Exhibit 10.42


 


BIOVAIL
CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT


 


THIS AGREEMENT is
made by and between Biovail Corporation (hereinafter the “Corporation”) and Gregory Gubitz
(hereinafter the “Executive”).


 


ARTICLE
ONE — GENERAL DUTIES AND TERM


 


Scope of Employment / Duties


 


1.01                           The Corporation will employ the Executive
as Sr. VP, Corporate Development.  The Executive will serve as an officer of the
Corporation.  During the Employment Term
(as defined below), the Executive will devote substantially all of the
Executive’s business efforts and time to the Corporation.  The Executive agrees, during the Employment
Term, not to actively engage in any other employment, occupation or consulting
activity for any direct or indirect compensation without the prior approval of
the Chief Executive Officer of the Corporation (the “CEO”); provided, however,
that the Executive may (a) serve on the boards of directors of other
companies (subject to reasonable approval of the CEO) and boards of trade
associations or charitable organizations; (b) engage in charitable
activities and community affairs; and (c) manage the Executive’s personal
investments and affairs, as long as such activities do not violate Section 4.02
and do not materially interfere with the Executive’s duties and
responsibilities for the Corporation.


 


1.02                           The Corporation reserves the right to
establish the employment relationship with the Executive directly with the
Corporation or with any of its affiliates or subsidiaries, or to change such
employment relationship over time, as it deems necessary or appropriate to
comply with legal requirements or for ease of administration of employee
benefits programs or other matters.


 


1.03  Notwithstanding 1.02, the Corporation
acknowledges and agrees that the Executive’s principal residence is and shall
remain in Canada.


 


Term of Agreement


 


1.04                           The Executive has been employed by the
Corporation since March 15, 2006 (the “Employment Commencement Date”).  The Corporation hereby agrees to continue to
employ the Executive and the Executive hereby accepts such continued
employment, in accordance with the terms and conditions of this Agreement,
commencing on July 3, 2009.  The period
of the Executive’s employment under this Agreement will be referred to as the
“Employment Term.”  Subject to the
Corporation’s obligation to provide severance benefits and the parties’
obligation to provide a Notice of Termination (as defined below), the Executive
and the Corporation acknowledge that this employment relationship may be
terminated at any time and for any or no cause or reason at the option of
either the Executive or the Corporation.


 

















 


ARTICLE
TWO — COMPENSATION


 


Base Salary


 


2.01                           As of the Employment Commencement Date,
the Executive’s annualized base salary will be $416,000.00
USD, payable in accordance with the Corporation’s normal payroll
practices for employees generally, and will be subject to annual review in
accordance with the Corporation’s normal review process for other similarly
situated senior executives.  The
Executive’s base salary shall be converted and paid in Canadian currency.  The conversion into Canadian currently shall
be made at the beginning of every quarter at a rate equal to the average
exchange rate for the previous quarter (as furnished by the Controller of the
Corporation).


 


Incentive Compensation


 


2.02                           The Executive will be eligible to
participate in the Corporation’s short term annual incentive compensation plan
as such plan may be amended from time to time (the “Short Term Incentive Plan”)
in accordance with the terms of the Short Term Incentive Plan.  As of the date of this Agreement, the
Executive’s target will be 50% of the
Executive’s annual base salary.


 


Equity Compensation


 


2.03                           Eligibility and Terms.


 


The Executive will
be eligible to participate in the Corporation’s equity compensation plan, as
such plan may be amended from time to time (the “Equity Compensation Plan”), in
accordance with the terms of the Equity Compensation Plan, except as may be
otherwise indicated in this Agreement.  The Executive’s
annual target under the Equity Compensation Plan shall be 75,000 stock options and 6,250 Restricted Share Units (“RSUs”), or a
substantially equivalent award.  Subject
to the approval of the Board of Directors, the Executive will be eligible in
2009 for a special one-time grant of 50,000 RSUs subject to performance goals.


 


Employee Benefits


 


2.04                           During the Employment Term, the Executive
will be eligible to participate in employee benefit plans and programs that are
offered to the Corporation’s other similarly-situated senior executives in
accordance with the terms of such plans as they may change from time to
time.  Nothing in this Agreement
shall preclude the Corporation or any affiliate of the Corporation from
terminating or amending any employee benefit plan or program from time to time
after the Employment Commencement Date.


 


Expenses


 


2.05 The Executive
shall be reimbursed for reasonable out of pocket business expenses, including
travel and entertainment expenses, actually and properly incurred by the
Executive in the course of performing the Executive’s services hereunder, upon
furnishing to the Corporation


 

















 


reasonable
supporting statements and vouchers; provided, however, that in any financial
year in which the Corporation has provided to the Executive an approved budget,
such expenses must not exceed the amount so budgeted without the prior written
approval from the CEO.


 


Vacation


 


2.06                           The Executive will be eligible for 4
weeks of vacation annually, to be taken in accordance with the terms of the
Corporation’s Vacation Policy, without regard to any lesser amount of vacation
time set forth therein.  Notwithstanding
the foregoing, the Executive’s eligibility for vacation in the year of hire
will be pro-rated in the manner specified in the Corporation’s Vacation Policy.


 


ARTICLE
THREE — TERMINATION AND RESIGNATION


 


Involuntary Termination - Either By The Corporation
Without Cause or By The Executive For Good Reason


 


3.01                           If the Executive incurs an involuntary
termination from employment with the Corporation on account of a termination by
the Corporation without Cause or by the Executive for Good Reason, then, in
addition to any benefits or compensation accrued, earned and due to the
Executive but not yet paid as of the date that is designated by the Corporation
or the Executive, as applicable, as the last day of the Executive’s employment
or term of office with the Corporation (the “Termination Date”), the Executive
will be eligible for the severance payments and benefits as described in this Section 3.01;
provided that (i) the Executive continues to comply with the Restrictive
Covenants (as defined below); and (ii) the Executive executes, and does
not revoke, a written waiver and release of all claims, demands and causes of
action against the Corporation and related parties in a form prescribed by the
Corporation, as limited by Section 3.09 (“Release”):


 


(a)                                  The Executive will be paid a lump sum
severance payment within 60 days of the Executive’s Termination Date, equal to
one (1) times the Executive’s base salary (calculated using the Executive’s
highest annual base salary in the three years prior to the Executive’s
Termination Date) plus one (1) times
the Executive’s target level of annual incentive compensation for the year
prior to the year in which the Executive’s Termination Date occurs;


 


(b)                                 The Executive will be entitled to a
pro-rated portion of the Executive’s target level of annual incentive
compensation for the year in which the Executive’s Termination Date occurs,
based on the number of months (rounded to the next highest number for a partial
month) of the calendar year elapsed prior to the Executive’s Termination Date
and calculated and paid in accordance with the terms of the Corporation’s Short
Term Incentive Plan; and


 


(c)                                  Until the earlier of (i) the end of
the one (1) year period following the Executive’s Termination Date, or (ii) the
date, or dates, the Executive is eligible to receive benefits under the same
type of plan of a subsequent employer (the “Benefit Period”), the Corporation will
pay to the Executive a monthly payment on the first payroll date of each month
equal to the cost of continued medial and dental coverage for the Executive and
the Executive’s covered


 

















 


dependents under
the medical and dental plans of the Corporation less the amount that the
Executive would be required to contribute for medical and dental coverage if
the Executive were an active employee. 
These payments will commence on the Corporation’s first payroll date
after the Executive’s Termination Date and will continue until the end of the
Benefit Period (but not longer than the Benefit Period).


 


Involuntary Termination By The Corporation For Cause
Or Voluntary Resignation Without Good Reason


 


3.02                         If the Executive is involuntarily
terminated by the Corporation for Cause or the Executive voluntarily resigns
from employment without Good Reason, then the Executive will forfeit the
Executive’s right to receive any salary, Short Term Incentive Plan
compensation, Equity Compensation Plan compensation or other compensation that
has not been fully accrued at the time the Executive’s employment terminates;
provided, however, that the Executive will be entitled to receive any benefits
or compensation accrued, earned and due to the Executive but not yet paid as of
the Executive’s Termination Date.


 


Death or Disability


 


3.03                           The Executive’s employment will terminate
automatically upon the Executive’s death. 
The Corporation may terminate the Executive’s employment if illness,
disease, or physical or mental incapacity render the Executive generally
incapable of performing the Executive’s duties or unfit to advance or represent
the Corporation on a daily basis for a period of twelve (12) consecutive months
and within such twelve (12) months, the Executive fails to produce to the
Corporation a medical opinion indicating a reasonable time for the return of
the Executive to the full-time assumption of the Executive’s past duties and
responsibilities.  Nothing herein is
intended to circumvent or abridge the Corporation’s short-term disability
policy or long-term disability plan.  In
the event of termination pursuant to the terms of this Section 3.03, the
Executive or the Executive’s estate, as applicable, will be entitled to receive
any salary, benefits or other amounts accrued, earned and due to the Executive
but not yet paid as of the Executive’s Termination Date.


 


Cause


 


3.04                         For purposes of this Agreement, Cause
includes:


 


(a)                                  conviction of the Executive, or entering
of a guilty plea or a plea of no contest by the Executive, with respect to, a
felony, any crime involving fraud, larceny or embezzlement or any other crime
involving moral turpitude which subjects, or if generally known, would damage
the business interests or reputation of the Corporation or any of its
affiliates;


 


(b)                                 any act of fraud, misappropriation,
material dishonesty, embezzlement or similar conduct involving the Corporation
or any affiliates;


 

















 


(c)                                  a material breach by the Executive of the
Executive’s duties hereunder (other than as a result of incapacity due to
physical or mental impairment) which is demonstrably willful and deliberate on
the part of the Executive or which is committed in bad faith or without
reasonable belief that such breach is in the best interests of the Corporation;


 


(d)                                 a material breach by the Executive of the
Executive’s duties hereunder (other than as a result of incapacity due to
physical or mental impairment), except as identified in Section 3.04(c) above,
which breach is not remedied by the Executive within 30 days after receipt of
written notice from the Corporation specifying such breach; or


 


(e)                                  the Executive’s failure to comply in any
material way with any of the provisions of this Agreement.


 


Good Reason


 


3.05                           For purposes of this Agreement, a
voluntary resignation by the Executive will be deemed to be a termination for
Good Reason if:


 


(a)                                  The Corporation makes:  (i) any assignment to the Executive of
any duties which are materially inconsistent with the Executive’s position; (ii) any
material reduction in the Executive’s authority, responsibilities or status; or
(iii) a material reduction to the Executive’s base salary;


 


(b)                                 The Executive notifies the Corporation in
writing of the Executive’s belief that the Corporation has taken an action
identified in Section 3.05(a) within thirty (30) days of the event at
issue;


 


(c)                                  The Corporation has not remedied the
situation within thirty (30) days after receipt of written notice from the
Executive; and


 


(d)                                 The Executive provides a Notice of
Termination within thirty (30) days after the Corporation’s opportunity to
remedy the situation has expired.


 


Change in Control


 


3.06                           (a)                                  The Corporation shall provide the payments and
benefits described in Section 3.06(b) below only if:  (i) the Executive continues to comply
with the Restrictive Covenants (as such term is defined below); and (b) the
Executive executes, and does not revoke, a Release (as defined above).


 


(b)                                 Upon
a Change in Control (as defined below), and an involuntary termination of the
Executive’s employment either by the Corporation without Cause or by the
Executive for Good Reason, which termination occurs within a period of twelve
(12) months following the Change in Control, the Corporation shall provide to
the Executive, in addition to any benefits or compensation accrued, earned and
due to the Executive but not yet paid as of the Executive’s Termination Date,
but in lieu of any payments or benefits to which the Executive may be entitled
under Section 3.01 above, (a) a lump sum severance payment of two (2) times the


 

















 


Executive’s
base salary (calculated using the Executive’s highest annual base salary in the
three years prior to the Executive’s Termination Date) plus two (2) times the Executive’s
target level of annual incentive compensation under the Short Term Incentive Plan
for the year prior to the year in which the Executive’s Termination Date
occurs, payable within thirty (30) days of the Executive’s Termination Date
and, (b) any unvested equity compensation awards held by the Executive
shall automatically accelerate and become one hundred percent (100%) vested
and, as applicable, exercisable, as of the Executive’s Termination Date.


 


(c)                                  For
the purpose of this Section 3.06, “Change in Control” means the happening
of any of the following events:


 


(i)                       the
completion of a transaction pursuant to which (A) the Corporation goes out
of existence or (B) any person, or any Associate (as such terms defined in
National Instrument 45-106 - Prospectus and
Registration Exemptions, as amended from time to time, or such other
successor rules, instruments or policies from time to time of Canadian
provincial securities regulatory authorities which may govern trades of
securities to employees, officers, directors or consultants (“NI45-106”)) or
Related Entity (as such term is defined in NI45-106) of such person (other than
the Corporation, any trustee or other fiduciary holding securities under any
employee benefit plan of the Corporation or a Related Entity, or any company
owned, directly or indirectly, by the shareholders of the Corporation in
substantially the same proportions as their ownership of common shares of the
Corporation) hereafter acquires the direct or indirect “beneficial ownership”
(as defined by the Canada Business
Corporations Act) of securities of the Corporation representing 50%
or more of the aggregate voting power of all of the Corporation’s then issued
and outstanding securities;


 


(ii)                    the lease,
exchange, license, sale or other similar disposition of all or substantially
all of the Corporation’s assets in one transaction or a series of related
transactions to a person, or any Associate or Related Entity of such person
(other than an Associate or Related Entity of the Corporation, any trustee or
other fiduciary holding securities under any employee benefit plan of the Corporation
or a Related Entity, or any company owned, directly or indirectly, by the
shareholders of the Corporation in substantially the same proportions as their
ownership of common shares of the Corporation);


 


(iii)                 the dissolution
or liquidation of the Corporation except in connection with the distribution of
assets of the Corporation to one or more persons which were Related Entities
prior to such event;


 


(iv)                during any period
of 24 consecutive months beginning on or after the date of the Equity Compensation
Plan, the persons who were members of the Board immediately before the
beginning of such period (the “Incumbent Directors”) cease (for any reason
other than death) to


 

















 


constitute at
least a majority of the Board or the board of directors of any successor to the
Corporation, provided that any director who was not a director as of the date
of the Equity Compensation Plan shall be deemed to be an Incumbent Director if
such director is elected to the Board by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of the foregoing
unless such election, recommendation or approval occurs as a result of an
actual or threatened election contest or other actual or threatened
solicitation of proxies or contests by or on behalf of a person other than a
member of the Board; or


 


(v)                   a merger,
amalgamation, arrangement or consolidation of the Corporation with any other
corporation other than a merger, amalgamation, arrangement or consolidation
that would result in the voting securities of the Corporation outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Corporation or such surviving entity outstanding immediately after such
merger, amalgamation, arrangement or consolidation; provided, however, that a
merger, amalgamation, arrangement or consolidation effected to implement a
recapitalization of the Corporation (or similar transaction) in which no person
(other than those covered by the exceptions in (i) above) acquires more
than 50% of the combined voting power of the Corporation’s then outstanding
securities shall not constitute a Change in Control.


 


Notice of Termination


 


3.07                           Any
termination of employment by the Corporation or by the Executive shall be
communicated by notice of termination to the other party hereto given in
accordance with Section 5.09 (a “Notice of Termination”).  For purposes of this Agreement, Notice of
Termination means a written notice which (a) identifies the specific
termination provision in the Agreement relied upon, and (b) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision identified, and (c)(i) in the case of a termination by the
Corporation, specifies the Executive’s Termination Date which shall not be less
than fifteen (15) nor more than sixty (60) days after the giving of such
notice; or (ii) in the case of a termination by the Executive without Good
Reason, shall not be less than ninety (90) days after the giving of such
notice.


 


Payments After Termination of Employment


 


3.08                           Payments made by the Corporation to the
Executive pursuant to this Agreement after the Executive’s Termination Date
will be made by courier delivery service to the last address provided for
notices to the Executive pursuant to Section 5.09 of this Agreement.


 














 


Release


 


3.09                           The Release identified in Sections 3.01
and 3.06 will not require the Executive to release any right the Executive may
have to indemnification as an officer, director or employee of the Corporation
(or any affiliate thereof) pursuant to the articles of incorporation or bylaws
(or other governing instruments) of the Corporation (or any affiliate thereof)
or any vested benefits to which the Executive may be entitled under any
employee benefit plan.


 


ARTICLE
FOUR — EXECUTIVE’S OBLIGATIONS


 


Confidentiality


 


4.01                           The Executive agrees to be bound by the
terms of the confidentiality agreement (the “Confidentiality Agreement”) dated
the date hereof, which Confidentiality Agreement has been read, understood and
executed by the Executive and is attached hereto as Schedule A and which is
incorporated by reference into this Agreement. 
In the event of a conflict between the terms of this Agreement and the
terms of the Confidentiality Agreement, the terms of this Agreement shall
govern.


 


Non-Competition


 


4.02                           The Executive acknowledges that the
Corporation currently conducts business activities in North America and
Barbados (the “Territory”).  The
Executive further acknowledges that, in the future, the business activities are
expected to substantially expand territorially. 
Accordingly, the Executive hereby agrees and covenants that he shall not
during the term of this Agreement and for a period of one (1) year following the Executive’s
Termination Date for involuntary termination by the Corporation for Cause,
voluntary termination by the Executive, or termination following a Change in
Control, directly or in any manner whatsoever, including without limitation,
either individually, in partnership, jointly or in conjunction with any other
individual, partnership, corporation, unincorporated organization, trust, joint
venture, the Crown or any agency or instrumentality thereof of any juridical
entity, in the Territory (excluding, as applicable, any portions of the
Territory in which the Corporation is no longer carrying on business at the
relevant time) or in any other regions or countries where the Corporation may
be carrying on business at the relevant time.


 


(a)                                  carry on, be engaged in, take part in or
be a party to any Competitive Activity, directly or indirectly; or


 


(b)                                 consult, advise, render services to lend
money, guarantee the debts or obligations of or permit the use of his name or
any part thereof for any Competitive Activity.


 


For the purposes
of this Section 4.02, a Competitive Activity shall be defined as any
business: (i) that competes with or plans to actively compete with the
business activities of the Corporation through, but not limited to, the
formulation, clinical testing, registration, manufacturing or marketing of
specialty pharmaceuticals and/or drug delivery technologies in the therapeutic
categories on which the Corporation is focused, which include central nervous
system disorders, pain management, cardiovascular disease, type II diabetes,
and any other


 

















 


category in which
the Corporation is focused in the future and excludes areas in which the
Corporation is not actively engaged at the relevant time, (ii) with which
the Corporation has a product(s) licensing agreement, (iii) in which
the Corporation has minority equity interest, and (iv) with which the
Corporation is at the time actively negotiating a commercial relationship.


 


During the
continuance of his employment, the Executive shall not (other than solely as a
holder of not more than three per cent (3%) of the issued and outstanding voting
shares of any public corporation or as a shareholder of the Corporation,
without the written approval of the board of directors of the Corporation,
directly or indirectly, either individually or in partnership or in conjunction
with any person or persons, firm, association, syndicate, company or
corporation as principal, agent, director, manager, servant, shareholder or in
any other manner whatsoever) carry on or be engaged in or be concerned with or
interested in any business or vocation whatsoever which would be reasonably
judged to be a Competitive Activity or would impede the Executive in performing
his duties as outlined herein.


 


The Executive may
at any time, or from time to time, request the Corporation to advise the
Executive in writing whether or not the Corporation considers a specified
business to be Competitive Activity.  Any
such request shall be made by written notice to the Corporation that includes: (i) the
name of the specific business unit for which the Executive proposes to provide
services; (ii) the name or names of any parent companies of such business
unit; (iii) a description of the specific services which the Executive
proposes to perform for such business unit; (iv) a statement as to why the
Executive believes that the performance of such services will not adversely
affect the Corporation’s legitimate interests.


 


Non-Solicitation


 


4.03                           The Executive hereby covenants and agrees
that the Executive shall not, during the term of this Agreement and for a
period of twelve (12) months thereafter, solicit or contact, either directly or
indirectly, any of the Customers, Prospective Customers or any suppliers of the
pharmaceutical compounds used by the Corporation on the Executive’s own behalf,
or on behalf of any entity, by which the Executive is hired or retained. “Customers”
means customers of the Corporation with which the Executive had personal
contact or had supervision over the efforts of those who had direct personal
contact with such customers during the last two (2) years of the Executive’s
employment with the Corporation.  “Prospective
Customer” means any organizations or entities which had been actively contacted
and solicited for their business by representatives of the Corporation, and
with whom the Executive had contact, both during the last two (2) years of
the Executive’s employment with the Corporation.


 


Non-Hiring


 


4.04                           The Executive hereby covenants and agrees
that the Executive shall not, during the term of this Agreement and for a
period of twelve (12) months thereafter,
either directly or indirectly, solicit or endeavour to solicit from the
Corporation any of its employees, and shall not for a period twelve (12) months from the end of the
term of this Agreement hire any of the foregoing on the Executive’s own behalf
or on behalf of any entity for which the Executive is hired or retained.  Notwithstanding the foregoing, the Executive
shall not be considered in breach of this section should the Executive solicit
for hiring such Executive’s Administrative Assistant.


 

















 


Injunctive Relief


 


4.05                           The Executive acknowledges and agrees
that the agreements and covenants in this Article Four are essential to
protect the business and goodwill of the Corporation and that a breach by the
Executive of the covenants in Sections 4.01, 4.02, 4.03 and 4.04 hereof could
result in irreparable harm to the Corporation for which the Corporation could
not be adequately compensated in damages and that, accordingly, the Corporation
may have no adequate remedy at law if the Executive breaches such provisions.  Consequently, if the Executive breaches any
of such provisions, the Corporation shall have, in addition to and not in lieu
of, any other rights and remedies available to it under any law or in equity,
the right to obtain injunctive relief to restrain any breach or threatened
breach thereof and to have such provisions specifically enforced by any court
of competent jurisdiction.


 


Severability of Covenants in Full or in Part


 


4.06                           The parties acknowledge that the
provisions of Article Four hereof (the “Restrictive Covenants”) are
reasonable and valid in geographic and temporal scope and in all other
respects.  If any court of competent
jurisdiction determines that any of the Restrictive Covenants or any part
thereof, is or are invalid or unenforceable, the Executive and the Corporation
agree that the remainder of the Restrictive Covenants shall not be affected by
the deemed invalid portions.


 


Assignment of IP


 


4.07                           The Executive shall disclose to the
Corporation any and all Intellectual Property (as defined in the
Confidentiality Agreement) which the Executive may make solely, jointly, or in
common with other employees during the term of the Executive’s employment
within the Corporation and which relates to the business.  Any Intellectual Property coming within the
scope of the business made and/or developed by the Executive while in the
employ of the Corporation, whether or not conceived or made during regular
working hours, and whether or not the Executive is specifically instructed to
make or develop same, shall be for the benefit of the Corporation and shall be
regarded as work made in the course of employment for the purposes of the Copyright Act (Canada).  The Executive shall assign, set over and
transfer to the Corporation the Executive’s entire right, title and interest in
and to any and all of the Intellectual Property and to all letters patent and
applications for letters patent which may be, or may have been filed and/or
issued by or to the Executive or on the Executive’s behalf and the Executive
agrees to execute and deliver to the Corporation any and all instruments
necessary or desirable to accomplish the foregoing and, in addition, to do all
lawful acts which may be necessary or desirable to assist the Corporation to
obtain and enforce protection of the Intellectual Property.  To the extent of any rights the Executive may
have with respect to the Intellectual Property which are not assignable,
including but not limited to moral rights, the Executive hereby waives
same.  The Executive will execute and
deliver to the Corporation or its successors and assigns, such other and
further assignments, instruments and documents as the Corporation from time to
time reasonably may request for the purpose of establishing, evidencing,


 

















 


and enforcing or defending
its complete, exclusive, perpetual, and world-wide ownership of all rights,
titles, and copyrights, in and to the Intellectual Property, and the Executive
constitutes and appoints the Corporation as agent and attorney-in-fact, with
full power of substitution, to execute and deliver such assignments,
instruments, documents as Executive may fail to or refuse to execute and
deliver, this power and agency being coupled with an interest and being
irrevocable.


 


Standards of Business Conduct


 


4.08                           The Executive acknowledges and agrees
that the Executive has read and understood and agrees to be bound by the
Corporation’s Standards of Business Conduct, which is attached hereto as
Schedule B.


 


No Conflicting Obligations


 


4.09                           The Executive warrants to the Corporation
that:


 


(a)                                  the performance of the Executive’s duties
as an employee of the Corporation will not breach any agreement or other
obligation to keep confidential the Confidential Information of any third
party; and


 


(b)                                 the Executive is not bound by any
agreement with or obligation to any third party that conflicts with the
Executive’s obligations as an employee of the Corporation.


 


ARTICLE
FIVE - INTERPRETATION AND ENFORCEMENT


 


Independent Legal Advice


 


5.02                           The Executive agrees to the terms and
conditions of this Agreement having had the opportunity to receive independent
legal advice, for which the Executive has been reimbursed by the Corporation.


 


Severability


 


5.03                           The parties further acknowledge that if
any provision contained in this Agreement is determined to be invalid or
unenforceable in whole or in part, such invalidity or unenforceability shall
attach only to such provision or part thereof and the remaining part of such
provision and all other provisions hereof shall continue in full force and
effect.


 


Sections and Headings


 


5.04                           The division of this Agreement into
Articles and Sections and the insertion of headings are for the convenience of
reference only and shall not affect the construction or interpretation of this
Agreement.


 

















 


Number and Gender


 


5.05                           In this Agreement words importing the
singular number only shall include the plural and vice versa and words
importing the masculine gender shall include the feminine and neuter genders
and vice versa.


 


Entire Agreement


 


5.06                           This Agreement and all the Schedules
hereto constitute the entire Agreement between the parties with respect to the
subject matter hereof and cancels and supersedes any prior understandings and
agreements between the parties with respect thereto (including, but not limited
to, the Executive’s employment agreement dated February 16, 2006 and the
amendment thereto dated January 14, 2008). 
There are no representations, warranties, forms, conditions,
undertakings or collateral Agreements, express, implied or statutory between
the parties other than as expressly set forth in this Agreement.


 


Amendments and Waivers


 


5.07                           No amendment to this Agreement shall be
valid or binding unless set forth in writing and duly executed by both
parties.  No waiver of any breach of any
term or provision of this Agreement shall be effective or binding unless made
in writing and signed by the party purporting to give the same and, unless
otherwise provided in written waiver, shall be limited to the specific breach
waived.


 


Governing Law


 


5.08                           This Agreement shall be deemed to have
been made in and shall be construed in accordance with the laws of the Province
of Ontario and all legal proceedings contemplated in this Agreement shall be
brought in, and be governed by, the laws of the Province of Ontario, without
regard to principles of conflicts of law.


 


Notices


 


5.09                           Any demand, notice or other communication
(hereinafter in this Section 5.09 referred to as a “Communication”) to be
made or given in connection with this Agreement shall be made or given in
writing and may be made or given by personal delivery addressed respectively to
the recipients:


 


To the Executive:


 


Gregory Gubitz


xxx


 

















 


To the
Corporation:


 


7150 Mississauga Road


Mississauga, ON L5N 8M5


Attn: Chief Executive Officer


 


or such other address or
individual as may be designated by notice by either party to the other.  Any communication made or given by personal
delivery shall be conclusively deemed to have been given on the day of the
actual delivery thereof.


 


Benefit of Agreement


 


5.10                           This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs,
executors, legal personal representatives, successors and assigns.


 


Assignment


 


5.11                           The Executive may not assign the
Executive’s rights or obligations under this Agreement without the prior
written consent of the Corporation which consent may be unreasonably
withheld.  The Corporation may
unilaterally assign this agreement to an affiliate without consent but on
notice to the Executive.


 


Execution of Agreement


 


5.12                           The Executive acknowledges that the
Executive has executed this Agreement freely; that the Executive has reviewed
this Agreement thoroughly; that the Executive agrees with its contents; and
that the terms herein are reasonable for the fair protection of both the
Executive and the Corporation.


 


 


IN WITNESS WHEREOF, the parties have executed this Agreement
on the dates identified below at Mississauga,
Ontario:


 


	
   

  	
   

  	
   

  	
   

  
	
  BIOVAIL
  CORPORATION

  	
   

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ W. WELLS

  	
   

  	
  /s/ GREGORY GUBITZ

  
	
  Name:

  	
  William Wells

  	
   

  	
  Gregory Gubitz

  
	
  Title:

  	
  Chief Executive
  Officer

  	
   

  	
  Sr. VP, Corporate Development

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
  Aug 4 / 09

  



 














 


SCHEDULE A


 


BIOVAIL CORPORATION

(and its Subsidiaries, Divisions, and Affiliates)


 


CONFIDENTIALITY AGREEMENT


 


As an
employee of Biovail Corporation (the “Corporation”), I acknowledge that I may
acquire or have disclosed to me by the Corporation or by any affiliate,
associate, or technology partner of the Corporation, either directly or
indirectly, in writing, conversation, or through observation, various
information about the business of the Corporation which is not in the public
domain and which the Corporation does not wish to be divulged to other persons,
companies, or third parties. I further understand that the Corporation’s
Confidential Information (as defined below) is essential to its competitive
advantage and to its ability to be financially viable. I further understand
that the unauthorized disclosure of such Confidential information may cause the
Corporation irreparable injury that may not be rectified in the future.


 


Therefore,
as a condition and in consideration of my employment with the Corporation, I
understand and agree that while employed with the Corporation and thereafter
(as more particularly described below). I am required to hold confidential and
not to disclose to anyone without the written authority from the Corporation
any knowledge, information, or facts concerning the Corporation’s:


 


·                                                                                          research and development activities


·                                                                                          technological plans, advances, applications and inventions


·                                                                                          technical specifications, designs and plans


·                                                                                          materials and sources of supply


·                                                                                          discoveries, inventions, trade secrets, patents


·                                                                                          financial affairs. contracts, licensing agreements, customer
lists, pricing practices, marketing strategies


·                                                                                          any other information regarding the Corporation, its
products and their development which is not in the public domain


 


All of
the foregoing shall hereinafter collectively be referred to as the “Confidential
Information”.


 


I
shall keep confidential any and all Confidential Information which has been
disclosed to me in writing or through oral communications and shall not divulge
in any manner whatsoever any such information to any person, firm, corporation,
partnership or similar entities without the Corporation’s written authority.


 


Should
I breach or threaten to breach this Agreement, I shall be liable to the
Corporation in equity and/or in law for damages that may be suffered by the
Corporation as a result of the breach or threatened breach. I understand that a
breach of this Agreement may result in irreparable harm to the Corporation such
as to warrant the entitlement by the 


 

















 


Corporation
to an interlocutory and/or permanent injunction or other equitable relief
against me, and an award of damages including punitive, exemplary and
aggravated damages, together with legal costs and expense and I specifically
agree that I will not argue the adequacy of damages or the Corporation’s
ability to seek equitable relief in any such proceeding.


 


All
Confidential Information supplied by the Corporation to me during the course of
my employment and any rights related thereto, including but not limited to
rights of know how, patent, trademark and copyright, with respect to existing
products or those that are developed during or after my employment, are and
remain the exclusive and absolute property of the Corporation.


 


I
shall not, except as and to the extent required to enable me to carry out my
duties with the Corporation, make any copies or reproduce the Confidential
Information nor shall I remove or cause to have removed from the premises of
the Corporation during my employment any Confidential Information unless
required to do so in order to fulfill my duties with the Corporation. Such
copies or reproductions shall be strictly subject to the terms and conditions
of this Agreement. I shall take such steps as are necessary to restrict access
to and protect the confidentiality of such copies or reproductions of the
Confidential Information. Any such copies or reproductions made shall become
the exclusive and absolute property of the Corporation.


 


Upon
request of the Corporation, I agree to immediately surrender to the Corporation
all documentation and information - notes, drawings, recordings, manuals,
letters, correspondence, computer data and programs, records, books or any
other materials relating to the Confidential Information which is in my
possession without my retaining any copies or duplicates thereof.


 


1
agree that this Agreement shall be construed in accordance with the laws of the
Province of Ontario and I agree that the applicable courts of the Province of
Ontario shall have exclusive jurisdiction with respect to any dispute or breach
herein and 1 hereby attorn to the exclusive jurisdiction of the courts of the
Province of Ontario.


 


This
Agreement shall enure to the benefit of and shall be binding upon my
successors, heirs and attorneys.


 


The
disclosure or divulging of any Confidential Information contrary to this
Agreement, or the violation of this Agreement in any way shall result in my
immediate termination of employment, in addition to which I may be subject to
criminal prosecution and civil liability.


 


I
acknowledge and agree that I have executed this Agreement freely and with the
benefit of independent legal advice and the terms herein are fair and
reasonable.


 

















 


I
acknowledge and agree to the foregoing.


 


 


	
  Employée Signature:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Witness Signature:

  	
   

  	
   

  	
  Date:

  	
   

  



 














 


SCHEDULE
B


 





 


BIOVAIL
CORPORATION

(and its Subsidiaries, Divisions, and Affiliates)


 


STANDARDS
OF BUSINESS CONDUCT


 


Biovail Corporation (“Biovail”),
together with its subsidiaries, divisions and affiliates, places great
importance on conducting its business activities in an ethical and appropriate
manner. Each employee, officer and director is a reflection of Biovail, and as
such, the activities and actions of every individual within Biovail must be
undertaken in accordance with a high standard of ethics and integrity. As such,
Biovail expects each employee, officer and director to comply with, and adhere
to, these Standards of Business Conduct (the “Standards”).


 


1.             CONFLICTS OF INTEREST


 


Employees, officers and
directors of Biovail must avoid situations where their private interests could
conflict with, or even appear to conflict with, the interests of Biovail and
its stockholders.


 


Conflicts of interest
arise when an individual’s position or responsibilities with Biovail present an
opportunity for personal gain apart from the normal rewards of employment. They
also arise when the private interests of an employee, officer or director are
inconsistent with those of Biovail or create conflicting loyalties. Such
conflicting loyalties can cause an employee, officer or director to give
preference to private interests in situations where corporate responsibilities
should come first. Employees, officers and directors must perform the
responsibilities of their positions on the basis of what is in the best interests
of Biovail and free from the influence of personal considerations and
relationships.


 


In the event that any
potential conflict of interest arises, the individual involved must immediately
notify his or her immediate supervisor. If such individual is an officer or
director of Biovail, the Executive Chairman (“Chairman”), Chief Executive
Officer (“CEO”) and the General Counsel, or in the absence of a General Counsel
the Vice President, Associate General Counsel (“SLO”) of Biovail must also be
immediately notified and no further action may be taken unless authorized in
writing by the Chairman and/or the CEO.


 


While it is not possible
to detail every situation where conflicts of interest may arise, the following
policies cover the areas that have the greatest potential for conflict:


 

















 


A.            Trading
in Biovail Securities and Use of Inside Information


 


There are numerous laws
in Canada and the United States (federal, provincial and state laws), to
regulate transactions in corporate securities (stocks and bonds) and the
securities industry. Violation of these laws may lead to civil and criminal
actions against the individual and Biovail.


 


i.              Any
employee, officer, director or other insider or anyone (family member, etc.)
who knows of any material information (as defined below) about Biovail that has
not been disclosed to the public (commonly known as “insider information”) may
not engage in any transaction in Biovail’s securities until such information is
disclosed to the public (whether or not there is a formal trading “black out”
in place). This rule applies equally to transactions in securities of
other companies. In addition, employees, officers and directors must not
provide insider information to others (“tippees”) who may trade in either the
securities of Biovail or the securities of other companies.


 


“Material information” is any information relating to
the business and affairs of Biovail that would reasonably be expected to result
in a change in the market price or value of Biovail’s securities. Generally
speaking, material information is a matter to which an average prudent investor
should be reasonably informed before a decision is made to buy or sell the
security involved. Examples of such information would include annual or
quarterly financial results; significant changes in management; significant
shifts in operating or financial circumstances, such as major write-offs and
changes in earnings projections; borrowing of a significant amount of funds;
acquisitions of, or mergers with, other companies; significant new contracts or
loss of business; and major new products, services or patents. This list
provides examples only; many other matters may be considered material
information.


 


Employees, officers, directors and other insiders who
have questions that relate to the sale or purchase of a security under
circumstances where these laws and regulations might apply should consult with
the SLO, who may refer them to outside legal counsel.


 


ii.             In
addition to the prohibition against the use of “insider” information which
applies to all employees, officers and directors, the various securities laws
that apply in the jurisdiction and countries in which Biovail does business
place definite restrictions on the manners in which employees, officers and
directors of Biovail, and their family members, their associates, etc., may
engage in transactions involving the securities of Biovail. Employees, officers
and directors shall comply with all laws, rules and regulations that
prohibit or restrict insider trading.


 


2

















 


Whenever there is any doubt as to whether any
transactions involving Biovail’s securities would violate securities laws,
employees, officers and directors should consult the SLO of
Biovail. Within the framework of the foregoing policies and laws, the final
decision of each employee, officer or director, with respect to securities
transactions, must be his or her own.


 


iii.            Employees,
officers, directors and other insiders shall maintain the confidentiality of
information entrusted to them by Biovail or its customers (except where
disclosure is authorized or legally mandated) and shall not, without proper
authority, give or release to anyone not employed by Biovail, data or
information of a confidential nature concerning Biovail. Disclosure of
confidential information can be harmful to Biovail and could be the basis for
legal action against Biovail and the individual disclosing the information.
Confidential information includes all non-public information that might be of
use to competitors, or harmful to Biovail or its customers, if disclosed.


 


iv.            Employees,
officers, directors and other insiders shall not acquire any property, security
or any business interest that they know Biovail has an interest in acquiring.
Moreover, based on such advance information, employees, officers and directors
shall not acquire any property, security or business interest for speculation
or investment.


 


v.             Employees,
officers, directors and other insiders must follow Biovail policies regarding “Blackout
Periods” when Biovail’s stock may not be traded. Such policies will be
communicated by the SLO from time to time and must be adhered to by all
employees, officers and directors.


 


B.            Personal
Financial Interest


 


Employees, officers and
directors should avoid any outside financial interests that might influence
decisions or actions they have been empowered to make on behalf of Biovail. An
employee, officer or director performing duties in conformity with this policy
shall not have a financial interest in, indebtedness to, or a personal contract
or understanding with any concern with which he or she does business on behalf
of Biovail.


 


i.              Employees,
officers or directors whose corporate duties bring them into business dealings
with an organization in which they, or a member of their family, have a
financial interest or to which they, or a member of their family, have any
indebtedness, or a business employing a relative or close friend, must
immediately notify their immediate supervisor. The employee, officer or
director, in turn, cannot complete a transaction on behalf of Biovail with this
organization unless properly authorized in writing from their supervisor after
full disclosure of the relationship.


 


3

















 


ii.             An
employee, officer or director may not perform work or services, outside the
course of their normal employment by Biovail, for an organization doing or
seeking to do business with Biovail without appropriate prior written approval
of their supervisor or the Board of Directors. An employee, officer or director
may rot be a director, officer, partner or consultant of an organization doing
or seeking to do business with Biovail, nor may any of them permit their names
to be used in any way indicating a business connection with such an
organization, without appropriate prior written approval of their supervisor or
the Board.


 


iii.            An
employee, officer or director shall not accept for himself or herself, or for
the benefit of any relative or friend, any payments, loans, services, favors
involving more than ordinary social amenity, or gifts of more than nominal
value from any organization doing or seeking to do business with Biovail.


 


iv.            The
requirement of freedom from conflict of interest applies with equal force to
the spouse, children and other close relatives of each employee, officer and
director. This policy applies to all employees, officers and directors of
Biovail with respect to all of the affairs of Biovail.


 


v.             Employees,
officers and directors shall not (a) take for themselves personally
opportunities that are discovered through the use of corporate property,
information or position; (b) use corporate property information, or
position for personal gain; (c) compete with Biovail. Employees, officers
and directors owe a duty to Biovail to advance its legitimate interests when
the opportunity to do so arises.


 


vi.            Biovail
may not make loans to any employee, officer or director.


 


C.            Outside
Activities


 


Employees, officers and
directors should avoid outside employment or activities which would impair the
effective performances of their responsibilities to Biovail, either because of
excessive demands on their time, or because the outside commitments can be
contrary to their obligations to Biovail


 


D.            Protection
and Proper Use of Biovail’s Assets


 


All employees, officers
and directors should protect Biovail’s assets and ensure their efficient use.
Theft, carelessness and waste have a direct impact on Biovail’s profitability.
All of Biovail’s assets should be used only for legitimate business purposes.


 


4

















 


E.             Fair
Dealing


 


Each employee, officer
and director shall endeavor to deal fairly with Biovail’s customers, suppliers,
competitors and employers. None should take unfair advantage of anyone through
manipulation, concealment, abuse of privileged information, misrepresentation
of material facts, or any other unfair-dealing practice,


 


2.             COMPETITIVE PRACTICES


 


The management of Biovail
firmly believes that fair competition is fundamental to continuation of the
free-enterprise system. Biovail complies with, and supports, laws of all
countries that prohibit restraints of trade, unfair practices, or abuse of
economic power.


 


Biovail will not enter
into arrangements that unlawfully restrict its ability to compete with other
businesses, or the ability of any other business organization to compete freely
with Biovail. Biovail policy also prohibits employees, officers and directors
from entering into, or even discussing, any unlawful arrangement or
understanding which may affect its pricing policies, terms upon which its
products and services are sold, or which might be construed as dividing
customers or sales territories with a competitor.


 


These principles of fair
competition are basic to all Biovail operations. They are integral parts of the
following sections that cover Biovail’s dealings with suppliers, customers and
public officials.


 


3.             DEALING WITH SUPPLIERS


 


Biovail is a valuable
customer for many suppliers of goods, services and facilities. People who want
to do business, or to continue to do business, with Biovail must understand
that all purchases by Biovail will be made in accordance with its purchasing
policy and exclusively on the basis of price, quality, service and suitability
to Biovail’s needs.


 


A.            Reciprocity


 


Biovail considers
reciprocity a harmful practice and a hindrance to assuring purchase of the best
available materials or services at the lowest possible prices. It will not be
practiced or allowed.


 


Suppliers of goods and
services to Biovail will not be asked to buy goods and services from Biovail in
order to become or continue as a supplier.


 


Biovail will not attempt
to influence its suppliers to purchase from customers of Biovail. When Biovail makes
purchases it will not favor firms who are customers of Biovail or any of its
affiliates.


 


5

















 


B.            “Kickbacks”
and Rebates


 


Purchases or sales of
goods and services by Biovail must not lead to employees, officers or
directors, or their families, receiving any type of personal kickbacks or
rebates. Employees, officers, directors, and their families, must not accept
any form of “under-the-table” payment.


 


C.            Receipt
of Gifts and Entertainment


 


Even when gifts and
entertainment are exchanged out of the purest motives of personal friendship,
they can be misunderstood. They can appear to be attempts to bribe Biovail’s
employees, officers or directors into directing business of Biovail to a
particular supplier. To avoid both the reality and the appearance of improper
relations with suppliers or potential suppliers, the following standards will
apply to the receipt of gifts and entertainment by employees, officers and
directors of Biovail:


 


Gifts


 


i)              Employees,
officers and directors arc prohibited from soliciting gifts, gratuities, or any
other personal benefit or favor of any kind from suppliers or potential
suppliers. Gifts include not only merchandise and products but also personal
services, and tickets to theatrical and sports events. Employees, officers and
directors should exercise good judgment when accepting unsolicited gifts.
Employees, officers and directors are prohibited from accepting gifts of money.


 


ii)             Employees,
officers and directors may accept unsolicited non-money gifts provided:


 


(1)           They
are items of nominal intrinsic value; or


 


(2)           They
are advertising and promotional materials, clearly marked with Biovail or brand
names of the giver.


 


iii)            Any
gift of more than nominal intrinsic value must be reported to the SLO to
determine whether it can be accepted. Some gifts may be perishable so as to
make their return impractical. Supervisors can permit acceptance of such gifts,
but should require employees, officers and directors to tactfully inform givers
that such gifts are discouraged.


 


iv)           In the
transaction of some international business, it is lawful and customary for
business leaders in some countries to give unsolicited gifts to employees,
officers or directors of Biovail. These gifts can be of more than nominal
value. Moreover, under the circumstances, returning the gifts or payment for
them may constitute an affront to the giver. In such cases, the gift must be
reported to the SLO who may permit the retaining of the gifts.


 


6

















 


v)            In
all other instances where gifts cannot be returned or may adversely affect
Biovail’s continuing business relationships, the SLO must be notified. They can
require employees, officers and directors to transfer ownership of such gifts
to Biovail.


 


Entertainment


 


i)              Employees,
officers and directors shall not encourage or solicit entertainment from any
individual or company with whom Biovail does business. Entertainment includes,
but is not limited to, activities such as dinner parties, theater parties, and
sporting events.


 


ii)             From
time to time employees, officers and directors may accept unsolicited
entertainment, but only under the following conditions:


 


(1)           The
entertainment occurs infrequently;


 


(2)           It
arises out of the ordinary course of business;


 


(3)           It
involves reasonable, not lavish expenditures (the amounts involved should be
ones employees, officers and directors are accustomed to normally spending for
their own business or personal entertainment); and


 


(4)           The
entertainment takes place in settings that also are reasonable, appropriate,
and fitting to employees, officers and directors, their hosts, and their
business at hand.


 


4.             DEALINGS WITH CUSTOMERS AND POTENTIAL
CUSTOMERS


 


Employees, officers and
directors must keep all dealings with customers and potential customers fair
and above board. Biovail gets business and keeps it because of the quality of
its goods and services. Biovail does not give unethical or illegal rebates,
kickbacks, under-the-table payments, or other similar improper favors to
customers or their representatives.


 


The boundary line between
ethical and unethical competition, or legal and illegal conduct, is not always
well defined, particularly in international activities where differing local
laws, custom; and practices come into play. Therefore, the following standards
will serve as guides:


 


a)             All
employees, officers and directors should make themselves aware of and fully
comply with all laws, rules and regulations, whether federal, state, local
or foreign, including laws governing relations with customers as well as
competitors.


 


b)            All
employees, officers and directors engaged in negotiations and contracts with
foreign governments, the United States or any political subdivision thereof
must 


 


7

















 


also know and abide by the specific rules and
regulations covering relations with such governments and their agencies.


 


c)             Employees,
officers and directors may not give gifts to customers except items of nominal
value, which fit the legal, normal, and customary pattern of Biovail’s sales
efforts for a particular market. Exceptions to this policy can occur in
international trades where it can be legal, customary, and appropriate business
practice to exchange gifts with customers. Only the CEO can authorize the
giving, receiving, or exchanging of such gifts. Any gifts received by
employees, officers or directors in such an exchange must be reported to the
CEO for determination as to the disposition of the gifts.


 


d)            Entertainment
for any customer must fit regular business practices. The place and type of
entertainment and the money spent must be reasonable and appropriate.


 


5.             DEALING WITH PUBLIC OFFICIALS


 


Domestic and foreign laws
and regulations require Biovail to be in contact with public officials on a
wide variety of matters. Employees, officers and directors who regularly make
these contacts have special responsibilities for upholding Biovail’s good name.
The following standards relate to these special responsibilities:


 


a)             All
employees, officers and directors who contact public officials must be familiar
with lobbying laws and public disclosure requirements, particularly those that
apply to registrations and filings.


 


b)            No
employee shall make any form of payment, direct or indirect, to any public
official as an inducement to procuring or keeping business or having a law or
regulation enacted, defeated, or violated. This is bribery, pure and simple. It
will not be tolerated.


 


It should be acknowledged that inherent in the current
health-care regulatory environment, the definition of “form of payment” may
include seemingly trivial gifts and/or favors (e.g. buying lunches, coffee,
etc.).


 


c)             When
not prohibited by law, employees, officers and directors are allowed to give to
public officials gifts where the presentation and acceptance of gifts is an
established custom and a normal business practice. All such gifts shall be of
reasonable value and the presentation approved in advance by the CEO. Moreover,
such gifts must be presented in a manner that clearly identifies Biovail and
the occasion that warrants the presentation.


 


d)            Employees,
officers and directors are also allowed to give public officials gifts in the
form of product models and pictures provided the models and pictures are 


 


8

















 


part of Biovail’s general marketing and public
relations programs (except as noted in clause (b) above).


 


e)             On
special ceremonial occasions, officers of Biovail may publicly give gifts of
more than nominal value to public institutions and public bodies. Such gifts
can commemorate special events or milestones in Biovail’s history.


 


These may be transmitted through public officials but
the gifts are given to the public institutions and public groups they
represent, not to the officials personally.


 


f)             From
time to time employees, officers and directors may entertain public officials,
but only under the following conditions:


 


i.              It
is legal and permitted by the entity represented by the official;


 


ii.             The
entertainment is not solicited by the public official;


 


iii.            The
entertainment occurs infrequently;


 


iv.            It
arises out of the ordinary course of business;


 


v.             It
does not involve lavish expenditures, considering the circumstances;


 


vi.            The
settings and types of entertainment are reasonable, appropriate and fitting to
our employees, officers or directors, their guests, and the business at hand.


 


6.             POLITICAL ACTIVITIES AND CONTRIBUTIONS


 


A.            Canada
and the United States


 


Employees, officers and
directors who participate in partisan political activities must make every
effort to ensure that they do not leave the impression that they speak or act
for Biovail.


 


Biovail encourages its
employees, officers and directors to participate in political activities in
their own time and at their sole expense. No corporate action, direct or
indirect, will be allowed that infringes on the right of any employee
individually to decide whether, to whom, and in what amount, they will make
personal political contributions. The same is true of volunteer political
donations of personal service time, so long as it does not interfere with the
working status of employees, officers or directors.


 


B.            Outside
Canada and the United States


 


No employees, officers
and directors are permitted to use Biovail’s funds, facilities, or other
assets, to support either directly or indirectly any political candidates or
political parties, 


 


9

















 


without advance
authorization in writing from their immediate supervisor and the General
Counsel. The policy of Biovail is that employees, officers and directors and
employees should not participate in political activities in countries of which
they are not nationals. However, such persons, of course, are free to
participate in political activities in countries of which they are nationals in
their own time and at their own expense.


 


7.             DISCLOSURE


 


Biovail has formed a
Disclosure Committee to promote consistent practices aimed at informative, timely
and broadly disseminated disclosure of Material Information to the market.
external stakeholder groups and employees in accordance with all applicable
legal, regulatory and stock-exchange requirements.


 


It is essential that the
Disclosure Committee be fully apprised of all material corporate developments
to be able to determine whether there is information that should be publicly
disclosed, and what the appropriate timing is for release of that information.
In some cases, the Disclosure Committee may determine that the information
should remain confidential. If that is the case, the Disclosure Committee will
determine how that information will be controlled so that it is not
inadvertently released. Therefore any employee who becomes aware of information
that he/she believes might be material to Biovail and/or any of its affiliates
and subsidiaries he/she should advise their manager or supervisor or a member
of the Disclosure Committee. Current membership of the Disclosure Committee is
posted on the Biovail.com website.


 


This applies throughout
the year, but is particularly critical when annual or quarterly financial
statements and Management Discussion and Analysis (MD&A) or regulatory
filings are being prepared (e.g. regulatory filings, such as the U.S.
Securities and Exchange Commission, Form 20-F).


 


8.             PUBLIC COMMUNICATIONS


 


Given the importance
placed on confidentiality and the appropriate disclosures of information
regarding Biovail, it is important for employees, officers and directors to
ensure that care be taken with any communication regarding Biovail or its
activities outside of Biovail.


 


A.            Designated
Spokespersons


 


Biovail has designated
official spokespersons who are authorized to speak on behalf of Biovail, and
answer questions from the news media and the investment community, about
Biovail and its activities. Employees, officers and directors who have not been
designated as spokespersons for Biovail are not permitted to speak on behalf of
the Company to the news media or to the investment community.


 


10














 


B.            Media
or Analyst Inquiries


 


Any employee who is
approached by any person asking for comment on the activities of Biovail must
direct any and all such inquiries to a member of the Disclosure Committee or to
a member of the Company’s Stakeholder Relations team (Corporate Communications,
Investor Relations) so that an appropriate spokesperson can respond to the
inquiry on behalf of Biovail.


 


C.            Conferences


 


The Disclosure Committee
should be advised of any request to present at any conference or public meeting.
Certain materials prepared for any such presentation may be required to be
reviewed by the Company’s Stakeholder Relations group.


 


D.            Electronic
Communications


 


Care must be taken in all
instances in the use of e-mail, and other devices (e.g., Blackberry’s) in
communications relating to Biovail’s business. While users tend to resort to
shorthand communication using these kinds of tools, those communications do
form a record of those communications that may be subject to later review and
disclosure. A more fulsome policy regarding electronic communications is in
place (found in the Human Resources Management System Policy Binder) and should
be adhered to by all employees, officers and directors.


 


E.             The
Internet


 


Biovail has instituted
policies regarding the use of, and access to the Internet by employees,
officers and directors. These policies include a prohibition against anyone
participating in any chat rooms dedicated to Biovail or its operations or the
industry at large. If any employee, officer or director becomes aware that any
such chat room exists, they are asked to report the address of such site to the
SLO so that it may be monitored and appropriate action may be taken.


 


9.             EQUAL OPPORTUNITY


 


Biovail supports the
principle that every individual must be accorded an equal opportunity to
participate in the free-enterprise system and to develop their ability to
achieve their full potential within that system.


 


There shall be no
discrimination against any employee or applicant because of race, religion,
color, sex, age, sexual orientation, national or ethnic origin, or disability
(as required by law) or any other consideration prohibited by local law. All
employees, officers and directors will be treated with equality during their
employment without regard to their race, religion, color, sex, age, national or
ethnic origin, or physical handicap, in all matters, including employment,
upgrading, promotion, transfer, layoff, termination, rates of pay, selection
for training and recruitment. Biovail will maintain a work environment free of
discriminatory practice of any kind.


 


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No employee shall have
any authority to engage in any action or course of conduct or to condone any
action or course of conduct by any other person which shall in any manner,
directly or indirectly, discriminate or result in discrimination in the course
of one’s employment, termination of employment, or any related matter where
such discrimination is, directly or indirectly, based upon race, religion,
color, sex, age, sexual orientation, national or ethnic origin, disability, or
any other consideration prohibited by law.


 


10.          HEALTH, SAFETY, AND ENVIRONMENTAL
PROTECTION


 


It is Biovail’s policy to
pay due regard to the health and safety of its employees, officers, directors
and others, and to the state of the environment. There are federal, provincial,
state and local workplace safety and environmental laws which through various
governmental agencies regulate both physical safety of employees, officers and
directors and their exposure to conditions in the workplace. Should you be
faced with an environmental health issue or have a concern about workplace
safety, you should contact your Health and Safety Committee representative or
notify Biovail management immediately.


 


Many countries and their
regional and local governments now have complex legislation to protect the
health and safety of employees, or the general public, and to prevent pollution
and protect the environment. In case of violation, these laws often provide
penalties for both the company involved and its executive personnel. Biovail’s
SLO should always be consulted when necessary to understand or comply with such
laws.


 


11.          WORK ENVIRONMENT


 


Employees, officers and
directors must treat each other with professional courtesy and respect at all
times. Employees, officers and directors shall not subject any other employee
to unwelcome sexual advances, requests for sexual favors or other verbal or
physical conduct which might be construed as sexual in nature, or harass others
on the basis of race, disability, gender, sexual orientation or any other
consideration prohibited by law. Such conduct may constitute sexual harassment
or harassment under federal, provincial and state law and may be the basis for
legal action against the offending employee and/or Biovail.


 


Employees are encouraged
to report all conduct that they believe in good faith to be violations of local
anti-harassment policies. To the extent permissible under local law the
identity of the employees, officers or directors involved will be kept strictly
confidential, and will not be revealed by Biovail’s management without the
employee’s permission. The alleged harassment will be thoroughly investigated
by Biovail and appropriate action will be taken. Biovail has an appropriate
policy to protect employees against discrimination or retaliation as a result
of such a complaint.


 


12.          INTEGRITY OF RECORDS AND FINANCIAL
REPORTS


 


It is of critical
importance that Biovail’s filings with the appropriate regulatory authorities
(e.g. U.S. Securities and Exchange Commission) be accurate and timely.
Depending on their position 


 


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with Biovail, an
employee, officer or director may be called upon to provide necessary
information to ensure that Biovail’s public reports are complete, fair and
understandable. Biovail expects employees, officers and directors to take this
responsibility very seriously and to provide prompt accurate answers to
inquiries related to Biovail’s public disclosure requirements.


 


The integrity of Biovail’s
record keeping systems will be respected at all times. Employees, officers and
directors are forbidden to use, authorize, or condone the use of “off-the-books”
bookkeeping, secret accounts, unrecorded bank accounts, “slush” funds,
falsified books, or any other devices that could be utilized to distort records
or reports of Biovail’s true operating results and financial conditions or
could otherwise result in the improper recordation of funds or transactions.


 


13.          USE OLD AGENTS AND NON-EMPLOYEES,
OFFICERS AND DIRECTORS


 


Agents or other
non-employees cannot be used to circumvent the law. Employees, officers and
directors will not retain agents or other representatives to engage in
practices that run contrary to the Standards of Business Conduct or applicable
laws.


 


14.          INTERNATIONAL OPERATIONS


 


Employees, officers and
directors operating outside of Canada and the United States have a special
responsibility to know and obey the laws and regulations of countries where
they act for Biovail. Customs vary throughout the world, but all employees,
officers and directors must uphold the integrity of Biovail in other nations
diligently.


 


15.          STANDARDS OF BUSINESS CONDUCT


 


A.            Initial
Distribution


 


i.              Employees,
officers and directors designated to receive these Standards will receive their
copies immediately alter publication.


 


ii.             Future
employees, officers and directors designated to receive these Standards will
receive their copies at the time they are hired.


 


B.            Initial
Verification


 


Upon receiving their copy
of the Standards, employees, officers and directors current and future will:


 


i.              Become
thoroughly familiar with the Standards.


 


ii.             Resolve
any doubts or questions about the Standards with their supervisors.


 


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iii.            Inform
their supervisors of any existing holdings or activities that might be, or
appear to be, inconsistent with, or in violation of, the Standards.


 


iv.            Prepare
written disclosures of such information, if requested, by supervisors.


 


v.             Take
steps to correct existing situations and bring holdings and activities into
full compliance with the Standards. Such steps will be approved in writing by
supervisors and will be based on the written disclosure submitted by employees,
officers or directors.


 


vi.            Sign
the verification and return it to their supervisors who will make it part of
employee’s permanent corporate records.


 


C.            Maintaining
Compliance


 


i.              Employees,
officers and directors have the responsibility to maintain their understanding
of the Standards of Business Conduct and for following them.


 


ii.             Supervisors
have the responsibility to maintain an awareness on the part of their
employees, officers and directors of the importance of their adhering to the
Standards of Business Conduct and for reporting deviations to Management.


 


iii.            As
requested by the Board of Directors or senior management, employees, officers
and directors will be asked to re-verify their understanding of the Standards
of Business Conduct and their compliance with them every year as a part of
Biovail’s annual reporting.


 


iv.            Employees,
officers and directors must inform their supervisors of any changes in their
holdings or activities that might be, or appear to be in non-compliance with
the Standards of Business Conduct.


 


v.             Employees,
officers and directors must prepare written disclosure of such information, if
requested, by supervisors.


 


vi.            Employees,
officers and directors must take steps to correct any such changes, if
necessary, to bring holdings and activities into full compliance. Such steps
will be approved in writing by supervisors and Management and will be based on
the written disclosures submitted by employees, officers and directors.


 


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D.            Audits
of Compliance


 


Regular audits of Biovail
will include procedures to test compliance with the Standards of Business
Conduct.


 


16.          VIOLATIONS OF STANDARDS


 


Employees, officers and
directors must immediately report any violations of the Standards or any
violation of any applicable law, rule or regulation. Failure to do so can
have serious consequences for the employees, officers or directors and for
Biovail.


 


Employees, officers and
directors, should report violations to their supervisors and/or to the Human
Resources department and to the SLO or to any secure reporting hotline the
company may have contracted with. When in doubt, employees should talk to their
supervisors or other appropriate personnel to determine the best course of
action in a particular situation.


 


Supervisors and the Human
Resources group have the responsibility to promptly and thoroughly investigate
all reports, and to report violations to the SLO.


 


After a violation is
investigated, appropriate action will be taken promptly. Management has the
right to determine the appropriate disciplinary action for a violation up to
and including termination of employment. All proposed disciplinary action is
subject to review by senior Management, Human Resources and the SLO.


 


Employees, officers and
directors should be aware that, in addition to any disciplinary action taken by
Biovail, violations of certain Standards may require restitution and may lead
to civil or criminal action against individual employees, officers and
directors and any corporation involved.


 


Supervisors have the
responsibility of taking remedial steps to correct any operating procedures
that may contribute to violations of Standards.


 


Retaliation in any form
against an individual who reports a violation of these Standards of Business
Conduct or of any law, rule or regulation in good faith, or who assists in
the investigation of a reported violation, is itself a serious violation of
this policy. Acts of retaliation will be disciplined appropriately and should
be reported immediately to your supervisor or Human Resources.


 


17.          CONTINUANCE OF EXISTING PERSONNEL
POLICIES, RULES AND PERFORMANCE STANDARDS


 


Biovail has codified
numerous personnel policies, rules and standards of employee performance,
which continue in force. These Standards of Business Conduct are intended to
supplement and amplify those established personnel policies, rules and
standards.


 


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It continues to be the
responsibility of all employees to comply with all such policies, rules and
performance standards. Additionally, all members of management are to continue
making certain that employees reporting to them are made aware of established
policies, rules and performance standards and comply with them.


 


18.          AMENDMENT, MODIFICATION AND WAIVER


 


Biovail will periodically
review these Standards of Business Conduct. These Standards may be amended,
modified or waived by the Board of Directors and waivers may also be granted by
the Nominating & Governance Committee, subject to the disclosure and
other provisions of the Securities Exchange Act of 1934, and the rules there
under and the applicable rules of the Toronto Stock Exchange/New York
Stock Exchange. Employees, officers and directors will be fully informed of any
revisions to the Standards of Business Conduct.


 


Any waiver of these
Standards for any employee other than a director or an executive officer, may
only be made by the Executive Chairman or the CEO. Any waiver of these
Standards for director or an executive officer may he made only the Board of
Directors or the Compensation, Nominating and Corporate Governance Committee
and will be promptly disclosed to Biovail’s stockholders.


 


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VERIFICATION
AND RECEIPT OF UNDERSTANDING


 


I have received a copy of
Standards of Business Conduct for BIOVAIL CORPORATION and its subsidiaries,
divisions and affiliates. I understand how the Standards apply to me. I
acknowledge that my receiving the Standards obligates me to follow them and I
agree to abide by their conditions.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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Employee’s Copy


 


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VERIFICATION
AND RECEIPT OF UNDERSTANDING


 


I have received a copy of
Standards of Business Conduct for BIOVAIL CORPORATION and its subsidiaries,
divisions and affiliates. I understand how the Standards apply to me. I acknowledge
that my receiving the Standards obligates me to follow them and I agree to
abide by their conditions.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  



 


 


HR File Copy


 


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