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EXHIBIT (c)(2)
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement") dated as of July 30, 1999
among the persons listed on Schedule 1 hereto (each, a "Holder" and,
collectively, the "Holders"), Merck & Co., Inc., a New Jersey corporation
("Parent"), and MC Subsidiary Corp., a Delaware corporation and a wholly owned
subsidiary of Parent (the "Merger Sub"). Parent, Merger Sub and SIBIA
Neurosciences, Inc., a Delaware corporation (the "Company"), propose to enter
into a Merger Agreement (the "Merger Agreement") on the date of this Agreement
providing for the making of a tender offer by Merger Sub (the "Offer") for
shares of Common Stock, par value $0.001 per share, of the Company (the "Company
Common Stock"), at a purchase price of $8.50 per share, and a subsequent merger
(the "Merger") between the Company and the Merger Sub.
Each Holder owns the number of shares of Company Common Stock (the
"Shares") or options to purchase Company Common Stock (the "Stock Options" and
collectively, with the Shares, the "Optioned Securities"), or has the right to
vote the number of Shares or other securities (the "Voting Securities"), listed
opposite the name of such Holder on Schedule 1. Parent and the Merger Sub have
required, as a condition to entering into the Merger Agreement, that the Holders
enter into this Agreement. The Holders believe that it is in the best interest
of the Company and its stockholders to induce Parent and the Merger Sub to enter
into the Merger Agreement and, therefore, the Holders are willing to enter into
this Agreement.
Accordingly, in consideration of the mutual covenants and agreements
set forth herein and in consideration of $1.00 and such other valuable
consideration the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. The Option. Each Holder hereby grants the Merger Sub an irrevocable
option (the "Option") to purchase all of the Optioned Securities of such Holder
at the price of $8.50 per share (or such higher price as may be paid pursuant to
the Offer), payable in cash, without interest.
2. Exercise of the Option; Term. On the terms and subject to the
conditions of this Agreement, the Merger Sub may exercise the Option at any time
after the date on which all waiting periods under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), applicable to
the exercise of the Option have expired or been terminated by written notice to
each Holder specifying a date and time for the closing not later than thirty
(30) business days from the date of such notice (which date and time may be one
day after the delivery of such notice), but only if (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 or entity shall have
announced an intention (whether or not conditional) to make an Acquisition
Proposal with respect to the
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Company, and on or following the date of the Merger Agreement but prior to the
date that the Offer is consummated and Parent 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 Parent 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
Company or the Parent pursuant to Section 9.2(i) of the Merger Agreement and if
terminated by Parent or Merger Sub, Parent 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 Company pursuant to Section 9.3(a) of the Merger Agreement, or (y) by the
Parent 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 Shareholders Agreement, the Merger Agreement or the
Stock Option 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 the 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 determination thereof any shares of Common
Stock issuable upon exercise of or subject to the Stock Option Agreement and/or
the Shareholders Agreement. The Option shall expire on the earliest of (1) the
Effective Time (as defined in the Merger Agreement), (2) the nine month
anniversary of the earliest to occur of the events set forth in any of clauses
(i) and (ii) of Section 9.5(b) of the Merger Agreement and (3) 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) or (ii) of Section 9.5(b) of the
Merger Agreement shall not have occurred (such earliest date being referred to
in this Agreement as the "Expiration Date"); provided that, if the Option cannot
be exercised or the Optioned Securities cannot be delivered to the Merger Sub
upon such exercise because (x) there shall be in effect a preliminary or
permanent injunction or other order issued by any federal or state court of
competent jurisdiction prohibiting delivery of the Optioned Securities or (y)
any applicable waiting periods under the HSR Act shall not have expired or been
terminated, then the Expiration Date shall be extended until thirty days after
such impediment to exercise or delivery has been removed.
3. Closing. At the closing:
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(a) against delivery of the Optioned Securities, free and
clear of all liens, claims, charges and encumbrances of any kind or
nature whatsoever, Parent shall cause the Merger Sub to make payment to
each Holder of the aggregate price for such Holder's Optioned
Securities by wire transfer of immediately available funds; and
(b) each Holder shall deliver to the Merger Sub a duly
executed certificate or certificates representing the number of
Optioned Securities purchased from such Holder, together with transfer
powers endorsed in blank relating to such certificates and, if
requested by the Merger Sub, an irrevocable proxy duly executed by such
Holder, authorizing such persons as the Merger Sub shall designate to
act for such Holder as his lawful agents, attorneys and proxies, with
full power of substitution, to vote in such manner as each such agent,
attorney and proxy or his substitute shall in his sole discretion deem
proper, and otherwise act with respect to the Optioned Securities at
any meeting (whether annual or special and whether or not an adjourned
meeting) of the Company's Holders or otherwise, and revoking any prior
proxies granted by such Holder with respect to the Holder's Optioned
Securities.
Notwithstanding any provision of this Agreement to the contrary, the
Holders shall validly tender their Shares pursuant to the Offer and shall not
withdraw such Shares prior to the expiration of the Offer, and their obligation
to sell any Optioned Securities shall be satisfied, solely with respect to the
Shares so tendered, upon the purchase of such Shares by the Merger Sub pursuant
to the Offer.
4. Covenants of the Holders.
(a) During the period from the date of this Agreement until
the Expiration Date, except in accordance with the provisions of this
Agreement, each Holder severally and not jointly agrees that he will
not:
(i) sell, sell short, transfer, pledge, hypothecate,
assign or otherwise dispose of, or enter into any contract,
option, hedging arrangement or other arrangement or
understanding with respect to the sale, transfer, pledge,
hypothecation, assignment or other disposition of, any
Optioned Securities or Voting Securities;
(ii) deposit any Optioned Securities or Voting
Securities into a voting trust, or grant any proxies or enter
into a voting agreement with respect to any Optioned
Securities or Voting Securities; or
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(iii) initiate, solicit or knowingly encourage,
directly or indirectly, any inquiries or the making or
implementation of any proposal that constitutes, or may
reasonably be expected to lead to, any Acquisition Proposal
(as defined in the Merger Agreement) or enter into discussions
or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Acquisition Proposal, or agree to or
endorse any Acquisition Proposal; except that any Holder who
is a member of the board of directors of the Company may
conduct himself in the manner expressly permitted under
Section 7.2 of the Merger Agreement.
(b) Any additional shares of Company Common Stock, warrants,
options or other securities or rights exercisable for, exchangeable for
or convertible into shares of Company Common Stock (collectively,
"Equity Securities") acquired by any Holder will become subject to this
Agreement and shall, for all purposes of this Agreement, be considered
Optioned Securities or Voting Securities, as the case may be.
(c) Each Holder agrees not to engage in any action or omit to
take any action which would have the effect of preventing or disabling
such Holder from delivering his Optioned Securities to the Merger Sub
or otherwise performing his obligations under this Agreement. To the
extent that any Optioned Securities (other than Company Common Stock)
may not be assigned by such Holder to the Merger Sub without
exercising, exchanging or converting such Optioned Securities for or
into Company Common Stock, each Holder agrees to exercise, exchange or
convert such Optioned Securities for or into Company Common Stock prior
to the closing of the purchase of such Optioned Securities upon
exercise of the Option.
5. Representations and Warranties of each Holder. Each Holder severally
and not jointly represents and warrants to Parent and the Merger Sub as follows:
(a) (i) such Holder is the record or beneficial owner of the
Optioned Securities, or has the right to vote the Voting Securities,
listed opposite the name of such Holder on Schedule 1, (ii) such
Optioned Securities or Voting Securities are the only Equity Securities
owned of record or beneficially by such Holder or in which such Holder
has any interest or which such Holder has the right to vote, as the
case may be, and (iii) such Holder does not have any option or other
right to acquire any other Equity Securities;
(b) such Holder has the right, power and authority to execute
and deliver this Agreement and to perform his obligations hereunder;
the execution, delivery and performance of this Agreement by such
Holder will not require the consent of any other person and will not
constitute a violation of, conflict with or result in a default under
(i) any contract, understanding or arrangement to which such Holder
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is a party or by which such Holder is bound, (ii) any judgment, decree
or order applicable to such Holder, or (iii) any law, rule or
regulation of any governmental body applicable to such Holder; and this
Agreement constitutes a valid and binding agreement on the part of such
Holder, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity;
(c) any Shares included in the Optioned Securities owned by
such Holder have been validly issued and are fully paid and
nonassessable and any shares of Company Common Stock issuable upon
exercise of the Stock Options or Warrants, when issued and upon payment
of the exercise price therefor, will be validly issued, fully paid and
nonassessable;
(d) except as set forth on Schedule 1, the Optioned Securities
owned by such Holder are now, and at all times during the term of this
Agreement will be, held by such Holder free and clear of all adverse
claims, liens, encumbrances and security interests, and none of the
Optioned Securities or Voting Securities are subject to any voting
trust or other agreement or arrangement (except as created by this
Agreement) with respect to the voting or disposition of the Optioned
Securities or Voting Securities; and there are no outstanding options,
warrants or rights to purchase or acquire, or agreements (except for
this Agreement) relating to, such Optioned Securities or Voting
Securities; and
(e) upon purchase of the Optioned Securities owned by such
Holder, the Merger Sub will obtain good and marketable title to such
Optioned Securities, free and clear of all adverse claims, liens,
encumbrances and security interests (except any created by the Merger
Sub).
6. Effect of Representations, Warranties and Covenants of Holders. The
representations, warranties and covenants of the Holders shall be several and
not joint. The liability of each individual Holder shall extend only to the
representations, warranties and covenants of such Holder and not to any
representation, warranty or covenant of any other Holder.
7. Representations and Warranties of Parent and the Merger Sub. Each of
Parent and the Merger Sub hereby represents and warrants to each Holder that: it
is a corporation duly formed under the laws of the states of their respective
incorporations; it has all requisite corporate power and authority to enter into
and perform all its obligations under this Agreement; the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on its part; this
Agreement has been duly executed and delivered by it; and this Agreement
constitutes a valid and binding agreement on its part, enforceable in accordance
with its terms, subject to applicable bankruptcy insolvency,
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moratorium or other similar laws relating to creditors' rights and general
principles of equity.
8. Voting of Equity Securities. Each Holder hereby agrees that, during
the time this Agreement is in effect, at any meeting of the stockholders of the
Company, however called, and in any action by written consent of the
stockholders of the Company, he shall (a) vote all Voting Securities of such
Holder in favor of the Merger; (b) not vote any Voting Securities in favor of
any action or agreement which would result in a breach in any material respect
of any covenant, representation or warranty or any other obligation of the
Company under the Merger Agreement; and (c) vote all Voting Securities of such
Holder against any action or agreement which would impede, interfere with or
attempt to discourage the Offer or the Merger, including, but not limited to:
(i) any Acquisition Proposal (other than the Offer and the Merger) involving the
Company or any of its subsidiaries; (ii) any change in the management or board
of directors of the Company, except as otherwise agreed to in writing by the
Merger Sub; (iii) any material change in the present capitalization or dividend
policy of the Company; or (iv) any other material change in the Company's
corporate structure or business. Each Holder hereby irrevocably appoints
designees of MC Merger Sub, the attorneys, agents and proxies, with full power
of substitution, for the undersigned and in the name, place and stead of the
undersigned to vote in such manner as such attorneys, agents and proxies or
their substitutes shall in their sole discretion deem proper and otherwise act,
including the execution of written consents, with respect to all Voting
Securities of the Company which the undersigned is or may be entitled to vote at
any meeting of the Company held after the date hereof, whether annual or special
and whether or not an adjourned meeting, or in respect of which the undersigned
is or may be entitled to act by written consent. This proxy is coupled with an
interest and shall be irrevocable and binding on any successor in interest of
the undersigned. This proxy shall operate to revoke any prior proxy as to Voting
Securities heretofore granted by the Holder. Such proxy shall terminate upon the
termination of this Agreement.
9. Adjustments. In the event of any increase or decrease or other
change in the Optioned Securities by reason of stock dividends, split-up,
recapitalizations, combinations, exchanges of shares or the like, the number of
Optioned Securities and Voting Securities subject to this Agreement shall be
adjusted appropriately.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of Delaware without regard to its rules of
conflict of laws.
11. Further Assurances. Each party hereto shall perform such further
acts and execute such further documents as may reasonably be required to carry
out the provisions of this Agreement.
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12. Legend. As soon as practicable after the execution of this
Agreement, the following legend shall be placed on the certificates representing
the Optioned Securities:
"The Securities represented by this certificate are subject to
certain transfer and other restrictions contained in an Shareholders
Agreement, dated as of July 30, 1999, among Merck & Co., Inc., MC
Subsidiary Corp. and certain stockholders of the Corporation."
13. Assignment. This Agreement may not be assigned by any party hereto,
except that the Merger Sub may assign its right to purchase the Optioned
Securities to one or more of its affiliates.
14. Remedies. The parties agree that legal remedies for breach of this
Agreement will be inadequate and that this Agreement may be enforced by Parent
and the Merger Sub by injunctive or other equitable relief.
15. Notices. All notices or other communications required or permitted
hereunder shall be in writing (except as otherwise provided herein) and shall be
deemed duly given if delivered in person, by confirmed facsimile transmission or
by overnight courier service, addressed as follows:
To Parent or the Merger Sub:
Xxxxx Xxxxxxx
Merck & Co., Inc.
Xxx Xxxxx Xxxxx
X.X. Xxx 000 X00XX-00
Xxxxxxxxxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
With a copy to:
Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
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To each Holder:
The Salk Institute
00000 Xxxxx Xxxxxx Xxxxx Xxxx
Xx Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
Executive Vice President
Fax: 000-0000
With copies to:
The Salk Institute
00000 Xxxxx Xxxxxx Xxxxx Xxxx
Xx Xxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx
General Counsel
Fax: 000-0000
16. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
17. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
18. Binding Effect; Benefits. This Agreement shall survive the death or
incapacity of any Holder and shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, legal representatives,
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to or shall confer on any person other than the parties
hereto and their respective heirs, legal representatives and successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
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IN WITNESS WHEREOF, the Holders, Parent and Merger Sub have entered
into this Agreement as of the date first written above.
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
HOLDERS:
THE SALK INSTITUTE FOR BIOLOGICAL STUDIES
By: /s/ Xxxxxxx X. Xxxxx
____________________________________
Name: Xxxxxxx X. Xxxxx
Title: Executive Vice President
By: /s/ Xxxxxxx X. Xxxxx
_____________________________________
Name: Xxxxxxx X. Xxxxx
Title: General Counsel, Assistant
Secretary
SKANDIGEN A.B.
By: /s/ Xxxxxx Xxxxxx
_______________________________________
Name: Xxxxxx Xxxxxx
Title: Director
/s/ Xxxxxxx X. Xxxxx
_________________________________________
Xxxxxxx X. Xxxxx
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SCHEDULE 1
Name Shares Stock Options Voting Securities
---- ------ ------------- -----------------
The Name Salk Institute for
Biological Studies 1,933,461 0 1,933,461
Skandigen AB 986,696 0 986,696
Xxxxxxx X. Xxxxx 267,900 189,790 267,900
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