Item 1.01. Entry Into a Material Definitive Agreement.
Agreement and Plan of Merger
On December 5, 2019, Aevi Genomic Medicine, Inc., a Delaware corporation
("Aevi"), entered into an Agreement and Plan of Merger and Reorganization (the
"Merger Agreement") with Cerecor, Inc., a Delaware corporation ("Cerecor"),
Genie Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Cerecor ("Merger Sub"), and Second Genie Merger Sub, LLC, a Delaware limited
liability company and a wholly owned subsidiary of Cerecor ("Second Merger
Sub"), pursuant to which Merger Sub shall merge with and into Aevi (the "First
Merger") and as part of the same overall transaction, Aevi shall then merge with
and into the Second Merger Sub (the "Second Merger" and together with the First
Merger, the "Mergers"), with the Second Merger Sub as the surviving corporation.
Following closing, the combined bio-pharmaceutical company will continue to be
focused on pediatric orphan diseases and will operate under the name Cerecor.
Michael F. Cola will become the Chief Executive Officer and Garry Neil will
become the Chief Medical Officer of the combined company.
The boards of directors of both Aevi and Cerecor have approved the proposed
Mergers. The consummation of each of the Mergers is subject to customary closing
conditions, including the stockholders of Aevi approving the Mergers and the
Securities and Exchange Commission declaring effective the registration
statement on which the shares of Cerecor common stock issued in the Mergers will
be registered. The Mergers are expected to close during the first quarter of
2020.
Upon completion of the Mergers, each share of Aevi common stock that is
outstanding immediately prior to the effective time of the Mergers (other than
cancelled shares or dissenting shares), inclusive of common stock issued upon
conversion of convertible notes issued by Aevi, will automatically be converted
into the right to receive (A) the fraction of a share of Cerecor common stock
equal to the exchange ratio set forth in the Merger Agreement and summarized
below, (B) one contingent value right (a "CVR"), which shall represent the right
to receive contingent payments upon the achievement of certain milestones (the
"CVR Consideration") as set forth in the CVR Agreement (as defined and described
below), and (C) cash in lieu of fractional shares of Cerecor common stock as
contemplated in the Merger Agreement. Cerecor will acquire all outstanding
shares of Aevi common stock at an aggregate purchase price of $16.1 million less
an amount by which Aevi's net assets at closing are less than negative $1.3
million, but in no event will such adjustment be more than $500,000. The per
share price will be based on the number of Aevi shares outstanding immediately
prior to closing, including the shares of Aevi stock to be issued to The
Children's Hospital of Philadelphia upon conversion of its outstanding secured
promissory note and to AstraZeneca in connection with the exercise by Aevi of
its license option for MEDI2338, which is anticipated to result in an
approximate per share value of $0.134, assuming the maximum net asset related
adjustment, excluding any potential payment in connection with the CVRs. The
purchase price will be paid in Cerecor common stock valued based on an average
of the volume weighted price of Cerecor common stock 20 days prior to signing
and closing.
The Merger Agreement contains customary representations and warranties of Aevi,
Cerecor, Merger Sub and Second Merger Sub, and customary pre-closing covenants,
including covenants requiring Aevi (i) to use reasonable best efforts to cause
the consummation of the transactions contemplated by the Merger Agreement,
(ii) to conduct its business in the ordinary course, and (iii) to refrain from
taking certain actions without Cerecor's consent.
The Merger Agreement also includes customary provisions prohibiting any
solicitation or negotiations by Aevi of other possible acquisition transactions
or any adverse change to the Aevi board of directors' recommendation to approve
the Mergers. Aevi may provide information to, and engage in, negotiations with a
potential acquirer prior to obtaining stockholder approval for the Mergers if
the Aevi board of directors: (a) determines in good faith after consultation
that the unsolicited offer is bona fide and constitutes a superior proposal to
Cerecor's offer; (b) thereafter furnish to such potential acquirer non-public
information relating to Aevi or any of its subsidiaries pursuant to an executed
confidentiality and standstill agreement that contains confidentiality and
standstill provisions that are no less favorable to Aevi than those contained in
the confidentiality agreement between Cerecor and Aevi; (c) following receipt of
and on account of a superior proposal, make a "Company Adverse Recommendation
Change" (as defined in the Merger Agreement); and (d) take any action that any
court of competent jurisdiction orders Aevi to take. The Aevi board of directors
may also, prior to obtaining stockholder approval for the Mergers, make a
Company Adverse Recommendation Change or terminate the Merger Agreement and
enter into a different acquisition agreement in order to accept another takeover
proposal that the Board determines in good faith is more favorable from a
financial point of view to Aevi's stockholders and is reasonably likely to be
consummated.
The Merger Agreement contains customary termination rights and may be terminated
by either Cerecor or Aevi at any time prior to the effective time of the Mergers
if: (a) the parties mutually consent to do so; (b) the Mergers have not been
consummated on or before April 30, 2020 (the "End Date") (or, for Cerecor only,
90 business days following such date if the Form S-4 referenced below has not
been declared effective as of the End Date); (c) if any governmental entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced, or
entered any law or order making illegal, permanently enjoining, or otherwise
permanently prohibiting the consummation of the Mergers or the other
transactions contemplated by the Merger Agreement; or (d) the Merger Agreement
has been submitted to the stockholders of Aevi for adoption at a duly convened
stockholders meeting and the requisite vote shall not have been obtained at such
meeting.
Cerecor may terminate the Merger Agreement if it is not then in material breach
of its representations, warranties, covenants and obligations in the Merger
Agreement and if: (i) a Company Adverse Recommendation Change has occurred; (ii)
Aevi intentionally and materially breaches or fails to perform any of its
obligations related to non-solicitation of takeover proposals and any Company
Adverse Recommendation Change; or (iii) there is any breach of any
representation, warranty, covenant, or agreement on the part of Aevi set forth
in the Merger Agreement such that the conditions to the closing of the Mergers
regarding: (A) Aevi's representations and warranties; or (B) Aevi's performance
of Aevi's pre-closing covenants, would not be satisfied and such breach is not
capable of being cured, or is not cured, by the End Date; provided, however,
that Cerecor shall give Aevi at least 30 days written notice prior to such
termination. If Cerecor terminates the Merger Agreement in accordance with (i)
or (ii) above, and at the time or prior to such termination Aevi has entered
into another transaction with respect to a Superior Proposal, then, upon
completion of such transaction, Aevi shall pay to Cerecor an amount equal to
$600,000 (the "Termination Fee").
Aevi may terminate the Merger Agreement if it is not then in material breach of
the Merger Agreement and if: (i) prior to receiving stockholder approval of the
Mergers, in accordance with the terms of the Merger Agreement, its board of
directors approves or recommends, or Aevi executes, a definitive agreement with
respect to a Superior Proposal; (ii) prior to receiving stockholder approval of
the Mergers, in accordance with the terms of the Merger Agreement, the Board
otherwise effects a Company Adverse Recommendation Change; or (iii) there is any
breach of any representation, warranty, covenant, or agreement on the part of
Cerecor, Merger Sub or Second Merger Sub set forth in the Merger Agreement such
that the conditions to the closing of the Mergers regarding (A) Cerecor's,
Merger Sub's and Second Merger Sub's representations and warranties, or (B)
Cerecor's, Merger Sub's and Second Merger Sub's performance of their pre-closing
covenants, would not be satisfied and such breach is not capable of being cured,
or is not cured, by the End Date; provided, however, that Aevi shall give
Cerecor at least 30 days written notice prior to such termination. The
Termination Fee would be payable by Aevi if Aevi terminates the Merger Agreement
in accordance with (i) above and Aevi has completed a transaction in connection
with therewith that was the cause of the termination.
The foregoing summary of the Merger Agreement is qualified in its entirety by
reference to the complete text of such document, which is filed as Exhibit 2.1
attached hereto and which is incorporated herein by reference.
Form of Voting Agreement
In connection with entering into the Merger Agreement, certain stockholders of
Aevi have entered into a voting agreement with Cerecor (the "Voting Agreement")
as a condition and inducement to the willingness of Cerecor, Merger Sub and
Second Merger Sub to enter into the Merger Agreement. Parties to the Voting
Agreement include The Children's Hospital of Philadelphia and certain directors
and officers of Aevi. The foregoing summary of the Voting Agreement is qualified
. . .
Item 8.01. Other Events.
On December 5, 2019, Aevi issued a press release announcing the execution of the
Merger Agreement. The press release is attached as Exhibit 99.1 and is
incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
No. Description
2.1* Agreement and Plan of Merger and Reorganization, dated as of December
5, 2019 among Aevi Genomic Medicine, Inc., Genie Merger Sub, Inc.,
Second Genie Merger Sub, LLC and Cerecor Inc. (including the Form of
Contingent Value Rights Agreement)
10.1 Form of Voting Agreement of Aevi Genomic Medicine, Inc. dated December
5, 2019
10.2 Promissory Note for License Expenses, dated December 5, 2019, by and
between Cerecor Inc. and Aevi Genomic Medicine, Inc.
10.3 Promissory Note for Operating Expenses, dated December 5, 2019, by and
between Cerecor Inc. and Aevi Genomic Medicine, Inc.
99.1 Press Release issued by Aevi Genomic Medicine, Inc. dated December 5,
2019
* The schedules and exhibits to the Agreement and Plan of Merger have been
omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K.
Aevi will furnish copies of any such schedules or exhibits to the SEC
upon request.
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AEVI GENOMIC MEDICINE, INC. 
