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Item 1.01.
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Entry into a Material Definitive Agreement.
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Merger Agreement
On January 20, 2018,
Cadus Corporation (the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”),
by and among the Company, Starfire Holding Corporation, a Delaware corporation (“Parent”), and Cadus Merger Sub LLC,
a Delaware limited liability company and a wholly-owned subsidiary of Parent (“Merger Sub” and, together with Parent,
the “Acquiring Parties”). The Acquiring Parties are affiliates of Barberry Corp. and High River Limited Partnership,
the Company’s controlling stockholders.
Pursuant to the terms
of the Merger Agreement, and subject to the conditions thereof, Merger Sub will merge with and into the Company, with the Company
continuing as the surviving corporation in the merger (the “Merger”). At the effective time of the Merger, each share
of common stock, par value $0.01 per share, of the Company (a “Common Share”) that is issued and outstanding immediately
prior to the effective time of the Merger (other than issued and outstanding Common Shares that are owned by (i) Parent, Merger
Sub or any of their respective subsidiaries or affiliates other than the Company, (ii) the Company as treasury stock or any of
its subsidiaries or (iii) stockholders that have perfected and not effectively withdrawn or lost their appraisal rights under Delaware
law) will be automatically converted into the right to receive $1.61 per Common Share in cash (the “Per Share Merger Consideration”),
without interest. The Merger and the Merger Agreement were unanimously approved by the Company’s Board of Directors, acting
on the unanimous recommendation of a special committee of independent directors.
The Company has made
customary representations and warranties to the Acquiring Parties in the Merger Agreement that expire at the effective time of
the Merger. In the Merger Agreement, the Company has also agreed to certain customary covenants, including, among other things,
covenants regarding: (i) the conduct of the business of the Company and its subsidiaries prior to the consummation of the Merger;
(ii) the use of the Company’s reasonable best efforts to cause the Merger to be consummated; and (iii) abstaining from initiating,
soliciting, providing information or entering into discussions concerning alternative acquisition proposals relating to the Company,
except in limited circumstances.
The Company will call
a special meeting of stockholders for the purpose of voting on the adoption of the Merger Agreement. The consummation of the Merger
is conditioned on adoption of the Merger Agreement: (i) by the holders of a majority of the outstanding Common Shares entitled
to vote on the adoption of the Merger Agreement; and (ii) by the holders of a majority of the outstanding Common Shares entitled
to vote on the adoption of the Merger Agreement that are not beneficially owned by the Acquiring Parties or their affiliates.
The consummation of
the Merger is also subject to certain other customary closing conditions, including (i) the absence of any law or order that is
in effect and restrains, enjoins or otherwise prohibits the consummation of the Merger, (ii) the accuracy of the representations
and warranties of the Acquiring Parties, in the case of the Company, and of the Company, in the case of the Acquiring Parties,
as contained in the Merger Agreement (subject to certain materiality qualifiers, as applicable), and (iii) compliance by the Acquiring
Parties, in the case of the Company, and by the Company, in the case of the Acquiring Parties, in all material respects with its
or their obligations required to be performed by it or them under the Merger Agreement on or prior to the closing date of the Merger.
Also, the obligation of the Acquiring Parties to consummate the Merger is subject to the absence of any Material Adverse Effect
(as defined in the Merger Agreement) with respect to the Company from the date of the Merger Agreement to the closing date of the
Merger.
The Acquiring Parties
have informed the Company that they intend to fund the payment of the aggregate Per Share Merger Consideration with cash on hand.
The Merger is not subject to a financing condition.
The Merger Agreement
contains certain customary termination rights for both the Company and Parent.
The representations,
warranties, covenants and agreements of each of the Company, Parent and Merger Sub contained in the Merger Agreement have been
made solely for the benefit of the parties to the Merger Agreement. In addition, such representations, warranties, covenants and
agreements (i) have been made only for purposes of the Merger Agreement, (ii) in the case of the Company, have been qualified by
certain matters disclosed in certain of the Company’s filings with the Securities and Exchange Commission (“SEC”), (iii) are subject to materiality qualifications contained in the Merger Agreement which may differ from what may be viewed as
material by investors, (iv) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger
Agreement and (v) have been included in the Merger Agreement for the purpose of allocating risk between the parties rather than
establishing matters as fact. Accordingly, the Merger Agreement is included as an exhibit to this Current Report on Form 8-K only
to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other
factual information regarding the parties or their respective businesses. Investors should not rely on the representations, warranties,
covenants and agreements, or any descriptions thereof, as characterizations of the actual state of facts or condition of the parties
or any of their subsidiaries or affiliates. In addition, information concerning the subject matter of the representations and warranties
may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in the Company’s
public disclosures. The Merger Agreement should not be read alone, but should instead be read in conjunction with the other information
regarding the parties that is or will be contained in, or incorporated by reference into, the Forms 10-K, Forms 10-Q and other
documents that the Company files with the SEC.
The foregoing description
of the Merger Agreement is only a summary, does not purport to be complete and is qualified in its entirety by reference to the
full text of the Merger Agreement, which is filed as Exhibit 2.1 hereto and incorporated herein by reference.