Exhibit
10.33


 


UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK


 




	
  IN
  RE BIOVAIL CORPORATION

  SECURITIES LITIGATION

  	
   

  	
  Master
  File No. 03-CV-8917 (GEL)

  






 


STIPULATION AND AGREEMENT OF SETTLEMENT


 


This Stipulation and Agreement of Settlement (the “Stipulation”) is
entered into in the above-captioned action (the “Action”) by and among Lead
Plaintiffs Ontario Teachers’ Pension Plan Board and Local 282 Welfare Trust
Fund (“Lead Plaintiffs”) on behalf of themselves and the other members of the Class (as
hereinafter defined) and Defendants Biovail Corporation (“Biovail”), and
individual defendants Eugene N. Melnyk, Brian H. Crombie, John R. Miszuk,
Kenneth Howling, and Rolf Reininghaus (the “Individual Defendants”) (Biovail
and the Individual Defendants are collectively referred to hereinafter as the “Defendants”),
by and through their undersigned respective counsel, subject to approval of the
United States District Court for the Southern District of New York pursuant to Rule 23(e) of
the Federal Rules of Civil Procedure.


 


WHEREAS:


 


A.            Beginning on or
about November 12, 2003, thirteen class action complaints were filed in
the United States District Court for the Southern District of New York against
certain of the Defendants.  The actions
were styled Hays v. Biovail Corp., et al.,
Civil Action No. 03-8917 (RO); Chrapko
v. Biovail Corp et al., Civil Action No. 03-8979 (RO); Felgoise v. Biovail Corp. et al., Civil
Action No. 03-09002 (unassigned); Newby
v. Biovail Corp. et al., Civil Action No. 03-9011 (unassigned);
Welsh v. Biovail Corp. et al.,
Civil Action No. 03-9293 (unassigned); Sobel
v. Biovail Corp. et al., Civil Action No. 03-9480 (unassigned);
Shi v. Biovail Corp. et al., 


 

















 


Civil Action No. 03-9590 (RO); Abrahamson v. Biovail Corp. et al., Civil Action No. 03-9616
(JFK); Gokhale v. Biovail Corp. et al., Civil
Action No. 03-9701 (GBD); Pierce v. Biovail et al.,
Civil Action No. 03-9914 (RO); Emery v. Biovail Corp. et
al., Civil Action No. 03-10058 (unassigned); Wojciechowski v. Biovail Corp. et al., Civil Action No. 03-10221
(HB); Rand v. Biovail Corp. et al., Civil
Action No. 04-00188 (unassigned). 
By Order Consolidating All Related Actions, Appointing Co-Lead
Plaintiffs and Approving Their Selection of Co-Lead Counsel entered March 9,
2004 (“March 9, 2004 Order”), these actions, together with any
subsequently filed or transferred actions on behalf of investors who purchased
Biovail securities related to the claims asserted in these actions were
consolidated for all purposes.  The March 9,
2004 Order also appointed Ontario Teachers’ Pension Plan Board and Local 282
Welfare Trust Fund as Co-Lead Plaintiffs and approved their selection of
co-lead counsel for the Action;(1)


 


B.            On June 18,
2004, Lead Plaintiffs filed the Consolidated Amended Class Action Complaint
asserting claims under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (the “First
Amended Complaint”).  The First Amended
Complaint generally alleges violations of the federal securities laws through,
among other things, misstatements and omissions by Defendants in Communications
(as defined below) regarding two drugs that would be launched in 2003, Cardizem
LA and Wellbutrin XL, and the projections that they gave Wall Street which were
based on the successful launches of those drugs.  The First Amended Complaint sought to proceed
on behalf of a class consisting of all persons who purchased Biovail publicly
traded common stock during the period February 7, 2003 through and
including March 2, 2004, excluding certain named persons and entities;


 






(1) 
The March 9, 2004 Order also appointed a third lead plaintiff whose motion
to voluntarily withdraw as such was granted by Order entered on April 7,
2005.


 

















 


C.            On September 28,
2004 Defendants moved to dismiss the First Amended Complaint.  The motion was denied by Order entered December 22,
2004.  Defendants answered the First
Amended Complaint on February 4, 2005;


 


D.            On February 28,
2006, Lead Plaintiffs’ filed their motion (i) to certify the Action as a
class action, (ii) to certify Lead Plaintiffs as well as Plaintiff City of
Dearborn Heights Act 345 Pension System as Class Representatives, and (iii) to
certify Co-Lead Counsel as Class Counsel. 
The motion was fully briefed and argued to the Court and was sub judice at the time the agreement in
principle to settle the Action was reached;


 


E.             On August 25,
2006, Lead Plaintiffs filed the Consolidated Second Amended Class Action
Complaint (the “Complaint”) which generally alleges, among other things, that,
in Communications in connection with the launching and marketing of Cardizem LA
and reporting to the public about the launch of Cardizem LA, Biovail, with the
participation of the Individual Defendants issued materially false and
misleading press releases and other statements, including financial statements
filed with the SEC, regarding Cardizem LA and Biovail’s financial condition
during the Class Period in a scheme to artificially inflate the value of
Biovail’s common stock;


 


F.             The Complaint
further alleges that Lead Plaintiffs and the other members of the Class purchased
the common stock of Biovail during the Class Period at prices artificially
inflated as a result of the Defendants’ dissemination in Communications of
materially false and misleading statements regarding Biovail in violation of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5
promulgated thereunder;


 


G.            On October 20,
2006, Defendants answered the Complaint;


 

















 


H.            The Defendants deny
any wrongdoing whatsoever and this Stipulation shall in no event be construed
or deemed to be evidence of or an admission or concession on the part of any
Defendant with respect to any claim or of any fault or liability or wrongdoing
or damage whatsoever, or any infirmity in the defenses that the Defendants have
asserted.  The parties to this
Stipulation recognize, however, that the litigation has been filed by
Plaintiffs and defended by Defendants in good faith and in compliance with Federal
Rule of Civil Procedure 11, that the litigation is being voluntarily
settled after advice of counsel, and that the terms of the settlement are fair,
adequate and reasonable.  This
Stipulation shall not be construed or deemed to be a concession by any
Plaintiff of any infirmity in the claims asserted in the Action;


 


I.              Plaintiffs’
Co-Lead Counsel have conducted an extensive investigation and thorough
discovery relating to the claims and the underlying events and transactions
alleged in the Complaint, including the review of millions of pages of
documents produced by Defendants and third parties and the deposing of
approximately fifteen (15) fact witnesses as of the date the agreement in
principle to settle was reached. 
Plaintiffs’ Co-Lead Counsel have analyzed the evidence adduced during
pretrial discovery and have researched the applicable law with respect to the
claims of Lead Plaintiffs and the other members of the Class against the
Defendants and the potential defenses thereto;


 


J.             In the fall of
2005, the parties mediated before former Judge Nicholas Politan but were unable
to reach an agreement to resolve the Action. 
In December 2007, with the benefit of the development of the Action
and the extensive discovery had since the earlier mediation and with the
assistance of Gary V. McGowan, Esq. acting as a mediator,  Lead Plaintiffs, by their counsel,
conducted discussions and arm’s-length negotiations with counsel for Defendants
with 


 

















 


respect to a compromise and settlement of the
Action with a view to settling the issues in dispute and achieving the best
relief possible consistent with the interests of the Class; and


 


K.            Based upon their
investigation and pretrial discovery as set forth above, Lead Plaintiffs and
Plaintiffs’ Co-Lead Counsel have concluded that the terms and conditions of this
Stipulation are fair, reasonable and adequate to Lead Plaintiffs and the other
members of the Class, and in their best interests, and have agreed to settle
the claims raised in the Action pursuant to the terms and provisions of this
Stipulation, after considering (i) the cash and other benefits that Lead
Plaintiffs and the other members of the Class will receive from settlement
of the Action, (ii) the attendant risks of litigation, including in
particular the risks of establishing recoverable damages, and (iii) the
desirability of permitting the Settlement to be consummated as provided by the
terms of this Stipulation.


 


NOW THEREFORE, without any admission or concession on the part of Lead
Plaintiffs of any lack of merit of the Action whatsoever, and without any
admission or concession of any liability or wrongdoing or lack of merit in the
defenses whatsoever by Defendants, it is hereby STIPULATED AND AGREED, by and
among the parties to this Stipulation, through their respective attorneys,
subject to approval of the Court pursuant to Rule 23(e) of the
Federal Rules of Civil Procedure, in consideration of the benefits flowing
to the parties hereto from the Settlement, that all Settled Claims (as defined
below) as against the Released Parties (as defined below) and all Settled
Defendants’ Claims (as defined below) shall be compromised, settled, released
and dismissed with prejudice, upon and subject to the following terms and
conditions:


 

















 


CERTAIN
DEFINITIONS


 


1.             As
used in this Stipulation, the following terms shall have the following
meanings:


 


(a)           “Authorized
Claimant” means a Class Member who submits a timely and valid Proof of
Claim form to the Claims Administrator.


 


(b)           “Claims
Administrator” means the firm of Complete Claim Solutions, LLC, which shall
administer the Settlement.


 


(c)           “Class”
means, for the purposes of this Settlement only, all persons and entities who
purchased the common stock of Biovail on the New York Stock Exchange or other
U.S. stock exchanges or the Toronto Stock Exchange or other Canadian stock
exchanges during the period from February 7, 2003, through and including March 2,
2004.  Excluded from the Class are
Biovail, its subsidiaries, affiliates, predecessor and successor entities;
Ernst & Young LLP [U.S. and Canada] and any of their affiliates,
subsidiaries, and predecessor and successor entities; Ernst & Young
LLP [U.S. and Canada] partners and partners of any of their affiliates,
subsidiaries, and predecessor and successor entities; individual defendants
Eugene N. Melnyk, Brian H. Crombie, John R. Miszuk, Kenneth Howling, and Rolf
Reininghaus; members of their immediate families; any entity in which any
defendant has a controlling interest; any person who was an officer or director
of Biovail during the Class Period; and the legal representatives, heirs,
successors or assigns of any of the foregoing excluded persons or
entities.  Also excluded from the Class are
any putative Class Members who exclude themselves by filing a request for
exclusion in accordance with the requirements set forth in the Notice.  “Class Member” means a member of the
Class.


 

















 


(d)           “Class Period”
means, for the purposes of this Settlement only, the period between and
including February 7, 2003, and March 2, 2004.


 


(e)           “Communications”
means communications made by Biovail, and the Individual Defendants (as defined
below) in their capacities as officers and/or employees and/or directors of
Biovail, in communicating financial and business information to shareholders
and the general public in the ordinary course of Biovail’s business.


 


(f)            “Court”
means the United States District Court for the Southern District of New York.


 


(g)           “Defendants”
means Biovail and the Individual Defendants.


 


(h)           “Defendants’
Counsel”  means the law firms of
Howrey LLP and Curtis, Mallet-Prevost, Colt & Mosle LLP for Defendant
Biovail and for the Individual Defendants.


 


(i)            “Effective
Date” means the date upon which the Settlement contemplated by this Stipulation
shall become effective, as set forth in ¶ 23 below.


 


(j)            “Escrow
Account” means one or more interest-bearing accounts created, established,
designated, controlled and maintained by Bernstein Litowitz Berger &
Grossmann LLP, acting as agent for the Class, wherein the Settlement Amount (as
specified in ¶ 4 herein) shall be deposited by or at its direction on behalf of
the Class and held in escrow.


 


(k)           “Escrow
Agent” means Valley National Bank, or such other financial institution(s) as
Plaintiffs’ Co-Lead Counsel shall select, which shall be responsible for
overseeing, safeguarding and distributing the Escrow Account, acting as agent
for the Class.


 


(l)            “Final,”
with respect to the Judgment (as defined herein), means: (i) if no appeal
is filed, the expiration date of the time for filing or noticing of any appeal
from the Court’s Judgment approving the Settlement substantially in the form of
Exhibit B hereto, i.e., 


 

















 


thirty (30) days after entry of the Judgment;
or (ii) if there is an appeal from the Judgment, the date of final
dismissal of any appeal from the Judgment, or the final dismissal of any
proceeding on certiorari to review the Judgment; or (iii) the date of
final affirmance on an appeal of the Judgment, the expiration of the time to
file a petition for a writ of certiorari, or the denial of a writ of certiorari
to review the Judgment, and, if certiorari is granted, the date of final
affirmance of the Judgment following review pursuant to that grant.  Any proceeding or order, or any appeal or
petition for a writ of certiorari pertaining solely to any plan of allocation
and/or application for attorneys’ fees, costs or expenses, shall not in any way
delay or preclude the Judgment from becoming Final.


 


(m)          “Gross
Settlement Fund” means the Settlement Amount plus any income or interest earned
thereon, while held by the Escrow Agent.


 


(n)           “Individual
Defendants” means Eugene N. Melnyk, Brian H. Crombie, John R. Miszuk, Kenneth
Howling, and Rolf Reininghaus.


 


(o)           “Judgment”
means the proposed judgment to be entered approving the Settlement
substantially in the form attached hereto as Exhibit B.


 


(p)           “Net
Settlement Fund” has the meaning defined in ¶ 5 herein.


 


(q)           “Notice”
means the Notice of Pendency of Class Action and Proposed Settlement,
Motion for Attorneys’ Fees and Settlement Fairness Hearing, which is to be sent
to members of the Class substantially in the form attached hereto as Exhibit 1
to Exhibit A.


 


(r)            “Order
for Notice and Hearing” means the proposed order preliminarily approving the
Settlement and directing notice thereof to the Class substantially in the
form attached hereto as Exhibit A.


 

















 


(s)           “Plaintiffs’
Counsel” means Plaintiffs’ Co-Lead Counsel and all other counsel representing Class Member
Plaintiffs in the Action.


 


(t)            “Plaintiffs’
Co-Lead Counsel” means the law firms of Bernstein Litowitz Berger &
Grossmann LLP (“Bernstein Litowitz”) and Milberg LLP (“Milberg”).


 


(u)           “Proof
of Claim” means the proposed proof of claim and release to be executed by Class Members
substantially in the form attached hereto as Exhibit 2 to Exhibit A.


 


(v)           “Publication
Notice” means the Summary Notice of Pendency of Class Action, Proposed
Settlement and Settlement Hearing for publication substantially in the form
attached as Exhibit 3 to Exhibit A.


 


(w)          “Released
Parties” means Biovail and the Individual Defendants, their past or present
subsidiaries, parents, successors and predecessors, officers, directors,
agents, employees, attorneys, insurers, advisors, and investment advisors, and
any person, firm, trust, corporation, officer, director or other individual or
entity in which any Defendant has a controlling interest or which is related to
or affiliated with any of the Defendants, and the legal representatives, heirs,
successors in interest or assigns of any of the Defendants.


 


(x)            “Settled
Claims” means any and all claims, debts, demands, rights or causes of action or
liabilities whatsoever (including, but not limited to, any claims for damages,
interest, attorneys’ fees, expert or consulting fees, and any other costs,
expenses or liability whatsoever), whether based on federal, state, local,
statutory or common law or any other law, rule or regulation, whether
fixed or contingent, accrued or un-accrued, liquidated or un-liquidated, at law
or in equity, matured or un-matured, whether class or individual in nature,
including both known claims and Unknown Claims (as defined herein), (i) that
have been asserted in this Action by the Class Members or any of them
against any of the Released Parties,


 

















 


or
(ii) that could have been asserted in any forum by the Class Members
or any of them on behalf of the Class against any of the Released Parties
which arise out of, are related to, or are based upon the allegations,
transactions, facts, matters or occurrences, representations or omissions
involved, set forth, or referred to in the Complaint and which relate to the
purchase, sale or ownership of the securities of Biovail during the Class Period.


 


(y)           “Settled
Defendants’ Claims” means any and all claims, rights or causes of action or
liabilities whatsoever, whether based on federal, state, local, statutory or
common law or any other law, rule or regulation, including both known
claims and Unknown Claims (as defined herein), that have been or could have
been asserted in the Action or any forum by any or all of the Released Parties
against any of the Lead Plaintiffs, any of the other named plaintiffs in these
consolidated actions or any of their attorneys, which arise out of or relate in
any way to the institution, prosecution, or settlement of the Action (except
for claims that arise out of, or are pursuant to, the provisions of this
Settlement).


 


(z)            “Settlement”
means the settlement contemplated by this Stipulation.


 


(aa)         “Settlement
Amount” means the amount specified in ¶ 4 herein.


 


(bb)         “Taxes”
means collectively (i) any and all taxes, duties and similar charges
(including any estimated taxes, withholdings, interest or penalties and
interest thereon) arising in any jurisdiction with respect to the income or
gains earned by or in respect of the Gross Settlement Fund, including, without
limitation, any taxes or tax detriments that may be imposed upon the Defendants
or their counsel with respect to any income earned by the Gross Settlement Fund
for any period during which the Gross Settlement Fund may be finally determined
to not qualify as a Qualified Settlement Fund (within the meaning contemplated
in paragraph 5(b) herein) for federal or state income tax purposes or any
distribution of any portion of the Gross


 














 


Settlement Fund to Authorized Claimants and other persons entitled
hereto pursuant to this Stipulation and (ii) expenses and costs incurred
in connection with the taxation of the Gross Settlement Fund (including,
without limitation, expenses of tax attorneys and accountants).


 


(cc)         “Unknown
Claims” means any and all Settled Claims which any Lead Plaintiff or other Class Member
does not know or suspect to exist in his, her or its favor at the time of the
release of the Released Parties, and any Settled Defendants’ Claims which any
Defendant does not know or suspect to exist in his or its favor, which if known
by him or it might have affected his or its decision(s) with respect to
the Settlement.  With respect to any and
all Settled Claims and Settled Defendants’ Claims, the parties stipulate and
agree that upon the Effective Date, the Lead Plaintiffs and the Defendants
shall expressly waive, and each other Class Member shall be deemed to have
waived, and by operation of the Judgment shall have expressly waived, any and
all provisions, rights and benefits conferred by any law of any state or
territory of the United States, or principle of common law, which is similar,
comparable, or equivalent to Cal. Civ. Code § 1542, which provides:


 


A
general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release,
which if known by him or her must have materially affected his or her
settlement with the debtor.


 


Lead Plaintiffs and Defendants acknowledge, and all
other Class Members by operation of law shall be deemed to have
acknowledged, that the inclusion of “Unknown Claims” in the definition of
Settled Claims and Settled Defendants’ Claims was separately bargained for and
was a key element of the Settlement.


 

















 


SCOPE AND EFFECT OF
SETTLEMENT


 


2.             The
obligations incurred pursuant to this Stipulation shall be in full and final
disposition of the Action and any and all Settled Claims as against all
Released Parties and any and all Settled Defendants’ Claims.


 


3.             (a)           Upon the Effective Date of this
Settlement, Lead Plaintiffs and the other members of the Class on behalf
of themselves, their heirs, executors, administrators, predecessors, successors
and assigns, shall, with respect to each and every Settled Claim, release and
forever discharge, and shall forever be enjoined from prosecuting, any Settled
Claims against any of the Released Parties.


 


(b)           Upon
the Effective Date of this Settlement, each of the Defendants, on behalf of
themselves, their heirs, executors, administrators, predecessors, successors
and assigns, and the other Released Parties, shall release and forever
discharge each and every of the Settled Defendants’ Claims, and shall forever
be enjoined from prosecuting the Settled Defendants’ Claims against any of the
Lead Plaintiffs, any of the other named plaintiffs in these consolidated
actions and any of their attorneys.


 


(c)           Notwithstanding
the provisions of ¶¶ 3(a) and (b) herein, in the event that any of
the Released Parties asserts against either or both of the Lead Plaintiffs, any
of the other named plaintiffs in these consolidated actions or any of their
counsel, any claim that is a Settled Defendants’ Claim, then Lead Plaintiff(s),
such other named plaintiff(s) or counsel shall be entitled to use and
assert such factual matters included within the Settled Claims only against
such Released Party in defense of such claim but not for the purposes of
affirmatively asserting any claim against any Released Party.


 

















 


THE SETTLEMENT CONSIDERATION


 


4.             In
consideration for the releases and discharges provided for in ¶ 3:


 


(a)          Within thirty (30) days of Preliminary Approval of the Settlement, Biovail shall pay and shall cause the insurers to pay their agreed
upon portions of the Settlement Amount, i.e., One Hundred Thirty-Eight
Million Dollars ($138,000,000.00) in cash, either by wire transfer or check, to
the Escrow Agent, as agent for the benefit of Lead Plaintiffs and the other
members of the Class.


 


(b)         In
addition, within six months after the Effective Date, Defendant Biovail will
adopt the corporate governance enhancements described in Section A of Exhibit C
to this Stipulation, and Defendant Biovail has agreed to maintain the corporate
governance enhancements described in Section B of Exhibit C.


 


5.             (a)           The Gross Settlement Fund, net of any
Taxes, shall be used to pay (i) the Notice and Administration Costs
referred to in ¶ 7 herein, (ii) the attorneys’ fee and expense award
referred to in ¶ 8 herein, and (iii) the remaining administration
expenses referred to in ¶ 9 herein. 
Additionally, Taxes shall be paid out of the Gross Settlement Fund,
shall be considered to be a cost of administration of the Settlement and shall
be timely paid by the Escrow Agent without prior Order of the Court.


 


(b)         The balance of the
Gross Settlement Fund after the above payments shall be the “Net Settlement
Fund.”  The Net Settlement Fund shall be
distributed to the Authorized Claimants as provided in ¶¶ 10-12 herein,
subject to the obligation, to the extent required by law, to withhold from any
distributions to Authorized Claimants and other persons entitled thereto
pursuant to this Stipulation any funds
necessary to pay Taxes including the establishment of adequate reserves for Taxes as well as any amount
that may be required to be withheld under


 

















 


United States Treasury Reg. 1.468B-(l)(2) or
otherwise under applicable law in respect of such distributions. Further, the
Released Parties, Lead Plaintiffs  and
their respective counsel shall be indemnified and held harmless by the Escrow
Account up to the amount in the Escrow Account for Taxes (including, without
limitation, Taxes payable by reason of any such indemnification payments).  Any sums required to be held in escrow
hereunder shall be held by Bernstein Litowitz, acting as agent for the
Class.  All funds so held in the Escrow
Account shall be deemed to be in the custody of the Court for the benefit of
the Class and shall remain subject to the jurisdiction of the Court until
such time as the funds shall be distributed pursuant to this Stipulation and/or
further order of the Court or the Settlement is terminated as provided
herein.  The Escrow Agent shall invest
any funds held in escrow in short-term United States Agency or Treasury
Securities (or a mutual fund invested solely in such instruments), pursuant to
instructions from Bernstein Litowitz, acting as agent for the Class, and shall
collect and reinvest all interest accrued thereon.  The parties hereto agree that the Gross
Settlement Fund is intended to be a Qualified Settlement Fund within the
meaning of United States Treasury Regulation § 1.468B-1 and that
Plaintiffs’ Co-Lead Counsel, as administrators of the Gross Settlement Fund
within the meaning of United States Treasury Regulation §1.468B-2(k)(3), shall
be responsible for filing tax returns for the Gross Settlement Fund and paying
from the Gross Settlement Fund any Taxes owed with respect to the Gross
Settlement Fund.  The parties hereto
agree that the Gross Settlement Fund shall be treated as a Qualified Settlement
Fund from the earliest date possible, and agree to any relation-back election
required to treat the Gross Settlement Fund as a Qualified Settlement Fund from
the earliest date possible.   Counsel for
Defendants agree to provide promptly to the Escrow Agent the statement
described in United States Treasury Regulation § 1.468B-3(e).


 

















 


ADMINISTRATION


 


6.             The
Claims Administrator shall administer the Settlement for the benefit of the
Class, subject to the jurisdiction of the Court.  Except as stated in ¶ 14 herein,
Defendants shall have no responsibility for the administration of the
Settlement and shall have no liability to the Class in connection with
such administration.  In particular, the
Defendants, Released Parties and their respective counsel have no
responsibility for or liability whatsoever with respect to (a) acts,
omissions or determinations of Plaintiffs’ Co-Lead Counsel, the Claims
Administrator or the Escrow Agent in connection with the administration of the
Gross Settlement Fund or otherwise; (b) the management, investment or
distribution of the Gross Settlement Fund; (c) losses suffered by or
fluctuations in the value of the Gross Settlement Fund; (d) payment or
withholding of any Taxes, expenses or costs incurred in connection with the
taxation of the Gross Settlement Fund or the filing of any related returns; (e) the
Plan of Allocation; or (f) the determination, administration, calculation
or payment of any claims asserted against the Gross Settlement Fund (with the
exception of providing the information referenced in the following
sentence).  Defendants’ Counsel shall
cooperate in the administration of the Settlement to the extent reasonably
necessary to effectuate its terms, including providing without charge all
information from Biovail’s transfer records concerning the identity of Class Members
and their transactions.


 


7.             Plaintiffs’
Co-Lead Counsel may pay up to $500,000 from the Settlement Amount, without
further order of the Court, for the reasonable costs and expenses associated
with identifying members of the Class and effecting mail Notice and
Publication Notice to the Class, and the administration of the Settlement,
including, but not limited to, the actual costs of publication, printing and
mailing the Notice, reimbursements to nominee owners for forwarding notice to
their beneficial owners, and the administrative expenses incurred and fees
charged by 


 

















 


the Claims Administrator in connection with providing notice and
processing the submitted claims.


 


ATTORNEYS’
FEES AND EXPENSES


 


8.             As
part of their motion for final approval of the Settlement, Plaintiffs’ Co-Lead
Counsel will apply to the Court for an award from the Gross Settlement Fund of
attorneys’ fees and reimbursement of expenses, including the fees of any experts
or consultants incurred in connection with prosecuting the Action.  Such amounts as are awarded by the Court
shall be payable from the Gross Settlement Fund to Plaintiffs’ Co-Lead Counsel
immediately upon award, notwithstanding the existence of any timely filed
objections thereto, or potential for appeal therefrom, collateral attack on the
Settlement or any part thereof, subject to Plaintiffs’ Co-Lead Counsel’s joint
and several liability and obligation to make appropriate refunds or repayments
to the Gross Settlement Fund plus accrued interest at the same net rate as is
earned by the Gross Settlement Fund, if and when, as a result of any appeal
and/or further proceedings on remand, successful collateral attack, or for any
other reason, the Settlement is terminated or the fee or cost award is reduced
or reversed.  Such refunds or repayments
will be made within thirty (30) days of any appeal and/or further proceedings
on remand, or successful collateral attack, pursuant to which the Settlement is
terminated or the fee or cost award is reduced or reversed.  Plaintiffs’ Co-Lead Counsel shall allocate
the attorneys’ fees amongst Plaintiffs’ Counsel in a manner in which they in
good faith believe reflects the contributions of such counsel to the
prosecution and settlement of the Action with Defendants.  The Released Parties have no liability or
obligation to Lead Plaintiffs, the other members of the Class, or Plaintiffs’
Counsel, with respect to any attorneys’ fees, costs or expenses, other than the
obligation to pay 


 

















 


or cause to be paid the Settlement Amount.  It is not a condition of this Settlement that
any particular attorneys’ fees, costs or expenses be awarded by the Court.


 


DISTRIBUTION TO AUTHORIZED
CLAIMANTS


 


9.             Plaintiffs’
Co-Lead Counsel will apply to the Court, on notice to Defendants’ Counsel, for
an order (the “Class Distribution Order”) approving the Claims
Administrator’s administrative determinations concerning the acceptance and
rejection of the claims submitted herein and approving any fees and expenses
not previously applied for, including the fees and expenses of the Claims
Administrator, and, if the Effective Date has occurred, directing payment of
the Net Settlement Fund to Authorized Claimants.


 


10.           The
Claims Administrator shall determine each Authorized Claimant’s pro rata share of the Net Settlement Fund based upon each
Authorized Claimant’s Recognized Claim (as defined in the Plan of Allocation
described in the Notice annexed hereto as Exhibit 1 to Exhibit A, or
in such other Plan of Allocation as the Court approves).


 


11.           The
Plan of Allocation proposed in the Notice is not a necessary term of this
Stipulation and it is not a condition of this Stipulation that any particular
Plan of Allocation be approved.


 


12.           Each
Authorized Claimant shall be allocated a pro rata share
of the Net Settlement Fund based on his, her or its Recognized Claim compared
to the total Recognized Claims of all accepted claimants.  This is not a claims-made settlement.  The entire Net Settlement Fund shall be
distributed to the Authorized Claimants. 
The Defendants shall not be entitled to get back any of the Gross
Settlement Fund and, prior to the Settlement becoming Final, shall be limited
to the termination provisions outlined in ¶ 25.  The Defendants shall have no involvement in
reviewing or challenging claims.


 

















 


ADMINISTRATION OF THE
SETTLEMENT


 


13.           Any
member of the Class who does not submit a valid Proof of Claim will not be
entitled to receive any of the proceeds from the Net Settlement Fund but will
otherwise be bound by all of the terms of this Stipulation and the Settlement,
including the terms of the Judgment to be entered in the Action and the
releases provided for herein, and will be barred from bringing any action
against the Released Parties concerning the Settled Claims.


 


14.           The
Claims Administrator shall process the Proofs of Claim and, after entry of the Class Distribution
Order, distribute the Net Settlement Fund to the Authorized Claimants.  Except for their obligation to pay the
Settlement Amount as set forth in ¶ 4(a), and to cooperate in the production of
information with respect to the identification of Class Members from
Biovail’s shareholder transfer records, as provided herein, Defendants and
their insurers shall have no liability, obligation or responsibility for the
administration or disbursement of the Gross or Net Settlement Funds pursuant to
the Stipulation.  Plaintiffs’ Co-Lead
Counsel shall have the right, but not the obligation, to advise the Claims
Administrator to waive what Plaintiffs’ Co-Lead Counsel deem to be formal or
technical defects in any Proofs of Claim submitted in the interests of
achieving substantial justice.


 


15.           For
purposes of determining the extent, if any, to which a Class Member shall
be entitled to be treated as an “Authorized Claimant”, the following conditions
shall apply:


 


(a)           Each
Class Member shall be required to submit a Proof of Claim (see attached Exhibit 2 to Exhibit A), supported by
such documents as are designated therein, including proof of the transactions
claimed and the losses incurred thereon, or such other documents or proof as
Plaintiffs’ Co-Lead Counsel, in their discretion may deem acceptable;


 

















 


(b)           All
Proofs of Claim must be submitted by the date specified in the Notice, unless
such period is extended by Order of the Court. 
Any Class Member who fails to submit a Proof of Claim by such date
shall be forever barred from receiving any payment pursuant to this Stipulation
(unless, by Order of the Court, a later submitted Proof of Claim by such Class Member
is approved), but shall in all other respects be bound by all of the terms of
this Stipulation and the Settlement, including the terms of the Judgment to be
entered in the Action and the releases provided for herein, and will be barred
from bringing any action against the Released Parties concerning the Settled
Claims.  Provided that it is received
before the motion for the Class Distribution Order is filed, a Proof of
Claim shall be deemed to have been submitted when posted, if received with a
postmark indicated on the envelope and if mailed by first-class mail and
addressed in accordance with the instructions thereon.  In all other cases, the Proof of Claim shall
be deemed to have been submitted when actually received by the Claims Administrator;


 


(c)           Each
Proof of Claim shall be submitted to and reviewed by the Claims Administrator,
who shall determine in accordance with this Stipulation and the approved Plan
of Allocation the extent, if any, to which each claim shall be allowed, subject
to review by the Court pursuant to subparagraph (e) below;


 


(d)           Proofs
of Claim that do not meet the submission requirements may be rejected.  Prior to rejection of a Proof of Claim, the
Claims Administrator shall communicate with the claimant in order to attempt to
remedy the curable deficiencies in the Proof of Claim submitted.  The Claims Administrator shall notify, in a
timely fashion and in writing, each claimant whose Proof of Claim it proposes
to reject in whole or in part, setting forth the reasons therefor, and shall
indicate in such notice that the claimant whose claim is to be rejected has the



 

















 


right to a review by the Court if the claimant so desires and complies
with the requirements of subparagraph (e) below;


 


(e)           If
any claimant whose claim has been rejected in whole or in part desires to
contest such rejection, the claimant must, within twenty (20) days after the
date of mailing of the notice required in subparagraph (d) above, serve
upon the Claims Administrator a notice and statement of reasons indicating the
claimant’s grounds for contesting the rejection along with any supporting
documentation, and requesting a review thereof by the Court.  If a dispute concerning a claim cannot be
otherwise resolved, Plaintiffs’ Co-Lead Counsel shall thereafter present the
request for review to the Court; and


 


(f)            The
administrative determinations of the Claims Administrator accepting and
rejecting claims shall be presented to the Court, on notice to Defendants’
Counsel, for approval by the Court in the Class Distribution Order.


 


16.           Each
claimant shall be deemed to have submitted to the jurisdiction of the Court
with respect to the claimant’s claim, and the claim will be subject to
investigation and discovery under the Federal Rules of Civil Procedure,
provided that such investigation and discovery shall be limited to that
claimant’s status as a Class Member and the validity and amount of the
claimant’s claim.  No discovery shall be
allowed on the merits of the Action or Settlement in connection with processing
of the Proofs of Claim.


 


17.           Payment
pursuant to this Settlement shall be deemed final and conclusive against all Class Members.  All Class Members whose claims are not
approved by the Court shall be barred from participating in distributions from
the Net Settlement Fund, but otherwise shall be bound by all of the terms of
this Stipulation and the Settlement, including the terms of the


 














 


Judgment
to be entered in the Action and the releases provided for herein, and will be
barred from bringing any action against the Released Parties concerning the
Settled Claims.


 


18.           All
proceedings with respect to the administration, processing and determination of
claims described by ¶ 15 of this Stipulation and the determination of all
controversies relating thereto, including disputed questions of law and fact
with respect to the validity of claims, shall be subject to the jurisdiction of
the Court.


 


19.           The
Net Settlement Fund shall be distributed to Authorized Claimants by the Claims
Administrator after the Effective Date on notice to Defendants’ Counsel
pursuant to Order of the Court.


 


TERMS OF ORDER FOR
NOTICE AND HEARING


 


20.           Concurrently
with their application for preliminary Court approval of the Settlement
contemplated by this Stipulation, Plaintiffs’ Co-Lead Counsel and Defendants’
Counsel jointly shall apply to the Court for entry of an Order for Notice and
Hearing, substantially in the form annexed hereto as Exhibit A.


 


TERMS OF FINAL
JUDGMENT


 


21.           If
the Settlement contemplated by this Stipulation is approved by the Court,
counsel for the parties shall request that the Court enter a Judgment
substantially in the form annexed hereto as Exhibit B.


 


OPT-OUT TERMINATION RIGHT


 


22.           The
Defendants may terminate this Settlement if Class Members who in total
purchased in excess of ten percent (10%) of the shares of Biovail common stock
purchased during the Class Period exclude themselves from the Class.  In the event of a termination by the
Defendants, this Stipulation shall become null and void and of no further force
and effect and the provisions of ¶ 25 shall apply.  If the Defendants elect to terminate this
Settlement pursuant to 


 

















 


this
paragraph written notice of such termination must be provided to Plaintiffs’
Co-Lead Counsel on or before seven (7) calendar days prior to the
Settlement Fairness Hearing.  Plaintiffs’
Co-Lead Counsel shall have the right to communicate with Class Members
regarding their decisions to opt-out.  If
a sufficient number of Class Members withdraw their requests for exclusion
such that the total number of remaining shares requesting exclusion falls below
the ten percent (10%) threshold noted above, Plaintiffs’ Co-Lead Counsel shall
so advise Defendants’ Counsel and any notice by Defendants of termination of
the Settlement shall automatically and immediately become null and void.


 


EFFECTIVE DATE OF
SETTLEMENT, WAIVER OR TERMINATION


 


23.           The
“Effective Date” of Settlement shall be the date when all the following shall
have occurred:


 


(a)           approval
by the Court of the Settlement, following notice to the Class and a
hearing, as prescribed by Rule 23 of the Federal Rules of Civil
Procedure; and


 


(b)           entry
by the Court of a Judgment, substantially in the form set forth in Exhibit B
annexed hereto, and the expiration of any time for appeal or review of such
Judgment, or, if any appeal is filed and not dismissed, after such Judgment is
upheld on appeal in all material respects and is no longer subject to review
upon appeal or review by writ of certiorari, or, in the event that the Court
enters a judgment in a form other than that provided above (“Alternative
Judgment”) and none of the parties hereto elect to terminate this Settlement,
the date that such Alternative Judgment becomes final and no longer subject to
appeal or review.


 


24.           Defendants
or Lead Plaintiffs shall have the right to terminate the Settlement and thereby
this Stipulation by providing written notice of their election to do so (“Termination
Notice”) to all other parties hereto within thirty (30) days of:  (a) the Court’s declining to enter 


 

















 


the
Order for Notice and Hearing in any material respect; (b) the Court’s
refusal to approve this Settlement as set forth in this Stipulation or any
material part of it; (c) the Court’s declining to enter the Judgment in
any material respect; (d) the date upon which the Judgment is modified or
reversed in any material respect by the Court of Appeals or the Supreme Court;
or (e) the date upon which an Alternative Judgment is modified or reversed
in any material respect by the Court of Appeals or the Supreme Court.


 


25.           Except
as otherwise provided herein, in the event the Settlement is terminated, then
the parties to this Stipulation shall be restored to their respective status in
the Action as of December 7, 2007 and, except as otherwise expressly
provided, the parties shall proceed in all respects as if this Stipulation and
any related orders had not been entered. 
Furthermore, the Escrow Agent shall pay from the Escrow Account the sum
of (a) an amount equal to that portion of the Settlement Amount previously
paid by Biovail and the insurers to the Escrow Agent as agent for the Class;
and (b) an amount equal to any interest or other income earned thereon;
less the sum of (c) an amount equal to any Taxes paid or due with respect
to such income; and (d) an amount equal to costs of administration and
notice actually incurred and paid or payable from the Settlement Amount, to
Biovail or the insurers (as the case may be). 
For greater certainty, the amount to be paid to Biovail and each of the
insurers will be an amount equal to the sum of each payor’s pro-rata share of (a) and
(b) in the preceding sentence, less each payor’s pro-rata share of (c) in
the preceding sentence.  The amount in (d) shall
be treated as a defense cost to be deducted from the payment due to the insurer
then responsible for paying or advancing defense costs.  Such payments will be made within thirty (30)
days of termination.  It shall be
Defendants’ responsibility to timely notify the Escrow Agent what the pro-rata
share of each payor was and which insurer’s payment is to be reduced by the
amount in (d).


 

















 


NO ADMISSION OF
WRONGDOING


 


26.           This
Stipulation, whether or not consummated or terminated, and any proceedings
taken pursuant to it:


 


(a)           shall
not be offered or received against any of the Defendants as evidence of or
construed as or deemed to be evidence of any presumption, concession, or
admission by any of the Defendants with respect to the truth of any fact
alleged by any of the Plaintiffs or the validity of any claim that has been or
could have been asserted in the Action or in any litigation, or the deficiency
of any defense that has been or could have been asserted in the Action or in
any litigation, or of any liability, negligence, fault, or wrongdoing of any of
the Defendants;


 


(b)           shall
not be offered or received against any of the Defendants as evidence of a
presumption, concession or admission of any fault, misrepresentation or
omission with respect to any statement or written document approved or made by
any of the Defendants;


 


(c)           shall
not be offered or received against any of the Defendants as evidence of a
presumption, concession or admission with respect to any liability, negligence,
fault or wrongdoing, or in any way referred to for any other reason as against
any of the Defendants, in any other civil, criminal or administrative action or
proceeding, other than such proceedings as may be necessary to effectuate the
provisions of this Stipulation; provided, however, that if this Stipulation is
approved by the Court, the Defendants may refer to it to effectuate the
liability protection granted them hereunder;


 


(d)           shall
not be construed against any of the Defendants as an admission or concession
that the consideration to be given hereunder represents the amount which could
be or would have been recovered after trial; and


 

















 


(e)           shall
not be construed as or received in evidence as an admission, concession or
presumption against Lead Plaintiffs or any of the other Class Members that
any of their claims are without merit, or that any defenses asserted by the
Defendants have any merit, or that damages recoverable under the Complaint
would not have exceeded the Gross Settlement Fund.


 


MISCELLANEOUS
PROVISIONS


 


27.           All
of the exhibits attached hereto are hereby incorporated by reference as though
fully set forth herein.


 


28.           Each
Defendant contributing to the Settlement Amount warrants as to himself or itself
that, as to the payments made by or on behalf of him or it to the Settlement
Amount, at the time of such payment that the Defendant made or caused to be
made pursuant to ¶ 4 above, he or it was not insolvent, nor will the
payment required to be made by or on behalf of him or it render such Defendant
insolvent, within the meaning of and/or for the purposes of the United States
Bankruptcy Code, including §§ 101 and 547 thereof.  This warranty is made by each such Defendant
and not by such Defendant’s Counsel.


 


29.           If
a case is commenced in respect of any Defendant contributing the Settlement
Amount (or any insurer contributing funds to the Settlement Amount on behalf of
any Defendant) under Title 11 of the United States Code (Bankruptcy), or a
trustee, receiver, conservator, or other fiduciary is appointed under any
similar law, and in the event of the entry of a final order of a court of
competent jurisdiction determining the transfer of money to the Gross
Settlement Fund or any portion thereof by or on behalf of such Defendant to be
a preference, voidable transfer, fraudulent transfer or similar transaction and
any portion thereof is required to be returned and is in fact returned to such
bankrupt Defendant or to the insurer who 


 

















 


contributed
the funds to the Settlement Amount on behalf of the Bankrupt Defendant, and
such amount is not promptly deposited to the Gross Settlement Fund by others,
then, at the election of Plaintiffs’ Co-Lead Counsel, the parties shall jointly
move the Court to vacate and set aside the releases given and Judgment entered
in favor of the Defendants pursuant to this Stipulation, which releases and
Judgment shall be null and void, and the parties shall be restored to their
respective positions in the litigation as of December 7, 2007 and an
amount equal to the amount computed in ¶ 25 above, less any amount already
in fact returned to the bankrupt Defendant or to the insurer who contributed
the funds to the Settlement Amount on behalf of the Bankrupt Defendant, shall
be paid to Biovail or the insurers (as the case may be).


 


30.           The
parties to this Stipulation intend the Settlement to be a final and complete
resolution of all disputes asserted or which could be asserted by the Class Members
against the Released Parties with respect to the Settled Claims.  Accordingly, Lead Plaintiffs and Defendants
agree not to make any disparaging remarks about each other in any public
statements concerning this litigation or the Settlement of this litigation and
Lead Plaintiffs and Defendants agree they will not assert in any forum that the
litigation was brought by Plaintiffs or defended by Defendants in bad faith or
without a reasonable basis.  The parties
hereto shall assert no claims of any violation of Rule 11 of the Federal Rules of
Civil Procedure relating to the prosecution, defense, or settlement of the
Action.  The parties agree that the
amount paid and the other terms of the Settlement were negotiated at arm’s-length
in good faith by the parties, and reflect a settlement that was reached voluntarily
after consultation with experienced legal counsel.


 


31.           This
Stipulation may not be modified or amended, nor may any of its provisions be
waived except by a writing signed by all parties hereto or their
successors-in-interest.


 

















 


32.           The
headings herein are used for the purpose of convenience only and are not meant
to have legal effect.


 


33.           The
administration and consummation of the Settlement as embodied in this
Stipulation shall be under the authority of the Court, and the Court shall
retain jurisdiction for the purpose of entering orders providing for awards of
attorneys’ fees and expenses to Plaintiffs’ Co-Lead Counsel and enforcing the
terms of this Stipulation.


 


34.           The
waiver by one party of any breach of this Stipulation by any other party shall
not be deemed a waiver of any other prior or subsequent breach of this
Stipulation.


 


35.           This
Stipulation and its exhibits constitute the entire agreement among the parties
hereto concerning the Settlement of the Action, and no representations, warranties,
or inducements have been made by any party hereto concerning this Stipulation
and its exhibits other than those contained and memorialized in such documents.


 


36.           This
Stipulation may be executed in one or more counterparts.  All executed counterparts and each of them
shall be deemed to be one and the same instrument.


 


37.           This
Stipulation shall be binding upon, and inure to the benefit of, the successors
and assigns of the parties hereto.


 


38.           The
construction, interpretation, operation, effect and validity of this
Stipulation, and all documents necessary to effectuate it, shall be governed by
the internal laws of the State of New York without regard to conflicts of laws,
except to the extent that federal law requires that federal law governs.


 


39.           No
opinion or advice concerning the tax consequences of the proposed Settlement to
individual Class Members is being given or will be given by Plaintiffs’
Co-Lead Counsel or counsel for the Defendants; nor is any representation or
warranty in this regard made by virtue of 


 

















 


this
Stipulation.  Each Class Member’s
tax obligations, and the determination thereof, are the sole responsibility of
the Class Member, and it is understood that the tax consequences may vary
depending on the particular circumstances of each individual Class Member.


 


40.           This
Stipulation shall not be construed more strictly against one party than another
merely by virtue of the fact that it, or any part of it, may have been prepared
by counsel for one of the parties, it being recognized that it is the result of
arm’s-length negotiations between the parties and all parties have contributed
substantially and materially to the preparation of this Stipulation.


 


41.           All
counsel and any other person executing this Stipulation and any of the exhibits
hereto, or any related settlement documents, warrant and represent that they
have the full authority to do so and that they have the authority to take
appropriate action required or permitted to be taken pursuant to the
Stipulation to effectuate its terms.


 


42.           Plaintiffs’
Co-Lead Counsel and Defendants’ Counsel agree to cooperate fully with one
another in seeking Court approval of the Order for Notice and Hearing, the
Stipulation


 

















 


and
the Settlement, and to promptly agree upon and execute all such other
documentation as may be reasonably required to obtain final approval by the
Court of the Settlement.


 


Dated:    April 4, 2008


 


 


	
  BERNSTEIN LITOWITZ BERGER &
  GROSSMANN LLP 

  	
   

  	
  MILBERG
  LLP 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:
  

  	
  Sanford
  P. Dumain (SD-8712)

  
	
  By:
  

  	
  Max
  W. Berger (MB-5010)

  	
   

  	
   

  	
  Kent
  A. Bronson (KB-4906)

  
	
   

  	
  Steven
  B. Singer (SS-5212)

  	
   

  	
   

  	
  Joshua
  E. Keller (JK-4882)

  
	
   

  	
  Rochelle
  Feder Hansen (RH-7061)

  	
   

  	
  One
  Penn Plaza

  
	
  1285
  Avenue of the Americas

  	
   

  	
  New
  York, New York 10119

  
	
  New
  York, New York 10019

  	
   

  	
  Tel:
  212-594-5300

  
	
  Tel:
  212-554-1400

  	
   

  	
  Fax:
  212-868-1229

  
	
  Fax:
  212-554-1444

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Co-Lead
  Counsel and Counsel for Co-Lead Plaintiff Ontario Teachers’ Pension Plan
  Board

  	
   

  	
  Co-Lead
  Counsel and Counsel for Co-Lead Plaintiff Local 282 Welfare Trust Fund

  
	
   

  	
   

  	
   

  
	
  HOWREY
  LLP 

  	
   

  	
  CURTIS,
  MALLET-PREVOST, COLT & MOSLE LLP 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:
  

  	
  Mark
  D. Wegener, Esq. (pro hac vice)

  	
   

  	
  By:
  

  	
  Peter
  Fleming, Jr., Esq. (PEF-1354)

  
	
   

  	
  Martin
  F. Cunniff, Esq. (pro hac vice)

  	
   

  	
   

  	
  T.
  Barry Kingham, Esq. (TBK-1219)

  
	
   

  	
  Andrew
  D. Lazerow, Esq. (pro hac vice)

  	
   

  	
  101
  Park Avenue

  
	
  1299
  Pennsylvania Ave., N.W.

  	
   

  	
  New
  York, New York 10178

  
	
  Washington,
  D.C. 20004

  	
   

  	
  Tel.:
  212-696-6000

  
	
  Tel:
  202-783-0800

  	
   

  	
  Fax:
  212-697-1559

  
	
  Fax:
  202-383-6610

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Co-Counsel
  for Defendants

  	
   

  	
  Co-Counsel
  for Defendants