Document:

Exhibit 10.43

 

BIOVAIL
CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT

 

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

 

ARTICLE ONE —
GENERAL DUTIES AND TERM

 

Scope of Employment
/ Duties

 

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

 

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

 

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

 

Term of Agreement

 

1.04         The Executive has
been employed by the Corporation since February 17, 2003 (the “Employment
Commencement Date”).  The Corporation
hereby agrees to continue to employ the Executive and the Executive hereby
accepts such continued employment, in accordance with the terms and conditions
of this Agreement, commencing on July 3, 2009. 
The period of the Executive’s employment under this Agreement will be
referred to as the “Employment Term.” 
Subject to the Corporation’s obligation to provide severance benefits
and the parties’ obligation to provide a Notice of Termination (as defined
below), the Executive and the Corporation acknowledge that this employment
relationship may be terminated at any time and for any or no cause or reason at
the option of either the Executive or the Corporation.

 

 

ARTICLE TWO —
COMPENSATION

 

Base Salary

 

2.01         As of the Employment Commencement Date,
the Executive’s annualized base salary will be $361,179.26
USD, payable in accordance with the Corporation’s normal payroll
practices for employees generally, and will be subject to annual review in
accordance with the Corporation’s normal review process for other similarly
situated senior executives.

 

Incentive
Compensation

 

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

 

Equity
Compensation

 

2.03         Eligibility and Terms.

 

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

 

Employee Benefits

 

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

 

Expenses

 

2.05 The Executive shall
be reimbursed for reasonable out of pocket business expenses, including travel
and entertainment expenses, actually and properly incurred by the Executive in
the course of performing the Executive’s services hereunder, upon furnishing to
the Corporation reasonable supporting statements and vouchers; provided,
however, that in any financial year in which the Corporation has provided to
the Executive an approved budget, such expenses must not exceed the amount so
budgeted without the prior written approval from the CEO.

 

 

Vacation

 

2.06         The Executive will be eligible for 5
weeks of vacation annually, to be taken in accordance with the terms of the
Corporation’s Vacation Policy, without regard to any lesser amount of vacation
time set forth therein.  Notwithstanding
the foregoing, the Executive’s eligibility for vacation in the year of hire
will be pro-rated in the manner specified in the Corporation’s Vacation Policy.

 

ARTICLE THREE —
TERMINATION AND RESIGNATION

 

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

 

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

 

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

 

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

 

(c)           Until the earlier of (i) the end of the one (1) year
period following the Executive’s Termination Date, or (ii) the date, or
dates, the Executive is eligible to receive benefits under the same type of
plan of a subsequent employer (the “Benefit Period”), the Corporation will pay
to the Executive a monthly payment on the first payroll date of each month
equal to the COBRA cost of continued medial and dental coverage for the
Executive and the Executive’s covered dependents under the medical and dental
plans of the Corporation pursuant to section 4980B of the Internal Revenue
Code, less the amount that the Executive would be required to contribute for
medical and dental coverage if the Executive were an active employee.  These payments will commence on the
Corporation’s first payroll date after the Executive’s 

 

 

Termination Date and will
continue until the end of the Benefit Period (but not longer than the Benefit
Period).

 

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

 

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

 

Death
or Disability

 

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

 

Cause

 

3.04         For purposes of this Agreement, Cause
includes:

 

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

 

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

 

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

 

 

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

 

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

 

Good
Reason

 

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

 

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

 

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

 

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

 

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

 

Change
in Control

 

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

 

(b)           Upon a Change in Control (as defined
below), and an involuntary termination of the Executive’s employment either by
the Corporation without Cause or by the Executive for Good Reason, which
termination occurs within a period of twelve (12) months following the Change
in Control, the Corporation shall provide to the Executive, in addition to any
benefits or compensation accrued, earned and due to the Executive but not yet
paid as of the Executive’s Termination Date, but in lieu of any payments or
benefits to which the Executive may be entitled under Section 3.01 above, (a) a
lump sum severance payment of two (2) times
the Executive’s base salary (calculated using the Executive’s highest annual
base salary in the three years prior to the Executive’s Termination Date) plus two (2) times the Executive’s
target level of annual incentive compensation under the Short Term Incentive
Plan for the year prior to the year in which the Executive’s Termination Date
occurs, payable within thirty (30) days of the Executive’s Termination Date
and, (b) any unvested equity compensation awards held by the 

 

 

Executive shall automatically accelerate and become one hundred percent
(100%) vested and, as applicable, exercisable, as of the Executive’s
Termination Date.

 

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

 

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

 

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

 

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

 

(iv)      during any period
of 24 consecutive months beginning on or after the date of the Equity
Compensation Plan, the persons who were members of the Board immediately before
the beginning of such period (the “Incumbent Directors”) cease (for any reason
other than death) to constitute at least a majority of the Board or the board
of directors of any successor to the Corporation, provided that any director
who was not a director as of the date of the Equity Compensation Plan shall be
deemed to be an Incumbent Director if such director is elected to the Board by,
or 

 

 

on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent Directors
either actually or by prior operation of the foregoing unless such election,
recommendation or approval occurs as a result of an actual or threatened
election contest or other actual or threatened solicitation of proxies or
contests by or on behalf of a person other than a member of the Board; or

 

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

 

(d)           In the event any payments or benefits
made to the Executive upon a Change of Control are deemed “excess parachute payments”
within the meaning of Section 280G of the U.S. Internal Revenue Code, and
the Executive is subject to excise tax under Section 4999 of the U.S.
Internal Revenue Code (the “Excise Tax”) with respect to such payments, the
Executive shall receive, in addition to any other payments and benefits to
which he is entitled under the Agreement, an amount which, after imposition of
any income, employment, excise or other taxes on such amount (including any
income, employment, excise or other taxes paid on any amount due under this
Section), equals the difference between the amount he actually receives after
payment of all taxes including all Excise Tax and the after-tax amount he would
receive of no Excise Tax were imposed on him. Any additional payment received
under this Section 3.06(d) shall be called the Gross-Up Payment.
Notwithstanding any provisions of this Section 3.06(d) to the
contrary, in accordance with the requirements of section 409A of the Code, any
Gross-Up Payment payable hereunder shall be paid not later than the end of the
Executive’s taxable year next following the Executive’s taxable year in which
the Executive or the Company, as the case may be, remits the taxes for which
the Gross-Up Payment is being paid.

 

Notice
of Termination

 

3.07         Any termination of employment by the
Corporation or by the Executive shall be communicated by notice of termination
to the other party hereto given in accordance with Section 5.09 (a “Notice
of Termination”).  For purposes of this
Agreement, Notice of Termination means a written notice which (a) identifies
the specific termination provision in the Agreement relied upon, and (b) to
the extent applicable, sets forth in reasonable detail the facts 

 

 

and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision identified, and (c)(i) in the case of a
termination by the Corporation, specifies the Executive’s Termination Date
which shall not be less than fifteen (15) nor more than sixty (60) days after
the giving of such notice; or (ii) in the case of a termination by the
Executive without Good Reason, shall not be less than ninety (90) days after
the giving of such notice.

 

Payments After
Termination of Employment

 

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

 

Release

 

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

 

ARTICLE FOUR —
EXECUTIVE’S OBLIGATIONS

 

Confidentiality

 

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

 

Non-Competition

 

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

 

 

business at the relevant time)
or in any other regions or countries where the Corporation may be carrying on
business at the relevant time:

 

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

 

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

 

For the purposes of this Section 4.02,
a Competitive Activity shall be defined as any business: (i) that competes
with or plans to actively compete with the business activities of the
Corporation through, but not limited to, the formulation, clinical testing,
registration, manufacturing or marketing of specialty pharmaceuticals and/or
drug delivery technologies in the therapeutic categories on which the
Corporation is focused, which include central nervous system disorders, pain
management, cardiovascular disease, type II diabetes, and any other category in
which the Corporation is focused in the future and excludes areas in which the
Corporation is not actively engaged at the relevant time, (ii) with which
the Corporation has a product(s) licensing agreement, (iii) in which
the Corporation has minority equity interest, and (iv) with which the
Corporation is at the time actively negotiating a commercial relationship.

 

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

 

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

 

Non-Solicitation

 

4.03         The Executive hereby covenants and
agrees that the Executive shall not, during the term of this Agreement and for
a period of twelve (12) months thereafter, solicit or contact, either directly
or indirectly, any of the Customers, Prospective Customers or any suppliers of
the pharmaceutical compounds used by the Corporation on the Executive’s own
behalf, or on behalf of any entity, by which the Executive is hired or
retained. “Customers” means customers of the

 

 

Corporation
with which the Executive had personal contact or had supervision over the
efforts of those who had direct personal contact with such customers during the
last two (2) years of the Executive’s employment with the
Corporation.  “Prospective Customer”
means any organizations or entities which had been actively contacted and
solicited for their business by representatives of the Corporation, and with
whom the Executive had contact, both during the last two (2) years of the
Executive’s employment with the Corporation.

 

Non-Hiring

 

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

 

Injunctive Relief

 

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

 

Severability of Covenants
in Full or in Part

 

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

 

Assignment of IP

 

4.07         The
Executive shall disclose to the Corporation any and all Intellectual Property
(as defined in the Confidentiality Agreement) which the Executive may make
solely, jointly, or in common with other employees during the term of the
Executive’s employment within the Corporation and which relates to the
business.  Any Intellectual Property
coming within the scope of the business made and/or developed by the Executive
while in the employ of the 

 

 

Corporation, whether or not conceived or made during
regular working hours, and whether or not the Executive is specifically
instructed to make or develop same, shall be for the benefit of the Corporation
and shall be regarded as work made in the course of employment for the purposes
of the Copyright Act
(Canada).  The Executive shall assign,
set over and transfer to the Corporation the Executive’s entire right, title
and interest in and to any and all of the Intellectual Property and to all
letters patent and applications for letters patent which may be, or may have
been filed and/or issued by or to the Executive or on the Executive’s behalf
and the Executive agrees to execute and deliver to the Corporation any and all
instruments necessary or desirable to accomplish the foregoing and, in
addition, to do all lawful acts which may be necessary or desirable to assist
the Corporation to obtain and enforce protection of the Intellectual Property.  To the extent of any rights the Executive may
have with respect to the Intellectual Property which are not assignable,
including but not limited to moral rights, the Executive hereby waives
same.  The Executive will execute and
deliver to the Corporation or its successors and assigns, such other and
further assignments, instruments and documents as the Corporation from time to
time reasonably may request for the purpose of establishing, evidencing, and
enforcing or defending its complete, exclusive, perpetual, and world-wide ownership
of all rights, titles, and copyrights, in and to the Intellectual Property, and
the Executive constitutes and appoints the Corporation as agent and
attorney-in-fact, with full power of substitution, to execute and deliver such
assignments, instruments, documents as Executive may fail to or refuse to
execute and deliver, this power and agency being coupled with an interest and
being irrevocable.

 

Standards of Business
Conduct

 

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

 

No Conflicting
Obligations

 

4.09         The
Executive warrants to the Corporation that:

 

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

 

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

 

ARTICLE FIVE - INTERPRETATION AND ENFORCEMENT

 

Section 409A

 

5.01         This
Agreement shall be interpreted to avoid any penalty sanctions under Internal
Revenue Code section 409A.  If any payment
or benefit cannot be provided or made at the time 

 

 

specified herein without incurring sanctions under
section 409A, then such benefit or payment shall be provided in full at the
earliest time thereafter when such sanctions will not be imposed.

 

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

 

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

 

Independent Legal Advice

 

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

 

Severability

 

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

 

 

Sections and Headings

 

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

 

Number and Gender

 

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

 

Entire Agreement

 

5.06         This
Agreement and all the Schedules hereto constitute the entire Agreement between
the parties with respect to the subject matter hereof and cancels and
supersedes any prior understandings and agreements between the parties with
respect thereto (including, but not limited to, the Executive’s employment
agreement dated December 20, 2007 and the amendment thereto dated December 10,
2008).  There are no representations,
warranties, forms, conditions, undertakings or collateral Agreements, express,
implied or statutory between the parties other than as expressly set forth in
this Agreement.

 

Amendments and Waivers

 

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

 

Governing Law

 

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

 

 

Notices

 

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

 

To the Executive:

 

Mark Durham

xxx

 

To the
Corporation:

 

7150 Mississauga Road

Mississauga, ON L5N 8M5

Attn: Chief Executive Officer

 

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

 

Benefit of Agreement

 

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

 

Assignment

 

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

 

Execution of Agreement

 

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

 

 

IN
WITNESS WHEREOF, the
parties have executed this Agreement on the dates identified below at Bridgewater, New Jersey:

 

	
  BIOVAIL CORPORATION

  	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ W. WELLS

  	
   

  	
  /s/ MARK DURHAM

  
	
  Name:

  	
  William Wells

  	
   

  	
  Mark Durham

  
	
  Title:

  	
  Chief Executive Officer

  	
   

  	
  Sr. VP, HR & Shared
  Services

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
  8-4-09

  	
   

  	
  Date:

  	
  8-4-09

  

 

 

SCHEDULE
A

 

BIOVAIL
CORPORATION

(and its Subsidiaries, Divisions, and Affiliates)

 

CONFIDENTIALITY
AGREEMENT

 

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

 

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

 

·                                                                                          research and development activities

·                                                                                          technological plans, advances, applications and inventions

·                                                                                          technical specifications, designs and plans

·                                                                                          materials and sources of supply

·                                                                                          discoveries, inventions, trade secrets, patents

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

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

I acknowledge and agree
to the foregoing.

 

 

	
  Employée Signature:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Witness
  Signature:

  	
   

  	
   

  	
  Date:

  	
   

  

 

 

SCHEDULE
B

 

 

BIOVAIL
CORPORATION

(and its Subsidiaries, Divisions, and Affiliates)

 

STANDARDS
OF BUSINESS CONDUCT

 

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

 

1.             CONFLICTS OF INTEREST

 

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

 

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

 

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

 

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

 

 

A.                                    Trading in Biovail Securities
and Use of Inside Information

 

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

 

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

 

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

 

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

 

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

 

20

 

Employees, officers and directors shall
comply with all laws, rules and regulations that prohibit or restrict
insider trading.

 

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

 

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

 

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

 

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

 

B.                                    Personal Financial Interest

 

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

 

i.                                          Employees, officers or
directors whose corporate duties bring them into business dealings with an organization
in which they, or a member of their family, have a financial interest or to
which they, or a member of their family, have any indebtedness, or a business 

 

21

 

employing a relative or close friend, must
immediately notify their immediate supervisor. The employee, officer or
director, in turn, cannot complete a transaction on behalf of Biovail with this
organization unless properly authorized in writing from their supervisor after
full disclosure of the relationship.

 

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

 

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

 

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

 

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

 

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

 

C.                                    Outside Activities

 

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

 

22

 

D.                                    Protection and Proper Use of
Biovail’s Assets

 

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

 

E.                                      Fair Dealing

 

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

 

2.             COMPETITIVE PRACTICES

 

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

 

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

 

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

 

3.             DEALING WITH SUPPLIERS

 

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

 

A.                                    Reciprocity

 

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

 

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

 

23

 

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

 

B.                                    “Kickbacks” and Rebates

 

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

 

C.                                    Receipt of Gifts and
Entertainment

 

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

 

Gifts

 

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

 

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

 

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

 

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

 

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

 

iv)                                  In the transaction of some
international business, it is lawful and customary for business leaders in some
countries to give unsolicited gifts to employees, officers or directors of
Biovail. These gifts can be of more

 

24

 

than nominal value. Moreover, under the
circumstances, returning the gifts or payment for them may constitute an
affront to the giver. In such cases, the gift must be reported to the SLO who
may permit the retaining of the gifts.

 

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

 

Entertainment

 

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

 

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

 

(1)                                  The entertainment occurs
infrequently;

 

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

 

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

 

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

 

4.                                      DEALINGS
WITH CUSTOMERS AND POTENTIAL CUSTOMERS

 

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

 

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

 

a)                                      All employees, officers and
directors should make themselves aware of and fully comply with all laws, rules and
regulations, whether federal,

 

25

 

state, local or foreign, including laws
governing relations with customers as well as competitors.

 

b)                                     All employees, officers and
directors engaged in negotiations and contracts with foreign governments, the
United States or any political subdivision thereof must also know and abide by
the specific rules and regulations covering relations with such
governments and their agencies.

 

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

 

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

 

5.                                      DEALING
WITH PUBLIC OFFICIALS

 

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

 

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

 

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

 

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

 

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

 

26

 

that clearly identifies Biovail and the
occasion that warrants the presentation.

 

d)                                     Employees, officers and
directors are also allowed to give public officials gifts in the form of
product models and pictures provided the models and pictures are part of
Biovail’s general marketing and public relations programs (except as noted in
clause (b) above).

 

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

 

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

 

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

 

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

 

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

 

iii.                                    The entertainment occurs
infrequently;

 

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

 

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

 

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

 

6.                                      POLITICAL
ACTIVITIES AND CONTRIBUTIONS

 

A.                                    Canada and the United States

 

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

 

Biovail encourages
its employees, officers and directors to participate in political activities in
their own time and at their sole expense. No corporate action, direct or
indirect, will be allowed that infringes on the right of any employee
individually to decide whether, to whom, and in what amount, they will make
personal political

 

27

 

contributions. The
same is true of volunteer political donations of personal service time, so long
as it does not interfere with the working status of employees, officers or
directors.

 

B.                                    Outside Canada and the United
States

 

No employees,
officers and directors are permitted to use Biovail’s funds, facilities, or
other assets, to support either directly or indirectly any political candidates
or political parties, without advance authorization in writing from their
immediate supervisor and the General Counsel. The policy of Biovail is that
employees, officers and directors and employees should not participate in
political activities in countries of which they are not nationals. However,
such persons, of course, are free to participate in political activities in
countries of which they are nationals in their own time and at their own
expense.

 

7.                                      DISCLOSURE

 

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

 

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

 

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

 

8.                                      PUBLIC
COMMUNICATIONS

 

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

 

A.                                    Designated Spokespersons

 

Biovail has
designated official spokespersons who are authorized to speak on behalf of
Biovail, and answer questions from the news media and the investment community,
about

 

28

 

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

 

B.                                    Media or Analyst Inquiries

 

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

 

C.                                    Conferences

 

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

 

D.                                    Electronic Communications

 

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

 

E.                                      The Internet

 

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

 

9.                                      EQUAL
OPPORTUNITY

 

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

 

There shall be no
discrimination against any employee or applicant because of race, religion,
color, sex, age, sexual orientation, national or ethnic origin, or disability
(as required by law) or any other consideration prohibited by local law. All
employees, officers and directors will be treated with equality during their
employment without

 

29

 

regard to their
race, religion, color, sex, age, national or ethnic origin, or physical
handicap, in all matters, including employment, upgrading, promotion, transfer,
layoff, termination, rates of pay, selection for training and recruitment.
Biovail will maintain a work environment free of discriminatory practice of any
kind.

 

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

 

10.                               HEALTH,
SAFETY, AND ENVIRONMENTAL PROTECTION

 

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

 

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

 

11.                               WORK
ENVIRONMENT

 

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

 

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

 

30

 

will be taken.
Biovail has an appropriate policy to protect employees against discrimination
or retaliation as a result of such a complaint.

 

12.                               INTEGRITY
OF RECORDS AND FINANCIAL REPORTS

 

It is of critical
importance that Biovail’s filings with the appropriate regulatory authorities
(e.g. U.S. Securities and Exchange Commission) be accurate and timely.
Depending on their position with Biovail, an employee, officer or director may
be called upon to provide necessary information to ensure that Biovail’s public
reports are complete, fair and understandable. Biovail expects employees,
officers and directors to take this responsibility very seriously and to
provide prompt accurate answers to inquiries related to Biovail’s public
disclosure requirements.

 

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

 

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

 

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

 

14.                               INTERNATIONAL
OPERATIONS

 

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

 

15.                               STANDARDS
OF BUSINESS CONDUCT

 

A.                                    Initial Distribution

 

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

 

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

 

B.                                    Initial Verification

 

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

 

31

 

i.                                          Become thoroughly familiar
with the Standards.

 

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

 

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

 

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

 

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

 

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

 

C.                                    Maintaining Compliance

 

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

 

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

 

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

 

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

 

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

 

vi.                                   Employees, officers and
directors must take steps to correct any such changes, if necessary, to bring
holdings and activities into full compliance. Such steps will be approved in
writing by supervisors

 

32

 

and Management and will be based on the
written disclosures submitted by employees, officers and directors.

 

D.                                    Audits of Compliance

 

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

 

16.                               VIOLATIONS
OF STANDARDS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

33

 

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

 

18.                               AMENDMENT,
MODIFICATION AND WAIVER

 

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

 

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

 

34

 

VERIFICATION
AND RECEIPT OF UNDERSTANDING

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

Employee’s Copy

 

35

 

VERIFICATION
AND RECEIPT OF UNDERSTANDING

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

HR File Copy

 

36Exhibit 10.44

 

BIOVAIL
LABORATORIES INTERNATIONAL SRL

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AGREEMENT is made by
and between Biovail Laboratories International SRL (hereinafter referred to as “Biovail”)
and Dr. Christian Fibiger (hereinafter the “Executive”).

 

ARTICLE
ONE — GENERAL DUTIES AND TERM

 

Scope
of Employment / Duties

 

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

 

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

 

Term
of Agreement

 

1.03         Biovail hereby agrees to employ the Executive
and the Executive hereby accepts employment, in accordance with the terms and
conditions of this Agreement, commencing on November 24, 2008 (the “Employment
Commencement Date”).  The period of the
Executive’s employment under this Agreement will be for a period of four (4) years,
ending November 23, 2012 and will be referred to as the “Employment Term.”  This Agreement will expire automatically on November 23,
2012 without any requirement for notice, pay in lieu of notice or severance
pay.  Subject to Biovail’s obligation to
provide severance benefits and the parties’ obligation to provide a Notice of
Termination (as defined below), the Executive and Biovail acknowledge that this
employment relationship may be terminated at any time and for any or no cause
or reason at the option of either the Executive or Biovail prior to its expiry.

 

Extension of Agreement

 

1.04         Both parties may mutually agree in
writing to extend the Employment Term for one or more successive periods of 12
months each.  Either party may give
written notice to the other of its wish to extend the Employment Term within
120 days of the end of the then current Employment Term.  If no notice of a wish to extend is provided
or if no mutual agreement is

 

 

reached, this Agreement
will terminate at the conclusion of the then current Employment Term without
any requirement for notice, pay in lieu of notice or severance pay except as
may be required by applicable employment standards legislation.  “Employment Term” includes the initial 4 -
year term hereof and any 12 - month extensions which are agreed upon.

 

ARTICLE
TWO — COMPENSATION

 

Base
Salary

 

2.01         As of the Employment Commencement Date,
the Executive’s annualized base salary will be $450,000(USD), payable in
accordance with Biovail’s normal payroll practices for employees generally, and
will be subject to annual review in accordance with Biovail’s normal review
process for other similarly situated senior executives.

 

Incentive
Compensation

 

2.02         For 2008, the Executive shall not
participate in Biovail’s short term annual incentive compensation plan.  For 2009 and thereafter the Executive will be
eligible to participate in Biovail’s short term annual incentive compensation
plan as such plan may be amended from time to time (the “Short Term Incentive
Plan”) in accordance with the terms of the Short Term Incentive Plan.  The Executive’s target incentive level will
be 60% of his base salary earnings in the performance period.

 

Sign-on Bonus

 

2.03         The Executive will be paid a one time
lump sum sign-on bonus of $100,000 (USD) after commencement of employment.  In the event the Executive voluntarily
resigns or is terminated with cause before the completion of 24 months of
employment, this bonus is to be reimbursed to Biovail in full within 30 days of
the last day of employment.

 

Equity
Compensation

 

2.04         Eligibility and Terms.

 

The Executive will be
eligible for a one time grant of 13,000 Restricted Share Units (RSUs) and
150,000 Stock Options subject to the terms and conditions outlined in the 2007
Equity Compensation Plan (ECP).  In
addition, the Executive will be eligible for participation in a performance
option grant of 220,000 options which will vest in 2012, based on the
attainment of performance criteria.

 

Employee
Benefits

 

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

 

2

 

any
employee benefit plan or program from time to time after the Employment
Commencement Date.

 

Housing
Allowance

 

2.06         For the duration of the assignment in
Barbados, Biovail will provide for the lease of appropriate accommodation up to
the amount of $7,500 USD per month.

 

Travel Allowance

 

2.07         While on assignment in Barbados, the
Executive and spouse or significant other will be provided with reimbursement
of reasonable and customary expenses associated with four (4) home leave
trips per year.

 

Car

 

2.08         During the Executive’s employment,
Biovail will provide the Executive with a vehicle and reimbursement of
associated expenses.

 

Expenses

 

2.09         The Executive shall be reimbursed for
reasonable out of pocket business expenses, including travel and entertainment
expenses, actually and properly incurred by the Executive in the course of
performing the Executive’s services hereunder, upon furnishing to Biovail
reasonable supporting statements and vouchers; provided, however, that in any
financial year in which Biovail has provided to the Executive an approved
budget, such expenses must not exceed the amount so budgeted without the prior
written approval from the CEO.

 

Vacation

 

2.10         The Executive will be eligible for five (5) weeks
of vacation annually, to be taken in accordance with the terms of Biovail’s
Vacation Policy, without regard to any lesser amount of vacation time set forth
therein.  Notwithstanding the foregoing,
the Executive’s eligibility for vacation in the year of hire will be pro-rated
in the manner specified in Biovail’s Vacation Policy.

 

Tax Preparation Services

 

2.11         Biovail shall reimburse the Executive for
costs incurred by the Executive in connection with tax preparation services
furnished by such advisors as chosen by Biovail.

 

Immigration Support

 

2.12         Biovail shall reimburse the Executive for
all legal expenses incurred by the Executive in connection with his immigration
status and/or eligibility to work in Barbados, to be furnished by such advisors
as chosen by Biovail.

 

3

 

Relocation

 

2.13         The Executive will be reimbursed for
reasonable and customary expenses associated with his relocation to Barbados.

 

ARTICLE
THREE — TERMINATION AND RESIGNATION PRIOR TO EXPIRY OF EMPLOYMENT TERM

 

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

 

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

 

(a)           The Executive will be paid a lump sum
severance payment within 60 days of the Executive’s Termination Date, equal to

 

(i)            the remainder of the base salary that
would be payable for the remainder of the Employment Term as if employment had
not been terminated.  The base salary
rate that will be applied is that in place on the Termination Date;

 

(ii)           the Executive’s target level of annual
incentive compensation that would be payable for the remainder of the
Employment Term as if employment had not been terminated.  The incentive compensation that will be
applied is that which was paid for the year prior to the year in which the
Termination Date occurs.  In the event
that the Executive has not completed a prior year at the time of the
Termination Date, incentive compensation will be paid at the same rate as the
average rate paid out to Biovail’s Senior Vice Presidents in the prior year.

 

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

 

4

 

(c)           Until the earlier of (i) the end of
the remainder of the Employment Term, or (ii) the date, or dates, the
Executive is eligible to receive benefits under the same type of plan of a
subsequent employer (the “Benefit Period”), Biovail will pay to the Executive a
monthly payment on the first payroll date of each month equal to the COBRA cost
of continued medial and dental coverage for the Executive and the Executive’s
covered dependents under the medical and dental plans of Biovail pursuant to
section 4980B of the Internal Revenue Code, less the amount that the Executive
would be required to contribute for medical and dental coverage if the
Executive were an active employee.  These
payments will commence on Biovail’s first payroll date after the Executive’s
Termination Date and will continue until the end of the Benefit Period (but not
longer than the Benefit Period).

 

Involuntary
Termination By Biovail For Cause Or Voluntary Resignation Without Good Reason

 

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

 

Death
or Disability

 

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

 

Cause

 

3.04         For purposes of this Agreement, Cause
includes:

 

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

 

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

 

5

 

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

 

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

 

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

 

Good
Reason

 

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

 

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

 

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

 

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

 

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

 

Change
in Control

 

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

 

(b)           Upon
a Change in Control (as defined below), and an involuntary termination of the
Executive’s employment either by Biovail without Cause or by the Executive for
Good Reason, which termination occurs within a period of twelve (12) months
following the Change in Control, Biovail shall provide to the Executive, in
addition to any benefits or compensation accrued, earned and due to the
Executive but not yet paid as of the Executive’s Termination Date, but in lieu
of any payments or benefits to which the Executive may be entitled under Section 3.01
above, (a) a lump sum severance payment of two times the Executive’s base salary (calculated using the
Executive’s highest annual base salary in the three years prior to the
Executive’s Termination Date) plus two
times the Executive’s target level of annual incentive compensation
under the Short Term Incentive Plan for the year prior to the year in which the

 

6

 

Executive’s
Termination Date occurs, payable within thirty (30) days of the Executive’s
Termination Date and, (b) any unvested equity compensation awards held by
the Executive shall automatically accelerate and become one hundred percent
(100%) vested and, as applicable, exercisable, as of the Executive’s
Termination Date.

 

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

 

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

 

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

 

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

 

(iv)  during
any period of 24 consecutive months beginning on or after the date of the
Equity Compensation Plan, the persons who were members of the Board immediately
before the beginning of such period (the “Incumbent Directors”) cease (for any
reason other than death) to constitute at least a majority of the Board or the
board of directors of any successor to Biovail Corporation, provided that any
director who was not a director as of the date of the Equity Compensation Plan
shall be deemed to be an Incumbent 

 

7

 

Director if such director is elected to the
Board by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors either
actually or by prior operation of the foregoing unless such election,
recommendation or approval occurs as a result of an actual or threatened
election contest or other actual or threatened solicitation of proxies or
contests by or on behalf of a person other than a member of the Board; or

 

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

 

Notice
of Termination

 

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

 

Payments
After Termination of Employment

 

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

 

Release

 

3.09         The Release identified in Sections 3.01
and 3.06 will not require the Executive to release any right the Executive may
have to indemnification as an officer, director or employee of 

 

8

 

Biovail (or any affiliate
thereof) pursuant to the articles of incorporation or bylaws (or other
governing instruments) of Biovail (or any affiliate thereof) or any vested
benefits to which the Executive may be entitled under any employee benefit
plan.

 

ARTICLE
FOUR — EXECUTIVE’S OBLIGATIONS

 

Confidentiality

 

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

 

Non-Competition

 

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

 

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

 

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

 

For the purposes of this Section 4.02,
a Competitive Activity shall be defined as any business: (i) that competes
with or plans to actively compete with the Business activities of Biovail
through, but not limited to, the formulation, clinical testing, registration,
manufacturing or marketing of specialty pharmaceuticals and/or drug delivery
technologies in the therapeutic categories on which Biovail is focused, which
include central nervous system disorders, pain management, cardiovascular
disease, type II diabetes, and any other category in which Biovail is focused
in the future and excludes areas in which Biovail is not actively engaged at
the relevant time, (ii) with which Biovail has a product(s) licensing
agreement, (iii) in which Biovail has a minority equity interest, and (iv) with
which Biovail is at the time actively negotiating a commercial relationship.

 

9

 

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

 

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

 

Non-Solicitation

 

4.03         The Executive hereby covenants and agrees
that the Executive shall not, during the term of this Agreement and for a
period of one (1) year  thereafter, solicit or contact,
either directly or indirectly, any of the Customers, Prospective Customers or
any suppliers of the pharmaceutical compounds used by Biovail on the Executive’s
own behalf, or on behalf of any entity, by which the Executive is hired or
retained. “Customers” means customers of Biovail with which the Executive had
personal contact or had supervision over the efforts of those who had direct
personal contact with such customers during the last two (2) years of the
Employment Term.  “Prospective Customer”
means any organizations or entities which had been actively contacted and
solicited for their business by representatives of Biovail, and with whom the
Executive had contact, both during the last two (2) years of the
Employment Term.

 

Non-Hiring

 

4.04         The Executive hereby covenants and agrees
that the Executive shall not, during the term of this Agreement and for a
period of one (1) year
thereafter, either directly or indirectly, solicit or endeavour to solicit from
Biovail any of its employees, and shall not for a period one (1) year from the end of the
term of this Agreement hire any of the foregoing on the Executive’s own behalf
or on behalf of any entity for which the Executive is hired or retained.  Notwithstanding the foregoing, the Executive
shall not be considered in breach of this section should the Executive solicit
for hiring such Executive’s administrative assistant.

 

Injunctive
Relief

 

4.05         The Executive acknowledges and agrees
that the agreements and covenants in this Article Four are essential to
protect the business and goodwill of Biovail and that a breach by the

 

10

 

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

 

Severability
of Covenants in Full or in Part

 

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

 

Assignment
of IP

 

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

 

11

 

Standards
of Business Conduct

 

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

 

No
Conflicting Obligations

 

4.09         The Executive warrants to Biovail that:

 

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

 

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

 

ARTICLE
FIVE - INTERPRETATION AND ENFORCEMENT

 

Section 409A

 

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

 

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

 

For purposes of section
409A, the right to any series of installment payments under this Agreement
shall be treated as a right to a series of separate payments.  All reimbursements and in kind benefits
provided under this Agreement shall be made or provided in accordance with the
requirements of section 409A, including, where applicable, the requirement that
(i) any reimbursement shall be for expenses incurred during the Executive’s
lifetime (or during a shorter period of time specified in this Agreement), (ii) the
amount of expenses eligible for 

 

12

 

reimbursement, or in kind
benefits, provided during a calendar year may not affect the expenses eligible
for reimbursement, or in kind benefits to be provided, in any other calendar
year, (iii) the reimbursement of an eligible expense will be made on or
before the last day of the calendar year following the year in which the
expense is incurred, and (iv) the right to reimbursement or in kind
benefits is not subject to liquidation or exchange for another benefit.

 

Independent
Legal Advice

 

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

 

Severability

 

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

 

Sections
and Headings

 

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

 

Number
and Gender

 

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

 

Entire
Agreement

 

5.06         This Agreement and all the Schedules
hereto constitute the entire Agreement between the parties with respect to the
subject matter hereof and cancels and supersedes any prior understandings and
agreements between the parties with respect thereto.  There are no representations, warranties,
forms, conditions, undertakings or collateral Agreements, express, implied or
statutory between the parties other than as expressly set forth in this
Agreement.

 

Amendments
and Waivers

 

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

 

13

 

Governing
Law

 

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

 

Notices

 

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

 

	
  To the Executive:

  	
   

  	
  Dr. Christian
  Fibiger,

  
	
   

  	
   

  	
  xxx

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dr. Christian
  Fibiger,

  
	
   

  	
   

  	
  xxx

  
	
   

  	
   

  	
   

  
	
  To Biovail:

  	
   

  	
  7150 Mississauga Road

  Mississauga, ON L5N 8M5

  Attn: Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  To Biovail Corporation:

  	
   

  	
  7150 Mississauga Road

  Mississauga, ON L5N 8M5

  Attn: Chief Executive Officer

  

 

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

 

Benefit
of Agreement

 

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

 

14

 

Assignment

 

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

 

Execution
of Agreement

 

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

 

15

 

IN
WITNESS WHEREOF, the
parties have executed this Agreement on the dates identified below at                                                               .

 

 

	
  BIOVAIL
  LABORATORIES INTERNATIONAL SRL

  	
  EXECUTIVE

  
	
   

  
	
   

  
	
  By:

  	
  /s/ MICHEL CHOUINARD

  	
   

  	
  /s/ CHRISTIAN FIBIGER

  
	
   

  	
   

  	
   

  
	
   

  	
  Michel Chouinard

  	
  Dr. Christian Fibiger

  
	
   

  	
   

  	
   

  
	
   

  	
  Chief Operating Officer

  	
   

  
	
   

  
	
  BIOVAIL
  CORPORATION

  	
   

  
	
   

  	
   

  
	
  By:

  	
  (Signed)

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  

 

16

 

SCHEDULE
A

 

BIOVAIL
CORPORATION

(and its Subsidiaries, Divisions, and Affiliates)

 

CONFIDENTIALITY
AGREEMENT

 

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

 

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

 

·                                          research
and development activities

·                                          technological
plans, advances, applications and inventions

·                                          technical
specifications, designs and plans

·                                          materials
and sources of supply

·                                          discoveries,
inventions, trade secrets, patents

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

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

18

 

I acknowledge and agree
to the foregoing.

 

	
  Employée Signature:

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Witness Signature:

  	
   

  	
   

  	
  Date:

  	
   

  

 

 

SCHEDULE
B

 

 

BIOVAIL
CORPORATION

(and its Subsidiaries, Divisions, and Affiliates)

 

STANDARDS
OF BUSINESS CONDUCT

 

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

 

1.             CONFLICTS OF INTEREST

 

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

 

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

 

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

 

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

 

 

A.                                    Trading in Biovail Securities
and Use of Inside Information

 

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

 

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

 

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

 

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

 

ii.                                       In addition to the prohibition
against the use of “insider” information which applies to all employees,
officers and directors, the various securities laws that apply in the
jurisdiction and countries in which Biovail does business place definite
restrictions on the manners in which employees, officers and directors of Biovail,
and their family members, their associates, etc., may 

 

21

 

engage in transactions involving the
securities of Biovail. Employees, officers and directors shall comply with all
laws, rules and regulations that prohibit or restrict insider trading.

 

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

 

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

 

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

 

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

 

B.                                    Personal Financial Interest

 

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

 

i.                                          Employees, officers or
directors whose corporate duties bring them into business dealings with an
organization in which they, or a member of their family, have a financial
interest or to which they, 

 

22

 

or a member of their family, have any
indebtedness, or a business employing a relative or close friend, must immediately
notify their immediate supervisor. The employee, officer or director, in turn,
cannot complete a transaction on behalf of Biovail with this organization
unless properly authorized in writing from their supervisor after full
disclosure of the relationship.

 

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

 

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

 

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

 

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

 

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

 

C.                                    Outside Activities

 

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

 

23

 

D.                                    Protection and Proper Use of
Biovail’s Assets

 

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

 

E.                                      Fair Dealing

 

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

 

2.             COMPETITIVE PRACTICES

 

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

 

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

 

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

 

3.             DEALING WITH SUPPLIERS

 

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

 

A.                                    Reciprocity

 

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

 

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

 

24

 

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

 

B.                                    “Kickbacks” and Rebates

 

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

 

C.                                    Receipt of Gifts and
Entertainment

 

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

 

Gifts

 

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

 

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

 

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

 

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

 

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

 

iv)                                  In the transaction of some
international business, it is lawful and customary for business leaders in some
countries to give unsolicited gifts to employees, officers or directors of
Biovail. These gifts can be of more 

 

25

 

than nominal value. Moreover, under the
circumstances, returning the gifts or payment for them may constitute an
affront to the giver. In such cases, the gift must be reported to the SLO who may
permit the retaining of the gifts.

 

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

 

Entertainment

 

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

 

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

 

(1)                                  The entertainment occurs
infrequently;

 

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

 

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

 

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

 

4.             DEALINGS WITH CUSTOMERS AND
POTENTIAL CUSTOMERS

 

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

 

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

 

26

 

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

 

b)                                     All employees, officers and
directors engaged in negotiations and contracts with foreign governments, the
United States or any political subdivision thereof must also know and abide by
the specific rules and regulations covering relations with such
governments and their agencies.

 

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

 

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

 

5.             DEALING WITH PUBLIC OFFICIALS

 

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

 

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

 

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

 

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

 

c)                                      When not prohibited by law,
employees, officers and directors are allowed to give to public officials gifts
where the presentation and acceptance of gifts is an established custom and a
normal business practice. All such 

 

27

 

gifts shall be of reasonable value and the
presentation approved in advance by the CEO. Moreover, such gifts must be
presented in a manner that clearly identifies Biovail and the occasion that
warrants the presentation.

 

d)                                     Employees, officers and
directors are also allowed to give public officials gifts in the form of
product models and pictures provided the models and pictures are part of
Biovail’s general marketing and public relations programs (except as noted in
clause (b) above).

 

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

 

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

 

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

 

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

 

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

 

iii.                                    The entertainment occurs
infrequently;

 

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

 

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

 

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

 

6.             POLITICAL ACTIVITIES AND
CONTRIBUTIONS

 

A.                                    Canada and the United States

 

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

 

Biovail encourages its
employees, officers and directors to participate in political activities in
their own time and at their sole expense. No corporate action, direct or
indirect, will be allowed that infringes on the right of any employee
individually to 

 

28

 

decide whether, to whom,
and in what amount, they will make personal political contributions. The same
is true of volunteer political donations of personal service time, so long as
it does not interfere with the working status of employees, officers or
directors.

 

B.                                    Outside Canada and the United
States

 

No employees, officers
and directors are permitted to use Biovail’s funds, facilities, or other
assets, to support either directly or indirectly any political candidates or
political parties, without advance authorization in writing from their
immediate supervisor and the General Counsel. The policy of Biovail is that
employees, officers and directors and employees should not participate in
political activities in countries of which they are not nationals. However, such
persons, of course, are free to participate in political activities in
countries of which they are nationals in their own time and at their own
expense.

 

7.             DISCLOSURE

 

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

 

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

 

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

 

8.             PUBLIC COMMUNICATIONS

 

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

 

29

 

A.                                    Designated Spokespersons

 

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

 

B.                                    Media or Analyst Inquiries

 

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

 

C.                                    Conferences

 

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

 

D.                                    Electronic Communications

 

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

 

E.                                      The Internet

 

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

 

9.             EQUAL OPPORTUNITY

 

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

 

30

 

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

 

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

 

10.          HEALTH, SAFETY, AND ENVIRONMENTAL
PROTECTION

 

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

 

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

 

11.          WORK ENVIRONMENT

 

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

 

Employees are encouraged
to report all conduct that they believe in good faith to be violations of local
anti-harassment policies. To the extent permissible under local law the 

 

31

 

identity of the
employees, officers or directors involved will be kept strictly confidential,
and will not be revealed by Biovail’s management without the employee’s
permission. The alleged harassment will be thoroughly investigated by Biovail
and appropriate action will be taken. Biovail has an appropriate policy to
protect employees against discrimination or retaliation as a result of such a
complaint.

 

12.          INTEGRITY OF RECORDS AND FINANCIAL
REPORTS

 

It is of critical
importance that Biovail’s filings with the appropriate regulatory authorities
(e.g. U.S. Securities and Exchange Commission) be accurate and timely.
Depending on their position with Biovail, an employee, officer or director may
be called upon to provide necessary information to ensure that Biovail’s public
reports are complete, fair and understandable. Biovail expects employees,
officers and directors to take this responsibility very seriously and to
provide prompt accurate answers to inquiries related to Biovail’s public
disclosure requirements.

 

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

 

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

 

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

 

14.          INTERNATIONAL OPERATIONS

 

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

 

15.          STANDARDS OF BUSINESS CONDUCT

 

A.                                    Initial Distribution

 

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

 

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

 

32

 

B.                                    Initial Verification

 

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

 

i.                                          Become thoroughly familiar
with the Standards.

 

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

 

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

 

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

 

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

 

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

 

C.                                    Maintaining Compliance

 

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

 

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

 

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

 

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

 

33

 

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

 

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

 

D.                                    Audits of Compliance

 

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

 

16.          VIOLATIONS OF STANDARDS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

34

 

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

 

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

 

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

 

18.          AMENDMENT, MODIFICATION AND WAIVER

 

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

 

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

 

35

 

VERIFICATION
AND RECEIPT OF UNDERSTANDING

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

Employee’s Copy

 

36

 

VERIFICATION
AND RECEIPT OF UNDERSTANDING

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  	
   

  

 

HR File Copy

 

37

 

Letter
of Guarantee

 

 

January 29, 2009

 

Dr. Christian
Fibiger

xxx

 

xxx

 

Dear Christian:

 

Re:                             Executive Employment Agreement
between Biovail Laboratories International SRL and Dr. Christian Fibiger

 

We are writing in respect
of your Executive Employment Agreement with Biovail Laboratories International
SRL dated November 24, 2008 (as amended, revised or extended from time to
time, the “Executive Employment Agreement”).

 

In the event that Biovail
Laboratories International SRL fails to make a payment to you due under the
Executive Employment Agreement, Biovail Corporation (“Guarantor”) hereby irrevocably and
unconditionally guarantees payment, forthwith on demand, of all present and
future indebtedness, liabilities and obligations owing at any time and from
time to time hereafter by Biovail Laboratories International SRL to you
pursuant to the Executive Employment Agreement (collectively, the “Obligations”). This guarantee shall be a
continuing guarantee and shall guarantee the Obligations, notwithstanding that
Biovail Laboratories International SRL will from time to time satisfy the
Obligations in whole or in part and thereafter incur further Obligations.

 

This guarantee is an
absolute, unconditional, and continuing guarantee of payment and performance
which shall remain in full force and effect without respect to future changes
in conditions, including any change of’ law. The obligations of Guarantor
hereunder are independent of the obligations of Biovail Laboratories
International SRL, and that a separate action may be brought against Guarantor
whether such action is brought against Biovail Laboratories International SRL
or whether Biovail Laboratories International SRI is joined in such action.
Guarantor agrees that its liability hereunder shall be immediate and shall not
be contingent upon the exercise or enforcement by Dr. Fibiger of whatever
remedies he may have

 

 

against Biovail
Laboratories International SRI., or the enforcement of any lien or realization
upon any security Dr. Fibiger may at any time possess.

 

If any withholding for or
on account of any present or future tax imposed by or within the jurisdiction
which governs the Executive Employment Agreement is required by law on any payments
made hereunder, Biovail Corporation shall make the withholding and pay the
amount withheld to the appropriate governmental authority.

 

Yours very truly,

 

	
  BIOVAIL
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Per:

  	
  /s/ MARK DURHAM

  	
   

  
	
  Name:

  	
  Mark Durham

  	
   

  
	
  Title:

  	
   

  	
   

  

 

2

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