ESCROW AGREEMENT
This ESCROW AGREEMENT ("Agreement") is made this 13th day of July, 1999, by
and among XXXXXXX X. XXXXX, M.D., an individual resident of the State of
Virginia ("Xx. Xxxxx"), 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, Xx. Xxxxx 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 Xx. Xxxxx 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 Xx. Xxxxx 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, Xx. Xxxxx 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
Xx. Xxxxx 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 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000.
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, Xx.
Xxxxx shall have caused to be
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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 Xx. Xxxxx. During the period commencing on
July 13, 1999 through and including the closing date under the Option Agreement
(the "Option Period"), Xx. Xxxxx 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 Xx. Xxxxx' 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 Xx. Xxxxx. 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 Xx. Xxxxx (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
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this Article III hereof, shall act only on the joint written instructions of Xx.
Xxxxx 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 Xx. Xxxxx;
(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: 000000000
BBK: US Trust Co. of New York/A/C 000-0-000000
BNF: Fuisz/Biovail Corporation Escrow/A/C-755-727-47/0BI
= M.D. XXXXXXX 213/861-5039
(iii) advice from counsel to Xx. Xxxxx or counsel to the Option Holder that
the requisite waiting period pursuant to the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 0000 (xxx "XXX Xxx") 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 Xx. Xxxxx 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 Xx. Xxxxx, plus
any interest thereon, by wire transfer of federal funds to the following
account:
Account Number: 000090133880
Bank: Bank of America
Routing: 000000000
Attention: Xx. Xxxxxx Xxxxxxx
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Phone: (000) 000-0000
Customer: Xxxxxxx X. Xxxxx, 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 Xx. Xxxxx any and all Shares (and the certificates and
other documentation pertaining thereto and all cash dividends held for the
account of Xx. Xxxxx, 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 Xx. Xxxxx
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 Xx. Xxxxx 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 Xx. Xxxxx 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 Xx. Xxxxx 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 Xx. Xxxxx 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 Xx. Xxxxx and the Option Holder, plus any interest thereon, shall be
returned to Xx. Xxxxx and the Option Exercise Price shall be returned to the
Option Holder.
ARTICLE IV -- FEES AND EXPENSES OF ESCROW AGENT
Each of Xx. Xxxxx 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
Xx. Xxxxx and the Option Holder, each party shall bear 50% of such fees and
expenses.
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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. Xx. Xxxxx 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.
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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 Xx. Xxxxx 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 Xx. Xxxxx:
Xxxxxxx X. Xxxxx, M.D.
0000 Xxxxxxxxxx Xxxx Xxxxx
XxXxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
with a copy to:
The Xxxx Law Firm
0000 X. Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxx X. Xxxx, Xx.
Facsimile No.: (000) 000-0000
If to the Option Holder:
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Biovail Corporation International
0000 Xxxxxx Xxxxx
Xxxxxxxxxxx, XXX
Xxxxxx X0X 0X0
Fax: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxxx
Facsimile No.: (000) 000-0000
If to the Escrow Agent, addressed to:
U.S. Trust Company, National Association
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Facsimile No.: (000) 000-0000
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.
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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.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXXXXXX X. XXXXX, M.D.
/s/ Xxxxxxx X. Xxxxx
-----------------------------------------
BIOVAIL CORPORATION INTERNATIONAL
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman of the Board
U.S. TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ N. Xxxxxxx Xxxxxxx
-------------------------------------
Name: N. Xxxxxxx Xxxxxxx
Title: Vice President
