CM LIFE Item 1.01. Entry into a Material Definitive Agreement.
On
Merger Agreement
On
Business Combination
Pursuant to the terms of the Merger Agreement, CMLSIII will acquire EQRx through the merger of Merger Sub with and into EQRx, with EQRx surviving as a wholly-owned subsidiary of CMLSIII (the "Merger"). In connection with the Merger, CMLSIII will be renamed.
The Business Combination was approved by the boards of directors of each of CMLSIII and EQRx.
The Business Combination is expected to close in the fourth quarter of 2021, following the receipt of the required approval by EQRx's and CMLSIII's stockholders and the satisfaction of certain other customary closing conditions.
Business Combination Consideration
At the effective time of the Merger (the "Effective Time"), each share of EQRx's
common stock and preferred stock (collectively, "EQRx Capital Sock") issued and
outstanding immediately prior to the Effective Time will be cancelled and
automatically deemed for all purposes to represent the right to receive a
portion of the total consideration, with each EQRx's stockholder (as applicable)
being entitled to receive a number of shares of Class A common stock, par value
In addition, at the Effective Time, each outstanding option to purchase EQRx Capital Stock will be rolled over into options to purchase Class A Common Stock, as further set forth in and in accordance with the terms of the Merger Agreement; and each outstanding EQRx restricted stock award will be cancelled and converted into restricted stock awards of Class A Common Stock calculated in accordance with the terms of the Merger Agreement.
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Earnout
In addition to the issuance of Class A Common Stock, the rollover of other EQRx equity awards and the conversion of EQRx restricted stock awards described above as of the Effective Time, (A) upon the occurrence of Triggering Event I, CMLSIII will issue or cause to be issued to each EQRx stockholder and certain employees or individual service providers of EQRx (the "Earn-Out Service Providers"), in accordance with the terms of their respective award agreements, 35,000,000 shares of Class A Common Stock, upon the terms and subject to the conditions set forth in the Merger Agreement and the other Transaction Agreements; and (B) upon the occurrence of Triggering Event II, CMLSIII will issue or cause to be issued to each EQRx stockholder and Earn-Out Service Provider an additional (one-time issuance) of 15,000,000 shares of Class A Common Stock, upon the terms and subject to the conditions set out in the Merger Agreement. Triggering Event I and Triggering Event II may be achieved at the same time or over the same overlapping trading days.
"Triggering Event I" shall occur if at any time during the period beginning on
the 12-month anniversary of the Closing and ending on the date that is the
36-month anniversary of the Closing (inclusive of the first and last day of such
period, the "Earn-Out Period"), the closing price of the Class A Common Stock
for a period of at least 20 days out of 30 consecutive trading days ending on
the trading day immediately prior to the date of determination (the "Common
Share Price of CMLSIII's Class A Stock") is greater than or equal to
"Triggering Event II" shall occur if at any time within the Earn-Out Period, the
Common Share Price of CMLSIII's Class A Common Stock is greater than
Governance
CMLSIII has agreed to take all action within its power as may be necessary or
appropriate such that, effective immediately after the closing of the Business
Combination, CMLSIII board of directors will consist of up to eleven directors,
which will initially include:
Representations and Warranties
The Merger Agreement contains representations and warranties of the parties
thereto that are customary for transactions of this type, with respect to, among
other things, (a) entity organization, formation and authority, (b) capital
structure, (c) authorization to enter into the Merger Agreement, (d) legal
compliance and approvals, (e) financial statements and liabilities, (f) absence
of changes, (g) litigation, (h) employee matters, (i) real property, (j) taxes,
(k) intellectual property and privacy, (l) material contracts, (m) transactions
with affiliates, (n) government grants and incentives and (o) in the case of
CMLSIII only, (i) its public filings, (ii) the
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Covenants
The Merger Agreement includes customary covenants of the parties with respect to the operation of their respective businesses prior to the consummation of the Business Combination and efforts to satisfy the conditions to consummation of the Business Combination.
The Merger Agreement also contains additional covenants of the parties, including, among others, covenants providing for CMLSIII and EQRx to use their reasonable best efforts to obtain all necessary regulatory approvals and covenants providing for CMLSIII, Merger Sub and EQRx to cooperate in the preparation of the Proxy Statement/Prospectus (as such term is defined in the Merger Agreement) required to be filed in connection with the Business Combination.
In addition, CMLSIII has agreed to adopt an equity incentive plan and an employee stock purchase plan, as more fully described in the Merger Agreement.
Non-Solicitation Restrictions
Except as expressly permitted by the Merger Agreement, from the date of the Merger Agreement to the Effective Time or, if earlier, the valid termination of the Merger Agreement in accordance with its terms, CMLSIII, EQRx and Merger Sub have each agreed not to, directly or indirectly: (i) solicit, initiate, enter into or continue discussions, negotiations or transactions with, or encourage or respond to any inquiries or proposals by, or provide any information to, any Person (other than CMLSIII and its agents, representatives, advisors) concerning any merger, sale of ownership interests and/or assets of the EQRx, recapitalization or similar transaction (each, a "Company Business Combination"); (ii) enter into any agreement regarding, continue or otherwise participate in any discussions or negotiations regarding, or cooperate in any way that would otherwise reasonably be expected to lead to a Company Business Combination; or (iii) commence, continue or renew any due diligence investigation regarding a Company Business Combination.
CMLSIII Change in Recommendation
CMLSIII is required to include in the Proxy Statement/Prospectus the recommendation of CMLSIII's board of directors to CMLSIII's stockholders that they approve the transaction proposals (as such proposals are more fully set forth in the Merger Agreement, collectively, the "CMLSIII Board Recommendation"). CMLSIII is permitted to change the CMLSIII Board Recommendation only as required by applicable legal requirements.
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Conditions to Closing
General Conditions
The consummation of the Merger is conditioned upon, among other things, (a)
receipt of CMLSIII's stockholder approval, (b) CMLSIII having at least
EQRx's Conditions to Closing
The obligations of EQRx to consummate the Merger also are conditioned upon, among other things, (a) customary closing conditions, including, without . . .
Item 3.02 Unregistered Sales of
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K
(this "Current Report") under the heading "Subscription Agreements and
Item 7.01. Regulation FD Disclosure.
On
Furnished as Exhibit 99.2 hereto is an investor presentation, dated
The information in this Item 7.01 and Exhibits 99.1, 99.2 and 99.3 attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to liabilities under that section, and shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act, regardless of any general incorporation language in such filings.
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Cautionary Statement Regarding Forward Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements
within the meaning of the federal securities laws with respect to the proposed
Business Combination between EQRx and the Company, including express or implied
statements regarding the anticipated benefits of the Business Combination, the
anticipated timing of the Business Combination, the expected cash proceeds from
the Business Combination, the expected continued listing on Nasdaq, EQRx's
ability to accelerate growth and expand access to innovative medicines, EQRx's
ability to obtain FDA and other approvals of any product candidates in its
pipeline, and EQRx's ability to expand its pipeline and execute on its business
strategy with payers, as well as other statements regarding plans and market
opportunities of EQRx. These forward-looking statements generally are identified
by the words "believe," "project," "expect," "anticipate," "estimate," "intend,"
"strategy," "future," "opportunity," "plan," "may," "should," "will," "would,"
"will be," "will continue," "will likely result," and similar expressions.
Forward-looking statements are predictions, projections and other statements
about future events that are based on current expectations and assumptions and,
as a result, are subject to risks and uncertainties. Many factors could cause
actual future events to differ materially from the forward-looking statements in
this Current Report on Form 8-K, including but not limited to: (i) the risk that
the Business Combination may not be completed in a timely manner or at all, (ii)
the risk that the Business Combination may not be completed by the Company's
business combination deadline and the potential failure to obtain an extension
of the business combination deadline if sought by the Company, (iii) the failure
to satisfy the conditions to the consummation of the Business Combination,
including the adoption of the merger agreement by the stockholders of the
Company, the satisfaction of the minimum trust account amount following
redemptions by the Company's public stockholders and the receipt of certain
governmental and regulatory approvals, (iv) the lack of a third party valuation
in determining whether or not to pursue the transaction, (v) the inability to
complete the PIPE investment in connection with the Business Combination, (vi)
the occurrence of any event, change or other circumstance that could give rise
to the termination of the Merger Agreement, (vii) the effect of the announcement
or pendency of the Business Combination on EQRx's business relationships,
operating results and business generally, (viii) risks that the proposed
Business Combination disrupts current plans and operations of EQRx and potential
difficulties in EQRx employee retention as a result of the Business Combination,
(ix) the outcome of any legal proceedings that may be instituted against the
Company or EQRx related to the Merger Agreement or the Business Combination, (x)
the ability to maintain the listing of the Company's securities on a national
securities exchange, (xi) changes in the competitive and highly regulated
industries in which EQRx operates, variations in operating performance across
competitors, changes in laws and regulations affecting EQRx's business and
changes in the combined capital structure, (xii) risks associated with EQRx's
ability to implement its business plans, including risks associated with its
growth strategy, obtaining regulatory approvals, and creating a global payer
network, and other risks associating with its plans to create a new kind of
pharmaceutical company, (xiii) the risk of downturns and a changing regulatory
landscape in the highly competitive healthcare and biopharmaceutical industries,
(xiv) the size and growth of the markets in which EQRx operates and its ability
to offer innovative medicines at reduced prices, and (xv) EQRx's ability to
operate as a public company. The foregoing list of factors is not exhaustive.
You should carefully consider the foregoing factors and the other risks and
uncertainties described in the "Risk Factors" section of the Company's
registration statement on Form S-1 (File No. 333-253475), the proxy
statement/prospectus included in the registration statement on Form S-4 to be
filed with the
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Additional Information and Where to Find It / Non-Solicitation
In connection with the proposed Business Combination, the Company intends to
file a registration statement, which will include a preliminary proxy
statement/prospectus with the
Participants in Solicitation
The Company and EQRx and their respective directors and executive officers may
be deemed to be participants in the solicitation of proxies from the Company's
shareholders in connection with the proposed Business Combination. Information
about the Company's directors and executive officers and their ownership of the
Company's securities is set forth in the Company's filings with the
No Offer or Solicitation
This Current Report on Form 8-K shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of the Business Combination. This Current Report on Form 8-K shall also not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act, or an exemption therefrom.
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Item 9.01 Exhibits.
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