OPTION AGREEMENT
This OPTION AGREEMENT ("Agreement") is made this 13th day of July, 1999, by
and between XXXXXXX X. XXXXX, M.D., an individual resident of the State of
Virginia ("Xx. Xxxxx"), and BIOVAIL CORPORATION INTERNATIONAL, an Ontario
corporation (the "Option Holder").
RECITALS:
WHEREAS, Xx. Xxxxx 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, Xx. Xxxxx 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. Xx. Xxxxx 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 Xx. Xxxxx 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"), Xx. Xxxxx 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 Xx. Xxxxx' 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
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Agreement"), pursuant to which, among other things, Xx. Xxxxx 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 Xx. Xxxxx 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 Xx. Xxxxx 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 Xxxx-Xxxxx-Xxxxxx 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 Xx. Xxxxx and
transfer the title of and release the Shares purchased to the Option Holder in
accordance with the terms of the Escrow Agreement. Xx. Xxxxx 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 Xx. Xxxxx 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 XX. XXXXX
4.1 Representations and warranties of Xx. Xxxxx. Xx. Xxxxx hereby
represents, warrants and agrees that:
(a) Due Authorization. Xx. Xxxxx 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 Xx. Xxxxx 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 Xx. Xxxxx
is a party or by or to which any of Xx. Xxxxx' 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 Xx. Xxxxx 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 Xx. Xxxxx.
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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 Xx. Xxxxx, 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 Xx. Xxxxx, enforceable against
Xx. Xxxxx 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. Xx. Xxxxx 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. Xx. Xxxxx 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. Xx. Xxxxx 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. Xx. Xxxxx 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 Xx. Xxxxx 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 Xx. Xxxxx, 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
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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-
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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 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:
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, Esq.
Facsimile No.: (000) 000-0000
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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.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed 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
