Document:

Exhibit 10.39

 

BIOVAIL CORPORATION

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is
effective the 1st day of May, 2008.

 

BETWEEN:

 

Biovail Corporation

(hereinafter called the “Corporation”)

 

OF THE FIRST PART

 

- and -

 

William M. Wells

(hereinafter called the “Executive”)

 

OF THE
SECOND PART

 

WHEREAS the Corporation, and the
Executive wish to enter into this Employment Agreement which provides, among
other things, that the Executive devote substantially all his time and
attention during normal business hours to the performance of his duties
hereunder upon the terms and conditions hereinafter set forth;

 

NOW THEREFORE IN CONSIDERATION of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency whereof is hereby acknowledged, the
parties hereto agree as follows:

 

 

ARTICLE ONE – GENERAL DUTIES AND TERM

 

Employment Services

 

1.01                                                                         The
Corporation, through its Barbadian subsidiary, Biovail Laboratories
International SRL, hereby employs the Executive as Chief Executive
Officer.  The Executive agrees to provide
such employment services on the terms and conditions as herein provided. Except
as otherwise set forth herein, this Agreement supersedes all existing oral or
written agreements between the Corporation and the Executive.  For purposes of this Agreement, all
references to the Corporation shall also include the Corporation’s subsidiaries
and affiliates.

 

General Duties and Obligations of Executive

 

1.02                                                                         The Executive:

 

(a)                                  shall well and
faithfully serve the Corporation to the best of his ability;

 

(b)                                 acknowledges
that his employment by the Corporation shall, unless otherwise mutually agreed
to in writing, be his only occupation and that he shall devote substantially
all his working time and attention during normal business hours to the
performance of his duties and the observing of all reasonable instructions
given to the Executive, provided, however, that the Executive may serve on the
board of directors of another publicly traded company as long as such service
does not impair his ability to perform his duties for the Corporation or put
the Executive in conflict with respect to such duties.  In addition, the Executive may serve on
civic, educational, philanthropic or charitable boards or committees, or, with
the prior written consent of the Board of Directors of Biovail Corporation (the
“Board”), other outside corporate boards, in each case, as long as such service
does not impair his ability to perform his duties for the Corporation or put
the Executive in conflict with respect to such duties;

 

(c)                                  shall
reasonably use his best efforts to promote the success of the business of the
Corporation (the “Business”) now or hereafter conducted by the Corporation; and

 

(d)                                 shall not
engage in any activity that would impair his ability to perform his duties or
that shall put the Executive in conflict with respect to such duties.

 

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Term of
Agreement

 

1.03                                                                           This Agreement
shall continue in full force and effect indefinitely and until terminated by
either the Executive or the Corporation pursuant to the terms hereof.   The period of the Executive’s employment
under this Agreement, which employment commenced May 1, 2008, shall be
referred to as the “Employment Term”.

 

ARTICLE
TWO – TERMINATION AND RESIGNATION

 

Involuntary Termination – Either by the Corporation Without
Cause or By the Executive for Good Reason

 

2.01                                                                           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 shall be eligible for the
severance payments and benefits as described in this Section 2.01; 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 2.08 (“Release”):

 

(a)                                  The Executive
shall be paid a lump sum severance payment within 60 days of the Executive’s
Termination Date, equal to two (2) times the Executive’s base salary
(calculated using the Executive’s annual base salary in the year in which the
Executive’s Termination Date occurs) plus two (2) times the Executive’s
target level of annual incentive compensation under the Short Term Incentive
Plan (as defined in Section 3.01.B below) for the fiscal year prior to the
fiscal year in which the Executive’s Termination Date occurs; provided that if
the Executive’s termination occurs in 2008 or 2009, the foregoing calculation
shall be made using the Executive’s 2008 guaranteed bonus amount;

 

(b)                                 The Executive
shall be entitled to a pro-rated portion of the Executive’s target level of
annual incentive compensation under the Short Term Incentive Plan for the
fiscal 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 fiscal year elapsed prior to the Executive’s Termination Date and
calculated and paid in accordance with the terms of the Short Term Incentive
Plan; and

 

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(c)                                  Until the
earlier of (i) the end of the two (2) 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 shall pay to the Executive a
monthly payment on the first payroll date of each month equal to the COBRA cost
of continued medical and dental coverage for the Executive and the Executive’s
covered dependents under the medical and dental plans of the Corporation
pursuant to section 4980B of the Internal Revenue Code of 1986, as amended (the
“Code”), 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 shall commence on the
Corporation’s first payroll date after the Executive’s Termination Date and
shall continue until the end of the Benefit Period (but not longer than the
Benefit Period).

 

(d)                                 On or after the
first anniversary of this Agreement, if the Executive’s termination or
resignation, as applicable, under this Section 2.01 occurs within the
twelve (12) month period following a Change in Control (as defined in Section 2.06(b)),
any unvested equity compensation awards held by the Executive as of his
Termination Date shall automatically accelerate and become one hundred percent
(100%) vested and, as applicable, exercisable, as of the Executive’s
Termination Date; provided that any unvested equity compensation awards that
vest based upon the attainment of performance criteria shall remain subject to
the attainment of such performance criteria, unless the Board determines
otherwise in accordance with the terms of the Equity Compensation Plan (as
defined below) (or any successor plan thereto).

 

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

 

2.02                                                                           If the
Executive is involuntarily terminated by the Corporation for Cause or the
Executive voluntarily resigns from employment without Good Reason, then the
Executive shall 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 shall 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

 

2.03                                                                           Subject to the
requirements of applicable law, the Corporation may terminate the Executive’s
employment if the Executive has been unable to perform the essential functions
of the Executive’s position with the Corporation, with or without reasonable accommodation,
by reason of physical or mental incapacity for a period of six consecutive
months (“Disability”).   The
Executive agrees, in the event of a dispute 

 

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under this Section 2.03 relating to the Executive’s Disability, to
submit to a physical examination by a licensed physician mutually agreed
between the Executive and the Board. 
Nothing herein is intended to circumvent or abridge the Corporation’s
short-term disability policy or long-term disability plan.  In the event the Corporation terminates the
Executive’s employment pursuant to the terms of this Section 2.03, the
Executive or the Executive’s estate, as applicable, shall 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

 

2.04                                                                           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 Disability) 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 Disability), 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
willful failure to substantially perform his duties with the Corporation (other
than any such failure resulting from the Executive’s Disability), after a
written demand for substantial performance is delivered to the Executive that
specifically identifies the manner in which the Corporation believes that the
Executive has not substantially performed his duties, and the Executive has
failed to remedy the situation within fifteen (15) business days of such
written notice from the Corporation;

 

(f)                                    gross
negligence in the performance of the Executive’s duties which results in
material financial harm to the Corporation;

 

(g)                                 the Executive’s
willful engagement in conduct that is demonstrably and materially injurious to
the Corporation, monetarily or otherwise;

 

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(h)                                 the Executive’s
failure to comply in any material way with any of the provisions of this
Agreement, including a failure to comply with the terms of the documents
attached hereto as Schedule A and Schedule B.

 

Good
Reason

 

2.05                                                                           For purposes of
this Agreement, a voluntary resignation by the Executive shall 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 2.05(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

 

2.06                           (a)                                  If a Change in
Control (as defined below) occurs prior to the first anniversary of the date of
this Agreement, 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 Change in Control,  (a) a
lump sum severance payment of two (2) times the Executive’s base salary
(calculated using the Executive’s annual base salary in the year in which the
Change in Control occurs) plus two (2) times the Executive’s target level
of annual incentive compensation under the Short Term Incentive Plan for the
fiscal year in which the Change in Control occurs, payable within thirty (30)
days of the Change in Control (provided that if the Change in Control occurs in
2008 or 2009 (and in any event, prior to the first anniversary of the date of
this Agreement), the foregoing calculation shall be made using the Executive’s
2008 guaranteed bonus amount), 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 Change
in Control; provided that any unvested equity compensation awards that vest
based upon the attainment of performance criteria shall remain subject to the
attainment of such performance criteria, unless the Board determines otherwise
in accordance 

 

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with the terms of the Equity
Compensation Plan (or any successor plan thereto).  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 within six (6) months
of the Change in Control, payment under this Section 2.06 shall be in lieu
of any payments or benefits to which the Executive may be entitled under Section 2.01
above.  This Section 2.06(a) shall
expire on the first anniversary of the date of this Agreement.

 

(b)                                 For purposes of this
Agreement, “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 this
Agreement, the persons who were members of the Board 

 

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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.

 

(c)                                  In the event
any payments or benefits made to the Executive upon a Change of Control are
deemed “excess parachute payments” within the meaning of Section 280G of
the Code, and the Executive is subject to excise tax under Section 4999 of
the Code (the “Excise Tax”) with respect to such payments, the Executive shall
receive, in addition to any other payments and benefits to which he is entitled
under the Agreement, an amount which, after imposition of any income,
employment, excise or other taxes on such amount (including any income,
employment, excise or other taxes paid on any amount due under this Section),
equals the difference between the amount he actually receives after payment of
all taxes including all Excise Tax and the after-tax amount he would receive if
no Excise Tax were imposed on him. 
Notwithstanding any provision of Section 2.06 to the contrary, in
accordance with the requirements of section 409A of the Code, any additional
payment payable to the Executive hereunder shall be paid not later than the end
of the calendar year next following the calendar year in which the Executive or
the Corporation (as applicable) remits the taxes for which the additional
payment is being paid.

 

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(d)                                 In the event a
Change in Control occurs prior to the first anniversary of the date of this
Agreement, the Corporation (or any successor thereto) shall establish an
irrevocable rabbi trust or a similar arrangement based generally on the
Internal Revenue Service’s model rabbi trust as provided in Revenue Procedure
92-64 and contribute to such trust immediately prior to the consummation of the
Change in Control, an amount sufficient to cover the amounts payable to the
Executive under Section 2.06(a) above, as well as the amount of any
expenses (as estimated by the trustee in good faith) expected to be incurred by
the trustee of such trust following the occurrence of the Change in Control.

 

Notice of Termination

 

2.07                                                                           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 5.10
(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 (but may
be shorter if approved by the Corporation) after the giving of such notice.

 

On
the date of termination or resignation, as applicable, the Executive agrees to
resign all positions, including as an officer and, if applicable, as a director
or member of a board of directors or committee, related to the Corporation.

 

Release

 

2.08                                                                           The Release
identified in Section 2.01 shall 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 THREE - REMUNERATION

 

Remuneration and Perquisites

 

3.01                           A.                                   Salary. 
For services to be rendered hereunder, the Executive shall receive an
annual base salary of USD$860,000.  The
Executive shall be considered 

 

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annually for increases in base salary in accordance with
Corporation policy and subject to review by the Compensation, Nominating and
Corporate Governance Committee and approval by the  independent
members of the Board of Directors.

 

B.                                     Annual
Bonus.  For 2008,
the Executive shall not 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”) but shall instead receive a guaranteed cash bonus of 100%
of the Executive’s base salary for 2008. 
For 2009 and thereafter, the Executive shall be eligible to participate
in the Short Term Incentive Plan, subject in all respects to the terms of the
Short Term Incentive Plan.  The Executive’s
target level of cash bonus under the Short Term Incentive Compensation Plan
shall be 100% of base salary.  Subsequent
adjustment to target levels shall subject to review by the Compensation,
Nominating and Corporate Governance Committee and approval by the independent
members of the Board of Directors.  Any bonus
earned and otherwise payable to the Executive shall be paid on or after January 1,
but not later than March 15 of the fiscal year following the fiscal year
for which the bonus is earned, in accordance with the Corporation’s Short Term
Incentive Plan.

 

C.                                     Additional
Compensation. 
To the extent the Executive’s previous employer requires the Executive
to repay an amount previously paid to him by such previous employer, in
connection with such Executive’s termination of employment, the Corporation
shall reimburse the Executive with a one-time payment for such amount; provided, however, that the Executive shall
be required to repay to the Corporation one-half of the amount of the
reimbursement if the Executive voluntarily resigns from employment with the
Corporation or is terminated by the Corporation for Cause pursuant to this
Agreement within the one (1) year period following the date of this
Agreement.

 

D.                                    Relocation
Expenses. The Executive shall receive
USD$100,000 for expenses relating to the Executive’s relocation.

 

E.                                      Housing
Allowance.  The
Corporation shall provide for the lease of appropriate accommodation for the
Executive.

 

F.                                      Corporate Vehicle.  During the Executive’s employment, the
Corporation shall pay the Executive a monthly car allowance, in an amount
sufficient to cover the lease and insurance costs of an automobile selected and
leased by the Executive.

 

G.                                     Access to
Corporate Jet and Travel Benefits.  The Executive shall have access to the
Corporation’s jet as needed and the Executive’s spouse shall be permitted to
accompany the Executive on trips as deemed appropriate, with the understanding
that the foregoing may result in taxable income to the Executive.

 

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H.      Tax Support. The
Corporation shall reimburse the Executive for costs incurred by the Executive
in connection with tax preparation furnished by such advisors as chosen by the
Executive.

 

I.       Immigration Support.
The Corporation shall reimburse the Executive for all legal expenses incurred
by the Executive in connection with his immigration status and/or right to work
in Barbados, to be furnished by such advisors as chosen by the Corporation.

 

J.       Security Personnel.
The Corporation shall provide security personnel to the Executive on terms to
be mutually agreed by the parties.

 

Expenses and Perquisites

 

3.02                 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 his services hereunder, upon furnishing to the Corporation
reasonable supporting statements and vouchers provided that where, in any
financial year, 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 Corporation.

 

Vacation

 

3.03                 The Executive shall be entitled to six weeks paid vacation annually.  In addition, the Executive and his family
shall be eligible for one home leave annually (with such home leave counting
toward the Executive’s six (6) weeks of annual paid vacation).  In connection with such home leave, the
Corporation shall reimburse the Executive in accordance with its expense
reimbursement policies for actual and reasonable transportation costs for
round-trip airfare for the Executive and his family to travel to and from
Barbados by the most direct route.  The
Executive shall be responsible for living expenses during home leave.

 

Group Life and Health Benefits

 

3.04                 Group Life and Health Benefits shall be provided to
the Executive in accordance with the Corporation’s Group Life and Health
Benefits Plan and policies, a copy of which has been provided to the Executive,
as these apply to Senior Executives.  The
Executive shall be eligible for Corporation-paid life insurance coverage equal
to three times his base salary, as of January 1st of each year,
rounded to the next $1,000, to a maximum of USD$1,000,000.  In addition, while traveling on business of
the Corporation, the Executive shall have insurance coverage for accident or
injury resulting in specified bodily harm or death.  Should the Executive’s death occur due to an 

 

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accident while traveling on business of the Corporation, the
Executive’s designated beneficiary shall receive a benefit in the amount of
USD$1,000,000.

 

Equity Compensation

 

3.05                 The Executive shall be eligible to participate in
the Corporation’s 2007 Equity Compensation Plan, as such plan may be amended or
supplemented 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.  
Contemporaneously with the date of this Agreement, the Executive shall
be granted a non-qualified stock option to purchase 150,000 shares of common
stock of the Corporation, subject in all respects to the terms of the Equity
Compensation Plan and the agreement evidencing the terms of the stock option
grant.  The Executive’s annual target
under the Equity Compensation Plan shall be 112,550 stock options and 9,375
RSUs, or a substantially equivalent award. 
In addition the Executives’ eligibility for such annual awards, the
Executive shall be entitled to additional equity compensation awards under the
Equity Compensation Plan as follows: (i) in 2008, 125,000 Restricted Share
Units (“RSUs “), (ii) in 2009, 62,500 RSUs, and (iii) 2010, 62,500
RSUs, in each case subject to the performance criteria and performance period
approved by the Compensation, Nominating and Corporate Governance Committee or
by the independent members of the Board of Directors, as applicable.

 

Retirement Benefits

 

3.06                 The Executive shall be eligible to participate in the
Biovail Pharmaceuticals, Inc. 401(k) Plan pursuant to its terms and
conditions.  Nothing in this Agreement
shall preclude the Corporation from terminating or amending any employee
benefit plan or program from time to time after the date of this Agreement.

 

ARTICLE FOUR – EXECUTIVE’S
OBLIGATIONS

 

Confidentiality

 

4.01                 Contemporaneously with the execution of this
Agreement, the Executive agrees to execute and be bound by the terms of the confidentiality agreement attached hereto
as Schedule  A and which is incorporated
by reference into this Agreement (the “Confidentiality Agreement”), which
Confidentiality Agreement has been read, understood and executed by the
Executive.

 

Non-Competition

 

4.02                 The Executive acknowledges that the Corporation
currently conducts Business activities in North America, Ireland, Barbados and
Puerto Rico (the “Territory”).  The
Executive further acknowledges that, in the future, the Business 

 

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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 from employment for any reason,  directly or in
any manner or in any capacity 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 a minority equity interest,
or (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 a 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 

 

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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 shall not adversely affect the
Corporation’s legitimate interests.

 

Non-Solicitation and Hiring

 

4.03                 The Executive hereby covenants and agrees that he
shall not during the term of this Agreement and for a period of one (1) year
thereafter, either
directly or indirectly, solicit or endeavour to solicit from the Corporation’s
employees, customers or suppliers for the pharmaceutical compounds used by
Biovail, and shall not for a period of one (1) year from the end of the
term of this Agreement hire any of the foregoing on his own behalf or on behalf
of any other entity.

 

Role of
CEO

 

4.04                 The Executive acknowledges that he shall fully abide
by the provisions of this Article 4.

 

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 and 4.03 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. If any court of competent jurisdiction determines
that any of the Restrictive Covenants or any part thereof is unenforceable
because of the duration or geographical scope of such provision, the parties hereto
agree that such court shall have the power to reduce the duration or 

 

14

 

scope of such provision, as the case may be, and in
its reduced form such provision shall then be enforceable.

 

Assignment of IP

 

4.07                 The Executive shall disclose to the Corporation any
and all Intellectual Property (as described in the Confidentiality Agreement) which he may make solely, jointly, or in common with
other employees during the term of his 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) and the equivalent regulations in the United States
and/or the State of New Jersey. The Executive shall assign, set over and
transfer to the Corporation his 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
him or on his 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 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 shall
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

 

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

 

15

 

Human Resources Management

 

4.09                                                  The Executive acknowledges receipt of the
Human Resources Management System and agrees to be bound by all of the terms,
policies and procedures contained therein.

 

No Conflicting Obligations

 

4.10                                                 The Executive warrants to the Corporation that:

 

(a)                                  the performance of the Executive’s duties as an employee of the Corporation
shall 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

 

Section 409A

 

5.01                 This Agreement shall be interpreted to avoid any
penalty sanctions under section 409A of the Code.   If any payment or benefit cannot be provided
or made at the time specified herein without incurring sanctions under section
409A of the Code, then such benefit or payment shall be provided in full (to
extent not paid in part at earlier date) at the earliest time thereafter when
such sanctions shall not be imposed.  For
purposes of section 409A of the Code, all payments to be made upon a
termination of employment under this Agreement may only be made upon the
Executive’s “separation from service” (within the meaning of such term under
section 409A of the Code), each payment made under this Agreement shall be
treated as a separate payment, and the right to a series of installment
payments under this Agreement shall be treated as a right to a series of
separate payments.  In no event shall the
Executive, directly or indirectly, designate the calendar year of payment,
except as permitted under section 409A of the Code.

 

Notwithstanding anything herein to the contrary, if,
at the time of the Executive’s termination of employment with the Corporation,
the Corporation has securities which are publicly traded on an established
securities market and the Executive is a “specified employee” (as such term is
defined in section 409A of the Code) and it is necessary to postpone the
commencement of any payments or benefits otherwise payable under this Agreement
as a result of such termination of employment to prevent any accelerated or
additional tax under section 409A of the Code, then the Corporation shall
postpone the commencement of the payment of any such payments or benefits
hereunder (without 

 

16

 

any reduction in such payments or benefits ultimately
paid or provided to the Executive) that are not otherwise paid within the ‘short-term
deferral exception’ under Treas. Reg. section 1.409A-1(b)(4) and/or the ‘separation
pay exception’ under Treas. Reg. section 1.409A-1(b)(9)(iii), until the first
payroll date that occurs after the date that is six months following the
Executive’s “separation of service” with the Corporation.  If any payments are postponed due to such
requirements, such postponed amounts shall be paid in a lump sum to the
Executive on the first payroll date that occurs after the date that is six
months following Executive’s “separation of service” with the Corporation.  If the Executive dies during the postponement
period prior to the payment of postponed amount, the amounts withheld on
account of section 409A of the Code shall be paid to the personal
representative of the Executive’ s estate within 60 days after the date of the
Executive’s death.

 

All reimbursements and in-kind benefits provided under
this Agreement shall be made or provided in accordance with the requirements of
section 409A of the Code, including, where applicable, the requirement that (1) any
reimbursement shall be for expenses incurred during the Executive’s lifetime
(or during a shorter period of time specified in this Agreement), (2) the
amount of expenses eligible for reimbursement, or in kind benefits provided,
during a calendar year may not affect the expenses eligible for reimbursement,
or in kind benefits to be provided, in any other calendar year, (3) the
reimbursement of an eligible expense shall be made on or before the last day of
the calendar year following the year in which the expense is incurred and (4) the
right to reimbursement or in kind benefits is not subject to liquidation or
exchange for another benefit.

 

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.

 

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 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.

 

17

 

5.05                 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

 

5.06                 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

 

5.07                 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.  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

 

5.08                 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

 

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

 

18

 

Notices

 

5.10                 Any demand, notice or other
communication (hereinafter in this section 5.10 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 or by registered mail
addressed respectively to the recipients:

 

	
   

  	
   

  	
  To the Executive:

  	
   

  	
  William M. Wells

  
	
   

  	
   

  	
   

  	
   

  	
  xxx

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  To the Corporation:

  	
   

  	
  7150 Mississauga Road

  
	
   

  	
   

  	
   

  	
   

  	
  Mississauga, Ontario

  
	
   

  	
   

  	
   

  	
   

  	
  L5N 8M5

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Attn:  
  General Counsel

  

 

or such other address or individual
as may be designed 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 and, if made or given by registered mail, on the third
business day following the deposit thereof in the mail.  If the party giving any Communication knows
or ought reasonably to know of any difficulties with the postal system which
might affect the delivery of the mail, any such Communication shall not be
mailed but shall be made or given by personal delivery.

 

Benefit of Agreement

 

5.11                 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

 

5.12                 The Executive may not assign
his or its 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.

 

19

 

Execution of Agreement

 

5.13                 The Executive acknowledges that
he has executed this Agreement freely; that he has reviewed his Agreement
thoroughly; that he agrees with its contents; that he has been given the
opportunity to obtain the benefit of independent legal advice; and that the
terms herein are reasonable for the fair protection of both the Executive and the
Corporation.

 

[SIGNATURE
PAGE FOLLOWS]

 

20

 

IN WITNESS WHEREOF
the Corporation has executed this amended and restated Agreement on the 21st day of April, 2008 at the City of Mississauga,
Ontario.

 

 

	
   

  	
   

  	
  BIOVAIL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
  /s/ Wendy Kelley

  
	
   

  	
   

  	
  Name: Wendy Kelley

  
	
   

  	
   

  	
  Title: 

  	
  Senior Vice-President, General

  
	
   

  	
   

  	
   

  	
  Counsel and Corporate Secretary

  
					

 

 

IN WITNESS WHEREOF the Executive has executed this Agreement on the 21st day of April, 2008 at the City of Mississauga, Ontario.

 

 

	
   

  	
   

  	
  SIGNED, SEALED AND
  DELIVERED

  
	
   

  	
   

  	
  in the presence of:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ William M. Wells

  	
   

  	
  /s/ Michelle Garraway

  
	
  William M. Wells

  	
   

  	
  Witness

  

 

21

 

“SCHEDULE
A”

 

CONFIDENTIALITY AGREEMENT

 

 

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 for a period of time 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”.

 

For a period commencing on the date I
commenced my employment with the Corporation and ending ten (10) years
from the date of the termination of my employment with the Corporation, 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.

 

I 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 I 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.

 

 

	
  Employee
  Signature:

  	
    /s/ William M. Wells

  	
   

  	
  Date:

  	
  April 21,
  2008

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness
  Signature:

  	
    /s/ Michelle Garraway

  	
   

  	
  Date:

  	
  April 21,
  2008

  
						

 

 

“SCHEDULE B”

 

STANDARDS OF BUSINESS CONDUCT

 

 

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”).

 

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.

 

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.

 

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 not 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.

 

E.                                      Fair Dealing

 

Each employee, officer and director shall
endeavor to deal fairly with Biovail’s customers, suppliers, competitors and
employees. 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.

 

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 are 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.

 

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, customs, 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 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 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, 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.

 

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., Blackberrys) 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.

 

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 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 OF 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 after 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.

 

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.

 

 

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.

 

 

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 be made only the Board of Directors or the
Compensation, Nominating and Corporate Governance Committee and will be
promptly disclosed to Biovail’s stockholders.

 

 

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.

 

 

	
  April 21, 2008

  	
   

  	
  William M. Wells

  
	
  Date

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ William M. Wells

  
	
   

  	
   

  	
  SignatureExhibit 10.40

 

BIOVAIL
CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT

 

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

 

ARTICLE
ONE – GENERAL DUTIES AND TERM

 

Scope
of Employment / Duties

 

1.01               The Corporation
will employ the Executive as Senior Vice President &
Chief Financial Officer.  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 Mississauga, Ontario, Canada.

 

Term
of Agreement

 

1.04               The Corporation
hereby agrees to employ the Executive and the Executive hereby accepts
employment, in accordance with the terms and conditions of this Agreement,
commencing on September 3, 2008 (the “Employment Commencement Date”).  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
$410,000 (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.  For the Executive’s year of hire,
the Executive’s target will be fifty percent (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. The ECP awards for the
2008 plan year will not be prorated.

 

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.

 

2

 

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 five (5) 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 

 

3

 

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.

 

4

 

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.

 

5

 

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;

 

6

 

(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 

 

7

 

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.

 

8

 

Non-Competition

 

4.02               The Executive
acknowledges that the Corporation currently conducts Business activities in,
among other jurisdictions, Canada and the United States (the “Territory”).  Accordingly, the Executive hereby agrees and
covenants that the Executive shall not, during the term of this Agreement, and
for a period of twelve (12)
months following the Executive’s Termination Date for involuntary termination
by the Corporation for Cause, voluntary termination by the Executive, or a
termination following a Change in Control to which the provisions of Section 3.06
apply, 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 (a “Person”), in the Territory:

 

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

 

(b)                     consult,
advise, render services to lend money, guarantee the debts or obligations of or
permit the use of the Executive’s name or any part thereof by any Person with
respect to a business carried on by that Person,

 

which actively competes
directly with the Corporation’s business objects or could be judged to be
causing or potentially be causing through competitive acts, material harm to
the Corporation.

 

For the purposes of this Section 4.02,
as of the date of this Agreement, a Person shall include, but not be limited
to, Abbott Laboratories, Andrx Group, Apotex Inc., Bayer Inc., Elan
Corporation, Ethypharm S.A., Flamel Technologies, S.A., Forest Laboratories
Inc., Johnson & Johnson, King Pharmaceuticals, Inc., Lundbeck
Canada Inc., Pfizer Inc., Novopharm Limited, GlaxoSmithKline, Reliant
Pharmaceuticals, Inc., Teva Pharmaceutical Industries Ltd., Wyeth
Pharmaceuticals and any of their affiliates and subsidiaries which are in the
same or a competitive business and, in addition, shall include any pharmaceutical
entity with which the Corporation has a product(s) licensing agreement,
any entity in which the Corporation has a minority equity interest and any
entity with which the Corporation is at the time actively negotiating a
commercial relationship.

 

During the continuance of
the Executive’s 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 competitive to the 

 

9

 

Business or would impede
the Executive in performing the Executive’s duties as outlined herein.

 

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 Employment Term.  “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
Employment Term.

 

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 

 

10

 

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 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 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.

 

11

 

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

 

Section 409A

 

5.01               This Agreement
shall be interpreted to avoid any penalty sanctions under Internal Revenue Code
section 409A.  If any payment or benefit
cannot be provided or made at the time specified herein without incurring
sanctions under section 409A, then such benefit or payment shall be provided in
full at the earliest time thereafter when such sanctions will not be imposed.

 

Notwithstanding any
provision of this Agreement to the contrary, if the Executive is a key employee
of a publicly traded corporation under section 409A at the time of the
Executive’s separation from service and if payment of any amount under this
Agreement is required to be delayed for a period of six (6) months after
separation from service pursuant to section 409A, payment of such amount shall
be delayed as required by section 409A, and the accumulated postponed amount
shall be paid in a lump sum payment within ten (10) days after the end of
the six-month period.  If the Executive
dies during the postponement period prior to the payment of postponed amount,
the amounts withheld on account of section 409A shall be paid to the personal
representative of the Executive’s estate within 60 days after the date of the
Executive’s death.  A “key employee”
shall mean an employee who, at any time during the twelve (12) month period
ending on the identification date, is a “specified employee” under section 409A
of the Internal Revenue Code, as determined by the Board.  The determination of key employees, including
the number and identity of persons considered key employees and the
identification date, shall be made by the Board in accordance with the
provisions of sections 416(i) and 409A and the regulations issued
thereunder.

 

For purposes of section
409A, the right to any series of installment payments under this Agreement
shall be treated as a right to a series of separate payments.  All reimbursements and in kind benefits
provided under this Agreement shall be made or provided in accordance with the
requirements of section 409A, including, where applicable, the requirement that
(i) any reimbursement shall be for expenses incurred during the Executive’s
lifetime (or during a shorter period of time specified in this Agreement), (ii) the
amount of expenses eligible for reimbursement, or in kind benefits, provided
during a calendar year may not affect the expenses eligible for reimbursement,
or in kind benefits to be provided, in any other calendar year, (iii) the
reimbursement of an eligible expense will be made on or before the last day of
the calendar year following the year in which the expense is incurred, and (iv) the
right to 

 

12

 

reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit.

 

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.  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.

 

13

 

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:

 

Margaret Mulligan

*  *  * 

 

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 

 

14

 

agrees with its
contents; and that the terms herein are reasonable for the fair protection of
both the Executive and the Corporation.

 

[SIGNATURE PAGE
FOLLOWS]

 

15

 

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

 

	
  BIOVAIL
  CORPORATION

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Mark Durham

  	
   

  	
  /s/ Margaret
  Mulligan

  
	
  Name:

  	
  Mark
  Durham

  	
   

  	
  Margaret
  Mulligan

  
	
  Title:

  	
  Senior Vice
  President

  	
   

  	
   

  
	
   

  	
  Corporate Human
  Resources

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
  August 21,
  2008

  	
   

  	
  Date:

  	
  August 21,
  2008

  

 

16

 

“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 for a period of time 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”.

 

For a period commencing on the date I commenced my employment with the
Corporation and ending ten (10) years from the date of the termination of
my employment with the Corporation, 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.

 

I 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 I 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, effective the 21st day of August, 2008.

 

 

	
  Employee
  Signature:

  	
  /s/ Margaret
  J. Mulligan

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witness
  Signature:

  	
  /s/
  Genevieve Carasco

  	
   

  	
   

  	
   

  
							

 

2

 

“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”).

 

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.

 

3

 

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.

 

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.

 

4

 

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.

 

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 not 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 

 

5

 

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.

 

E.                                      Fair Dealing

 

Each employee, officer and director shall
endeavor to deal fairly with Biovail’s customers, suppliers, competitors and
employees. 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.

 

6

 

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.

 

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 are 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.

 

7

 

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.

 

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 

 

8

 

local
laws, customs, 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 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.

 

9

 

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 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.

 

10

 

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, 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.

 

11

 

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., Blackberrys) 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.

 

12

 

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.

 

13

 

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 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 OF 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 after publication.

 

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

 

14

 

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.

 

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.

 

15

 

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.

 

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 

 

16

 

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 be made only the Board of Directors or the
Compensation, Nominating and Corporate Governance Committee and will be
promptly disclosed to Biovail’s stockholders.

 

17

 

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,
effective the 21st
day of August, 2008.

 

 

	
  Margaret J. Mulligan

  	
   

  
	
  Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Margaret J. Mulligan

  	
   

  
	
  Signature

  	
   

  

 

18

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