SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
FUISZ TECHNOLOGIES LTD.
(Name of Issuer)
Common Stock, $.01 Par Value per Share
(Title of Class of Securities)
359536109
(CUSIP Number)
Kenneth C. Cancellara, Esq. Roger Andrus, Esq.
2488 Dunwin Drive Cahill Gordon & Reindel
Mississauga, Ontario 80 Pine Street
Canada, L5L 1J9 New York, New York 10005
(905) 608-8008 (212) 701-3000
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
July 13, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-7(b), check the
following box [ ].
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 7 Pages
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CUSIP No. 359536109
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Biovail Corporation International.
- --------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)[ ]
(b)[ ]
- --------- ---------------------------------------------------------------------
3 SEC USE ONLY
- --------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------- ---------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
[ ]
- --------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ontario, Canada
- --------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 3,209,829
------- ------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
------- ------------------------------
OWNED BY EACH 9 SOLE DISPOSITIVE POWER
REPORTING PERSON 3,209,829
------- ------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- ---------------------------------------- ------- ------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
3,209,829
- --------- ---------------------------------------------------------------------
12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES
[ ]
- --------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
14.64%
- --------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------- ---------------------------------------------------------------------
Page 2 of 7 Pages
<PAGE>
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, $0.01 par value, (the
"Common Stock"), of Fuisz Technogies, Ltd. (the "Issuer"), a Delaware
corporation, whose principal executive offices are located at 14555 Avion at
Lakeside, Suite 250, Chantilly, Virginia 20151.
Item 2. Identity and Background.
This statement is filed on behalf of Biovail Corporation International
("Biovail" or the "Reporting Person"), an Ontario, Canada corporation.
Biovail has its principal office at 2488 Dunwin Drive, Mississauga,
Ontario, Canada, L5L 1J9. Biovail is an international full service
pharmaceutical company, engaged in the formulation, clinical testing,
registration and manufacture of drug products utilizing advanced drug delivery
technologies.
Neither Biovail nor, to the best of Biovail's knowledge, any of the persons
listed on Schedule A hereto, has during the last five years (i) been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On July 13, 1999, Biovail entered into an option agreement with Richard C.
Fuisz, M.D. ("Dr. Fuisz") (the "Option Agreement"). Under the Option Agreement,
Dr. Fuisz has granted to Biovail an option (the "Option") to acquire 3,209,829
shares of Common Stock (the "Option Shares") through July 23, 1999 for an
aggregate cash purchase price of $22,468,803 (the "Purchase Price"). If Biovail
exercises its Option to purchase the Option Shares, Biovail currently
anticipates that funds for the exercise price would come from general corporate
funds available to Biovail.
Upon exercise of the Option, the Option Shares and the Purchase Price will
be placed in escrow, pursuant to the Escrow Agreement, dated as of July 13,
1999, by and among Dr. Fuisz, Biovail and the U.S. Trust Company, National
Association (the "Escrow Agreement"), until the expiration of the waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. If the Option
Shares and the Purchase Price are not distributed as provided in the preceeding
sentence by October 31, 1999, the Option Shares will be returned to Dr. Fuisz
and the Purchase Price will be returned to Biovail.
The descriptions of the Option Agreement and Escrow Agreement contained in
this Schedule 13D are qualified in their entirety by reference to such
agreements, copies of which appear as Exhibits 1 and 2 hereto.
Page 3 of 7 Pages
<PAGE>
Item 4. Purpose of Transaction
The intent of Biovail, if it exercises the Option, is to acquire all of the
outstanding Common Stock of the Issuer. If such acquisition is consummated: (i)
the Issuer would become a subsidiary of Biovail, and Biovail would subsequently
determine the size and membership of the board of directors of the Issuer and
the officers of the Issuer and (ii) the Common Stock of the Issuer would become
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934. Biovail reserves the right to acquire, or cause
to be acquired, additional securities of the Issuer, to dispose of, or cause to
be disposed of, such securities at any time or to formulate other purposes,
plans or proposals regarding the Issuer or any of its securities, to the extent
deemed advisable by Biovail.
Item 5. Interest in Securities of Issuer.
Stock Ownership of the Reporting Person.
(a) Biovail is the beneficial owner of 3,209,829 shares of Common Stock, or
approximately 14.64%, of the outstanding shares of Common Stock (based upon the
outstanding shares of Common Stock as of March 31, 1999). To the best knowledge
of Biovail, no other person named in Item 2 above beneficially owns any shares
of Common Stock of the Issuer.
(b) If Biovail exercises the Option, Biovail will have the sole power to
vote and sole authority to dispose or direct the disposition of all shares of
Common Stock reported by this Schedule 13D.
(c) Except as stated in Item 3 above, neither Biovail nor, to the best of
its knowledge, any of the persons listed on Schedule A hereto, engaged in any
transactions in the Issuer Common Stock effected by or for the account of
Biovail during the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
Other than as described in Item 3 above, there are no contracts,
arrangements, understandings or relationships with respect to the Common Stock
of the Issuer to which Biovail is a party.
Page 4 of 7 Pages
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Item 7. Material to be Filed as Exhibits.
Exhibit 1. Option Agreement, dated as of July 13, 1999, by and between Richard
C. Fuisz, M.D. and Biovail Corporation International.
Exhibit 2. Escrow Agreement, dated as of July 13, 1999, by and between Richard
C. Fuisz, M.D., Biovail Corporation International and U.S. Trust
Company, National Association.
Signature.
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 23, 1999.
By: /s/ John Miszuk
-------------------------------------------
Name: John Miszuk
Title: Vice President and Controller
Page 5 of 7 Pages
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Schedule A
The (a) name, (b) business address, (c) principal occupation or employment
and the organization in which such occupation or employment is conducted and (d)
citizenship of each director and/or officer of Biovail Corporation
International, Inc. ("Biovail") are set forth in the following table:
1. (a) Eugene N. Melnyk
(b) Chelston Park, Building 2, Collymore Rock, St. Michael,
Barbados, West Indies
(c) Chairman of the Board and Director of Biovail
(d) Canada
2. (a) Bruce D. Brydon
(b) 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
(c) Chief Executive Officer and Director of Biovail
(d) Canada
3. (a) Robert A. Podruzny
(b) 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
(c) President, Chief Operating Officer and Director of Biovail
(d) Canada
4. (a) Kenneth C. Cancellara
(b) 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
(c) Senior Vice President, General Counsel, Secretary and
Director of Biovail
(d) Canada
5. (a) Rolf K. Reininghaus
(b) 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
(c) Senior Vice President and Director of Biovail
(d) Canada
6. (a) Kenneth G. Howling
(b) 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
(c) Vice President, Chief Financial Officer of Biovail
(d) Canada
7. (a) John Miszuk
(b) 2488 Dunwin Drive, Mississauga, Ontario, Canada L5L 1J9
(c) Vice President and Controller of Biovail
(d) Canada
Page 6 of 7 Pages
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8. (a) Wilfred G. Bristow
(b) c/o Biovail, 2488 Dunwin Drive, Mississauga, Ontario, Canada
L5L 1J9
(c) Senior Vice President of Nesbitt Burns Inc.
(d) Canada
9. (a) Roger Rowan
(b) c/o Biovail, 2488 Dunwin Drive, Mississauga, Ontario, Canada
L5L 1J9
(c) President and Chief Operating Officer of Watt Charmichael,
Inc.
(d) Canada
10. (a) Robert Vujea
(b) c/o Biovail, 2488 Dunwin Drive, Mississauga, Ontario, Canada
L5L 1J9
(c) President of R&D Chemical Corporation
(d) Canada
OPTION AGREEMENT
This OPTION AGREEMENT ("Agreement") is made this 13th day of July, 1999, by
and between RICHARD C. FUISZ, M.D., an individual resident of the State of
Virginia ("Dr. Fuisz"), and BIOVAIL CORPORATION INTERNATIONAL, an Ontario
corporation (the "Option Holder").
RECITALS:
WHEREAS, Dr. Fuisz is the record and beneficial owner of 3,209,829 of the
outstanding shares of common stock, $.01 par value per share ("Common Stock") of
FUISZ TECHNOLOGIES LTD., a Delaware corporation (the "Company") (collectively,
including all distributions made subsequent to the date of this Agreement and on
or prior to the Closing Date, the "Shares");
WHEREAS, Dr. Fuisz has agreed to grant to the Option Holder an exclusive
option to purchase all of the Shares in a single transaction pursuant to this
Agreement;
WHEREAS, the Option Holder has agreed to undertake the expense and effort
of performing business due diligence in respect of the Company in reliance upon
the Option;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties herein contained, and for other good and valuable consideration, the
parties covenant and agree as follows:
ARTICLE I -- GRANT OF OPTION
1.1 Grant of Option. Dr. Fuisz hereby grants to the Option Holder or any
affiliate of the Option Holder or any designee or assignee of the Option Holder,
and the Option Holder hereby accepts an exclusive, irrevocable option (the
"Option") to purchase from Dr. Fuisz all of the Shares in a single transaction,
in accordance with the terms and conditions of this Agreement. During the period
commencing on the date hereof through and including the closing date related to
the option exercise hereunder (the "Option Period"), Dr. Fuisz shall not (i)
directly or indirectly sell, transfer or assign any Shares or any interest
therein to any party other than pursuant to this Agreement; (ii) enter into any
voting arrangement with respect to the Shares; (iii) take any other action that
would in any way restrict, limit or interfere with the transactions contemplated
by an acquisition agreement or the performance of Dr. Fuisz' obligations under
the Option or the Escrow Agreement (as defined herein) or (iv) directly or
indirectly engage in any discussions or negotiations with any other party with
respect to the sale, transfer or assignment of any Shares. During the Option
Period, the Option Holder may place a stop order or other limitation on the
Shares to prevent any transfer thereof other than pursuant to this Agreement.
1.2 Escrow Agreement. Concurrent with the parties' execution of this
Agreement, the parties, together with U.S. Trust Company (the "Escrow Agent"),
will enter into an escrow agreement, in the form attached hereto as Exhibit A
(the "Escrow
<PAGE>
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Agreement"), pursuant to which, among other things, Dr. Fuisz shall deposit all
certificates representing the Shares, together with appropriate stock powers
endorsed in blank with medallion guarantied signatures and other documentation
necessary for the Escrow Agent to transfer marketable title to the Shares to the
Option Holder pursuant to exercise of the Option, in accordance with the terms
hereof and such Escrow Agreement.
1.3 Exercise Period. The Option may be exercised by the Option Holder at
any time prior to 5:00 p.m. New York City time on July 23, 1999 (the "Exercise
Period").
1.4 Option Exercise Price.
(a) Option Exercise Price. Subject to the terms of Section 1.4(b) hereof,
the purchase price for each Share transferred to the Option Holder upon the
exercise of the Option shall be $7.00 per Share (the "Option Exercise Price").
The Option Exercise Price shall be paid in cash, by wire transfer of federal
funds to a bank and for an account to be designated in the Escrow Agreement.
(b) Adjustment Upon Changes in Capitalization. In the event of any change
in the Common Stock during the Option Period by reason of stock dividends,
split-ups, mergers, recapitalizations, combinations, conversions, exchanges of
shares or the like, the number and kind of the Shares and the Option Price shall
be appropriately adjusted.
1.5 Exercise of Option.
(a) Delivery of the Option Exercise Notice. The Option Holder will be
entitled to exercise the Option in a single transaction at any time prior to the
expiration of the Exercise Period by written notice (the "Option Exercise
Notice") to Dr. Fuisz and the Escrow Agent and deposit of the Option Exercise
Price with the Escrow Agent. Upon timely delivery of the Option Exercise Notice
and deposit of the Option Exercise Price, the Option Holder shall be irrevocably
bound to purchase, and Dr. Fuisz shall be irrevocably bound to sell, convey and
transfer to the Option Holder, all right, title and interest in and to the
Shares specified in the Option Exercise Notice, pursuant to the terms hereof.
(b) Closing of the Option Exercise. The closing of the exercise shall occur
on the earliest practicable date after each of the following conditions have
been satisfied: (i) the Option Holder has deposited with the Escrow Agent the
Option Exercise Price applicable to the Shares to be purchased pursuant to the
Option Exercise Notice and (ii) the expiration of the requisite waiting period
pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR
Act"). On such date (the "Closing Date"), the Escrow Agent shall substantially
simultaneously remit the funds received from the Option Holder to Dr. Fuisz and
transfer the title of and release the Shares purchased to the Option Holder in
accordance with the terms of the Escrow Agreement. Dr. Fuisz and the Option
Holder each agree to use reasonable diligence in the preparation, filing and
pursuit of the expiration of the requisite waiting period pursuant to the HSR
Act.
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ARTICLE II -- RIGHTS ASSOCIATED WITH THE SHARES
Except to the extent the Option Holder exercises the Option with respect to
the Shares, the Option Holder shall have no right to vote, receive dividends or
have any other rights as a shareholder with respect to such Shares, provided,
that the Option Holder shall be entitled to receive from Dr. Fuisz the proceeds
of all dividends or other distributions (whether payable in cash, stock or
otherwise) made in respect of the Shares subsequent to the date of this
Agreement and on or prior to the last Closing Date.
ARTICLE III -- CONDITIONS TO EFFECTIVENESS
This Agreement shall become effective immediately upon satisfaction of each
of the following conditions: (i) each party hereto shall have executed a copy of
this Agreement (whether the same or different copies); (ii) each party hereto
shall have delivered such executed copies to the other party; and (iii) the
board of directors of the Company shall have approved the granting of this
Option to the Option Holder such that, pursuant to Section 203 of the General
Corporation Law of the State of Delaware (the "DGCL"), the Option Holder is and
will be exempt from the provisions of Section 203 of DGCL. The date of
effectiveness shall be referred to herein as the "Effective Date".
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF DR. FUISZ
4.1 Representations and warranties of Dr. Fuisz. Dr. Fuisz hereby
represents, warrants and agrees that:
(a) Due Authorization. Dr. Fuisz has taken all necessary action to enter
into this Agreement and the Escrow Agreement, to consummate the transactions
contemplated hereby and thereby and otherwise carry out his obligations
hereunder and thereunder.
(b) Board of Directors Approval. Pursuant to Section 203 of the DGCL and
approval of the board of directors of the Company, which has been obtained, the
Option Holder is exempt from the provisions of Section 203 of the DGCL. A
certified copy of such resolutions are attached hereto as Exhibit B.
(c) No Conflict. The execution and delivery of this Agreement and the
Escrow Agreement, and the consummation by Dr. Fuisz of the transactions
contemplated hereby and thereby, will not: (i) violate, conflict with or result
in the breach of any provision of, or result in a material modification or
otherwise entitle any party to terminate, or constitute (whether after the
filing of notice or lapse of time or both) a default (by way of substitution,
novation or otherwise) under any contract or other agreement to which Dr. Fuisz
is a party or by or to which any of Dr. Fuisz' assets or properties may be bound
or subject; (ii) result in the creation or imposition of any material lien,
charge, pledge, security interest or other encumbrance upon any property or
assets of Dr. Fuisz pursuant to any provision of any mortgage, lien, lease,
agreement, license or instrument; (iii) violate any law, regulation, statute; or
(iv) violate any injunction, order, arbitration award, judgment or decree
applicable to, against or binding upon Dr. Fuisz.
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(d) Consents and Approvals. No approval, consent or authorization by any
governmental authority or agency of the United States or any state is required
in connection with the execution and delivery of this Agreement and the Escrow
Agreement, or the consummation of the transactions, by Dr. Fuisz, other than the
expiration of the requisite waiting period pursuant to the HSR Act.
(e) Enforceability. Assuming due execution and delivery of this Agreement
and the Escrow Agreement by the Option Holder, this Agreement, the Escrow
Agreement and each other agreement or instrument contemplated hereby or thereby
will be valid, legal and binding obligations of Dr. Fuisz, enforceable against
Dr. Fuisz in accordance with their respective terms, except that such
enforceability may be subject to (i) bankruptcy, insolvency, reorganization or
other similar laws affecting or relating to enforcement of creditors' rights
generally, and (ii) general equitable principles.
(f) Good Title to the Shares. Dr. Fuisz holds good title to the Shares,
free and clear of any and all claims, charges, pledges, liens, security
interests or other encumbrances of any kind or nature whatsoever ("Liens"). In
the event of the exercise of the Option, any Shares conveyed to the Option
Holder pursuant to such exercise shall be free and clear of any and all Liens.
(g) Securities Laws. Dr. Fuisz is an "accredited investor" as such term is
defined in the Securities Act of 1933, as amended (the "Securities Act"), and
the regulations promulgated thereunder. Dr. Fuisz is aware that the shares of
the Option Holder to be delivered hereunder are not the subject of a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission (the "SEC") pursuant to Section 5 of the Securities Act, but
instead is being offered and sold in reliance upon the exemption from the
registration requirements of the Securities Act. Dr. Fuisz is acquiring such
shares for his own account and not with a view to distribution. The certificates
for such shares may be legended to reflect the substance of this paragraph.
4.2 Survival of Representations and Warranties. All representations and
warranties of Dr. Fuisz contained in this Agreement shall survive the execution
and delivery of this Agreement and any and all exercises of the Option.
ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF the Option Holder
5.1 Representations and Warranties of the Option Holder. The Option Holder
hereby represents, warrants and agrees that:
(a) Consents and Approvals. No approval, consent or authorization by any
governmental authority or agency of the United States or any state is required
in connection with the execution and delivery of this Agreement and the Escrow
Agreement, or the consummation of the transactions, by the Option Holder, other
than the expiration of the requisite waiting period pursuant to the HSR Act.
(b) Enforceability. Assuming due execution and delivery of this Agreement
and the Escrow Agreement by Dr. Fuisz, this Agreement, the Escrow Agreement and
each other agreement or instrument contemplated hereby or thereby will be valid,
legal and binding obligations of the Option Holder, enforceable against the
Option Holder in accordance with their respective terms, except that
<PAGE>
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such enforceability may be subject to (i) bankruptcy, insolvency, reorganization
or other similar laws affecting or relating to enforcement of creditors' rights
generally, and (ii) general equitable principles.
(c) Securities Laws. The Option Holder is an "accredited investor" as such
term is defined in the Securities Act of 1933, as amended (the "Securities
Act"), and the regulations promulgated thereunder. The Option Holder is aware
that neither the Option nor the Shares is the subject of a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission (the "SEC") pursuant to Section 5 of the Securities Act, but instead
is being offered and sold in reliance upon the exemption from the registration
requirements of the Securities Act. The Option Holder is acquiring such Shares
for their own account and not with a view to distribution. The certificates for
such shares may be legended to reflect the substance of this paragraph.
5.2 Survival of Representations and Warranties. All representations and
warranties of the Option Holder contained in this Agreement shall survive the
execution and delivery of this Agreement and any and all exercises of the
option.
ARTICLE VI -- ACCESS TO INFORMATION: CONFIDENTIALITY
OBLIGATIONS: INDEMNIFICATION
6.1 Access to Information. Each party hereby acknowledges that the other
party has apprised it of (or provided it with access to) information of a
confidential nature (i.e., information which the other party has not reported in
any filing or report filed with the SEC or otherwise made publicly available)
which might reasonably be deemed material to a decision to purchase or sell the
Shares ("Confidential Information");
All such Confidential Information has been provided to each party subject
to (i) the confidentiality obligations set forth in this Agreement, and (ii)
applicable federal and state securities laws.
6.2 Confidentiality Obligations. Each party hereby represents, warrants,
covenants and agrees that it:
(a) will hold any and all Confidential Information in the strictest
confidence, and not disclose or provide access to such information to any person
or entity;
(b) will not, directly or indirectly, engage in any trading activity in or
with respect to the Shares (or any interest therein) while in possession of any
such Confidential Information;
(c) will indemnify the other party, its officers and directors against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation or other action or proceeding, commenced or threatened, arising out
or based on any breach of the covenants in subsections (a) or (b) of this
Section or any violation of applicable federal and state securities laws in
connection therewith.
(d) hereby agrees that its obligations under this SECTION 6.2 shall survive
the non-exercise of the Option or any other event or circumstance, and shall
continue for so long as any Con-
<PAGE>
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fidential Information remains material non-public information and/or compliance
with federal or state securities laws so requires.
ARTICLE VII -- MISCELLANEOUS
7.1 Further Assurances. Each party shall execute and deliver such other
documents and instruments and take such further action that may be necessary in
order to consummate the transactions contemplated hereby.
7.2 Notices. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered personally, by express service, telefax, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
If to Dr. Fuisz:
Richard C. Fuisz, M.D.
1287 Ballantrae Farm Drive
McClean, Virginia 22101
Facsimile No.: (703) 893-6470
with a copy to:
The Falk Law Firm
2445 M. Street, N.W.
Suite 260
Washington, D.C. 20037
Attn: James H. Falk, Sr.
Facsimile No.: (202) 872-1725
If to the Option Holder:
Biovail Corporation International
2488 Dunwin Drive
Mississauga, ONT
Canada L5L 1J9
Fax: (905) 608-1659
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: Roger Andrus, Esq.
Facsimile No.: (212) 269-5420
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or to such other address as the person to whom notice is to be given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
7.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflict of
law principles thereof.
7.4 Severability. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions contained herein shall remain
in full force and effect, and shall in no way be affected, impaired or
invalidated.
7.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
7.6 Costs And Expenses. Each of the parties hereto shall bear and pay all
costs and expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including fees and expenses of its own
financial consultants, accountants and legal counsel.
7.7 Entire Agreement. Except as otherwise provided herein or in the Escrow
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral.
7.8 Parties in Interest. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any assignees, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided herein.
7.9 Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement with the assistance of outside legal
counsel. In the event an ambiguity or question of intent or interpretation
concerning this Agreement arises, this Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of proof
shall arise favoring and disfavoring any party by virtue of the authorship of
any of the provisions of this Agreement. Any references to any federal, state,
local or foreign statues or laws shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the contact requires otherwise. The
word "including" shall mean including without limitation.
7.10 Amendments; Waivers. Upon mutual consent of the parties hereto, this
Agreement may be amended in writing at any time, for the purpose of facilitating
performance hereunder or to comply with any applicable regulation of any
governmental authority or any applicable order of any court or for any other
purpose. The parties hereto may, by mutual consent, extend the time for
performance of any of the obligations or acts of either party hereto. Each party
may, in writing,
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waive (a) compliance with any of the covenants of the other party contained in
this Agreement or the Escrow Agreement, and/or (b) the other party's performance
of any of its obligations set forth in this Agreement or the Escrow Agreement.
7.11 Captions. The captions in this Agreement are inserted for convenience
and reference purposes only, and shall not limit or otherwise affect any of the
terms or provisions hereof.
7.12 Specific Performance. The parties agree that damages would be an
inadequate remedy for a breach of the provisions of this Agreement by either
party hereto and that this Agreement may be enforced by either party hereto
through injunctive or other equitable relief.
<PAGE>
-9-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the date first above written.
RICHARD C. FUISZ, M.D.
/s/ Richard C. Fuisz
---------------------------------------
BIOVAIL CORPORATION INTERNATIONAL
By: /s/ Eugene N. Melnyk
---------------------------------
Name: Eugene N. Melnyk
Title: Chairman of the Board
ESCROW AGREEMENT
This ESCROW AGREEMENT ("Agreement") is made this 13th day of July, 1999, by
and among RICHARD C. FUISZ, M.D., an individual resident of the State of
Virginia ("Dr. Fuisz"), BIOVAIL CORPORATION INTERNATIONAL, an Ontario, Canada
corporation (the "Option Holder"), and the U.S. TRUST COMPANY, NATIONAL
ASSOCIATION as escrow agent (the "Escrow Agent").
RECITALS:
WHEREAS, Dr. Fuisz and the Option Holder are parties to an Option
Agreement, dated July 13, 1999 (the "Option Agreement"), a copy of which is
attached hereto as Exhibit A, pursuant to which Dr. Fuisz has granted to the
Option Holder an exclusive option (the "Option") to purchase 3,209,829 of the
outstanding shares of common stock, $.01 par value per share ("Common Stock") of
FUISZ TECHNOLOGIES LTD., a Delaware corporation (the "Company") (collectively,
including all distributions made subsequent to the date of this Agreement and on
or prior to the Closing Date, the "Shares");
WHEREAS, the Option Agreement provides for the execution and delivery,
concurrent with the execution of the Option Agreement, of an escrow agreement,
and the deposit by Dr. Fuisz of all certificates representing the Shares
together with appropriate stock powers endorsed in blank and other documentation
necessary for the Escrow Agent to transfer marketable title to the Shares to a
third party pursuant to the exercise of the Option;
WHEREAS, Dr. Fuisz and the Option Holder have agreed that the execution and
delivery of this Escrow Agreement and the establishment of the escrow provided
for herein shall satisfy the obligation of the parties to execute and deliver
such escrow agreement.
NOW, THEREFORE, in consideration of consummating the transactions
contemplated by the Option Agreement, the covenants and agreements herein set
forth, and for other valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I -- APPOINTMENT AND AGREEMENT OF ESCROW AGENT
Dr. Fuisz and the Option Holder hereby appoint the Escrow Agent and the
Escrow Agent agrees to perform the duties of, Escrow Agent under this Agreement.
This Escrow Agreement shall be administered at and the Shares held in Los
Angeles, California by the Escrow Agent at 515 South Flower Street, Suite 2700,
Los Angeles, California 90071.
ARTICLE II -- ESTABLISHMENT OF ESCROW
2.1 Deposit of Shares. Simultaneously with the execution of the Option
Agreement, the delivery of the Option and the execution of this Agreement, Dr.
Fuisz shall have caused to be
<PAGE>
2
transmitted to the Escrow Agent via overnight courier: (i) certificates in
negotiable form duly endorsed in blank representing the Shares, such
certificates being more fully described in Exhibit B attached hereto, and (ii)
duly executed stock powers (endorsed in blank) with respect to such Shares (the
"Escrow Documents").
2.2 Receipt. Promptly upon receipt of the Escrow Documents, the Escrow
Agent will acknowledge receipt of the Escrow Documents to each of the other
parties hereto pursuant to Section 6.1. The Escrow Agent agrees to hold and
release such Escrow Documents in accordance with the terms and conditions of
this Agreement for the uses and purposes stated herein.
2.3 Voting Rights; Transfer of Shares. So long as any or all of the Shares
are held in escrow pursuant to the terms hereof, all rights to vote said Shares,
to receive dividends thereon (whether cash or stock) and all other shareholder
rights shall vest exclusively with Dr. Fuisz. During the period commencing on
July 13, 1999 through and including the closing date under the Option Agreement
(the "Option Period"), Dr. Fuisz will not: (i) directly or indirectly sell,
transfer or assign any Shares or any interest therein to any party other than
pursuant to this Agreement; (ii) enter into any voting arrangement with respect
to the Shares; (iii) take any other action that would in any way restrict, limit
or interfere with the transactions contemplated by the acquisition agreement or
the performance of Dr. Fuisz' obligations under the Option or the Escrow
Agreement or (iv) directly or indirectly engage in any discussions or
negotiations with any other party with respect to the sale, transfer or
assignment of any Shares. During the Option Period, the Option Holder may place
a stop order or other limitation on the Shares to prevent any transfer thereof
other than pursuant to the Option Agreement.
2.4 Dividends. Any stock splits or stock dividends distributed with respect
to Shares held in escrow shall be delivered to the Escrow Agent. Such additional
shares shall be dealt with by the Escrow Agent, pursuant to the provisions of
the Option Agreement, in the same manner as the Shares with respect to which
such additional shares are distributed. Any cash dividends received prior to the
exercise of the Option shall be held for the account of Dr. Fuisz. Any cash
dividends received after the execution of the Option shall be held for the
account of the Option Holder.
2.5 Investment of Cash in Escrow Fund. The Escrow Agent shall invest any
cash received in the Escrow Fund in a money market fund selected and authorized
by Dr. Fuisz (concurrently with the execution of this Agreement). Any such fund
shall be registered under the Investment Company Act of 1940, and have a rating
by S&P of "AAAm-G" or "AAm". The Escrow Agent shall have no responsibility for
losses resulting from or in connection with the acquisition or disposition of
any investment.
ARTICLE III -- DISBURSEMENT OF SHARES
3.1 Compliance with Written Instructions. The Escrow Agent shall not be
required to make any judgment with respect to the release of any or all of the
Shares, and except as provided in
<PAGE>
3
this Article III hereof, shall act only on the joint written instructions of Dr.
Fuisz and the Option Holder.
3.2 Procedure to Effect Disbursement of the Shares. Upon the Escrow Agent's
receipt of:
(i) written notice ("the Option Exercise Notice") from the Option Holder,
such notice to include a certification by the Option Holder that such notice is
submitted in accordance with the terms of the Option Agreement, specify the
number of Shares pursuant to which the option is being exercised, contain a
representation that a copy of such notice has been delivered to Dr. Fuisz;
(ii) $7.00 per share (the "Option Exercise Price") applicable to such
shares, such Option Exercise Price to be paid by wire transfer of federal funds
through the Federal Reserve Bank of New York to the following account, and;
CHASE NYC/CTR/
ABA: 021000021
BBK: US Trust Co. of New York/A/C 920-1-073195
BNF: Fuisz/Biovail Corporation Escrow/A/C-755-727-47/0BI
= M.D. GIBBONS 213/861-5039
(iii) advice from counsel to Dr. Fuisz or counsel to the Option Holder that
the requisite waiting period pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") has expired;
the Escrow Agent shall promptly take any and all actions necessary and
appropriate, in conjunction with the Option Holder's transfer agent, to
concurrently:
(a) deliver to the Option Holder a certificate(s) for the number of Shares
for which the Option Exercise Notice pertains, such Shares to be registered in
accordance with instructions provided by the Option Holder in such notice and
all cash dividends held for the account of the Option Holder, plus any interest
thereon;
(b) ensure its receipt from the transfer agent of a certificate(s)
evidencing any and all Shares not delivered to the Option Holder pursuant to the
terms hereof; and
(c) release to Dr. Fuisz the funds received representing payment of the
Option Exercise Price with respect to the Shares for which the Option Exercise
Notice pertains and all cash dividends held for the account of Dr. Fuisz, plus
any interest thereon, by wire transfer of federal funds to the following
account:
Account Number: 000090133880
Bank: Bank of America
Routing: 051000017
Attention: Ms. Collet Johnson
<PAGE>
4
Phone: (800) 880-5454
Customer: Richard C. Fuisz, M.D.
3.3 Disbursement of Shares Upon Expiration of the Option Period. Upon the
expiration of the Option Period prior to the exercise of the Option, the Escrow
Agent shall release to Dr. Fuisz any and all Shares (and the certificates and
other documentation pertaining thereto and all cash dividends held for the
account of Dr. Fuisz, plus any interest thereon) then held by the Escrow Agent.
In the event that any funds have been paid to the Escrow Agent by an Option
Holder in connection with the delivery of an Option Exercise Notice not received
by the Escrow Agent prior to expiration of the Exercise Period, the Escrow Agent
shall remit such funds to the Option Holder in accordance with the Option
Holder's instructions.
3.4 Disputes as to Escrowed Property. If a dispute arises between Dr. Fuisz
and any Option Holder as evidenced by the written objection to disbursement of
any Shares (and/or the funds received with respect to the Option Exercise Price
for such Shares) by either Dr. Fuisz or such Option Holder, as the case may be,
under Section 3.2 or 3.3, the Escrow Agent shall not be permitted or required to
resolve such dispute or take any action, including but not limited to,
disbursing such Shares or funds, but shall await resolution of the controversy
by (i) a final non-appealable court order of a court of competent jurisdiction
directing delivery of such Shares or funds to Dr. Fuisz or the Option Holder, as
the case may be, accompanied by a legal opinion by counsel for the presenting
party satisfactory to the Escrow Agent to the effect that the statutory time to
appeal the court order has elapsed and no notice of appeal has been filed with
the court; or (ii) a written agreement executed by Dr. Fuisz and such Option
Holder directing delivery of such Shares and/or funds, in which event the Escrow
Agent shall take such actions in accordance with such order or agreement.
3.5 Termination. This Agreement shall continue in effect until the earlier
of (i) final resolution of any dispute with respect to the disbursement of any
of the Shares and/or the funds received in payment therefor, and (ii) when all
of the Shares (and any funds received in payment of the Option Exercise Price
therefor) have been distributed in accordance with this Article III; provided,
however, that this Agreement shall terminate if the Option has been exercised
but the Escrow Agent has not received advice from counsel to Dr. Fuisz or
counsel to the Option Holder that the HSR Act waiting period has terminated by
October 31, 1999, in which event the Shares and all cash dividends held for the
accounts of Dr. Fuisz and the Option Holder, plus any interest thereon, shall be
returned to Dr. Fuisz and the Option Exercise Price shall be returned to the
Option Holder.
ARTICLE IV -- FEES AND EXPENSES OF ESCROW AGENT
Each of Dr. Fuisz and the Option Holder shall be jointly and severally
responsible for all fees and reasonable expenses, including any disbursements
and out-of-pocket expenses, of the Escrow Agent in performing its duties
hereunder (including reasonable legal fees) of the Escrow Agent, but as between
Dr. Fuisz and the Option Holder, each party shall bear 50% of such fees and
expenses.
<PAGE>
5
ARTICLE V -- LIABILITY OF ESCROW AGENT
5.1 Escrow Agent Obligations. The duties and obligations of the Escrow
Agent hereunder shall be determined solely by the express provisions of this
Agreement, and the Escrow Agent shall be under no obligation to refer to any
other documents between or among the parties related in any way to this
Agreement, it being specifically understood that the following provisions are
accepted by all parties hereto.
5.2 Escrow Agent Liability. The Escrow Agent shall not be liable to anyone
whatsoever by reason of any error of judgment or for any act done or step taken
or omitted by it in good faith or for any mistake of fact or law for anything
which it may do or refrain from doing in connection herewith unless caused by or
arising out of, its own gross negligence or willful misconduct. Dr. Fuisz and
the Option Holder shall, jointly and severally, indemnify and hold the Escrow
Agent (and any successor thereto) harmless from any and all liability and
expense which may arise out of any action taken or omitted by it as Escrow Agent
in accordance with this Agreement, as the same may be amended, modified or
supplemented, except such liability and expense as may result from the gross
negligence or willful misconduct of the Escrow Agent. The Escrow Agent may act
relative hereto upon advice of counsel in reference to any matter connected
herewith and shall not be liable for any action taken or omitted in accordance
with such advice.
5.3 Escrow Agent's Conduct. The Escrow Agent shall be entitled to rely upon
any order, judgment, certificate, demand, notice, instrument, opinion or other
writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity or the service thereof. The Escrow Agent may act in reliance upon any
instrument or signature believed by it to be genuine and may assume that any
person purporting to give notice or receipt or advise or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.
5.4 Duty of Care. The Escrow Agent shall not be under any duty to give the
property held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. Uninvested funds held hereunder
shall not earn or accrue interest.
5.5 No Implied Duties. This Escrow Agreement expressly sets forth all the
duties of the Escrow Agent with respect to any and all matters pertinent hereto.
No implied duties or obligations shall be read into this Agreement against the
Escrow Agent. The Escrow Agent shall not be bound by the provisions of any
agreement among the parties hereto except this Agreement
5.6 No Interest in Shares or Funds. The Escrow Agent does not and shall not
have any interest in the Shares or any funds received in connection therewith
and is serving as Escrow Agent only, having only possession thereof. This
Section 5.6 shall survive notwithstanding any termination of this Escrow
Agreement or the resignation of the Escrow Agent.
<PAGE>
6
5.7 No Representations. The Escrow Agent makes no representations to the
validity, value, genuineness or the collectibility of any security or other
document or instrument held by or delivered to it.
5.8 No Advice. The Escrow Agent shall not be called upon to advise any
party as to the wisdom in selling or retaining or taking or refraining from any
action with respect to any securities or other property deposited hereunder.
5.9 Resignation and Removal. The Escrow Agent (and any successor Escrow
Agent) may at any time resign as such by delivering any and all property then
held by such Escrow Agent in escrow to any successor Escrow Agent jointly
designated by Dr. Fuisz and the Option Holder in writing, or to any court of
competent jurisdiction, whereupon the Escrow Agent shall be discharged of and
from any and all further obligations arising in connection with this Escrow
Agreement. The resignation of the Escrow Agent will take effect on the earlier
of (a) the appointment of a successor (including a court of competent
jurisdiction); or (b) the day which is 30 days after the date of delivery of its
written notice of resignation to the other parties hereto. If at that time the
Escrow Agent has not received a designation of a successor Escrow Agent, the
Agent's sole responsibility after that time shall be to safekeep the escrowed
property until receipt of a designation of successor Escrow Agent or a joint
written disposition Instruction by the other parties hereto or a final,
non-appealable, order of a court of competent jurisdiction.
ARTICLE VI -- MISCELLANEOUS
6.1 Notices. Any notices or other communications required under this
Agreement shall be in writing and be effective upon delivery if given by hand
delivery or facsimile transmission or on the next day after given if delivered
by overnight courier and shall be given at the addresses or facsimile numbers
set forth below, with copies provided as follows:
If to Dr. Fuisz:
Richard C. Fuisz, M.D.
1287 Ballantrae Farm Drive
McClean, Virginia 22101
Facsimile No.: (703) 893-6470
with a copy to:
The Falk Law Firm
2445 M. Street, N.W.
Suite 260
Washington, D.C. 20037
Attn: James H. Falk, Sr.
Facsimile No.: (202) 872-1725
If to the Option Holder:
<PAGE>
7
Biovail Corporation International
2488 Dunwin Drive
Mississauga, ONT
Canada L5L 1J9
Fax: (905) 608-1659
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: Roger Andrus
Facsimile No.: (212) 269-5420
If to the Escrow Agent, addressed to:
U.S. Trust Company, National Association
515 South Flower Street, Suite 2700
Los Angeles, California 90071
Attn: Stuart Weiss
Facsimile No.: (213) 488-1370
or at such address as may be designated by written notice hereunder in the
manner herein provided.
6.2 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
agreements made and to be entirely performed with such State.
6.3 Consent to Jurisdiction. The parties agree that any legal action or
proceeding arising out of or in connection with this Agreement may be brought in
any state court located in New York City, State of New York or any federal court
located in the City of New York and each party agrees not to assert, by way of
motion, as a defense, or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of such court, that
its property is exempt or immune from attachment or execution, that the action,
suit or proceeding is brought in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court, and hereby waives any
offsets or counterclaims in any such action, suit or proceeding. Any and all
service of process and any other notice in any such action, suit or proceeding
shall be effective against any party if given personally or by registered or
certified mail, return receipt requested, or by any other means of mail that
requires a signed receipt, postage prepaid. Nothing herein contained shall be
deemed to affect the right of any party to serve process in any manner permitted
by law or to commence legal proceedings or otherwise proceed against any other
party in any jurisdiction other than New York.
<PAGE>
8
6.4 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties in respect to this escrow transaction and
supersedes all prior agreements, arrangements and understandings relating to the
subject matter hereof.
6.5 Binding Effect. All the terms and conditions of this Agreement shall be
binding upon, and inure to the benefit of and be enforceable by, the parties
hereto and their respective successors and permitted assigns.
6.6 Modification; Waivers. This Agreement may be amended, modified,
superseded or canceled, and any of the terms or conditions hereof may be waived,
only by a written instrument executed by each party hereto or, in the case of a
waiver, by the party waiving compliance. The failure of any party at any time or
times to require performance of any provisions hereof shall in no manner affect
the right at a later time to enforce the same. No waiver of any party of any
condition, or of the breach of any term contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition of or the breach of any other term of this
Agreement.
6.7 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.8 No Right of Set-Off. The Escrow Agent agrees that it will not assert
any right of set-off or similar right it may have with respect to the Shares or
any funds received in payment of the Option Exercise Price thereof, except for
unpaid fees owing to the Escrow Agent pursuant to this Agreement.
6.9 Assignment. This Agreement shall not be assigned other than by
operation of law.
<PAGE>
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
RICHARD C. FUISZ, M.D.
/s/ Richard C. Fuisz
-----------------------------------------
BIOVAIL CORPORATION INTERNATIONAL
By: /s/ Eugene N. Melnyk
-------------------------------------
Name: Eugene N. Melnyk
Title: Chairman of the Board
U.S. TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ N. Deborah Gibbons
-------------------------------------
Name: N. Deborah Gibbons
Title: Vice President
