Code of business conduct and ethics

VEL-CBCE-B-02-10en

Table of ConTenTs

I. Introduction............................................................................ 1

II. HealthandSafety.................................................................... 1

III. ConflictofInterestPolicy.......................................................... 1

•Policy.................................................................................. 2

•CommonSourcesofConflicts................................................... 2

•InsiderInformation............................................................... 2

IV. Confidentiality......................................................................... 2

•DefinitionofConfidentialInformation...................................... 2

•TheDutynottoDisclose,Useor

CommunicateConfidentialInformation..................................... 3

•IntellectualProperty,TradeSecretsandInventions.................... 3

V. PersonalInformation................................................................ 3

VI. CompliancewithInstructions..................................................... 3

VII. PolicyAgainstDiscriminationandHarassment.............................. 4

•Definitions............................................................................ 4

•Information–ManagersandSupervisorsspecificobligations....... 5

•Reporting............................................................................. 5

•Confidentiality...................................................................... 5

•Retaliatoryactionsareprohibited............................................ 5

•Investigation........................................................................ 6

VIII. Bribes,KickbacksandGifts........................................................ 6

IX. ReportingandPreventionofCorporateMisconduct....................... 6

X. AccurateBooksandRecords...................................................... 7

XI. Contracts................................................................................ 7

XII. TelephoneUsageandEtiquette.................................................. 7

XIII. NonSalesRelatedGovernmentInquiries...................................... 7

XIV. PoliticalActivities.................................................................... 8

XV. Competition/Antitrust............................................................... 8

XVI. Contacts................................................................................. 8

XVII. Conclusion–ProceduresandDisciplinaryProcedures..................... 9

•BreachofthisCodeofBusinessConductandEthics................... 9

•ObligationsFollowingTerminationofEmployment...................... 9

•Conclusion............................................................................ 9

XVIII. Acknowledgment.....................................................................10

I InTRoDUCTIonVelanhasalwaysbeeneffectivenessandthegoodreputationoftheentireorganization—alldependuponthequalityofourpersonnelandtheircommitmenttoahighstandardofethicalbehaviour.

EveryVelanEmployeemustactwithintegrity,honestyandabidebytheprinciplesherein.EachEmployeealsohasanobligationtoensurethatfellowEmployeesandassociatesactinaccordancewithVelan’spolicies,andtoreportknownorsuspectedethicalviolations.

Compliance with these principles is a priority for Velan and all Employees and might be monitored bymanagement.Failuretoadheretoproperstandardsofconductandethicscanbecausefordisciplinaryaction,andincertaincases,dismissalforcause.Wheresuchstandardsarerequiredbylaw,violationmayalsoresultincivilorcriminalliability.

ThecommitmentofallEmployees to thestandardsandprinciplesofVelan isneededtoensure thatVelan’sreputationcontinuestobeoneofitsmostvaluablebusinessassets.

WheneverinthisCodethemasculinegenderisused,itshallalsoincludethefemininegender.

II. HealTH anD safeTYManagement of the Company is vitally interested in the health and safety of its Employees. Protection ofEmployeesfrominjuryoroccupationalsicknessisamajorcontinuingobjective.TheCompanywillmakeeveryreasonableefforttoprovideasafe,healthyworkenvironment.ThededicationofallEmployeesisessentialtothecontinuingobjectiveofreducingriskofinjury.

TheCompany,asemployer,isconsciousofitsresponsibilityforworkerhealthandsafety.ThemanagementoftheCompanywilltakeeveryreasonableprecautionfortheprotectionofallitsEmployees.

supervisors are responsible to report any health and safety incident, any violation of a health and safety law or regulation and to ensure that machinery and equipment are safeandthatEmployeesareincompliancewithestablishedsafeworkpracticesandprocedures.Employeesmustreceiveadequatetrainingintheirspecificworktaskstoprotecttheirhealthandsafety.

EveryEmployeemustreportunsafeactsandprotecthis/herownhealthandsafetyandalsotakeintoaccountthe safety of his/her co-workers by working in compliance with the law and with safe work practices andproceduresestablishedbytheCompany.

III. ConflICT of InTeResT PolICYNoEmployeeshouldbesubjecttoinfluences,interests,orrelationshipswhichconflictwiththebestinterestsoftheCompany.

A conflict of interest exists when an Employee’s duty to give his/her undivided commercial loyalty to theCompanyisprejudicedbyactualorpotentialpersonalbenefitfromanothersource.EachEmployeeisexpectedto avoid any investment, interest or association which interferes, might interfere, or might be thought tointerferewiththeindependentexerciseofhis/herjudgmentintheCompany’sbestinterest.

DisclosuresofpersonalinterestsorofothercircumstanceswhichmightbethoughttocauseactualorpotentialconflictsofinterestaretobemadepromptlybytheEmployeetotheCEO,thePresident,anExecutiveVice-President, the Chief Financial Officer or the Vice President Human Resources and General Counsel of theCompany.Suchdisclosureswillbeheldinconfidencetothefullestextentconsistentwiththecircumstances.Intheeventaconflictisfoundtobepresent,anarrangementwillbemadeforresolutioninamannerbestsuitedtotheinterestsoftheCompanyandtheEmployee.ItisessentialtokeepinmindthatwhenanEmployeeisfacedwithapossibleconflictofinterest,promptandfulldisclosureisthecorrectfirststeptowardssolvingtheproblem.

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PolicyAllEmployeesshallmaintainthehighestethicalstandardsintheconductofCompanyaffairs.Employeesareinapositionof trustwith respect to theCompanyand theyareexpected, in transactionswithcustomers, suppliers,contractors and in all facets of their duties, to act in the best interests of the Company, to the exclusion ofconsiderationsofallpersonalpreferenceoradvantage.TheCompanywillconductitsbusinessonthebasisofarm’slengthtransactionsandnotthroughconsiderationofthepersonalinterestsofEmployeesoftheCompany.

Common sources of ConflictsConflictsofinterestariseinmanysituations.Thefollowingisanon-exclusivelistofsuchsituations:a.whenanEmployee,amemberofhis/herhouseholdoratrustcompanyorotherentityinwhichoneofthe

foregoinghasaninterest,hasasignificant(morethanonepercent(1%)oftheoutstandingshares)directorindirectfinancialinterestin,orobligationto,anactualorpotentialcustomer,competitororsupplieroftheCompany;

b.whenanEmployee,amemberofhis/herhouseholdoratrustorcompanyorotherentityinwhichoneoftheforegoinghasaninterest,oranyotherpersonorentitydesignatedbytheEmployeeacceptsgiftsofmorethantokenornominalvaluefromanactualorpotentialsupplier;

c.when an Employee uses information obtained in the course of employment for his own or anyone else’spersonalbenefit;

d.when an Employee, without the Company’s consent, performs outside work or solicits any business onCompanypremisesorwhileworkingonCompanytime;

e.whenanEmployee,withouttheCompany’sconsent,worksasanEmployee,consultant,officerordirectorforanorganization,includingself-employment,whichcompetesdirectlyorindirectlywiththeCompanyornegativelyimpactshis/herperformanceorattendanceatVelan;

f. whenanEmployeeisengagedinanyoutsideactivitywheretheskillsandknowledgehedevelopsorappliesinhisjobwiththeCompanyistransferredorappliedtosuchactivityinamannerwhichmightimpairpresentorprospectivebusinessinterestsoftheCompany.Ingeneral,theCompany’sEmployeesshallnothaveanyrelationshipwithanyotherbusinessenterprisewhichmightaffecttheEmployee’sindependenceofjudgmentintransactionsbetweentheCompanyandtheotherbusinessenterpriseorotherwiseconflictswiththeproperperformanceoftheEmployee’sdutiesattheCompany.

Thisisnotanexclusivelisting.Conflictsofinterestmayariseinothersituationsthanthoseoutlinedabove.

Insider InformationConfidentialinformationabouttheCompany’saffairsshallnotbeusedbyEmployeesfortheirowngain,orforthegainofothers.Individualswhoareinpossessionofanysuchconfidentialinformationwhichisnotgenerallyavailabletothefinancialcommunity--so-called“insider”information--areprohibitedfromdisclosingittoanyunauthorizedpersonorusingitasabasisfortradingintheCompany’ssecuritiesorinthesecuritiesofanycorporationwhichtheCompanyiscontemplatingacquiring.EmployeesmustalsorespecttheconfidentialnatureofanysimilarinformationconcerningorganizationswithwhichtheCompanyhasbusinessdealingsasasupplier,customerorcompetitor.

EmployeesaretorefertotheVelanTradingPolicyandtotheVelanDisclosurePolicyfordetails.

IV. ConfIDenTIalITY

Definition of Confidential InformationTheEmployeeacknowledgesthat“confidentialinformation”meansallconfidentialinformation,ofanynaturewhatsoever,whichiscommunicatedtotheEmployeeorofwhichtheEmployeehasacquiredknowledgeinthecourseofhis/heremploymentwiththeCompany,including,butnotlimitedto:a.anyandallinformation,writtenorverbal,revealedordisclosedtotheCompanyortoitsEmployeesbythird

partieswithwhomtheCompanyoritsEmployeesdobusiness;

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b.anyandalldocuments,files,budgets,designs,sketches,drawings,patterns,correspondence,evaluations,notes, studies, know-how, market surveys, systems, programs, samples, prototypes, manuals, computerlistings, processing information readable on either hard copy or computer, program-code and computersoftwareobject-code,ideas,projects,sourcesofsuppliesandlistofsuppliersandprices,tradesecrets,salescontracts,personnelinformationrelatingtotheCompany;and

c.anypurchasing,financialoroperatingorbusinessinformationofanykindrelatingtotheCompanyoranyinformationconcerningthecompensationorbenefitspayabletotheEmployeeoranyEmployeeorconsultantoftheCompany.

The Duty not to Disclose, Use or Communicate Confidential InformationDuringtheperiodinwhichtheEmployeeisemployedbytheCompanyandatalltimesthereafter,theEmployeewillkeepconfidentialbyprotectingandnotdisclosing,usingorcommunicatinganyconfidentialinformation,exceptasitmayberequiredinthefulfillmentofhis/herdutiesasaloyalEmployeeoftheCompanyandwillnotuseanysuchinformationinamannerwhichmightpossiblybecontrarytothebestinterestsoftheCompany.

TheEmployeewillnotdiscussconfidentialinformation,underanycircumstancesorwithanyone;removeorallowtoberemovedanyconfidentialinformationbelongingtotheCompanyortogivesuchinformationtoanythirdpartywithoutproperauthorization.

EmployeesarealsotorefertotheVelanTradingPolicyandtotheVelanDisclosurePolicyfordetails.

Intellectual Property, Trade secrets and InventionsNo Employee may appropriate any Velan intellectual property and/or trade secrets which include withoutlimitationanybusinessortechnical information,suchasdrawings,formulas,programs,methods,techniques,designsorcompilationofinformationwhicharenotgenerallyknown.

V. PeRsonal InfoRMaTIonTheCompanyrespectstheprivacyofitsEmployeesandrecognizesthatmuchofthedatacollectedinCompanyfilespertains to the individual’sbackground, family, income,andhealth informationwhich isconfidential innature. Therefore, it is Company policy that personal information be released to non-Company persons onlywith Employee approval, except to satisfy legitimate investigatory or legal requirements. Employeeswho areresponsibleformaintainingpersonalinformationandthosewhoareprovidedaccesstosuchinformationmustensurethatprivateinformationisnotdisclosedinviolationoftheCompany’spoliciesorpractices.

EmployeesshouldnotsearchfororretrieveitemsfromanotherEmployee’sworkspacewithoutpriorapprovalofthatEmployeeormanagement.However,personalitems,messagesorinformationthatanEmployeeconsiderstobeprivate shouldnotbeplacedor kept in telephone systems, computerand/orelectronicmail systems,officesystems,offices,workspaces,desks,credenzas,orfilecabinets.TheCompanyreservesitsrighttoaccessall such areas. Employees are to refer to the Velan Computing Policies for details on computer usage andrestrictions.

VI. CoMPlIanCe WITH InsTRUCTIonsAnEmployeeisexpectedtocomplyasrequestedwithallinstructions,exceptanywhichwouldviolateestablishedCompany rules and instructionsorwhichwould result inany imminent, abnormaldanger to theEmployee’shealthorsafety.If,aftercomplyingwiththeinstructions,anEmployeeisoftheopinionthattheinstructionsare unreasonable a complaintmaybe lodgedwith the Supervisor, the Vice PresidentHumanResources andGeneralCounsel,theExecutiveVice-President,thePresidentortheCEO.

IfyouareapproachedbyanyonewithinoroutsidetheCompanywitharequesttodosomethingwhichyouconsidermaybeillegalorunethical,youshouldrefusetodoso.TellthepersonmakingtheimproperrequestthatsuchconductiscontrarytoCompanypolicy.ThenreporttheincidenttoyoursupervisorwhoshallinturnreporttoaSeniorOfficer.NosupervisormayunderanycircumstancesrequireasubordinatetoviolatethisCodeofBusinessConductandEthics.

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VII. PolICY aGaInsT DIsCRIMInaTIon anD HaRassMenTVelanisunconditionallyandfundamentallycommittedtomaintainaworkplacethatisfreefromintimidation,coercion,discrimination,harassment,orretaliationagainstEmployees.

VelanEmployeesareexpectedtoconductthemselvesinabusiness-likemanneratalltimes.Anybehaviorthatiscoercive,intimidating,discriminatory,vexatious,harassingorsexualinnatureisinappropriateandprohibited.

Incidentsofdiscrimination,harassmentorretaliationbyEmployees,managers,contractors,vendors,suppliersorcustomerswillnotbetoleratedandshouldbepromptlyreportedasoutlinedinthispolicy.

DefinitionsIncidentsofdiscriminationorharassmentmaybesubjectiveinnature.Toassistinunderstandingwhatmayconstitutediscriminationorharassment,pleasereadthefollowingguidelines:

DiscriminationDiscrimination is described as an act or other inappropriate behavior which adversely affects employment,workingconditions,benefits,privilegesoranyopportunityfortrainingorpromotion,basedinwholeorinpartonaperson’srace,color,religion,gender,genderidentity,sexualorientation,maritalstatus,nationaloriginorage(underparticularlaws)andresultsinanunfairtreatmentorhasanunfairimpactonindividuals.

TheHumanResourcesDepartmentisresponsibleforensuringthatVelan’swrittenpolicies,standardformsandEmployeedocumentationarenon-discriminatorybothinletterandinspirit.

HarassmentHarassment is inappropriatebehaviour that causesoffenceorhumiliation toanyEmployeeor thatplacesacondition,unrelatedtojobrequirements,skills,attitudesorcapabilities,onemployment,workingconditions,benefits,privilegesoronopportunityfortrainingorpromotion.

Harassmentofeitherapsychologicalorasexualnatureisforbidden.

Psychological harassment Psychological harassment is described as any vexatious behaviour in the form of repeated and hostile orunwarrantedconduct,verbalcomments,actionsor failure toact,orgestures thatmayaffectanEmployee’sdignityorintegrityorthatresultinaharmfulworkenvironmentfortheEmployee.

Avexatiousbehaviourisahumiliatingorabusivebehaviourthatlowersaperson’sself-esteemorcauseshim/her torment; a behaviour that exceeds what the person considers to be appropriate and reasonable in theperformanceofhis/herwork.

sexual harassmentSexualharassmentisdefinedasanyunwelcomesexualadvances,requestsforsexualfavorsorotherverbalorphysicalconductofasexualnatureincluding,butnotlimitedto,circumstanceswhen:• Submission to such conduct is explicitly made or implied to be a term or condition of an individual’s

employment;

• Submissiontoorrejectionofsuchconductbyanindividualisusedasthebasisforanyemploymentdecisionsaffectingsuchindividual,includingcompensationandadvancement;or

• Suchconducthasthepurposeoreffectofunreasonablyinterferingwithanindividual’sworkperformanceorcreatinganintimidating,hostileorotherwiseoffensiveworkingenvironment.

A single incident of such behavior that has a lasting harmful effect on an Employee may also constituteharassment.

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Information - Managers and supervisors specific obligationsAllmanagersandsupervisors,inconjunctionwiththeHumanResourcesDepartment,areresponsibleforandchargedwithensuringthatCompany’spoliciesareknown,understoodandstrictlyenforcedintheirrespectiveareaofresponsibilityandforensuringthattheypersonallysupportthesepoliciesinmanner,wordanddeed.

Inaddition,managersandsupervisorsarerequiredto:• neithercondonenorpermitharassment,discriminationorretaliationasdefinedinthispolicyonCompany

premisesoratCompanyfunctions;

• promptlyreporttotheHumanResourcesDepartmentanyEmployee’sconcernsorcomplaints;

• deal,inconjunctionwiththeHumanResourcesDepartment,withanyEmployee’sconcernsorcomplaintsinthisregardinaseriousandpromptmanner;

• collaboratewithanyVelansponsoredinvestigation;

• implementwithoutdelayanycorrectiveordisciplinaryactionthatmayberecommendedafterinvestigation.

ReportingAnyEmployeewhoharassesanotherEmployeeviolatestheCompany’spoliciesandengagesinillegalconductasdefinedbycurrentemploymentlegislation.

Managers and supervisors are responsible for maintaining a workplace that is free of discrimination andharassment, but all Employees are responsible for helping to ensure that harassment does not occur byconductingthemselvesinanappropriatemannerandbyreportinganyandallharassmenttheymaywitness.

AnyconductwhichanEmployeeconsidersdiscriminationorharassmentmustbeimmediatelyreportedtohis/herimmediatesupervisorortotheHumanResourcesDepartment.Allmanagers,supervisorsoranyonewhohaswitnesseddiscriminationorharassmentmustalso immediately report thesituation to theHumanResourcesDepartment.

The Company cannot deal with such conduct unless it has knowledge of this conduct. However, becauseaccusationscanseriouslyaffectthecareersandlivesofinnocentpeople,Velanmaytakedisciplinaryactioniftheaccusationprovestobeunfounded,falseormadeinbadfaith.Thispolicyisnotmeanttodiscouragethereportingofincidents,buttoprotectthosewhoareinnocentofallegationsofdiscrimination,harassmentorretaliation.

Seebelowthelistofthecontactsforreportingpurposes.

ConfidentialityAny reported complaintwill be kept as confidential as possible considering the needs of the investigationprocess. Velanwillnotusetheinformationobtainedthroughacomplaintortheinvestigationprocess(seebelow)againstthepersonwhomakesagoodfaithallegationofdiscrimination,harassmentorretaliation.

Retaliatory actions are prohibitedVelan forbids retaliation of any kind against any Employee who complains about alleged discrimination orharassment, or provides information related to such complaints, and could take disciplinary action againstanyonewhoisfoundguiltyofsuchaction.

Retaliatory actions are defined as any actions taken against the Employee reporting theharassment or thediscriminationandmayinclude:

Disciplining,changingworkassignments,providinginaccurateworkinformationto,orrefusingtocooperateordiscusswork-relatedmatterswithanyassociatebecause thatassociatehascomplainedaboutor resistedharassment,discrimination,orretaliation;or

Intentionally pressuring, falsely denying, lying about or otherwise covering up or attempting to cover upconductsuchasthatdescribedinanyitemabove.

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Any conduct which an Employee considers retaliatory must be immediately reported to his/her immediatesupervisor or to the Human Resources Department. All managers, supervisors or anyone who has observedretaliationmustimmediatelyreportthesituationtotheHumanResourcesDepartment.

InvestigationAnycomplaintwillbepromptlyandfullyinvestigatedandthematterwillbekeptasconfidentialaspossible.

If,afterathoroughandpromptinvestigationofthematter,Velandeterminesthatdiscrimination,harassmentor retaliationhasoccurred,appropriatedisciplinaryactionwillbe takenaswarrantedagainstanyEmployeefoundtobeinviolationofthispolicy.

In this policy, reference to disciplinary or corrective action means actions that may include counselling,monitoring,writtenwarning,transfer,demotion,reductionofwages,suspension,discharge,oranyotheractiondeemedappropriateuptoandincludingdischarge.

IntheeventthatthecomplainingEmployeeisnotsatisfiedwiththeactiontakeninresponsetothecomplaint,he/shemay requesta reviewof thematterby theManagerofHumanResourcesand/or theVicePresident,HumanResources&GeneralCounsel.

An effective anti-discrimination and anti-harassment policy requires the support of Velan personnel in allpositions, particularly by those in authority. Any Employee, manager or supervisor who is made aware ofalleged improper conduct, and fails to notify the Human Resources Department or fails to cooperate withVelan-sponsoredinvestigations,orengagesinretaliation,willbesubjectedtoappropriatediscipline,includingcounselling,monitoring,writtenwarning, transfer, demotion, reductionofwages, suspension,discharge,oranyotheractiondeemedappropriateuptoandincludingdischargeasthiswillbeconsideredaninfringementofVelanpolicy.

VIII. bRIbes, KICKbaCKs anD GIfTsEmployeesshallnotoffer,deliverorpayforany inappropriategift,entertainmentor favortoaperson inapositionofinfluencethatmayaffectVelan’sbusiness.CommissionsanddiscountsmaybegiveninthenormalcourseofbusinessaccordingtoVelan’spoliciesandprocedures.

Velan’spolicyistoavoidanyrelationshiporactivitywhichmightaffectaperson’sindependentjudgmentorreflectadverselyontheCompany.Employeesareprohibitedfromsolicitingoracceptinggifts,entertainmentorfavorsfromanyonedoingbusinesswithVelan.Employeesandtheirfamiliesmaynotacceptgiftsthatareinappropriateinvalueornatureorgivenoutsidethenormalcourseofbusiness.AnEmployeewhoreceivessuchagiftshouldreturnitandnotifythesenderastotheCompany’spolicy.Allcashtransactionsmustbehandledsoastoavoidanyquestionofillegalorimproperpayments,oranysuspicionofimproprietywhatsoever.AlltransactionsmustberecordedinVelan’sbookofaccounts.

Employeesshallnotengageinillegalorunethicalconductinordertomakeasaleorotherwisedobusiness.AllinformationthatweprovideabouttheproductsandservicestheCompanyhastooffermustbeclear,accurateandtruthful.Attemptingtoobtainacompetitor’sconfidentialbusinessinformationortradesecretsthroughanyunlawfulmeansisalsoprohibited.

IX. RePoRTInG anD PReVenTIon of CoRPoRaTe MIsConDUCTVelaniscommittedtoprovidingaworkenvironmentthatisfreefromconductthatviolatesthesecuritieslaws,anyruleorregulationoranyprovisionoffederal,stateorprovinciallawsorregulationsrelatingtofraudagainstshareholders(collectively,“CorporateMisconduct”).

In support of this commitment, Velan encourages Employees to provide information, cause information to beprovided,orotherwiseassistinanyinvestigationregardinganyconductwhichtheEmployeereasonablybelievesconstitutescorporatemisconduct,thewholeasfurtherdetailedintheCompany’sWhistleBlowingpolicy.

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X. aCCURaTe booKs anD ReCoRDsVelan’sbooksandrecordsarerequiredtoaccuratelyreflectallmeasurabletransactionsaffectingVelan,includingthedispositionofVelan’sassets.Employeeswhohavetheresponsibilitytoreceiveordisbursemoneyhaveaspecialobligationtofollowestablishedprocedures,whichhavebeendesignedtoprotectEmployees,aswellastheCompany’sassets.AllreceiptsandexpendituresmustbefullyandproperlyaccountedforandrecordedinVelan’srecords.Approvalofexpendituresshouldbegivenonlywhentheamountsarecorrectandproper.Employeeswhopreparerecordsandreportsforthecompanyareobligated,ethicallyandlegally,toassuresuchdocumentsareaccurateandcomplete,safeguardedfromlossordestruction,retainedforspecificperiodsandmaintainedinconfidence.RecordsshallnotbedeliveredtoanypersonotherthantootherEmployeeswhoneedsuchrecordstoperformtheirjobsorinresponsetolegalproceedings.

Employeesmust notwillfully or knowingly falsify, alter, remove, or destroy records that are required to bemaintainedbylaworCompanypolicy.

XI. ConTRaCTsTotheextentpossible,contractsoutsidenormalbusinesstermsandconditionstowhichVelanisapartyshouldbeinwriting,leavingaslittleaspossibletoconjectureorspeculation.“Sideletters”or“comfortletters”whicharenotexhibits,appendicesorattachmentstothemaindocumentshouldonlybeaccepted(orgiven)withtheapprovaloftheCEO,thePresidentortheExecutiveVicePresidentNorthAmericanSalesandChairmanofVelanInc.

XII. TelePHone UsaGe anD eTIQUeTTeVelan telephones are to be used only for business purposes. Personal use of the phone is to be limited.Employeesshouldhavenoexpectationofprivacyregardingsuchcommunications.

LongdistancecallsusingVelan’slongdistanceserviceshallbelimitedtobusinesspurposes.Alltelephonecallsshouldbeansweredpromptly.Telephonemessagesshouldbedealtwithassoonaspossible.

XIII. non sales RelaTeD GoVeRnMenT InQUIRIesAspartoftheirjobresponsibilities,someEmployeesworkwithvariousgovernmentagenciesonaroutinebasisinaccordancewithestablishedpracticesandproceduresandwillcontinuetodoso.Velanwillcooperatewitheveryreasonableandvalidrequestforinformation.

Nevertheless,ifanEmployeereceivesarequestfromagovernmentofficialwhichisoutsidethenormalcourseofbusiness,Velanmighthavetofirstassertitsbasiclegalrights,suchasrepresentationbycounselifnecessary.

Thereforeifagovernmentrepresentative:• requestsaninterviewwithyou,

• seeksinformationoraccesstofilesoutsidetheordinarycourseofbusinessor,

• poseswrittenquestionsoutsidetheordinarycourseofbusiness,

youshouldinformher/himthatyoumustdiscussthematterwithyoursupervisororLegalCounsel.If,however,the government representative (a police officer for example) has a search warrant, you should cooperateimmediatelybutcontacttheGeneralCounselimmediately.IfyouareservedwithanylegaldocumentregardingtheCompany,youmustinformVelan’sCEO,PresidentorGeneralCounselandfaxacopytohis/herattention,unlessprohibitedbylaw.

Whensubmitting informationtoanygovernmentrepresentative,youmustconsiderwhetherthe informationsubmitted should be marked Confidential and whether appropriate steps should be taken to protect itsconfidentiality.Therefore,youshouldseektheadviceofVelanofficersassoonaspossible.

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XIV. PolITICal aCTIVITIesVelanrecognizestheimportanceofthepoliticalprocessandencouragesEmployeestoparticipateinamannerconsistentwiththeirobligationstotheCompany.However,VelandoesnotmakeorreimbursecontributionsofEmployeestopoliticalparties.WherependingissuesarevitaltoVelan’sinterests,Velanmaymakecontributionstoacommitteesupportingoropposinglegislationandpublicreferendums,providedsuchcontributionsarelegalandareapprovedbytheBoardofDirectorsorthePresidentortheCEO.TheCompanymayparticipateinthepoliticalprocessthroughvarioustradeassociationsaspermittedbylaw.

XV. CoMPeTITIon/anTITRUsTFairandethicalcompetitionisafundamentalprincipleofoureconomicsystemandVelan’spolicyistocomplystrictlywith applicable competition/antitrust laws. These laws regulate trade practices and prohibit awiderangeofpractices,whichcouldrestrainorlimitcompetition.Employeesmustexercisecaretoavoidviolatingcompetition/antitrustandtradepracticelaws.

XVI. ConTaCTsForthepurposeofanymatterrelatingtothispolicyincludingbutnotlimitedtothereportingofcomplaints,youcancontacteitherinperson,byphone,bymail,oremail,inadditionorinlieuofyoursupervisoranyofthefollowingindividuals

Note:ifyouchoosetoreportanycomplaintsrelatingtothepolicyagainstdiscriminationandharassmenttoyoursupervisorhe/shehasinturntheobligationtoreporttoamemberlistedbelow.

all Velan Canada and Usa: Mailingaddress:7007,Côte-de-Liesse,Montréal,Québec,H4T1G2(indicate“confidentialandattentionto”ontheenvelope)

SabineBruckert,VicePresident,HumanResources&GeneralCounselMontrealTel:(514)748-7743ext:5136Email:sabine.bruckert@velan.com

StephenCherlet,ExecutiveVicePresidentOperationsMontrealTel:(514)748-7743ext:2333Email:stephen.cherlet@velan.com

Velan Canada: JackCotugno,HumanResourcesManagerMontrealTel:(514)748-7743ext:5292Email:jack.cotugno@velan.com

Velan Usa: ReferhereaboveSabineBruckert,VicePresident,HumanResources&GeneralCounselorJamesDutka,HRManager(thelawfulharassementofficer)Mailingaddress:94,AvenueC,Williston,VT,USA05495-9732(indicate“confidentialandattentionto”ontheenvelop):WillistonTel:(802)863-2561

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XVII. ConClUsIon - PRoCeDURes anD DIsCIPlInaRY PRoCeDUResInperforminghis/herduties,eachEmployeemust:1.Maintainhighstandardsofethicalconductandavoidconflictsofinterest,asdefinedinthisCode;

2.Promptlydiscloseanyactual,apparentorpotentialmaterialconflictofinterest;

3.Ensurefull,fair,accurate,timely,andclearinformationisstatedinCompanyreportsanddocuments;

4.Complywithandtakeallreasonableactionstocauseotherstocomplywithallapplicablelaws,rulesandregulations,tothebestofhis/herknowledge.

5.Comply with and ensure others comply with Velan’s policies and disclosure and controls procedures andinternalcontrolsandprocedures.

6.Promptly report any violations of this Code to the CEO, the President or the Chief Financial Officer, theExecutiveVicePresidentNorthAmericanSalesandChairman,andtheVicePresidentHumanResourcesandGeneralCounsel.

It is important:• ThatallEmployeesread,understandandcomplywiththisCode.ExplanationsifneededrelativetothisCode

mustberequestedtotheVicePresidentHumanResources&GeneralCounsel,theExecutiveVicePresidentNorthAmericanSalesandChairman,thePresidentortheCEO.

• TofiletherequireddisclosureswithrespecttoconflictofinterestwiththeCompanyandtoupdatethemwhenitwillbeneeded.

• ToreportanyviolationsofthisCodetoseniormanagement.

breach of this Code of business Conduct and ethicsEmployeesarerequiredtocomplywiththisCodeofBusinessConductandEthics.Failuretodosomayresultindisciplinarymeasuresuptoandincludingdischargeinaccordancewithapplicablelabourrulesandregulations.

obligations following Termination of employmentTheprovisionsofparagraphIVofthisCodeofBusinessConductandEthicsmaystillapplyfollowingterminationof the Employee’s employment with the Company (whether by reason of termination by the Company,resignationoftheEmployee,orotherwise).NothingcontainedinthisCodeofBusinessConductandEthicsshallbeconstruedtocreateanyobligationoftheCompanytoretaintheEmployeeinitsemploy.

ConclusionThepoliciesandguidelinesreferencedinthisCodeareapplicabletoallEmployees.Itwillbeenforcedfairlyandwithoutprejudiceatalllevels.TheprovisionsofthisCodeestablishonlytheminimumstandardofconductandEmployeesmightberequiredtocomplywithotherworkrules.Followingthispublication,VelanreservestherighttoperiodicallyupdatetheCode.ThemostrecentversionoftheCodewillbemadeavailableonourWebsiteandfromyourHumanResourcesrepresentative.

Ethics,integrityandtrustarecriticaltoVelananditistheresponsibilityofallofustolivethesevalueseachday to preserve our ethical culture and thehighest standards to be a trustedpartner for our shareholders,customers,suppliersandbetweeneachother.TheCodeofBusinessConductandEthicsisanimportanttoolinthepursuitofthatgoal.

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10VEL-CBCE-B-02-10en

! Please cut the section below and return to Velan’s Human Resources Department.

employee signature

Please print name

Date

ThisistocertifythatIhavereceived,readandunderstoodtheVelanCodeofBusinessConductandEthics.

XVIII. acknowledgementThis istocertifythatIhavereceived,readandunderstoodtheVelanCodeofBusinessConductandEthics.IunderstandthatmycompliancewiththiscodeisaconditionofmypositionwithVelan.