13,019,451.66 1.25% 0.25% 0.25% 0.25% September 30, 2014

5.0%

$16,462,074.09 $13,019,451.66

1.25%

0.25%

0.25%

0.25%

December 31, 2014

5.0% $16,462,074.09

$13,019,451.66

1.25%

0.25%

0.25%

0.25%

March 31, 2015

5.0% $16,462,074.09

$13,019,451.66

2.5%

0.25%

0.25%

0.25%

June 30, 2015

5.0% $16,462,074.09

$13,019,451.66

2.5%

0.25%

0.25%

0.25%

September 30, 2015

5.0% $16,462,074.09

$13,019,451.66

2.5%

0.25%

0.25%

0.25%

December 31, 2015

5.0% $16,462,074.09

$13,019,451.66

2.5%

0.25%

0.25%

0.25%

March 31, 2016

5.0% $16,462,074.09

$13,019,451.66

5.0%

0.25%

0.25%

0.25%

Tranche A Term Loan Maturity Date

Remaining Balance

Remaining Balance

—

—

—

—

June 30, 2016 — 5.0% 0.25% 0.25% 0.25% September 30, 2016 — 5.0% 0.25% 0.25% 0.25% December 31, 2016 — 5.0% 0.25% 0.25% 0.25% March 31, 2017 — 5.0% 0.25% 0.25% 0.25% June 30, 2017 — 5.0% 0.25% 0.25% 0.25% September 30, 2017 — 5.0% 0.25% 0.25% 0.25% December 31, 2017 — 5.0% 0.25% 0.25% 0.25% March 31, 2018 — 5.0% 0.25% 0.25% 0.25% June 30, 2018 — 5.0% 0.25% 0.25% 0.25% September 30, 2018 — 5.0% 0.25% 0.25% 0.25% Series A-3 Tranche A Term Loan Maturity Date

—

Remaining Balance

—

—

—

December 31, 2018 — — 0.25% 0.25% 0.25% Tranche B Term Loan Maturity Date

—

—

—

Remaining Balance

—

March 31, 2019 — — 0.25% — 0.25% June 30, 2019 — — 0.25% — 0.25% September 30, 2019 — — 0.25% — 0.25% Series C Tranche B Term Loan Maturity Date

—

—

Remaining Balance

—

—

December 31, 2019 — — — — 0.25% March 31, 2020 — — — — 0.25% June 30, 2020 — — — — 0.25% Series E Tranche B Term Loan Maturity Date

—

—

—

—

Remaining Balance

-69-

Notwithstanding the foregoing, (x) such Installments shall be reduced in connection with any voluntary or mandatory prepayments of the Tranche A Term Loans and/or the Tranche B Term Loans as the case may be, in accordance with Sections 2.13, 2.14 and 2.15, as applicable; and (y) the Tranche A Term Loans and the Tranche B Term Loans, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Tranche A Term Loan Maturity Date and the Tranche B Term Loan Maturity Date, respectively.

In the event that any Extended Term Loans are established, such Extended Term Loans shall, subject to the requirements of Section 2.26, mature and be repaid by the Borrower in the amounts and on the dates set forth in the applicable Extension Amendment.

2.13 Voluntary Prepayments/Commitment Reductions.

(a) Voluntary Prepayments .

(i) Any time and from time to time:

(A) with respect to Base Rate Loans, Borrower may prepay any such Loans on any Business Day in whole or in part (in the case of a partial prepayment of Loans borrowed in Dollars, in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount);

(B) with respect to Eurodollar Rate Loans, subject to Section 2.18(c), Borrower may prepay any such Loans on any Business Day in whole or in part (in the case of a partial prepayment, in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount); and

(C) with respect to Swing Line Loans, Borrower may prepay any such Loans on any Business Day in whole or in part (in the case of a partial prepayment, in an aggregate minimum amount of $500,000, and in integral multiples of $100,000 in excess of that amount).

(ii) All such prepayments shall be made:

(A) upon not less than one Business Day’s prior written or telephonic notice in the case of Base Rate Loans;

-70-

(B) upon not less than three Business Days’ prior written or telephonic notice in the case of Eurodollar Rate Loans; and

(C) upon written or telephonic notice on the date of prepayment, in the case of Swing Line Loans;

in each case given to Administrative Agent or Swing Line Lender, as the case may be, by 12:00 p.m. (New York City time) on the date required and, if given by telephone, promptly confirmed by delivery of written notice thereof to Administrative Agent (and Administrative Agent will promptly transmit such original notice for Term Loans or Revolving Loans, as the case may be, by telefacsimile or telephone to each Lender) or Swing Line Lender, as the case may be. Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein; provided that a notice of voluntary prepayment may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or upon the closing of an acquisition transaction, in which case such notice of prepayment may be revoked by Borrower (by notice to Administrative Agent on or prior to the specified date) if such condition is not satisfied. Any such voluntary prepayment shall be applied as specified in Section 2.15(a).

Notwithstanding Section 2.13(a) above, in the event that on or prior to the first anniversary of the Third Restatement Date, the Borrower (x) makes any prepayment of Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of this Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the first anniversary of the Series A Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series A Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series A Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series A Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the first anniversary of the Series A Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series B Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series B Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series B Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the first anniversary of the Series D Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series C Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series C Tranche B Term Loans being prepaid and (II) in

-71-

the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series C Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the first anniversary of the Series D Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series D Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series D Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series D Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the six month anniversary of the Series C-1 Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series C-1 Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series C-1 Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series C-1 Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the six month anniversary of the Series D-1 Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series D-1 Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series D-1 Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series D-1 Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the six month anniversary of the Series E Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series E Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series E Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series E Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the six month anniversary of the Series C-2 Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series C-2 Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series C-2 Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series C-2 Tranche B Term Loans outstanding immediately prior to such amendment.

Notwithstanding Section 2.13(a) above, in the event that on or prior to the six month anniversary of the Series D-2 Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series D-2 Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any

-72-

amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the case of clause (x) above, a prepayment premium of 1% of the amount of the Series D-2 Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series D-2 Tranche B Term Loans outstanding immediately prior to such amendment.

(b) Voluntary Commitment Reductions .

(i) Borrower may, upon not less than three Business Days’ prior written or telephonic notice promptly confirmed by delivery of written notice thereof to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Commitments in an amount up to the amount by which the Revolving Commitments exceed the Total Utilization of Revolving Commitments at the time of such proposed termination or reduction; provided that any such partial reduction of the Revolving Commitments shall be in an aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in excess of that amount.

(ii) Borrower’s notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Revolving Commitments shall be effective on the date specified in Borrower’s notice and shall reduce the Revolving Commitment of each Lender proportionately to its Pro Rata Share thereof; provided that a notice of termination or partial reduction may state that such notice is conditional upon the effectiveness of other credit facilities or the receipt of the proceeds from the issuance of other Indebtedness or upon the closing of an acquisition transaction, in which case such notice of termination or partial reduction may be revoked by Borrower (by notice to the Administrative Agent on or prior to the specified date) if such condition is not satisfied.

2.14 Mandatory Prepayments.

(a) Asset Sales . No later than three Business Days following the date of receipt by Borrower or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the Loans as set forth in Section 2.15(b) in an aggregate amount equal to such Net Asset Sale Proceeds; provided that so long as no Event of Default shall have occurred and be continuing, Borrower or any of its Subsidiaries may invest an amount equal to all or any portion of such Net Asset Sale Proceeds received from Asset Sales of assets within 365 days of receipt thereof in real estate, equipment and other tangible assets, Intellectual Property or Intellectual Property licenses useful in the business of Borrower and its Subsidiaries (or any similar or related or ancillary business), in which case the amount of Net Asset Sale Proceeds so invested shall not be required to be applied to prepay the Loans pursuant to this Section 2.14(a).

(b) Insurance/Condemnation Proceeds . No later than three Business Days following the date of receipt by Borrower or any of its Subsidiaries, or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds in excess of $25,000,000 in the aggregate in any Fiscal Year, Borrower shall prepay the Loans as set forth in Section 2.15(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided that, so long as no Event of Default shall have occurred and be continuing, Borrower or any of its Subsidiaries may invest an amount equal to all or any portion of such Net Insurance/Condemnation Proceeds within 365 days of receipt thereof in real estate, equipment and other tangible assets useful in the business of Borrower and its Subsidiaries (or any similar or related or ancillary business), which investment may include the repair, restoration or replacement of the applicable assets thereof, in which case the amount of Net Insurance/Condemnation Proceeds so invested shall not be required to be applied to prepay the Loans pursuant to this Section 2.14(b).

-73-

(c) Issuance of Equity Securities . No later than three Business Days following the date of receipt by Borrower or any of its Subsidiaries of any Cash proceeds from a capital contribution to, or the issuance of any Equity Interests of, Borrower or any of its Subsidiaries (other than (i) pursuant to any employee stock or stock option compensation plan or any employment agreement, (ii) the receipt of a capital contribution from, or the issuance of Equity Interests to, Borrower or any of its Subsidiaries, (iii) the issuance of directors’ qualifying shares or of other nominal amounts of other Equity Interests that are required to be held by specified Persons under Applicable Law and (iv) in connection with a Permitted Majority Investment), Borrower shall prepay the Loans as set forth in Section 2.15(b) in an aggregate amount equal to 50% of such proceeds, in each case, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; provided that if, as of the end of the most recent four consecutive Fiscal Quarter period (determined for any such period by reference to the Compliance Certificate delivered pursuant to Section 5.1(c) calculating the Leverage Ratio as of the last day of such four consecutive Fiscal Quarter period), the Leverage Ratio determined on a Pro Forma Basis shall be 3.25:1.00 or less, Borrower shall only be required to make prepayments otherwise required hereby in an amount equal to 25% of such proceeds.

(d) Issuance of Debt . No later than two Business Days following the date of receipt by Borrower or any of its Subsidiaries of any Cash proceeds from the incurrence of any Indebtedness of Borrower or any of its Subsidiaries (other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.1), Borrower shall prepay the Loans as set forth in Section 2.15(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses.

(e) Consolidated Excess Cash Flow . In the event that there shall be Consolidated Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2012), Borrower shall, no later than ninety days after the end of such Fiscal Year, prepay the Loans as set forth in Section 2.15(b) in an aggregate amount equal to (i) 50% of such Consolidated Excess Cash Flow; provided that if, as of the last day of the most recently ended Fiscal Year the Leverage Ratio (determined for any such period by reference to the Compliance Certificate delivered pursuant to Section 5.1(c) calculating the Leverage Ratio as of the last day of such Fiscal Year) shall be (x) 3.25:1.00 or less, Borrower shall only be required to make the prepayments otherwise required hereby in an amount equal to 25% of such Consolidated Excess Cash Flow or (y) 2.50:1.00 or less, Borrower shall not be required to make prepayments pursuant to this Section 2.14(e) with respect to such Fiscal Year; minus (ii) voluntary repayments of the Loans (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments) made with Internally Generated Cash.

(f) Revolving Loans and Swing Line Loans . (i) Borrower shall from time to time prepay first , the Swing Line Loans, and second , the Revolving Loans to the extent necessary so that the Total Utilization of Revolving Commitments shall not at any time exceed the Revolving Commitments then in effect.

(g) Prepayment Certificate . Concurrently with any prepayment of the Loans pursuant to Sections 2.14(a) through 2.14(e), Borrower shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the case may be. In the event that Borrower shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Borrower shall promptly make an additional prepayment of the Loans in an amount equal to such excess, and Borrower shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess.

-74-

2.15 Application of Prepayments.

(a) Application of Voluntary Prepayments by Type of Loans . Any prepayment of any Loan pursuant to Section 2.13(a) shall be applied as specified by Borrower in the applicable notice of prepayment; provided that, in the event Borrower fails to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied as follows:

first , to repay outstanding Swing Line Loans to the full extent thereof;

second , to repay outstanding Revolving Loans to the full extent thereof; and

third , to prepay the Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof); and further applied on a pro rata basis to reduce the remaining scheduled Installments of principal of the Tranche A Term Loans, Tranche B Term Loans and the New Term Loans (if any).

(b) Application of Mandatory Prepayments by Type of Loans . Any amount required to be paid pursuant to Sections 2.14(a) through 2.14(e) shall be applied as follows:

first , to prepay Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) and further applied on a pro rata basis to reduce the remaining scheduled Installments of principal of the Tranche A Term Loans, Tranche B Term Loans and the New Term Loans (if any);

second , to prepay the Swing Line Loans to the full extent thereof;

third , to prepay the Revolving Loans to the full extent thereof;

fourth , to prepay outstanding reimbursement obligations with respect to Letters of Credit;

fifth , to cash collateralize Letters of Credit; and

sixth , to Borrower.

(c) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans . Considering each Class of Loans being prepaid separately, any prepayment thereof shall be applied, as between the Base Rate Loans and the Eurodollar Rate Loans, as directed by Borrower.

(d) Waivable Mandatory Prepayment . Anything contained herein to the contrary notwithstanding, so long as any Tranche A Term Loans are outstanding, in the event Borrower is required to make any mandatory prepayment (a “ Waivable Mandatory Prepayment ”) of the Tranche B Term Loans, not less than five Business Days prior to the date (the “ Required Prepayment Date ”) on which Borrower is required to make such Waivable Mandatory Prepayment, Borrower shall notify Administrative Agent of the amount of such prepayment, and Administrative Agent will promptly thereafter notify each Lender holding an outstanding Tranche B Term Loan of the amount of such Lender’s Pro Rata Share of such Waivable Mandatory Prepayment and such Lender’s option to refuse such amount. Each such Lender may exercise such option by giving written notice to Borrower and Administrative Agent of its election to do so on or before the third Business Day prior to the Required Prepayment Date (it being understood that any Lender which does not notify Borrower and Administrative Agent of its election to exercise such option on or before the third Business Day prior to the Required Prepayment Date shall be deemed to have elected, as of such date, not to exercise such option). On the Required Prepayment Date,

-75-

Borrower shall pay to Administrative Agent the amount of the Waivable Mandatory Prepayment, which amount shall be applied (i) in an amount equal to that portion of the Waivable Mandatory Prepayment payable to those Lenders that have elected not to exercise such option, to prepay the Tranche B Term Loans of such Lenders (which prepayment shall be applied to the scheduled Installments of principal of the Tranche B Term Loans in accordance with Section 2.15(b)), and (ii) in an amount equal to that portion of the Waivable Mandatory Prepayment otherwise payable to those Lenders that have elected to exercise such option, to prepay the Tranche A Term Loans (which prepayment shall be further applied to the scheduled installments of principal of the Tranche A Term Loans in accordance with Section 2.15(b)), with any excess after such prepayment of the Tranche A Term Loans being further applied in accordance with clauses second through sixth of Section 2.15(b).

2.16 General Provisions Regarding Payments.

(a) All payments by Borrower of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, recoupment, set-off or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than (x) 12:00 p.m. (New York City time) on the date due at the Principal Office designated by Administrative Agent for the account of Lenders; for purposes of computing interest and fees, funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Borrower on the next succeeding Business Day.

(b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Revolving Loans that are Base Rate Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid, and all such payments (and, in any event, any payments in respect of any Loan on a date when interest is due and payable with respect to such Loan) shall be applied to the payment of interest then due and payable before application to principal.

(c) Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, all fees payable with respect thereto, to the extent received by Administrative Agent.

(d) Notwithstanding the foregoing provisions hereof, if any Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter.

(e) Subject to the provisos set forth in the definition of “Interest Period” as they may apply to Revolving Loans, whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and, with respect to Revolving Loans only, such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder.

(f) Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Administrative Agent, for the account of the respective Lenders to which such payment is owed, in Dollars and otherwise in the manner set forth in clause (a) of this Section 2.16.

(g) Administrative Agent shall deem any payment by or on behalf of Borrower hereunder that is not made in same day funds prior to 12:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the next succeeding Business Day.

-76-

Administrative Agent shall give prompt telephonic notice to Borrower and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.10 from the date such amount was due and payable until the date such amount is paid in full.

(h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in Section 9.2 of the Second Amended and Restated Pledge and Security Agreement and the analogous sections of any other Collateral Documents.

2.17 Ratable Sharing . Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off, consolidation or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under any Insolvency Laws, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the “ Aggregate Amounts Due ” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker’s lien, consolidation, set-off or counterclaim with respect to any and all monies owing by Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. The provisions of this Section 2.17 shall not be construed to apply to (a) any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or (b) any payment obtained by any Lender as consideration for the assignment or sale of a participation in any of its Loans or other Obligations owed to it in accordance herewith.

2.18 Making or Maintaining Eurodollar Rate Loans.

(a) Inability to Determine Applicable Interest Rate . In the event that Administrative Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto absent manifest error), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market, adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate for any requested Interest Period with respect to a proposed

-77-

Eurodollar Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, Administrative Agent shall on such date give notice (by email or by telephone confirmed in writing) to Borrower and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Borrower and Lenders that the circumstances giving rise to such notice no longer exist, and (ii) any Funding Notice or Conversion/Continuation Notice given by Borrower with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Borrower.

(b) Illegality or Impracticability of Eurodollar Rate Loans . In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto absent manifest error) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the date hereof which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an “ Affected Lender ” and it shall on that day give notice (by email or by telephone confirmed in writing) to Borrower and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). If the Administrative Agent receives a notice from (x) any Lender pursuant to clause (i) of the preceding sentence or (y) a notice from Lenders constituting Requisite Lenders pursuant to clause (ii) of the preceding sentence, then (1) the obligation of the Lenders (or, in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by each Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Borrower pursuant to a Funding Notice or a Conversion/Continuation Notice, Lenders (or in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender) shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Lenders’ (or in the case of any notice pursuant to clause (i) of the preceding sentence, such Lender’s) obligations to maintain their respective outstanding Eurodollar Rate Loans (the “ Affected Loans ”), shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding anything herein to the contrary, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Borrower pursuant to a Funding Notice or a Conversion/Continuation Notice, Borrower shall have the option, subject to the provisions of Section 2.18(c), to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders by giving written or telephonic notice (promptly confirmed by delivery of written notice thereof) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender).

(c) Compensation for Breakage or Non-Commencement of Interest Periods . Borrower shall compensate each Lender, as promptly as practicable after written request by such Lender (which request shall set forth the basis for requesting such amounts and shall be conclusive absent manifest error), for all reasonable losses, expenses and liabilities (including any interest paid or calculated to be due and payable by such Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss, expense or liability sustained by such Lender in connection with the liquidation or deployment of such funds but excluding loss of anticipated profits) which such Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a

-78-

Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan; or (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Borrower.

(d) Booking of Eurodollar Rate Loans . Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of such Lender.

(e) Assumptions Concerning Funding of Eurodollar Rate Loans . Calculation of all amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans a matching deposit or other borrowing in the offshore interbank market for such currency for a comparable amount and for a comparable period through the transfer of such matching deposit or other borrowing from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided , however , each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this Section 2.18 and under Section 2.19.

2.19 Increased Costs; Capital Adequacy.

(a) Compensation for Increased Costs and Taxes . In the event that any Lender (which term shall include Issuing Bank for purposes of this Section 2.19(a)) shall reasonably determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any Applicable Law, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new Applicable Law), or any determination of any Governmental Authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any Governmental Authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Excluded Taxes (including any change in the rate of Excluded Taxes), Indemnified Taxes or Other Taxes indemnified under Section 2.20) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of “Adjusted Eurodollar Rate”); or (iii) imposes any other condition, cost or expense (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed a change of law, regardless of the date enacted, adopted or issued; then, in any such case, Borrower shall pay to such Lender, as promptly as practicable after receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating,

-79-

interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this Section 2.19(a), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

(b) Capital Adequacy Adjustment . In the event that any Lender (which term shall include Issuing Bank for purposes of this Section 2.19(b)) shall have reasonably determined that the adoption, effectiveness, phase in or applicability after the Third Restatement Date of any Applicable Law regarding capital or liquidity adequacy, reserve requirements or similar requirements, or any change therein or in the interpretation, application or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any Applicable Law regarding capital or liquidity adequacy, reserve requirements or similar requirements (whether or not having the force of law) of any such Governmental Authority, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans or Revolving Commitments or Letters of Credit, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy); provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed a change of law, regardless of the date enacted, adopted or issued, then from time to time, within five Business Days after receipt by Borrower from such Lender of the statement referred to in the next sentence, Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after tax basis for such reduction. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.19(b), which statement shall be conclusive and binding upon all parties hereto absent manifest error.

2.20 Taxes; Withholding, etc.

(a) Payments to Be Free and Clear . All sums payable by or on behalf of any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax.

(b) Withholding of Taxes . If any Credit Party or any other applicable withholding agent is required by law to make any deduction or withholding on account of any Indemnified Taxes or Other Taxes from any sum paid or payable by any Credit Party to any Agent or any Lender (which term shall include each Swing Line Lender and Issuing Bank for purposes of this Section 2.20) under any of the Credit Documents: (i) Borrower shall notify Administrative Agent of any such requirement or any change in any such requirement as soon as Borrower becomes aware of it; (ii) the applicable withholding agent shall make such deduction or withholding and pay such Indemnified Taxes or Other Taxes before the date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii)

-80-

the sum payable by the Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment (including any deduction, withholding or payment applicable to additional amounts payable under this Section 2.20), Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty days after the due date of payment of any Indemnified Taxes or Other Taxes which it is required by clause (ii) above to pay, Borrower (if Borrower is the withholding agent) shall deliver to Administrative Agent evidence reasonably satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority.

(c) Borrower agrees to indemnify each Agent and each Lender for (i) the full amount of Indemnified Taxes and Other Taxes (including any Indemnified Taxes or Other Taxes attributable to any amounts payable under this Section 2.20) payable by such Agent or such Lender (whether or not such Taxes are correctly or legally imposed) and (ii) any reasonable expenses arising therefrom or with respect thereto. A certificate from the relevant Lender or Agent, setting forth in reasonable detail the basis and calculation of such Taxes shall be conclusive, absent manifest error.

(d) Evidence of Exemption from Withholding Tax . Each Lender shall, at such times as are reasonably requested by Borrower or the Administrative Agent, provide Borrower and the Administrative Agent with any documentation prescribed by law or reasonably requested by Borrower or Administrative Agent certifying as to any entitlement of such Lender to an exemption from, or reduction in, withholding tax with respect to any payments to be made to such Lender under the Credit Documents. Each Lender shall, whenever a lapse in time or change in such Lender’s circumstances renders such documentation obsolete, expired or inaccurate in any material respect, deliver promptly to Borrower and the Administrative Agent updated or other appropriate documentation (including any new documentation reasonably requested by the applicable withholding agent) or promptly notify Borrower and the Administrative Agent of its inability to do so.

Notwithstanding anything to the contrary, a Lender shall be required to provide any documentation under this Section 2.20(d) only to the extent it is legally eligible to do so.

(e) Payment of Taxes . In addition, Borrower agrees to pay any present or future stamp, court or documentary, intangible, recording, filing or similar Taxes imposed by any Governmental Authority, which arise from any payment made under any Credit Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Credit Document (“ Other Taxes ”).

(f) Treatment of Certain Refunds . If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes (whether received in cash or applied by the taxing authority granting the refund to offset another Taxes otherwise owed) as to which it has been indemnified pursuant to this Section 2.20 (including additional amounts paid pursuant to this Section 2.20), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including any Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid to such indemnified party pursuant to the previous sentence ( plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this Section 2.20(f), in no

-81-

event will any indemnified party be required to pay any amount to any indemnifying party pursuant to this Section 2.20(f) if such payment would place such indemnified party in a less favorable position (on a net after-Tax basis) than such indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This Section 2.20(f) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes which it deems confidential) to the indemnifying party or any other Person.

(g) Minimum Interest . As part of entering into this Agreement, the parties hereto have assumed that the interest payable at the rates set forth in this Agreement is not and will not become subject to Swiss Federal Withholding Tax. Notwithstanding the foregoing, the parties hereto agree that in the event that (A) Swiss Federal Withholding Tax is due on interest payments or other payments by any Credit Party under this Agreement and (B) Section 2.20(b) ( Withholding of Taxes ) is unenforceable for any reason:

(x) the applicable interest rate in relation to that interest payment shall be (i) the interest rate which would have applied to that interest payment as provided for in Section 2.8 divided by (ii) 1 minus the rate at which the relevant Swiss Federal Withholding Tax deduction is required to be made under Swiss domestic tax law and / or applicable double taxation treaties (where the rate at which the relevant Swiss Federal Withholding Tax deduction is required to be made is for this purpose expressed as a fraction of 1); and

(y) the Credit Party shall (i) pay the relevant interest at the adjusted rate in accordance with paragraph (x) above, (ii) make the Swiss Federal Withholding Tax deduction on the interest so recalculated and (iii) all references to a rate of interest under the Agreement shall be construed accordingly.

To the extent that interest payable by any Credit Party under this Agreement becomes subject to Swiss Federal Withholding Tax, the parties shall promptly co-operate in completing any procedural formalities (including submitting forms and documents required by the Swiss or foreign tax authorities) to the extent possible and necessary for the Credit Party to obtain the tax ruling from the Swiss Federal Tax Administration.

Section 2.20(f) equally applies to this Section 2.20(g).

2.21 Obligation to Mitigate . Each Lender (which term shall include Issuing Bank for purposes of this Section 2.21) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Revolving Commitments, Loans or Letters of Credit or the interests of such Lender; provided , such Lender will not be obligated to utilize such other office or take such other measures pursuant to this Section 2.21 unless Borrower agrees to pay all reasonable incremental expenses incurred by such Lender as a result of utilizing such other office or

-82-

take such other measures as described above. A certificate as to the amount of any such expenses payable by Borrower pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Borrower (with a copy to Administrative Agent) shall be conclusive absent manifest error.

2.22 Defaulting Lenders . Anything contained herein to the contrary notwithstanding, in the event that any Lender becomes a Defaulting Lender, then during any Default Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of any amendment, waiver or consent with respect to any provision of the Credit Documents that requires the approval of Requisite Lenders, and Borrower shall pay to Administrative Agent such additional amounts of cash as reasonably requested by the Issuing Bank or the Swing Line Lender to be held as security for Borrower’s reimbursement Obligations in respect of Letters of Credit and Swing Line Loans then outstanding (such amount not to exceed such Defaulting Lender’s obligations under Sections 2.3 and 2.4). During any Default Period with respect to a Funds Defaulting Lender that is not also an Insolvency Defaulting Lender, (a) any amounts that would otherwise be payable to such Funds Defaulting Lender with respect to its Revolving Loans and Revolving Commitments under the Credit Documents (including, without limitation, voluntary and mandatory prepayments and fees) shall, in lieu of being distributed to such Funds Defaulting Lender, be retained by Administrative Agent and applied in the following order of priority: first , to the payment of any amounts owing by such Funds Defaulting Lender to Administrative Agent, second , to the payment of any amounts owing by such Funds Defaulting Lender to the Swing Line Lender, third , to the payment of any amounts owing by such Funds Defaulting Lender to the Issuing Bank, and fourth , to the payment of the Revolving Loans of other Lenders (but not to the Revolving Loans of such Funds Defaulting Lender) as if such Funds Defaulting Lender had funded all Defaulted Loans of such Funds Defaulting Lender; and (b) the Total Utilization of Revolving Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender. During any Default Period with respect to an Insolvency Defaulting Lender, any amounts that would otherwise be payable to such Insolvency Defaulting Lender under the Credit Documents (including, without limitation, voluntary and mandatory prepayments and fees including fees payable under Section 2.11) may, in lieu of being distributed to such Insolvency Defaulting Lender, be retained by Administrative Agent to collateralize indemnification and reimbursement obligations of such Insolvency Defaulting Lender in an amount reasonably determined by Administrative Agent. No Revolving Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.22, performance by Borrower of its obligations hereunder and the other Credit Documents shall not be excused or otherwise modified as a result of any Lender becoming a Defaulting Lender or the operation of this Section 2.22. The rights and remedies against a Defaulting Lender under this Section 2.22 are in addition to other rights and remedies which Borrower may have against such Defaulting Lender as a result of it becoming a Defaulting Lender and which Administrative Agent or any Lender may have against such Defaulting Lender with respect thereto. If any Letter of Credit Usage exists at the time such Lender becomes a Defaulting Lender then all or any part of such Letter of Credit Usage shall be reallocated among the non-Defaulting Lenders in accordance with their respective Pro Rata Share but only to the extent (x) the sum of each non-Defaulting Lender’s Revolving Exposures plus such Defaulting Lender’s Letter of Credit Usage does not exceed the total of such non-Defaulting Lender’s Revolving Commitments and (y) no Default or Event of Default exists or shall have occurred.

2.23 Removal or Replacement of a Lender . Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “ Increased Cost Lender ”) shall give notice to Borrower that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after Borrower’s request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender, (ii) the Default Period for such Defaulting

-83-

Lender shall remain in effect, and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five Business Days after Borrower’s request that it cure such default; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.5(b), the consent of Requisite Lenders shall have been obtained but the consent of one or more of such other Lenders (each a “ Non-Consenting Lender ”) whose consent is required shall not have been obtained; then, with respect to each such Increased Cost Lender, Defaulting Lender or Non-Consenting Lender (the “ Terminated Lender ”), Borrower may, by giving written notice to Administrative Agent and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible Assignees (each a “ Replacement Lender ”) in accordance with the provisions of Section 10.6 and Borrower shall pay the fees, if any, payable thereunder in connection with any such assignment from an Increased Cost Lender, a Non-Consenting Lender or Insolvency Defaulting Lender, and the Funds Defaulting Lender (if not also an Insolvency Defaulting Lender) shall pay the fees, if any, payable thereunder in connection with any such assignment from such Defaulting Lender; provided , (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all unreimbursed drawings that have been funded by such Terminated Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.11; (2) on the date of such assignment, Borrower shall pay any amounts payable to such Terminated Lender pursuant to Section 2.18(c), 2.19 or 2.20; or otherwise as if it were a prepayment; (3) in the case of any assignment resulting from a claim for compensation under Section 2.19 or payments required to be made under Section 2.20, such assignment will result in a reduction in such compensation or payment and (4) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender; provided that Borrower may not make such election with respect to any Terminated Lender that is also an Issuing Bank unless, prior to the effectiveness of such election, Borrower shall have caused each outstanding Letter of Credit issued thereby to be cancelled. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Revolving Commitments, if any, such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided that any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender. Each Lender agrees that if Borrower exercises its option hereunder to cause an assignment by such Lender as a Terminated Lender, such Lender shall, promptly after receipt of written notice of such election, execute and deliver all documentation necessary to effectuate such assignment in accordance with Section 10.6. In the event that a Terminated Lender does not comply with the requirements of the immediately preceding sentence within one Business Day after receipt of such notice, each Lender hereby authorizes and directs the Administrative Agent to execute and deliver such documentation as may be required to give effect to an assignment in accordance with Section 10.6 on behalf of such Terminated Lender and any such documentation so executed by the Administrative Agent shall be effective for purposes of documenting an assignment pursuant to Section 10.6.

2.24 Interest Act (Canada) . For purposes of disclosure pursuant to the Interest Act (Canada), the annual rates of interest or fees to which the rates of interest or fees provided for in this Agreement and the other Credit Documents (and stated herein or therein, as applicable, to be computed on the basis of a 360 day year or any other period of time less than a calendar year) are equivalent are the rates so provided for multiplied by the actual number of days in the applicable calendar year and divided by 360 or the actual number of days in such other period of time, respectively.

2.25 Incremental Facilities . Borrower may by written notice to Administrative Agent elect to request (A) prior to the Revolving Commitment Termination Date, an increase to the existing

-84-

Revolving Loan Commitments (any such increase, the “ New Revolving Loan Commitments ”) and/or (B) the establishment of one or more new term loan commitments (the “ New Term Loan Commitments ”), by an amount such that Borrower and its Subsidiaries shall be in compliance, on a Pro Forma Basis after giving effect to such New Term Loans or New Revolving Loan Commitments and the application of the proceeds thereof, with a Secured Leverage Ratio of 2.50 to 1.00; provided , that any New Revolving Loan Commitment or New Term Loan Commitment shall not be less than $25,000,000 individually (or such lesser amount which shall be approved by Administrative Agent or such lesser amount that represents all remaining availability under any limit set forth above in this Section 2.25 ), and integral multiples of $10,000,000 in excess of that amount. Each such notice shall specify (A) the date (each, an “ Increased Amount Date ”) on which Borrower proposes that the New Revolving Loan Commitments or New Term Loan Commitments shall be effective and (B) the identity of each Lender or other Person that is an Eligible Assignee; provided that, Issuing Bank shall have consented (such consent not to be unreasonably withheld or delayed) to the allocation of New Revolving Loan Commitments to any Eligible Assignee under clause (ii) of the definition thereof (each, a “ New Revolving Loan Lender ” or “ New Term Loan Lender ,” as applicable) to whom Borrower proposes any portion of such New Revolving Loan Commitments or New Term Loan Commitments, as applicable, be allocated and the amounts of such allocations; provided that GSLP may elect or decline to arrange such New Revolving Loan Commitments or New Term Loan Commitments, as applicable, in its sole discretion and any Lender approached to provide all or a portion of the New Revolving Loan Commitments or New Term Loan Commitments may elect or decline, in its sole discretion, to provide a New Revolving Loan Commitments or New Term Loan Commitment.

Such New Revolving Loan Commitments or New Term Loan Commitments shall become effective, as of such Increased Amount Date; provided that (1) no Default or Event of Default shall exist on such Increased Amount Date before or after giving effect to such New Revolving Loan Commitments or New Term Loan Commitments; (2) both before and after giving effect to the making of any Series of New Term Loans, each of the conditions set forth in Section 3.3(a) shall be satisfied; provided that, solely with respect to the effectiveness of New Term Loans incurred and/or New Revolving Loan Commitments established to finance the Medicis Acquisition, the Bausch & Lomb Acquisition or any Permitted Acquisition consummated after the Amendment No. 5 Effective Date, the Borrower shall not be required to satisfy the conditions set forth in clause (iii) or (iv) of such Section 3.3(a); (3) Borrower and its Subsidiaries shall be in compliance, on a Pro Forma Basis after giving effect to such New Term Loans and the application of the proceeds thereof, with each of the covenants set forth in Section 6.7 as of the last day of the most recently ended Fiscal Quarter after giving effect to such New Revolving Loan Commitments or New Term Loan Commitments; (4) the New Revolving Loan Commitments or New Term Loan Commitments, as applicable, shall be effected pursuant to one or more Joinder Agreements executed and delivered by the applicable New Revolving Loan Lender or New Term Loan Lender, as the case may be, Borrower and Administrative Agent (it being understood that the only representations and warranties that shall be certified in the Joinder Agreement with respect to New Term Loans incurred and/or New Revolving Loan Commitments established to finance the Medicis Acquisition, the Bausch & Lomb Acquisition or any Permitted Acquisition consummated after the Amendment No. 5 Effective Date shall be those representations and warranties set forth in the seventh paragraph of this Section 2.25), and each of which shall be recorded in the Register and shall be subject to the requirements set forth in Section 2.20(d); (5) Borrower shall make any payments required pursuant to Section 2.18(c) in connection with the New Revolving Loan Commitments or New Term Loan Commitments, as applicable; (6) Borrower shall deliver or cause to be delivered any legal opinions or other documents reasonably requested by Administrative Agent in connection with any such transaction . Any New Term Loans made on an Increased Amount Date shall be designated a separate series (“ Series ” ) of New Term Loans for all purposes of this Agreement ; and (7) Borrower and its Subsidiaries shall be in compliance, on a Pro Forma Basis, with a Leverage Ratio as of the Increased Amount Date (assuming in the case of any New Revolving Commitments, that the full amount of all outstanding Revolving Commitments, including New Revolving Commitments, are

-85-

borrowed on such date), of 5.25 to 1.00; provided , further , that, (x) the effectiveness of New Term Loans incurred to finance the Medicis Acquisition or the Bausch & Lomb Acquisition shall not be subject to Borrower’s compliance with clauses (1), (3) or (7) of the foregoing proviso and (y) the effectiveness of New Term Loans incurred and/or New Revolving Loan Commitments established to finance any Permitted Acquisition consummated after the Amendment No. 5 Effective Date shall not be subject to compliance with clause (1) of the foregoing proviso.

On any Increased Amount Date on which New Revolving Loan Commitments are effected, subject to the satisfaction of the foregoing terms and conditions, (a) each of the Revolving Lenders shall assign to each of the New Revolving Loan Lenders, and each of the New Revolving Loan Lenders shall purchase from each of the Revolving Loan Lenders, at the principal amount thereof (together with accrued interest), such interests in the Revolving Loans outstanding on such Increased Amount Date as shall be necessary in order that, after giving effect to all such assignments and purchases, such Revolving Loans will be held by existing Revolving Loan Lenders and New Revolving Loan Lenders ratably in accordance with their Revolving Loan Commitments after giving effect to the addition of such New Revolving Loan Commitments to the Revolving Loan Commitments, (b) each New Revolving Loan Commitment shall be deemed for all purposes a Revolving Loan Commitment and each Loan made thereunder (a “ New Revolving Loan ”) shall be deemed, for all purposes, a Revolving Loan and (c) each New Revolving Loan Lender shall become a Lender with respect to the New Revolving Loan Commitment and all matters relating thereto.

On any Increased Amount Date on which any New Term Loan Commitments of any Series are effective, subject to the satisfaction of the foregoing terms and conditions, (i) each New Term Loan Lender of any Series shall make a Loan to Borrower (a “ New Term Loan ”) in an amount equal to its New Term Loan Commitment of such Series (unless the Joinder Agreement with respect to any Series of New Term Loans shall provide for the making of such Series of New Term Loans on a date subsequent to the applicable Increased Amount Date), and (ii) each New Term Loan Lender of any Series shall become a Lender hereunder with respect to the New Term Loan Commitment of such Series and the New Term Loans of such Series made pursuant thereto.

Administrative Agent shall notify Lenders promptly upon receipt of Borrower’s notice of each Increased Amount Date and in respect thereof (x) the New Revolving Loan Commitments and the New Revolving Loan Lenders or the Series of New Term Loan Commitments and the New Term Loan Lenders of such Series, as applicable, and (y) in the case of each notice to any Revolving Loan Lender, the respective interests in such Revolving Loan Lender’s Revolving Loans, in each case subject to the assignments contemplated by this Section.

The terms and provisions of the Tranche A New Term Loans of any Series shall be, except with respect to pricing, amortization and maturity and except as otherwise set forth herein or in the Joinder Agreement and otherwise reasonably satisfactory to Administrative Agent, identical to the Tranche A Term Loans. The terms and provisions of the Tranche B New Term Loans of any Series shall be, except with respect to pricing, amortization and maturity and except as otherwise set forth herein or in the Joinder Agreement and otherwise reasonably satisfactory to Administrative Agent, identical to the Tranche B Term Loans. The terms and provisions of the New Revolving Loans shall be, except with respect to maturity, identical to the Revolving Loans. In any event (i) the weighted average life to maturity of all New Term Loans of any Series shall be no shorter than the then-remaining weighted average life to maturity of the Tranche B Term Loans (other than with respect to a Tranche A New Term Loan, which shall have a weighted average life to maturity not shorter than the remaining weighted average life to maturity of the Tranche A Term Loans), (ii) the applicable New Term Loan Maturity Date of each Series shall be no shorter than the latest of the final maturity of the Tranche B Term Loans (other than with respect to a Tranche A New Term Loan, which shall have a maturity date not earlier than the Tranche A Term Loan

-86-

Maturity Date), and (iii) the yield applicable to the New Term Loans of each Series shall be determined by Borrower and the applicable new Lenders and shall be set forth in each applicable Joinder Agreement; provided however (A) that the yield applicable to the Tranche A New Term Loans (after giving effect to all upfront or similar fees or original issue discount payable with respect to such Tranche A New Term Loans) shall not be greater than the applicable yield payable pursuant to the terms of this Agreement as amended through the date of such calculation with respect to Tranche A Term Loans (including any upfront or similar fees or original issue discount paid and payable to the initial Lenders hereunder) plus 0.50% per annum unless the interest rate with respect to the Tranche A Term Loan is increased so as to cause the then applicable yield under this Agreement on the Tranche A Term Loans (including any upfront or similar fees or original issue discount paid and payable to the initial Lenders hereunder) to equal the yield then applicable to the Tranche A New Term Loans (after giving effect to all upfront or similar fees or original issue discount payable with respect to such Tranche A New Term Loans) minus 0.50% per annum and (B) that the yield applicable to the Tranche B New Term Loans (after giving effect to all upfront or similar fees or original issue discount payable with respect to such Tranche B New Term Loans) shall not be greater than the applicable yield payable pursuant to the terms of this Agreement as amended through the date of such calculation with respect to Tranche B Term Loans (including any upfront or similar fees or original issue discount paid and payable to the initial Lenders hereunder) plus 0.50% per annum unless the interest rate with respect to the Tranche B Term Loan is increased so as to cause the then applicable yield under this Agreement on the Tranche B Term Loans (including any upfront or similar fees or original issue discount paid and payable to the initial Lenders hereunder) to equal the yield then applicable to the Tranche B New Term Loans (after giving effect to all upfront or similar fees or original issue discount payable with respect to such Tranche B New Term Loans) minus 0.50% per annum. For purposes of clause (iii) of the immediately preceding sentence, upfront or similar fees and original issue discount will be equated to interest rates based upon an assumed four-year average life. Each Joinder Agreement may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Credit Documents as may be necessary or appropriate, in the opinion of the Administrative Agent, to effect the provisions of this Section 2.25.

Except as expressly set forth in this Section 2.25, New Term Loans incurred and/or New Revolving Loan Commitments established to finance the Medicis Acquisition, the Bausch & Lomb Acquisition or any Permitted Acquisition after the Amendment No. 5 Effective Date shall be entered into in accordance with this Section 2.25 and shall be subject to the terms and conditions hereof; provided that as of the date of establishment of such New Term Loans incurred to finance the Medicis Acquisition or the Bausch & Lomb Acquisition, Borrower shall not be required to comply with the Secured Leverage Ratio set forth in the first paragraph of this Section 2.25; provided that, as of such date, the representations and warranties set forth in Section 4.1(a) (solely with respect to due organization) 4.1(b) (solely with respect to the Joinder Agreement to be entered into with respect to such New Term Loans and/or New Revolving Loan Commitments, as applicable), 4.3 (solely with respect to the Joinder Agreement to be entered into with respect to such New Term Loans and/or New Revolving Loan Commitments, as applicable), 4.4(a)(ii) (solely with respect to the Joinder Agreement to be entered into with respect to such New Term Loans and/or New Revolving Loan Commitments, as applicable), 4.6 (solely with respect to the Joinder Agreement to be entered into with respect to such New Term Loans and/or New Revolving Loan Commitments, as applicable), 4.15 (solely with respect to regulation under the Investment Company Act of 1940), 4.16 (solely with respect to the Joinder Agreement to be entered into with respect to such New Term Loans and/or New Revolving Loan Commitments, as applicable) and 4.23 (solely with respect to the PATRIOT Act), in each case, shall be true and correct in all material respects on and as of such date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; provided that, in each case, such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof.

-87-

2.26 Extensions of Loans and Commitments.

(a) The Borrower may, at any time request that all or a portion of the Term Loans of any Class (an “ Existing Term Loan Tranche ” ) be modified to constitute another Class of Term Loans in order to extend the scheduled final maturity date thereof (any such Term Loans which have been so modified, “ Extended Term Loans ” ) and to provide for other terms consistent with this Section 2.26. In order to establish any Extended Term Loans, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders of the applicable Existing Term Loan Tranche) (a “ Term Loan Extension Request ” ) setting forth the proposed terms of the Extended Term Loans to be established, which terms shall be identical to those applicable to the Term Loans of the Existing Term Loan Tranche from which they are to be modified except (i) the scheduled final maturity date shall be extended to the date set forth in the applicable Extension Amendment and the amortization shall be as set forth in the Extension Amendment, (ii) (A) the Applicable Margin with respect to the Extended Term Loans may be higher or lower than the Applicable Margin for the Term Loans of such Existing Term Loan Tranche and/or (B) additional fees (including prepayment or termination premiums) may be payable to the Lenders providing such Extended Term Loans in addition to or in lieu of any increased Applicable Margin contemplated by the preceding clause (A), in each case, to the extent provided in the applicable Extension Amendment, (iii) any Extended Term Loans may participate on a pro rata basis or a less than pro rata basis (but not greater than a pro rata basis) in any voluntary or mandatory prepayments or prepayment of Term Loans hereunder in each case as specified in the respective Term Loan Extension Request, (iv) the final maturity date and the scheduled amortization applicable to the Extended Term Loans shall be set forth in the applicable Extension Amendment and the scheduled amortization of such Existing Term Loan Tranche shall be adjusted to reflect the amortization schedule (including the principal amounts payable pursuant thereto) in respect of the Term Loans under such Existing Term Loan Tranche that have been extended as Extended Term Loans as set forth in the applicable Extension Amendment; provided, however, that the weighted average life to maturity of such Extended Term Loans shall be no shorter than the weighted average life to maturity of the Term Loans of such Existing Term Loan Tranche and (v) the covenants set forth in Section 6.7 may be modified in a manner acceptable to the Borrower, the Administrative Agent and the Lenders party to the applicable Extension Amendment, such modifications to become effective only after the latest maturity date of the then outstanding Term Loans in effect immediately prior to giving effect to such Extension Amendment (it being understood that each Lender providing Extended Term Loans, by executing an Extension Amendment, agrees to be bound by such provisions and waives any inconsistent provisions set forth in Section 2.5(a), 2.17 or 10.5). Except as provided above, each Lender holding Extended Term Loans shall be entitled to all the benefits afforded by this Agreement (including, without limitation, the provisions set forth in Section 2.15(a) and 2.15(b) applicable to Term Loans) and the other Credit Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guarantees and security interests created by the Collateral Documents. The Credit Parties shall take any actions reasonably required by Administrative Agent to ensure and/or demonstrate that the Lien and security interests granted by the Collateral Documents continue to secure all the Obligations and continue to be perfected under the UCC or otherwise after giving effect to the extension of any Term Loans, including, without limitation, the procurement of title insurance endorsements reasonably requested by and satisfactory to the Administrative Agent. No Lender shall have any obligation to agree to have any of its Term Loans of any Existing Term Loan Tranche modified to constitute Extended Term Loans pursuant to any Term Loan Extension Request. Any Extended Term Loans of any Extension Tranche shall constitute a separate Class of Term Loans from the Existing Term Loan Tranche from which they were modified.

(b) The Borrower may, at any time request that all or a portion of the Revolving Commitments of any Class (an “ Existing Revolving Tranche ” and any related Revolving Loans thereunder, “ Existing Revolving Loans ” ) be modified to constitute another Class of Revolving Commitments in order to extend the termination date thereof (any such Revolving Commitments which have been so

-88-

modified, “ Extended Revolving Commitments ” and any related Revolving Loans, “ Extended Revolving Loans ” ) and to provide for other terms consistent with this Section 2.26. In order to establish any Extended Revolving Commitments, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders of the applicable Existing Revolving Tranche) (a “ Revolving Extension Request ” ) setting forth the proposed terms of the Extended Revolving Commitments to be established, which terms shall be identical to those applicable to the Revolving Commitments of the Existing Revolving Tranche from which they are to be modified except (i) the scheduled termination date of the Extended Revolving Commitments and the related scheduled maturity date of the related Extended Revolving Loans shall be extended to the date set forth in the applicable Extension Amendment, (ii) (A) the Applicable Margin with respect to the Extended Revolving Loans may be higher or lower than the Applicable Margin for the Revolving Loans of such Existing Revolving Tranche and/or (B) additional fees may be payable to the Lenders providing such Extended Revolving Commitments in addition to or in lieu of any increased Applicable Margin contemplated by the preceding clause (A), in each case, to the extent provided in the applicable Extension Amendment and (iii) the covenants set forth in Section 6.7 may be modified in a manner acceptable to the Borrower, the Administrative Agent and the Lenders party to the applicable Extension Amendment, such modifications to become effective only after the latest maturity date of the then outstanding Revolving Loans and/or Revolving Commitments in effect immediately prior to giving effect to such Extension Amendment (it being understood that each Lender providing Extended Revolving Commitments, by executing an Extension Amendment, agrees to be bound by such provisions and waives any inconsistent provisions set forth in Section 2.5(a), 2.17 or 10.5). Except as provided above, each Lender holding Extended Revolving Commitments shall be entitled to all the benefits afforded by this Agreement (including, without limitation, the provisions set forth in Sections 2.15(a) and 2.15(b) applicable to existing Revolving Loans) and the other Credit Documents, and shall, without limiting the foregoing, benefit equally and ratably from the Guarantees and security interests created by the Collateral Documents. The Credit Parties shall take any actions reasonably required by Administrative Agent to ensure and/or demonstrate that the Lien and security interests granted by the Collateral Documents continue to secure all the Obligations and continue to be perfected under the UCC or otherwise after giving effect to the extension of any Revolving Commitments, including, without limitation, the procurement of title insurance endorsements reasonably requested by and satisfactory to the Administrative Agent. No Lender shall have any obligation to agree to have any of its Revolving Commitments of any Existing Revolving Tranche modified to constitute Extended Revolving Commitments pursuant to any Revolving Extension Request. Any Extended Revolving Commitments of any Extension Tranche shall constitute a separate Class of Revolving Commitments from the Existing Revolving Tranche from which they were modified. If, on any Extension Date, any Revolving Loans of any Extending Lender are outstanding under the applicable Existing Revolving Tranche, such Revolving Loans (and any related participations) shall be deemed to be allocated as Extended Revolving Loans (and related participations) and Existing Revolving Loans (and related participations) in the same proportion as such Extending Lender’s Extended Revolving Commitments bear to its remaining Revolving Commitments of the Existing Revolving Tranche. In addition, if so provided in the relevant Extension Amendment and with the consent of Issuing Bank, participations in Letters of Credit expiring on or after the latest Revolving Commitment Termination Date then in effect shall be re-allocated from Lenders of the Existing Revolving Tranche to Lenders holding Extending Revolving Commitments in accordance with the terms of such Extension Amendment; provided, however, that such participation interests shall, upon receipt thereof by the relevant Lenders holding Extending Revolving Commitments, be deemed to be participation interests in respect of such Extending Revolving Commitments and the terms of such participation interests (including, without limitation, the commission applicable thereto) shall be adjusted accordingly.

(c) The Borrower shall provide the applicable Extension Request at least five (5) Business Days prior to the date on which Lenders under the Existing Tranche are requested to respond (or such shorter period as is agreed to by Administrative Agent in its sole discretion). Any Lender (an “ Extending Lender ” ) wishing to have all or a portion of its Term Loans or Revolving Commitments of the Existing

-89-

Tranche subject to such Extension Request modified to constitute Extended Term Loans or Extended Revolving Commitments, as applicable, shall notify the Administrative Agent (an “ Extension Election ” ) on or prior to the date specified in such Extension Request of the amount of its Term Loans or Revolving Commitments of the Existing Tranche that it has elected to modify to constitute Extended Term Loans or Extended Revolving Commitments, as applicable. In the event that the aggregate amount of Term Loans or Revolving Commitments of the Existing Tranche subject to Extension Elections exceeds the amount of Extended Term Loans or Extended Revolving Commitments, as applicable, requested pursuant to the Extension Request, Term Loans or Revolving Commitments subject to such Extension Elections shall be modified to constitute Extended Term Loans or Extended Revolving Commitments, as applicable, on a pro rata basis based on the amount of Term Loans or Revolving Commitments included in such Extension Elections. The Borrower shall have the right to withdraw any Extension Request upon written notice to the Administrative Agent in the event that the aggregate amount of Term Loans or Revolving Commitments of the Existing Tranche subject to such Extension Request is less than the amount of Extended Term Loans or Extended Revolving Commitments, as applicable, requested pursuant to such Election Request.

(d) Extended Term Loans or Extended Revolving Commitments, as applicable, shall be established pursuant to an amendment (an “ Extension Amendment ” ) to this Agreement (in a form reasonably satisfactory to the Administrative Agent). Each Extension Amendment shall be executed by the Borrower, the Administrative Agent and the Extending Lenders (it being understood that such Extension Amendment shall not require the consent of any Lender other than (A) the Extending Lenders with respect to the Extended Term Loans or Extended Revolving Commitments, as applicable, established thereby, (B) with respect to any extension of the Revolving Commitments that results in an extension of Issuing Bank’s obligations with respect to Letters of Credit, the consent of Issuing Bank and (C) with respect to any extension of the Revolving Commitments that results in an extension of the Swing Line Lender’s obligations with respect to Swing Line Loans, the Swing Line Lender).

(e) In addition to any conditions precedent set forth in any applicable Extension Amendment, no Extension Amendment shall be effective unless no Default or Event of Default shall have occurred and be continuing at the time of such extension or after giving effect thereto.

SECTION 3. CONDITIONS PRECEDENT

3.1 Third Restatement Date . The effectiveness of this Agreement and the obligation of each Lender to make a Tranche B Term Loan, a Revolving Loan, or to issue a Letter of Credit, in each case on the Third Restatement Date are subject to the prior or concurrent satisfaction, or waiver in accordance with Section 10.5, of the following conditions:

(a) Credit Party Documents . Administrative Agent and Arrangers shall have received sufficient copies of each Credit Document executed and delivered by each applicable Credit Party for each Lender.

(b) Organizational Documents; Incumbency . Administrative Agent and Arrangers shall have received (i) a copy of each Organizational Document executed and delivered by each Credit Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, each dated the Third Restatement Date or a recent date prior thereto (or a certificate of a Responsible Officer certifying that the Organizational Documents previously delivered to Administrative Agent and Arranger on or about the Second Restatement Date or the Second Amendment and Restatement Joinder Date remain in full force and effect and unmodified as of the Third Restatement Date); (ii) signature and incumbency certificates of the officers of such Person executing the Credit Documents to which it is a party; (iii) resolutions of

-90-

the board of directors or similar governing body of each Credit Party approving and authorizing the execution, delivery and performance of this Agreement and the other Credit Documents to which it is a party or by which it or its assets may be bound as of the Third Restatement Date, including the Amendment Agreement, certified as of the Third Restatement Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) a certificate of status, certificate of compliance or other certificate of good standing from the applicable Governmental Authority of each Credit Party’s jurisdiction of incorporation, organization, amalgamation or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Third Restatement Date; and (v) such other documents, including, without limitation, current international SRL licenses for the applicable Barbados Credit Parties, a negative certificate from the Luxembourg Trade and Companies Register with respect to the Luxembourg Guarantor, an excerpt from the Luxembourg Trade and Companies Register for the Luxembourg Guarantor and an excerpt from the applicable commercial register for the Swiss Guarantor as Administrative Agent and Arrangers may reasonably request.

(c) [Intentionally Omitted].

(d) Personal Property Collateral . Each Credit Party shall have delivered to Collateral Agent:

(i) evidence satisfactory to Collateral Agent of the compliance by each Credit Party with their obligations under the Second Amended and Restated Pledge and Security Agreement, the Canadian Pledge and Security Agreement, the Quebec Security Documents, the Barbados Security Documents, the Luxembourg Security Documents, the Swiss Security Documents and the other Collateral Documents (including their obligations to execute and deliver, file or register UCC and PPSA financing statements (or equivalent filings), as applicable, to deliver originals of securities, instruments and chattel paper and any agreements governing deposit and/or securities accounts as provided therein);

(ii) a completed supplement to the Collateral Questionnaire dated on or prior to the Third Restatement Date and executed by an Authorized Officer of each Additional Credit Party, together with all attachments contemplated thereby; and

(iii) the results of a recent bring down lien search, by a Person reasonably satisfactory to the Collateral Agent, of all effective UCC and PPSA financing statements (or equivalent filings, including Quebec Register of Personal and Moveable Real Rights filings) made with respect to any Credit Party in each jurisdiction where the Collateral Agent, acting reasonably, considers it to be necessary or desirable that such searches be conducted, together with copies of all such filings disclosed by such search and (B) UCC and PPSA financing change statements (or similar documents) duly executed or authorized by all applicable Persons for filing in all applicable jurisdictions as may be necessary to terminate any effective UCC or PPSA financing statements (or equivalent filings) disclosed in such search (other than any such financing statements in respect of Permitted Liens).

(e) Opinions of Counsel to Credit Parties . Lenders and their respective counsel shall have received originally executed copies of the favorable written opinions of:

(i) Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel to Borrower;

-91-

(ii) Chancery Chambers, special Barbados counsel to Borrower;

(iii) Norton Rose Canada LLP, special Canadian counsel to Borrower;

(iv) Stewart McKelvey, special Nova Scotia counsel to Borrower;

(v) Fillmore Riley LLP, special Manitoba counsel to Borrower;

(vi) Clark Wilson LLP, special British Columbia counsel to Borrower; and

(vii) Baker & McKenzie, special Luxembourg and Swiss counsel to Borrower.

in each case as to such matters as Administrative Agent may reasonably request, dated as of the Third Restatement Date and otherwise in form and substance reasonably satisfactory to Administrative Agent and Arrangers (and each Credit Party hereby instructs such counsel to deliver such opinions to Agents and Lenders).

(f) Fees and Expenses . Borrower shall have paid to the Administrative Agent all fees payable on the Third Restatement Date referred to in Section 2.11(c) and shall have reimbursed the Administrative Agent and the Arrangers for their out-of-pocket expenses, including the invoiced legal fees and expenses of Cahill Gordon & Reindel LLP ; Lex Caribbean; Osler, Hoskin & Harcourt LLP, Lenz & Staehelin and Elvinger, Hoss & Prussen and Mallesons Stephen Jaques.

(g) Solvency Certificate . On the Third Restatement Date, Administrative Agent and Arrangers shall have received a Solvency Certificate dated the Third Restatement Date and addressed to Administrative Agent and Lenders, and in form, scope and substance satisfactory to Administrative Agent, certifying that Borrower and its Subsidiaries that are Credit Parties are and will be Solvent on a consolidated basis.

(h) Third Restatement Date Certificate . Borrower shall have delivered to Administrative Agent and Arrangers an originally executed Third Restatement Date Certificate.

(i) Title Insurance . Administrative Agent shall have received an executed copy of an endorsement amending the name of the insured under the title insurance policy in respect of the real property secured by the Quebec Security Documents.

Each Lender, by delivering its signature page to this Agreement, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Third Restatement Date.

Notwithstanding anything to the contrary contained in this Agreement or the other Credit Documents, the parties hereto acknowledge and agree that (i) the delivery of any document or instrument, and the taking of any action, set forth on Schedule 5.15 hereto shall not be a condition precedent to the Third Restatement Date but shall be required to be satisfied after the Third Restatement Date in accordance with Schedule 5.15 hereto, and (ii) all conditions precedent and representations, warranties, covenants, Events of Default and other provisions contained in this Agreement and the other Credit Documents shall be deemed modified as set forth on Schedule 5.15 hereto (and to permit the taking of the actions described therein within the time periods required therein, rather than as elsewhere provided in the Credit Documents); provided that (x) to the extent any representation and warranty would not be true because the

-92-

actions set forth therein were not taken on the Third Restatement Date, the respective representation and warranty shall be required to be true and correct in all material respects at the time the respective action is taken (or was required to be taken) in accordance with the provisions of Schedule 5.15 and (y) all representations and warranties relating to the Collateral Documents set forth in Schedule 5.15 shall be required to be true immediately after the actions required to be taken by Schedule 5.15 have been taken (or were required to be taken).

3.2 Prior Credit Dates . The obligations of (a) the Lenders (including the Swing Line Lender) to make Loans and (b) Issuing Bank to issue Letters of Credit on the Original Closing Date, the First Restatement Date and the Second Restatement Date was subject to the satisfaction of all of the conditions precedent set forth in Section 3.1 of the Original Credit Agreement, the First Amended and Restated Credit Agreement, and the Second Amended and Restated Credit Agreement, respectively.

3.3 Conditions to Each Credit Extension.

(a) Conditions Precedent . The obligation of each Lender to make any Loan, or Issuing Bank to issue, amend, modify, renew or extend any Letter of Credit, on any Credit Date, on or after the Third Restatement Date, are subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions precedent:

(i) Administrative Agent shall have received a fully executed and delivered Funding Notice or Issuance Notice, as the case may be;

(ii) after making the Credit Extensions requested on such Credit Date, the Total Utilization of Revolving Commitments shall not exceed the Revolving Commitments then in effect;

(iii) as of such Credit Date, the representations and warranties contained herein and in the other Credit Documents, in each case, shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date; provided that, in each case, such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof;

(iv) no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute an Event of Default or a Default; and

(v) on or before the date of issuance, amendment, modification, renewal or extension of any Letter of Credit, Administrative Agent shall have received all other information required by the applicable Letter of Credit application, and such other documents or information as Issuing Bank may reasonably require in connection with the issuance amendment, modification, renewal or extension of such Letter of Credit.

(b) Notices . Any Notice shall be executed by an Authorized Officer in a writing delivered to Administrative Agent. In lieu of delivering a Notice, Borrower may give Administrative Agent telephonic notice by the required time of any proposed borrowing, conversion/continuation or issuance of a Letter of Credit, as the case may be; provided that each such telephonic notice shall be promptly confirmed in writing by delivery of the applicable Notice to Administrative Agent on or before the close of business on the date that the telephonic notice is given. In the event of a discrepancy between the telephonic notice

-93-

and the written Notice, the written Notice shall govern. In the case of any Notice that is irrevocable once given, if Borrower provides telephonic notice in lieu thereof, such telephone notice shall also be irrevocable once given. Neither Administrative Agent nor any Lender shall incur any liability to Borrower in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized on behalf of Borrower or for otherwise acting in good faith.

SECTION 4. REPRESENTATIONS AND WARRANTIES

In order to induce Agents, Lenders and Issuing Bank to enter into this Agreement and to make each Credit Extension to be made thereby, each Credit Party represents and warrants to each Agent, each Lender and Issuing Bank, on the Third Restatement Date and on each Credit Date, that the following statements are true and correct.

4.1 Organization; Requisite Power and Authority; Qualification . Except as otherwise set forth on Schedule 4.1, each of Borrower and its Subsidiaries (a) is duly organized, validly existing and, to the extent such concept is applicable in the relevant jurisdiction, in good standing under the laws of its jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Credit Documents to which it is a party and to carry out the transactions contemplated thereby, and (c) to the extent such concept is applicable in the relevant jurisdiction, is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect.

4.2 Equity Interests and Ownership . The Equity Interests of each of Borrower and its Subsidiaries have been duly authorized and validly issued and are fully paid and non-assessable. Except as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which Borrower or any of its Subsidiaries is a party requiring, and there is no membership interest or other Equity Interests of Borrower or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Borrower or any of its Subsidiaries of any additional membership interests or other Equity Interests of Borrower or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase a membership interest or other Equity Interests of Borrower or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Borrower and each of its Subsidiaries as of the Third Restatement Date.

4.3 Due Authorization . The execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto.

4.4 No Conflict . The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not (a) violate (i) any provision of any Applicable Law, (ii) any of the Organizational Documents of Borrower or any of its Subsidiaries, or (iii) any order, judgment or decree of any court or other agency of government binding on Borrower or any of its Subsidiaries, except with respect to clauses (i) and (iii) to the extent that such violation could not reasonably be expected to have a Material Adverse Effect; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Borrower or any of its Subsidiaries, except to the extent that such conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrower or any of its Subsidiaries (other than any Liens created under any of the Credit

-94-

Documents in favor of Collateral Agent, on behalf of Secured Parties); or (d) require any approval of stockholders, members or partners or any approval or consent of any Person under any Contractual Obligation of Borrower or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Third Restatement Date and disclosed in writing to Lenders and except for any such approval or consent the failure of which to obtain could not reasonably be expected to have a Material Adverse Effect.

4.5 Governmental Consents . (a) The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the financing contemplated by this Agreement do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority, except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent for filing and/or recordation, and (b) with respect to the consummation of each Acquisition, as of the date thereof, consummation of such Acquisition did not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority as of the date thereof, except for such registrations, consents, notices or other actions which were obtained or made on or before such date.

4.6 Binding Obligation . Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability.

4.7 Historical Financial Statements . The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the Persons described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year end adjustments and the absence of footnotes. As of the Third Restatement Date, none of Borrower or any of its Subsidiaries has any contingent liability or liability for taxes, long term lease or unusual forward or long term commitment that is not reflected in the Historical Financial Statements or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets or condition (financial or otherwise) of Borrower and its Subsidiaries taken as a whole.

4.8 Projections . On and as of the Third Restatement Date, the Projections of Borrower and its Subsidiaries for the period of Fiscal Year 2012 through and including Fiscal Year 2016 provided to Lenders or prospective Lenders in writing on or prior to the Third Restatement Date (the “ Projections ”) are based on good faith estimates and assumptions made by the management of Borrower; provided that the Projections are not to be viewed as facts and that actual results during the period or periods covered by the Projections may differ from such Projections and that the differences may be material.

4.9 No Material Adverse Change . Since January 1, 2011, no event, circumstance or change has occurred that has caused or evidences, or could reasonably be expected to have, either in any case or in the aggregate, a Material Adverse Effect.

4.10 Adverse Proceedings, etc. There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. None of Borrower or any of its Subsidiaries (a) is in violation of any Applicable Laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (b) is subject to or in default with respect to any Governmental Authority or any final judgments, writs, injunctions, decrees, rules or regulations of any Governmental Authority, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

-95-

4.11 Payment of Taxes . Except for any failure that would not be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect:

(a) all Tax returns and reports of Borrower and each of its Subsidiaries required to be filed by any of them have been timely filed, and all Taxes (whether or not shown on such Tax returns) of Borrower and each of its Subsidiaries and upon their respective properties, assets, income, businesses and franchises (including in the capacity of a withholding agent) which are due and payable have been timely paid (except for Taxes that are being contested in accordance with the terms of Section 5.3) and adequate accruals and reserves have been made in accordance with GAAP for Taxes of Borrower and each of its Subsidiaries in that are not due and payable; and

(b) there is no current, or, to the knowledge of Borrower or its Subsidiaries, proposed or pending audit, examination, Tax assessment, claims or proceedings against Borrower or any of its Subsidiaries which is not being actively contested by Borrower or such Subsidiary in good faith and by appropriate proceedings and for which adequate reserves have been made in accordance with GAAP by Borrower or any of its Subsidiaries, as applicable.

4.12 Properties.

(a) Title . Each of Borrower and its Subsidiaries has (i) good, sufficient and legal and beneficial title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), (iii) valid licensed rights in (in the case of licensed interests in intellectual property) and (iv) good title to (in the case of all other personal property), all of their respective properties and assets material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens.

(b) Real Estate . As of the Third Restatement Date, Schedule 4.12 contains a true, accurate and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases, licenses or assignments of leases, subleases, licenses or other agreements (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of any Credit Party, regardless of whether such Credit Party is the landlord (licensor) or tenant (licensee) (whether directly or as an assignee or successor in interest) under such lease, sublease, license, assignment or other agreement. Each agreement listed in clause (ii) of the immediately preceding sentence is in full force and effect and Borrower does not have knowledge of any default that has occurred and is continuing thereunder, except to the extent that the failure to be in full force and effect or the occurrence and continuance of a default, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and each such agreement constitutes the legally valid and binding obligation of each applicable Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles. To the knowledge of the Credit Parties, none of the buildings or other structures located on any Real Estate Asset encroaches upon any land not owned or leased by a Credit Party (except in a manner that constitutes a Permitted Lien), and there are no restrictive covenants or statutes, regulations, orders or other laws which restrict or prohibit the use in any material respect of any Real Estate Asset or such buildings or structures for the purposes for which they are currently used. To the knowledge of the Credit Parties, there are no expropriation or similar proceedings, actual or threatened, against any Real Estate Asset or any part thereof.

-96-

(c) Intellectual Property . Each Credit Party possesses or has, by valid and enforceable license, ownership or the right to use all Intellectual Property used in the conduct of its business and, to each Credit Party’s knowledge, has the right to use such Intellectual Property without violation or infringement of any rights of others with respect thereto.

4.13 Environmental Matters . None of Borrower or any of its Subsidiaries or any of their respective Facilities or operations are subject to any actual or, to Borrower’s knowledge, as applicable, threatened, order, consent decree or settlement agreement with any Person pursuant to any Environmental Law or relating to any Environmental Claim or any Release or threat of Release of Hazardous Materials, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of Borrower or any of its Subsidiaries has received any written notice of non-compliance with any Environmental Law, letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law, except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Each Facility is free from the presence of Hazardous Materials, except for such materials the presence of which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. There are and, to each of Borrower’s and its Subsidiaries’ knowledge, have been no conditions, occurrences, or Release or threat of Release of Hazardous Materials that could reasonably be expected to form the basis of a Environmental Claim against Borrower or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of Borrower or any of its Subsidiaries or, to any Credit Party’s knowledge, any predecessor of Borrower or any of its Subsidiaries has filed any notice under any Environmental Law indicating past or present treatment of Hazardous Materials at any Facility, except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, and none of Borrower’s or any of its Subsidiaries’ operations involves the generation, transportation, treatment, storage or disposal of hazardous waste, as defined under 40 C.F.R. Parts 260 or 270 or any state or other equivalent, in each case, except as, individually or in the aggregate could not reasonably be expected to result in a Material Adverse Effect. Borrower and each of its Subsidiaries, Facilities and operations are in compliance with applicable Environmental Laws, in each case, except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

4.14 No Defaults . None of Borrower or any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect.

4.15 Governmental Regulation . Borrower and its Subsidiaries are not subject to regulation under the Investment Company Act of 1940 or any other Applicable Law or Governmental Authorization that restricts or limits their ability to incur Indebtedness or to perform or satisfy the Obligations.

4.16 Federal Reserve Regulations.

(a) None of Borrower or any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

(b) No portion of the proceeds of any Credit Extension shall be used in any manner, whether directly or indirectly, that causes or could reasonably be expected to cause, such Credit Extension or the application of such proceeds to violate Regulation T, Regulation U or Regulation X of the Board of Governors or any other regulation thereof.

-97-

4.17 Employee Matters . None of Borrower or any of its Subsidiaries is engaged in any unfair labor practice or other labor proceeding (including certification) or complaint that could reasonably be expected to have a Material Adverse Effect. Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, there is (a) no unfair labor practice complaint pending against Borrower or any of its Subsidiaries or, to the knowledge of Borrower, threatened against any of them before the National Labor Relations Board or a labor board of any other jurisdiction, and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement pending against Borrower or any of its Subsidiaries or, to the knowledge of Borrower, threatened against any of them, and none of Borrower or any of its Subsidiaries is in violation of any collective bargaining agreement, (b) no strike or work stoppage in existence or, to the knowledge of Borrower, threatened involving Borrower or any of its Subsidiaries and (c) to the knowledge of Borrower, no union representation question existing with respect to the employees of Borrower or any of its Subsidiaries and, to the knowledge of Borrower, no union organization activity is taking place with respect to the employees of Borrower or any of its Subsidiaries. Except as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, all payments due from any Canadian Credit Party for employee health and welfare insurance have been paid or accrued as a liability on the books of such Canadian Credit Party and such Canadian Credit Party has withheld and remitted all employee withholdings to be withheld or remitted by it and has made all employer contributions to be made by it, in each case, pursuant to applicable law on account of the Canada Pension Plan maintained by the Government of Canada, employment insurance, employee income taxes, and any other required payroll deduction.

4.18 Employee Benefit Plans . Except as could not reasonably be expected to have a Material Adverse Effect, (a) Borrower, each of its Subsidiaries and each of their respective ERISA Affiliates are in compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan, (b) each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified and, to the knowledge of Borrower, nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status, (c) no liability to the PBGC (other than required premium payments), the Internal Revenue Service, any Employee Benefit Plan or any trust established under Title IV of ERISA has been or is expected to be incurred by Borrower, any of its Subsidiaries or any of their ERISA Affiliates, (d) no ERISA Event has occurred or is reasonably expected to occur and (e) except to the extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise) for any retired or former employee of Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates. The present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by Borrower, any of its Subsidiaries or any of their ERISA Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan), did not exceed the then-current aggregate value of the assets of such Pension Plan by more than $150,000,000. As of the most recent valuation date for each Multiemployer Plan for which the actuarial report is available, the potential liability of Borrower, its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e) of ERISA, is not more than $150,000,000. Except as could not reasonably be expected to have a Material Adverse Effect, Borrower, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.

-98-

4.19 Canadian Employee Benefit Plans.

(a) Except as could not reasonably be expected to have a Material Adverse Effect and except as set forth on Schedule 4.18, the Canadian Employee Benefit Plans are, and have been, established, registered, amended, funded, invested and administered in compliance with the terms of such Canadian Employee Benefit Plans (including the terms of any documents in respect of such Canadian Employee Benefit Plans), all Applicable Laws and any applicable collective agreements. There is no investigation by a Governmental Authority or claim (other than routine claims for payment of benefits) pending or, to the knowledge of a Canadian Credit Party, threatened involving any Canadian Employee Benefit Plan or its assets, and no facts exist which could reasonably be expected to give rise to any such investigation or claim (other than routine claims for payment of benefits) which if determined adversely, could reasonably be expected to have a Material Adverse Effect.

(b) All employer and employee payments, contributions and premiums required to be remitted, paid to or in respect of each Canadian Pension Plan have been paid or remitted in accordance with its terms and all applicable laws.

(c) No Canadian Pension Plan Termination Events have occurred that individually or in the aggregate, would result in a Canadian Credit Party owing an amount that could reasonably be expected to have a Material Adverse Effect.

(d) Except as set forth on Schedule 4.18, no Credit Party has any liability (contingent, matured or otherwise) in respect of a Defined Benefit Plan.

None of the Canadian Employee Benefit Plans, other than the Canadian Pension Plans, provide benefits beyond retirement or other termination of service to employees or former employees of a Canadian Credit Party, or to the beneficiaries or dependants of such employees.

4.20 Solvency . The Credit Parties are and, upon the incurrence of any Obligation by any Credit Party on any date on which this representation and warranty is made, will be, Solvent, on a consolidated basis.

4.21 Compliance with Statutes, etc. Each of Borrower and its Subsidiaries is in compliance with all Applicable Laws imposed by all Governmental Authorities, in respect of the conduct of its business and the ownership of its property (including compliance with all applicable Environmental Laws with respect to any Real Estate Asset or governing its business and the requirements of any permits issued under such Environmental Laws with respect to any such Real Estate Asset or the operations of Borrower or any of its Subsidiaries as currently operated or conducted), except such non-compliance that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

4.22 Disclosure . None of the reports, certificates or written statements furnished to Lenders by or on behalf of Borrower or any of its Subsidiaries for use in connection with the Transactions, other than projections and information of a general economic or general industry nature, contains any untrue statement of a material fact or omits to state a material fact (known to Borrower, in the case of any document not furnished by either of them) necessary in order to make the statements contained herein or therein not misleading as of the date made, in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by Borrower to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material. There are no facts known (or which should upon the reasonable

-99-

exercise of diligence be known) to Borrower (other than matters of a general economic nature) that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have not been disclosed herein or other documents, certificates and statements furnished to Lenders for use in connection with the Transactions.

4.23 PATRIOT Act and PCTFA . To the extent applicable, each Credit Party is in compliance, in all material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (ii) the PATRIOT Act, (iii) Part II.1 of the Criminal Code (Canada), (iv) the Proceeds of Crime (money laundering) and Terrorist Financing Act (Canada) (the “ PCTFA ”), (v) the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism (Canada) and (vi) United Nations Al-Qaida and Taliban Regulations (Canada). No part of the proceeds of the Loans will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.

4.24 Creation, Perfection, etc. Except as otherwise contemplated hereby or under any other Credit Document, including without limitation in Section 3 hereof, all filings and other actions necessary to perfect the Liens on the Collateral created under, and in the manner contemplated by, the Collateral Documents have been duly made or taken or otherwise provided for (to the extent required hereby or by the applicable Collateral Documents), and, to the extent not previously executed and delivered, when executed and delivered, the Collateral Documents will create in favor of Collateral Agent for the benefit of the Secured Parties, or in favor of the Secured Parties, a valid and, together with such filings and other actions (to the extent required hereby or by the applicable Collateral Documents), perfected First Priority Lien on the Collateral, securing the payment of the Obligations.

4.25 OFAC Matters . None of Borrower, any of its Subsidiaries or, to the knowledge of Borrower, any director, officer, agent, employee or affiliate of Borrower or any of its Subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“ OFAC ”); and Borrower and its Subsidiaries will not, directly or indirectly, use the proceeds of the Loans, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person or entity, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC.

SECTION 5. AFFIRMATIVE COVENANTS

Each Credit Party covenants and agrees that so long as any Commitment is in effect and until payment in full of all principal of and interest on each Loan and all fees, expenses and other amounts (other than contingent amounts not yet due) payable under any Credit Document and cancellation or expiration of all Letters of Credit, each Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5.

5.1 Financial Statements and Other Reports . Borrower will deliver to Administrative Agent on behalf of each Lender:

(a) Quarterly Financial Statements . Within 45 days after the end of each Fiscal Quarter of each Fiscal Year (other than the fourth Fiscal Quarter of any such Fiscal Year), commencing with the Fiscal Quarter ending September 30, 2011, the consolidated balance sheets of Borrower and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated

-100-

statements of income and cash flows of Borrower and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year, commencing with the first Fiscal Quarter for which such corresponding figures are available, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto;

(b) Annual Financial Statements . Within 90 days after the end of each Fiscal Year, commencing with the Fiscal Year ending December 31, 2011, (i) the consolidated balance sheets of Borrower and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income, stockholders’ equity and cash flows of Borrower and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year commencing with the first Fiscal Year for which such corresponding figures are available, all in reasonable detail, together with a Financial Officer Certification and a Narrative Report with respect thereto; and (ii) with respect to such consolidated financial statements a report thereon by an independent certified public accountant (or accountants) of recognized national standing selected by Borrower, and reasonably satisfactory to Administrative Agent (which report and/or the accompanying financial statements shall be unqualified as to going concern and scope of audit, and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Borrower and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards) together with a written statement by such independent certified public accountants stating (1) that their audit examination has included a review of the terms of Section 6.7 of this Agreement and the related definitions, (2) whether, in connection therewith, any condition or event that constitutes a Default or an Event of Default under Section 6.7 has come to their attention and, if such a condition or event has come to their attention, specifying the nature and period of existence thereof, and (3) that nothing has come to their attention that causes them to believe that the information contained in any Compliance Certificate is not correct or that the matters set forth in such Compliance Certificate are not stated in accordance with the terms hereof (which statement may be limited to the extent required by accounting rules or guidelines);

(c) Compliance Certificate . Together with each delivery of financial statements of Borrower and its Subsidiaries pursuant to Sections 5.1(a) and 5.1(b), a duly executed and completed Compliance Certificate;

(d) Statements of Reconciliation after Change in Accounting Principles . If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Borrower and its Subsidiaries delivered pursuant to Section 5.1(a) or 5.1(b) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statements after such change, one or more statements of reconciliation for all such prior financial statements in form and substance reasonably satisfactory to Administrative Agent;

(e) Notice of Default . Promptly upon any Responsible Officer of Borrower obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to Borrower with respect thereto; (ii) that any Person has given any

-101-

notice to Borrower or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b); or (iii) of the occurrence of any event or change that has caused or evidences or could reasonably be expected to result in, either individually or in the aggregate, a Material Adverse Effect, a certificate of an Authorized Officer specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Borrower has taken, is taking and proposes to take with respect thereto;

(f) Notice of Litigation . Promptly upon any Responsible Officer of Borrower obtaining knowledge of any actual or threatened (i) Adverse Proceeding not previously disclosed in writing by Borrower to Lenders, or (ii) development in any Adverse Proceeding that, in the case of either clause (i) or (ii), if adversely determined could be reasonably expected to result in a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the Transactions, written notice thereof together with such other information as may be reasonably available to Borrower to enable Lenders and their counsel to evaluate such matters;

(g) ERISA . (i) Promptly upon any Responsible Officer of Borrower obtaining knowledge of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices received by Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request;

(h) Canadian Employee Benefit Plans . Promptly upon any Responsible Officer of Borrower obtaining knowledge of: (1) a Canadian Pension Plan Termination Event; (2) the failure to make a required contribution to or payment under any Canadian Pension Plan when due; (3) the occurrence of any event which is reasonably likely to result in a Canadian Credit Party incurring any liability, fine or penalty with respect to any Canadian Employee Benefit Plan that could reasonably be expected to result in a Material Adverse Effect; (4) the establishment of any material new Canadian Employee Benefit Plans or (5) any change to an existing Canadian Employee Benefit Plan that could reasonably be expected to result in a Material Adverse Effect; in the notice to the Administrative Agent of the foregoing, copies of all documentation relating thereto as Administrative Agent shall reasonably request shall be provided;

(i) Financial Plan . As soon as practicable and in any event no later than 60 days subsequent to the beginning of each Fiscal Year (beginning with the Fiscal Year ending December 31, 2012), a consolidated plan and financial forecast for such Fiscal Year and each Fiscal Year (or portion thereof) through the final maturity date of the Loans (a “ Financial Plan ”), including forecasted consolidated statements of income of Borrower for each Fiscal Quarter of such Fiscal Year (it being understood that the forecasted financial information is not to be viewed as facts and that actual results during the period or periods covered by the Financial Plan may differ from such forecasted financial information and that such differences may be material);

-102-

(j) Insurance Report . As soon as practicable and in any event within 60 days after the last day of each Fiscal Year, a certificate from Borrower’s insurance broker in form and substance satisfactory to Administrative Agent outlining all material insurance coverage maintained as of the date of such certificate by Borrower and its Subsidiaries;

(k) Information Regarding Collateral . Borrower will furnish to Collateral Agent prompt (and in any event within 30 days of such change) written notice of any change (i) in any Credit Party’s legal name, (ii) in any Credit Party’s identity or corporate structure, (iii) in any Credit Party’s jurisdiction of organization or of the jurisdiction in which its chief executive office is located or (iv) in any Credit Party’s Federal Taxpayer Identification Number or state organizational identification number. Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the Uniform Commercial Code, the PPSA or similar laws of jurisdictions in which Credit Parties are organized or otherwise that are required in order for Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral as contemplated in the Collateral Documents. Borrower also agrees promptly to notify Collateral Agent if any material portion of the Collateral is damaged or destroyed;

(l) Annual Collateral Verification . Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to Section 5.1(b), Borrower shall deliver to Collateral Agent a certificate of an Authorized Officer (i) either confirming that there has been no change in the information required by the Collateral Questionnaire since the date of the most recently delivered Collateral Questionnaire or the date of the most recent certificate delivered pursuant to this Section and/or identifying such changes and (ii) certifying that all Uniform Commercial Code and PPSA financing statements (including fixtures filings, as applicable) and all supplemental Intellectual Property Security Agreements or other appropriate filings, recordings or registrations, have been filed or recorded in each governmental, municipal or other appropriate office in each jurisdiction identified in the Collateral Questionnaire or pursuant to clause (i) above to the extent necessary to effect, protect and perfect the security interests under the Collateral Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period);

(m) Other Information . (A) Promptly upon their becoming publicly available, copies (or e-mail notice) of (i) all financial statements, reports, notices and proxy statements sent or made available generally by Borrower to its security holders acting in such capacity or by any Subsidiary of Borrower to its security holders other than Borrower or another Subsidiary of Borrower, (ii) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Borrower or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission, the Ontario Securities Commission or any other Governmental Authority and (iii) all press releases and other statements made available generally by Borrower or any of its Subsidiaries to the public concerning material developments in the business of Borrower or any of its Subsidiaries, and (B) such other information and data with respect to the operations, business affairs and financial condition of Borrower or any of its Subsidiaries as from time to time may be reasonably requested by Administrative Agent or any Lender;

(n) Certification of Public Information . Borrower and each Lender acknowledge that certain of the Lenders may be Public Lenders and, if documents or notices required to be delivered pursuant to this Section 5.1 or otherwise are being distributed through IntraLinks, SyndTrak or another relevant website or other information platform (the “ Platform ”), any document or

-103-

notice that Borrower has indicated contains Non-Public Information shall not be posted on that portion of the Platform designated for such Public Lenders. Borrower agrees to clearly designate all information provided to Administrative Agent by or on behalf of Borrower which is suitable to make available to Public Lenders. If Borrower has not indicated whether a document or notice delivered pursuant to this Section 5.1 contains Non-Public Information, Administrative Agent reserves the right to post such document or notice solely on that portion of the Platform designated for Lenders who wish to receive material non-public information with respect to Borrower, its Subsidiaries and their respective Securities; and

(o) Environmental Reports and Audits . As soon as practicable following receipt thereof, copies of all environmental audits and written reports with respect to environmental matters at any Facility or that relate to any environmental liabilities of any Credit Party, in each case that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

(p) General . Any financial statement, report, notice, proxy statement, registration statement, prospectus or other document required to be delivered pursuant to this Section 5.1 shall be delivered in accordance with Section 10.1 and shall be deemed to have been delivered on the date on which such financial statement, report, notice, proxy statement, registration statement, prospectus or other document is posted on the SEC’s website on the Internet at www.sec.gov and, in each case, such financial statement, report, notice, proxy statement, registration statement, prospectus or other document is readily accessible to the Administrative Agent on such date; provided that Borrower shall give notice of any such posting to Administrative Agent (who shall then give notice of any such posting to the Lenders). Furthermore, if any financial statement, certificate or other information required to be delivered pursuant to this Section 5.1 shall be required to be delivered on any date that is not a Business Day, such financial statement, certificate or other information may be delivered to Administrative Agent on the next succeeding Business Day after such date.

5.2 Existence . Except as otherwise permitted under Section 6.8, each Credit Party will, and will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided that no Credit Party (other than Borrower with respect to existence) or any of its Subsidiaries shall be required to preserve any such existence, right or franchise, licenses and permits if such Person’s board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to Lenders.

5.3 Payment of Taxes and Claims . Except for failures that, individually and in the aggregate, would not reasonably be expected to result in a Material Adverse Effect, each Credit Party will, and will cause each of its Subsidiaries to, pay all Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for sums that have become due and payable and that by law have or may become a Lien upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided , no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP shall have been made therefor, and (b) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral to satisfy such Tax or claim. No Credit Party will, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Borrower or any of its Subsidiaries).

-104-

5.4 Maintenance of Properties . Each Credit Party will, and will cause each of its Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Borrower and its Subsidiaries.

5.5 Insurance . Borrower and its Subsidiaries will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, property damage insurance and business interruption insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Borrower and its Subsidiaries as is customarily carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses in the same or similar locations, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons. Without limiting the generality of the foregoing, Borrower will maintain or cause to be maintained (a) flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, and (b) replacement value property damage insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses in the same or similar locations. Each such policy of insurance shall (i) name Collateral Agent, on behalf of the Secured Parties, as an additional insured thereunder as its interests may appear and (ii) in the case of each property damage insurance policy, contain a loss payable clause or endorsement, reasonably satisfactory in form and substance to Collateral Agent, that names Collateral Agent, on behalf of the Secured Parties, as the loss payee thereunder and provides for at least thirty days’ prior written notice to Collateral Agent of any modification or cancellation of such policy; provided that the provisions of the foregoing sentence shall not apply to any policy of insurance maintained solely for the purpose of compliance with Applicable Law to the extent that the assets, properties and businesses that are the subject of such policy are separately the subject of an insurance policy with respect to which Borrower shall have satisfied the provision of the foregoing sentence.

5.6 Books and Records; Inspections . Each Credit Party will, and will cause each of its Subsidiaries to, keep proper books of record and accounts in which full, true and correct entries in conformity in all material respects with GAAP shall be made of all dealings and transactions in relation to its business and activities. Each Credit Party will, and will cause each of its Subsidiaries to, permit any authorized representatives designated by any Lender to visit and inspect any of the properties of any Credit Party and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested; provided that, excluding any such visits and inspections during the continuation of an Event of Default, only the Administrative Agent on behalf of the Lenders may exercise rights under this Section 5.6 and the Administrative Agent shall not exercise such rights more often than once during any calendar year absent the existence of an Event of Default. Notwithstanding anything to the contrary in this Section 5.6 or any other Credit Document, none of Borrower or any of its Subsidiaries shall be required to disclose, permit the inspection, examination or making of copies or taking of extracts of, or discussion of, any document, information or other matter (a) that constitutes non-financial trade secrets or non-financial proprietary information, (b) in respect of which disclosure to Administrative Agent or any Lender (or any of their respective representatives) is prohibited by any Applicable Law or any binding contractual agreement or (c) is subject to attorney-client or similar privilege or constitutes attorney work product.

5.7 Lenders Meetings . Borrower will, upon the request of Administrative Agent or Requisite Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at Borrower’s corporate offices (or at such other location as may be agreed to by Borrower and Administrative Agent) at such time as may be agreed to by Borrower and Administrative Agent.

-105-

5.8 Compliance with Laws . Each Credit Party will comply, and shall cause each of its Subsidiaries to comply, with the requirements of all Applicable Law, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), non-compliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

5.9 Environmental .

(a) Environmental Disclosure . Borrower will deliver to Administrative Agent and Lenders:

(i) as soon as practicable following receipt thereof, copies of all written reports of environmental audits, investigations or analyses of any kind or character, whether prepared by personnel of Borrower or any of its Subsidiaries or, to the extent in Borrower’s or any of its Subsidiaries’ possession or control, by independent consultants, Governmental Authorities or any other Persons, with respect to significant environmental matters at any Facility or with respect to any Environmental Claims that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(ii) promptly upon the occurrence thereof, written notice describing in reasonable detail (1) any Release required to be reported to any Governmental Authority under any applicable Environmental Laws that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, (2) any response or remedial action taken by Borrower or any other Person as a result of (A) any Hazardous Materials at a Facility the existence of which could reasonably be expected to result in one or more Environmental Claims having, individually or in the aggregate, a Material Adverse Effect, or (B) any Environmental Claims that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, (3) Borrower’s discovery of any occurrences or conditions at any Facility that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, and (4) Borrower’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be subject to any material restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(iii) as soon as practicable following the sending or receipt thereof by Borrower or any of its Subsidiaries, a copy of any and all written communications to or from any Governmental Authority or third party claimant or their representatives with respect to any Environmental Claims that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect;

(iv) prompt written notice describing in reasonable detail (1) any proposed acquisition of stock, assets, or property by Borrower or any of its Subsidiaries that could reasonably be expected to (A) expose Borrower or any of its Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (B) adversely affect the ability of Borrower or any of its Subsidiaries to maintain in full force and effect Governmental Authorizations required under any Environmental Laws for their respective operations, the absence of which could reasonably be expected to result in a Material Adverse Effect and (2) any proposed action to be taken by Borrower or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Borrower or any of its Subsidiaries to any additional obligations or requirements under any Environmental Laws, to the extent any such obligation or requirement could reasonably be expected to result in a Material Adverse Effect; and

-106-

(v) with reasonable promptness, such other documents and information as from time to time may be reasonably requested by Administrative Agent in relation to any matters disclosed pursuant to this Section 5.9(a).

(b) Environmental Matters . Each Credit Party shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Credit Party or its Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) make an appropriate response to any Environmental Claim against such Credit Party or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, except in each case to the extent such Credit Party or Subsidiary is contesting such violation, Environmental Claim or obligation in good faith and by proper proceedings and appropriate reserves are being maintained in accordance with GAAP.

5.10 Subsidiaries.

(1) In the event that any Person becomes a Domestic Subsidiary of Borrower (including with respect to any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary) (other than a Subsidiary that is, or would be, an Excluded Subsidiary), Borrower shall: (I) promptly cause such Domestic Subsidiary to become a Guarantor hereunder and a Grantor under the Second Amended and Restated Pledge and Security Agreement by executing and delivering to Administrative Agent and Collateral Agent a Counterpart Agreement and a Pledge Supplement (as defined in the Second Amended and Restated Pledge and Security Agreement ), and (II) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.1(b), 3.1(f), 3.1(h) and 3.1(i) of the Original Credit Agreement.

(2) In the event that any Person becomes a Foreign Subsidiary of VPI (including with respect to any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary) (other than a Subsidiary that is, or would be, an Excluded Subsidiary), and the ownership interests of such Foreign Subsidiary are directly owned by VPI or by any Guarantor that is a Domestic Subsidiary thereof, Borrower shall, or shall cause such Domestic Subsidiary to: (I) deliver all such documents, instruments, agreements, and certificates as are similar to those described in Section 3.1(b), and (II) take all of the actions referred to in Section 3.1(d)(i) necessary to grant and to perfect a First Priority Lien in favor of Collateral Agent, for the benefit of Secured Parties, under the Second Amended and Restated Pledge and Security Agreement (subject to the limitations set forth therein) in 65% of such ownership interests that is voting stock and 100% of such ownership interest that is not voting stock.

(3) In the event that any Person becomes a Foreign Subsidiary of Borrower (but not a Subsidiary of VPI) (including with respect to any Subsidiary Redesignation resulting in an Unrestricted Subsidiary becoming a Subsidiary) (other than a Subsidiary that is, or would be, an Excluded Subsidiary), Borrower shall: (I) promptly cause such Subsidiary to become a Guarantor (and to deliver (x) a Canadian Guarantee in respect of any such Foreign Subsidiary that is a Canadian Credit Party satisfying clause (i) of the definition thereof, (y) a Barbados Guarantee in respect of any such Foreign Subsidiary that is a Barbados Credit Party and (z) a Counterpart Agreement in form and substance sufficient to create a binding Guarantee of the Obligations by each such Foreign Subsidiary not meeting the requirements of clauses (x) and (y) above) (and to deliver (v) the Luxembourg Security Documents in respect of any such Foreign Subsidiary that is a Luxembourg Guarantor, (w) the Swiss Security Documents, in respect of any such Foreign Subsidiary that is a Swiss Guarantor, (x) the Canadian Pledge and Security Agreement and,

-107-

as applicable, Quebec Security Documents, in respect of any such Foreign Subsidiary that is a Canadian Credit Party satisfying clause (i) of the definition thereof, (y) the Barbados Security Documents in respect of any such Foreign Subsidiary that is a Barbados Credit Party and (z) such agreement or agreements under the laws of the jurisdiction of organization of such Foreign Subsidiary as are analogous to the Collateral Documents described under clauses (v), (w), (x) and (y) above), and (II) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.1(b), 3.1(f), 3.1(h) and 3.1(i) of the Original Credit Agreement.

(4) With respect to each such Subsidiary described in paragraph (1) through (3) of this Section 5.10, Borrower shall promptly send to Administrative Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of Borrower, and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Borrower, and such written notice shall be deemed to supplement Schedules 4.1 and 4.2 for all purposes hereof.

(5) Notwithstanding anything in this Section 5.10 to the contrary, in no event shall (i) any Subsidiary that is otherwise prohibited by Applicable Law from guaranteeing the Obligations or pledging

its assets in support of the Obligations be required to execute a Counterpart Agreement or any Collateral Document or take any other action set forth in paragraph (1), (2) or (3) of this Section 5.10 (including, without limitation, Biovail Insurance) and (ii) Borrower or any Guarantor be required to pledge the Equity Interests of any Subsidiary in support of the Obligations if such pledge is otherwise prohibited by Applicable Law.

(6) Notwithstanding anything in this Agreement or any other Credit Document to the contrary (including this Section 5.10 and Sections 5.11 and 5.13), no Credit Document shall require the creation or perfection of pledges of or security interests in, or the obtaining of title insurance, legal opinions or other deliverables with respect to, particular assets of the Credit Parties, if, and for so long as, Administrative Agent, in consultation with Borrower, determines in writing that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such title insurance, legal opinions or other deliverables in respect of such assets (taking into account any adverse tax consequences to Borrower and its Subsidiaries (including the imposition of withholding or other material taxes)), shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom. Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of title insurance, legal opinions or other deliverables with respect to particular assets or the provision of the Guarantee (or any other guarantee in support of the Obligations) by any Subsidiary where it determines that such action cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required to be accomplished by this Agreement or the other Credit Documents.

(7) If it becomes illegal for any Lender to hold or benefit from a Lien over real or personal property pursuant to any law of the United States of America, such Lender may, in its sole discretion, notify the Administrative Agent and disclaim any benefit of such security interest to the extent of such illegality, but the election by any Lender to so disclaim the benefit of such security interest shall not invalidate or render unenforceable such Lien for the benefit of each of the other Lenders.

5.11 Additional Material Real Estate Assets . In the event that any Credit Party acquires a Material Real Estate Asset or a Real Estate Asset owned or leased on the Third Restatement Date becomes a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, then such Credit Party shall promptly take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those

-108-

described in Sections 3.1(h) and 3.1(i) of the Original Credit Agreement with respect to each such Material Real Estate Asset that Collateral Agent shall reasonably request to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in such Material Real Estate Asset. In addition to the foregoing, Borrower shall, at the request of Collateral Agent, deliver, from time to time, to Collateral Agent such appraisals as are required by Applicable Law of Material Real Estate Assets with respect to which Collateral Agent has been granted a Lien.

5.12 Interest Rate Protection . No later than ninety (90) days following the Third Restatement Date and at all times thereafter until the third anniversary of the Third Restatement Date, Borrower shall obtain and cause to be maintained protection against fluctuations in interest rates pursuant to one or more Interest Rate Agreements in form and substance reasonably satisfactory to Administrative Agent, in order to ensure that for a period of not less than three years after the Third Restatement Date, no less than 35% of the aggregate principal amount of the total Indebtedness for borrowed money of Borrower and its Subsidiaries then outstanding is either (i) subject to such Interest Rate Agreements or (ii) Indebtedness that bears interest at a fixed rate.

5.13 Further Assurances . At any time or from time to time, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as Administrative Agent or Collateral Agent may reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations are guarantied by the Guarantors and are secured by substantially all of the assets of Borrower and the other Guarantors (subject to the limitations contained herein and in the other Credit Documents).

5.14 Maintenance of Ratings . At all times, Borrower shall use commercially reasonable efforts to maintain (x) a corporate family rating issued by Moody’s and a corporate credit rating issued by S&P and (y) public ratings issued by Moody’s and S&P with respect to its senior secured debt.

5.15 Post-Closing Matters . Borrower and its Subsidiaries, as applicable, agree to execute and deliver the documents and take the actions set forth on Schedule 5.15, in each case within the time limits specified on such schedule (unless Administrative Agent, in its sole and absolute discretion, shall have agreed to any particular longer period).

5.16 Canadian Employee Benefit Plans . Each Canadian Credit Party shall:

(a) with respect to each Canadian Pension Plan, pay all contributions, premiums and payments when due in accordance with its terms and applicable law; and

(b) promptly deliver to the Administrative Agent copies of: (A) annual information returns, actuarial valuations and any other reports which have been filed with a Governmental Authority with respect to each Canadian Pension Plan; and (B) any direction, order, notice, ruling or opinion that a Canadian Credit Party may receive from a Governmental Authority with respect to any Canadian Employee Benefit Plan.

SECTION 6. NEGATIVE COVENANTS

Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until payment in full of all principal of and interest on each Loan and all fees, expenses and other amounts (other than contingent amounts not yet due) payable under any Credit Document and cancellation or expiration of all Letters of Credit, such Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6.

-109-

6.1 Indebtedness . No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:

(a) the Obligations;

(b) Senior Notes in an aggregate principal amount not to exceed $4,350,000,000;

(c) Indebtedness of any Subsidiary of Borrower to Borrower or any other such Subsidiary or of Borrower to any of its Subsidiaries; provided that (i) all such Indebtedness, if owed to a Credit Party, shall be evidenced by the Intercompany Note or another promissory note and shall be subject to a First Priority Lien pursuant to the applicable Collateral Document, (ii) all such Indebtedness owing by a Credit Party to a Subsidiary that is not a Credit Party shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of a subordination agreement with respect to such Indebtedness substantially in the form of Exhibit J-2 among the Credit Parties and such Subsidiaries party to such Indebtedness and (iii) in respect of any Indebtedness owing by a Subsidiary that is not a Credit Party to a Credit Party, such Indebtedness is permitted as an Investment under the proviso to Section 6.6(d);

(d) Indebtedness incurred by Borrower or any of its Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations (including Indebtedness consisting of the deferred purchase price of property acquired in a Permitted Acquisition) or from guaranties or letters of credit, surety bonds, performance bonds or similar obligations securing the performance of Borrower or any such Subsidiary pursuant to such agreements, in connection with Permitted Acquisitions or permitted dispositions of any business, assets or Subsidiary of Borrower or any of its Subsidiaries;

(e) Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety, statutory, appeal or similar obligations incurred in the ordinary course of business;

(f) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;

(g) guaranties in the ordinary course of business of the obligations of suppliers, customers, franchisees of and licensees to and of Borrower and its Subsidiaries;

(h) guaranties by Borrower of Indebtedness of a Subsidiary of Borrower or guaranties by a Subsidiary of Borrower of Indebtedness of Borrower or any other such Subsidiary, in each case with respect to Indebtedness otherwise permitted to be incurred pursuant to this Section 6.1; provided that (i) if the Indebtedness that is being guarantied is unsecured and/or subordinated to the Obligations, the guaranty thereof shall be unsecured and/or subordinated to the Obligations to the same extent and (ii) in respect of any guaranty by a Credit Party of Indebtedness of a Subsidiary that is not a Credit Party, such guaranty is permitted as an Investment under Section 6.6(d);

(i) Indebtedness described in Schedule 6.1 (other than Indebtedness described in clauses (a) or (b) of this Section 6.1);

-110-

(j) Indebtedness of Borrower or its Subsidiaries with respect to Capital Leases or purchase money Indebtedness in an aggregate principal amount at any time outstanding not to exceed the greater of (x) $50,000,000 and (y) 1.00% of Consolidated Total Assets; provided , any such Indebtedness shall be secured only by the asset acquired in connection with the incurrence of such Indebtedness;

(k) Indebtedness of a Person or Indebtedness attaching to assets of a Person that, in either case, becomes a Subsidiary of Borrower or Indebtedness attaching to assets that are acquired by Borrower or any of its Subsidiaries, in each case after the Third Restatement Date; provided that (x) on a Pro Forma Basis (including, for the avoidance of doubt, Subordinated Indebtedness) after giving effect to the incurrence of such Indebtedness (including the use of proceeds thereof), the Leverage Ratio of Borrower shall be less than or equal to 5.25 to 1.00, as of the last day of the most recently ended Fiscal Quarter for which financial statements were required to have been delivered pursuant to Section 5.1(a) or (b), (y) such Indebtedness existed at the time such Person became a Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof and (z) such Indebtedness is not guaranteed in any respect by Borrower or any Subsidiary (other than by any such Person that so becomes a Subsidiary);

(l) Indebtedness representing the deferred purchase price of property (including Intellectual Property) or services, including earn-out obligations, purchase price adjustments, escrow arrangements or other arrangements representing deferred payments incurred in connection with the acquisition of equity or assets permitted or consented to hereunder;

(m) (i) Indebtedness under any Hedge Agreement (and any guarantees thereof), (ii) Indebtedness under any Cash Management Agreement (and any guarantees thereof) and (iii) Indebtedness arising under any Currency Agreement or Interest Rate Agreement (and, in each case, any guarantees thereof), including any extensions thereof and such increases, if any, as shall result when the underlying obligations of such agreements are marked to market or increased to address accrued interest on the obligation relating to such agreement; provided , that, with respect to Indebtedness under Hedge Agreements, Interest Rate Agreements or Currency Agreements (or Guarantees thereof), such Indebtedness is entered into in the ordinary course of business and not for speculative purposes;

(n) Indebtedness in respect of performance and surety bonds and completion guarantees provided by Borrower or any of its Subsidiaries;

(o) Indebtedness of Borrower or any Subsidiary as an account party in respect of trade letters of credit;

(p) [ Reserved ];

(q) other Indebtedness (including, for the avoidance of doubt, Subordinated Indebtedness) of Borrower or any Guarantor; provided that on a Pro Forma Basis after giving effect to the incurrence of such Indebtedness (including the use of proceeds thereof including, without limitation, after the date of incurrence or issuance of any such Indebtedness pursuant to any escrow arrangement, delayed draw, delayed closing or similar or analogous arrangement), (x) no Default or Event of Default has occurred and is continuing or would result therefrom and (y) the Leverage Ratio of Borrower and its Subsidiaries shall be less than or equal to 5.25 to 1.00, as of the last day of the most recently ended Fiscal Quarter for which financial statements were required to have been delivered pursuant to Section 5.1(a) or (b);

-111-

(r) provided that no Default or Event of Default has occurred and is continuing or would result therefrom, the incurrence or issuance by Borrower or any Subsidiary of Borrower of Indebtedness which serves to extend, replace, refund, renew, defease or refinance any Indebtedness incurred as permitted under clause (b), (i), (j), (k), (r), (s) or (v) of this Section 6.1 or any Indebtedness issued to so extend, replace, refund, renew, defease or refinance such Indebtedness, or any Indebtedness, including additional Indebtedness, incurred to pay premiums (including tender premiums), defeasance costs and fees and expenses in connection therewith (the “ Refinancing Indebtedness ”); provided , however , that such Refinancing Indebtedness:

(1) has a final maturity date later than the date that is 91 days after the latest Term Loan Maturity Date, and has a weighted average life to the date of the latest Term Loan Maturity Date that is not less than the weighted average life to the date of the latest Term Loan Maturity Date of the Indebtedness being extended, replaced, renewed, defeased, refunded or refinanced,

(2) to the extent such Refinancing Indebtedness extends, replaces, refunds, renews, defeases or refinances (x) Indebtedness subordinated or pari passu to the Obligations, such Refinancing Indebtedness is subordinated or pari passu to the Obligations at least to the same extent (as determined in good faith by the board of directors of Borrower) as the Indebtedness being extended, replaced, renewed, defeased, refinanced or refunded or (y) Disqualified Equity Interests such Refinancing Indebtedness must be Disqualified Equity Interests,

(3) shall have direct and contingent obligors that are the same as (or, in the case of contingent obligors, no more expansive than) the direct and contingent obligors, respectively, of the refinanced Indebtedness, or

(4) shall not be secured by any assets that were not required to be used to secure the Indebtedness being extended, replaced, renewed, defeased, refunded or refinanced;

(s) Permitted Secured Notes;

(t) Indebtedness owed to any Person (including obligations in respect of letters of credit for the benefit of such Person) providing workers’ compensation, health, death, disability or other employee benefits or property, casualty or liability insurance or self-insurance, or other Indebtedness regarding workers’ compensation claims pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business;

(u) Indebtedness of Borrower or any of its Subsidiaries consisting of (x) the financing of insurance premiums or (y) take-or-pay obligations contained in supply arrangements, in each case, incurred in the ordinary course of business;

(v) Indebtedness of Subsidiaries of Borrower (other than Biovail Insurance and any other such Subsidiary that is not permitted by Applicable Law to guaranty the Obligations) that are not Credit Parties and that are organized under the laws of any jurisdiction other than the United States of America consisting of working capital credit facilities in an aggregate principal amount at any time outstanding under this clause (v) not to exceed the greatest of (i) 2.5% of the consolidated total revenues for the four Fiscal Quarter period most recently ended, (ii) 2.5% of the consolidated total assets, as determined in accordance with GAAP, as of the applicable date of determination, in each case of subclause (i) and (ii), of all Subsidiaries of Borrower (other than Biovail Insurance and any other such Subsidiary that is not permitted by Applicable Law to guaranty the Obligations) that are not Credit Parties, and (iii) $40,000,000; and

-112-

(w) the Bausch & Lomb Unsecured Debt.

6.2 Liens . No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, or any income, profits or royalties therefrom, or file or permit the filing of any financing statement or other similar notice of any Lien with respect to any such property, asset, income, profits or royalties under the UCC of any State, the PPSA of any province or territory or under any similar recording or notice statute of jurisdictions in which Credit Parties are organized or under any applicable intellectual property laws, rules or procedures, except:

(a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to any Credit Document;

(b) Liens for Taxes not yet due and payable or that are being contested in accordance with Section 5.3;

(c) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 430(k) of the Internal Revenue Code or ERISA or a violation of Section 436 of the Internal Revenue Code or, in respect of a Canadian Credit Party, a Lien imposed pursuant to pension benefits standards legislation; provided that, in each case, such Liens shall be governed by Sections 5.1(g), 5.1(h), 8.1(j) and 8.1(k) and not this Section 6.2), in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;

(d) Liens incurred in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof;

(e) easements, rights of way, restrictions, encroachments, encumbrances and other minor defects or irregularities in title, in each case which do not and will not interfere in any material respect with the ordinary conduct of the business of Borrower or any of its Subsidiaries;

(f) any interest or title of a lessor, lessee, sublessor or sublessee under any lease or sublease permitted hereunder and any interest or title of a licensor, licensee, sublicensor or sublicensee under any license or sublicense permitted hereunder;

(g) Liens solely on any cash earnest money deposits, escrow arrangements or similar arrangements made by Borrower or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;

-113-

(h) purported Liens evidenced by the filing of precautionary UCC or PPSA financing statements (or any similar precautionary filings) relating solely to operating leases of personal property entered into in the ordinary course of business;

(i) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;

(j) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property;

(k) outbound licenses of patents, copyrights, trademarks and other Intellectual Property rights granted by Borrower or any of its Subsidiaries in the ordinary course of business and not interfering in any material respect with the ordinary conduct of, or materially detracting from the aggregate value of, the business of Borrower or such Subsidiary (taking into account the value of the license as well);

(l) Liens described in Schedule 6.2 or on a title report delivered pursuant to Section 3.1(e)(iii) of the Original Credit Agreement and any modifications, renewals and extensions thereof and any Lien granted as a replacement or substitute therefor; provided that (x) such Lien shall not apply to any other property or asset of Borrower or any Subsidiary other than improvements thereon or proceeds from the disposition of such asset and (y) such Lien shall secure only those obligations which it secures on the date hereof and any refinancing, extensions, renewals or replacements thereof that do not increase the outstanding principal amount thereof (except by an amount not greater than accrued and unpaid interest with respect to such original obligations and any premium, fees, costs and expenses incurred in connection with such extension, renewal or refinancing) and, in the case of any such obligations constituting Indebtedness, that are permitted under Section 6.1(r) as Refinancing Indebtedness in respect thereof;

(m) Liens securing Indebtedness permitted pursuant to Section 6.1(j) (and any Refinancing Indebtedness in respect thereof permitted under Section 6.1(r)); provided , any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness;

(n) Liens securing Indebtedness permitted by Sections 6.1(k) (and any Refinancing Indebtedness in respect thereof permitted under Section 6.1(r)), provided any such Lien shall encumber only those assets which secured such Indebtedness at the time such assets were acquired by Borrower or its Subsidiaries;

(o) other Liens on assets other than the Collateral securing obligations in an aggregate principal amount not to exceed 1.25% of Consolidated Total Assets at any time outstanding;

(p) Liens securing Indebtedness permitted by Section 6.1(m);

(q) Liens arising out of judgments, decrees, orders or awards that do not constitute an Event of Default under Section 8.1(h);

(r) Liens securing Indebtedness permitted by Sections 6.1(q) and (s); provided that either (x) on a Pro Forma Basis after giving effect to the incurrence of such Indebtedness (and the use of proceeds thereof) Borrower and its Subsidiaries shall be in compliance with each of the covenants set forth in Section 6.7 as of the last day of the most recently ended Fiscal Quarter, as if such Indebtedness had been outstanding on the last day of such Fiscal Quarter or (y) the Cash proceeds of Indebtedness secured by such Liens are applied to prepay Term Loans in accordance with Section 2.15;

-114-

(s) Liens on assets of any Subsidiary of Borrower (other than Biovail Insurance and any other such Subsidiary that is not permitted by Applicable Law to guaranty the Obligations) that is not a Credit Party and that is organized in a jurisdiction other than the United States of America to the extent such Liens secure Indebtedness of such Subsidiary permitted under Section 6.1(v);

(t) Liens granted by any Canadian Credit Party to a landlord to secure the payment of rent and other obligations under a lease with such landlord for premises situated in the Province of Québec; provided that such Lien (i) is limited to the tangible assets located at or about such leased premises and (ii) is incurred in the ordinary course of business (a) for amounts not yet overdue or (b) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of five days) are being contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;

(u) Liens arising by reason of deposits necessary to obtain standby letters of credit in the ordinary course of business;

(v) Liens in connection with repurchase obligations referred to in clause (vi) of the definition of the term “Cash Equivalents”;

(w) in connection with the sale or transfer of any Equity Interests or other assets in a transaction permitted by Section 6.8, customary rights and restrictions contained in agreements relating to such sale or transfer pending the completion thereof;

(x) in the case of any Joint Venture, any put and call arrangements related to its Equity Interests set forth in its Organizational Documents or any related joint venture or similar agreement;

(y) Liens in the nature of the right of setoff in favor of counterparties to contractual agreements with Borrower or any of its Subsidiaries in the ordinary course of business; and

(z) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business.

provided , however , that no reference herein to Liens permitted hereunder (including Permitted Liens), including any statement or provision as to the acceptability of any Liens (including Permitted Liens), shall in any way constitute or be construed as to provide for a subordination of any rights of the Agents, Lenders or other Secured Parties hereunder or arising under any of the other Credit Documents in favor of such Liens.

6.3 No Further Negative Pledges . Except with respect to (a) specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to a permitted Asset Sale or other sale or disposition permitted by Section 6.8, (b) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, agreements in connection with a Permitted Majority Investment, Joint Venture agreements and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to

-115-

the property or assets secured by such Liens or the property or assets subject to such Liens or the property or assets subject to such leases, licenses, agreements in connection with a Permitted Majority Investment, Joint Venture agreements and similar agreements, as the case may be), (c) restrictions and conditions imposed by law, and (d) restrictions identified on Schedule 6.3, no Credit Party nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, to secure the Obligations.

6.4 Restricted Junior Payments . No Credit Party shall, nor shall it permit any of its Subsidiaries through any manner or means or through any other Person to, directly or indirectly, declare, order, pay, make or set apart, or agree to declare, order, pay, make or set apart, any sum for any Restricted Junior Payment except for:

(a) the declaration and payment of dividends or the making of other distributions by any Subsidiary of Borrower ratably to its direct equity holders;

(b) the redemption, repurchase, retirement, defeasance or other acquisition of any Equity Interests, including any accrued and unpaid dividends thereon, or Subordinated Indebtedness of Borrower or any Equity Interests of any direct or indirect parent company of Borrower, in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary) of, Equity Interests of Borrower or any direct or indirect parent company of Borrower to the extent contributed to Borrower (in each case, other than any Disqualified Equity Interests) or Subordinated Indebtedness incurred under Section 6.1; provided that any such Subordinated Indebtedness shall be Refinancing Indebtedness;

(c) refinancings of Indebtedness permitted by Section 6.1;

(d) any Restricted Junior Payment to pay for the repurchase, retirement or other acquisition or retirement for value of Equity Interests (other than Disqualified Equity Interests) of Borrower held by any future, present or former employee, director, officer or consultant of Borrower or any of its Subsidiaries or any direct or indirect parent companies pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement (including, for the avoidance of doubt, any principal and interest payable on any notes issued by Borrower or any direct or indirect parent company of Borrower in connection with any such repurchase, retirement or other acquisition), or any stock subscription or shareholder agreement, including any Equity Interest rolled over by management of Borrower or any direct or indirect parent company of Borrower in connection with the 2010 Transactions; provided , that the aggregate amount of Restricted Junior Payments made under this clause (d) shall not exceed in any calendar year $25,000,000 (with unused amounts for any year being carried over to the next succeeding year, but not to any subsequent year, and the permitted amount for each year shall be used prior to any amount carried over from the previous year); provided further that such amount in any calendar year may be increased by an amount not to exceed:

(i) the cash proceeds of key man life insurance policies received by Borrower or its Subsidiaries after the Original Closing Date; less

(ii) the amount of any Restricted Junior Payments previously made with the cash proceeds described in subclause (i) of this clause (d);

(e) cashless repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price of such options or warrants;

-116-

(f) cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of Borrower or any direct or indirect parent company of Borrower;

(g) so long as no Default or Event of Default has occurred and is continuing, (i) Borrower may repurchase shares of Borrower’s common stock within six months before or after any conversion date for Borrower Convertible Notes, which repurchases may be in an aggregate amount not to exceed the number of shares of Borrower’s common stock delivered upon conversion of Borrower Convertible Notes on such conversion date and (ii) Borrower may repurchase shares of Borrower’s common stock within six months before or after the settlement of any written call option agreements entered into in connection with the issuance of the VPI Convertible Notes, which repurchases may be in an aggregate amount not to exceed the number of shares of Borrower’s common stock delivered upon settlement of such written call options;

(h) other Restricted Junior Payments in an aggregate amount taken together with all other Restricted Junior Payments made pursuant to this clause (h) not to exceed $350,000,000 (reduced on a dollar for dollar basis by outstanding Investments pursuant to clause (i) of Section 6.6, other than Investments under such clause made using the CNI Growth Amount) at any time outstanding from and after the Amendment No. 6 Effective Date; provided that such amount shall be increased (but not decreased) by the CNI Growth Amount as in effect immediately prior to the time of making of such Restricted Junior Payment; and

(i) Restricted Junior Payments in connection with the Pre-Merger Special Dividend and/or the Post-Merger Special Dividend in an aggregate amount not to exceed $10,000,000.

6.5 Restrictions on Subsidiary Distributions . Except as provided herein, no Credit Party shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of Borrower to (a) pay dividends or make any other distributions on any of such Subsidiary’s Equity Interests owned by Borrower or any other Subsidiary of Borrower, (b) repay or prepay any Indebtedness owed by such Subsidiary to Borrower or any other Subsidiary of Borrower, (c) make loans or advances to Borrower or any other Subsidiary of Borrower, or (d) transfer, lease or license any of its property or assets to Borrower or any other Subsidiary of Borrower other than restrictions (i) imposed by law or by any Credit Document, (ii) in agreements evidencing Indebtedness permitted by Section 6.1(k) that impose restrictions on the property so acquired, and any amendments, modifications, extensions or renewals thereof (including any such extension or renewal arising as a result of an extension, renewal or refinancing of any Indebtedness containing such restriction or condition) that do not materially expand the scope of any such restriction or condition taken as a whole, (iii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, Joint Venture agreements and similar agreements entered into in the ordinary course of business, (iv) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Equity Interests not otherwise prohibited under this Agreement, (v) in the case of any Subsidiary that is not directly or indirectly wholly owned by Borrower, restrictions and conditions imposed by its Organizational Documents or any related joint venture, shareholders’ or similar agreement; provided that such restrictions and conditions apply only to such Subsidiary and to any Equity Interests in such Subsidiary, or (vi) identified on Schedule 6.5, and any amendments, modifications, extensions or renewals thereof (including any such extension or renewal arising as a result of an extension, renewal or refinancing of any Indebtedness containing such restriction or condition) that do not materially expand the scope of any such restriction or condition taken as a whole.

-117-

6.6 Investments . No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including any Joint Venture, except:

(a) Investments in Cash and Cash Equivalents;

(b) equity Investments owned as of the Third Restatement Date in any Subsidiary and Investments made after the Third Restatement Date in any Guarantor;

(c) Investments (i) received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business and (ii) consisting of deposits, prepayments and other credits to suppliers made in the ordinary course of business consistent with the past practices of Borrower or any of its Subsidiaries, as applicable;

(d) intercompany loans and advances to the extent permitted under Section 6.1(c) and other Investments (i) in (including Guarantees of Indebtedness of) any Credit Party and (ii) in (including (without duplication for purposes of the proviso to this clause (ii)) Guarantees of Indebtedness of) Subsidiaries of Borrower which are not Guarantors; provided that such Investments under this clause (ii) shall not exceed at any one time outstanding an aggregate amount of 4.0% of Consolidated Total Assets;

(e) Permitted Interim Investments and intercompany loans and advances and capital contributions by Credit Parties to Subsidiaries that are not Credit Parties in connection with any Permitted Interim Investment; provided , that, for the avoidance of doubt, the acquisition of the remaining Equity Interests of a Person such that such Person becomes a wholly owned Subsidiary of Borrower shall either (x) be subject to the provisions of Section 6.8(h) or (y) be made pursuant to and in compliance with Section 6.6(d)(ii) or 6.6(i);

(f) loans and advances to employees of Borrower and its Subsidiaries made in the ordinary course of business in an aggregate principal amount not to exceed $25,000,000;

(g) Permitted Acquisitions permitted under Section 6.8;

(h) Investments described in Schedule 6.6 and any modification, replacement, renewal or extension thereof to the extent not involving an additional Investment;

(i) (a) other Investments in an aggregate amount not to exceed $350,000,000 (reduced on a dollar for dollar basis by Restricted Junior Payments pursuant to clause (h) of Section 6.4, other than Restricted Junior Payments under such clause made using the CNI Growth Amount) at any time outstanding from and after the Amendment No. 6 Effective Date; provided that such amount shall be increased (but not decreased) by the CNI Growth Amount as in effect immediately prior to the time of making of such Investments and (b) Investments in Pele Nova Biotecnologia S.A. at any time outstanding not to exceed $8,000,000;

(j) Investments represented by (i) any Hedge Agreement (and any guarantees thereof), (ii) any Cash Management Agreement (and any guarantees thereof) and (iii) any Interest Rate Agreement or Currency Agreement (and any guarantees thereof); provided , that, with respect to Indebtedness under Hedge Agreements for Interest Rate Agreements or Currency Agreements (or Guarantees thereof), such Indebtedness is entered into in the ordinary course of business and not for speculative purposes;

-118-

(k) Investments received in connection with the disposition of any asset permitted by Section 6.8;

(l) Investments (which may take the form of asset contributions) in (x) Joint Ventures consisting primarily of a Prescription Drug Business, (y) Joint Ventures involving aesthetic product lines of Borrower or its Subsidiaries and consisting of any or all of the Sculptra, Succeev, Artesense, Selphyl, Viscountour, Renova, Kinerase and Refissa products, and/or (z) Joint Ventures (in addition to those described in clauses (x) and (y)) in an aggregate amount not exceeding 1.50% of Consolidated Total Assets in any calendar year (with unused amounts for any year being carried over to the next succeeding year, but not to any subsequent year, and the permitted amount for each year shall be used prior to any amount carried over from the previous year);

(m) Investments of any Person existing at the time such Person becomes a Subsidiary of Borrower or consolidates or merges with Borrower or any of its Subsidiaries (including in connection with a Permitted Acquisition) and any modification, replacement, renewal or extension thereof to the extent not involving an additional Investment so long as such Investments were not made in contemplation of such Person becoming a Subsidiary of Borrower or of such consolidation or merger;

(n) extensions of trade credit in the ordinary course of business; and

(o) Investments in the capital stock of non-wholly owned Subsidiaries in jurisdictions where Applicable Law does not permit Borrower to own 100% of the capital stock of such Subsidiary; provided that, Borrower or one or more of its wholly owned Subsidiaries owns more than 50% of such capital stock and the aggregate amount of Investments made pursuant to this subclause (o) shall not exceed $150,000,000 per annum (with unused amounts in any calendar year permitted to be carried over to the next succeeding calendar year, but not to any subsequent year, and the amount permitted pursuant to this subclause (o) being used prior to the use of any unused amount carried over from the previous year) (all such Investments pursuant to this subclause (o) “ Permitted Majority Investments ”).

Notwithstanding the foregoing, in no event shall any Credit Party make any Investment which results in or facilitates in any manner any Restricted Junior Payment not otherwise permitted under the terms of Section 6.4.

6.7 Financial Covenants.

(a) Interest Coverage Ratio . Borrower shall not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending December 31, 2011, to be less than 3.00:1.00.

(b) Secured Leverage Ratio . Borrower shall not permit the Secured Leverage Ratio as of the last day of (i) the Fiscal Quarter ending December 31, 2011, to exceed 1.75 to 1.0 and (ii) any subsequent Fiscal Quarter, beginning with Fiscal Quarter ending March 31, 2012, to exceed 2.50 to 1.0.

6.8 Fundamental Changes; Disposition of Assets; Acquisitions . No Credit Party shall, nor shall it permit any of its Subsidiaries to, enter into any transaction of merger, amalgamation, arrangement, reorganization or consolidation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or license, exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired,

-119-

leased or licensed, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment and capital expenditures in the ordinary course of business) the business or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person, except:

(a) any Subsidiary of Borrower may be (i) merged or amalgamated with or merged into Borrower or any other Subsidiary of Borrower; provided that (A) in the case of such a merger or amalgamation involving Borrower, Borrower shall be the surviving Person or a Person that continues as an amalgamated corporation and (B) in the case of such a merger or amalgamation involving any other Guarantor (and not involving Borrower), the surviving Person, or a Person that continues as an amalgamated corporation, shall be a Guarantor; provided further that, in the case of this clause (B), solely for the purpose of internal corporate tax restructuring, it is understood that any Guarantor may merge or amalgamate with a non-Guarantor Subsidiary so long as (x) such non-Guarantor Subsidiary merges or amalgamates with the Borrower or a Guarantor substantially simultaneous with, or no longer than one Business Day after the internal merger or amalgamation involving a Guarantor, with the surviving person, or the Person that continues as an amalgamated corporation from such subsequent merger or amalgamation being the Borrower or a Guarantor, and (y) the Borrower shall certify to the Administrative Agent on the date of any such merger or amalgamation that such merger or amalgamation shall comply with this Section 6.8(a), or (ii) other than with respect to Borrower, liquidated, wound up or dissolved if Borrower determines in good faith that such liquidation, winding up or dissolution is in the best interest of Borrower and is not materially disadvantageous to the Lenders;

(b) sales or other dispositions of assets or property that do not constitute Asset Sales (which sales or other dispositions may take the form of a merger, amalgamation or similar transaction);

(c) Asset Sales (which Asset Sale may take the form of a merger, amalgamation or similar transaction), the proceeds of which (valued at the principal amount thereof in the case of non-Cash proceeds consisting of notes or other debt Securities and valued at fair market value in the case of other non-Cash proceeds) when aggregated with the proceeds of all other Asset Sales made within the same Fiscal Year, are less than 4.00% of Consolidated Total Assets (with the amount for any Fiscal Year increased by an amount equal to the excess, if any, of such amount for the immediately preceding Fiscal Year over the amount of proceeds from Asset Sales made pursuant to this clause (c) in such immediately preceding Fiscal Year); provided that (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Borrower (or similar governing body) of Borrower or the applicable Subsidiary or Credit Party for Asset Sales with a fair market value in excess of $75,000,000), (2) no less than 75% thereof shall be paid in Cash, and (3) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a);

(d) Asset Sales consisting of obsolete, worn out or surplus assets or property, including, for greater certainty, Intellectual Property;

(e) Asset Sales consisting of sale and leaseback transactions permitted by Section 6.10; provided that the Net Asset Sale Proceeds in excess of $50,000,000 from any such Asset Sale shall be applied as required by Section 2.14(a);

(f) Specified Asset Disposition; provided that the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a);

-120-

(g) Asset Sales of property to the extent that (i) such property is concurrently exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Asset Sales are promptly applied to the purchase price of such replacement property;

(h) Permitted Acquisitions (which acquisition may take the form of a merger, amalgamation or similar transaction so long as such merger, amalgamation or similar transaction would be permitted by clause (a) of this Section 6.8 if the acquired Person was, initially, a Subsidiary of Borrower); provided that (x) in respect of acquisitions of assets that are not or have not become subject to the Collateral Documents and/or acquisitions of Equity Interests of Persons (other than Excluded Subsidiaries) that do not become Guarantors or are not owned by a Credit Party, the consideration (other than Equity Interests of Borrower issued in payment of a portion of such consideration and the net proceeds of the issuance of Equity Interests of Borrower to the extent used to pay a portion of such consideration) shall not exceed, collectively with any Investments then outstanding under Section 6.6(d)(ii) in Persons other than Credit Parties (without duplication of any such Investments then outstanding under Section 6.6(d)(ii)), 4.0% of Consolidated Total Assets per Fiscal Year and (y) immediately prior to such Permitted Acquisition and on a Pro Forma Basis after giving effect thereto, Borrower and its Subsidiaries shall be in compliance with each of the covenants set forth in Section 6.7 as of the last day of the most recently ended Fiscal Quarter;

(i) Investments made in accordance with Section 6.6, other than pursuant to clause (g) thereof (which Investment may take the form of a merger, amalgamation or similar transaction so long as such merger, amalgamation or similar transaction would be permitted by clause (a) of this Section 6.8 if the acquired Person was, initially, a Subsidiary of Borrower);

(j) Liens incurred in compliance with Section 6.2;

(k) dispositions of investments in Joint Ventures, to the extent required by, or made pursuant to buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements; provided that the consideration received shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Borrower; provided that any Net Asset Sale Proceeds from any such disposition shall be applied as required by Section 2.14(a);

(l) the disposition by Dow Pharmaceutical Sciences, Inc. of its Equity Interests in Bioskin GmbH, a company with limited liability organized under the laws of Germany; provided that any Net Asset Sale Proceeds from any such disposition shall be applied as required by Section 2.14(a);

(m) Asset Sales in connection with any Acquisition or the Bausch & Lomb Acquisition, for regulatory reasons; provided that any Net Asset Sale Proceeds therefrom shall be applied as required by Section 2.14(a);

(n) the Acquisitions; and

(o) Asset Sales by Sanitas AB of real property; provided that any Net Asset Sale Proceeds from any such disposition shall be applied as required by Section 2.14(a).

For purposes of clause (c) of this Section 6.8, each of the following will be deemed Cash:

-121-

(i) any liabilities, as shown on Borrower’s most recent consolidated balance sheet, of Borrower or any of its Subsidiaries (other than contingent liabilities and liabilities that are by their terms subordinated to the Loans) that are assumed by the transferee of any such assets pursuant to an agreement that releases Borrower or such Subsidiary from further liability;

(ii) any securities, notes or other obligations received by Borrower or any such Subsidiary from such transferee that are converted by Borrower or such Subsidiary into Cash within 180 days after the consummation of the applicable Asset Sale, to the extent of the Cash received in that conversion; and

(iii) any Designated Noncash Consideration having an aggregate fair market value that, when taken together with all other Designated Noncash Consideration previously received and then outstanding, does not exceed at the time of the receipt of such Designated Noncash Consideration (with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value) the greater of $100,000,000 or 1.00% of Consolidated Total Assets.

6.9 Disposal of Subsidiary Interests . Except for any sale of all of its interests in the Equity Interests of any of its Subsidiaries in compliance with the provisions of Section 6.8, no Credit Party shall, nor shall it permit any of its Subsidiaries to directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any Equity Interests of any of its Subsidiaries, except to another Credit Party (subject to the restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required by Applicable Law.

6.10 Sales and Leasebacks . No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which such Credit Party (a) has sold or transferred or is to sell or to transfer to any other Person (other than Borrower or any of its Subsidiaries), or (b) intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by such Credit Party to any Person (other than Borrower or any of its Subsidiaries) in connection with such lease, except for any such sale and subsequent lease of any fixed or capital assets by a Credit Party or any of its Subsidiaries that is made for Cash consideration in an amount not less than the fair value of such fixed or capital asset and is consummated within 90 days after such Credit Party or such Subsidiary acquires or completes the construction of such fixed or capital asset, provided that, if such sale and leaseback results in Indebtedness with respect to Capital Leases, such Indebtedness is permitted by Section 6.1(j) and any Lien made the subject of such Indebtedness is permitted by Section 6.2(m).

6.11 Transactions with Shareholders and Affiliates . No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate of Borrower on terms that are less favorable to Borrower or that Subsidiary, as the case may be, than those that might be obtained at the time from a Person who is not such an Affiliate; provided that the foregoing restriction shall not apply to (a) any transaction between or among Borrower and the Guarantors; (b) reasonable and customary fees paid to members of the board of directors (or similar governing body) of Borrower or of its Subsidiaries; (c) compensation arrangements (including severance arrangements to the extent approved by a majority of the disinterested members of Borrower’s or the applicable Subsidiary’s board of directors (or similar governing body) or the applicable committee thereof) for present or former officers and other employees of Borrower or of its Subsidiaries entered into in the ordinary course of business; (d) transactions described in Schedule 6.11; (e) any Restricted Junior Payment permitted pursuant to Section 6.4; (f) indemnities provided for the benefit of, directors, officers or employees of Borrower or of its Subsidiaries in the ordinary course of business; and (g) loans and advances to employees of Borrower or of its Subsidiaries permitted by Section 6.6(f) (as well as advances to employees contemplated by clause (iii) of the defined term “Investment”).

-122-

6.12 Conduct of Business . From and after the Third Restatement Date, no Credit Party shall, nor shall it permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by such Credit Party or Subsidiary on the Third Restatement Date and similar or related or ancillary businesses and (ii) such other lines of business as may be consented to by Requisite Lenders.

6.13 Amendments or Waivers with Respect to Subordinated Indebtedness . No Credit Party shall, nor shall it permit any of its Subsidiaries to, amend or otherwise change the terms of any Subordinated Indebtedness, if such amendment or change would be materially adverse to any Credit Party or Lenders.

6.14 Amendments or Waivers of Organizational Documents . No Credit Party shall, nor shall it permit any of its Subsidiaries to, agree to any amendment, restatement, supplement or other modification to, or waiver of, any of its Organizational Documents after the Third Restatement Date that is materially adverse to such Credit Party or such Subsidiary, as applicable, and to the Lenders.

6.15 Fiscal Year . No Credit Party shall, nor shall it permit any of its Subsidiaries to, change its Fiscal Year end from December 31.

6.16 Specified Subsidiary Dispositions . Borrower will not, and will not permit any Subsidiary to, sell, transfer, lease or otherwise dispose of the Equity Interests it holds in Biovail Insurance.

6.17 Biovail Insurance . Borrower will not permit Biovail Insurance to (i) carry on any business other than the business of an Exempt Insurance Company as defined under the Exempt Insurance Act of Barbados for the purpose of insuring Borrower and/or some or all of its Subsidiaries or (ii) cancel, terminate or otherwise amend or modify the Biovail Insurance Trust Indenture.

6.18 Establishment of Defined Benefit Plan . No Credit Party shall (a) sponsor, administer, maintain, contribute to, participate in or assume or incur any liability in respect of, any Defined Benefit Plan, or (b) acquire an interest in any Person if such Person sponsors, administers, maintains, contributes to, participates in or has any liability in respect of, any Defined Benefit Plan, other than, with respect to clauses (a) and (b), Defined Benefit Plans that do not, in the aggregate, have a solvency deficit in excess of $10,000,000 at any time.

SECTION 7. GUARANTY

7.1 Guaranty of the Obligations . Subject to the provisions of the Contribution Agreement, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or other Insolvency Laws) (collectively, the “ Guaranteed Obligations ”).

7.2 Contribution by Guarantors . Each of the Guarantors shall be party to, and subject to the terms of, the Contribution Agreement.

-123-

7.3 Payment by Guarantors . Subject to the Contribution Agreement, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the failure of Borrower to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or analogous provisions of other Insolvency Laws), Guarantors will upon demand pay, or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Borrower’s becoming the subject of a case or proceeding under any Insolvency Law, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.

7.4 Liability of Guarantors Absolute . To the extent permitted under Applicable Law, each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than satisfaction in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:

(a) this Guaranty is a guaranty of payment and performance when due and not of collectability. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;

(b) to the extent permitted under Applicable Law, Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default notwithstanding the existence of any dispute between Borrower and any Beneficiary with respect to the existence of such Event of Default;

(c) the obligations of each Guarantor hereunder are independent of the obligations of Borrower and the obligations of any other guarantor (including any other Guarantor) of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Borrower or any of such other guarantors and whether or not Borrower is joined in any such action or actions;

(d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;

(e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise,

-124-

release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith or the applicable Hedge Agreement or Cash Management Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents or any Hedge Agreements or any Cash Management Agreements; and

(f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents or any Hedge Agreements or any Cash Management Agreements, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment or performance of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any of the Hedge Agreements, any of the Cash Management Agreements or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Credit Document, such Hedge Agreement, such Cash Management Agreement or any agreement relating to such other guaranty or security; (iii) to the extent permitted by Applicable Law, the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the other Credit Documents, any of the Hedge Agreements, any of the Cash Management Agreements or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Borrower or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) to the extent permitted by Applicable Law, any defenses, set-offs or counterclaims which Borrower may allege or assert against any Beneficiary in respect of the Guaranteed Obligations, including failure

-125-

of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.

(g) Each of the Secured Parties agrees not to enforce the guarantee created hereunder by, or any other Obligations under the Credit Document of a Guarantor established in Luxembourg (a “ Luxembourg Guarantor ”) in so far as the aggregate obligations and liabilities of any Luxembourg Guarantor with respect to the repayment under a joint and several liability clause of any borrowing or costs or expenses not incurred directly or indirectly by or on behalf of the Luxembourg Guarantor, and the granting of any guarantee, indemnity or security under the Credit Documents exceed 90% each time the higher of (i) the book value of all the assets of the Luxembourg Guarantor at the time of this Agreement or at the time the relevant guarantee or security is enforced or (ii) the net assets (capitaux propres as referred to in article 34 of the Luxembourg law on the commercial register and annual accounts) of such Luxembourg Guarantor as shown in the financial statements as of the date of this Agreement or in the latest financial statements (comptes annuels) available at the date of the relevant payment hereunder and approved by the shareholders of such Luxembourg Company, and as audited by its statutory auditor or its external auditor (réviseur d’entreprise), if required by law; it being understood that the payment obligations of the Luxembourg Guarantor shall not be limited to the extent that the Luxembourg Guarantor secures obligations of its direct or indirect Subsidiaries or in respect of sums that have been made directly or indirectly available to the Luxembourg Guarantor. Notwithstanding anything to the contrary in the Credit Documents, the limitation set out in this Section 7.4(g) shall apply to the aggregate of all securities, whether guarantees, pledges, security assignments, or otherwise, granted or to be granted by the Luxembourg Guarantor.

7.5 Waivers by Guarantors . To the extent permitted by Applicable Law, each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Borrower or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Borrower or any other Guarantor from any cause other than satisfaction in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to gross negligence, willful misconduct or bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, the Hedge Agreements, the Cash Management Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Borrower and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.

-126-

7.6 Guarantors’ Rights of Subrogation, Contribution, etc . Until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor hereby waives, to the extent permitted by Applicable Law, any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Borrower, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including any such right of contribution as contemplated by the Contribution Agreement. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Borrower, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.

7.7 Subordination of Other Obligations . Any Indebtedness of Borrower or any Guarantor now or hereafter held by any Guarantor (the “ Obligee Guarantor ”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such Indebtedness collected or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.

7.8 Continuing Guaranty . This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full and the Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.

-127-

7.9 Authority of Guarantors or Borrower . It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents acting or purporting to act on behalf of any of them.

7.10 Financial Condition of Borrower . Any Credit Extension may be made to Borrower or continued from time to time, and any Hedge Agreements or Cash Management Agreements may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the financial or other condition of Borrower at the time of any such grant or continuation or at the time such Hedge Agreement or Cash Management Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Borrower. Each Guarantor has adequate means to obtain information from Borrower on a continuing basis concerning the financial condition of Borrower and its ability to perform its obligations under the Credit Documents and the Hedge Agreements and the Cash Management Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrower and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Borrower now known or hereafter known by any Beneficiary.

7.11 Bankruptcy, etc.

(a) So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any bankruptcy, reorganization or insolvency case, application or proceeding of or against Borrower or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case, application or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.

(b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case, application or proceeding referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case, application or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case, application or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar Person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case, application or proceeding is commenced.

(c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.

-128-

7.12 Discharge of Guaranty upon Sale of Guarantor . If all of the Equity Interests of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger, amalgamation or consolidation) in accordance with the terms and conditions hereof, the Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such Asset Sale.

7.13 Swiss Guarantee Limitations . Notwithstanding anything to the contrary in this Agreement or any other Credit Document, the following limitations shall apply to any Swiss Guarantor:

(a) If complying with the obligations of the Swiss Guarantor under the guarantee (including for the avoidance of doubt, any restrictions of the Swiss Guarantor’s rights of set-off and/or subrogation or its duties to subordinate or waive claims, if any) would constitute a repayment of capital ( Einlagerückgewähr ), a violation of the legally protected reserves ( gesetzlich geschützte Reserven ) or the payment of a (constructive) dividend ( Gewinnausschüttung ) by the Swiss Guarantor or would otherwise be restricted under Swiss corporate law then applicable (the “ Restricted Obligations ”), the aggregate liability of the Swiss Guarantor for Restricted Obligations shall not exceed the amount of the Swiss Guarantor’s freely disposable equity in accordance with Swiss law, being the total assets of the relevant Swiss Guarantor less the total of (1) the aggregate of the relevant Swiss Guarantor’s liabilities, (2) the aggregate share capital and (3) statutory reserves (including reserves for own shares and revaluations as well as capital surplus ( agio ) to the extent such reserves cannot be transferred into unrestricted, distributable reserves (the “ Maximum Amount ”). The amount of freely disposable equity shall be determined on the basis of an audited interim balance sheet as set out in clause (b)(ii) below. This limitation shall only apply to the extent that it is a requirement under applicable Swiss mandatory law at the time the Swiss Guarantor is required to perform its guarantee obligations under the Credit Documents. Such limitation shall not free the Swiss Guarantor from its obligations in excess thereof, but merely postpone the performance date therefor until such time as performance is again permitted notwithstanding such limitation.

(b) Immediately after having been requested to make any payments or otherwise perform Restricted Obligations under the guarantee, the Swiss Guarantor shall, and any parent company of the Swiss Guarantor being a party to this Agreement shall procure that, the Swiss Guarantor will:

(i) perform any Restricted Obligations which are not affected by the above limitations and take and cause to be taken all and any action, including, without limitation, (1) the passing of any shareholders’ resolutions to approve any payment or other performance under this Agreement or any other Credit Document and (2) the obtaining of any confirmations which may be required as a matter of Swiss mandatory law in force at the time the Swiss Guarantor is required to make a payment or perform other obligations under this Agreement or any other Credit Document, in order to allow a prompt payment of amounts owed by the Swiss Guarantor under this Agreement or any other Credit Document as well as the performance by the Swiss Guarantor of other obligations there related with a minimum of limitations; and

(ii) in respect of any balance, if and to the extent requested by the Collateral Agent or required under then applicable Swiss law, provide the Collateral Agent with an interim balance sheet audited by the statutory auditors of the Swiss Guarantor setting out the Maximum Amount, take such further corporate and other action as may be required by law (such as board and shareholders’ approvals and the receipt of any confirmations

-129-

from the Swiss Guarantor’s statutory auditors) and other measures necessary to allow the Swiss Guarantor to make the payments agreed hereunder with a minimum of limitations and, immediately thereafter, pay up to the Maximum Amount to the Collateral Agent.

(c) If the enforcement of the obligations of the Swiss Guarantor under the Credit Documents would be limited due to the effects referred to in this Agreement, the Swiss Guarantor shall further, to the extent permitted by applicable law and Swiss accounting standards and upon request by the Collateral Agent, write up or sell any of its assets that are shown in its balance sheet with a book value that is significantly lower than the market value of the assets, in case of sale, however, only if such assets are not necessary for the Swiss Guarantor’s business ( nicht betriebsnotwendig ) and such sale is permitted under the Credit Documents.

(d) To the extent required by applicable law, including double tax treaties, in force at the time, the Swiss Guarantor is required to make a payment under this Agreement it shall:

(i) use its best efforts to ensure that such payments can be made without deduction of Swiss Withholding Tax, or with deduction of Swiss Federal Withholding Tax at a reduced rate, by discharging the liability to such tax by notification pursuant to applicable law (including tax treaties) rather than payment of the tax;

(ii) deduct the Swiss Federal Withholding Tax at such rate (being 35% on the date hereof) as in force from time to time if the notification procedure pursuant to sub-paragraph (i) above does not apply; or shall deduct the Swiss Federal Withholding Tax at the reduced rate resulting after discharge of part of such tax by notification if the notification procedure pursuant to sub-paragraph (i) applies for a part of the Swiss Federal Withholding Tax only; and shall pay within the time allowed any such taxes deducted to the Swiss Federal Tax Administration; and

(iii) notify and provide evidence to the Collateral Agent that the Swiss Federal Withholding Tax has been paid to the Swiss Federal Tax Administration.

(e) To the extent such deduction is made, and to the extent the maximum amount of freely disposable shareholder equity pursuant to this Agreement is not fully utilized, the Swiss Guarantor shall be required to pay an additional amount so that after making any required deduction of Swiss Federal Withholding Tax the aggregate net amount paid to the Lenders is equal to the amount which would have been paid if no deduction of Swiss Federal Withholding Tax had been required, provided that the aggregate amount paid (and including amounts withheld) shall in any event be limited to the maximum amount of freely disposable shareholder equity pursuant to this Agreement.

(f) The Swiss Guarantor shall use its reasonable efforts to ensure that any Person which is, as a result of a deduction of Swiss Federal Withholding Tax, entitled to a full or partial refund of the Swiss Federal Withholding Tax, will, as soon as possible after the deduction of the Swiss Federal Withholding Tax,

(i) request a refund of the Swiss Federal Withholding Tax under any applicable law (including double tax treaties), and

(ii) pay to the Collateral Agent upon receipt any amount so refunded (and after deduction of any tax) if so required under the guarantee or the Indenture and to the extent legally permissible.

-130-

(g) Notwithstanding anything to the contrary in the Credit Documents, the limitation set out in this Section 7.13 shall apply to the aggregate of all securities, whether guarantees, pledges, security assignments, or otherwise, granted or to be granted by the Swiss Guarantor.

SECTION 8. EVENTS OF DEFAULT

8.1 Events of Default . If any one or more of the following conditions or events shall occur:

(a) Failure to Make Payments When Due . Failure by Borrower to pay (i) when due any installment of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to Issuing Bank in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee or any other amount due hereunder within three days after the date due; or

(b) Default in Other Agreements . (i) Failure of any Credit Party or any of their respective Subsidiaries to pay when due any principal of or interest on or any other amount, including any payment in settlement, payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a)) in an individual principal amount (or Net Mark-to-Market Exposure) of $100,000,000 or with an aggregate principal amount (or Net Mark-to-Market Exposure) of $100,000,000 or more, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any Credit Party with respect to any other material term of (1) one or more items of Indebtedness in the individual or aggregate principal amounts (or Net Mark-to-Market Exposure) referred to in clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; or

(c) Breach of Certain Covenants . Failure of any Credit Party to perform or comply with any term or condition contained in Section 2.6, Section 5.1(e), Section 5.2 or Section 6; or

(d) Breach of Representations, Etc . Any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document or in any statement or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect as of the date made or deemed made; or

(e) Other Defaults Under Credit Documents . Any Credit Party shall default in the performance of or compliance with any term contained herein or any of the other Credit Documents, other than any such term referred to in any other Section of this Section 8.1, and such default shall not have been remedied or waived within thirty days after the earlier of (i) an officer of such Credit Party becoming aware of such default or (ii) receipt by Borrower of notice from Administrative Agent or any Lender of such default; or

(f) Involuntary Bankruptcy; Appointment of Receiver, etc . (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries) in an involuntary case under any Insolvency Law, which decree or order is not stayed; or any other similar relief shall be granted under any Applicable Law; or (ii) an involuntary case or proceeding (including the filing of any notice of intention in respect thereof) shall be commenced against Borrower or any of its Subsidiaries (other than any

-131-

Immaterial Subsidiaries) under any Insolvency Law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, receiver-manager, administrative receiver, administrator, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee, custodian or similar officer of Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries) for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries), and any such event described in this clause (ii) shall continue for sixty days without having been dismissed, bonded or discharged; or

(g) Voluntary Bankruptcy; Appointment of Receiver, etc . (i) Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries) shall have an order for relief entered with respect to it or shall file a petition or application seeking any relief or shall otherwise commence a voluntary case or proceeding under any Insolvency Law, or shall consent to, or fail to contest in a timely manner the commencement of, or the entry of an order for relief in an involuntary case or proceeding, or to the conversion of an involuntary case to a voluntary case or proceeding, under any such law, or shall consent to, or fail to contest in a timely manner, the commencement of, or the appointment of or taking possession by a receiver, receiver-manager, trustee, custodian or other similar officer for all or a substantial part of its property; or Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries) shall make any assignment for the benefit of creditors; or (ii) Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries) shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due or is otherwise insolvent; or the board of directors (or similar governing body) of Borrower or any of its Subsidiaries (other than any Immaterial Subsidiaries) (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f); or

(h) Judgments and Attachments . Any money judgment, writ or warrant of attachment or similar process involving an amount in excess of $100,000,000 individually or in the aggregate at any time (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Borrower, any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty days (or in any event later than five days prior to the date of any proposed sale thereunder); or

(i) Dissolution . Any order, judgment or decree shall be entered against any Credit Party decreeing the dissolution, winding-up or split-up of such Credit Party and such order shall remain undischarged or unstayed for a period in excess of thirty days; or

(j) Employee Benefit Plans . There shall occur one or more ERISA Events that have had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or

(k) Canadian Employee Benefit Plans . (x) There shall occur one or more Canadian Pension Plan Termination Events that have had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (y) a Canadian Credit Party fails to make a required contribution to or payment under any Canadian Pension Plan when due and such failure has had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or

-132-

(l) Change of Control . A Change of Control shall occur; or

(m) Guaranties, Collateral Documents and Other Credit Documents . At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations (other than Obligations in respect of any Hedge Agreement or Cash Management Agreement) in accordance with the terms hereof) or shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document, in each case for any reason other than the failure of Collateral Agent or any Secured Party to take any action within its control, or (iii) any Credit Party shall contest the validity or enforceability of any Credit Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Credit Document to which it is a party or shall contest the validity or perfection of any Lien in any portion of the Collateral purported to be covered by the Collateral Documents,

THEN , (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g) with respect to Borrower, automatically, and (2) upon the occurrence and during the continuance of any other Event of Default, at the request of (or with the consent of) Requisite Lenders, upon notice to Borrower by Administrative Agent, (A) the Revolving Commitments, if any, of each Lender having such Revolving Commitments and the obligation of Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), to be held as security for Borrower’s reimbursement Obligations in respect of Letters of Credit then outstanding and (III) all other Obligations (other than Hedge Agreements and Cash Management Agreements unless and to the extent such agreements are independently declared due and payable in accordance with their respective terms); provided , the foregoing shall not affect in any way the obligations of Lenders under Section 2.3(b)(v) or Section 2.4(e); and (C) Administrative Agent may cause Collateral Agent to enforce any and all Liens and security interests created pursuant to Collateral Documents.

SECTION 9. AGENTS

9.1 Appointment of Agents . J.P. Morgan and Morgan Stanley are hereby appointed Co-Syndication Agents hereunder, and each Lender hereby authorizes J.P. Morgan and Morgan Stanley to act as Co-Syndication Agents in accordance with the terms hereof and the other Credit Documents. GSLP is hereby appointed Administrative Agent and Collateral Agent hereunder and under the other Credit Documents and each Lender hereby authorizes GSLP to act as Administrative Agent and Collateral Agent in accordance with the terms hereof and of the other Credit Documents. Each Agent hereby agrees to act in its capacity as such upon the express conditions contained herein and the other Credit Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for Borrower or any of its Subsidiaries. Each Co-Syndication Agent, without consent of or notice to any

-133-

party hereto, may assign any and all of its rights or obligations hereunder (in its capacity as a Co-Syndication Agent) to any of its Affiliates. As of the Third Restatement Date, each of J.P. Morgan and Morgan Stanley, in each of their capacities as a Co-Syndication Agent, shall not have any obligations but shall be entitled to all benefits of this Section 9. The Syndication Agents and any Agent described in clause (d) of the definition thereof may resign from such role at any time, with immediate effect, by giving prior written notice thereof to Administrative Agent and Borrower.

9.2 Powers and Duties . Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Credit Documents. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Credit Documents, a fiduciary relationship in respect of any Lender (except, in respect of Collateral Agent in its capacity as trustee under Section 9.8(a), to the extent such fiduciary relationship cannot lawfully be excluded); and nothing herein or any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents except as expressly set forth herein or therein.

9.3 General Immunity.

(a) No Responsibility for Certain Matters . No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by or on behalf of any Credit Party or to any Agent or any Lender in connection with the Credit Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the Letter of Credit Usage or the component amounts thereof.

(b) Exculpatory Provisions . No Agent nor any of its officers, partners, directors, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross negligence or willful misconduct, as determined by a final, non-appealable judgment of a court of competent jurisdiction. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or with any of the other Credit Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons and shall be entitled

-134-

to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for Borrower and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Credit Documents in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5).

(c) Delegation of Duties . Administrative Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Credit Document by or through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.3 and of Section 9.6 shall apply to any of the Affiliates of Administrative Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.3 and of Section 9.6 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by the Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against any or all of Credit Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to Administrative Agent and not to any Credit Party, Lender or any other Person and no Credit Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent; provided that the Administrative Agent shall be responsible for the gross negligence, willful misconduct or bad faith of such sub-agent.

9.4 Agents Entitled to Act as Lender . The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with Borrower or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Borrower for services in connection herewith and otherwise without having to account for the same to Lenders.

9.5 Lenders’ Representations, Warranties and Acknowledgment.

(a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of Borrower and its respective Subsidiaries in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrower and its Subsidiaries. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.

-135-

(b) Each Lender, by delivering its signature page to this Agreement, or an Assignment Agreement or a Joinder Agreement and funding its Tranche A Term Loans, Tranche B Term Loans, New Term Loans and/or Revolving Loans shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Original Closing Date, on the First Restatement Date, on the Second Restatement Date, on the Second Amendment and Restatement Joinder Date, on the Third Restatement Date or as of the date of funding of such New Term Loans and/or Revolving Loans.

9.6 Right to Indemnity . Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each (a) Agent, their Affiliates and their respective officers, partners, directors, trustees, employees and agents of each Agent and (b) Issuing Bank, their Affiliates and their respective officers, partners, directors, trustees, employees and agents of Issuing Bank (each, an “ Indemnitee Agent Party ”), to the extent that such Indemnitee Agent Party shall not have been reimbursed by any Credit Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Indemnitee Agent Party in exercising its powers, rights and remedies or performing its duties hereunder or under the other Credit Documents or otherwise in its capacity as such Agent or Issuing Bank in any way relating to or arising out of this Agreement or the other Credit Documents, in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of such Indemnitee Agent Party; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Indemnitee Agent Party’s gross negligence or willful misconduct as determined by a final, non-appealable judgment of a court of competent jurisdiction. If any indemnity furnished to any Indemnitee Agent Party for any purpose shall, in the opinion of such Indemnitee Agent Party, be insufficient or become impaired, such Indemnitee Agent Party may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided that in no event shall this sentence require any Lender to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further that this sentence shall not be deemed to require any Lender to indemnify any Indemnitee Agent Party against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.

9.7 Successor Administrative Agent, Collateral Agent and Swing Line Lender.

(a) Administrative Agent shall have the right to resign at any time by giving prior written notice thereof to Lenders and Borrower, and Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Borrower and Administrative Agent and signed by Requisite Lenders. Administrative Agent shall have the right to appoint a financial institution to act as Administrative Agent and/or Collateral Agent hereunder, subject to the reasonable satisfaction of Borrower (other than at any time an Event of Default shall have occurred and then be continuing) and the Requisite Lenders, and Administrative Agent’s resignation shall become effective on the earliest of (i) 30 days after delivery of the notice of resignation, (ii) the acceptance of such successor Administrative Agent by Borrower (other than at any time an Event of Default shall have occurred and then be continuing) and the Requisite Lenders or (iii) such other date, if any, agreed to by the Requisite Lenders. Upon any such notice of resignation or any such removal, if a successor Administrative Agent has not already been appointed by the retiring Administrative Agent, Requisite Lenders shall have the right, upon five Business Days’ notice to Borrower, to appoint a successor Administrative Agent. If

-136-

neither Requisite Lenders nor Administrative Agent have appointed a successor Administrative Agent, Requisite Lenders shall be deemed to have succeeded to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent; provided that, until a successor Administrative Agent is so appointed by Requisite Lenders or Administrative Agent, any collateral security held by Administrative Agent in its role as Collateral Agent on behalf of the Lenders or the Issuing Bank under any of the Credit Documents shall continue to be held by the retiring Collateral Agent as nominee until such time as a successor Collateral Agent is appointed. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall promptly (i) transfer to such successor Administrative Agent all sums, Securities and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under the Credit Documents, and (ii) execute and deliver to such successor Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder. Except as provided above, any resignation or removal of GSLP or its successor as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of GSLP or its successor as Collateral Agent. After any retiring or removed Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder. Any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Collateral Agent for all purposes hereunder.

(b) In addition to the foregoing, Collateral Agent may resign at any time by giving prior written notice thereof to Lenders and the Grantors, and Collateral Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to the Grantors and Collateral Agent signed by Requisite Lenders. Administrative Agent shall have the right to appoint a financial institution as Collateral Agent hereunder, subject to the reasonable satisfaction of Borrower (other than at any time an Event of Default shall have occurred and then be continuing) and the Requisite Lenders and Collateral Agent’s resignation shall become effective on the earliest of (i) 30 days after delivery of the notice of resignation, (ii) the acceptance of such successor Collateral Agent by Borrower (other than at any time an Event of Default shall have occurred and then be continuing) and the Requisite Lenders or (iii) such other date, if any, agreed to by the Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days’ notice to Administrative Agent, to appoint a successor Collateral Agent. Until a successor Collateral Agent is so appointed by Requisite Lenders or Administrative Agent, any collateral security held by Collateral Agent on behalf of the Lenders or the Issuing Bank under any of the Credit Documents shall continue to be held by the retiring Collateral Agent as nominee until such time as a successor Collateral Agent is appointed. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, that successor Collateral Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Collateral Agent under this Agreement and the Collateral Documents, and the retiring or removed Collateral Agent under this Agreement shall promptly (i) transfer to such successor Collateral Agent all sums, Securities and other items of Collateral held hereunder or under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Collateral Agent under this Agreement and the Collateral Documents, and (ii) execute and deliver to such successor Collateral Agent or otherwise authorize the filing of such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Collateral Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Collateral

-137-

Agent shall be discharged from its duties and obligations under this Agreement and the Collateral Documents. After any retiring or removed Collateral Agent’s resignation or removal hereunder as the Collateral Agent, the provisions of this Agreement and the Collateral Documents shall inure to its benefit as to any actions taken or omitted to be taken by it under this Agreement or the Collateral Documents while it was the Collateral Agent hereunder.

(c) Any resignation or removal of GSLP or its successor as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of GSLP or its successor as Swing Line Lender, and any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Swing Line Lender for all purposes hereunder. In such event (i) Borrower shall prepay any outstanding Swing Line Loans made by the retiring or removed Administrative Agent in its capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or removed Administrative Agent and Swing Line Lender shall surrender any Swing Line Note held by it to Borrower for cancellation, and (iii) Borrower shall issue, if so requested by successor Administrative Agent and Swing Line Loan Lender, a new Swing Line Note to the successor Administrative Agent and Swing Line Lender, in the principal amount of the Swing Line Sublimit then in effect and with other appropriate insertions.

9.8 Collateral Documents and Guaranty.

(a) Agents Under Collateral Documents and Guaranty . Each Secured Party hereby further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of Secured Parties with respect to the Guaranty, the Collateral and the Collateral Documents; provided that neither Administrative Agent nor Collateral Agent shall owe any fiduciary duty, duty of loyalty, duty of care, duty of disclosure or any other obligation whatsoever to any holder of Obligations with respect to any Hedge Agreement. Subject to Section 10.5, without further written consent or authorization from any Secured Party, Administrative Agent or Collateral Agent, as applicable may execute any documents or instruments necessary to (i) in connection with a sale or disposition of assets permitted by this Agreement, release any Lien encumbering any item of Collateral that is the subject of such sale or other disposition of assets or to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented or (ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented. Collateral Agent further declares that it holds all Australian Collateral acquired by the Collateral Agent after the date hereof on trust for the benefit of the Secured Parties from time to time (it being understood that the provisions of this Section 9 apply to Collateral Agent in its capacity as trustee of such trust).

(b) Right to Realize on Collateral and Enforce Guaranty . Anything contained in any of the Credit Documents to the contrary notwithstanding, Borrower, Administrative Agent, Collateral Agent and each Secured Party hereby agree that (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale or other disposition.

-138-

(c) Rights Under Hedge Agreements and Cash Management Agreements . No Hedge Agreement or Cash Management Agreement will create (or be deemed to create) in favor of any Lender Counterparty that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Guarantor under the Credit Documents except as expressly provided in Section 10.5(c)(v) of this Agreement, Section 9.2 of the Second Amended and Restated Pledge and Security Agreement and the analogous sections of any other Collateral Documents. By accepting the benefits of the Collateral, such Lender Counterparty shall be deemed to have appointed Collateral Agent as its agent and agreed to be bound by the Credit Documents as a Secured Party, subject to the limitations set forth in this clause (c).

(d) Release of Collateral and Guarantees, Termination of Credit Documents . Notwithstanding anything to the contrary contained herein or any other Credit Document, when all Obligations (other than obligations in respect of any Hedge Agreement or Cash Management Agreement) have been paid in full, all Commitments have terminated or expired and no Letter of Credit shall be outstanding (unless the outstanding amounts under all such Letters of Credit have been cash collateralized in a manner reasonably satisfactory to Issuing Bank or, if satisfactory to Issuing Bank in its sole discretion, a backstop Letter of Credit is in place), upon request of Borrower, (i) Collateral Agent shall (without notice to, or vote or consent of, any Lender, or any Affiliate of any Lender or any Lender Counterparty that is a party to any Hedge Agreement or Cash Management Agreement) take such actions as shall be required to release its security interest in all Collateral, and (ii) Administrative Agent shall (without notice to, or vote or consent of, any Lender, or any Affiliate of any Lender or any Lender Counterparty that is a party to any Hedge Agreement or Cash Management Agreement) take such actions as shall be required to release all guarantee obligations provided for in any Credit Document, whether or not on the date of such release there may be outstanding Obligations in respect of Hedge Agreements or Cash Management Agreements (and, subject to the next succeeding sentence, the provisions of Section 7 shall cease to apply). Any such release of guarantee obligations shall be deemed subject to the provision that such guarantee obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made. In addition, upon (a) any disposition of property permitted by this Agreement to a Person that is not a Credit Party, the Liens granted thereon shall be deemed to be automatically released and such property shall automatically revert to the applicable Grantor with no further action on the part of any Person and (b) the consummation of any transaction permitted by the Credit Agreement as a result of which a Guarantor ceases to be a Subsidiary of Borrower, such Guarantor shall automatically be released from its obligations hereunder and under the Collateral Documents and the guaranty and security interest in the Collateral of such Guarantor shall automatically be released.

9.9 Withholding Taxes . To the extent required by any Applicable Law, Administrative Agent may withhold from any payment to any Lender (which term shall include Swing Line Lender and Issuing Bank for purposes of this Section 9.9) an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any other Governmental Authority asserts a claim that Administrative Agent did not properly withhold Tax from amounts paid to or for the account of any Lender because the appropriate form was not delivered or was not properly executed or because such Lender failed to notify Administrative Agent of a change in circumstance which rendered the exemption from, or reduction of, withholding tax ineffective or for any other reason, such Lender shall indemnify fully and hold harmless Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by

-139-

Borrower pursuant to Section 2.20 and without limiting or expanding the obligation of Borrower to do so) for all amounts paid, directly or indirectly, by the Administrative Agent as Taxes or otherwise, together with all expenses incurred, including legal expenses and any other out-of-pocket expenses, whether or not such Tax was correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. The agreements in this Section 9.9 shall survive the resignation and/or replacement of the Administrative Agent, any assignment of rights by, or the replacement of, a Lender, the termination of the Agreement and the repayment, satisfaction or discharge of all other Obligations.

9.10 Quebec Security . To the extent that any Canadian Credit Party now or in the future is required to grant security pursuant to the laws of the Province of Quebec, each Agent (other than the Collateral Agent) and Lender acting for itself and on behalf of all present and future Affiliates of such Agent or Lender that are or become a Lender Counterparty, hereby irrevocably authorizes and appoints the Collateral Agent to act as the holder of an irrevocable power of attorney ( fondé de pouvoir ) (within the meaning of Article 2692 of the Civil Code of Quebec ) in order to hold any hypothec granted under the laws of the Province of Quebec as security for any debenture, bond or other title of indebtedness that may be issued by any Canadian Credit Party and to exercise such rights and duties as are conferred upon a fondé de pouvoir under the relevant deed of hypothec and applicable laws (with the power to delegate any such rights or duties). Moreover, in respect of any pledge by any such Canadian Credit Party of any such debenture, bond or other title of indebtedness as security in respect of any Obligations, the Collateral Agent shall also be authorized to hold such debenture, bond or other title of indebtedness as agent, mandatary, custodian and pledgee for the benefit of the Agents, the Lenders and the Lender Counterparties, the whole notwithstanding the provisions of Section 32 of the An Act respecting the Special Powers of Legal Persons (Quebec). The execution prior to the date hereof by the Collateral Agent of any deed of hypothec or other security documents made pursuant to the laws of the Province of Quebec, is hereby ratified and confirmed. Any person who becomes a Lender, Issuing Bank, an Agent or a Lender Counterparty shall be deemed to have consented to and ratified the foregoing appointment of each of the Collateral Agent as fondé de pouvoir , agent, mandatary and custodian on behalf of all Agents, Issuing Banks, Lenders and the Lender Counterparties, including such person. For greater certainty, the Collateral Agent, when acting as the holder of an irrevocable power of attorney ( fondé de pouvoir ), shall have the same rights, powers, immunities, indemnities and exclusions from liability as are prescribed in favour of the Collateral Agent in this Agreement, which shall apply mutatis mutandis . In the event of the resignation and appointment of a successor Collateral Agent, such successor of the Collateral Agent shall also act as the holder of an irrevocable power of attorney ( fondé de pouvoir ), and as agent, mandatary and custodian for the purposes set forth above. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Administrative Agent) authorized to act for, any other Lender.

SECTION 10. MISCELLANEOUS

10.1 Notices.

(a) Notices Generally . Any notice or other communication herein required or permitted to be given to a Credit Party, Co-Syndication Agent, Collateral Agent, Administrative Agent or Swing Line Lender, shall be sent to such Person’s address as set forth on Appendix B or in the other relevant Credit Document, and in the case of Issuing Bank or Lender, the address as indicated on Appendix B or otherwise indicated to Administrative Agent in writing. Except as otherwise set forth in Section 3.3(b) or paragraph (b) below, each notice hereunder shall be in writing and may be personally served or sent by telefacsimile (except for any notices sent to Administrative Agent) or United States mail or Canada Post

-140-

or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile, or three Business Days after depositing it in the United States mail or Canada Post with postage prepaid and properly addressed; provided that no notice to any Agent shall be effective until received by such Agent; provided further that any such notice or other communication shall at the request of the Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.3(c) hereto as designated by the Administrative Agent from time to time.

(b) Electronic Communications . (1) Notices and other communications to Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites, including the Platform) pursuant to procedures approved by Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Section 2 if such Lender or Issuing Bank, as applicable, has notified Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. Administrative Agent or Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.

(2) Each Credit Party understands that the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution and agrees and assumes the risks associated with such electronic distribution, except to the extent caused by the willful misconduct or gross negligence of Administrative Agent, as determined by a final, non-appealable judgment of a court of competent jurisdiction.

(3) The Platform and any Approved Electronic Communications are provided “as is” and “as available.” None of the Agents nor any of their respective officers, directors, employees, agents, advisors or representatives (the “ Agent Affiliates ”) warrant the accuracy, adequacy, or completeness of the Approved Electronic Communications or the Platform and each expressly disclaims liability for errors or omissions in the Platform and the Approved Electronic Communications. No warranty of any kind, express, implied or statutory, including any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects is made by the Agent Affiliates in connection with the Platform or the Approved Electronic Communications.

(4) Each Credit Party, each Lender, Issuing Bank and each Agent agrees that Administrative Agent may, but shall not be obligated to, store any Approved Electronic Communications on the Platform in accordance with Administrative Agent’s customary document retention procedures and policies.

(5) Any notice of Default or Event of Default may be provided by telephone if confirmed promptly thereafter by delivery of written notice thereof.

(c) Private Side Information Contacts . Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public

-141-

Lender or its delegate, in accordance with such Public Lender’s compliance procedures and Applicable Law, including United States federal and state securities laws, to make reference to information that is not made available through the “Public Side Information” portion of the Platform and that may contain Non-Public Information with respect to Borrower, its Subsidiaries or their securities for purposes of Applicable Law, including United States federal or state securities laws.

10.2 Expenses . Whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to pay promptly (a) all the actual and reasonable out-of-pocket costs and expenses incurred in connection with the negotiation, preparation and execution of the Credit Documents and any consents, amendments, waivers or other modifications thereto; (b) all the reasonable out-of-pocket costs of furnishing all opinions by counsel for Borrower and the other Credit Parties; (c) the reasonable and documented out-of-pocket fees, expenses and disbursements of counsel to Agents and Issuing Bank in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Borrower; (d) all the actual costs and reasonable out-of-pocket expenses of creating, perfecting, recording, maintaining and preserving Liens in favor of Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or Requisite Lenders may request in respect of the Collateral or the Liens created pursuant to the Collateral Documents; (e) all the actual costs and reasonable out-of-pocket fees, expenses and disbursements of any auditors, accountants, consultants or appraisers; (f) all the actual costs and reasonable out-of-pocket expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (g) all other actual and reasonable out-of-pocket costs and expenses incurred by each Agent or Issuing Bank in connection with the syndication of the Loans, including for purposes of this Section 10.2 , Letters of Credit and Commitments and the transactions contemplated by the Credit Documents and any consents, amendments, waivers or other modifications thereto; and (h) after the occurrence of a Default or an Event of Default, all out-of-pocket costs and expenses, including reasonable attorneys’ fees and costs of settlement, incurred by any Agent, Issuing Bank and Lender in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Credit Documents by reason of such Default or Event of Default (including in connection with the sale, lease or license of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or proceedings.

10.3 Indemnity.

(a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend indemnify, pay and hold harmless each Agent, Issuing Bank and Lender and the officers, partners, members, directors, trustees, advisors, employees, agents, sub-agents and Affiliates of each Agent, Issuing Bank and each Lender (each, an “ Indemnitee ”), from and against any and all Indemnified Liabilities, in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of such Indemnitee; provided that no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of that Indemnitee, in each case as determined by a final, non-appealable judgment of a court of competent jurisdiction, or if such Indemnified Liabilities result from any action, suit or proceeding in contract brought by a Credit Party for direct damages (as opposed to special, indirect, consequential or punitive damages) against such Indemnitee for a material breach by such Indemnitee of its obligations under any Credit Document that is determined in favor of such Credit Party by a final, non-appealable judgment

-142-

of a court of competent jurisdiction. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 apply but are unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under Applicable Law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.

(b) To the extent permitted by Applicable Law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against each Lender, each Agent, Issuing Bank, Arranger and their respective Affiliates, directors, employees, attorneys, agents or sub-agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Credit Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. No Indemnitee referred to above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby.

10.4 Set-Off . In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender is hereby authorized by each Credit Party at any time or from time to time subject to the consent of Administrative Agent (such consent not to be unreasonably withheld or delayed), to set-off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts (in whatever currency)) and any other Indebtedness at any time held or owing by such Lender to or for the credit or the account of any Credit Party (in whatever currency) against and on account of the obligations and liabilities of any Credit Party to such Lender hereunder, the Letters of Credit and participations therein and under the other Credit Documents, including all claims of any nature or description arising out of or connected hereto, the Letters of Credit and participations therein or with any other Credit Document, irrespective of whether or not (a) such Lender shall have made any demand hereunder or (b) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 2 and although such obligations and liabilities, or any of them, may be contingent or unmatured. The applicable Lender shall notify Borrower and Administrative Agent of such set-off and application, provided that any failure or any delay in giving such notice shall not affect the validity of any such set-off and application under this Section 10.4.

10.5 Amendments and Waivers.

(a) Requisite Lenders’ Consent . Subject to the additional requirements of Sections 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders; provided , that Administrative Agent may, with the consent of Borrower only, amend, modify or supplement this Agreement to cure any ambiguity, omission, defect or inconsistency, so long as such amendment, modification or supplement does not adversely affect the rights of any Lender or Issuing Bank.

-143-

(b) Affected Lenders’ Consent . Without the written consent of each Lender that would be directly affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:

(i) extend the scheduled final maturity of any Loan or Note;

(ii) waive, reduce or postpone any scheduled repayment (but not prepayment);

(iii) extend the stated expiration date of any Letter of Credit beyond the Revolving Commitment Termination Date;

(iv) reduce the rate of interest on any Loan (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10) or any fee or any premium or other amount payable hereunder;

(v) extend the time for payment of any such interest or fees;

(vi) reduce the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit;

(vii) amend, modify, terminate or waive any provision of Section 2.13(b)(iii), this Section 10.5(b), Section 10.5(c) or any other provision of this Agreement that expressly provides that the consent of all Lenders is required or for the pro rata treatment among Lenders;

(viii) amend the definition of “Requisite Lenders” or “Pro Rata Share”; provided , with the consent of Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro Rata Share” on substantially the same basis as the Term Loan Commitments, the Term Loans, Revolving Commitments and the Revolving Loans are included on the Second Restatement Date;

(ix) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Credit Documents; or

(x) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Credit Document;

provided that for the avoidance of doubt, all Lenders shall be deemed directly affected thereby with respect to any amendment described in clauses (vii), (viii), (ix) and (x).

(c) Other Consents . No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall:

(i) increase any Revolving Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; provided that no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Revolving Commitment of any Lender;

(ii) amend, modify, terminate or waive any provision hereof relating to the Swing Line Sublimit or the Swing Line Loans without the consent of Swing Line Lender;

-144-

(iii) alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.17 without the consent of Lenders holding more than 50% of the aggregate Tranche A Term Loan Exposure of all Lenders, Tranche B Term Loan Exposure of all Lenders, New Term Loan Exposure of all Lenders, Revolving Exposure of all Lenders, as applicable, of each Class which is being allocated a lesser repayment or prepayment as a result thereof; provided that Requisite Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment which is still required to be made is not altered;

(iv) amend, modify, terminate or waive any obligation of Lenders relating to the purchase of participations in Letters of Credit as provided in Section 2.4(e) without the written consent of Administrative Agent and of Issuing Bank;

(v) amend, modify or waive this Agreement, the Second Amended and Restated Pledge and Security Agreement, the Canadian Pledge and Security Agreement, the Quebec Security Documents, the Barbados Security Documents, the Luxembourg Security Documents or the Swiss Security Documents, so as to alter the ratable treatment of Obligations arising under the Credit Documents and Obligations arising under Hedge Agreements or Cash Management Agreements or the definition of “Lender Counterparty,” “Hedge Agreement,” “Cash Management Agreement,” “Obligations,” or “Secured Obligations” (as defined in any applicable Collateral Document) in each case in a manner adverse to any Lender Counterparty with Obligations then outstanding without the written consent of any such Lender Counterparty;

(vi) amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent;

(vii) amend any provision relating solely to the Delayed Draw Commitments without the written consent of Lenders holding a majority in aggregate principal amount of the Delayed Draw Commitments;

(viii) increase any Delayed Draw Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; provided that no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Delayed Draw Commitment of any Lender; or

(ix) waive any condition to the making of any Revolving Loan or Delayed Draw Term Loan without the consent of a majority in interest of the Lenders holding Revolving Commitments or Delayed Draw Commitments, as applicable.

(d) Notwithstanding Section 10.5(a) , any such agreement that shall extend the Revolving Commitment Termination Date or the Term Loan Maturity Date, as applicable, of one or more Lenders (the “ Extending Lender ”) and does not amend any other provision of this Agreement or the Credit Documents other than to change the Applicable Margin of Extending Lenders shall only require the consent of Borrower, the Administrative Agent and the Extending Lenders.

Notwithstanding anything to the contrary, without the consent of any other Person, the applicable Credit Party or Credit Parties and the Administrative Agent and/or Collateral Agent may (in its or their respective sole discretion, or shall, to the extent required by any Credit Document) enter into any amendment or waiver of any Credit Document, or enter into any new agreement or instrument, to effect the granting, perfection, protection, expansion or enhancement of any security interest in Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable law.

-145-

(e) Execution of Amendments, etc . Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.

10.6 Successors and Assigns; Participations.

(a) Generally . This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, Indemnitee Agent Parties under Section 9.6 and Indemnitees under Section 10.3, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Register . Borrower, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register following receipt of a fully executed Assignment Agreement effecting the assignment or transfer thereof, together with the required forms and certificates regarding tax matters and any fees payable in connection with such assignment, in each case, as provided in Section 10.6(d). Each assignment shall be recorded in the Register promptly following receipt by the Administrative Agent of the fully executed Assignment Agreement and all other necessary documents and approvals, prompt notice thereof shall be provided to Borrower and a copy of such Assignment Agreement shall be maintained, as applicable. The date of such recordation of a transfer shall be referred to herein as the “ Assignment Effective Date .” Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans, absent manifest error.

(c) Right to Assign . Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including all or a portion of its Commitment or Loans owing to it or other Obligations; provided , however , that (x) pro rata assignments shall not be required and (y) each assignment, other than pursuant to Section 10.6(h), shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Loan and any related Commitments):

(i) to any Person meeting the criteria of clause (i) of the definition of the term “Eligible Assignee” upon the giving of notice to Borrower and Administrative Agent and with the prior written consent (such consent not to be unreasonably withheld or delayed) of Issuing Bank at the time of such assignment in the case of assignments of Revolving Loans or Revolving Commitments; and

-146-

(ii) to any Person meeting the criteria of clause (ii) of the definition of the term “Eligible Assignee” upon giving of notice to Borrower and Administrative Agent and, (x) in the case of assignments of Tranche A Term Loans, Tranche B Term Loans, Revolving Loans or Revolving Commitments to any such Person (except in the case of assignments made by or to GSLP or any of its affiliates), consented to by each of Borrower and Administrative Agent and (y) in the case of assignments of Revolving Loans or Revolving Commitments to any such Person, consented to by Issuing Bank; provided that any such consent (x) shall not be unreasonably withheld or delayed or (y) in the case of Borrower shall not be required at any time an Event of Default shall have occurred and then be continuing; provided , further that (A) each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than $1,000,000 (or such lesser amount as may be agreed to by Borrower and Administrative Agent or as shall constitute the aggregate amount of the Tranche B Term Loans, Revolving Commitments and Revolving Loans of the assigning Lender) with respect to the assignment of the Tranche B Term Loans, Revolving Commitments and Revolving Loans, and $2,500,000 (or such lesser amount as may be agreed to by Borrower and Administrative Agent or as shall constitute the aggregate of the Tranche A Term Loan) with respect to the assignment of Tranche A Term Loans and (B) any required Borrower consent shall be deemed to have been given to any assignment of Loans or Commitments unless it shall object thereto by written notice to Administrative Agent within 5 Business Days after having received notice thereof.

(d) Mechanics . Assignments and assumptions of Loans and Commitments by Lenders shall be effected by manual execution and delivery to Administrative Agent of an Assignment Agreement. Assignments made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments there shall be delivered to Administrative Agent such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(d), together with payment to Administrative Agent of a registration and processing fee of $3,500 (except that no such registration and processing fee shall be payable (x) in connection with an assignment by or to GSLP or any Affiliate thereof or (y) in the case of an assignee which is already a Lender or is an Affiliate or Related Fund of a Lender or a Person under common management with a Lender).

(e) Representations and Warranties of Assignee . Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Third Restatement Date or as of the Assignment Effective Date that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its Commitments or Loans for its own account in the ordinary course and without a view to distribution of such Commitments or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of such Revolving Commitments or Loans or any interests therein shall at all times remain within its exclusive control).

(f) Effect of Assignment . Subject to the terms and conditions of this Section 10.6, as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its interest in the Loans and Commitments so assigned as reflected in the Register and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof under

-147-

Section 10.8) and be released from its obligations hereunder (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date); provided that anything contained in any of the Credit Documents to the contrary notwithstanding, (y) Issuing Bank shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (z) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder; (iii) the Commitments shall be modified to reflect any Commitment of such assignee and any Revolving Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Borrower shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Commitments and/or outstanding Loans of the assignee and/or the assigning Lender.

(g) Participations .

(1) Each Lender shall have the right at any time to sell one or more participations to any Person (other than Borrower, its Subsidiaries or any of its Affiliates) in all or any part of its Commitments or Loans or in any other Obligation.

(2) The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except that the participation agreement may provide that the Lender must first obtain the participant’s consent with respect to any amendment, modification or waiver that would (A) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Commitment Termination Date) in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (B) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under this Agreement or (C) release all or substantially all of the Collateral under the Collateral Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in which such participant is participating. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Loans or other obligations under this Agreement (the “ Participant Register ”). The entries in the Participant Register shall be conclusive and such Lender shall treat each person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

(3) Borrower agrees that each participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender (subject to the requirements and limitations thereof, including the requirement to provide forms under Section 2.20(d)) and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided that a participant shall not be entitled to receive any greater payment under Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, except to the extent that entitlement to

-148-

a greater payment results from a change in law that occurs after such Participant acquires the applicable participation. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such participant agrees to be subject to Section 2.17 as though it were a Lender.

(h) SPC . Notwithstanding anything to the contrary contained herein, any Lender (a “ Granting Lender ”) may grant to a special purpose funding vehicle identified as such in writing from time to time by the Granting Lender to Administrative Agent and Borrower (an “ SPC ”) the option to provide all or any part of any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. Each party hereto hereby agrees that (i) an SPC shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender (subject to the requirements and limitations thereof, including the requirement to provide forms under Section 2.20(d)) and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided that an SPC shall not be entitled to receive any greater payment under Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the Loans subject to such option, except to the extent that entitlement to a greater payment results from a change in law that occurs after such SPC acquires such option, (ii) no SPC shall be liable for any indemnity or similar payment obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender shall for all purposes, including the approval of any amendment, waiver or other modification of any provision of any Credit Document, remain the lender of record hereunder. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Notwithstanding anything to the contrary contained herein, any SPC may (i) with notice to, but without prior consent of Borrower and Administrative Agent and with the payment of a processing fee of $3,500, assign all or any portion of its right to receive payment with respect to any Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity enhancement to such SPC.

(i) Certain Other Assignments and Participations . In addition to any other assignment or participation permitted pursuant to this Section 10.6, any Lender may assign and/or pledge all or any portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such Lender including any Federal Reserve Bank or any central bank having jurisdiction over such Lender as collateral security pursuant to Regulation A of the Board of Governors and any operating circular issued by such Federal Reserve Bank or such other central bank having jurisdiction over such Lender; provided that no Lender, as between Borrower and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and provided further that in no event shall the applicable Federal Reserve Bank, pledgee or trustee be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.

10.7 Independence of Covenants . All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.

10.8 Survival of Representations, Warranties and Agreements . All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17, 9.3(b) and 9.6 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement of any amounts drawn thereunder, and the termination hereof.

-149-

10.9 No Waiver; Remedies Cumulative . No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of the other Credit Documents or any of the Hedge Agreements or Cash Management Agreements. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.

10.10 Marshalling; Payments Set Aside . Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or any Agent or Lenders enforce any security interests or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state, provincial, territorial or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or set-off had not occurred.

10.11 Severability . In case any provision in or obligation hereunder or under any other Credit Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

10.12 Obligations Several; Independent Nature of Lenders’ Rights . The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.

10.13 Headings . Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.

10.14 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND EN FORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

-150-

10.15 CONSENT TO JURISDICTION.

(a) SUBJECT TO CLAUSE (E) OF THE FOLLOWING SENTENCE , ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENTS, OR ANY OF THE OBLIGATIONS, SHALL BE BROUGHT IN ANY STATE OR FEDER AL COURT OF COMPETENT JURISDICTION IN THE BOROUGH OF MANHATTAN IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND I N CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLU SIVE JURISDICTION AND VENUE OF SUCH COURTS (OTHER THAN WITH RESPECT TO ACTIONS BY ANY AGENT IN RESPECT OF RIGHTS UNDER ANY COLLATERAL DOCUMENT GOVERNED BY LAWS OTHER THAN THE LAWS OF TH E STATE OF NEW YORK OR WITH RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEF ENSE OF FORUM NON CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN AN Y SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE AP PLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SE RVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTIT UTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGA INST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY SECURITY DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.

(b) EACH CREDIT PARTY THAT IS ORGANIZED UNDER THE L AWS OF A JURISDICTION OUTSIDE THE UNITED STATES HEREBY APPOINTS VPI AS ITS AGENT FOR SERVICE OF PROCESS IN ANY MATTER RELATED TO THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS AND VPI HER EBY ACCEPTS SUCH APPOINTMENT.

10.16 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HER ETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACT ION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS B ETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORRO WER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCO MPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT M ATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WA IVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELI ED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON T HIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS T HAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRR EVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY

-151-

REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EAC H OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENT S OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AG REEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

10.17 Confidentiality . Each Agent and each Lender (which term shall for the purposes of this Section 10.17 include the Issuing Bank) shall hold all Non-Public Information regarding Borrower and its Subsidiaries and their businesses identified as such by Borrower or such Subsidiary (or which is reasonably apparent to be of a confidential nature, even if not so identified) and obtained by such Agent and such Lender pursuant to the requirements hereof in accordance with such Agent’s and such Lender’s customary procedures for handling confidential information of such nature, it being understood and agreed by Borrower that, in any event, the Administrative Agent may disclose such information to the Lenders and each Agent and each Lender may make (i) disclosures of such information to Affiliates of such Lender and to their respective agents and advisors (and to other Persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation of any Loans or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) to any swap or derivative transaction relating to Borrower and its obligations ( provided that such assignees, transferees, participants, counterparties and advisors are advised of and agree to be bound by either the provisions of this Section 10.17 or other provisions at least as restrictive as this Section 10.17), (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to Credit Parties received by it from any Agent or any Lender, (iv) disclosures necessary in connection with the exercise of any remedies hereunder or under any other Credit Document, (v) disclosures required or requested by any Governmental Authority or pursuant to legal or judicial process; provided that, unless specifically prohibited by Applicable Law or court order, each Lender and each Agent shall make reasonable efforts to notify Borrower of any request by any Governmental Authority or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such Governmental Authority) for disclosure of any such Non-Public Information reasonably in advance of disclosure of such information (and each Agent and Lender shall cooperate with Borrower and its Subsidiaries (at the sole cost and expense of Borrower and its Subsidiaries) to limit any such disclosure) and (vi) disclosures to any other Person with the written consent of the Borrower. In addition, each Agent and each Lender may disclose the existence of this Agreement and the information about this Agreement to service providers to Agents and Lenders in connection with the administration and management of this Agreement and the other Credit Documents.

10.18 Usury Savings Clause . If any provision of this Agreement or of any of the other Credit Documents would obligate any Credit Party to make any payment of interest or other amount payable to any Agent or any Lender in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by such Agent or Lender of interest at a criminal rate (as such terms are construed under the Criminal Code (Canada)) or in excess of the Highest Lawful Rate, then notwithstanding such provisions, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by such Agent or such Lender of interest at a criminal rate, such adjustment to be effected, to the extent necessary, as follows: (1) firstly, by reducing the amount or rate of interest required to be paid to such Agent or such Lender under Section 2.8, and (2) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to such Agent or such Lender which would constitute

-152-

“interest” for purposes of Section 347 of the Criminal Code (Canada) or for the purposes of determining the Highest Lawful Rate. Notwithstanding the foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable usury laws, and after giving effect to all adjustments contemplated in the preceding sentence, if an Agent or Lender shall have received an amount in excess of the maximum permitted by that section of the Criminal Code (Canada) or by application of the Highest Lawful Rate, such Credit Party shall be entitled, by notice in writing to such Agent or such Lender, to obtain reimbursement from such Agent or such Lender in an amount equal to such excess and, pending such reimbursement, such amount shall be deemed to be an amount payable by such Agent or such Lender to such Credit Party. Any amount or rate of interest referred to in this Section 10.18 shall be determined in accordance with GAAP as an effective annual rate of interest over the term that the applicable Loan remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada) or for the purposes of determining the Highest Lawful Rate) shall, if they relate to a specific period of time, be pro-rated over that period of time and otherwise be pro-rated over the period from the Third Restatement Date to the later of the Revolving Commitment Termination Date or the Term Loan Commitment Termination Date and, in the event of a dispute, a certificate of an actuary appointed by Administrative Agent shall be conclusive for the purposes of such determination absent manifest error.

10.19 Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. Delivery of an executed counterpart to this Agreement by facsimile transmission or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement.

10.20 Effectiveness; Entire Agreement . This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Borrower and Administrative Agent of written notification of such execution and authorization of delivery thereof.

10.21 PATRIOT Act; PCTFA . Each Lender to whom the PATRIOT Act applies and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies each Credit Party that pursuant to the requirements of the PATRIOT Act and the PCTFA, it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Lender or Administrative Agent, as applicable, to identify such Credit Party in accordance with those Acts.

10.22 Electronic Execution of Assignments . The words “execution,” “signed,” “signature,” and words of like import in any Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act, the Commerce Act (Ontario) or any similar provincial, territorial or federal laws.

10.23 No Fiduciary Duty . Each Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “ Lenders ”) may have economic interests that conflict with those of Borrower, its stockholders and/or its affiliates. Borrower agrees that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between any Lender, on the one hand, and Borrower, its stockholders or its affiliates, on the other. The Credit Parties acknowledge and agree that (i) the transactions contemplated by the Credit Documents (including the exercise of rights and remedies hereunder and thereunder) are arm’s-length

-153-

commercial transactions between the Lenders, on the one hand, and Borrower, on the other, and (ii) in connection therewith and with the process leading thereto, (x) no Lender has assumed an advisory or fiduciary responsibility in favor of Borrower, its stockholders or its affiliates with respect to the transactions contemplated hereby (or the exercise of rights or remedies with respect thereto) or the process leading thereto (irrespective of whether any Lender has advised, is currently advising or will advise Borrower, its stockholders or its Affiliates on other matters) or any other obligation to Borrower except the obligations expressly set forth in the Credit Documents and (y) each Lender is acting solely as principal and not as the agent or fiduciary of Borrower, its management, stockholders, creditors or any other Person. Borrower has consulted its own legal and financial advisors to the extent it deemed appropriate and that it is responsible for making its own independent judgment with respect to such transactions and the process leading thereto. Borrower agrees that it will not claim that any Lender has rendered advisory services of any nature or respect, or owes a fiduciary or similar duty to Borrower, in connection with such transaction or the process leading thereto.

10.24 Judgment Currency.

(a) If, for the purpose of obtaining or enforcing judgment against any Credit Party in any court in any jurisdiction, it becomes necessary to convert into any other currency (such other currency being hereinafter in this Section 10.24 referred to as the “ Judgment Currency ”) an amount due under any Credit Document in any currency (the “ Obligation Currency ”) other than the Judgment Currency, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding the date of actual payment of the amount due, in the case of any proceeding in the courts of any jurisdiction that will give effect to such conversion being made on such date, or the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the applicable date as of which such conversion is made pursuant to this Section 10.24 being hereinafter in this Section 10.24 referred to as the “ Judgment Conversion Date ”).

(b) If, in the case of any proceeding in the court of any jurisdiction referred to in Section 10.24(a), there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual receipt for value of the amount due, then the applicable Credit Party or Credit Parties shall pay such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount actually received in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will provide the amount of the Obligation Currency which could have been purchased with the amount of the Judgment Currency stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date. Any amount due from any Credit Party under this Section 10.24(b) shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of any of the Credit Documents.

(c) The term “rate of exchange” in this Section 10.24 means the rate of exchange at which Administrative Agent, on the relevant date at or about 12:00 noon (New York time), would be prepared to sell, in accordance with Administrative Agent’s normal course foreign currency exchange practices, the Obligation Currency against the Judgment Currency.

10.25 Joint and Several Liability . Notwithstanding any other provision contained herein or in any other Credit Documents, if a “secured creditor” (as that term is defined under the BIA) is determined by a court of competent jurisdiction not to include a Person to whom obligations are owed on a joint or joint and several basis, then any Canadian Credit Party’s Obligations (and the Obligations of each other Credit Party with respect thereto), to the extent such Obligations are secured, only shall be several obligations and not joint or joint and several obligations.

-154-

10.26 Advice of Counsel; No Strict Construction . Each of the parties represents to each other party hereto that it has discussed this Agreement and the other Credit Documents with its counsel. The parties hereto have participated jointly in the negotiation and drafting of this Agreement and the other Credit Documents. In the event an ambiguity or question of intent or interpretation arises, this Agreement and each of the other Credit Documents shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any other Credit Document.

10.27 Day Not a Business Day . In the event that any day on or before which any action, calculation, determination or allocation is required to be taken hereunder is not a Business Day, then such action, calculation, determination or allocation shall be required to be taken at the requisite time on or before the first succeeding day that is a Business Day thereafter, unless such day is in the next calendar month, in which case such action, calculation, determination or allocation shall be required to be taken at the requisite time on the first preceding day that is a Business Day.

10.28 Limitations Act, 2002 . Each of the parties hereto agrees that any and all limitation periods provided for in the Limitations Act, 2002 (Ontario) or any other Applicable Law that provides for or relates to limitation periods, shall be excluded from application to the Obligations and any undertaking, covenant, indemnity or other agreement of any Credit Party provided for in any Credit Document to which it is a party in respect thereof, in each case to fullest extent permitted by such Act or other Applicable Law.

10.29 Parallel Debt.

(a) Notwithstanding anything to the contrary contained in this Agreement and the other Credit Documents and solely for the purpose of ensuring and preserving the validity and effect of the security rights granted and to be granted under or pursuant to the Collateral Documents governed by the laws of The Netherlands and the laws of Poland (the “ Foreign Security Agreements ”), each of the Lenders and the other parties hereto hereby acknowledges and consents to (i) each Credit Party that is a party to the Foreign Security Agreements undertaking herein to pay to the Administrative Agent, in its individual capacity and not as agent, representative or trustee, as a separate independent obligation to the Administrative Agent, the amount of its Parallel Debt (which each such Credit Party hereby so undertakes to do), and (ii) the security rights contemplated by the Foreign Security Agreements being granted in favor of the Administrative Agent in its individual capacity as security for its claims under the Parallel Debt.

(b) Each Credit Party acknowledges and agrees that it may not pay its Parallel Debt other than at the instruction of, and in the manner instructed by, the Administrative Agent; provided, however, that no Credit Party shall be obligated to pay any amount of its Parallel Debt unless and until a corresponding amount of its Underlying Debt shall have become due and payable.

(c) To the extent any amount is paid to and received by the Administrative Agent in payment of the Parallel Debt and the Administrative Agent has turned over any amounts received by it in respect to the Parallel Debt to the Secured Parties as their interests appeared with respect to the Underlying Debt, the total amount due and payable in respect of the Underlying Debt shall be decreased as if such amount were received by the Secured Parties or any of them in payment of the corresponding Underlying Debt.

[Remainder of page intentionally left blank]

-155-

[Signature Pages Intentionally Omitted]

S-1

APPENDIX A-1

TO THIRD AMENDED AND RESTATED CREDIT AND GUARANTY A GREEMENT

Revolving Commitments

APPENDIX A-1-1

Lender Revolving Commitment Pro Rata Share Goldman Sachs Lending Partners LLC $ 30,937,500 11.25 % JPMorgan Chase Bank, N.A., Toronto Branch $ 24,062,500 8.75 % Royal Bank Of Canada $ 24,062,500 8.75 % Export Development Canada $ 24,062,500 8.75 % The Bank of Nova Scotia $ 20,625,000 7.50 % SunTrust Bank $ 20,625,000 7.50 % DnB NOR Bank ASA $ 20,625,000 7.50 % Morgan Stanley Bank, N.A. $ 19,937,500 7.25 % Barclays Bank PLC $ 19,937,500 7.25 % Bank of America, N.A. $ 13,750,000 5.00 % The Toronto-Dominion Bank $ 9,625,000 3.50 % HSBC Bank Canada $ 6,875,000 2.50 % HSBC Bank USA, NA $ 6,875,000 2.50 % ICICI Bank Canada $ 6,187,500 2.25 % Canadian Imperial Bank of Commerce $ 5,500,000 2.00 % Mizuho Corporate Bank, Ltd. $ 5,500,000 2.00 % Raymond James Bank, FSB $ 4,812,500 1.75 % Sumitomo Mitsui Banking Corp., New York $ 3,437,500 1.25 % Union Bank, N.A. $ 3,437,500 1.25 % Bank of Montreal $ 2,750,000 1.00 % Manufacturers Bank $ 1,375,000 0.50 %

Total $ 275,000,000 100.00 %

APPENDIX A-2

TO THIRD AMENDED AND RESTATED CREDIT AND GUARANTY A GREEMENT

Tranche B Term Loan Commitments

EXHIBIT A-2-1

Lender Tranche B Term Loan

Commitment Pro Rata Share JPMorgan Chase Bank, N.A., Toronto Branch $ 600,000,000 100.00 %

Total $ 600,000,000 100.00 %

Exhibit 10.36

EXECUTION VERSION

JOINDER AGREEMENT

This Joinder Agreement is dated as of February 6, 2014 (this “Agreement” ), by and among each of the financial institutions set forth on Schedule A annexed hereto (each a “New Term Loan Lender” and collectively the “New Term Loan Lenders” ), Valeant Pharmaceuticals International, Inc., a corporation continued under the laws of the Province of British Columbia (“ Borrower ”), the undersigned subsidiaries of Borrower and Goldman Sachs Lending Partners LLC (“ GSLP ”), as Administrative Agent and Collateral Agent.

RECITALS:

WHEREAS , reference is hereby made to the Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, as amended by Amendment No. 1, dated as of March 6, 2012, by Amendment No. 2, dated as of September 10, 2012, by Amendment No. 3, dated as of January 24, 2013, by Amendment No. 4, dated as of February 21, 2013, by Amendment No. 5, dated as of June 6, 2013, by Amendment No. 6, dated as of June 26, 2013, by Amendment No. 7, dated as of September 17, 2013, by Amendment No. 8, dated as of December 20, 2013 (“ Amendment No. 8 ”), as further supplemented by the Joinder Agreement, dated as of June 14, 2012, by the Joinder Agreement, dated as of July 9, 2012, by the Joinder Agreement, dated as of September 11, 2012, by the Joinder Agreement dated as of October 2, 2012, by the Joinder Agreement, dated as of December 11, 2012 and by the Joinder Agreements, each dated as of August 5, 2013 (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement ”; the terms defined therein and not otherwise defined herein being used herein as therein defined), among Borrower, certain Subsidiaries of Borrower, as Guarantors, the Lenders party thereto from time to time, GSLP, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc. (“ Morgan Stanley ”), as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A. (“ JPMorgan ”) and Morgan Stanley, as Co-Syndication Agents, JPMorgan, as Issuing Bank, GSLP, as Administrative Agent and Collateral Agent, and the other Agents party thereto;

WHEREAS , subject to the terms and conditions of the Credit Agreement, Borrower may obtain New Revolving Loan Commitments and/or New Term Loan Commitments by entering into one or more Joinder Agreements with the New Term Loan Lenders;

WHEREAS , pursuant to Section 2.25 of the Credit Agreement, the Credit Agreement may, without the consent of any other Lenders, be amended as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of Section 2.25 of the Credit Agreement; and

WHEREAS , the Borrower may, in its sole discretion, use the proceeds of the Additional Series A-3 Tranche A Term Loans (as defined below) for any purpose not prohibited by the Credit Agreement, including repayment of outstanding Indebtedness of the Borrower.

NOW, THEREFORE , in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Each New Term Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Credit Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance

upon the Administrative Agent or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes Administrative Agent and each other Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Credit Documents as are delegated to Administrative Agent or such other Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

Each New Term Loan Lender hereby commits to provide its respective New Term Loan Commitment (each an “ Additional Series A-3 Tranche A Term Loan Commitment ”) as set forth on Schedule A annexed hereto, on the terms and subject to the conditions set forth below:

-2-

1. Additional Series A-3 Tranche A Term Loan Commitments. The terms and provisions of the New Term Loans made pursuant to this Agreement (the “ Additional Series A-3 Tranche A Term Loans ” and each an “ Additional Series A-3 Tranche A Term Loan ”) shall be identical to, and constitute, Series A-3 Tranche A Term Loans for all purposes under the Credit Agreement. The Additional Series A-3 Tranche A Term Loan Commitments and Additional Series A-3 Tranche A Term Loans made pursuant thereto shall be subject to the provisions of the Credit Agreement and the other Credit Documents, and shall constitute “Tranche A Term Loan Exposure” and “Tranche A Term Loans” , respectively, thereunder.

2. Closing Fee . Borrower agrees to pay on the Additional Series A-3 Tranche A Term Loan Funding Date (as defined below) to Administrative Agent, for the account of each New Term Loan Lender party to this Agreement, as fee compensation for the commitment of such New Term Loan Lender’s Additional Series A-3 Tranche A Loan Commitments, a closing fee in an amount equal to 0.25% of the aggregate principal amount of such New Term Loan Lender’s allocated Additional Series A-3 Tranche A Term Loan Commitments which are actually funded on the Additional Series A-3 Tranche A Term Loan Funding Date.

3. Proposed Borrowing . In accordance with Section 2.25 of the Credit Agreement, Borrower has previously delivered to Administrative Agent an executed Funding Notice for Additional Series A-3 Tranche A Term Loans, requesting a proposed borrowing in the principal amount of up to $225,560,593.40 (the “ Proposed Borrowing ”) on the date hereof (the “ Additional Series A-3 Tranche A Term Loan Funding Date ”). Each New Term Loan Lender shall make its Additional Series A-3 Tranche A Term Loan available to Administrative Agent not later than 11:00 a.m. (New York City time) on the date hereof, by wire transfer of same day funds in Dollars at the Principal Office designated by Administrative Agent. Promptly upon receipt thereof, Administrative Agent shall make the proceeds of the Additional Series A-3 Tranche A Term Loan available to Borrower on the date hereof by causing an amount of same day funds in Dollars equal to the proceeds of all such loans received by Administrative Agent from New Term Loan Lenders to be credited to the account of Borrower, at the Principal Office designated by Administrative Agent or to such other account as may be designated in writing to Administrative Agent by Borrower.

4. New Lenders . Each New Term Loan Lender (other than any New Term Loan Lender that, immediately prior to the execution of this Agreement, is a “Lender” under the Credit Agreement) acknowledges and agrees that upon its execution of this Agreement its Additional Series A-3 Tranche A Term Loan Commitments shall be effective and that such New Term Loan Lender shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Credit Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.

-3-

5. Credit Agreement Governs . Additional Series A-3 Tranche A Term Loans shall be subject to the provisions of the Credit Agreement and the other Credit Documents, except as set forth in this Agreement, and shall constitute Tranche A Term Loans thereunder.

6. Borrower ’s Certifications . By its execution of this Agreement, the undersigned officer, to the best of his or her knowledge, and Borrower hereby certify that:

i. The representations and warranties contained in the Credit Agreement and the other Credit Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date;

ii. No event has occurred and is continuing or would result from the consummation of the Proposed Borrowing contemplated

hereby that would constitute a Default or an Event of Default; and

iii. Borrower has performed in all material respects all agreements and satisfied all conditions which the Credit Agreement provides shall be performed or satisfied by it on or before the date hereof in connection with the Proposed Borrowing.

7. Borrower Covenants . By its execution of this Agreement, Borrower hereby covenants that:

i. Borrower shall deliver or cause to be delivered, on or before the Additional Series A-3 Tranche A Term Loan Funding Date, the following legal opinions and documents: originally executed copies of the favorable written opinions of (a) Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel to the Credit Parties, (b) Chancery Chambers, special Barbados counsel to the Credit Parties, (c) Norton Rose Fulbright Canada LLP, special Canadian counsel to the Credit Parties, (d) Baker & McKenzie, special Luxembourg counsel to the Credit Parties, (e) Conyers Dill & Pearman Limited, special Bermuda counsel to the Credit Parties, (f) Arthur Cox, special Ireland counsel to the Credit Parties, (g) Baker & McKenzie, special Switzerland counsel to the Credit Parties, (h) Venable LLP, special Maryland counsel to the Credit Parties, (i) Souza, Cescon, Barrieu & Flesch Advogados, special Brazil counsel to the Credit Parties, (j) Squire Sanders Święcicki Krześniak sp.k., special Poland counsel to the Credit Parties and (k) Tark Grunte Sutkiene, special Lithuania counsel to the Credit Parties, together with all other legal opinions and other documents reasonably requested by Administrative Agent in connection with this Agreement.

8. Eligible Assignee . By its execution of this Agreement, each New Term Loan Lender (other than any New Term Loan Lender that, immediately prior to the execution of this Agreement, is a “Lender” under the Credit Agreement) represents and warrants that it is an Eligible Assignee.

9. Notice . For purposes of the Credit Agreement, the initial notice address of each New Term Loan Lender shall be as set forth below its signature below.

10. Non-U.S. Lenders . For each New Term Loan Lender that is a Non-U.S. Lender, delivered herewith to Administrative Agent are such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such New Term Loan Lender may be required to deliver to Administrative Agent pursuant to subsection 2.20(d) of the Credit Agreement.

-4-

11. Recordation of the New Loans . Upon execution and delivery hereof, Administrative Agent will record in the Register the Additional Series A-3 Tranche A Term Loans made by New Term Loan Lenders pursuant hereto as being of the same Class as the Series A-3 Tranche A Term Loans.

12. Reaffirmation .

i. Each Credit Party hereby expressly acknowledges the terms of this Agreement and reaffirms, as of the date hereof, the

covenants and agreements contained in each Credit Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Agreement and the transactions contemplated hereby.

ii. Each Credit Party, by its signature below, hereby affirms and confirms (a) its obligations under each of the Credit Documents to which it is a party, and (b) the pledge of and/or grant of a security interest or hypothec in its assets as Collateral to secure such Obligations, all as provided in the Collateral Documents as originally executed, and acknowledges and agrees that such guarantee, pledge and/or grant continue in full force and effect in respect of, and to secure, such Obligations under the Credit Agreement and the other Credit Documents.

iii. Each Credit Party acknowledges and agrees that each of the Credit Documents in existence as of the date hereof shall be

henceforth read and construed in accordance with and so as to give full force and effect to the ratifications, confirmations, acknowledgements and agreements made herein.

13. Amendment, Modification and Waiver . This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto.

14. Entire Agreement . This Agreement, the Credit Agreement, the other Credit Documents and the letter agreement dated as of February 4, 2014 between the New Term Loan Lenders, the Borrower and GSLP as Administrative Agent and Collateral Agent constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof. It is understood and agreed that each reference in each Credit Document to the Credit Agreement, whether direct or indirect, shall hereafter be deemed to be a reference to the Credit Agreement as amended and supplemented hereby and that this Agreement is a Credit Document.

15. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OB LIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND EN FORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

16. Severability . Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.

[Remainder of page intentionally left blank]

-5-

17. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of the date first written above.

[Signature Page to Joinder Agreement]

BARCLAYS BANK PLC as a “New Term Loan Lender”

By: /s/ Naom Azachi Name: Naom Azachi Title: Vice President

Notice Address: 745 7 th Avenue New York, NY 10019

Attention: Mathew Cybul Telephone: 212-526-5851 Facsimile: 212-526-5115

[Signature Page to Joinder Agreement]

CITIBANK, N.A. , as a “New Term Loan Lender”

By: /s/ Laura Fogarty Name: Laura Fogarty Title: Vice President

Notice Address: 388 Greenwich Street, Floor 32 New York, NY 10013

Attention: Laura Fogarty Telephone: (212) 816-2197 Facsimile: (646) 862-8137

[Signature Page to Joinder Agreement]

MORGAN STANLEY SENIOR FUNDING INC. , as a “New Term Loan Lender”

By: /s/ Alice Lee Name: Alice Lee Title: Authorized Signatory

Notice Address:

Morgan Stanley Loan Servicing 1300 Thames Street Wharf, 4 th Floor Baltimore, MD 21231 443-627-4355 718-233-2140 msloanservicing@morganstanley.com

[Signature Page to Joinder Agreement]

SUNTRUST BANK , as a “New Term Loan Lender”

By: /s/ Katherine Bass Name: Katherine Bass Title: Director

Notice Address: 3333 Peachtree Road, NE 7 th Floor Atlanta, GA 30326

Attention: Katherine Bass Telephone: 404-439-7602 Facsimile: 404-439-7600

[Signature Page to Joinder Agreement]

DBS BANK LTD., LOS ANGELES AGENCY , as a “New Term Loan Lender”

By: /s/ James McWalters Name: James McWalters Title: General Manager

Notice Address: 725 South Figueroa Street Suite 2000 Los Angeles, CA 90017

Attention: General Manager Telephone: 213-627-0222 Facsimile: 213-627-0228

IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Amendment No. 8 as of the date first written above.

[Signature Page to Joinder Agreement]

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. as Borrower

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Senior Vice President and Treasurer

VALEANT PHARMACEUTICALS INTERNATIONAL as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

BAUSCH & LOMB INCORPORATED as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

BAUSCH & LOMB HOLDINGS INCORPORATED as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

[Signature Page to Joinder Agreement]

ATON PHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

CORIA LABORATORIES, LTD. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

DOW PHARMACEUTICAL SCIENCES, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

OBAGI MEDICAL PRODUCTS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

OMP, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

[Signature Page to Joinder Agreement]

MEDICIS PHARMACEUTICAL CORPORATION as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President, Chief Financial Officer and Treasurer

DR. LEWINN ’S PRIVATE FORMULA INTERNATIONAL, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

OCEANSIDE PHARMACEUTICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

PRINCETON PHARMA HOLDINGS, LLC as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

[Signature Page to Joinder Agreement]

PRIVATE FORMULA CORP. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

RENAUD SKIN CARE LABORATORIES, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

VALEANT BIOMEDICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

VALEANT PHARMACEUTICALS NORTH AMERICA LLC as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

BIOVAIL AMERICAS CORP. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

[Signature Page to Joinder Agreement]

ORAPHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President, Chief Financial Officer and Treasurer

ORAPHARMA TOPCO HOLDINGS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President, Chief Financial Officer and Treasurer

PRESTWICK PHARMACEUTICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

IOLAB CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

TECHNOLAS PERFECT VISION, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB PHARMA HOLDINGS CORP. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

[Signature Page to Joinder Agreement]

BAUSCH & LOMB CHINA, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB SOUTH ASIA, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB TECHNOLOGY CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

RHC HOLDINGS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

SIGHT SAVERS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

[Signature Page to Joinder Agreement]

BAUSCH & LOMB INTERNATIONAL INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB REALTY CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

[Signature Page to Joinder Agreement]

ISTA PHARMACEUTICALS, LLC as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

VRX HOLDCO INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Chief Financial Officer and Treasurer

[Signature Page to Joinder Agreement]

VALEANT INTERNATIONAL BERMUDA as Guarantor

By: /s/ Peter J. McCurdy Name: Peter J. McCurdy Title: President and Assistant Secretary

VALEANT PHARMACEUTICALS NOMINEE BERMUDA as Guarantor

By: /s/ Peter J. McCurdy Name: Peter J. McCurdy Title: President and Assistant Secretary

[Signature Page to Joinder Agreement]

HYTHE PROPERTY INCORPORATED as Guarantor

By: /s/ Mauricio Zavala Name: Mauricio Zavala Title: Assistant Secretary

[Signature Page to Joinder Agreement]

VALEANT CANADA GP LIMITED as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn

Title:

Executive Vice President and General Counsel

VALEANT CANADA LP by its sole general partner, VALEANT CANADA GP LIMITED as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn

Title:

Executive Vice President and General Counsel

V-BAC HOLDING CORP. as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn

Title: Vice President

[Signature Page to Joinder Agreement]

VALEANT PHARMACEUTICALS IRELAND as Guarantor

By: /s/ Graham Jackson Name: Graham Jackson Title: Director

[Signature Page to Joinder Agreement]

BIOVAIL INTERNATIONAL S.À R.L. as Guarantor

By: /s/ Kuy Ly Ang Name: Kuy Ly Ang Title: Manager

VALEANT PHARMACEUTICALS LUXEMBOURG S.À R.L. as Guarantor

By: /s/ Kuy Ly Ang Name: Kuy Ly Ang Title: Manager

[Signature Page to Joinder Agreement]

PHARMASWISS SA as Guarantor

By: /s/ Matthias Courvoisier Name: Matthias Courvoisier Title: Director

[Signature Page to Joinder Agreement]

Signed by Valeant Holdco 2 Pty Ltd (ACN 154 341 367) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Wirra Holdings Pty Limited (ACN 122 216 577) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

[Signature Page to Joinder Agreement]

Signed by Wirra Operations Pty Limited (ACN 122 250 088) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by iNova Pharmaceuticals (Australia) Pty Limited (ACN 000 222 408) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Wirra IP Pty Limited (ACN 122 536 350) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

[Signature Page to Joinder Agreement]

Signed by iNova Sub Pty Limited (ACN 134 398 815) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

[Signature Page to Joinder Agreement]

Signed by Valeant Pharmaceuticals Australasia Pty Limited (ACN 001 083 352 )

as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Linda A. LaGorga Signature of director Signature of director/secretary

Robert R. Chai-Onn Linda A. LaGorga Name of director (please print) Name of director/secretary (please print)

Signed by DermaTech Pty Limited (ACN 003 982 161)

as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

[Signature Page to Joinder Agreement]

Signed by Private Formula International Holdings Pty Ltd (ACN 095 450 918 )

as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

Signed by Private Formula International Pty Ltd (ACN 095 451 442 )

as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

[Signature Page to Joinder Agreement]

Signed by Ganehill Pty Ltd (ACN 065 261 538)

as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

[Signature Page to Joinder Agreement]

UCYCLYD PHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller

Name: Howard B. Schiller

Title:

Executive Vice President, Chief Financial Officer

[Signature Page to Joinder Agreement]

VALEANT EUROPE B.V. as Guarantor

By: /s/ Rob Meijer Name: Rob Meijer Title: Managing Director A

[Signature Page to Joinder Agreement]

PRZEDSIEBIORSTWO FARMACEUTYCZNE JELFA S.A. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VALEANT SP. ZOO as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VP VALEANT SP. Z.O.O.SP.J. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VALEANT SPOLKA Z ORGANICZONA ODPOWIEDZIALNOSCIA SP.J. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

[Signature Page to Joinder Agreement]

LABENNE PARTICIPACOES LTDA as Guarantor

By: /s/ Marcelo Noll Barboza Name: Marcelo Noll Barboza Title: Officer

By: /s/ Mauricio Santos da Luz Name: Mauricio Santos da Luz Title: Officer

PROBIOTICA LABORATORIES LTDA. as Guarantor

By: /s/ Marcelo Noll Barboza Name: Marcelo Noll Barboza Title: Officer

By: /s/ Mauricio Santos da Luz Name: Mauricio Santos da Luz Title: Officer

[Signature Page to Joinder Agreement]

AB SANITAS as Guarantor

By: /s/ Saulius Žemaitis Name: Saulius Žemaitis Title: General Manager

[Signature Page to Joinder Agreement]

Consented to by:

GOLDMAN SACHS LENDING PARTNERS LLC As Administrative Agent and Collateral Agent

By: /s/ Elizabeth Fischer Authorized Signatory

SCHEDULE A TO JOINDER AGREEMENT

Name of Lender Type of Commitment Amount BARCLAYS BANK PLC

Additional Series A-3 Tranche A Term Loan Commitment $ 74,952,387.64

CITIBANK, N.A.

Additional Series A-3 Tranche A Term Loan Commitment $ 75,000,000.00

MORGAN STANLEY SENIOR FUNDING, INC.

Additional Series A-3 Tranche A Term Loan Commitment $ 20,770,632.32

SUNTRUST BANK

Additional Series A-3 Tranche A Term Loan Commitment $ 36,837,573.44

DBS BANK LTD., LOS ANGELES AGENCY

Additional Series A-3 Tranche A Term Loan Commitment $ 18,000,000.00

Total: $ 225,560,593.40

Exhibit 10.37

EXECUTION VERSION

JOINDER AGREEMENT

This Joinder Agreement is dated as of February 6, 2014 (this “Agreement” ), by and among each of the undersigned financial institutions (each a “New Term Loan Lender” and collectively the “New Term Loan Lenders” ), Valeant Pharmaceuticals International, Inc., a corporation continued under the laws of the Province of British Columbia (“ Borrower ”), the undersigned subsidiaries of Borrower and Goldman Sachs Lending Partners LLC (“ GSLP ”), as Administrative Agent and Collateral Agent.

RECITALS:

WHEREAS , reference is hereby made to the Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, as amended by Amendment No. 1, dated as of March 6, 2012, by Amendment No. 2, dated as of September 10, 2012, by Amendment No. 3, dated as of January 24, 2013, by Amendment No. 4, dated as of February 21, 2013, by Amendment No. 5, dated as of June 6, 2013, by Amendment No. 6, dated as of June 26, 2013, by Amendment No. 7, dated as of September 17, 2013, by Amendment No. 8, dated as of December 20, 2013 (“ Amendment No. 8 ”), as further supplemented by the Joinder Agreement, dated as of June 14, 2012, by the Joinder Agreement, dated as of July 9, 2012, by the Joinder Agreement, dated as of September 11, 2012, by the Joinder Agreement dated as of October 2, 2012, by the Joinder Agreement, dated as of December 11, 2012 and by the Joinder Agreements, each dated as of August 5, 2013 (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement ”; the terms defined therein and not otherwise defined herein being used herein as therein defined), among Borrower, certain Subsidiaries of Borrower, as Guarantors, the Lenders party thereto from time to time, GSLP, J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc. (“ Morgan Stanley ”), as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A. (“ JPMorgan ”) and Morgan Stanley, as Co-Syndication Agents, JPMorgan, as Issuing Bank, GSLP, as Administrative Agent and Collateral Agent, and the other Agents party thereto;

WHEREAS , subject to the terms and conditions of the Credit Agreement, Borrower may obtain New Revolving Loan Commitments and/or New Term Loan Commitments by entering into one or more Joinder Agreements with the New Term Loan Lenders;

WHEREAS , pursuant to Section 2.25 of the Credit Agreement, the Credit Agreement may, without the consent of any other Lenders, be amended as may be necessary or appropriate, in the opinion of the Administrative Agent, to give effect to the provisions of Section 2.25 of the Credit Agreement; and

WHEREAS , each Lender that has executed and delivered a settlement election to this Agreement substantially in the form of Exhibit A hereto (an “ Election ”) (a) shall be deemed, solely with respect to any such Lender consenting to the “Cashless Roll” option in such Election, upon effectiveness of this Agreement, to have exchanged and/or converted all (or such lesser amount allocated to it by the Joint Lead Arrangers) of its Series E Tranche B Term Loans for Series E-1 Tranche B Term Loans (such exchanged and/or converted Series E-1 Tranche B Loans, “ Exchanged Series E-1 Tranche B Loans ”) and (b) in its capacity as a Lender, shall be deemed to have approved and consented to Amendment No. 8 with respect to any and all Loans of such Lender;

WHEREAS , the Borrower intends to repay (the “ Series E Tranche B Repayment ”) in cash any existing Series E Tranche B Term Loans other than any existing Series E Tranche B Term Loans that are exchanged, converted and/or rolled pursuant to an Election for Exchanged Series E-1 Tranche B Term Loans on the Series E-1 Tranche B Term Loan Funding Date;

NOW, THEREFORE , in consideration of the premises and agreements, provisions and covenants herein contained, the parties hereto agree as follows:

Each New Term Loan Lender (i) confirms that it has received a copy of the Credit Agreement and the other Credit Documents, together with copies of the financial statements referred to therein and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (ii) agrees that it will, independently and without reliance upon the Administrative Agent or any other Lender or Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes Administrative Agent and each other Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Credit Documents as are delegated to Administrative Agent or such other Agent, as the case may be, by the terms thereof, together with such powers as are reasonably incidental thereto; and (iv) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

Each New Term Loan Lender hereby commits to provide its respective New Term Loan Commitment (each a “ Series E-1 Tranche B Term Loan Commitment ”) on the terms and subject to the conditions set forth below and such New Term Loan Commitment (other than with respect to the Exchanged Series E-1 Tranche B Term Loans) for each New Term Loan Lender is set forth on Schedule A annexed hereto:

-2-

1. Applicable Margin . The Applicable Margin for each New Term Loan made pursuant to this Agreement (each a “Series E-1 Tranche B Term Loan”) shall mean, as of any date of determination, (x) until delivery of financial statements of Borrower and a related Compliance Certificate for the first full Fiscal Quarter commencing on or after February 6, 2014, pursuant to Section 5.1(c) of the Credit Agreement, (A) with respect to Series E-1 Tranche B Term Loans that are Eurodollar Rate Loans, 3.00% per annum and (B) with respect to Series E-1 Tranche B Term Loans that are Base Rate Loans, 2.00% per annum and (y) thereafter, the percentages per annum set forth in the table below, based upon the Secured Leverage Ratio of Borrower, as of the last day of the most recently ended Fiscal Quarter for which financial statements were required to have been delivered pursuant to Section 5.1(a) or (b) of the Credit Agreement:

Pricing Level Secured Leverage Ratio

Eurodollar

Rate Loans

Base Rate

Loans I > 1.75 to 1.0 3.00 % 2.00 % II < 1.75 to 1.0 2.75 % 1.75 %

-3-

2. Principal Payments . Borrower shall make principal payments on the Series E-1 Tranche B Term Loans in installments on the dates and in the amounts equal to the percentage set forth below of an amount equal to the aggregate principal amount of the Series E Tranche B Term Loans outstanding as of the date hereof:

Amortization Date

Series E-1 Tranche B Term

Loan Installments June 30, 2014 0.25 % September 30, 2014 0.25 % December 31, 2014 0.25 % March 31, 2015 0.25 % June 30, 2015 0.25 % September 30, 2015 0.25 % December 31, 2015 0.25 % March 31, 2016 0.25 % June 30, 2016 0.25 % September 30, 2016 0.25 % December 31, 2016 0.25 % March 31, 2017 0.25 % June 30, 2017 0.25 % September 30, 2017 0.25 % December 31, 2017 0.25 % March 31, 2018 0.25 % June 30, 2018 0.25 % September 30, 2018 0.25 % December 31, 2018 0.25 % March 31, 2019 0.25 % June 30, 2019 0.25 % September 30, 2019 0.25 % December 31, 2019 0.25 % March 31, 2020 0.25 % June 30, 2020 0.25 % August 5, 2020 (the “ Series E-1 Tranche B Term Loan

Maturity Date ” ) Remaining Balance

3. Voluntary and Mandatory Prepayments . Scheduled installments of principal of the Series E-1 Tranche B Term Loans set forth above shall be reduced in connection with any voluntary or mandatory prepayments of the Series E-1 Tranche B Term Loans in accordance with Sections 2.12, 2.13 and 2.14 of the Credit Agreement respectively.

4. Ticking Fee . Administrative Agent shall receive from Borrower, for the account of the New Term Loan Lenders, a nonrefundable ticking fee (the “ Ticking Fee ”) on the aggregate principal amount of such New Term Loan Lender’s Series E-1 Tranche B Term Loan Commitment (including Exchanged Series E-1 Tranche B Term Loans) as of the Series E-1 Tranche B Term Loan Funding Date (as defined below), which fee will commence accruing as of January 1, 2014 and expire one day prior to the Series E-1 Tranche B Term Loan Funding Date, at a rate per annum equal to 3.00%, and shall be payable on the Series E-1 Tranche B Term Loan Funding Date; which such Ticking Fee shall be calculated at a rate per annum, calculated on the basis of a year of 360 days and the actual number of days expired during the applicable period.

5. Prepayment Premium . In the event that on or prior to the six month anniversary of the Series E-1 Tranche B Term Loan Funding Date, the Borrower (x) makes any prepayment of the Series E-1 Tranche B Term Loans in connection with any Repricing Transaction or (y) effects any amendment of the Credit Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Lenders, (I) in the

For purposes of this Agreement, a “ Repricing Transaction ” means the prepayment or refinancing of all or a portion of the Series E-1 Tranche B Term Loans with the incurrence by any Credit Party of any long-term bank debt financing having an effective interest cost or weighted average yield (excluding any arrangement or commitment fees in connection therewith) that is less than the effective interest cost for or weighted average yield of the Series E-1 Tranche B Term Loans, including without limitation, as may be effected through any amendment to this Agreement relating to the effective interest cost for, or weighted average yield of, the Series E-1 Tranche B Term Loans.

-4-

case of clause (x) above, a prepayment premium of 1% of the amount of the Series E-1 Tranche B Term Loans being prepaid and (II) in the case of clause (y) above, a payment equal to 1% of the aggregate amount of the applicable Series E-1 Tranche B Term Loans outstanding immediately prior to such amendment.

6. Proposed Borrowing . In accordance with Section 2.25 of the Credit Agreement, Borrower has previously delivered to Administrative Agent an executed Funding Notice for Series E-1 Tranche B Term Loans, requesting a proposed borrowing in the principal amount of up to $2,950,000,000 (the “ Proposed Borrowing ”) on the date hereof (the “ Series E-1 Tranche B Term Loan Funding Date ”). Each New Term Loan Lender shall make its Series E-1 Tranche B Term Loan (other than such portion of Series E-1 Tranche B Term Loans which are Exchanged Series E-1 Tranche B Term Loans) available to Administrative Agent not later than 11:00 a.m. (New York City time) on the date hereof, by wire transfer of same day funds in Dollars at the Principal Office designated by Administrative Agent. Promptly upon receipt thereof, Administrative Agent shall make the proceeds of the Series E-1 Tranche B Term Loans available to Borrower on the date hereof by causing an amount of same day funds in Dollars equal to the proceeds of all such loans received by Administrative Agent from New Term Loan Lenders to be credited to the account of Borrower, at the Principal Office designated by Administrative Agent or to such other account as may be designated in writing to Administrative Agent by Borrower.

7. New Lenders . Each New Term Loan Lender (other than any New Term Loan Lender that, immediately prior to the execution of this Agreement, is a “Lender” under the Credit Agreement) acknowledges and agrees that upon its execution of this Agreement its Series E-1 Tranche B Term Loan Commitments shall be effective and that such New Term Loan Lender shall become a “Lender” under, and for all purposes of, the Credit Agreement and the other Credit Documents, and shall be subject to and bound by the terms thereof, and shall perform all the obligations of and shall have all rights of a Lender thereunder.

8. Credit Agreement Governs . Series E-1 Tranche B Term Loans shall be subject to the provisions of the Credit Agreement and the other Credit Documents, except as set forth in this Agreement, and shall constitute Tranche B Term Loans thereunder. For the avoidance of doubt, Section 5 of this Agreement shall supersede the final paragraph of Section 2.13(a) of the Credit Agreement with respect to Series E-1 Tranche B Term Loans.

9. Borrower’s Certifications . By its execution of this Agreement, the undersigned officer, to the best of his or her knowledge, and Borrower hereby certify that:

i. The representations and warranties contained in the Credit Agreement and the other Credit Documents are true and correct in all material respects on and as of the date hereof to the same extent as though made on and as of the date hereof, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties were true and correct in all material respects on and as of such earlier date;

-5-

ii. No event has occurred and is continuing or would result from the consummation of the Proposed Borrowing contemplated

hereby that would constitute a Default or an Event of Default; and

iii. Borrower has performed in all material respects all agreements and satisfied all conditions which the Credit Agreement provides shall be performed or satisfied by it on or before the date hereof in connection with the Proposed Borrowing.

10. Borrower Covenants . By its execution of this Agreement, Borrower hereby covenants that:

i. Borrower shall deliver or cause to be delivered the following legal opinions and documents: originally executed copies of the favorable written opinions of (a) Skadden, Arps, Slate, Meagher & Flom LLP, U.S. counsel to the Credit Parties, (b) Chancery Chambers, special Barbados counsel to the Credit Parties, (c) Norton Rose Fulbright Canada LLP, special Canadian counsel to the Credit Parties, (d) Baker & McKenzie, special Luxembourg counsel to the Credit Parties, (e) Conyers Dill & Pearman Limited, special Bermuda counsel to the Credit Parties, (f) Arthur Cox, special Ireland counsel to the Credit Parties, (g) Baker & McKenzie, special Switzerland counsel to the Credit Parties, (h) Venable LLP, special Maryland counsel to the Credit Parties, (i) Souza, Cescon, Barrieu & Flesch Advogados, special Brazil counsel to the Credit Parties, (j) Squire Sanders Święcicki Krześniak sp.k., special Poland counsel to the Credit Parties and (k) Tark Grunte Sutkiene, special Lithuania counsel to the Credit Parties, together with all other legal opinions and other documents reasonably requested by Administrative Agent in connection with this Agreement.

11. Eligible Assignee . By its execution of this Agreement, each New Term Loan Lender (other than any New Term Loan Lender that, immediately prior to the execution of this Agreement, is a “Lender” under the Credit Agreement) represents and warrants that it is an Eligible Assignee.

12. Notice . For purposes of the Credit Agreement, the initial notice address of each New Term Loan Lender shall be as set forth below its signature below.

13. Non-U.S. Lenders . For each New Term Loan Lender that is a Non-U.S. Lender, delivered herewith to Administrative Agent are such forms, certificates or other evidence with respect to United States federal income tax withholding matters as such New Term Loan Lender may be required to deliver to Administrative Agent pursuant to subsection 2.20(d) of the Credit Agreement.

14. Recordation of the New Loans . Upon execution and delivery hereof, Administrative Agent will record the Series E-1 Tranche B Term Loans made by New Term Loan Lenders pursuant hereto in the Register.

15. Reaffirmation .

i. Each Credit Party hereby expressly acknowledges the terms of this Agreement and reaffirms, as of the date hereof, the

covenants and agreements contained in each Credit Document to which it is a party, including, in each case, such covenants and agreements as in effect immediately after giving effect to this Agreement and the transactions contemplated hereby.

-6-

ii. Each Credit Party, by its signature below, hereby affirms and confirms (a) its obligations under each of the Credit Documents to which it is a party, and (b) the pledge of and/or grant of a security interest or hypothec in its assets as Collateral to secure such Obligations, all as provided in the Collateral Documents as originally executed, and acknowledges and agrees that such guarantee, pledge and/or grant continue in full force and effect in respect of, and to secure, such Obligations under the Credit Agreement and the other Credit Documents.

iii. Each Credit Party acknowledges and agrees that each of the Credit Documents in existence as of the date hereof shall be

henceforth read and construed in accordance with and so as to give full force and effect to the ratifications, confirmations, acknowledgements and agreements made herein.

16. Waiver . Each Series E Tranche B Term Loan Lender that executes an Election to receive Exchanged Series E-1 Tranche B Term Loans hereby waives any right to any voluntary payment under Section 2.17 of the Credit Agreement in connection with the Series E Tranche B Repayment. The New Term Loan Lenders party hereto waive the payment of any breakage loss or expense under Section 2.18 of the Credit Agreement in connection with the repayment or exchange and/or conversion into Series E-1 Tranche B Term Loans of Series E Tranche B Term Loans.

17. Interest . The repayment or exchange and/or conversion into Series E-1 Tranche B Term Loans of Series E Tranche B Term Loans will not affect the right of any Lender to receive any accrued and unpaid interest with respect to the Series E Tranche B Term Loans all of which shall be paid by Borrower on the Series E-1 Tranche B Term Loan Funding Date.

18. Amendment, Modification and Waiver . This Agreement may not be amended, modified or waived except by an instrument or instruments in writing signed and delivered on behalf of each of the parties hereto.

19. Entire Agreement . This Agreement, the Credit Agreement and the other Credit Documents constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all other prior agreements and understandings, both written and verbal, among the parties or any of them with respect to the subject matter hereof. It is understood and agreed that each reference in each Credit Document to the Credit Agreement, whether direct or indirect, shall hereafter be deemed to be a reference to the Credit Agreement as amended and supplemented hereby and that this Agreement is a Credit Document.

20. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OB LIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND EN FORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

21. Severability . Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.

[Remainder of page intentionally left blank]

-7-

22. Counterparts . This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.

IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Agreement as of the date first written above.

[Signature Page to Joinder Agreement]

JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as a “New Term Loan Lender”

By: /s/ Michael N. Tam Name: Michael N. Tam Title: Senior Vice President

Notice Address:

Attention: Telephone: Facsimile:

IN WITNESS WHEREOF , each of the undersigned has caused its duly authorized officer to execute and deliver this Amendment No. 8 as of the date first written above.

[Signature Page to Joinder Agreement]

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. as Borrower

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Senior Vice President and Treasurer

VALEANT PHARMACEUTICALS INTERNATIONAL as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

BAUSCH & LOMB INCORPORATED as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

BAUSCH & LOMB HOLDINGS INCORPORATED as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

[Signature Page to Joinder Agreement]

ATON PHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

CORIA LABORATORIES, LTD. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

DOW PHARMACEUTICAL SCIENCES, INC . as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

OBAGI MEDICAL PRODUCTS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

OMP, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

[Signature Page to Joinder Agreement]

MEDICIS PHARMACEUTICAL CORPORATION as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President, Chief Financial Officer and Treasurer

DR. LEWINN ’S PRIVATE FORMULA INTERNATIONAL, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

OCEANSIDE PHARMACEUTICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

PRINCETON PHARMA HOLDINGS, LLC as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

[Signature Page to Joinder Agreement]

PRIVATE FORMULA CORP. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

RENAUD SKIN CARE LABORATORIES, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

VALEANT BIOMEDICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

VALEANT PHARMACEUTICALS NORTH AMERICA LLC as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President and Chief Financial Officer

BIOVAIL AMERICAS CORP. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

[Signature Page to Joinder Agreement]

ORAPHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President, Chief Financial Officer and Treasurer

ORAPHARMA TOPCO HOLDINGS, INC . as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Executive Vice President, Chief Financial Officer and Treasurer

PRESTWICK PHARMACEUTICALS, INC. as Guarantor

By: /s/ Howard B. Schiller Name: Howard B. Schiller Title: Chief Financial Officer and Treasurer

IOLAB CORPORATIO N as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

TECHNOLAS PERFECT VISION, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB PHARMA HOLDINGS CORP. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

[Signature Page to Joinder Agreement]

BAUSCH & LOMB CHINA, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB SOUTH ASIA, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB TECHNOLOGY CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

RHC HOLDINGS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Treasurer

SIGHT SAVERS, INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

[Signature Page to Joinder Agreement]

BAUSCH & LOMB INTERNATIONAL INC. as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

BAUSCH & LOMB REALTY CORPORATION as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

[Signature Page to Joinder Agreement]

ISTA PHARMACEUTICALS, LLC as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Vice President and Treasurer

VRX HOLDCO INC . as Guarantor

By: /s/ Linda LaGorga Name: Linda LaGorga Title: Chief Financial Officer and Treasurer

[Signature Page to Joinder Agreement]

VALEANT INTERNATIONAL BERMUDA as Guarantor

By: /s/ Peter J. McCurdy Name: Peter J. McCurdy Title: President and Assistant Secretary

VALEANT PHARMACEUTICALS NOMINEE BERMUDA as Guarantor

By: /s/ Peter J. McCurdy Name: Peter J. McCurdy Title: President and Assistant Secretary

[Signature Page to Joinder Agreement]

HYTHE PROPERTY INCORPORATED as Guarantor

By: /s/ Mauricio Zavala Name: Mauricio Zavala Title: Assistant Secretary

[Signature Page to Joinder Agreement]

VALEANT CANADA GP LIMITED as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn Title: Executive Vice President and General Counsel

VALEANT CANADA LP by its sole general partner, VALEANT CANADA GP LIMITED as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn Title: Executive Vice President and General Counsel

V-BAC HOLDING CORP. as Guarantor

By: /s/ Robert R. Chai-Onn Name: Robert R. Chai-Onn

Title: Vice President

[Signature Page to Joinder Agreement]

VALEANT PHARMACEUTICALS IRELAND as Guarantor

By: /s/ Graham Jackson Name: Graham Jackson Title: Director

[Signature Page to Joinder Agreement]

BIOVAIL INTERNATIONAL S.À R.L. as Guarantor

By: /s/ Kuy Ly Ang Name: Kuy Ly Ang Title: Manager

VALEANT PHARMACEUTICALS LUXEMBOURG S.À R.L. as Guarantor

By: /s/ Kuy Ly Ang Name: Kuy Ly Ang Title: Manager

[Signature Page to Joinder Agreement]

PHARMASWISS SA as Guarantor

By: /s/ Matthias Courvoisier Name: Matthias Courvoisier Title: Director

[Signature Page to Joinder Agreement]

Signed by Valeant Holdco 2 Pty Ltd (ACN 154 341 367) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Wirra Holdings Pty Limited (ACN 122 216 577) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

[Signature Page to Joinder Agreement]

Signed by Wirra Operations Pty Limited (ACN 122 250 088) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by iNova Pharmaceuticals (Australia) Pty Limited (ACN 000 222 408) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

Signed by Wirra IP Pty Limited (ACN 122 536 350) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

[Signature Page to Joinder Agreement]

Signed by iNova Sub Pty Limited (ACN 134 398 815) as Guarantor in accordance with section 127 of the Corporations Act 2001 by two directors:

/s/ Robert R. Chai-Onn Howard B. Schiller Signature of director Signature of director

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director (please print)

[Signature Page to Joinder Agreement]

Signed by Valeant Pharmaceuticals Australasia Pty Limited (ACN 001 083 352 ) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Linda A. LaGorga Signature of director Signature of director/secretary

Robert R. Chai-Onn Linda A. LaGorga Name of director (please print) Name of director/secretary (please print)

Signed by DermaTech Pty Limited (ACN 003 982 161) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

[Signature Page to Joinder Agreement]

Signed by Private Formula International Holdings Pty Ltd (ACN 095 450 918 ) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

Signed by Private Formula International Pty Ltd (ACN 095 451 442 ) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

[Signature Page to Joinder Agreement]

Signed by Ganehill Pty Ltd (ACN 065 261 538) as Guarantor in accordance with section 127 of the Corporations Act 2001 by a director and secretary/director:

/s/ Robert R. Chai-Onn /s/ Howard B. Schiller Signature of director Signature of director/secretary

Robert R. Chai-Onn Howard B. Schiller Name of director (please print) Name of director/secretary (please print)

[Signature Page to Joinder Agreement]

UCYCLYD PHARMA, INC. as Guarantor

By: /s/ Howard B. Schiller

Name: Howard B. Schiller

Title:

Executive Vice President, Chief Financial Officer

[Signature Page to Joinder Agreement]

VALEANT EUROPE B.V. as Guarantor

By: /s/ Rob Meijer Name: Rob Meijer Title: Managing Director A

[Signature Page to Joinder Agreement]

PRZEDSIEBIORSTWO FARMACEUTYCZNE JELFA S.A. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VALEANT SP. ZOO as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VP VALEANT SP. Z.O.O.SP.J. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

VALEANT SPOLKA Z ORGANICZONA ODPOWIEDZIALNOSCIA SP.J. as Guarantor

By: /s/ Marcin Wnukowski Name: Marcin Wnukowski Title: Attorney-In-Fact

[Signature Page to Joinder Agreement]

LABENNE PARTICIPACOES LTDA as Guarantor

By: /s/ Marcelo Noll Barboza Name: Marcelo Noll Barboza Title: Officer

By: /s/ Mauricio Santos da Luz Name: Mauricio Santos da Luz Title: Officer

PROBIOTICA LABORATORIES LTDA. as Guarantor

By: /s/ Marcelo Noll Barboza Name: Marcelo Noll Barboza Title: Officer

By: /s/ Mauricio Santos da Luz Name: Mauricio Santos da Luz Title: Officer

[Signature Page to Joinder Agreement]

AB SANITAS as Guarantor

By: /s/ Saulius Žemaitis Name: Saulius Žemaitis Title: General Manager

[Signature Page to Joinder Agreement]

Consented to by:

GOLDMAN SACHS LENDING PARTNERS LLC As Administrative Agent and Collateral Agent

By: /s/ Elizabeth Fischer Authorized Signatory

SCHEDULE A TO JOINDER AGREEMENT

Name of Lender Type of Commitment Amount JPMORGAN CHASE BANK,

N.A., TORONTO BRANCH Series E-1 Tranche B Term Loan Commitment $ 256,926,242.49

Total: $ 256,926,242.49

EXHIBIT A TO JOINDER AGREEMENT

FORM OF SETTLEMENT ELECTION

SETTLEMENT ELECTION (this “ Election ”) pursuant to the Joinder Agreement (the “ Joinder Agreement ”) to that certain Third Amended and Restated Credit and Guaranty Agreement, dated as of February 13, 2012, as amended by Amendment No. 1, dated as of March 6, 2012, by Amendment No. 2, dated as of September 10, 2012, by Amendment No. 3, dated as of January 24, 2013, by Amendment No. 4, dated as of February 21, 2013, by Amendment No. 5, dated as of June 6, 2013, by Amendment No. 6, dated as of June 26, 2013, by Amendment No. 7, dated as of September 17, 2013, as further supplemented by the Joinder Agreement, dated as of June 14, 2012, by the Joinder Agreement, dated as of July 9, 2012, by the Joinder Agreement, dated as of September 11, 2012, by the Joinder Agreement dated as of October 2, 2012, by the Joinder Agreement, dated as of December 11, 2012 and by the Joinder Agreements, each dated as of August 5, 2013 (as it may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “ Credit Agreement ), by and among Borrower, certain Subsidiaries of Borrower, as Guarantors, the Lenders party thereto from time to time, Goldman Sachs Lending Partners LLC (“ GSLP ”), J.P. Morgan Securities LLC and Morgan Stanley Senior Funding, Inc. (“ Morgan Stanley ”), as Joint Lead Arrangers and Joint Bookrunners, JPMorgan Chase Bank, N.A. (“ JPMorgan ”) and Morgan Stanley, as Co-Syndication Agents, JPMorgan, as Issuing Bank, GSLP, as Administrative Agent and Collateral Agent, and the other Agents party thereto. Capitalized terms defined in the Credit Agreement or the Joinder Agreement shall have the same meaning when used herein, as the context may require.

(A) The undersigned Series E Tranche B Term Loan Lender hereby irrevocably and unconditionally consents as follows:

Cashless Roll

(B) The undersigned Series E Tranche B Term Loan Lender hereby irrevocably and unconditionally consents as follows:

Non-Cashless Roll

I. The undersigned signatory, in its capacity as a Lender, hereby consents to Amendment No. 8 to the Credit Agreement, among the Borrower, certain Subsidiaries of the Borrower, as Guarantors, GSLP, as Administrative Agent and Collateral Agent, the New Term Loan Lenders (as defined therein) party thereto and the other Lenders party there with respect to any and all Loans of such Lender (the “ Consent ”). For the avoidance of doubt, solely for purposes of calculating the Requisite Lenders under Amendment No. 8, this Consent shall be deemed a “Lender Consent and Election” referred to in Amendment No. 8.

II. Lenders with Series E Tranche B Term Loans (each a “ Series E Tranche B Term Loan Lender” ) (check applicable option):

� to exchange 100% of the outstanding principal amount of the Series E Tranche B Term Loans held by such Lender (or such

lesser amount allocated to such Lender by the Joint Lead Arrangers) into Series E-1 Tranche B Term Loans in a like principal amount on a dollar for dollar basis.

� to have 100% of the outstanding principal amount of the Series E Tranche B Term Loans held by such Lender (or such lesser amount allocated to such Lender by the Joint Lead Arrangers) prepaid on the Series E-1 Tranche B Term Loan Funding Date and purchase by assignment, on or promptly after the Series E-1 Tranche B Term Loan Funding Date pursuant to procedures specified by the Administrative Agent, a like principal amount on a dollar for dollar basis of Series E-1 Tranche B Term Loans.

III. The undersigned Lender hereby acknowledges and agrees that in the absence of a change to the terms and conditions of the Joinder Agreement that is (x) materially adverse to the New Term Loan Lenders and (y) made after the submission of this Election, this Election is irrevocable. Notwithstanding anything to the contrary contained herein, to the extent this Election is revoked pursuant to the proceeding sentence, such revocation shall not apply to the Consent.

IN WITNESS WHEREOF, the undersigned has caused this Election to be executed and delivered by a duly authorized officer.

Date: , 2013

, as a “Lender” and a “New Term Loan Lender” (type name of the legal entity)

By: Name: Title:

If a second signature is necessary:

By: Name: Title:

Exhibit 21.1

Subsidiary Information

As of February 28, 2014 Company Jurisdiction of Incorporation Doing Business As

Bausch & Lomb Argentina S.R.L. Argentina Bausch & Lomb Argentina S.R.L. Waicon Vision S.A. Argentina Waicon Vision S.A. Bausch & Lomb (Australia) Pty. Limited Australia Bausch & Lomb (Australia) Pty. Limited DermaTech Pty. Ltd. Australia DermaTech Pty. Ltd. Ganehill North America Pty. Ltd. Australia Ganehill North America Pty. Ltd. Ganehill Pty. Ltd. Australia Ganehill Pty. Ltd. iNova Pharmaceuticals (Australia) Pty Limited Australia iNova Pharmaceuticals (Australia) Pty Limited iNova Sub Pty Limited Australia iNova Sub Pty Limited Private Formula International Holdings Pty.

Ltd. Australia

Private Formula International Holdings Pty. Ltd.

Private Formula International Pty. Ltd. Australia Private Formula International Pty. Ltd. Solta Medical Australia Propretary Ltd Australia Solta Medical Australia Propretary Ltd Solta Medical Inc. Australia Solta Medical Inc. Solta Medical International, Inc. Australia Solta Medical International, Inc. Valeant Holdco 2 Pty Ltd Australia Valeant Holdco 2 Pty Ltd Valeant Holdco 3 Pty Ltd Australia Valeant Holdco 3 Pty Ltd Valeant Pharmaceuticals Australasia Pty. Ltd. Australia Valeant Pharmaceuticals Australasia Pty. Ltd. Wirra Holdings Pty Limited Australia Wirra Holdings Pty Limited Wirra IP Pty Limited Australia Wirra IP Pty Limited Wirra Operations Pty Limited Australia Wirra Operations Pty Limited Bausch & Lomb GmbH Austria Bausch & Lomb GmbH Hythe Property Incorporated Barbados Hythe Property Incorporated Natur Produkt-M Belarus Natur Produkt-M Bausch & Lomb B.V.B.A. Belgium Bausch & Lomb B.V.B.A. Bausch & Lomb Pharma S.A. Belgium Bausch & Lomb Pharma S.A. Valeant International Bermuda Bermuda Valeant International Bermuda Valeant Pharmaceuticals Nominee Bermuda Bermuda Valeant Pharmaceuticals Nominee Bermuda PharmaSwiss BH drustvo za trgovinu na veliko

d.o.o. Bosnia

PharmaSwiss BH drustvo za trgovinu na veliko d.o.o.

BL Importações Ltda. Brazil BL Importações Ltda. BL Indústria Ótica Ltda. Brazil BL Indústria Ótica Ltda. Bunker Indústria Farmacêutica Ltda. Brazil Bunker Indústria Farmacêutica Ltda. Instituto Terapêutico Delta Ltda. Brazil Instituto Terapêutico Delta Ltda. Probiótica Laboratórios Ltda. Brazil Probiótica Laboratórios Ltda. Valeant Farmacêutica do Brasil Ltda. Brazil Valeant Farmacêutica do Brasil Ltda. Bauch & Lomb-Lord (BVI) Incorporated British Virgin Islands Bauch & Lomb-Lord (BVI) Incorporated

PharmaSwiss EOOD Bulgaria PharmaSwiss EOOD 9079-8851 Quebec, Inc. Canada 9079-8851 Quebec, Inc. Bausch & Lomb Canada Inc. Canada Bausch & Lomb Canada Inc. Medicis Aesthetics Canada Ltd. Canada Medicis Aesthetics Canada Ltd. Medicis Canada Ltd. Canada Medicis Canada Ltd. Valeant Canada GP Limited Canada Valeant Canada GP Limited Valeant Canada S.E.C./Valeant Canada LP Canada Valeant Canada S.E.C./Valeant Canada LP Valeant Canada Ltd. Canada Valeant Canada Ltd. Valeant Groupe Cosmoderme Inc. Canada Valeant Groupe Cosmoderme Inc. V-BAC Holding Corp. Canada V-BAC Holding Corp. Bausch & Lomb (Shanghai) Trading Co., Ltd. China Bausch & Lomb (Shanghai) Trading Co., Ltd. Beijing Bausch & Lomb Eyecare Company,

Ltd.

China

Beijing Bausch & Lomb Eyecare Company, Ltd.

Shandong Bausch & Lomb Freda New Packaging Materials Co Ltd

China

Shandong Bausch & Lomb Freda New Packaging Materials Co Ltd

Shandong Bausch & Lomb Freda Pharmaceutical Co. Ltd.

China

Shandong Bausch & Lomb Freda Pharmaceutical Co. Ltd.

PharmaSwiss drustvo s ogranicenom odgovornoscu za trgovinu I usluge

Croatia

PharmaSwiss drustvo s ogranicenom odgovornoscu za trgovinu I usluge

Ivonton Holdings Limited Cyprus Ivonton Holdings Limited PharmaSwiss Ceska republika s.r.o. Czech Republic PharmaSwiss Ceska republika s.r.o. Valeant Czech Pharma s.r.o. Czech Republic Valeant Czech Pharma s.r.o. PharmaSwiss Eesti OU Estonia PharmaSwiss Eesti OU Natur Produkt Suomi Oy Finland Natur Produkt Suomi Oy Bausch & Lomb France S.A.S. France Bausch & Lomb France SAS BCF S.A.S. France BCF SAS Chauvin Opsia S.A.S. France Chauvin Opsia S.A.S. Laboratoire Chauvin S.A.S. France Laboratoire Chauvin SAS Pharma Pass S.A.S. France Pharma Pass SAS Bausch & Lomb GmbH Germany Bausch & Lomb GmbH BLEP Europe GmbH Germany BLEP Europe GmbH BLEP Holding GmbH Germany BLEP Holding GmbH Chauvin ankerpharm GmbH Germany Chauvin ankerpharm GmbH Dr. Gerhard Mann chem.-pharm. Fabrik GmbH Germany Dr. Gerhard Mann chem.-pharm. Fabrik GmbH Dr. Robert Winzer Pharma GmbH Germany Dr. Robert Winzer Pharma GmbH Grundstuckgesellschaft Dr. Gerhard Mann

chem.-pharm. Fabrik GmbH

Germany

Grundstuckgesellschaft Dr. Gerhard Mann chem.-pharm. Fabrik GmbH

Pharmaplast Vertriebsgesellschaft mbH Germany Pharmaplast Vertriebsgesellschaft mbH Technolas Perfect Vision GmbH Germany Technolas Perfect Vision GmbH PharmaSwiss Hellas S.A. Greece PharmaSwiss Hellas S.A. Bausch & Lomb (Hong Kong) Limited Hong Kong Bausch & Lomb (Hong Kong) Limited iNova Pharmaceuticals (Hong Kong) Limited Hong Kong iNova Pharmaceuticals (Hong Kong) Limited Sino Concept Technology Limited Hong Kong Sino Concept Technology Limited Solta Medical International, Ltd Hong Kong Solta Medical International, Ltd

Technolas Hong Kong Limited Hong Kong Technolas Hong Kong Limited Csatarka Irodahaz-Ingatlan LLC Hungary Csatarka Irodahaz-Ingatlan LLC Valeant Pharma Hungary Commercial LLC Hungary Valeant Pharma Hungary Commercial LLC Bausch & Lomb Eyecare (India) Private

Limited

India

Bausch & Lomb Eyecare (India) Private Limited

PT Bausch Lomb Indonesia Indonesia PT Bausch Lomb Indonesia PT Bausch & Lomb (Distributing) Indonesia PT Bausch & Lomb (Distributing) PT Bausch & Lomb Manufacturing Indonesia PT Bausch & Lomb Manufacturing C&C Vision International Limited Ireland C&C Vision International Limited Valeant Holdings Ireland Ireland Valeant Holdings Ireland Valeant Pharmaceuticals Ireland Ireland Valeant Pharmaceuticals Ireland Bausch & Lomb IOM S.p.A. Italy Bausch & Lomb IOM S.p.A. B.L.J. Company, Ltd. Japan B.L.J. Company, Ltd. Solta Medical Japan K.K. Japan Solta Medical Japan K.K. Bausch & Lomb (Jersey) Limited Jersey Bausch & Lomb (Jersey) Limited TOO “NP Market Asia” Kazakhstan TOO “NP Market Asia” Bausch & Lomb Korea Co. Ltd. Korea Bausch & Lomb Korea Co. Ltd. PharmaSwiss SA Sh.k.p. Kosovo PharmaSwiss SA Sh.k.p. PharmaSwiss Latvia Latvia PharmaSwiss Latvia AB Sanitas Lithuania AB Sanitas UAB PharmaSwiss Lithuania UAB PharmaSwiss Bausch & Lomb Luxembourg s.a.r.l. Luxembourg Bausch & Lomb Luxembourg s.a.r.l. Biovail International S.a.r.l. Luxembourg Biovail International S.a.r.l. Valeant Holdings Luxembourg S.a r.l. Luxembourg Valeant Holdings Luxembourg S.a r.l. Valeant International Luxembourg S.a r.l. Luxembourg Valeant International Luxembourg S.a r.l. Valeant Pharmaceuticals Luxembourg S.a r.l. Luxembourg Valeant Pharmaceuticals Luxembourg S.a r.l. PharmaSwiss dooel Skopje Macedonia PharmaSwiss dooel Skopje Bausch & Lomb (Malaysia) Sdn Bhd Malaysia Bausch & Lomb (Malaysia) Sdn Bhd Bausch & Lomb Mexico, S.A. de C.V. Mexico Bausch & Lomb Mexico, S.A. de C.V. Laboratorios Grossman, S.A. Mexico Laboratorios Grossman, S.A. Logistica Valeant, S.A. de C.V. Mexico Logistica Valeant, S.A. de C.V. Nysco de Mexico S.A. de C.V. Mexico Nysco de Mexico S.A. de C.V. Tecnofarma, S.A. de C.V. Mexico Tecnofarma, S.A. de C.V. Valeant Farmaceutica S.A. de CV. Mexico Valeant Farmaceutica S.A. de CV. Valeant Servicios y Administracion, S. de R.L.

de C.V.

Mexico

Valeant Servicios y Administracion, S. de R.L. de C.V.

Bausch & Lomb B.V. Netherlands Bausch & Lomb B.V. Bausch & Lomb Dutch Holdings C.V. Netherlands Bausch & Lomb Dutch Holdings C.V. Bausch+Lomb OPS B.V. Netherlands Bausch+Lomb OPS B.V. Natur Produkt Europe BV Netherlands Natur Produkt Europe BV Solta Medical International, B.V. Netherlands Solta Medical International, B.V. Technolas Perfect Vision Cooperatief U.A. Netherlands Technolas Perfect Vision Cooperatief U.A. Valeant Dutch Holdings B.V. Netherlands Valeant Dutch Holdings B.V. Valeant Europe BV Netherlands Valeant Europe BV

Bausch & Lomb (New Zealand) Limited New Zealand Bausch & Lomb (New Zealand) Limited Valeant Pharmaceuticals New Zealand Limited New Zealand Valeant Pharmaceuticals New Zealand Limited Valeant Farmaceutica Panama S.A. Panama Valeant Farmaceutica Panama S.A. Bausch & Lomb (Philippines), Inc. Philippines Bausch & Lomb (Philippines), Inc. Bausch & Lomb Polska Sp. z.o.o. Poland Bausch & Lomb Polska Sp. z.o.o. Cadogan spółka z ograniczoną

odpowiedzialnością

Poland

Cadogan spółka z ograniczoną odpowiedzialnością

Cochrane spółka z ograniczoną odpowiedzialnością

Poland

Cochrane spółka z ograniczoną odpowiedzialnością

Croma Inter Sp.z.o.o. Poland Croma Inter Sp.z.o.o. Croma-Pharma Polska Sp. z o.o. Poland Croma-Pharma Polska Sp. z o.o. Emo-Farm spółka z ograniczoną

odpowiedzialnością

Poland

Emo-Farm spółka z ograniczoną odpowiedzialnością

ICN Polfa Rzeszow SA Poland ICN Polfa Rzeszow SA IPOPEMA 73 Fundusz inwestycyjny

Zamkniety Aktywow Niepublicznych (FIZAN)

Poland

IPOPEMA 73 Fundusz inwestycyjny Zamkniety Aktywow Niepublicznych (FIZAN)

Laboratorium Farmaceutyczne Homeofarm Sp. Z.o.o.

Poland

Laboratorium Farmaceutyczne Homeofarm Sp. Z.o.o.

PharmaSwiss Poland Sp. z.o.o. Poland PharmaSwiss Poland Sp. z.o.o. Przedsiebiorstwo Farmaceutyczne Jelfa SA Poland Przedsiebiorstwo Farmaceutyczne Jelfa SA Valeant sp. z.o.o. Poland Valeant sp. z.o.o. Valeant spółka z ograniczoną

odpowiedzialnością

Poland

Valeant spółka z ograniczoną odpowiedzialnością

VP Valeant Sp. z o.o. Poland VP Valeant Sp. z o.o. S.C. Croma Romania Srl Romania S.C. Croma Romania Srl S.C. PharmaSwiss Medicines S.R.L. Romania S.C. PharmaSwiss Medicines S.R.L. S.C. Valeant Romania S.R.L. Romania S.C. Valeant Romania S.R.L. JSC “Natur Produkt International” Russia JSC “Natur Produkt International” Limited Liability Company “Bausch & Lomb” Russia Limited Liability Company “Bausch & Lomb” OOO “NP-Logistika” Russia OOO “NP-Logistika” OOO “NP-Nedvizhimost” Russia OOO “NP-Nedvizhimost” Valeant LLC Russia Valeant LLC PharmaSwiss d.o.o. Serbia Serbia PharmaSwiss d.o.o. Serbia Bausch & Lomb (Singapore) Private Limited Singapore Bausch & Lomb (Singapore) Private Limited iNova Pharmaceuticals (Singapore) Pte Limited Singapore iNova Pharmaceuticals (Singapore) Pte Limited Solta Medical Singapore Private Limited Singapore Solta Medical Singapore Private Limited Technolas Singapore Pte. Ltd. Singapore Technolas Singapore Pte. Ltd. Wirra International Bidco Pte Limited Singapore Wirra International Bidco Pte Limited Wirra International Holdings Pte Limited Singapore Wirra International Holdings Pte Limited

Sanitas Pharma Slovakia Sanitas Pharma Valeant Slovakia s.r.o. Slovakia Valeant Slovakia s.r.o. Fidimed podjetje za proizvodnjo in trzenje

d.o.o.

Slovenia

Fidimed podjetje za proizvodnjo in trzenje d.o.o.

PharmaSwiss d.o.o., Ljubljana Slovenia PharmaSwiss d.o.o., Ljubljana Bausch & Lomb (South Africa) (Pty) Ltd South Africa Bausch & Lomb (South Africa) (Pty) Ltd iNova Pharmaceuticals (Pty) Limited South Africa iNova Pharmaceuticals (Pty) Limited Soflens (Pty) Ltd South Africa Soflens (Pty) Ltd Bausch & Lomb S.A. Spain Bausch & Lomb S.A. Bausch & Lomb Nordic AB Sweden Bausch & Lomb Nordic AB Valeant Sweden AB Sweden Valeant Sweden AB Bausch & Lomb Fribourg s.a.r.l. Switzerland Bausch & Lomb Fribourg s.a.r.l. Bausch & Lomb Swiss AG Switzerland Bausch & Lomb Swiss AG Biovail S.A. Switzerland Biovail S.A. fx Life Sciences AG Switzerland fx Life Sciences AG PharmaSwiss SA Switzerland PharmaSwiss SA Bausch & Lomb Taiwan Limited Taiwan Bausch & Lomb Taiwan Limited Bausch & Lomb (Thailand) Limited Thailand Bausch & Lomb (Thailand) Limited iNova Pharmaceuticals (Thailand) Ltd Thailand iNova Pharmaceuticals (Thailand) Ltd Bausch & Lomb Saglik ve Optic Urunleri Tic.

A.S.

Turkey

Bausch & Lomb Saglik ve Optic Urunleri Tic. A.S.

OOO “NP-Vita” Ukraine OOO “NP-Vita” Valeant Pharmaceuticals LLC Ukraine Valeant Pharmaceuticals LLC Chauvin Pharmaceuticals Limited United Kingdom Chauvin Pharmaceuticals Limited Bausch & Lomb Scotland Limited United Kingdom Bausch & Lomb Scotland Limited Bausch & Lomb UK Holdings Limited United Kingdom Bausch & Lomb UK Holdings Limited Bausch & Lomb U.K. Limited United Kingdom Bausch & Lomb U.K. Limited Solta Medical UK Limited United Kingdom Solta Medical UK Limited Reliant Technologies International, Inc. United Kingdom Reliant Technologies International, Inc. Dr. LeWinn’s Private Formula International,

Inc.

California (US)

Dr. LeWinn’s Private Formula International, Inc.

Iolab Corporation California (US) Iolab Corporation Private Formula Corp. California (US) Private Formula Corp. Aton Pharma, Inc. Delaware (US) Aton Pharma, Inc. Audrey Enterprise, LLC Delaware (US) Audrey Enterprise, LLC B&L Financial Holdings Corp. Delaware (US) B&L Financial Holdings Corp. B&L Minority Dutch Holdings LLC Delaware (US) B&L Minority Dutch Holdings LLC Bausch & Lomb China, Inc. Delaware (US) Bausch & Lomb China, Inc. Bausch & Lomb Holdings Incorporated Delaware (US) Bausch & Lomb Holdings Incorporated Bausch & Lomb Pharma Holdings Corp. Delaware (US) Bausch & Lomb Pharma Holdings Corp. Bausch & Lomb South Asia, Inc. Delaware (US) Bausch & Lomb South Asia, Inc. Bausch & Lomb Technology Corporation Delaware (US) Bausch & Lomb Technology Corporation Biovail Americas Corp. Delaware (US) Biovail Americas Corp. Biovail NTI Inc. Delaware (US) Biovail NTI Inc. COLD-FX Pharmaceuticals (USA) Inc. Delaware (US) COLD-FX Pharmaceuticals (USA) Inc.

In accordance with the instructions of Item 601 of Regulation S-K, certain subsidiaries are omitted from the foregoing table.

Coria Laboratories, Ltd. Delaware (US) Coria Laboratories, Ltd. Dow Pharmaceutical Sciences, Inc. Delaware (US) Dow Pharmaceutical Sciences, Inc. Emma Z LP Delaware (US) Emma Z LP Erin S LP Delaware (US) Erin S LP eyeonics, inc. Delaware (US) eyeonics, inc. Eyetech Inc. Delaware (US) Eyetech Inc. ICN Southeast, Inc. Delaware (US) ICN Southeast, Inc. ISTA Pharmaceuticals, LLC Delaware (US) ISTA Pharmaceuticals, LLC Katie Z LP Delaware (US) Katie Z LP Kika LP Delaware (US) Kika LP Liposonix, Inc. Delaware (US) Liposonix, Inc. Medicis Body Aesthetics, Inc. Delaware (US) Medicis Body Aesthetics, Inc. Medicis Pharmaceutical Corporation Delaware (US) Medicis Pharmaceutical Corporation Obagi Medical Products, Inc. Delaware (US) Obagi Medical Products, Inc. Oceanside Pharmaceuticals, Inc . Delaware (US) Oceanside Pharmaceuticals, Inc . OMP, Inc. Delaware (US) OMP, Inc. OPO, Inc. Delaware (US) OPO, Inc. OraPharma TopCo Holdings, Inc. Delaware (US) OraPharma TopCo Holdings, Inc. OraPharma, Inc. Delaware (US) OraPharma, Inc. OrphaMed Inc. Delaware (US) OrphaMed Inc. Prestwick Pharmaceuticals, Inc. Delaware (US) Prestwick Pharmaceuticals, Inc. Princeton Pharma Holdings, LLC Delaware (US) Princeton Pharma Holdings, LLC RHC Holdings, Inc. Delaware (US) RHC Holdings, Inc. RTI Acquisition Corporation, Inc. Delaware (US) RTI Acquisition Corporation, Inc. Sight Savers, Inc. Delaware (US) Sight Savers, Inc. Solta Medical, Inc. Delaware (US) Solta Medical, Inc. Stephanie LP Delaware (US) Stephanie LP Technolas Perfect Vision, Inc. Delaware (US) Technolas Perfect Vision, Inc. Tinea Pharmaceuticals, Inc. Delaware (US) Tinea Pharmaceuticals, Inc. Tori LP Delaware (US) Tori LP Valeant Biomedicals, Inc. Delaware (US) Valeant Biomedicals, Inc. Valeant Pharmaceuticals International Delaware (US) Valeant Pharmaceuticals International Valeant Pharmaceuticals North America LLC Delaware (US) Valeant Pharmaceuticals North America LLC VRX Holdco Inc. Delaware (US) VRX Holdco Inc. VRX Holdco2 Inc. Delaware (US) VRX Holdco2 Inc. Ucyclyd Pharma, Inc. Maryland (US) Ucyclyd Pharma, Inc. Dermavest, Inc. Nevada (US) Dermavest, Inc. Bausch & Lomb Incorporated New York (US) Bausch & Lomb Incorporated Bausch & Lomb International Inc. New York (US) Bausch & Lomb International Inc. Bausch & Lomb Realty Corporation New York (US) Bausch & Lomb Realty Corporation Pedinol Pharmacal, Inc. New York (US) Pedinol Pharmacal, Inc. Renaud Skin Care Laboratories, Inc. New York (US) Renaud Skin Care Laboratories, Inc. Image Acquisition Corp. Texas (US) Image Acquisition Corp.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Forms S-4 (No. 333-168254), as amended, and Forms S-8 (Nos. 333-92229, 333-138697, 333-168629, 333-168254, and 333-176205), as amended (where applicable), of Valeant Pharmaceuticals International, Inc. of our report dated February 28, 2014 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLP Florham Park, New Jersey February 28, 2014

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-4 (No. 333-168254) and Form S-8 (Nos. 333-92229, 333-138697, 333-168629, 333-168254, 333-176205) of Valeant Pharmaceuticals International, Inc. of our report dated February 29, 2012 ( except for the reclassifications described in Note 2 and segment information presented in Note 26 (which is restated to reflect a new management structure), for which the date is February 28, 2014 ) relating to the consolidated financial statements and financial statement schedule of Valeant Pharmaceuticals International, Inc., which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Toronto, Canada February 28, 2014

Chartered Professional Accountants Licensed Public Accountants

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 annual report on Form 10-K 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: Februar y 28, 2014

/s/ J. MICHAEL PEARSON

J. Michael Pearson

Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

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, Howard B. Schiller, certify that:

1. I have reviewed this annual report on Form 10-K 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: Februar y 28, 2014

/s/ HOWARD B. SCHILLER

Howard B. Schiller

Executive Vice-President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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, Chairman of the Board and 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:

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.

1. The Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 2013 (the “Annual 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 Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: Februar y 28, 2014

/s/ J. MICHAEL PEARSON

J. Michael Pearson

Chairman of the Board and Chief Executive Officer

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, Howard B. Schiller, Executive Vice-President and 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:

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.

1. The Annual Report of the Company on Form 10-K for the fiscal year ended December 31, 2013 (the “Annual 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 Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: February 28, 2014

/s/ HOWARD B. SCHILLER

Howard B. Schiller

Executive Vice-President and Chief Financial Officer