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EXHIBIT 3
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of July 30, 1999 (the
"Agreement"), among Merck & Co., Inc., a New Jersey corporation (the "Grantee"),
MC Subsidiary Corp., a Delaware corporation and a wholly owned subsidiary of the
Grantee ("Merger Sub"), and SIBIA Neurosciences, Inc., a Delaware corporation
(the "Grantor"). Capitalized terms used herein and not otherwise defined shall
have the meanings given to such terms in the Merger Agreement (as defined
below).
WHEREAS, the Grantee, Merger Sub, and the Grantor are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the merger of Merger Sub
with and into Grantor (the "Merger");
WHEREAS, the Grantee and Merger Sub have requested that the
Grantor grant to the Grantee an option to purchase up to 1,931,050 shares of
Common Stock, par value $0.001 per share, of the Grantor (the "Common Stock"),
on the terms and subject to the conditions hereof; and
WHEREAS, the Grantor is willing to grant the Grantee the
requested option.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
1. The Option; Exercise; Adjustments; Payment of Spread. (a)
Contemporaneously herewith the Grantee, Merger Sub and the Grantor are entering
into the Merger Agreement. Subject to the other terms and conditions set forth
herein, the Grantor hereby grants to the Grantee an irrevocable option (the
"Option") to purchase up to 1,931,050 shares of Common Stock (the "Shares") at a
cash purchase price equal to $8.50 per share (the "Purchase Price"). The Option
may be exercised by the Grantee, in whole or in part, at any time, but only on
one occasion, following (but not prior to) the occurrence of the events set
forth in any of clauses (i), (ii) or (iii) of Section 2(d) hereof, and prior to
the Termination Date (as defined below).
(b) In the event the Grantee wishes to exercise the Option,
the Grantee shall send a written notice to the Grantor (the "Stock Exercise
Notice") specifying the total number of Shares it wishes to purchase and a date
(subject to the expiration or termination of any applicable waiting period under
the HSR Act (as defined below) ) not later than 10 business days and not earlier
than three business days following the date such notice is given for the closing
of such purchase. In the event of any change in the number of issued and
outstanding shares of capital stock of the Company (by reason of any stock
dividend, stock split, split -- up, recapitalization, merger, issuance of
capital stock upon exercise of warrants or options or any other event), the
number of Shares
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subject to this Option and the purchase price per Share shall be appropriately
adjusted to restore the Grantee to its rights hereunder, including its right to
purchase Shares representing 19.9% of the capital stock of the Grantor entitled
to vote generally for the election of the directors of the Grantor which is
issued and outstanding immediately prior to the exercise of the Option.
(c) If at any time the Option is then exercisable pursuant to
the terms of Section 1(a) hereof and at or prior to such time the termination
fee referred to in Section 9.5(b) of the Merger Agreement shall have become
payable, the Grantee may on one occasion elect, in lieu of exercising the Option
to purchase Shares provided in Section 1(a) hereof, to send a written notice to
the Grantor (a "Cash Exercise Notice") specifying a date not later than 20
business days and not earlier than 10 business days following the date such
notice is given on which date the Grantor shall pay to the Grantee an amount in
cash (the "Cancellation Amount") equal to the Spread (as defined below)
multiplied by all or such portion of the Shares subject to the Option as Grantee
shall specify. As used herein "Spread" shall mean the excess, if any, over the
Purchase Price of the higher of (x) if applicable, the highest price per share
of Common Stock (including any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid or proposed to be paid by any person pursuant to
any Acquisition Proposal (as defined in the Merger Agreement) occurring after
the date of this Agreement and prior to the Termination Date (the "Alternative
Purchase Price") or (y) the average of the closing bid and asked prices of the
Common Stock on the NASDAQ National Market ("NASDAQ") or on such other national
securities exchange on which the shares of the Grantor's common stock are then
listed for the last five trading days immediately prior to the date of the Cash
Exercise Notice (the "Closing Price"). If the Alternative Purchase Price
includes any property other than cash, the Alternative Purchase Price shall be
the sum of (i) the fixed cash amount, if any, included in the Alternative
Purchase Price plus (ii) the fair market value of such other property. If such
other property consists of securities with an existing public trading market,
the average of the closing prices (or the average of the closing bid and asked
prices if closing prices are unavailable) for such securities in their principal
public trading market on the five trading days ending five days prior to the
date of the Cash Exercise Notice shall be deemed to equal the fair market value
of such property. If such other property consists of something other than cash
or securities with an existing public trading market and, as of the payment date
for the Spread, agreement on the value of such other property has not been
reached, the Alternative Purchase Price shall be deemed to equal the Closing
Price. Upon exercise of its right to receive cash pursuant to this Section 1(c),
the obligations of the Grantor to deliver Shares pursuant to Section 3 shall be
terminated with respect to such number of Shares for which the Grantee shall
have elected to be paid the Spread.
2. Conditions to Delivery of Shares. The Grantor's obligation
to deliver Shares upon exercise of the Option is subject only to the conditions
that:
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(a) No preliminary or permanent injunction or other order
issued by any federal or state court of competent jurisdiction prohibiting the
delivery of the Shares shall be in effect; and
(b) Any applicable waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX Xxx") shall have expired or been
terminated; and
(c) the representations and warranties of the Grantee made in
Section 5 of this Agreement shall be true and correct in all material respects
as of the date of the closing of the issuance of the Shares; and
(d) (i) (A) a bona fide Acquisition Proposal (as defined in
the Merger Agreement) shall have been made to the Company or any of its
stockholders or any Person shall have announced an intention (whether or not
conditional) to make an Acquisition Proposal with respect to the Company, and on
or following the date of the Merger Agreement but prior to the date that the
Offer is consummated and Grantee owns a majority of the outstanding shares of
Common Stock, such Acquisition Proposal, announcement or intention is or becomes
publicly known, and (B) on or following the date of the Merger Agreement but
prior to the time such Acquisition Proposal, announcement or intention is or
becomes publicly known, the occurrence of an event that would have a material
adverse effect on the ability of Grantee or Merger Sub to consummate the Merger
shall not have become publicly known, and (C) on or following the date on which
such Acquisition Proposal, announcement or intention is or becomes publicly
known, the Merger Agreement is terminated by either the Grantee or the Grantor
pursuant to Section 9.2(i) of the Merger Agreement and if terminated by Grantee
or Merger Sub, Grantee or Merger Sub shall not collectively beneficially own a
majority of the outstanding shares of Common Stock on a fully diluted basis, and
a termination fee has become payable pursuant to Section 9.5(b) of the Merger
Agreement or (ii) the Merger Agreement is terminated (x) by the Grantor pursuant
to Section 9.3(a) of the Merger Agreement, or (y) by the Grantee pursuant to
Section 9.4(a) of the Merger Agreement, or (z) pursuant to Section 9.2(iv) of
the Merger Agreement as a result of the failure to satisfy any one of the
conditions set forth in paragraphs (e) or (f) of Annex A of the Merger
Agreement. As used in this Agreement, "person" shall have the meaning specified
in Sections 3(a)(9) and 13(d)(3) of the Exchange Act. Notwithstanding any other
provision of this Stock Option Agreement, the Merger Agreement or the
Shareholders Agreement, any reference to a majority of the total issued and
outstanding shares or Shares, or shares or Shares outstanding on a fully diluted
basis, or similar references, shall, for purposes of such agreements, exclude
from the determination thereof any shares of Common Stock issuable upon exercise
of or subject to this Stock Option Agreement and any reference to beneficial
ownership of shares of Common Stock or similar references shall, for purposes of
such agreements, exclude from the
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determination thereof any shares of Common Stock issuable upon exercise of or
subject to this Stock Option Agreement and/or the Shareholders Agreement.
3. The Closing. (a) Any closing hereunder shall take place on
the date specified by the Grantee in its Stock Exercise Notice or Cash Exercise
Notice or as specified in Section 1(d), as the case may be, at 10:00 A.M., local
time, at the offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx, One New York
Plaza, New York, New York, or, if the conditions set forth in Section 2(a), (b)
or (c) have not then been satisfied, on the second business day following the
satisfaction of such conditions, or at such other time and place as the parties
hereto may agree (the "Closing Date"). On the Closing Date, (i) in the event of
a closing pursuant to Section 1(b) hereof, the Grantor will deliver to the
Grantee a certificate or certificates, representing the Shares in the
denominations designated by the Grantee in its Stock Exercise Notice and the
Grantee will purchase such Shares from the Grantor at the price per Share equal
to the Purchase Price, or (ii) in the event of a closing pursuant to Section
1(c) hereof, the Grantor will deliver to the Grantee cash in an amount
determined pursuant to Section 1(c) hereof. Any payment made by the Grantee to
the Grantor, or by the Grantor to the Grantee, pursuant to this Agreement shall
be made by certified or official bank check or by wire transfer of federal funds
to a bank designated by the party receiving such funds.
(b) The Grantee agrees not to transfer or otherwise dispose of
the Option or the Shares, or any interest therein, except in compliance with the
Securities Act of 1933, as amended (the "Securities Act") and any applicable
state securities law. The Grantee further agrees that the certificates
representing the Shares shall bear an appropriate legend relating to the fact
that such Shares have not been registered under the Securities Act.
4. Representations and Warranties of the Grantor. The Grantor
represents and warrants to the Grantee that (a) the Grantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to enter
into and perform this Agreement; (b) the execution and delivery of this
Agreement by the Grantor and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Grantor and this Agreement has been duly executed and delivered by a duly
authorized officer of the Grantor and constitutes a valid and binding obligation
of the Grantor, enforceable against Grantor in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; (c) the Grantor has taken
all necessary corporate action to authorize and reserve the Shares issuable upon
exercise of the Option and the Shares, when issued and delivered by the Grantor
upon exercise of the Option and paid for by the Grantee as contemplated hereby,
will be duly authorized, validly issued, fully paid and non-assessable and free
of preemptive rights; (d) except as otherwise required by the HSR Act
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or the rules and regulations of NASDAQ, the execution and delivery of this
Agreement by the Grantor and the consummation by it of the transactions
contemplated hereby do not require the consent, waiver, approval or
authorization of or any filing with any person or public authority and will not
violate, result in a breach of or the acceleration of any obligation under, or
constitute a default under, any provision of the Grantor's certificate of
incorporation or bylaws, or any indenture, mortgage, lien, lease, agreement,
contract, instrument, order, rule, regulation, judgment, ordinance, or decree,
or restriction by which the Grantor or any of its subsidiaries or any of their
respective properties or assets is bound; (e) no "fair price," "moratorium,"
"control share acquisition," "interested shareholder" or other form of
antitakeover statute or regulation (including but not limited to Section 203 of
the Delaware General Corporation Law) is or shall be applicable to the
acquisition of Shares pursuant to this Agreement; and (f) the Grantor has taken
all corporate action necessary so that any Shares acquired pursuant to this
Agreement shall not be counted for purposes of determining the number of shares
of Common Stock beneficially owned by the Grantee or any of its Affiliates or
Associates pursuant to the Rights Agreement (as defined in the Merger Agreement,
the terms "Affiliate" and "Associate" having the respective meanings ascribed to
them in the Rights Agreement).
5. Representations and Warranties of the Grantee. The Grantee
represents and warrants to the Grantor that (a) the Grantee is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New Jersey and has the requisite corporate power and authority to enter
into and perform this Agreement, (b) the execution and delivery of this
Agreement by the Grantee and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Grantee and this Agreement has been duly executed and
delivered by a duly authorized officer of the Grantee and constitutes a valid
and binding obligation of the Grantee, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and (c) the Grantee is
acquiring the Option and, if and when it exercises the Option, will be acquiring
the Shares issuable upon the exercise thereof for its own account and not with a
view to distribution or resale in any manner which would be in violation of the
Securities Act.
6. Listing of Shares; Filings; Governmental Consents. Subject
to applicable law and the rules and regulations of NASDAQ or such other national
securities exchange on which the shares of the Grantor's common stock are then
listed, after the Option becomes exercisable hereunder, the Grantor will
promptly file an application to list the Shares on NASDAQ or on such other
national securities exchange on which the shares of the Grantor's common stock
are then listed and will use its reasonable best efforts to obtain approval of
such listing and to effect all necessary filings by the Grantor under the HSR
Act; provided, however, that if the Grantor is unable to effect such listing on
NASDAQ by the Closing Date, the Grantor will nevertheless be obligated to
deliver
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the Shares upon the Closing Date. Each of the parties hereto will use its
reasonable best efforts to obtain consents of all third parties and governmental
authorities, if any, necessary to the consummation of the transactions
contemplated by this Agreement.
7. Registration Rights. (a) In the event that the Grantee
shall desire to sell any of the Shares within two years after the purchase of
such Shares pursuant to this Agreement, and such sale requires, in the opinion
of counsel to the Grantee, which opinion shall be reasonably satisfactory to the
Grantor and its counsel, registration of such Shares under the Securities Act,
the Grantor will cooperate with the Grantee and any underwriters (which
underwriters must be reasonably satisfactory to the Grantor) in registering such
Shares for resale, including, without limitation, promptly filing a registration
statement which complies with the requirements of applicable federal and state
securities laws, and entering into an underwriting agreement with such
underwriters upon such terms and conditions as are customarily contained in
underwriting agreements with respect to secondary distributions; provided that
the Grantor shall not be required to have declared effective more than two
registration statements hereunder and shall be entitled to delay the filing or
effectiveness of any registration statement and may suspend the use of any
registration statement (and related prospectus) for one or more periods of time
not exceeding an aggregate of 60 days in any one year period if the offering
would, in the judgment of the board of directors of the Grantor, require
premature disclosure of any material corporate development or material
transaction involving the Grantor or interfere with any previously planned
securities offering by the Grantor. In addition, upon receipt of notice of the
happening of any event as a result of which any registration statement,
prospectus or prospectus supplement, contains any untrue statements of material
fact or fails or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading the Grantee shall forthwith discontinue the
disposition of any Shares under such registration statement, prospectus or
prospectus supplement until the Grantee receives from the Grantor copies (which
subject to the limitations on suspension set forth above shall promptly be made
available by the Grantor) of an amended or supplemented registration statement,
prospectus or supplement so that, as thereafter delivered to purchasers of such
Shares, such registration statement, prospectus or prospectus supplement shall
not contain any untrue statement of material fact or fail or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(b) If the Shares are registered pursuant to the provisions of
this Section 7, the Grantor agrees (i) to furnish copies of the registration
statement and the prospectus relating to the Shares covered thereby in such
numbers as the Grantee may from time to time reasonably request and (ii) if any
event shall occur as a result of which it becomes necessary to amend or
supplement any registration statement or prospectus, to prepare and file under
the applicable securities laws such amendments and supplements as may
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be necessary to keep available for at least 45 days a prospectus covering the
Shares meeting the requirements of such securities laws, and to furnish the
Grantee such numbers of copies of the registration statement and prospectus as
amended or supplemented as may reasonably be requested. The Grantor shall bear
the cost of the registration, including, but not limited to, all registration
and filing fees, printing expenses, and fees and disbursements of counsel and
accountants for the Grantor, except that the Grantee shall pay the fees and
disbursements of its counsel, and the underwriting fees and selling commissions
applicable to the shares of Common Stock sold by the Grantee. The Grantor shall
indemnify and hold harmless (i) the Grantee, its affiliates and its officers and
directors and (ii) each underwriter and each person who controls any underwriter
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (collectively, the "Underwriters") ((i) and (ii) being referred to as
"Indemnified Parties") against any losses, claims, damages, liabilities or
expenses, to which the Indemnified Parties may become subject, insofar as such
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained or incorporated by reference in any
registration statement filed pursuant to this paragraph, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Grantor will not be liable in any such
case to the extent that any such loss, liability, claim, damage or expense
arises out of or is based upon (A) an untrue statement or alleged untrue
statement in or omission or alleged omission from any such documents in reliance
upon and in conformity with written information furnished to the Grantor by the
Indemnified Parties expressly for use or incorporation by reference therein, or
(B) the fact that the person asserting any such loss, liability, claim, damage
or expense did not receive a copy of an amended preliminary prospectus or the
final prospectus (or the final prospectus as amended or supplemented) at or
prior to the written confirmation of the sale of the Shares to such person
because of the failure of the Grantee to so provide such amended preliminary or
final prospectus.
(c) The Grantee and the Underwriters shall indemnify and hold
harmless the Grantor, its affiliates and its officers and directors against any
losses, claims, damages, liabilities or expenses to which the Grantor, its
affiliates and its officers and directors may become subject, insofar as such
losses, claims, damages, liabilities (or actions in respect thereof) and
expenses arise out of or are based upon (i) any untrue statement of any material
fact contained or incorporated by reference in any registration statement filed
pursuant to this paragraph, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Grantor by the Indemnified
Parties, as applicable, specifically for use or incorporation by reference
therein, or (ii) the fact that the person asserting any such loss,
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liability, claim, damage or expense did not receive a copy of an amended
preliminary prospectus or the final prospectus (or the final prospectus as
amended or supplemented) at or prior to the written confirmation of the sale of
the Shares to such person because of the failure of the Grantee to so provide
such amended preliminary or final prospectus.
(d) Promptly after receipt by an indemnified party under
subsection (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnified party shall settle any
action or claim without the consent of the indemnifying party, which consent
shall not be unreasonably withheld or delayed.
8. Expenses. Each party hereto shall pay its own expenses
incurred in connection with this Agreement, except as otherwise specifically
provided herein.
9. Modification or Amendment. Subject to the provisions of
applicable law, the parties hereto may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized officers of the
respective parties.
10. Counterparts. This Agreement may be executed in any number
of counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
11. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. THE
PARTIES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF DELAWARE AND THE FEDERAL COURTS OF THE UNITED
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STATES OF AMERICA LOCATED IN THE COUNTY OF NEW CASTLE, DELAWARE SOLELY IN
RESPECT OF THE INTERPRETATION AND ENFORCEMENT OF THE PROVISIONS OF THIS
AGREEMENT, THE MERGER AGREEMENT AND OF THE OTHER DOCUMENTS REFERRED TO IN THIS
AGREEMENT AND THE MERGER AGREEMENT, AND IN RESPECT OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY, AND HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A
DEFENSE IN ANY ACTION, SUIT OR PROCEEDING FOR THE INTERPRETATION OR ENFORCEMENT
HEREOF OR OF ANY SUCH DOCUMENT, THAT IT IS NOT SUBJECT THERETO OR THAT SUCH
ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT OR IS NOT MAINTAINABLE IN SAID
COURTS OR THAT THE VENUE THEREOF MAY NOT BE APPROPRIATE OR THAT THIS AGREEMENT,
THE MERGER AGREEMENT, OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH RESPECT TO
SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH A DELAWARE STATE
OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY SUCH COURT
JURISDICTION OVER THE PERSON OF SUCH PARTIES AND OVER THE SUBJECT MATTER OF SUCH
DISPUTE AND AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY
SUCH ACTION OR PROCEEDING IN THE MANNER PROVIDED IN SECTION 12 OR IN SUCH OTHER
MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE
THEREOF.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT OR THE SHAREHOLDER AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE MERGER AGREEMENT, THE OTHER DOCUMENTS REFERRED
TO IN THIS AGREEMENT AND THE MERGER AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 11.
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12. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in writing
and delivered personally or sent by registered or certified mail, postage
prepaid, or by facsimile:
if to the Grantee:
Xxxxx Xxxxxxx
Merck & Co., Inc.
Xxx Xxxxx Xxxxx
X.X. Xxx 000 XX0XX-00
Xxxxxxxxxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
with copies to:
Xxxx X. Xxxxxxxxxxx, Esq.
Fried, Frank, Harris, Xxxxxxx and Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
if to the Grantor:
Xxxxxxx X. Xxxxx
SIBIA Neurosciences, Inc.
000 Xxxxx Xxxx. Xxxxx
Xxxxx 000
Xx Xxxxx, XX 00000
Fax: (000) 000-0000
with copies to:
Xxxxxxxxx X. Xxxx, Esq.
Xxxxxx Godward LLP
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000
Fax: (000) 000-0000
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or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
13. Entire Agreement. This Agreement (including any exhibits
and schedules hereto), the Merger Agreement and the other documents referred to
in this Agreement and the Merger Agreement, constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the subject
matter hereof.
14. No Third Party Beneficiaries. This Agreement is not
intended to confer upon any person or entity other than the parties hereto any
rights or remedies hereunder.
15. Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other persons or entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
16. Specific Performance. The parties hereto each acknowledge
that, in view of the uniqueness of the subject matter hereof, the parties hereto
would not have an adequate remedy at law for money damages if this Agreement
were not performed in accordance with its terms, and therefore agree that the
parties hereto shall be entitled to specific enforcement of the terms hereof in
addition to any other remedy to which the parties hereto may be entitled at law
or in equity.
17. Assignment. This Agreement shall not be assignable by
operation of law or otherwise; provided, however, that the Grantee may assign
its rights and obligations under this Agreement to any of its direct or indirect
wholly owned subsidiaries (including Merger Sub). Any purported assignment made
in contravention of this Agreement shall be null and void.
18. Captions. The Section captions herein are for convenience
of reference only and do not constitute part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
19. Termination. (a) The right to exercise the Option granted
pursuant to this Agreement shall terminate at (and the Option shall no longer be
exercisable after)
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the earliest of (i) the Effective Time (as defined in the Merger Agreement),
(ii) the nine month anniversary of the earliest to occur of the events set forth
in any of clauses (i), (ii) or (iii) of Section 2(d), and (iii) the fifteenth
day following the termination of the Merger Agreement if prior to such fifteenth
day the events set forth in any of clauses (i), (ii), or (iii) of Section 2(d)
shall not have occurred (such earliest date being referred to in this Agreement
as the "Termination Date"); provided that, if the Option cannot be exercised or
the Shares cannot be delivered to the Grantee upon such exercise because one or
more of the conditions set forth in Section 2(a) or (b) hereof have not yet been
satisfied, the Termination Date shall be extended until fifteen days after such
impediment to exercise or delivery has been removed.
(b) All representations and warranties contained in this
Agreement shall survive delivery of and payment for the Shares.
20. Profit Limitation. Notwithstanding any other provision of
this Agreement or the Merger Agreement, any Cancellation Amount shall be reduced
(but not below zero) to the extent necessary so that the sum of (1) the portion
of any termination fee actually paid to the Grantee pursuant to Section
9.5(b)(p) of the Merger Agreement (such portion actually paid, the "Termination
Fee"), (2) the aggregate of all Cancellation Amounts paid to Grantee pursuant to
this Agreement and (3) the cash proceeds actually received by the Grantee as the
result of selling Shares issued to Grantee pursuant to this Agreement to a third
party which acquires more than 50% of the Grantor's outstanding voting
securities (other than any such acquisitions by Grantor or any of its
affiliates) shall not exceed $4.4 million. In no event shall (i) the sum of the
Termination Fee and the cash proceeds actually received by the Grantee as the
result of selling Shares issued to Grantee pursuant to this Agreement to a third
party which acquires more than 50% of the Grantor's outstanding voting
securities (other than any such acquisitions by Grantor or any of its
affiliates) exceed $4.4 million, or (ii) the sum of the Termination Fee, the
aggregate Cancellation Amounts paid to Grantee pursuant to this Agreement and
the cash proceeds actually received by the Grantee as the result of selling
Shares issued to Grantee pursuant to this Agreement to a third party which
acquires more than 50% of the Grantor's outstanding voting securities (other
than any such acquisitions by Grantor or any of its affiliates) exceed $4.4
million.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by duly authorized officers of the parties hereto as of the date
hereof.
SIBIA NEUROSCIENCES, INC.
By: /s/ Xxxxxxx X. Xxxxx
------------------------
Name: Xxxxxxx X. Xxxxx
Title: President, Chief Executive
Officer
MERCK & CO., INC.
By: /s/ Xxxx X. Xxxxxx
-----------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
MC SUBSIDIARY CORP.
By: /s/ Xxxx X. Xxxxxx
------------------------
Name: Xxxx X. Xxxxxx
Title: President
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