Item 1.01 |
Entry into a Material Definitive Agreement
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Merger Agreement
On September 19, 2022, Rocket Pharmaceuticals, Inc., a Delaware corporation (“Rocket” or “Parent”), entered into an Agreement and Plan of Merger (the “Merger Agreement”)
with Renovacor, Inc., a Delaware corporation (“Renovacor” or the “Company”), Zebrafish Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (“Merger Sub I”), Zebrafish Merger Sub, LLC, a Delaware limited liability
company and a direct wholly owned subsidiary of Parent (“Merger Sub II” and together with Merger Sub I, the “Merger Subs”) pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth Merger Agreement,
(i) Merger Sub I will merge with and into
the Company (the “First Merger”) and (ii) the Company, as the surviving company of the First Merger, will merge with and into Merger Sub II (the “Second Merger” and together with
the First Merger, the “Mergers”), with Merger Sub II as the surviving company (the “Surviving Company”). The Mergers are intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended.
Merger Consideration
Subject to the terms and conditions of the Merger Agreement, each
share of the Company’s common stock, par value $0.0001 per share (“Company Shares”) outstanding immediately prior to the effective time of the First Merger (the “First Effective Time”) (including Company Earnout Shares (as defined in the Merger
Agreement)) will be canceled and converted into the right to receive a number of fully paid and non-assessable shares of Parent common stock, $0.01 par value per share (“Parent Shares”) determined on the basis of an exchange formula set forth in the
Merger Agreement (the “Exchange Ratio”). The Exchange Ratio will initially be equal to 0.1676 for each Company Share (subject to adjustment as described in this paragraph, the “Per Share Merger Consideration”). Under certain circumstances further
described in the Merger Agreement, the Exchange Ratio may be adjusted upward or downward based on the level of the Company’s net cash at the Closing of the First Merger and certain other adjustments, as determined in accordance with the Merger
Agreement. There can be no assurances as to the Company’s level of net cash between now and the closing of the transactions contemplated by the Merger Agreement (the “Closing”).
In addition, subject to the terms and conditions of the Merger Agreement:
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At the First Effective time, all Company Shares held by Parent or any Merger Sub immediately prior to the First Effective Time will be canceled and retired and will cease to exist,
and no consideration will be delivered in exchange therefor;
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Immediately prior to the First Effective Time, all Sponsor Earnout Shares (as defined in the Merger Agreement) will vest in full and be released to Chardan Investments 2, LLC
(formerly known as Chardan Investments III, LLC), a Delaware limited liability company (the “Sponsor”), in accordance with the terms of the that certain Sponsor Support Agreement, dated as of March 22, 2021, by and among the Company (formerly
known as Chardan Healthcare Acquisition 2 Corp.), the Sponsor and Renovacor Holdings, Inc. (formerly known as Renovacor, Inc.) (“Renovacor Holdings”) and, at the First Effective Time, will be canceled and converted into the right to receive
the Per Share Merger Consideration;
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Immediately prior to the First Effective Time, the Company will issue a number of Company Shares comprising the maximum number of SPAC Merger Earnout Shares (as defined in the
Merger Agreement) issuable in connection with and in accordance with that certain Agreement and Plan of Merger, dated as of March 22, 2021, by and among the Company (formerly known as Chardan Healthcare Acquisition 2 Corp.), CHAQ2 Merger
Sub, Inc., a Delaware corporation, and Renovacor Holdings to certain persons entitled thereto (other than Company Shares issuable in settlement of outstanding Company Earnout RSUs (as defined in the Merger Agreement)) and, at the First
Effective Time, all Company Shares issued pursuant to this paragraph will be canceled and converted into the right to receive the Per Share Merger Consideration;
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Immediately prior to the First Effective Time, the Company will issue a number of Company Shares comprising the maximum number of SPAC Merger Earnout Shares issuable in settlement of
Company Earnout RSUs and, at the First Effective Time, the Company Shares issuable pursuant to this paragraph will be canceled and converted into the right to receive the Per Share Merger Consideration;
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At the First Effective Time, each restricted stock unit award that is subject to time vesting (a “Company Time-Vesting RSU”) outstanding immediately prior to the First Effective Time
will automatically, without any further action on the part of Parent, Merger Sub I, the Company or any holder thereof, vest in full and be canceled and converted into the right to receive a number of Parent Shares, rounded to the nearest
whole number, equal to the number of Company Shares subject to such Company Time-Vesting RSU multiplied by the Exchange Ratio;
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At the First Effective Time, each option to purchase Company Shares (a “Company Option”) outstanding immediately prior to the First Effective Time will automatically, without any
action on the part of Parent, Merger Sub I, the Company or any holder thereof, be converted into and thereafter evidence an option to acquire a number of Parent Shares that is equal to the product of (A) the number of Company Shares subject
to such Company Option as of immediately prior to the First Effective Time, multiplied by (B) the Exchange Ratio, rounded down to the nearest whole number of Parent Shares (after such conversion, an “Exchanged Option”), at an exercise price
per Parent Share underlying such Exchanged Option equal to the quotient obtained by dividing (x) the per share exercise price of Company Options immediately prior to the First Effective Time by (y) the Exchange Ratio, rounded up to the
nearest whole cent.
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At the First Effective Time, each public warrant to purchase Company Shares (a “Company Public Warrant”) outstanding and unexercised immediately prior to the First Effective Time
will automatically, without any action on the part of Parent, Merger Sub I, the Company or any holder thereof, be converted into and thereafter evidence a warrant to purchase a number of Parent Shares, rounded down to the nearest whole share,
that is equal to the product of (A) the number of Company Shares subject to such Company Public Warrant as of immediately prior to the First Effective Time, multiplied by (B) the Exchange Ratio (after such conversion, an “Exchanged Warrant”),
at an exercise price per Parent Share underlying such Exchanged Warrant equal to the quotient obtained by dividing (x) the per share exercise price applicable to such Company Public Warrant immediately prior to the First Effective Time by (y)
the Exchange Ratio, rounded up to the nearest whole cent.
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At the First Effective Time, each private warrant to purchase Company Shares (a “Company Private Warrant”) outstanding and unexercised immediately prior to the First Effective Time
will automatically, without any action on the part of Parent, Merger Sub I, the Company or any holder thereof, be converted into and thereafter evidence an Exchanged Warrant entitling the holder thereof to purchase a number of Parent Shares,
rounded down to the nearest whole share, that is equal to the product of (A) the number of Company Shares subject to such Company Private Warrant as of immediately prior to the First Effective Time, multiplied by (B) the Exchange Ratio, at an
exercise price per Parent Share underlying such Exchanged Warrant equal to the quotient obtained by dividing (x) the per share exercise price applicable to such Company Private Warrant immediately prior to the First Effective Time by (y) the
Exchange Ratio, rounded up to the nearest whole cent; and
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At the First Effective Time, each pre-funded warrant to purchase Company Shares (a “Company Pre-Funded Warrant”) outstanding and unexercised immediately prior to the First Effective
Time will automatically, without any action on the part of Parent, Merger Sub I, the Company or any holder thereof, be converted into and thereafter evidence an Exchanged Warrant entitling the holder thereof to purchase a number of Parent
Shares, rounded down to the nearest whole share, that is equal to the product of (A) the number of Company Shares subject to such Company Pre-Funded Warrant as of immediately prior to the First Effective Time, multiplied by (B) the Exchange
Ratio, at an exercise price per Parent Share underlying such Exchanged Warrant equal to the quotient obtained by dividing (x) the per share exercise price applicable to such Company Pre-Funded Warrant immediately prior to the First Effective
Time by (y) the Exchange Ratio, rounded up to the nearest whole cent.
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Conditions to the Mergers
The closing of the Mergers is subject to the satisfaction or waiver of certain conditions including, among other things, (i) the required approvals by Parent’s and the
Company’s stockholders, (ii) the accuracy of the respective representations and warranties of each party, subject to certain materiality qualifications, (iii) compliance by the parties with their respective covenants, (iv) the absence of any law or
order preventing the Mergers and the contemplated transactions, (v) the Parent Shares to be issued in the First Merger being approved for listing (subject to official notice of issuance) on Nasdaq as of the closing and (vi) the Registration Statement
(as defined below) having become effective in accordance with the provisions of the Securities Act of 1933, as amended, and not being subject to any stop order or proceeding (or threatened proceeding by the Securities and Exchange Commission (the
“SEC”)) seeking a stop order with respect to the Registration Statement that has not been withdrawn.
Certain Other Terms of the Merger Agreement
The Merger Agreement contains customary representations, warranties and covenants made by Parent and the Company, including covenants relating to
obtaining the requisite approvals of the stockholders of Parent and the Company, indemnification of directors and officers, and the Parent’s and the Company’s conduct of their respective businesses between the date of signing the Merger Agreement and
the closing of the Mergers.
In connection with the Mergers, Parent and the Company will jointly prepare and file a registration statement on Form S-4 (the “Registration
Statement”), in which a joint proxy statement will be included (the “Proxy Statement”) to seek the approval of (i) Parent’s stockholders with respect to certain actions, including the issuance of Parent Shares, pursuant to the Nasdaq rules (the
“Parent Stockholder Approval”) and (ii) the Company’s stockholders with respect to certain actions, including the adoption of the Merger Agreement and the approval of the First Merger (the “Company Stockholder Approval”).
The Company is subject to a customary “no-shop”
provision whereby, subject to certain exceptions, it is prohibited from, directly or indirectly (i) initiating, seeking or soliciting, or knowingly encouraging or facilitating (including by way of furnishing non-public information) or inquiring or
the making or submission of any proposal that constitutes, or would reasonably be expected to lead to, a Company Acquisition Proposal (as defined in the Merger Agreement); (ii) participating or engaging in discussions or negotiating with, or
disclosing any non-public information or data relating to, the Company or its Subsidiary or affording access to the properties, books or records of the Company or
its subsidiary to any person that has made or could reasonably be expected to make, a Company Acquisition Proposal; or (iii) entering into any agreement, including any letter of intent, memorandum of understanding, agreement in principle, merger
agreement, acquisition agreement or other similar agreement, whether or not binding, with respect to a Company Acquisition Proposal. The “no-shop” provision is subject to certain exceptions that permit the board of directors of the Company (the “Company
Board”) to comply with its fiduciary duties, which, under certain circumstances, would enable the Company to provide information to, and enter into discussions or negotiations with, third parties in response to a Superior Proposal (as defined
in the Merger Agreement).
The Merger Agreement contains certain customary termination rights, including, among others:
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upon the mutual consent of Parent and the Company;
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by the Company,
if any of Parent’s or the Merger Sub’s covenants, representations or warranties contained in the Merger Agreement will be or have become untrue and such breach is not capable of being cured or has not been cured within 45 days following
notice of such breach;
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by the Company,
if at any time prior to the Company Stockholder Approval, upon written notice to Parent, in order to enter into a definitive agreement for a transaction constituting a Superior Proposal;
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by the Company,
if Parent makes a Parent Adverse Recommendation Change (as defined in the Merger Agreement);
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by Parent, if the Company makes a Company Adverse Recommendation Change (as defined in the Merger Agreement); and
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by either Parent or the Company, if (A) a court of competent jurisdiction or other governmental body issues a final and non-appealable order, decree or ruling, or has taken any other action, having the effect of prohibiting the Mergers and the
contemplated transactions, (B) the Mergers have not occurred by March 19, 2023, subject to certain conditions, (C) the Company Stockholder Approval will not have been obtained at the Company’s stockholder meeting or any adjournment thereof; or (D) the Parent Stockholder Approval will not have been obtained at Parent’s stockholder meeting or any adjournment thereof.
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Under certain circumstances and in compliance with certain obligations
set forth in the Merger Agreement, (x) Parent and the Company are permitted to terminate the Merger Agreement prior to the First Effective Time, subject to the
payment by either Parent or the Company, as applicable, of a termination fee of $1.74 million or (y) in some circumstances, Parent may be required to reimburse
the Company’s expenses up to a maximum of $750,000.
The foregoing summary does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Merger
Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
The Merger Agreement is attached to provide investors with information regarding its terms and is not intended to provide any other factual information
about Parent, the Company or the Merger Subs. The Merger Agreement also contains representations and warranties of each of Parent, the Company and the Merger Subs. The assertions embodied in those representations and warranties were made for purposes
of the Merger Agreement and are subject to qualifications and limitations agreed to by the respective parties in connection with negotiating the terms of the Merger Agreement, including information contained in certain disclosures between the
parties. Accordingly, investors and security holders should not rely on such representations and warranties as characterizations of the actual statements of facts or circumstances, since they were only made as of a specific date and are modified in
important part by the disclosures between the parties. In addition, certain representations and warranties may be subject to a contractual standard of materiality different from what might be viewed as material to security holders, or may have been
used for purposes of allocating risk between the respective parties rather than establishing matters of fact. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Merger
Agreement, which subsequent information may or may not be fully reflected in Parent’s and the Company’s public disclosures.
Voting Agreements
In connection with the execution of the Merger Agreement, certain stockholders of Parent and the Company holding approximately 35% and 9.4%
respectively, of the companies’ outstanding voting shares entered into voting agreements with Parent (the “Company Voting Agreements”) and the Company, as applicable (the “Parent Voting Agreements” and together with the Company Voting Agreements, the
“Voting Agreements”).
Pursuant to the Voting Agreements, the securityholders of Parent and the Company, as applicable, have agreed, among other things, to: (i) vote their
beneficially owned securities of Parent or the Company, as applicable, (1) in favor of the transactions contemplated by the Merger Agreement, including any matter necessary for the consummation of the Mergers, (2) in favor of any proposal to adjourn
or postpone any meeting of shareholders at which any of the foregoing matters are submitted for consideration and vote of the shareholders if there are not sufficient votes for approval of any such matters on the date on which the meeting is held,
(3) against any third-party acquisition transactions, (4) against any other proposal that could reasonably be expected to result in a breach of any covenant, representation or warranty under the Merger Agreement or any obligation of the
securityholder under the Voting Agreement and (5) against any other proposal that could reasonably be expected to impeded, delay or adversely affect the timely consummation of the transactions contemplated by the Merger Agreement; and (ii) comply
with certain restrictions on the disposition of such shares, in each case subject to the terms and conditions contained therein.
The foregoing description of the Voting Agreements do not purport to be complete and are subject to, and qualified in their entirety by, references to
the form of the Company Voting Agreement, which is filed as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference and to the form of Parent Voting Agreement, which is filed as Exhibit 99.2 to this Current Report on Form
8-K and incorporated herein by reference.