Item 1.01.
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Entry into a Material Definitive Agreement.
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Merger Agreement
On March 29, 2021, Millendo Therapeutics, Inc., a Delaware corporation
(“Millendo”), Mars Merger Corp., a Delaware corporation and a wholly owned subsidiary of Millendo (“Merger
Sub”), and Tempest Therapeutics, Inc., a Delaware corporation (“Tempest”), entered into an Agreement and
Plan of Merger (the “Merger Agreement”), pursuant to which, among other matters, and subject to the satisfaction or
waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Tempest, with Tempest continuing as a
wholly owned subsidiary of Millendo and the surviving corporation of the merger (the “Merger”). The Merger is 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.
Subject to the terms and conditions of the Merger Agreement, at the
closing of the Merger, (a) each then outstanding share of Tempest common stock (including shares of Tempest common stock issued upon
conversion of Tempest preferred stock and shares of Tempest common stock issued in the financing transaction described below) will be
converted into the right to receive a number of shares of Millendo common stock (subject to the payment of cash in lieu of fractional
shares and after giving effect to a reverse stock split of Millendo common stock described below) calculated in accordance with the Merger
Agreement (the “Exchange Ratio”); and (b) each then outstanding Tempest stock option and warrant to purchase Tempest
common stock will be assumed by Millendo, subject to adjustment as set forth in the Merger Agreement. Under the terms of the Merger Agreement,
the Millendo board of directors may accelerate the vesting of any Millendo stock options that are outstanding as of immediately prior
to the closing of the Merger.
Under the Exchange Ratio formula in the Merger Agreement, upon the
closing of the Merger, on a pro forma basis and based upon the number of shares of Millendo common stock expected to be issued in the
Merger, pre-Merger Millendo shareholders will own approximately 18.5% of the combined company and pre-Merger Tempest stockholders will
own approximately 81.5% of the combined company (assuming the financing transaction described below results in gross proceeds of approximately
$30 million). For purposes of calculating the Exchange Ratio, shares of Millendo common stock underlying Millendo stock options outstanding
as of the immediately prior to the closing of the Merger with an exercise price per share of less than or equal to $5.00 (as adjusted
for the reverse stock split described below) will be deemed to be outstanding and all shares of Tempest common stock underlying outstanding
Tempest stock options, warrants and other derivative securities will be deemed to be outstanding. The Exchange Ratio will be adjusted
to the extent that Millendo’s net cash at closing is less than $15.3 million or greater than $18.7 million and based on the amount
of the financing transaction described below, as further described in the Merger Agreement.
In connection with the Merger, Millendo will seek the approval of
its stockholders to (a) issue the shares of Millendo common stock issuable in connection with the Merger under the rules of The
Nasdaq Stock Market LLC (“Nasdaq”) and (b) amend its certificate of incorporation to effect a reverse split of
Millendo common stock at a ratio of between 1:10 and 1:15, as determined by a committee of the Millendo board of directors prior to
the closing of the Merger (the “Millendo Voting Proposals”).
Each of Millendo and Tempest has agreed to customary representations,
warranties and covenants in the Merger Agreement, including, among others, covenants relating to (1) using reasonable best efforts to
obtain the requisite approval of its stockholders, (2) non-solicitation of alternative acquisition proposals, (3) the conduct of their
respective businesses during the period between the date of signing the Merger Agreement and the closing of the Merger, (4) Millendo
using reasonable best efforts to maintain the existing listing of the Millendo common stock on Nasdaq and Millendo causing the shares
of Millendo common stock to be issued in connection with the Merger to be approved for listing on Nasdaq prior to the closing of the
Merger, and (5) Millendo filing with the U.S. Securities and Exchange Commission (the “SEC”) and causing to become
effective a registration statement to register the shares of Millendo common stock to be issued in connection with the Merger (the “Registration
Statement”).
Consummation of the Merger is subject to certain closing conditions,
including, among other things, (1) approval by Millendo stockholders of the Millendo Voting Proposals, (2) approval by the Tempest stockholders
of the adoption of the Merger Agreement, (3) Nasdaq’s approval of the listing of the shares of Millendo common stock to be issued
in connection with the Merger, (4) the effectiveness of the Registration Statement, and (5) the determination of Millendo’s net
cash in accordance with the Merger Agreement. Each party’s obligation to consummate the Merger is also subject to other specified
customary conditions, including the representations and warranties of the other party being true and correct as of the date of the Merger
Agreement and as of the closing date of the Merger, generally subject to an overall material adverse effect qualification, and the performance
in all material respects by the other party of its obligations under the Merger Agreement required to be performed on or prior to the
date of the closing of the Merger. Millendo’s obligation to consummate the Merger also is subject to the completion of at least
$25 million of the financing transaction described below.
The Merger Agreement contains certain termination rights of each of
Millendo and Tempest, including, subject to compliance with the applicable terms of the Merger Agreement, the right of each party to
terminate the Merger Agreement to enter into a definitive agreement for a superior proposal. Upon termination of the Merger Agreement
under specified circumstances, Millendo may be required to pay Tempest a termination fee of $1,400,000 or reimburse Tempest’s expenses
up to a maximum of $1,000,000 and Tempest may be required to pay Millendo a termination fee of $2,800,000 or reimburse Millendo’s
expenses up to a maximum of $1,000,000.
At the effective time of the Merger, the Board of Directors of Millendo
is expected to consist of seven members, six of whom will be designated by Tempest and one of whom will be designated by Millendo.
Financing Transaction
Concurrently with the execution and delivery of the Merger Agreement,
certain parties have entered into agreements with Tempest pursuant to which they have agreed, subject to the terms and conditions of
such agreements, to purchase prior to the consummation of the Merger shares of Tempest common stock for an aggregate purchase price of
approximately $30 million. The consummation of the transactions contemplated by such agreements is conditioned on the satisfaction or
waiver of the conditions set forth in the Merger Agreement. Shares of Tempest common stock issued pursuant to this financing transaction
will be converted into shares of Millendo common stock in the Merger in accordance with the Exchange Ratio.
Support Agreements and Lock-Up Agreements
Concurrently with the execution of the Merger Agreement, (i) certain
executive officers, directors and stockholders of Tempest (solely in their respective capacities as Tempest stockholders) holding approximately
87% of the outstanding shares of Tempest capital stock have entered into support agreements with Millendo and Tempest to vote all of
their shares of Tempest capital stock in favor of adoption of the Merger Agreement and against any alternative acquisition proposals
(the “Tempest Support Agreements”) and (ii) certain executive officers, directors and stockholders of Millendo (solely
in their respective capacities as Millendo stockholders) holding approximately 16% of the outstanding shares of Millendo common stock
have entered into support agreements with Millendo and Tempest to vote all of their shares of Millendo common stock in favor of the Millendo
Voting Proposals and against any alternative acquisition proposals (the “Millendo Support Agreements”, and together
with the Tempest Support Agreements, the “Support Agreements”).
Concurrently with the execution of the Merger Agreement, certain executive
officers, directors and stockholders of Tempest have entered into lock-up agreements (the “Lock-Up Agreements”) pursuant
to which, subject to specified exceptions, they agreed not to transfer their shares of Millendo common stock for the 180-day period following
the closing of the Merger. In addition, each of Millendo and Tempest is obligated under the Merger Agreement to use reasonable best efforts
prior to the closing of the Merger to obtain a Lock-Up Agreement from any person who will serve as a director or officer of Millendo
following completion of the Merger.
The preceding summaries of the Merger Agreement, the Support Agreements
and the Lock-Up Agreements do not purport to be complete and are qualified in their entirety by reference to the Merger Agreement, the
form of Tempest Support Agreement, the form of Millendo Support Agreement and the form of Lock-Up Agreement, which are filed as Exhibits
2.1, 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and which are incorporated herein by reference. The Merger
Agreement has been attached as an exhibit to this Current Report on Form 8-K to provide investors and securityholders with information
regarding its terms. It is not intended to provide any other factual information about Tempest or Millendo or to modify or supplement
any factual disclosures about Millendo in its public reports filed with the SEC. The Merger Agreement includes representations, warranties
and covenants of Tempest, Millendo and Merger Sub made solely for the purpose of the Merger Agreement and solely for the benefit of the
parties thereto in connection with the negotiated terms of the Merger Agreement. Investors should not rely on the representations, warranties
and covenants in the Merger Agreement or any descriptions thereof as characterizations of the actual state of facts or conditions of
Tempest, Millendo or any of their respective affiliates. Moreover, certain of those representations and warranties may not be accurate
or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable
to SEC filings or may have been used for purposes of allocating risk among the parties to the Merger Agreement, rather than establishing
matters of fact.