Document:

exv10w3

Exhibit 10.3

EXECUTION VERSION

BIOVAIL CORPORATION

EMPLOYMENT AGREEMENT

J. MICHAEL PEARSON

          THIS EMPLOYMENT AGREEMENT (the “Agreement”) is hereby entered into as of June 20, 2010
by and between Biovail Corporation (the “Company”), Biovail Laboratories International SRL
(“BLS”) and J. Michael Pearson, an individual (the “Executive”) (hereinafter
collectively referred to as “the parties”) and shall be effective as of the “Effective
Date” (as hereinafter defined).

RECITALS

          WHEREAS, the Company, Biovail Americas Corp., a wholly owned subsidiary of the Company, Beach
Merger Corp., a wholly owned subsidiary of the Company (“Merger Sub”), and Valeant
Pharmaceuticals International (“Valeant”) have entered into an Agreement and Plan of
Merger, dated as of June 20, 2010 (the “Merger Agreement”), pursuant to which Merger Sub
will be merged with and into Valeant (the “Merger”) and, as a result of which, Valeant will
become a wholly-owned subsidiary of the Company; and

          WHEREAS, as a material incentive for the Company and Valeant to execute the Merger Agreement,
and subject to the consummation of the Merger, Executive has agreed to be employed by the Company
and by BLS, effective as of the Effective Date (as defined below), subject to the terms and
provisions of this Agreement.

          Now, THEREFORE, in consideration of the respective agreements of the parties contained herein,
it is agreed as follows:

	1.	 	Effective Date; Term; Effect on Other Agreements.

	 	(a)	 	Effective as of the consummation of the Merger (the “Effective Date”),
the Company and BLS agree to employ Executive and Executive agrees to be employed by
each of the Company and BLS on the terms and conditions set forth in this Agreement.
If for any reason the Merger Agreement is terminated and the Merger is not consummated,
this Agreement shall be null and void and of no force and effect.
	 
	 	(b)	 	The employment term (the “Employment Term”) of Executive’s employment
under this Agreement shall be, in respect of the Company, for the period commencing on
the Effective Date, and in respect of BLS, commencing on the date that the board of
managers of BLS (the “BLS Board”) has determined that Executive has established
his principal residence in Barbados and is legally entitled to be employed in Barbados
pursuant to relevant Barbados law, and ending in respect of both the Company and BLS on
February 1, 2014. Not later than 120 days prior to the expiration of the Employment
Term, the parties to this Agreement shall either commence negotiations in good faith
regarding the terms of a new employment agreement or new agreements to take effect at
the expiration of the Employment Term, or, if any party does not intend to enter into a
new agreement or agreements to be effective following the Employment Term, notify each
other party of such intent. For the avoidance of doubt, Executive shall not be entitled
to payments pursuant to Section 9 of this Agreement by reason of the Company and/or BLS
electing to not enter into a new agreement or agreements with Executive following the
Employment Term.
	 
	 	(c)	 	As of the Effective Date, Executive’s Amended and Restated Executive Employment
Agreement with Valeant, dated as of March 23, 2010 (the “Existing Agreement”),
shall be superseded in its entirety by

 

 

	 	 	 	this Agreement, and the Existing Agreement shall thereupon have no further force and
effect, except as otherwise provided herein.

	2.	 	Employment. During the Employment Term:

	 	(a)	 	Employment by the Company. Executive shall be employed as Chief
Executive Officer of the Company. In addition, effective as of the Effective Date,
Executive shall be selected by the Board of Directors of the Company (the
“Board”) as director of the Company. For as long as Executive is employed by
the Company as the Chief Executive Officer, the Company shall nominate Executive for
reelection to the Board. At the time of his termination of employment with the Company
for any reason, Executive shall resign from the Board if requested to do so by the
Company. In addition, Executive agrees to resign from the Board, effective upon the
earlier of (1) the date the Board determines the Board’s nominees for election as
directors at the 2012 annual general meeting of shareholders, if at that Board meeting,
Executive’s re-nomination as a director has not been approved by at least 70% of the
directors then in office excluding Executive, and (2) the date of the first meeting of
the Board following the 2012 annual meeting of shareholders if at that Board meeting,
Executive has not been elected to continue in his capacity as Chief Executive Officer
by the affirmative vote of at least 70% of the directors then in office excluding
Executive. Executive shall not receive any compensation in addition to the
compensation described in Sections 3, 4, 5 and 6 of this Agreement for serving as a
director of the Company.
	 
	 	(b)	 	Employment by BLS. As soon as possible following the Effective Date,
Executive shall endeavor to obtain such permission and approval as required by relevant
law to be entitled to live and work in Barbados and shall establish his principal
residence in Barbados. Upon the BLS Board being satisfied that such permission has been
obtained and such principal residence established, Executive shall also be employed by
BLS as the President of BLS, with his permanent office at BLS’s headquarters in
Barbados.
	 
	 	(c)	 	Executive shall report directly to the Board in his capacity of CEO of the
Company, and directly to the BLS Board in his capacity as President of BLS. Executive
shall perform the duties, undertake the responsibilities and exercise the authority
customarily performed, undertaken and exercised by persons situated in similar
executive capacities.
	 
	 	(d)	 	Excluding periods of vacation and sick leave to which Executive is entitled,
Executive shall devote reasonable attention and time to the business and affairs of the
Company and of BLS to the extent necessary to discharge the responsibilities of
Executive hereunder. Prior to joining or agreeing to serve on corporate, civil or
charitable boards or committees, Executive shall obtain approval of both the Board and
the BLS Board. Executive may manage personal and family investments, participate in
industry organizations and deliver lectures at educational institutions, so long as
such activities do not interfere with the performance of Executive’s responsibilities
hereunder.
	 
	 	(e)	 	Executive shall be subject to and shall abide by each of the personnel policies
applicable and communicated in writing to senior executives, including but not limited
to any policy the Company or BLS adopts restricting hedging investments in Company
equity by Company or BLS executives.

	3.	 	Annual Compensation.

	 	(a)	 	Responsibilities of the Company and BLS. Executive, in his capacity as
an employee of both the Company and BLS, shall be entitled to receive, in the
aggregate, the total amounts described in this Section 3, and in Sections 6 and 9 (if
relevant), and any other relevant provision of this Agreement, and

2

 

	 	 	 	acknowledges that such entitlement shall be satisfied whether such amounts are paid
by BLS, by the Company or by a combination of BLS and the Company. For each year
during the Employment Term, the Company and BLS shall agree as to their respective
obligations (as between them) in respect of (i) Executive’s annual compensation (as
described in this Section 3), (ii) the costs and expenditures relating to the rights
described in Sections 4 and 5, (iii) the costs and expenditures relating to benefits
described in Section 6 (except to the extent that responsibility is expressly
allocated in Section 6), and (iv) if relevant, the costs and expenditures described
in Section 9, in light of, in each case, the relative time and energy devoted by
Executive to his respective responsibilities with the Company and BLS. For greater
certainty, the failure of the Company and BLS to come to any such agreement shall in
no way affect Executive’s aggregate entitlements under any Section of this
Agreement.

	 	(b)	 	Base Salary. The Company and BLS agree to pay or cause to be paid to
Executive during the Employment Term a base salary at the rate of $1,500,000
(hereinafter referred to as the “Base Salary”). Such Base Salary shall be
payable in accordance with the Company’s customary practices applicable to Company and
BLS executives. Such Base Salary shall be reviewed at least annually by the Board or by
the Compensation Committee of the Board (the “Committee”) and the BLS Board,
and may be increased at the discretion of the Committee and the BLS Board, but not
decreased.
	 
	 	(c)	 	Performance Bonus.

	 	(1)	 	For each fiscal year of the Company ending during the
Employment Term, beginning with the 2011 fiscal year, Executive shall be
eligible to receive a target annual cash bonus of 100% of the Base Salary (such
target bonus, as may hereafter be increased, the “Target Bonus”) with
the opportunity to receive a maximum annual cash bonus of 200% of the Base
Salary, payable in accordance with the Company’s customary practices applicable
to bonuses paid to Company and BLS executives. Executive shall be entitled to
a 2010 annual cash bonus as determined by the Compensation Committee of the
Board and the BLS Board, payable in accordance with the customary practices
applicable to bonuses paid to Company and BLS executives, provided that such
bonus shall be no less than an amount representing a pro rata bonus based on
performance of Valeant from January 1, 2010 to the Effective Date, as
determined by the Compensation Committee of the Board of Directors of Valeant
prior to the Effective Date and communicated to the Committee.
	 
	 	(2)	 	Beginning with the 2011 fiscal year, any annual cash bonus will
be based on performance by Executive, the Company and BLS based on performance
targets to be established by the Board or the Committee and the BLS Board on or
before March 31 of the applicable calendar year.

	4.	 	Treatment of Outstanding Equity Awards.

	 	(a)	 	Options and Time-Based RSUs. Except as provided herein, each of
Executive’s stock options and time-based restricted stock unit awards relating to
shares of Valeant common stock which were outstanding immediately prior to the
Effective Date, shall be converted, as of the Effective Date, into a similar award
relating to shares of the Company’s common stock, pursuant to the terms and conditions
set forth in the Merger Agreement. Without limiting the generality of the foregoing,
unless and solely to the extent modified by this Agreement, each such award shall,
after the Effective Date, otherwise remain subject to the same terms and conditions as
were in effect with respect to such award immediately prior to the Effective Date, as
set forth in the Existing Agreement and/or the agreement evidencing such award,
including in connection with any termination of employment, except that to the extent
all or a portion of Executive’s Option, Matching Share Units, 2009 Option, or
Additional Matching Units (each as defined in the Existing Agreement) would otherwise
have become vested and exercisable by reason of consummation of the Merger, Executive
agrees to waive such treatment

3

 

	 	 	 	(notwithstanding anything in the Merger Agreement to the contrary) and, in lieu
thereof, such awards shall continue to vest in accordance with their normal terms,
subject to acceleration in accordance with Section 9 and 10 hereof.

	 	(b)	 	Performance-Based RSUs. The parties acknowledge and agree that,
notwithstanding the provisions of the Merger Agreement, Executive’s outstanding
Performance Share Units and Long-Term Performance Units (each as defined in the
Existing Agreement) shall be adjusted as follows in connection with the transactions
contemplated by the Merger Agreement (capitalized terms used but not defined herein
shall have the meaning ascribed to such terms in the Merger Agreement):

	 	(1)	 	Each Performance Share Unit outstanding immediately prior to
the Pre-Merger Special Dividend Time and prior to the Effective Time shall
represent, immediately after the Pre-Merger Special Dividend Time, the right to
receive, on the same terms and conditions as were applicable to the Performance
Share Units immediately prior to the Pre-Merger Special Dividend Time (but
taking into account paragraphs (4), (5) and (6) below), (1) the same number of
shares of Valeant Common Stock underlying the Performance Share Units (the
“PSU Shares”), plus (2) an amount of cash equal to the product of the
Pre-Merger Special Dividend multiplied by the number of shares of Valeant
Common Stock underlying the Performance Share Units (such product, the “PSU
Dividend Equivalent Amount”).
	 
	 	(2)	 	Each Long-Term Performance Unit outstanding immediately prior
to the Pre-Merger Special Dividend Time shall represent, immediately after the
Pre-Merger Special Dividend Time, the right to receive, on the same terms and
conditions as were applicable to the Long-Term Performance Units immediately
prior to the Pre-Merger Special Dividend Time (but taking into account
paragraphs (4) and (6) below), a number of shares of Valeant Common Stock,
rounded down to the nearest whole share, determined by multiplying the number
of shares of Valeant Common Stock subject to the Long-Term Performance Units
immediately prior to the Pre-Merger Special Dividend Time by the Pre-Merger
Special Dividend Adjustment Ratio (the “Long-Term PSU Shares”).
	 
	 	(3)	 	Each Performance Unit and Long-Term Performance Unit
outstanding immediately prior to the Effective Time shall represent,
immediately after the Effective Time, the right to receive, on the same terms
and conditions as were applicable under such award following the Pre-Merger
Special Dividend Time and immediately prior to the Effective Time (but taking
into account paragraphs (4), (5) and (6) below), a number of shares of Company
common stock, rounded down to the nearest whole share, determined by
multiplying (I) in the case of Performance Units, the number of PSU Shares by
the Equity Award Exchange Ratio (and, for the avoidance of doubt, the right to
receive an amount in cash equal to the PSU Dividend Equivalent Amount) and (II)
in the case of Long-Term Performance Units, the number of Long-Term PSU Shares
by the Equity Award Exchange Ratio.
	 
	 	(4)	 	To the extent all or a portion of Executive’s Performance Units
or Long-Term Performance Units would otherwise have vested (or had performance
goals or criteria measured) by reason of consummation of the Merger, Executive
agrees to waive such vesting (or measurement) and, in lieu thereof, such awards
shall continue to vest (and be measured) in accordance with their normal terms,
subject to acceleration in accordance with Section 9 and 10 hereof.
	 
	 	(5)	 	Performance Share Units, as adjusted hereby, shall be payable
without regard to the condition relating to Valeant’s receipt of the Second
Tranche Private Letter Ruling referred to in Section 4(c)(x) of the Existing
Agreement.

4

 

	 	(6)	 	All applicable performance criteria in effect with respect to
Performance Share Units and Long-Term Performance Units shall be equitably
adjusted to reflect the Pre-Merger Special Dividend Adjustment Ratio and the
Equity Award Exchange Ratio.

	 	(c)	 	Executive shall be subject to the following provisions with respect to the net
number of shares of Company common stock (“Shares”) acquired or otherwise held
by Executive in respect of his equity awards relating to shares of Valeant common stock
(collectively, the “Existing Equity Awards”), after subtracting any such Shares
(or, in the case of any such awards exercised or settled prior to the Effective Date,
shares of Valeant common stock) withheld in payment of tax withholding obligations
applicable to the exercise or settlement of such awards (“Net Shares”), as if a
“Change in Control” (as defined in the Existing Agreement) had not occurred upon
consummation of the Merger:

	 	(1)	 	Option. Executive shall not be permitted to surrender
Shares to the Company as payment for the exercise price of the Option (as
defined in the Existing Agreement). Executive may satisfy any tax withholding
obligation with respect to the Option by having Shares withheld by the Company
that would otherwise be issued upon exercise of the Option. Executive shall not
be permitted to sell, assign, transfer, or otherwise dispose of the Net Shares
acquired upon exercise of the Option until February 1, 2014, or, if sooner: (A)
upon a Change in Control (unless immediately following such Change in Control
Executive serves as Chief Executive Officer of the ultimate parent entity
resulting from such Change in Control); (B) upon termination of employment by
reason of death or Disability; or (C) upon Executive’s termination of
employment without Cause or for Good Reason;
	 
	 	(2)	 	Performance Share Units. Executive may satisfy any tax
withholding obligation with respect to the Performance Share Units by having
Shares withheld by the Company that would otherwise be distributed upon
settlement of the Performance Share Units. Executive shall not be permitted to
sell, assign, transfer, or otherwise dispose of any Net Shares acquired upon
settlement of the Performance Share Units until February 1, 2014, or, if
sooner: (A) upon a Change in Control (unless immediately following such Change
in Control Executive serves as Chief Executive Officer of the ultimate parent
entity resulting from such Change in Control); (B) upon termination of
employment by reason of death or Disability; or (C) upon Executive’s
termination of employment without Cause or for Good Reason;
	 
	 	(3)	 	Matching Share Units, Annual Bonus Share Units and 2008 RSU
Grant. Executive may satisfy any tax withholding obligation with
respect to the Matching Units, Annual Bonus Share Units and 2008 RSU Grant
(each as defined in the Existing Agreement) by having Shares withheld by the
Company that would otherwise be distributed upon settlement of such awards.
Executive shall not be permitted to sell, assign, transfer, or otherwise
dispose of any Net Shares acquired upon settlement of the Matching Share Units,
Annual Bonus Share Units and 2008 RSU Grant until February 1, 2014, or, if
sooner: (A) upon a Change in Control (unless immediately following such Change
in Control Executive serves as Chief Executive Officer of the ultimate parent
entity resulting from such Change in Control); (B) upon termination of
employment by reason of death or Disability; or (C) upon Executive’s
termination of employment without Cause or for Good Reason;
	 
	 	(4)	 	2009 Option. Executive shall not be permitted to
surrender Shares to the Company as payment for the exercise price of the 2009
Option (as defined in the Existing Agreement). Executive may satisfy any tax
withholding obligation with respect to the 2009 Option by having Shares
withheld by the Company that would otherwise be issued upon exercise of the
2009 Option. Executive shall not be permitted to sell, assign, transfer, or
otherwise dispose of the Net Shares acquired upon exercise of the 2009 Option
until February 1, 2014, or, if sooner: (A) upon a Change in Control (unless
immediately following such Change in Control Executive serves as Chief
Executive Officer of the ultimate parent entity resulting from such Change in

5

 

	 	 	 	Control); (B) upon termination of employment by reason of death or
Disability; or (C) upon Executive’s termination of employment without Cause
or for Good Reason;

	 	(5)	 	Long-Term Performance Units. Executive may
satisfy any tax withholding obligation with respect to the Long-Term
Performance Units by having Shares withheld by the Company that would otherwise
be distributed upon settlement of the Long-Term Performance Units. Executive
shall not be permitted to sell, assign, transfer, or otherwise dispose of any
Net Shares acquired upon settlement of the Long-Term Performance Units until
February 1, 2014, or, if sooner: (A) upon a Change in Control (unless
immediately following such Change in Control Executive serves as Chief
Executive Officer of the ultimate parent entity resulting from such Change in
Control); (B) upon termination of employment by reason of death or Disability;
or (C) upon Executive’s termination of employment without Cause or for Good
Reason;
	 
	 	(6)	 	Additional Matching Units. Executive may satisfy any
tax withholding obligation with respect to the Additional Matching Units (as
defined in the Existing Agreement) by having Shares withheld by the Company
that would otherwise be distributed upon settlement of the Additional Matching
Units. Executive shall not be permitted to sell, assign, transfer, or otherwise
dispose of any Net Shares acquired upon settlement of the Additional Matching
Units until February 1, 2014, or, if sooner: (A) upon a Change in Control
(unless immediately following such Change in Control Executive serves as Chief
Executive Officer of the ultimate parent entity resulting from such Change in
Control); (B) upon termination of employment by reason of death or Disability;
or (C) upon Executive’s termination of employment without Cause or for Good
Reason; and
	 
	 	(7)	 	Permitted Transfers of Net Shares. Notwithstanding the
foregoing restrictions that do not permit Executive to surrender, sell, assign,
transfer or otherwise dispose of Shares and Net Shares in respect of Existing
Equity Awards, Executive is permitted to transfer Shares in respect of Existing
Equity Awards without penalty under the following circumstances: Executive may
contribute Shares and Net Shares to a limited partnership where all partners
are members of Executive’s family (“Family Limited Partnership”) or
Grantor Retained Annuity Trust (“GRAT”) or like-vehicle, provided that
the Family Limited Partnership, GRAT or like-vehicle (x) does not allow the
Shares and Net Shares to be surrendered, sold, assigned, transferred or
otherwise disposed of during the applicable restricted period with respect to
such Shares or Net Shares, and (y) in the case of a GRAT, Executive shall at
all times remain the trustee of the GRAT, and (z) in the case of a Family
Limited Partnership or such like vehicle Executive retains “beneficial
ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act (as
defined below)) of such Shares or Net Shares.

	5.	 	Long-Term Compensation.

	 	(a)	 	2010 Long-Term Performance Units. As soon as possible after the
Effective Date and subject to any required shareholder approval, provided that the
Company will seek any required approval prior to the Effective Date, the Company shall
grant to Executive 486,114 performance-based restricted share units (the “2010
Long-Term Performance Units”) under the Biovail 2007 Equity Compensation Plan,
which shall vest as follows, provided that, except as otherwise specifically set forth
in Section 9 of this Agreement, Executive is employed by the Company on such vesting
date:

	 	(1)	 	Partial Vesting Share Price. If at November 1, 2013,
February 1, 2014 or May 1, 2014, the Adjusted Share Price (as defined below) is
greater than the Threshold Share Price (as defined below) and less than the
Full Vesting Share Price (as defined below), Executive shall vest in a
proportionate number of 2010 Long-Term Performance Units, such number to be
determined

6

 

	 	 	 	based on the mathematical interpolation between the number of 2010 Long-Term
Performance Units which would vest at the Threshold Share Price and the Full
Vesting Share Price and based on the applicable percentage set forth in
paragraph (2) below.

	 	(2)	 	Full Vesting Share Price. If at November 1, 2013,
February 1, 2014 or May 1, 2014, the Adjusted Share Price equals the Full
Vesting Share Price (as defined below), Executive shall vest in 25%, 75% and
100% respectively of the 2010 Long-Term Performance Units (less any 2010
Long-Term Performance Units that had previously vested pursuant to paragraph
(1) above and this paragraph (2)).
	 
	 	(3)	 	2010 Long-Term Performance Units that could have been vested
under either of paragraphs (1) or (2) that do not become vested on November 1,
2013, February 1, 2014, or May 1, 2014, may become vested on November 1, 2014,
February 1, 2015, or May 1, 2015, respectively, based upon the Adjusted Share
Price on the applicable measurement date, provided that, except as otherwise
specifically set forth in Section 9 of this Agreement, Executive is employed by
the Company on such applicable vesting date. Any 2010 Long-Term Performance
Units that are not vested as of May 1, 2015 shall be immediately forfeited.
	 
	 	(4)	 	Subject to paragraph (5) below, the Company will deliver to
Executive a number of Shares equal to the number of 2010 Long-Term Performance
Units that become vested pursuant to this Section 5(a) on the date that is the
earlier of February 1, 2019 and Executive’s termination of employment (or, if
required by Section 11 of this Agreement, the date that is six months and one
day following Executive’s termination of employment).
	 
	 	(5)	 	Executive may satisfy any tax withholding obligation with
respect to the 2010 Long-Term Performance Units by having Shares withheld by
the Company that would otherwise be distributed upon settlement of the 2010
Long-Term Performance Units. Executive shall not be permitted to sell, assign,
transfer, or otherwise dispose of any 2010 Net Shares (as defined below)
acquired upon settlement of the 2010 Long-Term Performance Units until February
1, 2014 or, if sooner: (A) upon a Change in Control (unless immediately
following such Change in Control Executive serves as Chief Executive Officer of
the ultimate parent entity resulting from such Change in Control); (B) upon
termination of employment by reason of death or Disability; or (C) upon
Executive’s termination of employment without Cause or for Good Reason. For
purposes of this Section 5(a), “2010 Net Shares” shall mean the net
number of Shares acquired by Executive upon settlement of the 2010 Long-Term
Performance Units after subtracting any such Shares withheld by the Company in
payment of tax withholding obligations applicable to such settlement.
Notwithstanding the foregoing restrictions that do not permit Executive to
surrender, sell, assign, transfer or otherwise dispose of Shares and Net
Shares, Executive is permitted to transfer Shares and 2010 Net Shares without
penalty under the circumstances described in Section 4(c)(7) hereof.
	 
	 	(6)	 	“Adjusted Share Price” means the sum of (i) the average
of the closing prices of Shares during the 20 consecutive trading days ending
on the day prior to the specified measurement date (“Average Share
Price”); and (ii) the value that would be derived from the number of Shares
(including fractions thereof) that would have been purchased had an amount
equal to each dividend paid on a share of common stock after the grant date and
on or prior to the applicable measurement date been deemed invested on the
dividend payment date, based on the closing price of the common stock on such
dividend payment date. The Adjusted Share Price and Average Share Price shall
be subject to equitable adjustment to reflect stock splits, stock dividends and
other capital adjustments.

7

 

	 	(7)	 	“Threshold Share Price” means the Adjusted Share Price
equal to a compound annual share price appreciation (the “Annual Compound
TSR”) of 45%, as measured from a base price of $13.37 over a measurement
period from February 1, 2011 to the applicable measurement date. Such base
price shall be subject to equitable adjustment to reflect stock splits, stock
dividends and other capital adjustments (such price, as adjusted, the “Base
Price”).
	 
	 	(8)	 	“Full Vesting Share Price” means the Adjusted Share
Price equal to an Annual Compound TSR of 60%, as measured from the Base Price
over a measurement period from February 1, 2011 to the applicable measurement
date.
	 
	 	(9)	 	Notwithstanding the foregoing vesting provisions of the 2010
Long-Term Performance Units, if on any date between the Effective Date and
February 1, 2014, the closing price per Share (“Per Share Price”) on
such date exceeds $71.65, then Executive shall vest in the 486,114 2010
Long-Term Performance Units that could have been earned under paragraph (2)
above; provided, however, that Executive is employed by the Company on such
vesting date. The Per Share Price specified herein shall be subject to
equitable adjustment to reflect stock splits, stock dividends and other capital
adjustments.
	 
	 	(10)	 	The Company shall enter into a restricted share unit award
agreement with Executive for the above grant of 2010 Long-Term Performance
Units, incorporating the terms set forth in this Agreement and otherwise on the
terms and conditions set forth in Valeant’s standard form of performance-based
restricted share unit award agreement.

	 	(b)	 	Ongoing Grants. Executive shall be eligible to receive, solely in the
discretion of the Board or the Committee, additional annual equity grants during the
Employment Term.

	6.	 	Other Benefits.

	 	(a)	 	Employee Benefits. Executive shall be entitled to participate in all
employee benefit plans, practices and programs maintained by the Company and BLS, and
made available to employees generally, including, without limitation, all pension,
retirement, profit sharing, savings, medical, hospitalization, disability, dental, life
or travel accident insurance benefit plans and including the Barbados Benefits Plan and
Expatriate Benefits Plan. Executive’s participation in such plans, practices and
programs shall be on the same basis and terms as are applicable to employees of the
Company and BLS generally.
	 
	 	(b)	 	Executive Benefits. Executive shall be entitled to participate in all
executive benefit or incentive compensation plans now maintained or hereafter
established by the Company and BLS for the purpose of providing compensation and/or
benefits to comparable executive employees of the Company or BLS including, but not
limited to, the Company’s deferred compensation plans and any supplemental retirement,
deferred compensation, supplemental medical or life insurance or other bonus or
incentive compensation plans. Unless otherwise provided herein, Executive’s
participation in such plans shall be on the same basis and terms, as other senior
executives of the Company and BLS. No additional compensation provided under any of
such plans shall be deemed to modify or otherwise affect the terms of this Agreement or
any of Executive’s entitlements hereunder.
	 
	 	(c)	 	Fringe Benefits and Perquisites. Executive shall be entitled to all
fringe benefits and perquisites generally made available by the Company and BLS to
their senior executives. In addition, during the Employment Term, the Company shall
provide Executive with (or reimburse Executive for the cost of) life insurance in the
face amount of $10,000,000, subject to Executive’s insurability and Executive

8

 

	 	 	 	taking steps reasonably requested by the Company to obtain such insurance, if
required. In connection with the services provided by Executive to BLS in Barbados
and his residency therein, substantially consistent with the arrangements
implemented with respect to the individual serving as chief executive officer of the
Company as of the date hereof: (1) Executive shall receive $100,000 for expenses
relating to Executive’s relocation to Barbados; (2) BLS shall provide for the lease
of appropriate accommodations in Barbados for Executive; (3) during Executive’s
employment with BLS, BLS shall pay Executive a monthly car allowance, in an amount
sufficient to cover the lease and insurance costs of an automobile selected and
leased by Executive in Barbados; (4) Executive shall have access to the Company’s
jet as needed and Executive’s spouse and children shall be permitted to accompany
Executive on trips as deemed as appropriate, with the understanding that the
foregoing may result in taxable income to Executive; (5) the Company and/or BLS
shall reimburse Executive for costs incurred by Executive in connection with tax
preparation furnished by such advisors as chosen by Executive; (6) BLS shall
reimburse Executive for all legal expenses incurred by Executive in connection with
his immigration status and/or right to work in Barbados, to be furnished by such
advisors as chosen by the Company; and (7) the Company and/or BLS shall provide
security personal to Executive on terms mutually agreed by the parties.

	 	(d)	 	Business Expenses. Upon submission of proper invoices in accordance
with the Company’s and BLS’ normal procedures, Executive shall be entitled to receive
prompt reimbursement of all reasonable out-of-pocket business, entertainment and travel
expenses (including travel in first-class) incurred by him in connection with the
performance of his duties hereunder. Such reimbursement shall in no event occur later
than March 15 of the year following the year in which the expenses were
incurred.
	 
	 	(e)	 	Office and Facilities. Upon becoming employed by BLS, Executive shall
be provided with an appropriate permanent office at BLS’ headquarters in Barbados, with
such permanent secretarial and other support facilities as are commensurate with
Executive’s status with the Company and BLS, which facilities shall be adequate for the
performance of his duties hereunder. Executive shall be provided with similar
temporary facilities in the Company’s other offices to the extent he visits such
offices in his capacity as CEO of the Company. At all times and without exception in
Executive’s capacity as President of BLS, Executive shall not perform any activities
for or on behalf of BLS from any Company facility outside of Barbados, or otherwise
outside of Barbados except for occasional and customary visits to customers,
prospective business partners, advisors, and suppliers, occasional meetings with
affiliates of BLS providing services to BLS regarding such services, or to attend
conferences or similar public functions relevant to Executive’s role and
responsibilities as President of BLS.
	 
	 	(f)	 	Vacation and Sick Leave. Executive shall be entitled, without loss of
pay, to absent himself voluntarily from the performance of his employment under this
Agreement, pursuant to the following:

	 	(1)	 	Executive shall be entitled to annual vacation in accordance
with the policies as periodically established by the Board for senior
executives of the Company, which shall in no event be less than four weeks per
year;
	 
	 	(2)	 	in addition to the aforesaid paid vacations, Executive shall be
entitled, without loss of pay, to absent himself voluntarily from the
performance of his employment for such additional periods of time and for such
valid and legitimate reasons as the Board and the BLS Board in their discretion
may determine. Further, the Board and the BLS Board shall be entitled to grant
to Executive a leave or leaves of absence with or without pay at such time or
times and upon such terms and conditions as they may in their discretion
determine; and
	 
	 	(3)	 	Executive shall be entitled to sick leave (without loss of pay)
in accordance with the Company’s and BLS’ policies as in effect from time to
time.

9

 

	 	(g)	 	Travel Expenses. Executive shall be entitled to be reimbursed for
travel expenses for Executive’s spouse to accompany Executive on one business trip per
year.

	7.	 	Termination. Executive’s employment with the Company and BLS hereunder may be
terminated under the circumstances set forth below; provided, however, that notwithstanding
anything contained herein to the contrary, Executive shall not be considered to have
terminated employment with the Company and BLS for purposes of this Agreement until he would
be considered to have incurred a “separation from service” from the Company within the meaning
of Section 409A of the Internal Revenue Code. For the avoidance of doubt, unless otherwise
agreed with Executive, any termination of Executive’s employment by the Company pursuant to
this Agreement shall automatically result in termination of employment with BLS, and any
termination of Executive’s employment by BLS pursuant to this Agreement shall automatically
result in termination of employment with the Company.

	 	(a)	 	Death. Executive’s employment shall be terminated as of the date of
Executive’s death and Executive’s beneficiaries shall be entitled to the benefits
provided in Section 9(b) hereof.
	 
	 	(b)	 	Disability. The Company and BLS may terminate Executive’s employment,
on written notice to Executive after having established Executive’s Disability and
while Executive remains Disabled, subject to the payment by the Company and BLS to
Executive of the benefits provided in Section 9(b) hereof. For purposes of this
Agreement, “Disability” shall mean Executive’s inability to substantially perform his
duties and responsibilities hereunder by reason of any physical or mental incapacity
for two or more periods of ninety (90) consecutive days each in any three hundred and
sixty (360) day period, as determined by a physician with no history of prior dealings
with the Company, BLS, or Executive, as reasonably agreed upon by the Company, BLS, and
Executive. Executive shall be entitled to the compensation and benefits provided for
under this Agreement for any period prior to Executive’s termination by reason of
Disability during which Executive is unable to work due to a physical or mental
infirmity in accordance with the Company’s and BLS’ policies for similarly-situated
executives.
	 
	 	(c)	 	Cause. The Company and BLS may terminate Executive’s employment for
“Cause,” effective as of the date of the Notice of Termination (as defined in Section 8
below) and as evidenced by a resolution adopted in good faith by a majority of the
independent members of the Board and the BLS Board (in both cases, excluding
Executive), subject to the payment by the Company to Executive of the benefits provided
in Section 9(a) hereof. “Cause” shall mean, for purposes of this agreement: (1)
conviction of any felony (other than one related to a vehicular offense) or other
criminal act involving fraud; (2) willful misconduct that results in a material
economic detriment to the Company or BLS; (3) material violation of Company or BLS
policies and directives, which is not cured after written notice and an opportunity for
cure; (4) continued refusal by Executive to perform his duties after written notice
identifying the deficiencies and an opportunity for cure; and (5) a material violation
by Executive of any material covenants to the Company or BLS. No action or inaction
shall be deemed willful if not demonstrably willful and if taken or not taken by
Executive in good faith and with the understanding that such action or inaction was not
adverse to the best interests of the Company and/or BLS. Reference in this paragraph to
the Company shall also include direct and indirect subsidiaries of the Company
(including BLS), and materiality shall be measured based on the action or inaction and
the impact upon the Company taken as a whole. The Company and BLS may suspend, with
pay, Executive upon Executive’s indictment for the commission of a felony as described
under clause (1) above. Such suspension may remain effective until such time as the
indictment is either dismissed or a verdict of not guilty has been entered.
	 
	 	(d)	 	Without Cause. The Company and BLS may terminate Executive’s employment
without Cause. The Company and/or BLS shall deliver to Executive a Notice of
Termination (as defined in Section 8 below) not less than thirty (30) days prior to the
termination of Executive’s employment without Cause and the Company and/or BLS shall
have the option of terminating Executive’s duties and responsibilities prior to the
expiration of such thirty-day notice period, subject to the payment by the Company
and/or BLS,

10

 

	 	 	 	as applicable, of the benefits provided in either Section 9(c) or Section 9(d)
hereof, as may be applicable.

	 	(e)	 	Good Reason. Executive may terminate his employment for Good Reason (as
defined below) by delivering to the Company and BLS Notices of Termination (as defined
in Section 8 below) not less than thirty (30) days prior to the termination of
Executive’s employment for Good Reason. The Company and BLS shall have the option of
terminating Executive’s duties and responsibilities prior to the expiration of such
thirty-day notice period, subject to the payment by the Company and BLS of the benefits
provided in either Section 9(c) or 9(d) hereof, as may be applicable. For purposes of
this Agreement, Good Reason shall mean the occurrence of any of the events or
conditions described in Subsections (i) through (iii) hereof which are not cured by the
Company and BLS (if applicable) (if susceptible to cure by the Company) within thirty
(30) days after the Company and BLS have received written notices from Executive within
ninety (90) days of the initial existence of the event or condition constituting Good
Reason specifying the particular events or conditions which constitute Good Reason and
the specific cure requested by Executive. For the avoidance of doubt, no act or
omission occurring prior to the Effective Date or contemplated by the Merger Agreement
(including Executive ceasing to be the Chairman of Valeant’s Board of Directors) shall
constitute Good Reason.

	 	(1)	 	Diminution of Responsibility. (A) any material
reduction in his duties or responsibilities as in effect immediately prior
thereto, (B) removal of Executive from the position of Chief Executive Officer
of the Company or President of BLS, except in connection with the termination
of his employment for Disability, Cause, as a result of his death or by
Executive other than for Good Reason, or (C) any failure to re-nominate
Executive to the Board (including by reason of the failure to obtain any
supermajority approval of directors as provided for in Section 2(a) hereof); or
	 
	 	(2)	 	Compensation Reduction. Any reduction in Executive’s
base salary or target bonus opportunity; or
	 
	 	(3)	 	Company Breach. Any other material breach by the
Company or BLS of any material provision of this Agreement.

	 	(f)	 	Without Good Reason. Executive may voluntarily terminate his employment
without Good Reason by delivering to the Company and BLS Notices of Termination not
less than thirty (30) days prior to the termination of Executive’s employment and the
Company and BLS shall have the option of terminating Executive’s duties and
responsibilities prior to the expiration of such thirty-day notice period, subject to
the payment by the Company and BLS to Executive of the benefits provided in Section
9(a) hereof through the last day of such notice period.

	8.	 	Notice of Termination. Any purported termination by the Company, BLS or by Executive
shall be communicated by written Notice of Termination to the other party hereto. For purposes
of this Agreement, a “Notice of Termination” shall mean a notice which indicates a
termination date, the specific termination provision in this Agreement relied upon and sets
forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive’s employment under the provision so indicated. For purposes of this
Agreement, no such purported termination of Executive’s employment hereunder shall be
effective without such Notice of Termination (unless waived by the party entitled to receive
such notice).
	 
	9.	 	Compensation Upon Termination. Upon termination of Executive’s employment during the
Employment Term, Executive shall be entitled to the following benefits, it being understood
that a termination by the Company, by

11

 

	 	 	BLS or by both BLS and the Company shall be considered a single termination for the purposes
of this section and Executive shall in no case have any right to receive any amounts
described in this Section more than once:

	 	(a)	 	Termination by the Company and/or BLS for Cause or by Executive Without
Good Reason. If Executive’s employment is terminated by the Company and/or BLS for
Cause or by Executive without Good Reason, the Company and BLS shall pay Executive all
amounts earned or accrued hereunder through the termination date, including:

	 	(1)	 	any accrued and unpaid Base Salary;
	 
	 	(2)	 	reimbursement for any and all monies advanced or expenses
incurred in connection with Executive’s employment for reasonable and necessary
expenses incurred by Executive on behalf of the Company or BLS for the period
ending on the termination date;
	 
	 	(3)	 	any accrued and unpaid vacation pay;
	 
	 	(4)	 	any previous compensation which Executive has previously
deferred (including any interest earned or credited thereon), in accordance
with the terms and conditions of the applicable deferred compensation plans or
arrangements then in effect;
	 
	 	(5)	 	equity and incentive awards, to the extent previously vested,
shall be paid or delivered to Executive in accordance with the terms of such
awards; and
	 
	 	(6)	 	any amount or benefit as provided under any benefit plan or
program (the foregoing items in Sections 9(a)(1) through 9(a)(5) being
collectively referred to as the “Accrued Compensation”).

	 	(b)	 	Termination by the Company and BLS for Disability or By Reason of
Death. If Executive’s employment is terminated by the Company and BLS for
Disability or by reason of Executive’s death, the Company and BLS shall pay Executive
(or his beneficiaries, as applicable) the Accrued Compensation, and, Executive shall be
entitled to the following benefits:

	 	(1)	 	The Company and BLS shall pay to Executive within sixty (60)
days following the termination date, any bonus earned but unpaid in respect of
any fiscal year preceding the termination date;
	 
	 	(2)	 	The Company shall deliver to Executive, on the date that is six
months and one day following Executive’s termination date (or, if sooner,
Executive’s death), Shares in respect of the Annual Bonus Share Units and the
2008 RSU Grant described in Sections 3(b)(ii) and 4(a), respectively, of the
Existing Agreement;
	 
	 	(3)	 	The Company shall deliver to Executive, as soon as practicable
(but in no event more than sixty (60) days) following Executive’s termination
date, Shares in respect of the Matching Share Units described in Section 4(d)
of the Existing Agreement;

12

 

	 	(4)	 	The Option described in Section 4(b) of the Existing Agreement
shall vest in full and remain exercisable for one year following Executive’s
termination date (but in no event beyond the expiration of the Option term);
	 
	 	(5)	 	The 2009 Option described in Section 4(f) of the Existing
Agreement shall vest in full and remain exercisable for one year following
Executive’s termination date (but in no event beyond the expiration of the 2009
Option term);
	 
	 	(6)	 	The performance measures applicable to each of the Performance
Share Units described in Section 4(c) of the Existing Agreement, the Long-Term
Performance Share Units described in Section 4(g) of the Existing Agreement,
and the 2010 Long-Term Performance Units set forth in Section 5(a) hereof, will
be applied as though the termination date were the end of the measurement
period (but in the case of the Long-Term Performance Share Units, in no event
shall the measurement period be less than one year) and the units will vest in
a manner consistent with the respective vesting provisions applicable to those
awards (provided that no pro ration shall be applied to Performance Share Units
or Long-Term Performance Share Units). The Company shall deliver Shares in
respect of vested units in respect of each such award (including previously
vested units that have not been delivered), if any, and cash in respect of
Performance Share Units described in Section 4(c) of the Existing Agreement, as
provided in the Merger Agreement, on Executive’s termination of employment
(subject to any delay required by Section 11 of this Agreement), and all other
units in respect of such awards unvested as of the termination date shall be
forfeited, it being understood that if Executive’s termination is prior to
February 1, 2011, the 2010 Long-Term Performance Units shall be forfeited in
their entirety; and
	 
	 	(7)	 	The Company shall deliver Shares in respect of vested
Additional Matching Units described in Section 4(h) of the Existing Agreement
that have not been delivered, if any, on the date that is six months and one
day following Executive’s termination of employment, and all Additional
Matching Units unvested as of the termination date shall be forfeited.

	 	(c)	 	Termination by the Company and/or BLS Without Cause or by the Executive for
Good Reason Other Than in Connection with a Change in Control. If Executive’s
employment by the Company and/or BLS shall be terminated by the Company without Cause
or by the Executive for Good Reason, either prior to a Change in Control or more than
twelve (12) months following a Change in Control, then, subject to Section 15(f) of the
Agreement, Executive shall be entitled to the benefits provided in this Section 9(c).

	 	(1)	 	The Company and BLS shall pay to Executive any Accrued
Compensation through the end of the notice period provided for in Section 7(e)
hereof;
	 
	 	(2)	 	The Company and BLS shall pay to Executive any bonus earned but
unpaid in respect of any fiscal year preceding the termination date within
sixty (60) days following the termination date;
	 
	 	(3)	 	The Company and BLS shall pay to Executive a bonus or incentive
award in respect of the fiscal year in which Executive’s termination date
occurs, as though he had continued in employment until the payment of bonuses
by the Company and BLS to its executives for such fiscal year, in an amount
equal to the product of (A) the bonus or incentive award that Executive would
have been entitled to receive (x) based on actual achievement against the
stated performance objectives through the date of termination or (y) assuming
that the applicable performance objectives for such year were achieved at
“target”, whichever is less,

13

 

	 	 	 	and (B) a fraction (x) the numerator of which is the number of days in such
fiscal year through termination date and (y) the denominator of which is
365. Any bonus or incentive award payable to Executive under this subsection
(3) shall be paid in the calendar year commencing immediately following the
date of his termination of employment, but in no event later than March 15
of such following year;

	 	(4)	 	The Company and BLS shall pay Executive as severance pay, in
lieu of any further compensation for the periods subsequent to the termination
date, an amount in cash, which amount shall be payable in a lump sum payment
within sixty (60) days following such termination (subject to Section 11),
equal to the sum of (A) two (2) times Executive’s Base Salary and (B) $3.0
million;
	 
	 	(5)	 	The Company and BLS shall provide Executive self-insured
coverage under any health, medical, dental or vision program or policy in which
Executive was eligible to participate as of the time of his employment
termination for two (2) years following such termination on terms no less
favorable to Executive and his dependents (including with respect to payment
for the costs thereof) than those in effect immediately prior to such
termination;
	 
	 	(6)	 	The Company shall deliver to Executive, on the date that is six
months and one day following Executive’s termination date, Shares in respect of
the Annual Bonus Share Units and the 2008 RSU Grant described in the Existing
Agreement;
	 
	 	(7)	 	The Option and the 2009 Option shall become fully vested and
Executive shall have three months following the termination date to exercise
vested 2009 Options (but in no event beyond the expiration of the respective
terms of such options);
	 
	 	(8)	 	The performance measures applicable to each of the Performance
Share Units described in Section 4(c) of the Existing Agreement and the
Long-Term Performance Share Units described in Section 4(g) of the Existing
Agreement will be applied as though the termination date were the end of the
measurement period (but in the case of the Long-Term Performance Share Units,
in no event shall the measurement period be less than one year) and the units
will vest in a manner consistent with the respective vesting provisions
applicable to those awards (provided that no pro ration shall be applied). The
Company shall deliver Shares in respect of vested units in respect of each such
award (including previously vested units that have not been delivered), if any,
and cash in respect of Performance Share Units described in Section 4(c) of the
Existing Agreement, as provided in the Merger Agreement, on Executive’s
termination of employment (subject to any delay required by Section 11 of this
Agreement), and all other units in respect of such awards unvested as of the
termination date shall be forfeited;
	 
	 	(9)	 	With respect to the 2010 Long-Term Performance Units set forth
in Section 5(a) hereof, if Executive’s termination date is after February 1,
2011, the performance measures applicable to any unvested units will be applied
as though the termination date were the end of the measurement period, with the
number of units calculated in a manner consistent with the respective vesting
provisions applicable to those awards; provided, however, that in the event
Executive is entitled to benefits pursuant to this Section, only a pro rata
portion of such calculated units will vest upon termination based on the number
of completed months elapsed from February 1, 2011 to the date of termination
divided by 36 months. The Company shall deliver Shares in respect of vested
units (including previously vested units that have not been delivered), if any,
on Executive’s termination of employment (subject to any delay required by
Section 11 of this Agreement), and all other units as of the termination date
shall be

14

 

	 	 	 	forfeited, it being understood that if Executive’s termination date is prior
to February 1, 2011 the 2010 Long-Term Performance Units shall be forfeited;

	 	(10)	 	The Company shall deliver Shares in respect of vested
Additional Matching Units described in Section 4(h) of the Existing Agreement
that have not been delivered, if any, on the date that is six months and one
day following Executive’s termination of employment, and all other Additional
Matching Units as of the termination date shall be forfeited; and
	 
	 	(11)	 	The Company shall deliver shares in respect of vested Matching
Units described in Section 4(d) of the Existing Agreement that have not been
delivered, if any, as soon as practicable following the Executive’s termination
date (subject to any delay required by Section 11) , any Matching Units
scheduled to vest on such date shall vest on Executive’s termination date, and
all other Matching Units as of the termination date shall be forfeited.

	 	(d)	 	Termination by the Company and/or BLS Without Cause or by Executive for
Good Reason Following a Change in Control. If Executive’s employment by the Company
and/or by BLS shall be terminated by the Company without Cause or by Executive for Good
Reason within twelve (12) months following a Change in Control (as defined in Section
10 below), then in lieu of the amounts due under Section 9(c) above and subject to the
requirements of Section 15(f) of the Agreement, Executive shall be entitled to the
benefits provided in this Section 9(d).

	 	(1)	 	The Company and BLS shall pay Executive any Accrued
Compensation through the end of the notice period provided for in Section 7(e)
hereof;
	 
	 	(2)	 	The Company and BLS shall pay Executive any bonus earned but
unpaid in respect of any fiscal year preceding the termination date within
sixty (60) days following the termination date;
	 
	 	(3)	 	The Company and BLS shall pay to Executive an amount equal to
the bonus or incentive award that Executive would have been entitled to receive
in respect of the fiscal year in which Executive’s termination date occurs, had
he continued in employment until the end of such fiscal year, which amount
shall be payable in a lump sum payment within sixty (60) days following such
termination (subject to Section 11), calculated as if all performance targets
and goals (if applicable) had been fully met at the “target” level by the
Company, BLS, and by Executive, as applicable, for such fiscal year, multiplied
by a fraction (A) the numerator of which is the number of days in such fiscal
year through termination date and (B) the denominator of which is 365;
	 
	 	(4)	 	The Company and BLS shall pay Executive as severance pay and in
lieu of any further Base Salary for periods subsequent to the termination date,
an amount in cash, which amount shall be payable in a lump sum payment within
sixty (60) days following such termination (subject to Section 11), equal to
three (3) times the sum of (A) Executive’s Base Salary and (B) the Target
Bonus;
	 
	 	(5)	 	The Company and BLS shall provide Executive with self-insured
coverage under any health, medical, dental or vision program or policy in which
Executive was eligible to participate as of the time of his employment
termination for two (2) years following such termination on terms no less
favorable to Executive and his dependents (including with respect to payment
for the costs thereof) than those in effect immediately prior to such
termination;

15

 

	 	(6)	 	Annual Bonus Share Units and the 2008 RSU Grant shall be
payable, in the Company’s and BLS’ discretion, in either cash or in shares of
the acquiring entity, on the date that is six months and one day following
Executive’s termination date. Notwithstanding the above, the Annual Bonus Share
Units and the 2008 RSU Grant shall be payable in shares of the acquiring entity
only if the common stock of the acquiring entity is publicly traded on an
established securities market on the date on which such shares are payable;
	 
	 	(7)	 	If the Option and the Matching Share Units are not cancelled in
connection with a Change in Control in exchange for a cash payment (as set
forth in Section 10), each outstanding Option and Matching Share Unit will
vest, the Option will remain exercisable for one year following the termination
date (but not beyond the Option term), and each Matching Share Unit will be
settled as soon as practicable (but in no event more than sixty (60) days)
following the termination date;
	 
	 	(8)	 	The 2009 Option shall become fully vested and, if not cancelled
in connection with a Change in Control in exchange for a cash payment (as set
forth in Section 10), then the 2009 Option will remain exercisable for one year
following the termination date (but not beyond the 2009 Option term);
	 
	 	(9)	 	The Company shall deliver Shares in respect of vested
Additional Matching Units described in Section 4(h) of the Existing Agreement
that have not been delivered, if any, on the date that is six months and one
day following Executive’s termination of employment, and all other Additional
Matching Units as of the termination date shall be forfeited;
	 
	 	(10)	 	The performance measures applicable to each of the Performance
Share Units described in Section 4(c) of the Existing Agreement and the
Long-Term Performance Share Units described in Section 4(g) of the Existing
Agreement will be applied as though the termination date were the end of the
measurement period (but in the case of the Long-Term Performance Share Units,
in no event shall the measurement period be less than one year) and the units
will vest in a manner consistent with the respective vesting provisions
applicable to those awards (provided that no pro ration shall be applied). The
Company shall deliver Shares in respect of vested units in respect of each such
award (including previously vested units that have not been delivered), if any,
and cash in respect of Performance Share Units described in Section 4(c) of the
Existing Agreement, as provided in the Merger Agreement, on Executive’s
termination of employment (subject to any delay required by Section 11 of this
Agreement), and all other units in respect of such awards unvested as of the
termination date shall be forfeited;
	 
	 	(11)	 	With respect to the 2010 Long-Term Performance Units set forth
in Section 5(a) hereof, if Executive’s termination date is after February 1,
2011, the performance measures applicable to any unvested units will be applied
as though the termination date were the end of the measurement period, with the
number of units calculated in a manner consistent with the vesting provisions
of Section 5(a); provided, however, that in the event Executive is entitled to
benefits pursuant to this Section, only a pro rata portion of such calculated
units will vest upon termination based on the number of completed months
elapsed from February 1, 2011 to the date of termination divided by 36 months.
The Company shall deliver Shares in respect of vested units (including
previously vested units that have not been delivered), if any, on Executive’s
termination of employment (subject to any delay required by Section 11 of this
Agreement), and all other 2010 Long-Term Performance Units unvested as of the
termination date shall be forfeited, it being understood that if Executive’s
termination date is prior to February 1, 2011 the 2010 Long-Term Performance
Units shall be forfeited; and

16

 

	 	(12)	 	Executive shall not be required to mitigate the amount of any
payment provided for under this Section 9 by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to Executive in any subsequent employment.

	10.	 	Change in Control.

	 	(a)	 	For purposes of this Agreement, a “Change in Control” shall mean any of
the following events, but shall not include the Merger:

	 	(1)	 	the date any one person (as such term is defined in Section
13(c) or 14(d) of the Securities Exchange Act of 1934, as amended (the
“1934 Act”), or more than one person acting as a group (as determined
under Treas. Reg. Section 1.409A-3(i)(5)(v)(B)) acquires, or has acquired
during the twelve (12) month period ending on the date of the most recent
acquisition by such person or persons (other than from the Company), ownership
of stock of the Company possessing fifty percent (50%) or more of the combined
voting power of the Company’s then outstanding voting securities;
	 
	 	(2)	 	the date a majority of members of the Company’s Board is
replaced during any twelve (12) month period by directors whose appointment or
election is not endorsed by a majority of the members of the Company’s Board
before the date of the appointment or election;
	 
	 	(3)	 	the consummation of a merger or consolidation involving the
Company if the stockholders of the Company, immediately before such merger or
consolidation, do not, as a result of such merger or consolidation, own,
directly or indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the corporation resulting
from such merger or consolidation; or
	 
	 	(4)	 	the consummation of the sale of all or substantially all of the
assets of the Company.

	 	 	 	Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant to
Section 10, solely because fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities is acquired by (i) a trustee or other fiduciary
holding securities under one or more employee benefit plans maintained by the Company or any
of its subsidiaries or (ii) any corporation which, immediately prior to such acquisition, is
owned directly or indirectly by the stockholders of the Company in the same proportion as
their ownership of stock in the Company immediately prior to such acquisition. Also, a
Change in Control shall not be deemed to occur pursuant to this Section 10 if the Change in
Control does not constitute a change in the ownership or effective control of the Company,
or in the ownership of a substantial portion of the assets of the Company, within the
meaning of Section 409A(a)(2)(A)(v) of the Code and its corresponding regulations.

	 	(b)	 	Upon the occurrence of a Change in Control, at the election of the Company, the
Options and the Matching Share Units shall either be (i) cancelled in exchange for a
cash payment based in the case of any merger transaction on the price received by
shareholders in the transaction constituting the Change in Control or in the case of
any other event that constitutes a Change in Control, the closing price of a Share on
the date such Change in Control occurs (minus, in the case of Options, the applicable
exercise price per share) or, (ii) converted into options or units, as applicable, in
respect of the common stock of the acquiring entity (in a merger or otherwise) on the
basis of the relative values of such stock and the Shares at the time of the Change in
Control; provided that subclause (ii) shall only be applicable if the

17

 

	 	 	 	common stock of the acquiring entity is publicly traded on an established securities
market on the date on which such Change in Control is effected.

	 	(c)	 	Upon the occurrence of a Change in Control, all outstanding 2009 Options shall
either be (i) cancelled in exchange for a cash payment based in the case of any merger
transaction on the price received by shareholders in the transaction constituting the
Change in Control or in the case of any other event that constitutes a Change in
Control, the closing price of a Share on the date such Change in Control occurs (minus
the applicable exercise price per share) or, (ii) converted into options in respect of
the common stock of the acquiring entity (in a merger or otherwise) on the basis of the
relative values of such stock and the Shares at the time of the Change in Control;
provided that subclause (ii) shall only be applicable if the common stock of the
acquiring entity is publicly traded on an established securities market on the date on
which such Change in Control is effected.
	 
	 	(d)	 	Upon the occurrence of a Change in Control, any Additional Matching Units that
had vested, but had not been delivered, prior to the Change in Control shall, at the
election of the Company, either be (i) delivered as Shares, or (ii) cancelled in
exchange for a cash payment for the vested Additional Matching Units based in the case
of any merger transaction on the price received by shareholders in the transaction
constituting the Change in Control or in the case of any other event that constitutes a
Change in Control, the closing price of a Share on the date such Change in Control
occurs, or (iii) delivered as shares of the common stock of the acquiring entity (in a
merger or otherwise) on the basis of the relative values of such stock and the Shares
at the time of the Change in Control; provided that subclause (iii) shall only be
applicable if the common stock of the acquiring entity is publicly traded on an
established securities market on the date on which such Change in Control is effected.

	11.	 	Section 409A. The parties intend for the payments and benefits under this Agreement
to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section
409A”) or, if not so exempt, to be paid or provided in a manner which complies with the
requirements of such section, and intend that this Agreement shall be construed and
administered in accordance with such intention. If any payments or benefits due to Executive
hereunder would cause the application of an accelerated or additional tax under Section 409A,
such payments or benefits shall be restructured in a manner which does not cause such an
accelerated or additional tax. For purposes of the limitations on nonqualified deferred
compensation under Section 409A of the Code, each payment of compensation under this Agreement
shall be treated as a separate payment of compensation. Without limiting the foregoing and
notwithstanding anything contained herein to the contrary, to the extent required in order to
avoid accelerated taxation and/or tax penalties under Section 409A amounts that would
otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement
during the six-month period immediately following Executive’s separation from service shall
instead be paid on the first business day after the date that is six months following
Executive’s termination date (or death, if earlier), with interest from the date such amounts
would otherwise have been paid at the short-term applicable federal rate, compounded
semi-annually, as determined under Section 1274 of the Internal Revenue Code of 1986, as
amended, for the month in which payment would have been made but for the delay in payment
required to avoid the imposition of an additional rate of tax on Executive under Section 409A.
Notwithstanding anything to the contrary in this Agreement, all (A) reimbursements and (B)
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 (x) 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; (y) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following the year in
which the expense is incurred; and (z) the right to reimbursement or in kind benefits is not
subject to liquidation or exchange for another benefit.
	 
	12.	 	Records and Confidential Data.

	 	(a)	 	Executive acknowledges that in connection with the performance of his duties
during the Employment Term, the Company and BLS will make available to Executive, or
Executive will have access to,

18

 

	 	 	 	certain Confidential Information (as defined below) of the Company, BLS and their
affiliates. Executive acknowledges and agrees that any and all Confidential
Information learned or obtained by Executive during the course of his employment by
the Company or BLS or otherwise, whether developed by Executive alone or in
conjunction with others or otherwise, shall be and is the property of the Company,
BLS, and their affiliates.

	 	(b)	 	Except to the extent required to be disclosed at law or pursuant to judicial
process or administrative subpoena, the Confidential Information will be kept
confidential by Executive, will not be used in any manner which is detrimental to the
Company or BLS, will not be used other than in connection with Executive’s discharge of
his duties hereunder, and will be safeguarded by Executive from unauthorized
disclosure.
	 
	 	(c)	 	Following the termination of Executive’s employment hereunder, as soon as
possible after the Company’s or BLS’ written request, Executive will return to the
Company and BLS (as applicable) all written Confidential Information which has been
provided to Executive and Executive will destroy all copies of any analyses,
compilations, studies or other documents prepared by Executive or for Executive’s use
containing or reflecting any Confidential Information. Within five (5) business days of
the receipt of such request by Executive, he shall, upon written request of the
Company, deliver to each of the Company and BLS a document certifying that such written
Confidential Information has been returned or destroyed in accordance with this Section
12(c).
	 
	 	(d)	 	For the purposes of this Agreement, “Confidential Information” shall
mean all confidential and proprietary information of the Company, BLS, and their
affiliates, including, without limitation, information derived from reports,
investigations, experiments, research, work in progress, drawing, designs, plans,
proposals, codes, marketing and sales programs, client lists, client mailing lists,
supplier lists, financial projections, cost summaries, pricing formula, marketing
studies relating to prospective business opportunities and all other concepts, ideas,
materials, or information prepared or performed for or by the Company, BLS, or their
affiliates. For purposes of this Agreement, the Confidential Information shall not
include and Executive’s obligation’s shall not extend to (i) information which is
generally available to the public, (ii) information obtained by Executive other than
pursuant to or in connection with this employment and (iii) information which is
required to be disclosed by law or legal process.
	 
	 	(e)	 	Executive’s obligations under this Section 12 shall survive the termination of
the Employment Term.

	13.	 	Covenant Not to Solicit and Not to Compete.

	 	(a)	 	Covenant Not to Solicit. To protect the Confidential Information and
other trade secrets of the Company and BLS, Executive agrees, during the term of this
Agreement and for a period of twelve (12) months after Executive’s cessation of
employment with the Company and/or BLS, not to solicit or participate in or assist in
any way in the solicitation of any employees of the Company or BLS. For purposes of
this covenant, “solicit” or “solicitation” means directly or indirectly influencing or
attempting to influence employees of the Company or BLS to become employed with any
other person, partnership, firm, corporation or other entity. Executive agrees that the
covenants contained in this Section 13(a) are reasonable and desirable to protect the
Confidential Information of the Company, BLS, and their affiliates, provided, that
solicitation through general advertising or the provision of references shall not
constitute a breach of such obligations.
	 
	 	(b)	 	Covenant Not to Compete. To protect the Confidential Information and
other trade secrets of the Company, BLS and their affiliates, Executive agrees, during
the term of this Agreement and for a

19

 

	 	 	 	period of twelve (12) months after Executive’s cessation of employment with the
Company or BLS during the Employment Term pursuant to Section 7(c) or 7(f) hereof,
not to engage in Prohibited Activities (as defined below). For the purposes of this
Agreement, the term “Prohibited Activities” means directly or indirectly
engaging as an owner, employee, consultant or agent of any entity that develops,
manufactures, markets and/or distributes (directly or indirectly) prescription or
non-prescription pharmaceuticals or medical devices for treatments in the fields of
neurology, dermatology, oncology or hepatology; provided, that Prohibited Activities
shall not mean Executive’s investment in securities of a publicly-traded company
equal to less than five (5%) percent of such company’s outstanding voting
securities. Executive agrees that the covenants contained in this Section 13(b) are
reasonable and desirable to protect the Confidential Information of the Company,
BLS, and their affiliates.

	 	(c)	 	It is the intent and desire of Executive and the Company and BLS that the
restrictive provisions of this Section 13 be enforced to the fullest extent permissible
under the laws and public policies as applied in each jurisdiction in which enforcement
is sought. If any particular provision of this Section 13 shall be determined to be
invalid or unenforceable, such covenant shall be amended, without any action on the
part of either party hereto, to delete there from the portion so determined to be
invalid or unenforceable, such deletion to apply only with respect to the operation of
such covenant in the particular jurisdiction in which such adjudication is made.
	 
	 	(d)	 	Executive’s obligations under this Section 13 shall survive the termination of
the Employment Term.

	14.	 	Remedies for Breach of Obligations under Sections 12 or 13 hereof. Executive
acknowledges that the Company will suffer irreparable injury, not readily susceptible of
valuation in monetary damages, if Executive breaches his obligations under Sections 12 or 13
hereof. Accordingly, Executive agrees that the Company will be entitled, in addition to any
other available remedies, to obtain injunctive relief against any breach or prospective breach
by Executive of his obligations under Sections 12 or 13 hereof. Executive agrees that process
in any or all of those actions or proceedings may be served by registered mail, addressed to
the last address provided by Executive to the Company and BLS, or in any other manner
authorized by law.
	 
	15.	 	Miscellaneous.

	 	(a)	 	Successors and Assigns.

	 	(1)	 	This Agreement shall be binding upon and shall inure to the
benefit of the Company and BLS, their successors and permitted assigns and the
Company and BLS shall require any successor or assign to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company and BLS would be required to perform if no such succession or
assignment had taken place. The Company and BLS may not assign or delegate any
rights or obligations hereunder except to a successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company and BLS, as
applicable. The term “the Company” as used herein shall mean a
corporation or other entity acquiring all or substantially all the assets and
business of the Company or BLS, as the case may be, (including this Agreement)
whether by operation of law or otherwise.
	 
	 	(2)	 	Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by Executive, his beneficiaries or legal
representatives, except by will or by the, laws of descent and distribution.

20

 

	 	 	 	This Agreement shall inure to the benefit of and be enforceable by
Executive’s legal personal representatives.

	 	(b)	 	Fees and Expenses. The Company and BLS shall pay all reasonable legal
and financial advisory fees and related expenses, up to a maximum amount of $50,000 in
the aggregate, incurred by Executive in connection with the negotiation of this
Agreement and related employment arrangements. Executive acknowledges that he has had
the opportunity to consult with legal counsel of his choice in connection with the
drafting, negotiation and execution of this Agreement and related employment
arrangements.
	 
	 	(c)	 	Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of Termination)
shall be in writing and shall be deemed to have been duly given when personally
delivered or sent by Certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses last given by each party to each other party;
provided that all notices to the Executive shall be directed to the Executive at his
primary home address with a copy sent by overnight delivery to Lawrence Cagney,
Debevoise & Plimpton, 919 3rd Avenue, New York, NY 10022; and provided that
all notices to the Company shall be directed to the attention of the General Counsel of
the Company with a copy to the Committee. Notices to BLS shall be directed to the
Chairman of the Board of BLS with a copy to the Chief Operating Officer of BLS and a
copy to the General Counsel of the Company. All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the third business
day after the mailing thereof, except that notice of change of address shall be
effective only upon receipt.
	 
	 	(d)	 	Indemnity Agreement. The Company and BLS agree to indemnify and hold
Executive harmless to the fullest extent permitted by applicable law, as in effect at
the time of the subject act or omission. In connection therewith, Executive shall be
entitled to the protection of any insurance policies which the Company or BLS elect to
maintain generally for the benefit of the Company’s and BLS’ directors and officers,
against all costs, charges and expenses whatsoever incurred or sustained by Executive
in connection with any action, suit or proceeding to which he may be made a party by
reason of his being or having been a director, officer or employee of the Company or
BLS. This provision shall survive any termination of the Employment Term.
	 
	 	(e)	 	Withholding. The Company and BLS shall be entitled to withhold the
amount, if any, of all taxes of any applicable jurisdiction required to be withheld by
an employer with respect to any amount paid to Executive hereunder. The Company and
BLS, in their sole and absolute discretions, shall make all determinations as to
whether it is obligated to withhold any taxes hereunder and the amount hereof.
	 
	 	(f)	 	Release of Claims. The termination benefits described in Sections 9(c)
and 9(d) of this Agreement shall be conditioned on Executive delivering to the Company
and BLS, and failing to revoke, a signed release of claims in the form of Exhibit A
hereto within twenty-one days following Executive’s termination date; provided,
however, that Executive shall not be required to release any rights Executive may have
to be indemnified by the Company and BLS under Section 15(d) of this Agreement.
Notwithstanding any provision of this Agreement to the contrary, in no event shall the
timing of Executive’s execution of the release, directly or indirectly, result in
Executive designating the calendar year of payment, and if a payment that is subject to
execution of the release could be made in more than one taxable year, payment shall be
made in the later taxable year.
	 
	 	(g)	 	Modification. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing and
signed by Executive and the Company and BLS. No waiver by any party hereto at any time
of any breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by any such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreement or representations, oral or otherwise, express or
implied, with respect to

21

 

	 	 	 	the subject matter hereof have been made by any party which are not expressly set
forth in this Agreement.

	 	(h)	 	Arbitration. If any legally actionable dispute arises under this
Agreement or otherwise which cannot be resolved by mutual discussion between the
parties, then the Company, BLS, and Executive each agree to resolve that dispute by
binding arbitration before an arbitrator experienced in employment law. Said
arbitration will be conducted in accordance with the rules applicable to employment
disputes of the Judicial Arbitration and Mediation Services (“JAMS”) and the
law applicable to the claim. The parties shall have 30 calendar days after notice of
such arbitration has been given to attempt to agree on the selection of an arbitrator
from JAMS. In the event the parties are unable to agree in such time, JAMS will provide
a list of five (5) available arbitrators and an arbitrator will be selected from such
five member panel provided by JAMS by the parties alternately striking out one name of
a potential arbitrator until only one name remains. The party entitled to strike an
arbitrator first shall be selected by a toss of a coin. The parties agree that this
agreement to arbitrate includes any such disputes that the Company and/or BLS may have
against Executive, or Executive may have against the Company and/or BLS and/or their
related entities and/or employees, arising out of or relating to this Agreement, or
Executive’s employment or Executive’s termination including, but not limited to, any
claims of discrimination or harassment in violation of applicable law and any other
aspect of Executive’s compensation, employment, or Executive’s termination. The parties
further agree that arbitration as provided for in this Section 15(h) is the exclusive
and binding remedy for any such dispute and will be used instead of any court action,
which is hereby expressly waived, except for any request by any party for temporary or
preliminary injunctive relief pending arbitration in accordance with applicable law or
for breaches by Executive of Executive’s obligations under Sections 12 or 13 above or
an administrative claim with an administrative agency. The parties agree that the
arbitration provided herein shall be conducted in or around Morristown, New Jersey
unless otherwise mutually agreed. The Company and BLS shall pay the cost of any
arbitration brought pursuant to this paragraph, excluding, however, the cost of
representation of Executive unless such cost is awarded in accordance with law or
otherwise awarded by the arbitrators. Except as otherwise provided above, the
arbitrator may award legal fees to the prevailing party in his sole discretion,
provided that the percentage of fees so awarded shall not exceed 1% of the net worth of
the paying party (i.e., the Company, BLS or Executive).
	 
	 	(i)	 	Effect of Other Law. Anything herein to the contrary notwithstanding,
the terms of this Agreement shall be modified to the extent required to meet the
provisions of the Sarbanes-Oxley Act of 2002, Section 409A of the Code, or other
federal law applicable to the employment arrangements between the Executive and the
Company and/or BLS. Any delay in providing benefits or payments, any failure to provide
a benefit or payment, or any repayment of compensation that is required under the
preceding sentence shall not in and of itself constitute a breach of this Agreement,
provided, however, that the Company and/or BLS shall provide economically equivalent
payments or benefits to Executive to the extent permitted by law.
	 
	 	(j)	 	Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey applicable to contracts
executed in and to be performed entirely within such State, without giving effect to
the conflict of law principles thereof.
	 
	 	(k)	 	No Conflicts. Executive represents and warrants to the Company and BLS
that he is not a party to or otherwise bound by any agreement or arrangement
(including, without limitation, any license, covenant, or commitment of any nature), or
subject to any judgment, decree, or order of any court or administrative agency, that
would conflict with or will be in conflict with or in any way preclude, limit or
inhibit Executive’s ability to execute this Agreement or to carry out his duties and
responsibilities hereunder.

22

 

	 	(l)	 	Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

	16.	 	Entire Agreement. This Agreement constitutes the entire agreement between the parties
hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or
written, between the parties hereto with respect to the subject matter hereof, including
without limitation the Existing Agreement (except as provided herein).

[Remainder of page left intentionally blank]

23

 

     IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of the day and year
first above written, to be effective as of the Effective Date.

	 	 	 	 	 
	 	BIOVAIL CORPORATION

 	 
	 	By:  	/s/ Mark Durham	 
	 	 	Name: Mark Durham

Title:   Senior Vice President, Human Resources & 

            Shared Services 	 
	 	 	 	 
	 
	 	BIOVAIL LABORATORIES INTERNATIONAL SRL

 	 
	 	By:  	/s/ Sir Louis Tull
	 
	 	 	Name: Sir Louis Tull 
Title:   Manager	 
	 	 	 	 
	 
	 	EXECUTIVE

 	 
	 	By:  	/s/ J. Michael Pearson 	 
	 	 	Name:  	J. MICHAEL PEARSON	 
	 	 	 	 
	 

 

 

EXHIBIT A

[Subject to Revision]

FORM OF RELEASE AGREEMENT

          THIS RELEASE AGREEMENT (the “Release”) is made as of this [ ] day of , [ ], 201_, by and
between J. Michael Pearson (“Executive”), Biovail Corporation (the “Company”) and Biovail
Laboratories International SRL ( “BLS”).

          FOR AND IN CONSIDERATION of the payments and benefits provided in the Employment Agreement
between Executive, the Company and BLS entered into on June 20, 2010, (the “Employment Agreement”),
Executive, for himself, his successors and assigns, executors and administrators, now and forever
hereby releases and discharges the Company and BLS, together with all of its past and present
parents, subsidiaries, and affiliates, together with each of their officers, directors,
stockholders, partners, employees, agents, representatives and attorneys, and each of their
subsidiaries, affiliates, estates, predecessors, successors, and assigns (hereinafter collectively
referred to as the “Releasees”) from any and all rights, claims, charges, actions, causes of
action, complaints, sums of money, suits, debts, covenants, contracts, agreements, promises,
obligations, damages, demands or liabilities of every kind whatsoever, in law or in equity, whether
known or unknown, suspected or unsuspected, which Executive or Executive’s executors,
administrators, successors or assigns ever had, now has or may hereafter claim to have by reason of
any matter, cause or thing whatsoever; arising from the beginning of time up to the date of the
Release: (i) relating in any way to Executive’s employment relationship with the Company or any of
the Releasees, or the termination of Executive’s employment relationship with the Company or any of
the Releasees; (ii) arising under or relating to the Employment Agreement; (iii) arising under any
federal, local or state statute or regulation, including, without limitation, the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act,
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, the
Employee Retirement Income Security Act of 1974, and/or the New Jersey Law against Discrimination,
each as amended; (iv) relating to wrongful employment termination or breach of contract; or (v)
arising under or relating to any policy, agreement, understanding or promise, written or oral,
formal or informal, between the Company and any of the Releasees and Executive; provided, however,
that notwithstanding the foregoing, nothing contained in the Release shall in any way diminish or
impair: (a) any rights Executive may have, from and after the date the Release is executed, under
the Section [9(c)][ 9(d)] of the Employment Agreement, (b) any rights to indemnification that may
exist from time to time under the Company’s certificate of incorporation or bylaws, BLS’ documents
of formation or bylaws, or pursuant to the Employment Agreement; (c) any rights Executive may have
to vested benefits under employee benefit plans or incentive compensation plans of the Company or
of BLS; (d) Executive’s ability to bring appropriate proceedings to enforce the Release, or (e) any
rights or claims Executive may have that cannot be waived under applicable law (collectively, the
“Excluded Claims”). Executive further acknowledges and agrees that, except with respect to Excluded
Claims, the Company, BLS and the Releasees have fully satisfied any and all obligations whatsoever
owed to Executive arising out of his employment with the Company, BLS or any of the Releasees, and
that no further payments or benefits are owed to Executive by the Company, BLS or any of the
Releasees.

          Executive understands and agrees that, except for the Excluded Claims, he has knowingly
relinquished, waived and forever released any and all rights to any personal recovery in any action
or proceeding that may be commenced on Executive’s behalf arising out of the aforesaid employment
relationship or the termination thereof, including, without limitation, claims for backpay, front
pay, liquidated damages, compensatory damages, general damages, special damages, punitive damages,
exemplary damages, costs, expenses and attorneys’ fees. Executive acknowledges and agrees that
Executive has been advised to consult with an attorney of Executive’s choosing prior to signing the
Release. Executive understands and agrees that Executive has the right and has been given the
opportunity to review the Release with an attorney of Executive’s choice should Executive so
desire. Executive also agrees that Executive has entered into the Release freely and voluntarily.
Executive further acknowledges and agrees that Executive has had at least twenty-one (21) calendar
days to consider the Release, although Executive may sign it sooner if Executive wishes. In
addition, once Executive has signed the Release, Executive shall have seven (7) additional days
from the date of execution to revoke Executive’s consent and may do so by writing to:
                                        . The Release shall not be effective, and no payments shall be due hereunder,
until the eighth (8th) day after Executive shall have executed the Release and returned it to the
Company and BLS, assuming that Executive had not revoked Executive’s consent to the Release prior
to such date.

 

 

          Executive agrees never to seek reemployment or future employment with the Company, BLS or any
of the other Releasees.

          It is understood and agreed by Executive that the payment made to him is not to be construed
as an admission of any liability whatsoever on the part of the Company, BLS or any of the other
Releasees, by whom liability is expressly denied. The Release is executed by Executive voluntarily
and is not based upon any representations or statements of any kind made by the Company, BLS or any
of the other Releasees as to the merits, legal liabilities or value of his claims. Executive
further acknowledges that he has had a full and reasonable opportunity to consider the Release and
that he has not been pressured or in any way coerced into executing the Release. The exclusive
venue for any disputes arising hereunder shall be the state or federal courts located in the State
of New Jersey, and each of the parties hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the venue of any such
proceeding brought in such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum. Each of the parties hereto also agrees that any final
and unappealable judgment against a party hereto in connection with any action, suit or other
proceeding may be enforced in any court of competent jurisdiction, either within or outside of the
United States. A certified or exemplified copy of such award or judgment shall be conclusive
evidence of the fact and amount of such award or judgment. The Release and the rights and
obligations of the parties hereto shall be governed and construed in accordance with the laws of
the State of New Jersey. If any provision hereof is unenforceable or is held to be unenforceable,
such provision shall be fully severable, and this document and its terms shall be construed and
enforced as if such unenforceable provision had never comprised a part hereof, the remaining
provisions hereof shall remain in full force and effect, and the court construing the provisions
shall add as a part hereof a provision as similar in terms and effect to such unenforceable
provision as may be enforceable, in lieu of the unenforceable provision.

          The Release shall inure to the benefit of and be binding upon the Company, BLS and their
respective successors and assigns.

          IN WITNESS WHEREOF, Executive, the Company and BLS have executed the Release as of the date
and year first written above.

	 	 	 

	 

	 	 
	[EXECUTIVE]
	 	 BIOVAIL CORPORATION

	 
	 	 
	 
	 	 
	 

	 	 
	BIOVAIL LABORATORIES INTERNATIONAL SRLexv10w4

Exhibit 10.4

EXECUTION COPY

BIOVAIL CORPORATION NON-EXECUTIVE CHAIRMAN AND

BIOVAIL LABORATORIES INTERNATIONAL SRL PRESIDENT

AGREEMENT

BETWEEN:

Biovail Corporation

(hereinafter called the “Corporation”)

OF THE FIRST PART

- and -

Biovail Laboratories International SRL

(hereinafter called “BLS”)

OF THE SECOND PART

- and -

William M. Wells

(hereinafter called “Mr. Wells”)

OF THE THIRD PART

          WHEREAS Mr. Wells is employed as Chief Executive Officer of the Corporation and President of
BLS;

          WHEREAS Mr. Wells previously entered into an Executive Employment Agreement with the
Corporation, dated May 1, 2008 (the “Employment Agreement”);

          WHEREAS, on the date hereof, the Corporation, Valeant Pharmaceuticals International
(“Valeant”) and Beach Merger Corp. have entered into an Agreement and Plan of Merger (the “Merger
Agreement”) (the merger provided for in the Merger Agreement, the “Merger”, and the date of
consummation of the Merger, the “Effective Date”);

          WHEREAS the Corporation desires to deem the Merger a Change in Control (as defined in the
Employment Agreement);

          WHEREAS the Corporation desires to terminate Mr. Wells’s employment without Cause (as defined
in the Employment Agreement), effective as of the Effective Date, immediately following the
consummation of the Merger;

          WHEREAS, as a result of such termination from the Corporation, Mr. Wells will be entitled to
receive certain severance payments and benefits provided for in the Employment Agreement;

          WHEREAS the Corporation desires to appoint Mr. Wells the Non-Executive Chairman (the
“Non-Executive Chairman”) of the Board of Directors of the Corporation (the “Board”), effective
upon Mr. Wells’s termination of employment from the Corporation, and BLS desires to continue Mr.
Wells’s employment;

           WHEREAS the Corporation, BLS and Mr. Wells desire to enter into this Non-Executive Chairman
and BLS President Agreement (this “Agreement”) to set forth the terms of Mr. Wells’s role as

 

 

Non-Executive Chairman, both during a limited transition period on and following the Effective Date
during which Mr. Wells will serve as President and chairman of BLS and thereafter;

          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 I

Term of Agreement

          SECTION 1.01. Term of Agreement. This Agreement shall be effective as of the
Effective Date and shall continue in full force and effect indefinitely until terminated pursuant
to Article VII hereof. The period of Mr. Wells’s services under this Agreement shall be referred
to as the “Term”. This Agreement shall be null and void ab initio and of no force
and effect if the Merger Agreement is terminated in accordance with its terms and the Merger is not
consummated.

ARTICLE II

Severance Payments and Benefits

          SECTION 2.01. Change in Control. The Merger shall be deemed a Change in Control for
purposes of the Employment Agreement.

          SECTION 2.02. Termination of Employment. Effective as of the Effective Date,
immediately following the consummation of the Merger, the Corporation shall terminate Mr. Wells’s
employment without Cause.

          SECTION 2.03. Severance Payments and Benefits. Pursuant to Sections 2.01 and 2.06(c)
of the Employment Agreement (as modified herein), in addition to any benefits or compensation
accrued, earned and due to Mr. Wells but not yet paid as of the Effective Date, Mr. Wells shall be
eligible to receive the severance payments and benefits described in this Section 2.03;
provided that (i) Mr. Wells continues to comply with the provisions of Article VIII hereof
and (ii) Mr. Wells executes, and does not revoke, a Release (as defined, and subject to the
conditions, in the Employment Agreement).

     (a) Mr. Wells shall be paid a lump sum severance payment within 60 days of the
Effective Date, equal to two (2) times Mr. Wells’s base salary (calculated using Mr.
Wells’s annual base salary in the year in which the Effective Date occurs) plus two (2)
times Mr. Wells’s target level of annual incentive compensation under the Short Term
Incentive Plan (as defined in the Employment Agreement) for the fiscal year prior to the
fiscal year in which the Effective Date occurs;

     (b) Mr. Wells shall be entitled to a pro-rated portion of Mr. Wells’s target level of
annual incentive compensation under the Short Term Incentive Plan for the fiscal year in
which the Effective 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 Effective Date and
calculated in accordance with the terms of the Short Term Incentive Plan; provided that
within the 30 days immediately prior to the Effective Date, the Board (or a committee
thereof) shall review the Corporation’s and Mr. Wells’s performance through the date of
such review that would otherwise be used to determine payouts under the Short Term
Incentive Plan for the fiscal year in which the Effective Date occurs, and the Board (or
such committee) shall consider in its absolute discretion whether to pay a larger amount of
incentive compensation to Mr. Wells with respect to such plan than would otherwise be paid
pursuant this Section 2.03(b).

2

 

     (c) Until the earlier of (i) the end of the two (2) year period following the
Effective Date, and (ii) the date, or dates, Mr. Wells is eligible to receive benefits
under the same type of plan of a subsequent employer (the “Benefit Period”), the
Corporation shall pay to Mr. Wells a monthly payment on the first payroll date of each
month equal to the COBRA cost of continued medical and dental coverage for Mr. Wells and
Mr. Wells’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 Mr. Wells would be required to contribute for medical and dental
coverage if Mr. Wells were an active employee. These payments shall commence on the
Corporation’s first payroll date after the Effective Date and shall continue until the end
of the Benefit Period (but not longer than the Benefit Period);

     (d) Except as otherwise provided in this Section 2.03(d), upon and following the
Effective Date, the equity compensation awards that Mr. Wells holds as of the Effective
Date shall remain outstanding in accordance with their terms and the terms of the equity
compensation plans and award agreements pursuant to which such equity compensation awards
were granted. Notwithstanding the foregoing, (i) any unvested equity compensation awards
held by Mr. Wells as of the Effective Date other than any restricted share unit awards with
performance goals (“Performance-based RSUs”) shall automatically accelerate and become one
hundred percent (100%) vested and, as applicable, exercisable, as of the Effective Date,
and (ii) (A) the performance period with respect to any Performance-based RSUs held by Mr.
Wells as of the Effective Date shall terminate on the Effective Date, (B) the performance
multiplier used to determine the number of such performance-based RSUs that will be earned
and settled pursuant to the applicable equity compensation plan or award agreement shall be
determined based on performance during the applicable performance period through the
Effective Date; provided that the price per share in the capital of the Corporation
on the Effective Date used for purposes of determining such multiplier shall be increased
by the value of the Post-Merger Special Dividend, (C) within 10 business days following the
Effective Date, the Corporation shall provide Mr. Wells with the shares in the capital of
the Corporation underlying the Performance-based RSUs that are earned pursuant to the
preceding clause (B), plus any dividends accrued and paid thereon from the Effective Date
to the date of delivery of the shares to Mr. Wells, and (D) any Performance-based RSUs held
by Mr. Wells as of the Effective Date that are not earned pursuant to clause (B) shall be
forfeited for no consideration as of the Effective Date.

     (e) In the event any payments or benefits made to Mr. Wells are deemed “excess
parachute payments” within the meaning of Section 280G of the Code, and Mr. Wells is
subject to excise tax under Section 4999 of the Code (the “Excise Tax”) with respect to
such payments, Mr. Wells shall receive, in addition to any other payments and benefits to
which he is entitled under this 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 this Agreement to the contrary, in accordance with the requirements of
section 409A of the Code, any additional payment payable to Mr. Wells hereunder shall be
paid not later than the end of the calendar year next following the calendar year in which
Mr. Wells or the Corporation (as applicable) remits the taxes for which the additional
payment is being paid; and

     (f) For purposes of the foregoing and for the avoidance of doubt, Mr. Wells and the
Corporation acknowledge that (i) Mr. Wells’s annual base salary in 2010 is $860,000 (ii)
Mr. Wells’s target level of annual incentive compensation under the Short Term Incentive
Plan for the 2009 fiscal year was $860,000 and (iii) Mr. Wells’s target level of annual
incentive compensation under the Short Term Incentive Plan for the 2010 fiscal year is
$860,000.

3

 

ARTICLE III

Retention of Shares

          SECTION 3.01. Retention of Shares. Mr. Wells and the Corporation acknowledge that, as
of the date of this Agreement, Mr. Wells holds the shares in the capital of the Corporation that
are listed on Schedule A (the “Shares”). During the Term, Mr. Wells shall not assign,
alienate, pledge, attach, sell or otherwise transfer or encumber any of the Shares otherwise than
by will or by the laws of descent and distribution, and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the
Corporation.

ARTICLE IV

Services, Continued Employment and Residence

          SECTION 4.01. Services During Term. Effective as of the Effective Date, upon the
termination of Mr. Wells’s employment in accordance with Section 2.02, Mr. Wells shall be appointed
as the Non-Executive Chairman and shall serve in such position during the remainder of the Term.
Mr. Wells’s duties as Non-Executive Chairman shall include presiding over meetings of the Board,
calling special meetings of the Board, receiving Board and officer resignations, and such other
specific duties that are normal and customary to such position and as may reasonably be assigned to
the Non-Executive Chairman from time to time by the Board. The scope of Mr. Wells’s activities and
his committee memberships shall be determined by the Board, acting in its sole discretion. Mr.
Wells shall report to the Board and coordinate his activities with the Board and the Corporation.
The foregoing duties of Mr. Wells shall be referred to for purposes of this Agreement as the
“General Services”.

          SECTION 4.02. Continued BLS Employment and Additional Services During Transition
Period. The period from the Effective Date through the date that is 15 days following the date
on which the Board determines that the Corporation’s Chief Executive Officer (or another individual
designated by the Board) has become a resident of Barbados and President and chairman of BLS (the
date of such determination, the “Residence Date”) shall be referred to for purposes of this
Agreement as the “Transition Period”; provided that the Board (at the request of the
Corporation’s Chief Executive Officer) may extend the Transition Period by up to nine additional
months (but in no event beyond the 12-month anniversary of the Effective Date) upon written notice
to Mr. Wells prior to the Residence Date; provided, however, that Mr. Wells may
terminate any such extension of the Transition Period upon 30 days’ written notice to the
Corporation and BLS. During the Transition Period, in addition to the General Services, Mr. Wells
shall (a) continue to serve as the President and chairman of BLS, continue to perform his customary
duties consistent with his positions as President and chairman of BLS, and continue to be based in
Barbados and maintain his residence and entitlement to work in Barbados and (b) as requested by the
Corporation’s Chief Executive Officer, (i) provide transition services in connection with the
Merger and the integration of the Corporation and Valeant, consistent with Mr. Wells’s continuing
position as President of BLS and his prior position as Chief Executive Officer of the Corporation,
(ii) assist the Corporation and BLS in complying with Barbados and other tax processes and
procedures, (iii) assist the Corporation and BLS in maintaining research and development partner
relations and (iv) assist the Corporation in maintaining investor relations within the Canadian
investor community. The foregoing duties of Mr. Wells shall be referred to for purposes of this
Agreement as the “Transition Services”.

ARTICLE V

Remuneration During Term

          SECTION 5.01. Remuneration During Term. The Corporation shall pay to Mr. Wells
$350,000 per year during the Term (both during and following the Transition Period) for the General
Services (the “General Services Fee”). The General Services Fee shall be paid in the form of
deferred share units. Such deferred share units shall be granted under, and subject to the terms
and conditions of, the applicable equity compensation plan of the Corporation. The General
Services Fee shall be paid in four

4

 

equal annual installments, with each installment payable on the first business day of each
calendar quarter during the Term; provided that the first installment of the General
Services Fee shall be prorated based on the number of days on and following the Effective Date in
the calendar quarter that includes the Effective Date and shall be payable on or about the
Effective Date. Each such installment of deferred share units shall be valued based on the fair
market value of the underlying stock on the date of grant.

          SECTION 5.02. Additional Remuneration During Transition Period. In addition to the
General Services Fee, BLS shall pay to Mr. Wells a cash fee for the Transition Services (the
“Transition Services Fee”) in the amount of $40,000 for each month of the Term that ends during the
Transition Period, payable in cash in arrears on the last business day of each such month, subject
to Mr Wells’s compliance with his obligations set forth in Section 4.02 through each such payment
date; provided that the first installment of the Transition Services Fee shall be prorated
based on the number of days on and following the Effective Date in the calendar month that includes
the Effective Date. Within five days following the end of the Transition Period (but in no event
later than 12 months following the Effective Date), BLS shall pay to Mr. Wells a lump-sum cash fee
for the Transition Services in an amount equal to the excess, if any, of (i) $860,000 over (ii) the
aggregate amount of the Transition Services Fee paid to him prior to such earlier date, subject to
Mr. Wells’s compliance with his obligations set forth in Section 4.02 during the Transition Period.
Mr. Wells shall be entitled to no further remuneration as a consequence of the termination of the
Transition Period. If the Corporation, BLS and Mr. Wells agree to extend the period during which
Mr. Wells provides Transition Services by more than 12 months following the Effective Date, Mr.
Wells’s remuneration during such extended period shall be reasonably determined by negotiations
among the Corporation, BLS and Mr. Wells at the time of such extension.

          SECTION 5.03. Perquisites and Expenses and Location of Services.

     (a) During the Transition Period, BLS shall provide for the lease of appropriate
accommodation in Barbados for Mr. Wells and associated expenses consistent with past
practice.

     (b) During the Transition Period, BLS shall pay Mr. Wells a monthly car allowance, in
an amount sufficient to cover the lease and insurance costs of an automobile selected and
leased in Barbados by Mr. Wells.

     (c) During the Transition Period Mr. Wells shall be provided with an appropriate
permanent office and secretarial and other support facilities solely at BLS’s headquarters
in Barbados. At all times and without exception during the Transition Period, in Mr.
Wells’s capacity as President of BLS, Mr. Wells shall not perform any activities for or on
behalf of BLS from any Company facility outside of Barbados, or otherwise outside of
Barbados except, in the latter case, for occasional and customary visits to customers,
prospective business partners, advisors, and suppliers, or to attend conferences or similar
public functions relevant to Mr. Wells’s role and responsibilities as President of BLS.

     (d) During the Term, subject to the approval of the Corporation’s Chief Executive
Officer and in accordance with any applicable business travel policies of the Corporation,
Mr. Wells shall have access to the Corporation’s owned or leased aircraft as needed in
performing his services hereunder and Mr. Wells’s spouse shall be permitted to accompany
Mr. Wells on trips as deemed appropriate, with the understanding that the foregoing may
result in taxable income to Mr. Wells.

     (e) BLS shall reimburse Mr. Wells for costs incurred by Mr. Wells in connection with
tax preparation with respect to any of his tax returns for his 2010 and 2011 taxable years,
to be furnished by such advisors as chosen by Mr. Wells.

     (f) During the Transition Period, BLS shall reimburse Mr. Wells for all legal expenses
incurred by Mr. Wells in connection with his immigration status and right to work in
Barbados, with such legal services to be furnished by such advisors as chosen by BLS.

5

 

     (g) During the Transition Period, BLS shall provide security personnel to Mr. Wells in
Barbados, on terms to be mutually agreed by the parties.

     (h) During the Term, Mr. Wells shall be reimbursed for reasonable out-of-pocket
business expenses, including travel and entertainment expenses actually and properly
incurred by Mr. Wells in the course of performing his services hereunder, upon furnishing
to the Corporation (or BLS if during the Transition Period) reasonable supporting
statements and vouchers; provided that where, in any financial year, Mr. Wells has
been provided with an approved budget, such expenses must not exceed the amount so budgeted
without the prior written approval from the Corporation (or BLS if during the Transition
Period).

     (i) During the Term, the Corporation (or BLS if during the Transition Period) shall
provide and pay reasonable expenses related to Mr. Wells’s use of mobile technology,
consistent with his usage of such technology on the date of this Agreement, including fees
for use of a wireless email device (e.g., a “Blackberry”) and a laptop computer.

ARTICLE VI

Employee/Independent Contractor Status

     SECTION 6.01. Employee/Independent Contractor Status. During the Transition Period,
Mr. Wells shall continue to be an employee of BLS, but he shall, throughout the entire Term, be an
independent contractor with respect to the Corporation. Except (a) as otherwise provided herein
and (b) as provided in any benefit plans from time to time in effect for members of the Board
generally, Mr. Wells is not entitled to any of the benefits that the Corporation provides to its
employees.

     SECTION 6.02. Tax Reporting. Mr. Wells shall be solely responsible for taxes and
other wage deductions incurred as a result of performing services under this Agreement. Unless
required to do so by applicable law, the Corporation shall not pay or withhold any Federal, state
or foreign governmental payroll taxes of any kind, including FICA and FUTA, with respect to its
payments to Mr. Wells. BLS will continue to make the required withholdings in accordance with
Barbados law.

ARTICLE VII

Termination

          SECTION 7.01. Termination. The Corporation (or BLS during the Transition Period) may
terminate the Term (a) for any reason upon 60 days’ prior written notice to Mr. Wells or (b) for
Cause (defined as in the Employment Agreement, but with the references to the Employment Agreement
in such definition deemed to be replaced with references to this Agreement) with immediate effect
upon written notice to Mr. Wells. Mr. Wells may terminate the Term for any reason upon 60 days’
prior written notice to the Corporation (and BLS if during the Transition Period). In the event of
any termination of the Term, Mr. Wells shall be entitled to receive any accrued but unpaid payments
(including any vested equity awards), and reimbursement for any incurred but unreimbursed expenses,
in each case subject to the terms set forth herein, but no other remuneration. Mr. Wells shall
automatically cease to be Non-Executive Chairman on the date of any of the Corporation’s annual
general meetings of shareholders held following the date of this Agreement if Mr. Wells is not
elected to the Board at such meeting, but if such event shall occur during the Transition Period,
this Agreement shall continue in full force and effect with respect to Mr. Wells’s continued
employment as President of BLS until the end of the Transition Period, and, notwithstanding
anything to the contrary in Article V, he will be entitled to continue to receive his Transition
Services Fee for the remainder of the Transition Period but will cease receiving the General
Services Fee.

          In addition, Mr. Wells agrees to resign from the Board, effective upon the earlier of (1) the
date the Board determines the Board’s nominees for election as directors at the 2012 annual general
meeting of shareholders, if at that Board meeting, Mr. Wells’s re-nomination as a director has not
been

6

 

approved by at least 70% of the directors then in office excluding Mr. Wells, and (2) the date of
the first meeting of the Board following the 2012 annual meeting of shareholders if at that Board
meeting, Mr. Wells has not been elected to continue in his capacity as Non-Executive Chairman by
the affirmative vote of at least 70% of the directors then in office excluding Mr. Wells, but if
such event shall occur during the Transition Period, this Agreement shall continue in full force
and effect with respect to Mr. Well’s continued employment as President of BLS until the end of the
Transition Period, and, notwithstanding anything to the contrary in Article V, he will be entitled
to continue to receive his Transition Services Fee for the remainder of the Transition Period but
will cease receiving the General Services Fee.

ARTICLE VIII

Obligations

          SECTION 8.01. Confidentiality. Mr. Wells acknowledges that he remains bound by the
terms of the confidentiality agreement, dated April 21, 2008 (the “Confidentiality Agreement”),
which Confidentiality Agreement has been read, understood and executed by Mr. Wells and which is
hereby incorporated by reference. For a period commencing on the date hereof and ending ten (10)
years from the expiration of the Term, the Corporation and BLS shall use reasonable efforts to
ensure that their respective directors, executive officers and employees keep confidential any and
all information they have about Mr. Wells that is not in the public domain and that they do not
divulge in any manner whatsoever any such information to any person, firm, corporation, partnership
or similar entities without Mr. Wells’s written authority, provided that this provision
shall not restrict the ability of the Corporation’s and BLS’s respective directors, executive
officers or employees to make truthful statements in good faith in response to any governmental
inquiry or request for information or otherwise when required by law, including any securities
laws, or legal process to do so.

          SECTION 8.02. Non-Competition; Non-Solicitation and Hiring. Mr. Wells acknowledges
and agrees that he remains bound by the terms of Sections 4.02 and 4.03 of the Employment
Agreement, for the time periods set forth therein (treating the Effective Date as the expiration of
the term of the Employment Agreement for such purpose), subject to the terms and conditions set
forth in Article IV of the Employment Agreement.

          SECTION 8.03. Standards of Business Conduct. Mr. Wells acknowledges and agrees that
he has read and understood and agrees that he remains bound by the Corporation’s Standards of
Business Conduct, which is hereby incorporated by reference.

ARTICLE IX

Indemnification

          SECTION 9.01. Indemnification. The Corporation agrees to indemnify and hold Mr. Wells
harmless to the fullest extent permitted by applicable law, as in effect at the time of the subject
act or omission. In connection therewith, Mr. Wells shall be entitled to the protection of any
insurance policies which the Corporation elects to maintain generally for the benefit of the
Corporation’s directors and officers, against all costs, charges and expenses whatsoever incurred
or sustained by Mr. Wells in connection with any action, suit or proceeding to which he may be made
a party by reason of his being or having been a director, officer or employee of the Corporation
and BLS. This provision shall survive any termination of Mr. Wells’s service hereunder.

ARTICLE X

Interpretation and Enforcement

          SECTION 10.01. Section 409A. 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

7

 

or payment shall be provided in full (to extent not paid in part at an 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 Mr. Wells’s services under this Agreement
may only be made upon Mr. Wells’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 Mr. Wells, 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 Mr. Wells’s termination of
employment with the Corporation, the Corporation has securities which are publicly traded on an
established securities market and Mr. Wells 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
any reduction in such payments or benefits ultimately paid or provided to Mr. Wells) 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 Mr. Wells’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 Mr. Wells on the first payroll date that occurs
after the date that is six months following Executive’s “separation of service” with the
Corporation. If Mr. Wells dies during the postponement period prior to the payment of the
postponed amount, the amounts withheld on account of section 409A of the Code shall be paid to the
personal representative of Mr. Wells’s estate within 60 days after the date of Mr. Wells’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 Mr.
Wells’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.

          SECTION 10.02. Independent Legal Advice. Mr. Wells agrees to the terms and conditions
of this Agreement having had the opportunity to receive independent legal advice.

          SECTION 10.03. Severability. 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.

          SECTION 10.04. Sections and Headings. 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.

          SECTION 10.05. Number. 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.

          SECTION 10.06. Entire Agreement. This Agreement and the Schedules hereto constitute
the entire Agreement between the parties with respect to the subject matter hereof and cancel and
supersede any prior understandings and agreements between the parties with respect thereto,
including the Employment Agreement, except as expressly set forth herein. There are no
representations, warranties,

8

 

forms, conditions, undertakings or collateral Agreements, express, implied or statutory
between the parties other than as expressly set forth in this Agreement.

          SECTION 10.07. Amendments and Waivers. 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.

          SECTION 10.08. Governing Law. 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.

          SECTION 10.09. Notices. Any demand, notice or other communication (hereinafter in
this section 10.09 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 or by
registered mail addressed respectively to the recipients:

	 	 	 	 	 

	 

	 	To Mr. Wells:
	 	William M. Wells
	 

	 	 	 	At the most recent address on file with the Corporation
	 
	 	 	 	 
	 

	 	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.

          SECTION 10.10. Benefit of Agreement. 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.

          SECTION 10.11. Assignment. Mr. Wells may not assign his rights or obligations under
this Agreement without the prior written consent of the Corporation and BLS, which consent may not
be unreasonably withheld. The Corporation and BLS may assign this agreement to an affiliate
without consent but on notice to Mr. Wells. Neither the Corporation nor BLS may assign its rights
or obligations under this Agreement to any third party other than an affiliate without the prior
written consent of Mr. Wells, which consent may not be unreasonably withheld.

          SECTION 10.12. Execution of Agreement. Mr. Wells 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 Mr. Wells, the Corporation and
BLS.

[SIGNATURE PAGE FOLLOWS]

9

 

          IN WITNESS WHEREOF the Corporation has executed this Agreement on June 20, 2010.

	 	 	 	 	 
	 	BIOVAIL CORPORATION

 	 
	 	by  	/s/ MARK DURHAM
 	 
	 	 	Name:  	Mark Durham	 
	 	 	Title:  	Senior Vice President, Human Resources and Shared Services	 
	 

          IN WITNESS WHEREOF BLS has executed this Agreement on June 20, 2010.

	 	 	 	 	 
	 	BIOVAIL LABORATORIES INTERNATIONAL SRL

 	 
	 	by  	/s/ Sir Louis Tull
 	 
	 	 	Name:  	Sir Louis Tull	 
	 	 	Title:  	Manager	 
	 

          IN WITNESS WHEREOF Mr. Wells has executed this Agreement on June 20, 2010.

	 	 	 

	 

	 	SIGNED, SEALED AND DELIVERED
	 

	 	in the presence of:
	 
	 	 
	/s/ WILLIAM M. WELLS
	 	/s/ Christopher Hall
	 

	 	 
	William M. Wells

	 	Witness

10

 

EXECUTION COPY

SCHEDULE A

SHARES

75,000 shares held as of the date hereof in Mr. Wells’s Morgan Stanley brokerage account

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]