Item 1.01. Entry into a Material Definitive Agreement
Merger Agreement
On January 17,
2017, CoLucid Pharmaceuticals, Inc. (the Company) entered into an Agreement and Plan of Merger (the Merger Agreement) with Eli Lilly and Company (Parent) and ProCar Acquisition Corporation, a wholly owned
subsidiary of Parent (Merger Sub), for the acquisition of the Company by Parent.
Pursuant to the terms of the Merger
Agreement, upon the terms and subject to the conditions thereof, Merger Sub will commence a tender offer (the Offer) no later than January 31, 2017 to acquire all of the outstanding shares of the Companys common stock, $0.001
par value per share (collectively, the Shares), at a purchase price of $46.50 per Share (the Offer Price), net to the seller in cash, without interest, subject to any required withholding taxes.
The Offer will expire at one minute after 11:59 p.m., New York City time, on the 20th business day following the commencement date of the
Offer, unless extended in accordance with the terms of the Offer and the Merger Agreement.
As soon as practicable following the
acceptance for payment of the Shares tendered in the Offer (such time, the Acceptance Time) and subject to the satisfaction or waiver of various conditions set forth in the Merger Agreement, Merger Sub will merge with and into the
Company, with the Company surviving as a wholly owned subsidiary of Parent (the Merger). The Merger will be effected pursuant to Section 251(h) of the Delaware General Corporation Law (the DGCL) without a vote of
stockholders of the Company in accordance with Section 251(h) of the DGCL. At the effective time of the Merger (the Effective Time), each Share not purchased pursuant to the Offer (other than Shares owned by the Company, Merger Sub,
Parent or any direct or indirect wholly owned subsidiary of Parent, which Shares will be cancelled for no consideration, or by stockholders of the Company who have properly exercised and perfected their statutory rights of appraisal under the DGCL)
will be converted into the right to receive an amount in cash equal to the Offer Price, without interest (the Merger Consideration), subject to any required withholding taxes.
The Merger Agreement provides that each outstanding stock option of the Company (each, an Option), whether vested or unvested,
will be cancelled as of immediately prior to the Effective Time and will be converted into the right to receive (a) a lump sum cash payment in the amount of the Merger Consideration, less the exercise price of such Option, subject to any
required withholding taxes, multiplied by the number of Shares issuable under such Option, if the exercise price of the Option is less than the Merger Consideration, or (b) no consideration, if the exercise price of the Option is greater than
or equal to the Merger Consideration. The Merger Agreement provides that each outstanding restricted stock unit of the Company (each, a Restricted Stock Unit), whether vested or unvested, will be cancelled as of immediately prior to the
Effective Time in exchange for the right to receive a lump sum cash payment equal to (x) the number of Shares subject to such Restricted Stock Unit, multiplied by (y) the Merger Consideration, subject to any required withholding taxes. The
Merger Agreement provides that the Board will terminate the Companys 2006 Equity Incentive Plan and 2015 Equity Incentive Plan.
The
Merger Agreement contains customary representations and warranties and covenants by the parties. The Companys covenants include those relating to the Companys conduct of its business between the date of the Merger Agreement and the
Acceptance Time; restrictions on soliciting or initiating discussions with respect to proposals for alternative transactions and certain restrictions on its ability to respond to such proposals, subject to certain limited exceptions to permit the
Companys Board of Directors (the Board) to comply with its fiduciary duties; public disclosures; and other matters. Parent and the Company have agreed to make certain filings as promptly as practicable after the date of the Merger
Agreement, including those required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the HSR Act). The Merger Agreement contains certain termination rights of Parent and the Company and provides that, upon the
termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee of $34.0 million.
The Board, acting upon the unanimous recommendation of a special committee, has unanimously approved the Merger Agreement and unanimously
recommends that the stockholders of the Company tender their Shares in the Offer. The obligation of Merger Sub to purchase Shares tendered in the Offer is conditioned on, among other things, the valid tender of a number of Shares in the Offer,
together with any Shares beneficially owned by Parent or any wholly owned subsidiary of Parent, representing a majority of the total number of fully-diluted Shares then outstanding, the expiration or termination of the waiting period (and any
extensions thereof) under the HSR Act, the absence of a material adverse effect on the Company (as described in the Merger Agreement), and other customary closing conditions.
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The Merger Agreement has been included to provide information regarding its terms. It is not
intended to modify or supplement any factual disclosures about the Company, Parent or Merger Sub in any public reports filed with the U.S. Securities and Exchange Commission (the SEC) by the Company, Parent or Merger Sub. In particular,
the assertions embodied in the representations, warranties, and covenants contained in the Merger Agreement were made only for purposes of the Merger Agreement and as of specified dates, were solely for the benefit of the parties to the Merger
Agreement, and are subject to limitations agreed upon by the parties to the Merger Agreement, including being qualified by confidential disclosure schedules provided by the Company to Parent in connection with the execution of the Merger Agreement.
These disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement have
been made for the purposes of allocating risk between the parties to the Merger Agreement instead of establishing matters of fact. Accordingly, the representations and warranties in the Merger Agreement may not constitute statements regarding the
actual state of facts about the Company, Parent or Merger Sub. The representations and warranties set forth in the Merger Agreement may also be subject to a contractual standard of materiality different from that generally applicable under federal
securities laws. Investors are not third-party beneficiaries under the Merger Agreement and should not rely on the representations, warranties, or covenants or any descriptions thereof as characterizations of the actual state of facts or the actual
condition of the Company, Parent, or Merger Sub or any of their respective subsidiaries or affiliates. Moreover, 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 Companys public disclosures.
Tender and Support Agreements
On January 17, 2017, in connection with the Merger Agreement, each of (a) A.M. Pappas Life Science Ventures III, L.P., PV III CEO
Fund, LP, and Pappas Capital, LLC, (b) Novo A/S, and (c) TVM Life Science Ventures VII, L.P., solely in their respective capacities as stockholders of the Company and who collectively beneficially own approximately 34.7% of the outstanding
Shares, each entered into a Tender and Support Agreement (each, a Tender and Support Agreement) with Parent and Merger Sub. Each Tender and Support Agreement provides, among other things, that the applicable stockholder will tender all
of the Shares held by it in the Offer.
The form of Tender and Support Agreement has been included to provide information regarding its
terms. It is not intended to modify or supplement any factual disclosures about the applicable stockholder or the Company, Parent or Merger Sub in any public reports filed with the SEC by the Company, Parent or Merger Sub.
The foregoing descriptions of each of the Merger Agreement and the form of Tender and Support Agreement do not purport to be complete and are
qualified in their entirety by reference to the full text of each such agreement, which are attached hereto as Exhibits 2.1 and 10.1, respectively, and are incorporated herein by reference.