DEFM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material under § 240.14a-12

HARPOON THERAPEUTICS, INC.

(Name of Registrant as Specified in its Charter)

N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

 

No fee required

 

Fee paid previously with preliminary materials

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

 

 


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LOGO

HARPOON THERAPEUTICS, INC.

611 Gateway Boulevard, Suite 400

South San Francisco, California 94080

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

February 8, 2024

Dear common stockholders of Harpoon Therapeutics, Inc.:

You are cordially invited to attend a special meeting of the common stockholders of Harpoon Therapeutics, Inc., a Delaware corporation (“Harpoon,” the “Company,” “we,” “us” or “our”), to be held virtually on March 8, 2024 at 8:30 a.m. Pacific Time (including any adjournments or postponements thereof, the “Special Meeting”). Common stockholders will be able to attend the Special Meeting by visiting www.virtualshareholdermeeting.com/HARP2024SM and using the 16-digit control number included in your proxy materials. You will not be able to attend the Special Meeting in person. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” shall mean virtually present at the Special Meeting.

We have entered into an Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of January 7, 2024, with Merck Sharp & Dohme LLC, a New Jersey limited liability company (“Merck”), and Hawaii Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Merck (“Merger Sub”). Pursuant to and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Harpoon, with Harpoon surviving the merger as a wholly owned subsidiary of Merck (the “Merger”).

At the Special Meeting, you will be asked to consider and vote on a proposal to adopt the Merger Agreement (the “Merger Proposal”). The affirmative vote of the holders of a majority of the outstanding shares of Harpoon common stock, par value $0.0001 per share (the “Company Shares”), issued and outstanding as of the close of business on February 6, 2024 (the “Record Date”) is required to approve the Merger Proposal. At the Special Meeting, you also will be asked to consider and vote on a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes in person or by proxy to approve the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”). The affirmative vote of the holders of a majority of the voting power of the Company Shares present in person or represented by proxy at the Special Meeting is required to approve the Adjournment Proposal. Holders of shares of Harpoon’s Series A preferred stock, par value $0.0001 per share (“Preferred Shares”), do not have the right to vote their Preferred Shares on the Merger Proposal or the Adjournment Proposal.

If the Merger is consummated, you will be entitled to receive $23.00 in cash, without interest, for each Company Share that you own (unless you have properly exercised appraisal rights, including by not voting in favor of the Merger Proposal). Such merger consideration represents a premium of approximately 118% over the closing price of the Company Shares of $10.55 on January 5, 2024, the last trading day before the public announcement that Harpoon entered into the Merger Agreement.


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The Board of Directors of Harpoon (the “Board”), after considering the factors more fully described in the enclosed proxy statement, has unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Harpoon and the holders of Company Shares, (ii) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the General Corporation Law of the State of Delaware, and approved the execution and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger, and (iii) resolved to recommend that holders of Company Shares vote to approve the adoption of the Merger Agreement. The Board unanimously recommends that holders of Company Shares vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement. We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the proxy statement, and its annexes, including the Merger Agreement, carefully and in their entirety, as they contain important information. You may also obtain more information about Harpoon from documents we file with the Securities and Exchange Commission from time to time.

Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying postage prepaid envelope or grant your proxy electronically over the Internet or by telephone. Only your last-dated proxy will be counted, and any proxy may be revoked prior to its exercise at the Special Meeting. If you attend the Special Meeting and vote thereat, your vote will revoke any proxy that you have previously submitted.

Your vote is very important, regardless of the number of Company Shares that you own. We cannot consummate the Merger unless the Merger Proposal is approved by the affirmative vote of the holders of at least a majority of the issued and outstanding Company Shares as of the Record Date.

If you have questions or need assistance voting your Company Shares, please contact:

 

LOGO

1407 Broadway, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: 212-929-5500

or

Toll-Free (800) 322-2885

On behalf of the Board, I thank you for your support and appreciate your consideration of this matter.

Very truly yours,

/s/ Julie Eastland

Julie Eastland

President, Chief Executive Officer, Secretary and Director

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the transactions described in this document, including the Merger, or determined if the information contained in this document is accurate or adequate. Any representation to the contrary is a criminal offense.

PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD PROMPTLY. This proxy statement is dated February 8, 2024 and, together with the enclosed form of proxy card, is first being mailed to common stockholders on or about February 8, 2024.


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LOGO

HARPOON THERAPEUTICS, INC.

611 Gateway Boulevard, Suite 400

South San Francisco, California 94080

 

 

NOTICE OF SPECIAL MEETING OF COMMON STOCKHOLDERS

TO BE HELD ON MARCH 8, 2024

 

 

NOTICE IS HEREBY GIVEN that a special meeting of the common stockholders of Harpoon Therapeutics, Inc., a Delaware corporation (“Harpoon,” the “Company,” “we,” “us” or “our”), will be held virtually via live webcast at www.virtualshareholdermeeting.com/HARP2024SM on March 8, 2024 at 8:30 a.m. Pacific Time (including any adjournments or postponements thereof, the “Special Meeting”). The Special Meeting is being held for the following purposes:

 

1.

To consider and vote on a proposal to adopt the Agreement and Plan of Merger (as it may be amended from time to time, the “Merger Agreement”), dated as of January 7, 2024, by and among Merck Sharp & Dohme LLC, a New Jersey limited liability company (“Merck”), Hawaii Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Merck (“Merger Sub”), and Harpoon, pursuant to which Merger Sub will be merged with and into Harpoon, with Harpoon surviving as a wholly owned subsidiary of Merck (the “Merger”); and

 

2.

To consider and vote on a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes in person or by proxy to approve the proposal to adopt the Merger Agreement at the time of the Special Meeting.

Only Harpoon common stockholders of record as of the close of business on February 6, 2024 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting or at any adjournment or postponement thereof. Holders of shares of Harpoon’s Series A preferred stock, par value $0.0001 per share (“Preferred Shares”), do not have the right to vote their Preferred Shares on either of the proposals described above.

The Board unanimously recommends that you vote:

1. “FOR” the proposal to adopt the Merger Agreement (the “Merger Proposal”); and

2. “FOR” the proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting.

Your vote is very important, regardless of the number of shares of Harpoon common stock, par value $0.0001 per share (“Company Shares”), that you own. Whether or not you plan to attend the Special Meeting, please complete, sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone. If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or attend the Special Meeting, your Company Shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting and, if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal.


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Under Delaware law, common stockholders and beneficial owners who do not vote in favor of the Merger Proposal will have the right to seek appraisal of the fair value of their issued and outstanding Company Shares as determined by the Delaware Court of Chancery if the Merger is consummated, but only if they submit a written demand for such an appraisal to Harpoon before the vote on the Merger Proposal and comply with the other Delaware law procedures explained in the accompanying proxy statement.

By Order of the Board of Directors,

/s/ Julie Eastland

Julie Eastland

President, Chief Executive Officer, Secretary and Director

South San Francisco, California

February 8, 2024


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YOUR VOTE IS VERY IMPORTANT!

Whether or not you plan to attend the Special Meeting, please submit your proxy as soon as possible, whether over the Internet, by telephone or by completing, signing and returning the enclosed proxy card by mail in the prepaid reply envelope. You may revoke your proxy or change your vote before it is voted at the Special Meeting.

If your Company Shares are held in the name of a bank, broker or other nominee, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form provided to you by your bank, broker or other nominee. Your broker or other agent cannot vote on any of the proposals, including the Merger Proposal, without your instructions.

If your Company Shares are registered directly in your name, voting electronically at the Special Meeting will revoke any proxy that you previously submitted. If you hold your Company Shares through a bank, broker or other nominee and do not have a 16-digit control number, you must obtain a “legal proxy” in order to vote in person at the Special Meeting.

If you fail to return your proxy card, grant your proxy electronically over the Internet or by telephone or vote by virtual ballot at the Special Meeting, your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting, and if a quorum is present, will have the same effect as a vote “AGAINST” the Merger Proposal.

We encourage you to read the accompanying proxy statement, including all documents incorporated by reference into the accompanying proxy statement, and its annexes, carefully and in their entirety. If you have any questions concerning the Merger, the Special Meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement or require assistance in submitting your proxy or voting your Company Shares, please contact our proxy solicitor by using the contact information provided below:

 

LOGO

1407 Broadway, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free (800) 322-2885

 


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TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS

     1  

SUMMARY

     13  

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

     26  

THE COMPANIES

     28  

THE SPECIAL MEETING

     29  

Date, Time and Place of the Special Meeting

     29  

Purpose of the Special Meeting

     29  

Record Date; Shares Entitled to Vote; Quorum

     29  

Vote Required; Abstentions and Broker Non-Votes

     30  

Company Shares Held by Directors and Executive Officers

     30  

Voting; Proxies

     30  

Revocability of Proxies

     32  

Abstentions

     32  

Adjournments and Postponements

     32  

Board Recommendation

     33  

Solicitation of Proxies

     33  

Anticipated Date of Consummation of the Merger

     33  

Appraisal Rights

     34  

Householding of Special Meeting Materials

     34  

Questions and Additional Information

     35  

THE MERGER

     36  

Certain Effects of the Merger on Harpoon

     36  

Effect on Harpoon if the Merger Is Not Consummated

     36  

Merger Consideration

     36  

Background of the Merger

     38  

Recommendation of the Harpoon Board of Directors and Reasons for the Merger

     44  

Opinion of Centerview Partners LLC

     48  

Certain Unaudited Prospective Financial Information

     52  

Interests of the Directors and Executive Officers of Harpoon in the Merger

     56  

Financing of the Merger

     60  

Closing and Effective Time of the Merger

     61  

Appraisal Rights

     61  

Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares

     65  

Regulatory Approvals Required for the Merger

     68  

Litigation Related to the Merger

     69  

Delisting and Deregistration of Company Shares

     69  

THE MERGER AGREEMENT

     70  

Explanatory Note Regarding the Merger Agreement

     70  

When the Merger Becomes Effective

     70  

Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

     71  

Effect of the Merger on Company Shares and Series A Preferred Stock

     71  

Treatment of Company Series A Preferred Stock

     72  

Treatment of Equity Awards and the ESPP

     72  

Treatment of Company Warrants

     73  

Appraisal Shares

     73  

Payment for Company Shares

     73  

Representations and Warranties

     74  

Conduct of Business Pending the Merger

     77  

Other Covenants and Agreements

     80  

Conditions to the Merger

     90  

 

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Termination

     91  

Termination Fee; Certain Expenses

     93  

Expenses Generally

     94  

Specific Performance

     94  

Amendments; Waiver

     94  

Governing Law and Jurisdiction

     94  

THE SUPPORT AGREEMENTS

     95  

PROPOSAL NO. 1: APPROVAL OF THE MERGER PROPOSAL

     97  

The Merger Proposal

     97  

Vote Required

     97  

Board Recommendation

     97  

PROPOSAL NO. 2: ADJOURNMENT OF THE SPECIAL MEETING

     98  

The Adjournment Proposal

     98  

Vote Required

     98  

Board Recommendation

     98  

MARKET PRICES AND DIVIDEND DATA

     99  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     100  

FUTURE STOCKHOLDER PROPOSALS

     105  

WHERE YOU CAN FIND MORE INFORMATION

     106  

MISCELLANEOUS

     107  

ANNEXES

  

ANNEX A – AGREEMENT AND PLAN OF MERGER

     A-1  

ANNEX B – FORM OF SUPPORT AGREEMENT

     B-1  

ANNEX C – OPINION OF CENTERVIEW PARTNERS LLC

     C-1  

ANNEX D – SECTION 262 OF THE DELAWARE GENERAL CORPORATE LAW

     D-1  

 

 

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QUESTIONS AND ANSWERS

The following questions and answers address some commonly asked questions regarding the Special Meeting, the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. Please refer to the “Summary” beginning on page 13 of this proxy statement and the more detailed information contained elsewhere in this proxy statement, the annexes to this proxy statement and the documents incorporated by reference or referred to in this proxy statement, which you should read carefully and in their entirety.

Except as otherwise specifically noted in this proxy statement or as the context otherwise requires, “Harpoon,” “we,” “our,” “us,” the “Company” and similar words in this proxy statement refer to Harpoon Therapeutics, Inc. Throughout this proxy statement, we refer to Merck Sharp & Dohme LLC as “Merck” and Hawaii Merger Sub, Inc. as “Merger Sub.” In addition, throughout this proxy statement, we refer to: (1) the Agreement and Plan of Merger, dated as of January 7, 2024, as it may be amended from time to time, by and among Merck, Merger Sub and Harpoon, as the “Merger Agreement”; (2) the merger of Merger Sub with and into Harpoon, with Harpoon surviving as a wholly owned subsidiary of Merck, as the “Merger”; (3) shares of our common stock, par value $0.0001 per share, as the “Company Shares”; (4) our Series A preferred stock, par value $0.0001 per share, as the “Company Series A Preferred Stock”; (5) the holders of Company Shares as the “Company Stockholders”; and (6) the special meeting of Company Stockholders described in this proxy statement, including any adjournments or postponements thereof, as the “Special Meeting”. Unless indicated otherwise, any other capitalized term used herein but not otherwise defined herein has the meaning assigned to such term in the Merger Agreement.

 

Q:

Why am I receiving these materials?

 

A:

On January 7, 2024, Harpoon entered into the Merger Agreement providing for the merger of Merger Sub, a wholly owned subsidiary of Merck, with and into Harpoon, with Harpoon surviving the Merger as a wholly owned subsidiary of Merck. The Board of Directors of Harpoon (the “Board”) is furnishing this proxy statement and form of proxy card to the holders of Company Shares in connection with the solicitation of proxies to be voted at the Special Meeting.

 

Q:

What is the proposed transaction?

 

A:

The proposed transaction is the acquisition of Harpoon by Merck pursuant to the Merger Agreement. If the proposal to adopt the Merger Agreement (the “Merger Proposal”) is approved by the holders of a majority of the Company Shares issued and outstanding and entitled to vote thereon and the other closing conditions set forth in the Merger Agreement have been satisfied or, to the extent permitted by applicable law, waived, Merger Sub will be merged with and into Harpoon, with Harpoon surviving the Merger as a wholly owned subsidiary of Merck. As a result of the Merger, the Company Shares will no longer be publicly traded and will be delisted from the Nasdaq Stock Market LLC (“Nasdaq”). In addition, the Company Shares will be deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Harpoon will no longer file periodic reports with the U.S. Securities and Exchange Commission (the “SEC”).

 

Q:

What will holders of Company Shares receive if the Merger is consummated?

 

A:

Upon consummation of the Merger, you will be entitled to receive $23.00 in cash, without interest (the “Merger Consideration”), less any applicable withholding taxes, for each Company Share that you own as of the effective time of the Merger (the “Effective Time”), unless you have properly exercised and not failed to perfect, waived, withdrawn or otherwise lost your right to appraisal in accordance with Section 262 of the

 

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  General Corporation Law of the State of Delaware (the “DGCL”). For example, if you own 100 Company Shares as of the Effective Time, you will receive $2,300.00 in cash in exchange for your Company Shares (less any applicable withholding taxes). You will not be entitled to receive shares in the surviving corporation or in Merck as a result of the Merger.

 

Q:

How does the Merger Consideration compare to the market price of the Company Shares as of a recent trading date?

 

A:

The Merger Consideration represents a premium of approximately 118% over the closing price of the Company Shares on Nasdaq of $10.55 on January 5, 2024, the last trading day before the public announcement that Harpoon had entered into the Merger Agreement. On February 7, 2024, the last practicable day before the printing of this proxy statement, the closing price of the Company Shares on Nasdaq was $22.33 per share. You are encouraged to obtain current market quotations for the Company Shares.

 

Q:

When and where is the Special Meeting?

 

A:

The Special Meeting will take place virtually on March 8, 2024, at 8:30 a.m. Pacific Time. There will not be a physical meeting location. Company Stockholders will be able to virtually attend and vote at the Special Meeting by visiting www.virtualshareholdermeeting.com/HARP2024SM and by using the 16-digit control number included in their proxy materials. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” shall mean virtually present at the Special Meeting.

 

Q:

Who is entitled to vote at the Special Meeting?

 

A:

Only holders of record of Company Shares as of the close of business on February 6, 2024 (the “Record Date”) will be entitled to notice of, and to vote at, the Special Meeting. As of the close of business on the Record Date, there were 21,397,205 Company Shares issued and outstanding. Each issued and outstanding Company Share on that date will entitle its holder to one vote, in person or by proxy, on all matters to be voted on at the Special Meeting. Holders of Company Series A Preferred Stock do not have the right to vote their shares of such preferred stock on any of the proposals described in this proxy statement.

 

Q:

What are Company Stockholders being asked to vote on at the Special Meeting?

 

A:

You are being asked to consider and vote on the following proposals:

 

   

The Merger Proposal; and

 

   

A proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes in person or by proxy to adopt the Merger Proposal at the time of the Special Meeting (the “Adjournment Proposal”).

Pursuant to Harpoon’s amended and restated bylaws, the only business that will be transacted at the Special Meeting are the Merger Proposal and the Adjournment Proposal, as stated in the accompanying notice of the Special Meeting.

 

Q:

What vote is required to approve the proposal to adopt the Merger Agreement?

 

A:

The affirmative vote of the holders of a majority of the Company Shares issued and outstanding as of the Record Date is required to approve the Merger Proposal. As a result, the failure to grant a proxy to vote your Company Shares by submitting a signed proxy card, granting a proxy electronically over the Internet or by telephone or to vote virtually at the Special Meeting will have the same effect as a vote “AGAINST” the Merger Proposal.

 

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Q:

What factors did the Board consider in deciding to enter into the Merger Agreement and recommending the adoption of the Merger Agreement by the Company Stockholders?

 

A:

In reaching its decision to unanimously adopt, approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, and to recommend that the Company Stockholders approve the Merger Proposal, the Board consulted with our senior management, as well as our legal and financial advisors, and considered the terms of the proposed Merger Agreement and the transactions contemplated thereby, including the Merger, as well as other alternatives. For a more detailed description of these factors, see “The Merger—Recommendation of the Harpoon Board of Directors and Reasons for the Merger” beginning on page 44 of this proxy statement.

 

Q:

What is a quorum and how many Company Shares are needed to constitute a quorum?

 

A:

A quorum of Company Stockholders is the presence of Company Stockholders holding the minimum number of shares necessary to transact business at the Special Meeting. The holders of a majority of the Company Shares entitled to vote at the Special Meeting, either present in person or represented by proxy, will constitute a quorum at the Special Meeting. If a quorum is not present, then under our amended and restated bylaws, either (1) a majority in voting power of the Company Stockholders entitled to vote at the Special Meeting, present at the Special Meeting in person or represented by proxy, or (2) the chairperson of the Special Meeting, may adjourn the meeting, and the meeting may be held as adjourned without further notice other than an announcement at the meeting at which the adjournment is taken of the time, place, if any, and the means of remote communications, if any, by which Company Stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting.

 

Q:

What vote is required to approve the proposal to approve the adjournment of the Special Meeting to a later date or dates if necessary or appropriate to solicit additional proxies?

 

A:

The affirmative vote of the holders of a majority of voting power of the Company Shares present in person or represented by proxy at the Special Meeting is required to approve the Adjournment Proposal.

 

Q:

Are there any Company Stockholders who have already committed to voting in favor of any of the proposals?

Yes. In connection with the execution of the Merger Agreement, Merck and Merger Sub entered into support agreements (the “Support Agreements”) with certain of the directors and executive officers of Harpoon (and certain of their affiliates) under which such stockholders agreed, among other things, to vote, or cause to be voted, all of the Company Shares beneficially owned by such Company Stockholders in favor of the Merger Proposal and the Adjournment Proposal at the Special Meeting. As of the Record Date, the Company Stockholders party to the Support Agreements collectively held approximately 8.86% of the total voting power of the outstanding Company Shares.

 

Q:

How does the Board recommend that I vote?

 

A:

The Board, after considering the various factors described under “The Merger—Recommendation of the Harpoon Board of Directors and Reasons for the Merger” beginning on page 44 of this proxy statement, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Harpoon and the Company Stockholders, (2) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approved the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger, and (3) resolved to recommend that the Company Stockholders vote to approve the adoption of the Merger Agreement.

 

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The Board unanimously recommends that you vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

 

Q:

What do I need to do now?

 

A:

We encourage you to read this proxy statement, the annexes to this proxy statement, including the Merger Agreement, and the documents we incorporate by reference and refer to in this proxy statement carefully and consider how the Merger affects you, and then sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying reply envelope, or grant your proxy electronically on the Internet or by telephone, so that your Company Shares can be voted at the Special Meeting. If you hold your Company Shares in “street name,” please refer to the voting instruction forms provided by your bank, broker or other nominee to vote your Company Shares. Please do not send your stock certificates with your proxy card.

 

Q:

How do I vote?

 

A:

If you are a stockholder of record (that is, if your Company Shares are registered in your name with our transfer agent, Computershare Trust Company, N.A. (“Computershare”)), there are four ways to cause your Company Shares to be voted at the Special Meeting:

 

   

by visiting the Internet at the address on your proxy card and granting your proxy;

 

   

by calling toll-free (within the U.S. or Canada) at the phone number on your proxy card and granting your proxy;

 

   

by completing, dating, signing and returning the enclosed proxy card in the accompanying prepaid reply envelope; or

 

   

by voting virtually at the Special Meeting; Company Shares held directly in your name as a stockholder of record may be voted at the Special Meeting via the Special Meeting website. Company Shares held in “street name” may be voted at the Special Meeting via the Special Meeting website using the 16-digit control number included in your proxy materials. If you did not receive a 16-digit control number, you should follow the instructions from your bank, brokerage firm or other nominee, including any requirement to obtain a legal proxy.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the Merger Proposal and the Adjournment Proposal.

A control number, located on your proxy card, is designed to verify your identity and allow you to grant a proxy to vote your Company Shares, and to confirm that your voting instructions have been properly recorded when granting a proxy electronically over the Internet or by telephone. Please be aware that, although there is no charge for granting a proxy to vote your Company Shares, if you grant a proxy electronically over the Internet or by telephone, you may incur costs such as telephone and Internet access charges for which you will be responsible. Even if you plan to attend the Special Meeting, you are strongly encouraged to grant a proxy to vote your Company Shares.

If your Company Shares are held in “street name” through a bank, broker or other nominee, you should follow the directions provided by your bank, broker or other nominee regarding how to instruct your bank, broker or other nominee to vote your Company Shares. Without those instructions, your Company Shares will not be voted, which will have the same effect as voting “AGAINST” the Merger Proposal.

 

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Q:

What is the difference between holding Company Shares as a stockholder of record and as a beneficial owner?

 

A:

If your Company Shares are registered directly in your name with our transfer agent, Computershare, you are considered, with respect to those Company Shares, to be the “stockholder of record.” In this case, this proxy statement and your proxy card have been sent directly to you by or on behalf of Harpoon.

If your Company Shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of such Company Shares and are considered to hold them in “street name.” In that case, this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those Company Shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote your shares by following their instructions for voting. You are also invited to attend the Special Meeting and may vote via the Special Meeting website using the 16-digit control number included in your proxy materials. If you did not receive a 16-digit control number, you should follow the instructions from your bank, broker or other nominee, including any requirement to obtain a legal proxy.

 

Q:

Will my Company Shares held in “street name” or another form of record ownership be combined for voting purposes with Company Shares I hold as the stockholder of record?

 

A:

No. Because any Company Shares you may hold in “street name” will be deemed to be held of record by a different stockholder than any Company Shares you hold directly as the stockholder of record, any Company Shares held in “street name” will not be combined for voting purposes with the Company Shares you hold as the stockholder of record. Similarly, if you own Company Shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those Company Shares because they are held in a different form of record ownership. Company Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Company Shares held in an individual retirement account must be voted under the rules governing the account.

 

Q:

If I hold my Company Shares in “street name,” will my bank, broker or other nominee vote my Company Shares for me on the proposals to be considered at the Special Meeting?

 

A:

Not without your direction. Your bank, broker or other nominee will only be permitted to vote your Company Shares on any “non-routine” proposal if you instruct your bank, broker or other nominee on how to vote. Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your Company Shares on routine matters if you fail to instruct your bank, broker or other nominee on how to vote your Company Shares with respect to such matters. The proposals in this proxy statement are non-routine matters, and banks, brokers and other nominees therefore cannot vote on these proposals without your instructions. Therefore, it is important that you instruct your bank, broker or other nominee on how you wish to vote your Company Shares.

You should follow the procedures provided by your bank, broker or other nominee to instruct them, as applicable, to vote your Company Shares. Without such instructions, your Company Shares will not be voted at the Special Meeting. A failure to vote will have the same effect as if you voted “AGAINST” the Merger Proposal.

 

Q:

What happens if I do not vote?

 

A:

The required vote to approve the Merger Proposal is based on the total number of Company Shares issued and outstanding as of the close of business on the Record Date, not just the Company Shares that are voted at the Special Meeting. If you do not vote in person or by proxy, it will have the same effect as a vote “AGAINST” the Merger Proposal.

 

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Q:

May I change my vote after I have mailed my signed proxy card or otherwise submitted my vote by proxy?

 

A:

Yes. If you are a stockholder of record, you may change your vote or revoke your proxy by:

 

   

delivering a written notice of revocation of your proxy to our Corporate Secretary at Harpoon Therapeutics, Inc., Attention: Corporate Secretary, 611 Gateway Boulevard, Suite 400, South San Francisco, California 94080, prior to the Special Meeting;

 

   

signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same Company Shares and returning it to us by mail prior to the Special Meeting;

 

   

submitting a new proxy by telephone prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting;

 

   

submitting a new proxy by Internet prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting; or

 

   

attending the Special Meeting and voting thereat (simply attending the Special Meeting will not cause your proxy to be revoked).

Please note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to Harpoon or by sending a written notice of revocation to Harpoon, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by Harpoon before the Special Meeting.

Please note that if you hold your Company Shares in “street name,” and you have instructed a bank, broker or other nominee to vote your Company Shares, the above-described options for revoking your voting instructions do not apply, and instead you should contact your bank, broker or other nominee for instructions regarding how to change or revoke your vote.

 

Q:

What is a proxy?

 

A:

A “proxy” is your legal designation of another person to vote your Company Shares. This written document describing the matters to be considered and voted on at the Special Meeting is called a “proxy statement.” The document used to designate a proxy to vote your Company Shares is called a “proxy card.” The Board has designated each of Julie Eastland, President, Chief Executive Officer and Director, and James B. Bucher, Chief Legal Officer, with full power of substitution, as proxies for the Special Meeting.

 

Q:

If a Company Stockholder gives a proxy, how are the Company Shares voted?

 

A:

Regardless of the method you choose to grant a proxy to vote your Company Shares, the individuals named on the enclosed proxy card, or your proxies, will vote your Company Shares in the way that you indicate. When completing the Internet or telephone process or the proxy card, you may specify whether your Company Shares should be voted “FOR” or “AGAINST” or to abstain from voting on the specific items of business to come before the Special Meeting.

If you properly sign your proxy card but do not mark the boxes showing how your Company Shares should be voted on a matter, the Company Shares represented by your properly signed proxy will be voted “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

 

Q:

May I attend the Special Meeting and vote in person?

 

A:

All Company Stockholders as of the Record Date may attend and vote at the virtual Special Meeting by visiting www.virtualshareholdermeeting.com/HARP2024SM and by using the 16-digit control number included in their proxy materials. You will not be able to attend the Special Meeting physically in person.

 

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Stockholders of record: If you are a stockholder of record, in order to participate in the Special Meeting, you will need your 16-digit control number included on the proxy notice, proxy card or the voting instruction form previously distributed to you. If you are a stockholder of record, you may vote electronically during the Special Meeting by following the instructions available at www.virtualshareholdermeeting.com/HARP2024SM.

 

   

Stockholders holding shares in “street” name: If your shares are held in “street name” through a brokerage firm, bank, trust or other similar organization and you do not have a 16-digit control number, in order to participate in the Special Meeting, you must first obtain a legal proxy from your bank, broker or other nominee reflecting the number of Company Shares you held as of the record date, your name and email address. If you hold your Company Shares in “street name,” you must obtain the appropriate documents from your bank, broker or other nominee giving you the right to vote the shares at the Special Meeting.

Instructions on how to attend and participate in the Special Meeting via the webcast are posted at www.virtualshareholdermeeting.com/HARP2024SM.

You should ensure that you have a strong Internet connection and allow plenty of time to log in and ensure that you can hear streaming audio prior to the start of the Special Meeting. We will offer live technical support for all Company Stockholders attending the meeting. Technical support phone numbers will be available on the virtual-only meeting platform at www.virtualshareholdermeeting.com/HARP2024SM.

Even if you plan to attend the Special Meeting, we encourage you to complete, sign, date and return the enclosed proxy or grant a proxy electronically over the Internet or via telephone to ensure that your Company Shares will be represented at the Special Meeting. If you hold your Company Shares in “street name,” because you are not the stockholder of record, we encourage you to provide voting instructions to your bank, broker or other nominee.

 

Q:

What happens if I sell or otherwise transfer my Company Shares before consummation of the Merger?

 

A:

If you sell or transfer your Company Shares before consummation of the Merger, you will have transferred your right to receive the Merger Consideration in the Merger. In order to receive the Merger Consideration, you must hold your Company Shares through consummation of the Merger.

The Record Date for stockholders entitled to vote at the Special Meeting is earlier than the date the Merger is anticipated to be consummated. Accordingly, if you sell or transfer your Company Shares after the Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your Company Shares and each of you notifies Harpoon in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is consummated, to the person to whom you sell or transfer your Company Shares, but you will have retained your right to vote these Company Shares at the Special Meeting. Even if you sell or otherwise transfer your Company Shares after the Record Date, we encourage you to complete, date, sign and return the enclosed proxy card or grant a proxy via the Internet or telephone.

 

Q:

How will I receive the Merger Consideration to which I am entitled?

 

A:

If you hold your Company Shares in certificated form, you will receive a letter of transmittal shortly after the Merger is consummated instructing you how to surrender your stock certificates, to a paying agent to be designated by Merck in order to receive the Merger Consideration to which you are entitled. Please do not send in your stock certificates now. If you hold your Company Shares in book-entry form but not through

 

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  the Depository Trust Company (“DTC”), you will receive instructions regarding delivery of an “agent’s message” with respect to such book-entry shares. If your Company Shares are held in “street name” by your bank, broker or other nominee, you may receive instructions from your bank, broker or other nominee as to what action, if any, you need to take to effect the surrender of your “street name” Company Shares in exchange for the Merger Consideration.

 

Q:

Should I send in my stock certificate(s) or other evidence of ownership now?

 

A:

No. Please do not send in your stock certificates or other documents evidencing ownership of Company Shares now or with your proxy card.

 

Q:

I do not know where my stock certificate is. How will I get the Merger Consideration for my Company Shares?

 

A:

If the Merger is consummated, the transmittal materials you will receive after the consummation of the Merger will include the procedures that you must follow if you cannot locate your stock certificate. This will include an affidavit that you will need to sign attesting to the loss of your stock certificate. You may also be required to post a bond as indemnity against any potential loss.

 

Q:

When do you expect the Merger to be consummated?

 

A:

Consummation of the Merger is subject to various closing conditions, including, among others, adoption of the Merger Agreement by the holders of a majority of the Company Shares issued and outstanding and entitled to vote as of the Record Date, the expiration or termination of the required waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and certain other conditions.

We currently anticipate that the Merger will be consummated in the first half of 2024, assuming satisfaction or waiver of all of the conditions to the Merger. However, it is possible, including as a result of factors outside the control of Harpoon and Merck, that the Merger will be consummated at a later time or not at all.

 

Q:

What effects will the Merger have on Harpoon?

 

A:

The Company Shares are currently registered under the Exchange Act, and are listed on Nasdaq under the symbol “HARP.” As a result of the Merger, Harpoon will cease to be a publicly traded company and will become a wholly owned subsidiary of Merck. As soon as reasonably practicable following the consummation of the Merger, the Company Shares will cease trading on and be delisted from Nasdaq and will be deregistered under the Exchange Act, and Harpoon will no longer be required to file periodic reports with the SEC.

 

Q:

What happens if the Merger is not consummated?

 

A:

If the Merger Agreement is not adopted by the holders of a majority of the issued and outstanding Company Shares entitled to vote as of the Record Date or if the Merger is not consummated for any other reason, Company Stockholders will not receive any payment for their Company Shares pursuant to the Merger Agreement. Instead, Harpoon will remain a public company, the Company Shares will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC.

Under specified circumstances, we may be required to pay Merck a termination fee of $23,860,000 upon the termination of the Merger Agreement as described under “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 93 of this proxy statement.

 

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Q:

Do any directors or executive officers have interests in the Merger that may differ from those of Company Stockholders generally?

 

A:

In considering the recommendation of the Board with respect to the Merger Proposal, you should be aware that our directors and executive officers may have interests in the Merger that may be different from, or in addition to, your interests as a stockholder. The Board was aware of these potential interests and considered them, among other matters, in approving the Merger Agreement and the Merger and in recommending that the Merger Agreement be adopted by the Company Stockholders. For a description of the potential interests of our directors and executive officers in the Merger, see “The Merger—Interests of the Directors and Executive Officers of Harpoon in the Merger” beginning on page 56 of this proxy statement.

 

Q:

Who will count the votes obtained at the Special Meeting?

 

A:

The votes will be counted by the inspector of election appointed for the Special Meeting.

 

Q:

Who will solicit votes for and bear the cost and expenses of this proxy solicitation?

 

A:

We will bear the cost of the solicitation of proxies. We have retained MacKenzie Partners, Inc. (“MacKenzie”), a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $18,500 plus expenses. We will also indemnify the proxy solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of Company Shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.

 

Q:

Where can I find the voting results of the Special Meeting?

 

A:

We intend to publish final voting results in a Current Report on Form 8-K that we will file with the SEC within four business days of the Special Meeting. All reports that we file with the SEC are publicly available when filed. See “Where You Can Find More Information” beginning on page 106 of this proxy statement.

 

Q:

What are the material U.S. federal income tax consequences to Company Stockholders of the exchange of Company Shares for cash pursuant to the Merger?

 

A:

The exchange of the Company Shares for cash pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. A “U.S. Holder” (as defined below under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 65 of this proxy statement) generally will recognize gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received by such U.S. Holder pursuant to the Merger and such U.S. Holder’s adjusted tax basis in the Company Shares surrendered pursuant to the Merger. A “Non-U.S. Holder” (as defined below under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 65 of this proxy statement) generally will not be subject to U.S. federal income tax with respect to the exchange of the Company Shares for cash in the Merger unless such Non-U.S. Holder has certain connections to the United States, but may be subject to backup withholding unless the Non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding. You are urged to consult your tax advisors to determine the U.S. federal income tax consequences relating to the Merger in light of your own particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction or other tax laws. A more complete description of the material U.S. federal income tax consequences of the Merger is provided under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 65 of this proxy statement.

 

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Q:

What will holders of Company Series A Preferred Stock receive in the Merger?

 

A:

At the Effective Time, each share of Company Series A Preferred Stock (other than Excluded Shares (as defined below)) issued and outstanding immediately prior to the Effective Time will automatically be cancelled and the holder thereof will be entitled to receive an amount in respect of each such share determined in accordance with the terms of the Company Series A Preferred Stock, as amended, altered or modified and in effect as of immediately prior to the Effective Time, subject to applicable withholding taxes. The terms of the Company Series A Preferred Stock provide that, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or the occurrence of any event that is a Deemed Liquidation Event (as defined in the Certificate of Designation for the Company Series A Preferred Stock and which includes the Merger), the holders of shares of Company Series A Preferred Stock then outstanding will be entitled to be paid an amount per share of Company Series A Preferred Stock equal to the greater of: (1) the redemption price per share (which, as defined in the Certificate of Designation, is equal to the product of the stated value of $1,000 and a return factor equal to 3.5, plus accrued and unpaid dividends, whether or not declared) and (2) the amount per share such holder would have been entitled to receive had such holder exchanged the share of Company Series A Preferred Stock for a number of Company Shares equal to $1,000 plus all accrued but unpaid dividends, divided by $7.251. As of the date of this proxy statement and based on accrued dividends on the Company Series A Preferred Stock through March 11, 2024, the amount to be paid to the holders of the Company Series A Preferred Stock in the Merger is approximately $3,577.56 per share of Company Series A Preferred Stock or $89,438,889 in the aggregate. For additional information regarding the treatment of the Company Series A Preferred Stock, see “The Merger Agreement—Treatment of Company Series A Preferred Stock” beginning on page 72 of this proxy statement.

 

Q:

What will holders of Company warrants receive in the Merger?

 

A:

At the Effective Time, each warrant to purchase Company Shares (each, a “Company Warrant”) that is outstanding and unexercised immediately prior to the Effective Time will, in accordance with its terms, cease to represent a warrant exercisable for Company Shares and automatically will become a warrant exercisable for the consideration that the holder would have been entitled to receive if the Company Warrant had been exercised immediately prior to the Effective Time. For additional information regarding the treatment of Company Warrants, see “The Merger Agreement—Treatment of Company Warrants” beginning on page 73 of this proxy statement.

 

Q:

What will the holders of Harpoon equity awards receive in the Merger?

 

A:

Each outstanding and unexercised Harpoon stock option will, to the extent unvested, become fully vested and exercisable immediately prior to, and contingent upon, the Effective Time. At the Effective Time, each Harpoon stock option that is outstanding and unexercised immediately prior to the Effective Time and that has a per share exercise price that is less than the Merger Consideration (each, an “In the Money Option”) will be cancelled and, in exchange therefor, each former holder thereof will be entitled to receive a payment in cash (without interest and subject to any applicable withholding or other taxes required by applicable law) equal to the product of (1) the total number of Company Shares subject to such In the Money Option immediately prior to the Effective Time and (2) the excess, if any, of the Merger Consideration over the per share exercise price payable for such In the Money Option (the “Option Consideration”). At the Effective Time, each Harpoon stock option other than an In the Money Option that is then outstanding and unexercised will be cancelled with no consideration payable in respect thereof.

At the Effective Time, each Harpoon restricted stock unit award (each, a “Harpoon RSU”) that is outstanding immediately prior to the Effective Time will be cancelled and converted automatically into the right to receive a payment in cash (without interest and subject to any applicable withholding or other taxes

 

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required by applicable law), equal to the product of (1) the Merger Consideration multiplied by (2) the total number of Company Shares subject to such Harpoon RSU immediately prior to the Effective Time, with the number of Company Shares subject to any such Harpoon RSU that vests based on the achievement of performance goals determined in accordance with the applicable award agreement (the “RSU Consideration”).

For additional information regarding the treatment of Harpoon equity awards, see “The Merger Agreement—Treatment of Equity Awards and the ESPP” beginning on page 72 of this proxy statement.

 

Q:

What will happen to the Harpoon 2019 Employee Stock Purchase Plan?

 

A:

Under the Merger Agreement, Harpoon will take all actions necessary to ensure that (1) no new participants are permitted to participate in the Harpoon Therapeutics, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”) and participants may not increase their payroll deductions or purchase elections and (2) except for the offering or purchase period under the ESPP in effect on January 7, 2024 (the “Final Offering Period”), no offering or purchase period will be authorized, continued, or commenced following January 7, 2024. If the Effective Time occurs during the Final Offering Period, the Final Offering Period will terminate no later than the date that is five days prior to the Closing Date, and Harpoon will cause the exercise date applicable to the Final Offering Period to accelerate and occur on such termination date with respect to any then outstanding purchase rights. All amounts allocated to each participant’s account under the ESPP at the end of the Final Offering Period will be used to purchase whole Company Shares under the terms of the ESPP for such offering period, which Company Shares will be cancelled at the Effective Time in exchange for the right to receive the Merger Consideration and Harpoon will return to each participant the funds, if any, that remain in such participant’s account after such purchase.

For additional information regarding the ESPP, see “The Merger Agreement—Treatment of Equity Awards and the ESPP” beginning on page 72 of this proxy statement.

 

Q:

Are holders of Company Shares and shares of Company Series A Preferred Stock entitled to appraisal rights in connection with the Merger under the DGCL?

 

A:

Yes. As a holder of record or beneficial owner of Company Shares or shares of Company Series A Preferred Stock, you are entitled to exercise appraisal rights under the DGCL in connection with the Merger if you take certain actions and meet certain conditions. Under the DGCL, holders and beneficial owners of Company Shares or shares of Company Series A Preferred Stock who do not vote for the adoption of the Merger Agreement have the right to seek appraisal of the fair value of their Company Shares or shares of Company Series A Preferred Stock, as applicable, as determined by the Delaware Court of Chancery if the Merger is consummated. Appraisal rights are only available if the holder of the Company Shares or shares of Company Series A Preferred Stock comply fully with all applicable requirements of Section 262 of the DGCL. Any appraisal amount determined by the court could be more than, the same as, or less than the value of the consideration that such holder of Company Shares or shares of Company Series A Preferred Stock may receive in the Merger. Any stockholder or beneficial owner intending to exercise appraisal rights must, among other things, submit a written demand for appraisal to Harpoon before the vote on the adoption of the Merger Agreement is taken and must not vote or otherwise submit a proxy to vote in favor of adoption of the Merger Agreement. Failure to follow exactly the procedures specified under Section 262 of the DGCL will result in the loss of appraisal rights. Because of the complexity of the DGCL relating to appraisal rights, if you are considering exercising your appraisal rights we encourage you to seek the advice of your own legal counsel. See “The Merger—Appraisal Rights” beginning on page 61 of this proxy statement.

 

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Q:

What should I do if I receive more than one set of voting materials?

 

A:

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if your Company Shares are held in more than one brokerage account or are registered differently, you will receive more than one proxy card or voting instruction card. Please complete, date, sign and return (or grant a proxy to vote via the Internet or telephone with respect to) each proxy card and voting instruction card that you receive to ensure that all of your Company Shares are voted.

 

Q:

What is householding and how does it affect me?

 

A:

The SEC permits us to send a single set of proxy materials to any household at which two or more stockholders reside, unless contrary instructions have been received, but only if we provide advance notice and follow certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. Certain brokerage firms may have instituted householding for beneficial owners of Company Shares held through brokerage firms. If your family has multiple accounts holding Company Shares, you may have already received householding notification from your broker. Please contact your broker directly if you have any questions or require additional copies of this proxy statement. The broker will arrange for delivery of a separate copy of this proxy statement promptly upon your written or oral request. You may decide at any time to revoke your decision to household, and thereby receive multiple copies.

 

Q:

Who can help answer my questions?

 

A:

If you have any more questions concerning the Merger, the Special Meeting or this proxy statement, would like additional copies of this proxy statement or enclosed proxy card, or require assistance in submitting your proxy or voting your Company Shares, please contact our proxy solicitor at the contact information provided below:

 

LOGO

1407 Broadway, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free (800) 322-2885

If your bank, broker or other nominee holds your Company Shares, you should also call your bank, broker or other nominee for additional information.

 

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SUMMARY

This summary highlights selected information contained in this proxy statement, including with respect to the Merger and the Merger Agreement. This summary may not contain all of the information that is important to you. To understand the Merger more fully and for a more complete description of the legal terms of the Merger, you should read carefully this entire proxy statement, the annexes, including the Merger Agreement, and the documents we incorporate by reference into this proxy statement. You may obtain the documents and information incorporated by reference into this proxy statement without charge by following the instructions under “Where You Can Find More Information” beginning on page 106 of this proxy statement. The Merger Agreement is attached as Annex A to this proxy statement and incorporated herein by reference.

The Companies (page 28)

Harpoon Therapeutics, Inc.

Harpoon is a Delaware corporation with its principal executive offices located at 611 Gateway Boulevard, South San Francisco, California 94080, telephone number (650) 443-7400. Harpoon is a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases. Using its proprietary Tri-specific T cell Activating Construct (TriTAC®) platform, Harpoon is developing a pipeline of novel TriTACs initially focused on the treatment of certain types of solid tumors and hematologic malignancies. Harpoon also has developed a proprietary ProTriTAC platform, which applies a prodrug concept to its TriTAC platform to create a therapeutic T-cell engager that is designed to remain inactive until it reaches the tumor. Harpoon’s third proprietary technology platform, extended release TriTAC-XR, is designed to mitigate cytokine release syndrome. Harpoon’s lead candidate, HPN328, is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand that is expressed at high levels in small cell lung cancer (SCLC) and neuroendocrine tumors. Additional pipeline candidates include HPN217 targeting B-cell maturation antigen (BCMA), currently in Phase 1 clinical development for the treatment of patients with relapsed/refractory multiple myeloma, and several preclinical stage candidates, including HPN601, a conditionally activated targeting epithelial cell adhesion molecule (EpCAM) for the treatment of certain patients with EpCAM expressing tumors. The Company Shares are listed on Nasdaq under the symbol “HARP.” See “The Companies—Harpoon Therapeutics, Inc.” beginning on page 28 of this proxy statement.

Additional information about Harpoon is contained in certain of its public filings that are incorporated by reference into this proxy statement. See “Where You Can Find More Information” beginning on page 106 of this proxy statement.

Merck Sharp & Dohme LLC

Merck is a wholly owned subsidiary of Merck & Co., Inc., a New Jersey corporation (“Merck Parent”) with principal executive offices located at 126 East Lincoln Avenue, Rahway, NJ 07065, telephone number (908) 423-1000. Merck Parent is a global health care company that delivers innovative health solutions through its prescription medicines, including biologic therapies, vaccines and animal health products. The common stock of Merck Parent is listed on the New York Stock Exchange under the symbol “MRK.” See “The Companies—Merck Sharp & Dohme LLC” beginning on page 28 of this proxy statement.

Hawaii Merger Sub, Inc.

Merger Sub is a Delaware corporation and a direct wholly owned subsidiary of Merck, with a registered office located at 1209 Orange Street, Wilmington, DE 19801. Merger Sub was formed solely for the purpose of

 

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effecting the Merger and the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will cease to exist. See “The Companies—Hawaii Merger Sub, Inc.” beginning on page 28 of this proxy statement.

The Special Meeting (page 29)

This proxy statement is being furnished to Company Stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held virtually on March 8, 2024, at 8:30 a.m. Pacific Time, or at any adjournment or postponement thereof. Company Stockholders will be able to virtually attend and vote at the Special Meeting by visiting www.virtualshareholdermeeting.com/HARP2024SM and by using the 16-digit control number included in their proxy materials. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” shall mean virtually present at the Special Meeting.

Company Shares held directly in your name as a stockholder of record may be voted at the Special Meeting via the Special Meeting website. Shares held in “street name” may be voted at the Special Meeting via the Special Meeting website using the 16-digit control number included in your proxy materials. If you did not receive a 16-digit control number, you should follow the instructions from your bank, broker or other nominee, including any requirement to obtain a legal proxy.

At the Special Meeting, Company Stockholders of record as of the Record Date will be asked to vote on the Merger Proposal and the Adjournment Proposal, each as further described below.

The Merger Proposal (page 97)

Company Stockholders will be asked to consider and vote upon the proposal to adopt the Merger Agreement. The Merger Agreement provides, among other things, that, upon the terms and subject to the satisfaction or, to the extent permitted by applicable law, waiver of the conditions set forth therein, Merger Sub will be merged with and into Harpoon, with Harpoon surviving the Merger as a wholly owned subsidiary of Merck. At the Effective Time and as a result of the Merger, each Company Share issued and outstanding immediately prior to the Effective Time (other than Company Shares held in the treasury of Harpoon or owned by Merck or Merger Sub or any direct or indirect wholly owned subsidiary of Merck or Harpoon immediately prior to the Effective Time and shares held by stockholders who have perfected their statutory rights of appraisal under Section 262 of the DGCL (collectively, the “Excluded Shares”)) will be cancelled and converted automatically into the right to receive $23.00 per shares in cash, without interest and less any applicable withholding tax.

Following the Merger, the Company Shares will no longer be publicly listed and traded on Nasdaq, the Company Shares will be deregistered under the Exchange Act, Harpoon will no longer file periodic reports with the SEC and existing Company Stockholders will cease to have any ownership interest in Harpoon.

Record Date; Shares Entitled to Vote; Quorum (page 29)

You are entitled to receive notice and to vote at the Special Meeting if you owned Company Shares as of the close of business on February 6, 2024, which is the Record Date for the Special Meeting. As of the Record Date, there were 21,397,205 Company Shares issued and outstanding and entitled to vote at the Special Meeting. A quorum of Company Stockholders is necessary to transact business at the Special Meeting. The presence at the Special Meeting, in person or by proxy, of the holders of a majority of the voting power of our issued and outstanding Company Shares entitled to vote at the Special Meeting, will constitute a quorum at the Special Meeting and permit Harpoon to transact business at the Special Meeting.

 

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Vote Required (page 30)

Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting.

Approval of the Merger Proposal requires the holders of a majority of the Company Shares issued and outstanding as of the Record Date to vote “FOR” the Merger Proposal. A failure to vote your Company Shares or an abstention from voting for the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares on the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal.

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of voting power of the Company Shares present in person or represented by proxy at the Special Meeting. An abstention from voting for the Adjournment Proposal will have the same effect as a vote “AGAINST” the Adjournment Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares on the Adjournment Proposal will have no effect on the Adjournment Proposal.

Support Agreements (page 95)

In connection with the execution of the Merger Agreement, certain of the directors and executive officers of Harpoon (and certain of their affiliates) (collectively, the “Specified Stockholders”) entered into support agreements with Merck and Merger Sub (each, a “Support Agreement”). Subject to its terms, the Support Agreement obligates the Specified Stockholder to, among other things, vote (or cause to be voted) all Company Shares beneficially owned by such Specified Stockholder in favor of the adoption of the Merger Agreement at the Special Meeting. The Support Agreement will terminate automatically, without any notice or other action by any person, upon the earliest of (1) the mutual written consent of Merck and the Specified Stockholder, (2) the Effective Time, and (3) the termination of the Merger Agreement in accordance with its terms. As of the close of business on the Record Date, the Specified Stockholders beneficially owned in the aggregate approximately 1,895,937 Company Shares, representing approximately 8.86% of the total voting power of the outstanding Company Shares. A copy of the form of Support Agreement is included as Annex B to this proxy statement.

Recommendation of the Harpoon Board of Directors and Reasons for the Merger (page 44)

The Board recommends that the Company Stockholders vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal. In its determinations and in reaching its recommendations, the Board held a number of meetings, received the recommendation of a committee of the Board, referred to as the Transactions Committee, consulted with Harpoon senior management and its outside legal and financial advisors, and considered a number of factors and a substantial amount of information. For a description of the factors considered by the Board in reaching this decision, including potentially negative factors against which the anticipated benefits of the Merger were weighed, and additional information on the recommendations of the Board and the Transactions Committee, see the section of this proxy statement titled “The Merger—Recommendation of the Harpoon Board of Directors and Reasons for the Merger” beginning on page 44 of this proxy statement.

Opinion of Centerview Partners LLC (page 48)

Harpoon retained Centerview Partners LLC (“Centerview”) as financial advisor in connection with the Merger. In connection with this engagement, the Board requested that Centerview evaluate the fairness, from a financial point of view, to the holders of Company Shares (other than the Excluded Shares and any Company

 

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Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. On January 7, 2024, Centerview rendered to the Board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 7, 2024 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated January 7, 2024, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex C and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the members of the Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Merger and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Centerview’s opinion did not address any other term or aspect of the Merger Agreement or the Merger and does not constitute a recommendation to any Company Stockholder or any other person as to how such Company Stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Merger or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

Certain Effects of the Merger on Harpoon (page 36)

Upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will be merged with and into Harpoon, with Harpoon surviving as a wholly owned subsidiary of Merck. Throughout this proxy statement, we use the term “Surviving Corporation” to refer to Harpoon as the surviving corporation following the Merger. If the Merger is consummated, you will not own any shares of the capital stock of the Surviving Corporation. The Effective Time will occur, if it occurs, upon the filing of a certificate of merger with the Secretary of State of the State of Delaware (or at such later date and time as we and Merck may agree in writing and specify in such certificate of merger). Throughout this proxy statement, we use the term “Closing Date” to refer to the date on which the closing of the Merger occurs.

Effect on Harpoon if the Merger Is Not Consummated (page 36)

If the Merger Agreement is not adopted by the holders of a majority of the issued and outstanding Company Shares entitled to vote as of the Record Date or if the Merger is not consummated for any other reason, Company Stockholders will not receive any payment for their Company Shares pursuant to the Merger Agreement. Instead, Harpoon will remain a public company, the Company Shares will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC. Under specified circumstances, upon termination of the Merger Agreement, Harpoon may be required to pay Merck a termination fee, as described under “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 93 of this proxy statement.

Furthermore, if the Merger is not consummated, depending on the circumstances that caused the Merger not to be consummated, the price of the Company Shares may decline significantly. If that were to occur, it is

 

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uncertain when, if ever, the price of the Company Shares would return to the price at which the Company Shares trade as of the date of this proxy statement.

Merger Consideration (page 36)

At the Effective Time, each Company Share and share of Company Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares) will be cancelled and cease to exist and will be converted automatically into the right to receive (a) in the case of the Company Shares, $23.00 per share in cash, without interest and subject to applicable withholding taxes and (b) in the case of the Company Series A Preferred Stock, an amount in respect of each such share determined in accordance with the terms of the Company Series A Preferred Stock, as amended, altered or modified and in effect as of immediately prior to the Effective Time, subject to applicable withholding taxes. The terms of the Company Series A Preferred Stock provide that, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or the occurrence of any event that is a Deemed Liquidation Event (as defined in the Certificate of Designation for the Company Series A Preferred Stock and which includes the Merger), the holders of shares of Company Series A Preferred Stock then outstanding will be entitled to be paid an amount per share of Company Series A Preferred Stock equal to the greater of: (1) the redemption price per share (which, as defined in the Certificate of Designation, is equal to the product of the stated value of $1,000 and a return factor equal to 3.5, plus accrued and unpaid dividends, whether or not declared) and (2) the amount per share such holder would have been entitled to receive had such holder exchanged the share of Company Series A Preferred Stock for a number of Company Shares equal to $1,000 plus all accrued but unpaid dividends, divided by $7.251. As of the date of this proxy statement and based on accrued dividends on the Company Series A Preferred Stock through March 11, 2024, the amount to be paid to the holders of the Company Series A Preferred Stock in the Merger is approximately $3,577.56 per share of Company Series A Preferred Stock or $89,438,889 in the aggregate.

After the Merger is consummated, holders of Company Shares and shares of Series A Preferred Stock will no longer have any rights as a Harpoon stockholder as a result of the Merger, nor will they be entitled to receive any shares in Merck or the Surviving Corporation.

Treatment of Company Warrants (page 73)

At the Effective Time, each Company Warrant that is outstanding and unexercised immediately prior to the Effective Time will, in accordance with its terms, cease to represent a warrant exercisable for Company Shares and automatically will become a warrant exercisable for the consideration that the holder would have been entitled to receive if the Company Warrant had been exercised immediately prior to the Effective Time.

Treatment of Equity Awards and the ESPP (page 72)

Each outstanding and unexercised Harpoon stock option will, to the extent unvested, become fully vested and exercisable immediately prior to, and contingent upon, the Effective Time. At the Effective Time, (i) each Harpoon stock option that is outstanding and unexercised immediately prior to the Effective Time and that has a per share exercise price that is less than the Merger Consideration (each, an “In the Money Option”) will be cancelled and, in exchange therefor, each former holder thereof will be entitled to receive a payment in cash (without interest and subject to any applicable withholding or other taxes required by applicable law) equal to the product of (1) the total number of Company Shares subject to such In the Money Option immediately prior to the Effective Time and (2) the excess, if any, of the Merger Consideration over the per share exercise price payable for such In the Money Option (the “Option Consideration”) and (ii) each Harpoon stock option other than an In the Money Option that is then outstanding and unexercised will be cancelled with no consideration payable in respect thereof.

 

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At the Effective Time, each Harpoon restricted stock unit award (each, a “Harpoon RSU”) that is outstanding immediately prior to the Effective Time will be cancelled and converted automatically into the right to receive a payment in cash (without interest and subject to any applicable withholding or other taxes required by applicable law), equal to the product of (i) the Merger Consideration multiplied by (ii) the total number of Company Shares subject to such Harpoon RSU immediately prior to the Effective Time, with the number of Company Shares subject to any such Harpoon RSU that vests based on the achievement of performance goals determined in accordance with the applicable award agreement (the “RSU Consideration”).

Under the Merger Agreement, Harpoon will take all actions necessary to ensure that (1) no new participants are permitted to participate in the Harpoon Therapeutics, Inc. 2019 Employee Stock Purchase Plan (the “ESPP”) and participants may not increase their payroll deductions or purchase elections and (2) except for the offering or purchase period under the ESPP in effect on January 7, 2024 (the “Final Offering Period”), no offering or purchase period will be authorized, continued, or commenced following January 7, 2024. If the Effective Time occurs during the Final Offering Period, the Final Offering Period will terminate no later than the date that is five days prior to the Closing Date, and Harpoon will cause the exercise date applicable to the Final Offering Period to accelerate and occur on such termination date with respect to any then outstanding purchase rights. All amounts allocated to each participant’s account under the ESPP at the end of the Final Offering Period will be used to purchase whole Company Shares under the terms of the ESPP for such offering period, which Company Shares will be cancelled at the Effective Time in exchange for the right to receive the Merger Consideration and the Company will return to each participant the funds, if any, that remain in such participant’s account after such purchase.

Interests of the Directors and Executive Officers of Harpoon in the Merger (page 56)

Certain of Harpoon’s directors and executive officers may have financial interests in the Merger that are different from, or in addition to, the interests of stockholders of Harpoon generally. The Board was aware of these potential interests and considered them, among other matters, in evaluating and negotiating the Merger Agreement and in reaching its decision to approve the Merger Agreement and the Merger, and to recommend that the Company Stockholders adopt the Merger Agreement. These interests include the following, among others:

 

   

The Harpoon stock options and Harpoon RSUs held by Harpoon’s directors and executive officers will accelerate and vest and be treated as detailed above;

 

   

Transaction bonuses have been granted to certain executive officers which are payable in the event the Merger is consummated;

 

   

Pursuant to employment arrangements, Harpoon’s executive officers are eligible for severance payments and benefits upon their qualifying termination of employment within a certain period following the Merger;

 

   

Certain retention arrangements granted to Harpoon’s executive officers in November 2023 will vest and be paid upon the consummation of the Merger; and

 

   

Harpoon’s directors and executive officers are entitled to continued indemnification following the Merger.

The interests of Harpoon’s directors and executive officers are described in more detail in the section titled “The Merger—Interests of the Directors and Executive Officers of Harpoon in the Merger” beginning on page 56 of this proxy statement.

 

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Financing of the Merger (page 60)

The consummation of the Merger is not conditioned upon receipt of financing by Merck. Merck has represented in the Merger Agreement that it has access to, and will cause Merger Sub to have, at the closing of the Merger (the “Closing”) and the Effective Time, sufficient funds for the consummation of the Merger and other transactions contemplated by the Merger Agreement, including payment in cash of the aggregate consideration payable under the Merger Agreement, and to pay all related fees and expenses required to be paid by Merck and Merger Sub pursuant to the terms of the Merger Agreement.

Appraisal Rights (page 61)

If the Merger is consummated, stockholders who do not wish to accept the applicable merger consideration are entitled to seek appraisal of their Company Shares or shares of Company Series A Preferred Stock under Section 262 of the DGCL and, if all procedures described in Section 262 are strictly complied with, to receive payment in cash for the fair value of their Company Shares or shares of Company Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of Company Shares or shares of Series A Preferred Stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the consideration that you are otherwise entitled to receive under the Merger Agreement. These rights are known as “appraisal rights”. This proxy statement serves as a notice of such appraisal rights pursuant to Section 262.

Persons who exercise appraisal rights under Section 262 of the DGCL will not receive the consideration that they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their Company Shares or shares of Company Series A Preferred Stock, as applicable, following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal should recognize that the fair value of their Company Shares or shares of Company Series A Preferred Stock determined under Section 262 could be more than, the same as or less than the consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 is required. Failure to comply strictly with all of the procedures set forth in Section 262 may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A holder of record of Company Shares or shares of Company Series A Preferred Stock and a beneficial owner who:

 

   

continuously holds or beneficially owns, as applicable, such shares through the Effective Time;

 

   

has not consented to the Merger in writing or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights;

 

   

strictly complies with the procedures under Section 262 of the DGCL;

 

   

does not thereafter withdraw his, her or its demand for appraisal of such shares; and

 

   

in the case of a beneficial owner, a person who (1) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (2) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be, and (3) provides an address at which such beneficial owner consents to receive notices given by Harpoon and to be set forth on the Chancery List (as defined in the section entitled “The MergerAppraisal Rights” beginning on page 61 of this proxy statement);

 

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will be entitled to receive the fair value of his, her or its Company Shares or shares of Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value.

A copy of Section 262 of the DGCL is attached to this proxy statement as Annex D. The foregoing summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. For more information, please see the section entitled “The MergerAppraisal Rights” beginning on page 61 of this proxy statement and Annex D.

Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares (page 65)

The receipt of cash for Company Shares pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. The receipt of cash by a U.S. Holder (as defined below under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares”) in exchange for such U.S. Holder’s Company Shares in the Merger generally will result in such U.S. Holder’s recognition of gain or loss in an amount equal to the difference, if any, between the cash such U.S. Holder receives in the Merger and such U.S. Holder’s adjusted tax basis in the Company Shares surrendered in the Merger. A Non-U.S. Holder (as defined below under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 65 of this proxy statement) generally will not be subject to U.S. federal income tax with respect to the exchange of Company Shares for cash in the Merger unless such Non-U.S. Holder has certain connections to the United States, but may be subject to backup withholding unless the Non-U.S. Holder complies with certain certification procedures or otherwise establishes a valid exemption from backup withholding. For more information, stockholders should refer to the discussion under “The Merger—Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares” beginning on page 65 of this proxy statement and consult their tax advisors concerning the U.S. federal income tax consequences relating to the Merger in light of their particular circumstances and any consequences arising under the laws of any state, local or non-U.S. taxing jurisdiction or other tax laws.

Regulatory Approvals Required for the Merger (page 68)

Under the Merger Agreement, the Merger cannot be consummated until the applicable waiting period (and any extension thereof) under the HSR Act has expired or been terminated. Harpoon and Merck filed their respective HSR Act notifications on January 22, 2024. We currently do not expect that any other clearance, approval or consent would be required under any other applicable antitrust law in connection with the Merger.

Litigation Related to the Merger (page 69)

In connection with the Merger, one complaint has been filed against Harpoon and its directors, and four additional demands have been made seeking additional disclosures in the proxy statement by purported Harpoon stockholders. Harpoon intends to vigorously defend against the allegations, claims and demands asserted. It is possible that Harpoon will receive additional complaints or demand letters relating to the Merger in the future. In the event that Harpoon subsequently receives additional complaints or demand letters related to the Merger, Harpoon does not intend to update this description of complaints and demand letters relating to the Merger unless those new complaints or letters contain material differences from those received to date. For a more detailed description of litigation related to the Merger, see the section titled “The Merger—Litigation Related to the Merger.”

 

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No Solicitation of Acquisition Proposals (page 81)

During the period from January 7, 2024 until the earlier of the Effective Time and the valid termination of the Merger Agreement (the “Pre-Closing Period”), Harpoon may not, and may not authorize or knowingly permit its representatives to, directly or indirectly (other than with respect to Merck or Merger Sub):

 

   

solicit, initiate, propose or take any action to knowingly encourage any inquiries or the submission of any proposal or offer that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal (as described under “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change” beginning on page 81 of this proxy statement) or otherwise knowingly facilitate any effort or attempt to make an Acquisition Proposal;

 

   

except as otherwise expressly permitted by the Merger Agreement, enter into, continue or otherwise participate in any discussions or negotiations regarding, furnish to any third party any information or data relating to, afford access to the business, personnel, properties, assets, books or records of Harpoon in connection with, or otherwise cooperate with any person with respect to, any Acquisition Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal (except to provide notice as to the existence of these provisions or solely to the extent necessary to clarify the terms and conditions of any Acquisition Proposal);

 

   

grant any waiver, amendment or release of or under, or fail to enforce, any confidentiality, standstill or similar agreement (or any confidentiality, standstill or similar provision of any other contract) with respect to any potential Acquisition Proposal, unless the Board determines in good faith, after consultation with Harpoon’s outside legal counsel, that the failure to take such action would be inconsistent with the fiduciary duties of the Board under applicable law;

 

   

enter into any letter of intent, contract, commitment or agreement in principle with respect to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement (as described under “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change” beginning on page 81 of this proxy statement) entered into in accordance with the terms of the Merger Agreement) or enter into any contract or commitment requiring Harpoon to abandon, terminate or fail to consummate the transactions contemplated by the Merger Agreement or that would otherwise materially impede the ability of Merck and Merger Sub to consummate the Merger;

 

   

take any action or exempt any third party from the restriction on “business combinations” or any similar provision contained in applicable takeover provisions or Harpoon’s organizational documents or grant a waiver under Section 203 of the DGCL; or

 

   

resolve, propose or agree to do any of the foregoing.

However, if before obtaining approval of the Merger Proposal by the Company Stockholders, Harpoon or any of its representatives has received an unsolicited bona fide written Acquisition Proposal made by a third party after January 7, 2024 and prior to obtaining such approval, in circumstances not involving a breach of Harpoon’s obligations under the non-solicit provisions of the Merger Agreement, and the Board determines in good faith (after consultation with outside legal counsel and a financial advisor of nationally recognized reputation) that such Acquisition Proposal constitutes, or could reasonably be expected to lead to, a Superior Proposal (as described under “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change” beginning on page 81 of this proxy statement) and that the failure to take such action would be inconsistent with its fiduciary duties under applicable law, then Harpoon may, at any time prior to obtaining such approval, subject to certain requirements:

 

   

enter into an Acceptable Confidentiality Agreement with the third party making such an Acquisition Proposal and thereafter;

 

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furnish information and data with respect to Harpoon and afford access to the business, personnel, properties, assets, books or records of Harpoon, in each case, pursuant to such Acceptable Confidentiality Agreement; and

 

   

enter into, maintain and participate in discussions or negotiations with, the third party making the Acquisition Proposal and its representatives.

No Change in Recommendation (page 81)

Subject to certain exceptions described below, the Board may not make a change in its recommendation to Company Stockholders to vote in favor of the Merger Proposal as set forth in this proxy statement. Prior to the approval of the Merger Proposal by the Company Stockholders:

 

   

The Board may make a change in recommendation in connection with an Intervening Event (as described under “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change” beginning on page 81 of this proxy statement) if (1) the Board determines in good faith, after consultation with outside legal counsel, that the failure to make a change in recommendation would be inconsistent with its fiduciary duties under applicable law and (2) certain other conditions are met, as described in the section of this proxy statement titled “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change”.

 

   

The Board may make a change in recommendation with respect to an Acquisition Proposal or terminate the Merger Agreement to enter into a definitive agreement with a third party, in each case, if (1) such Acquisition Proposal did not result from a breach of Harpoon’s obligations under the non-solicit provisions of the Merger Agreement, (2) the Board determines that such Acquisition Proposal is a Superior Proposal, (3) the Board determines in good faith, after consultation with outside legal counsel, that the failure take such action would be inconsistent with its fiduciary duties under applicable law, and (4) certain other conditions are met, as described in the section of this proxy statement titled “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change”.

For a further discussion of the limitations on changing the Board Recommendation, approving or recommending a Superior Proposal, or terminating the Merger Agreement to enter into a definitive agreement for a Superior Proposal, see “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change” beginning on page 81 of this proxy statement.

Conditions to the Merger (page 90)

The respective obligations of Harpoon, Merck and Merger Sub to consummate the Merger are subject to the satisfaction (or, to the extent permitted by applicable law, waiver by Harpoon and Merck) on or prior to the Closing Date of the following conditions:

 

   

Company Stockholder approval of the Merger Proposal shall have been obtained;

 

   

no governmental restraints enjoining, making illegal or otherwise prohibiting the consummation of the Merger shall be in effect; and

 

   

any waiting period (including any extensions thereof) applicable to the consummation of the Merger under the HSR Act shall have been terminated or shall have expired.

 

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The obligations of Merck and Merger Sub to consummate the Merger are subject to the satisfaction (or, to the extent permitted by applicable law, waiver by Merck) on or prior to the Closing Date of the following conditions:

 

   

the representations and warranties made by Harpoon in the Merger Agreement with respect to the occurrence of a Company Material Adverse Effect (as described in the section of this proxy statement titled “The Merger Agreement—Representations and Warranties” beginning on page 74 of this proxy statement) being true and correct as of January 7, 2024 and as of the Closing Date as though made as of such date;

 

   

except for any inaccuracies that are, individually or in the aggregate, de minimis in the context of the transactions contemplated by the Merger Agreement, certain specified representations and warranties made by Harpoon in the Merger Agreement with respect to the capitalization of Harpoon being true and correct as of January 7, 2024 and as of the Closing Date as though made as of such date;

 

   

the representations and warranties made by Harpoon in the Merger Agreement with respect to corporate organization, authorization, no conflict, broker’s or finder’s fees, opinion of financial advisor and takeover provisions being true and correct in all material respects as of January 7, 2024 and as of the Closing Date as though made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

   

except where any failures of any such representations and warranties to be true and correct would not have, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the other representations and warranties made by Harpoon in the Merger Agreement being true and correct (without giving effect to any qualification as to “materiality” or Company Material Adverse Effect qualifiers set forth therein) as of January 7, 2024 and as of the Closing Date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, at and as of such earlier date);

 

   

Harpoon shall have performed or complied in all material respects with all of the obligations, agreements and covenants required to be performed or complied with by it under the Merger Agreement prior to the Closing;

 

   

since January 7, 2024, there shall have not occurred any event, effect, condition, change, occurrence, development, circumstance or state of facts that has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

 

   

the delivery by Harpoon of a certificate signed by the Chief Executive Officer or the Chief Financial Officer of Harpoon, certifying that the conditions described in the preceding six bullets have been satisfied; and

 

   

there shall have not been instituted, pending or threatened in writing any proceeding by any governmental authority seeking to (1) prevent, prohibit or make illegal the consummation of the Merger; (2) prohibit or materially limit Merck’s ability to own, control, direct, manage or operate Harpoon or (3) otherwise impose any Non-Required Remedy (as defined under “The Merger Agreement—Other Covenants and Agreements—Efforts to Consummate the Merger” beginning on page 86 of this proxy statement).

The obligations of Harpoon to consummate the Merger are subject to the satisfaction (or, to the extent permitted by applicable law, waiver by Harpoon) on or prior to the Closing Date of the following conditions:

 

   

the representations and warranties of Merck or Merger Sub made in the Merger Agreement with respect to corporate organization, authorization, no conflict, and broker’s or finder’s fees being true and correct in all material respects as of January 7, 2024 and as of the Closing Date as though made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

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the other representations and warranties of Merck or Merger Sub made in the Merger Agreement being true and correct (without giving effect to any qualification as to “materiality” qualifiers set forth therein) as of January 7, 2024 and as of the Closing Date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, at and as of such earlier date), except, in each case, where the failure to be so true and correct would not, and would not reasonably be expected to, have, individually or in the aggregate, a material adverse effect on the ability of Merck or Merger Sub to consummate the transactions contemplated by the Merger Agreement on or before the Outside Date (as defined below);

 

   

Merck shall have performed or complied in all material respects with all of the obligations, agreements and covenants required to be performed or complied with by it under the Merger Agreement prior to the Closing; and

 

   

the delivery by Merck of a certificate signed on behalf of Merck by an authorized representative certifying that the conditions described in the preceding three bullets have been satisfied.

Termination (page 91)

The Merger Agreement may be terminated and the transactions contemplated thereby may be abandoned at any time prior to the Effective Time as follows:

 

   

by mutual written agreement of Harpoon and Merck;

 

   

by either Harpoon or Merck, if:

 

   

the Effective Time shall not have occurred on or before July 8, 2024 (the “Outside Date”); however, if at the time of the original Outside Date, all of the conditions to Closing have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the Closing, but such conditions are then capable of being satisfied) except for the conditions related to the receipt of required antitrust approval, then either Merck or Harpoon, upon written notice to the other prior to the original Outside Date, shall be entitled to extend the Outside Date to October 7, 2024;

 

   

any governmental restraint enjoining, making illegal or otherwise prohibiting the consummation of the Merger shall have become final and non-appealable; or

 

   

the Special Meeting shall have been held and Company Stockholder approval of the Merger Proposal shall not have been obtained;

 

   

by Merck, if:

 

   

at any time prior to obtaining Company Stockholder approval of the Merger Proposal, if a Company Adverse Recommendation Change (as described in the section of this proxy statement titled “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change” beginning on page 81 of this proxy statement) shall have occurred; or

 

   

at any time prior to the Effective Time, for an uncured breach of any representation or warranty or failure to perform any covenant or agreement on the part of Harpoon set forth in the Merger Agreement that would cause the conditions to closing with respect to the accuracy of representations and warranties or the performance of covenants of Harpoon not to be satisfied.

 

   

by Harpoon, if:

 

   

at any time prior to obtaining Company Stockholder approval of the Merger Proposal, in order to accept a Superior Proposal (as defined in the section of this proxy statement titled “The Merger Agreement—Other Covenants and Agreements—No Solicitation; Company Acquisition Proposals; Board Recommendation Change” beginning on page 81 of this proxy statement) and enter into a written definitive acquisition agreement providing for the consummation of a transaction constituting a Superior Proposal (a “Specified Agreement”), subject to certain conditions; or

 

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at any time prior to the Effective Time, for an uncured breach of any representation or warranty or failure to perform any covenant or agreement on the part of Merck or Merger Sub set forth in the Merger Agreement that would cause the conditions to closing with respect to the accuracy of representations and warranties or the performance of covenants of Merck and Merger Sub not to be satisfied.

Termination Fee (page 93)

Under certain circumstances, Harpoon will be required to pay Merck a termination fee equal to $23,860,000 (the “Termination Fee”), including upon:

 

   

termination of the Merger Agreement by Merck due to a Company Adverse Recommendation Change;

 

   

termination of the Merger Agreement by Harpoon to enter into a Specified Agreement relating to a Superior Proposal, subject to certain conditions; and

 

   

termination of the Merger Agreement by Merck or Harpoon under certain circumstances where (1) an Acquisition Proposal shall have been made, proposed or otherwise communicated to Harpoon or the Company Stockholders or shall have become publicly known after January 7, 2024 and shall not have been withdrawn prior to the termination of the Merger Agreement or the date of the Special Meeting, as applicable, and (2) within 12 months of such termination, Harpoon consummates, or enters into a binding written definitive agreement with respect to, an Acquisition Proposal (replacing “15%” in the definition thereof with “50%” and disregarding clause (d) of such definition).

For more information, please see “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 93 of this proxy statement.

Expenses Generally (page 94)

Except as otherwise described in this proxy statement, including under “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 93 of this proxy statement, whether or not the Merger is consummated, Harpoon, Merck and Merger Sub are each responsible for all of their respective costs and expenses incurred in connection with the Merger and the transactions contemplated by the Merger Agreement.

Market Prices and Dividend Data (page 99)

The Company Shares are listed on Nasdaq under the symbol “HARP.” On January 5, 2024, the last trading day prior to the public announcement of the execution of the Merger Agreement, the closing price of the Company Shares on Nasdaq was $10.55 per share. On February 7, 2024, the latest practicable trading day before the printing of this proxy statement, the closing price of the Company Shares on Nasdaq was $22.33 per share. You are encouraged to obtain current market quotations for the Company Shares.

Harpoon has never declared or paid any cash dividends on the Company Shares, and Harpoon does not currently intend to pay, nor under the Merger Agreement may Harpoon pay without the prior written consent of Merck, any cash dividends on its capital stock (other than the accrual of dividends on the Company Series A Preferred Stock in accordance with its terms).

Delisting and Deregistration of Company Shares (page 69)

If the Merger is consummated, following the Effective Time, the Company Shares will cease trading on Nasdaq and will be deregistered under the Exchange Act. As such, we would no longer file periodic reports with the SEC.

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents to which we refer you in this proxy statement, as well as information included in oral statements or other written statements made or to be made by us or on our behalf, contain “forward-looking statements” that do not directly or exclusively relate to historical facts. Forward-looking statements can usually be identified by the use of terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “evolve,” “expect,” “forecast,” “intend,” “looking ahead,” “project,” “may,” “might,” “opinion,” “plan,” “possible,” “potential,” “should,” “will,” “would” and similar words or expressions. Stockholders are cautioned that any such forward-looking statements, such as statements about the consummation of the proposed Merger and the anticipated benefits thereof, are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, factors and matters described or incorporated by reference into this proxy statement, and the following factors:

 

   

the inability to consummate the Merger within the anticipated time period, or at all, including, but not limited to, as a result of the failure to obtain the required approval of the Company Stockholders or the failure to satisfy the other conditions to the consummation of the Merger;

 

   

the risk that the parties may be unable to obtain the regulatory approval required to complete the Merger, or that the required regulatory approval may delay the consummation of the Merger or result in the imposition of conditions that could cause the parties to abandon the Merger;

 

   

the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement, including, but not limited to, the risk that the Merger Agreement may be terminated in circumstances requiring us to pay a termination fee to Merck;

 

   

the risk that our stock price may decline significantly, including below our stock price prior to the public announcement of the execution of the Merger Agreement, if the Merger is not consummated;

 

   

the effect of the announcement, pendency or consummation of the Merger on our business relationships (including, but not limited to, employees, suppliers, vendors, other business partners and governmental entities), operating results, cash flows and business generally;

 

   

risks that the proposed Merger may disrupt our current plans and operations or affect our ability to retain or recruit key employees;

 

   

the response of our competitors to the proposed Merger;

 

   

the amount of the costs, fees, expenses and charges incurred by Harpoon related to the Merger Agreement or the Merger;

 

   

risks related to the diversion of the attention of our management and employees from ongoing business operations;

 

   

the effect of the restrictions placed on our business activities pursuant to the Merger Agreement and the limitations on our ability to pursue certain business opportunities and alternatives to the Merger during the pendency of the Merger;

 

   

the nature, cost and outcome of any litigation and other legal proceedings, including, but not limited to, any such proceedings related to the Merger and instituted against us and others;

 

   

the fact that under the terms of the Merger Agreement, we are unable to solicit other Acquisition Proposals during the pendency of the Merger;

 

   

the fact that receipt of the all-cash Merger Consideration would be taxable to our stockholders that are treated as U.S. Holders for United States federal income tax purposes;

 

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risks related to the implementation of our business model and strategic plans for our business and product candidates;

 

   

risks related to the advancement of product candidates into, and successful completion of, preclinical studies and clinical trials;

 

   

risks and uncertainties related to the regulatory application, review and approval processes and our compliance with applicable legal and regulatory requirements;

 

   

risks related to general industry conditions and competition; and

 

   

risks related to the potential impact of general economic, political and market factors on the parties to the proposed Merger.

Consequently, there can be no assurance that the actual results or developments anticipated by such forward-looking statements will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, Harpoon or its businesses or operations. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements. The foregoing review of risks and uncertainties that could cause actual events to differ from expectations should not be construed as exhaustive and should be read in conjunction with statements that are included in this proxy statement and elsewhere, including the risk factors included in Harpoon’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, factors and matters described or incorporated by reference in this proxy statement, and other reports filed with the SEC.

Any forward-looking statement made in this proxy statement speaks only as of the date on which it is made. Harpoon can give no assurance that the conditions to the Merger will be satisfied. You should not put undue reliance on any forward-looking statements. Harpoon undertakes no obligation, and expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as may be required by law. If Harpoon does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.

 

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THE COMPANIES

Harpoon Therapeutics, Inc.

Harpoon is a Delaware corporation with principal executive offices located at 611 Gateway Boulevard, South San Francisco, California 94080, telephone number (650) 443-7400. Harpoon is a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases. Using its proprietary Tri-specific T cell Activating Construct (TriTAC®) platform, Harpoon is developing a pipeline of novel TriTACs initially focused on the treatment of certain types of solid tumors and hematologic malignancies. Harpoon also has developed a proprietary ProTriTAC platform, which applies a prodrug concept to its TriTAC platform to create a therapeutic T-cell engager that is designed to remain inactive until it reaches the tumor. Harpoon’s third proprietary technology platform, extended release TriTAC-XR, is designed to mitigate cytokine release syndrome. Harpoon’s lead candidate, HPN328, is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand that is expressed at high levels in small cell lung cancer (SCLC) and neuroendocrine tumors. Additional pipeline candidates include HPN217 targeting B-cell maturation antigen (BCMA), currently in Phase 1 clinical development for the treatment of patients with relapsed/refractory multiple myeloma, and several preclinical stage candidates, including HPN601, a conditionally activated targeting epithelial cell adhesion molecule (EpCAM) for the treatment of certain patients with EpCAM expressing tumors. The Company Shares are listed on Nasdaq under the symbol “HARP.” Additional information about Harpoon is contained in certain of its public filings that are incorporated by reference into this proxy statement. See “Where You Can Find More Information” beginning on page 106 of this proxy statement.

Merck Sharp & Dohme LLC

Merck is a wholly owned subsidiary of Merck & Co., Inc., a New Jersey corporation with principal executive offices located at 126 East Lincoln Avenue, Rahway, New Jersey 07065, telephone number (908) 740-4000. Merck Parent is a global health care company that delivers innovative health solutions through its prescription medicines, including biologic therapies, vaccines and animal health products. The common stock of Merck Parent is listed on the New York Stock Exchange under the symbol “MRK.” 

Hawaii Merger Sub, Inc.

Merger Sub is a Delaware corporation and a direct wholly owned subsidiary of Merck, with a registered office located at 1209 Orange Street, Wilmington, Delaware 19801. Merger Sub was formed solely for the purpose of effecting the Merger and the transactions contemplated by the Merger Agreement. Upon completion of the Merger, Merger Sub will cease to exist.

 

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THE SPECIAL MEETING

We are furnishing this proxy statement to Company Stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting or any adjournment or postponement thereof.

Date, Time and Place of the Special Meeting

This proxy statement is being furnished to Company Stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting to be held virtually on March 8, 2024, at 8:30 a.m. Pacific Time. Company Stockholders will be able to virtually attend and vote at the Special Meeting by visiting www.virtualshareholdermeeting.com/HARP2024SM.

Company Shares held directly in your name as a stockholder of record may be voted at the Special Meeting via the Special Meeting website. Shares held in “street name” may be voted at the Special Meeting via the Special Meeting website using the 16-digit control number included in your proxy materials. If you did not receive a 16-digit control and wish to vote at the Special Meeting, you should follow the instructions from your bank, broker or other nominee, including any requirement to obtain a legal proxy.

Purpose of the Special Meeting

At the Special Meeting, we will ask the Company Stockholders as of the Record Date to vote on the Merger Proposal and the Adjournment Proposal. If holders of Company Shares fail to adopt the Merger Agreement by approving the Merger Proposal, the Merger will not occur. A copy of the Merger Agreement is attached to this proxy statement as Annex A and incorporated herein by reference, and the material provisions of the Merger Agreement are described under “The Merger Agreement” beginning on page 70 of this proxy statement.

This proxy statement and the enclosed form of proxy are first being mailed to stockholders on or about February 8, 2024.

Record Date; Shares Entitled to Vote; Quorum

Only Company Stockholders of record as of the close of business on February 6, 2024, the Record Date for the Special Meeting, are entitled to notice of and to vote at the Special Meeting or at any adjournments or postponements thereof. A list of stockholders entitled to vote at the Special Meeting will be available in our offices located at 611 Gateway Boulevard, Suite 400, South San Francisco, CA 94080, during regular business hours for a period of at least 10 days before the Special Meeting.

As of the Record Date, there were 21,397,205 Company Shares issued and outstanding and entitled to be voted at the Special Meeting.

A quorum of Company Stockholders is necessary to transact business at the Special Meeting. Our amended and restated bylaws provide that the presence at the Special Meeting, in person, by remote communication, or by proxy, of the holders of a majority of the voting power of our outstanding Company Shares entitled to vote at the Special Meeting will constitute a quorum for Harpoon to transact business at the Special Meeting. In general, Company Shares that were issued and outstanding as of the Record Date and are represented by a properly signed and returned proxy card will be counted as Company Shares present and entitled to vote at the Special Meeting for purposes of determining a quorum. Company Shares represented by proxies received but marked “ABSTAIN” will be included in the calculation of the number of Company Shares considered to be present at the Special Meeting for purposes of determining a quorum. If a beneficial owner of Company Shares held in street name gives voting instructions to the bank, broker or other nominee with respect to at least one of the proposals, but gives no instruction as to one or more of the other proposals, then those Company Shares will be deemed present at the Special Meeting and for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal.

 

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In the event that a quorum is not present at the Special Meeting, it is expected that the meeting would be adjourned to a later date to solicit additional proxies, and a quorum will have to be established at such adjourned date.

Vote Required; Abstentions and Broker Non-Votes

Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting.

Approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the Company Shares that are outstanding as of the Record Date. Adoption of the Merger Agreement by Company Stockholders is a condition to the closing of the Merger. A failure to vote your Company Shares or an abstention from voting for the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares on the Merger Proposal will have the same effect as a vote “AGAINST” the Merger Proposal.

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of voting power of the Company Shares present in person or represented by proxy at the Special Meeting. An abstention from voting for the Adjournment Proposal will have the same effect as a vote “AGAINST” the Adjournment Proposal. If you hold your Company Shares in “street name,” the failure to instruct your bank, broker or other nominee on how to vote your Company Shares on the Adjournment Proposal will have no effect on the Adjournment Proposal.

Company Shares Held by Directors and Executive Officers

As of the close of business on the Record Date, directors and executive officers of Harpoon and their affiliates beneficially owned and were entitled to vote, in the aggregate, 1,895,937 Company Shares, which represented approximately 8.86% of the Company Shares issued and outstanding on that date. Certain of our directors and executive officers (and certain of their affiliates) have entered into Support Agreements obligating them to vote all of their Company Shares “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

See the section entitled “The Support Agreements” beginning on page 95 of this proxy statement for further information.

Voting; Proxies

Voting at the Special Meeting

You can vote at the virtual Special Meeting, which will be held on March 8, 2024 at 8:30 a.m. Pacific Time, at www.virtualshareholdermeeting.com/HARP2024SM (unless the Special Meeting is adjourned or postponed).

You also may authorize the persons named as proxies on the proxy card to vote your shares by returning the proxy card in advance by mail, over the Internet or by telephone. Although Harpoon offers four different voting methods, Harpoon encourages you to vote over the Internet or by phone as Harpoon believes they are the most cost-effective methods. We also recommend that you vote as soon as possible, even if you are planning to attend the Special Meeting, so that the vote count will not be delayed.

Providing Voting Instructions by Proxy

To ensure that your Company Shares are voted at the Special Meeting, we recommend that you submit your proxy or provide voting instructions for your Company Shares held in “street name” to your bank, broker or other nominee promptly, even if you plan to attend the Special Meeting.

 

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Company Shares Held by Record Holders

If you are a stockholder of record and your Company Shares are registered in your name with our transfer agent, Computershare, you may submit your proxy using one of the methods described below.

Submit a Proxy by Telephone or via the Internet. This proxy statement is accompanied by a proxy card with instructions for submitting a proxy. You can grant a proxy by telephone by calling the toll-free number 1-800-690-6903 or via the Internet by following the instructions specified on the enclosed proxy card. Votes submitted by telephone or via the Internet for the matters brought before the Special Meeting as described in this proxy statement must be received by 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting. Your Company Shares will be voted as you direct, and in the same manner as if you had completed, signed, dated and returned your proxy card, as described below. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to submit a proxy electronically over the Internet or by telephone.

Submit a Proxy Card. If you complete, sign, date and return the enclosed proxy card by mail so that it is received prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting, your Company Shares will be voted in the manner directed by you on your proxy card.

Voting instructions are included on your proxy card. All Company Shares represented by properly executed proxies received in time for the Special Meeting will be voted at the Special Meeting in accordance with the instructions of the stockholder. If you sign, date and return your proxy card without indicating how you wish to vote, such Company Shares represented by your properly signed proxy card will be voted “FOR” each of the Merger Proposal and the Adjournment Proposal. If you fail to return your proxy card and you are a holder of record as of the close of business on the Record Date, unless you attend the Special Meeting, your Company Shares will not be considered present at the Special Meeting for purposes of determining whether a quorum is present, and your failure to vote will have the same effect as a vote “AGAINST” the Merger Proposal and will have no effect on the vote regarding the Adjournment Proposal.

Company Shares Held in “Street Name”

If your Company Shares are held in “street name” through a bank, broker or other nominee, your bank, broker or other nominee will send you instructions as to how to provide voting instructions for your Company Shares. You may cause your Company Shares to be voted through your bank, broker or other nominee by completing and returning the voting form provided by your bank, broker or other nominee, or by the Internet or telephone through your bank, broker or other nominee by following the instructions provided to you by them if such a service is available, or by attending the Special Meeting and voting using your control number, or, if you did not obtain a control number, by contacting your bank, broker or other nominee to obtain a control number so that you may vote.

Under applicable stock exchange rules, banks, brokers or other nominees have the discretion to vote your Company Shares on “routine” matters if you fail to instruct your bank, broker or other nominee on how to vote your Company Shares with respect to such matters. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of the relevant shares. Harpoon does not expect any broker non-votes at the Special Meeting because the Merger Proposal and the Adjournment Proposal described in this proxy statement are “non-routine” matters, and your bank, broker or other nominee therefore cannot vote on these proposals without your instructions. Accordingly, if you do not return your bank’s, broker’s or other nominee’s voting form, do not provide voting instructions via the Internet or telephone through your bank, broker or other nominee, if applicable, or do not attend the Special Meeting and vote in person with a “legal proxy” from your bank, broker or other nominee, your Company Shares will not be

 

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considered present at the Special Meeting for purposes of determining whether a quorum is present at the Special Meeting, and your failure to vote will have the same effect as if you voted “AGAINST” the Merger Proposal and will have no effect on the Adjournment Proposal. However, if a beneficial owner of shares of common stock held in street name gives voting instructions to the bank, broker or other nominee with respect to one of the proposals, but gives no instruction as to the other proposal, then those shares will be deemed present at the Special Meeting and for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to any proposal as to which instructions were given, and will not be voted with respect to any other proposal. For Company Shares held in “street name,” only Company Shares affirmatively voted “FOR” the Merger Proposal or the Adjournment Proposal will be counted as a vote in favor of such proposal.

Revocability of Proxies

Any person giving a proxy pursuant to this solicitation has the power to revoke and change it any time before it is voted at the Special Meeting. If you are a stockholder of record, you may change your vote or revoke your proxy by:

 

   

delivering a written notice of revocation of your proxy to our Corporate Secretary at Harpoon Therapeutics, Inc., Attention: Corporate Secretary, 611 Gateway Boulevard, Suite 400, South San Francisco, California 94080, prior to the Special Meeting;

 

   

signing a new proxy card with a date later than the date of the previously submitted proxy card relating to the same Company Shares and returning it to us by mail prior the Special Meeting;

 

   

submitting a new proxy by telephone prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting;

 

   

submitting a new proxy by Internet prior to 11:59 p.m. Eastern Time on March 7, 2024, the day preceding the Special Meeting; or

 

   

attending the Special Meeting and voting thereat (simply attending the Special Meeting will not cause your proxy to be revoked).

Please note, however, that only your last-dated proxy will count. Attending the Special Meeting without taking one of the actions described above will not in itself revoke your proxy. Please note that if you want to revoke your proxy by mailing a new proxy card to Harpoon or by sending a written notice of revocation to Harpoon, you should ensure that you send your new proxy card or written notice of revocation in sufficient time for it to be received by Harpoon before the Special Meeting.

If you hold your Company Shares in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote or submit new voting instructions. You may also vote in person at the Special Meeting with your control number, or, if you did not obtain a control number, by contacting your bank, broker or other nominee to obtain a control number. Any adjournment or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow Company Stockholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting, as adjourned or postponed.

Abstentions

An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. Abstentions will be included in the calculation of the number of Company Shares represented at the Special Meeting for purposes of determining whether a quorum has been achieved. Abstaining from voting will have the same effect as a vote “AGAINST” the Merger Proposal, but will have no effect on the Adjournment Proposal.

Adjournments and Postponements

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proxies. If a quorum is not present, then under our amended and restated bylaws, (1) the chairperson of the Special Meeting or (2) the majority of the voting power of the shares present in person or represented by proxy at the Special Meeting, shall have power to adjourn the Special Meeting until a quorum is present or represented, and notice need not be given of the adjourned meeting if the time, place, if any, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. However, our amended and restated bylaws provide that if any such adjournment is for more than 30 days, or if after an adjournment a new record date for determining stockholders entitled to vote is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the adjourned meeting.

If the Special Meeting is adjourned or postponed to solicit additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the Special Meeting, as adjourned or postponed.

In the event that there is present at the Special Meeting, in person or by proxy, sufficient favorable voting power to secure the vote of the Company Stockholders necessary to adopt the Merger Agreement, we do not currently anticipate that we will adjourn or postpone the Special Meeting.

Board Recommendation

The Board, after considering the various factors more fully described under “The Merger—Recommendation of the Harpoon Board of Directors and Reasons for the Merger” beginning on page 44 of this proxy statement, unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Harpoon and the Company Stockholders, (2) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approved the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger, and (3) resolved to recommend that the Company Stockholders vote to approve the adoption of the Merger Agreement (the matters described in clauses (1) through (3), the “Board Recommendation”).

The Board unanimously recommends that you vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

Solicitation of Proxies

The Board is soliciting your proxy, and we will bear the cost of the solicitation of proxies.

We have retained MacKenzie Partners, Inc., a proxy solicitation firm, to solicit proxies in connection with the Special Meeting at a cost of approximately $18,500 plus expenses. We will also indemnify the proxy solicitor against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of Company Shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax, over the Internet or other means of communication. No additional compensation will be paid for such services.

Anticipated Date of Consummation of the Merger

We currently anticipate that the Merger will be consummated in the first half of 2024, assuming satisfaction or, to the extent permitted by applicable law. waiver of all of the conditions to the Merger. However, the Merger is subject to various conditions, and it is possible, including as a result of factors outside the control of Harpoon and Merck, that the Merger will be consummated at a later time or not at all.

 

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Appraisal Rights

If the Merger is consummated, stockholders who do not wish to accept the applicable merger consideration are entitled to seek appraisal of their Company Shares or shares of Company Series A Preferred Stock under Section 262 of the DGCL and, if all procedures described in Section 262 of the DGCL are strictly complied with, to receive payment in cash for the fair value of their Company Shares or shares of Company Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of Company Shares or shares of Company Series A Preferred Stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the consideration that such holder of Company Shares or shares of Company Series A Preferred Stock may receive in the Merger. These rights are known as “appraisal rights”. This proxy statement serves as a notice of such appraisal rights pursuant to Section 262 of the DGCL.

Persons who exercise appraisal rights under Section 262 of the DGCL will not receive the consideration that they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their Company Shares or shares of Company Series A Preferred Stock, as applicable, following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal should recognize that the fair value of their Company Shares or shares of Company Series A Preferred Stock determined under Section 262 of the DGCL could be more than, the same as or less than the consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 of the DGCL is required. Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262 of the DGCL, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A holder of record of Company Shares or shares of Company Series A Preferred Stock and a beneficial owner who (1) continuously holds or beneficially owns, as applicable, such shares through the Effective Time, (2) has not consented to the Merger in writing, voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (3) strictly complies with the procedures under Section 262 of the DGCL, (4) does not thereafter withdraw his, her or its demand for appraisal of such shares and (5) in the case of a beneficial owner, is a person who (A) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (B) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (C) provides an address at which such beneficial owner consents to receive notices given by Harpoon and to be set forth on the Chancery List (as defined in the section entitled “The Merger—Appraisal Rights” beginning on page 61 of this proxy statement), will be entitled to receive the fair value of his, her or its Company Shares or shares of Company Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value.

A copy of Section 262 of the DGCL is attached to this proxy statement as Annex D. The foregoing summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. For more information, please see the section entitled “The Merger—Appraisal Rights” beginning on page 61 of this proxy statement and Annex D.

Householding of Special Meeting Materials

Unless we have received contrary instructions, we may send a single copy of this proxy statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same

 

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family. Each stockholder in the household will continue to receive a separate proxy card. This process, known as “householding,” reduces the volume of duplicate information received at your household and helps to reduce our expenses.

We will promptly deliver a separate copy of our proxy statement to any stockholder without charge upon a written request or verbal request to Harpoon Therapeutics, Inc., Attention: Corporate Secretary, 611 Gateway Boulevard, Suite 400, South San Francisco, California 94080, telephone number (650) 443-7400. Stockholders sharing an address that are receiving multiple copies of this proxy statement can request delivery of a single copy of the proxy materials by contacting their bank, broker or other intermediary or sending a written request to us at the address above.

Questions and Additional Information

If you have more questions about the Merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact our proxy solicitor:

 

LOGO

1407 Broadway, 27th Floor

New York, New York 10018

proxy@mackenziepartners.com

Call Collect: (212) 929-5500

or

Toll-Free (800) 322-2885

If your bank, broker or other nominee holds your Company Shares, you should also call your bank, broker or other nominee for additional information.

 

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THE MERGER

This discussion of the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated by reference into this proxy statement. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Certain Effects of the Merger on Harpoon

If the Merger Agreement is adopted by the Company Stockholders and the other conditions to the closing of the Merger are either satisfied or waived, Merger Sub will be merged with and into Harpoon, with Harpoon continuing as the Surviving Corporation and a wholly owned subsidiary of Merck.

The Company Shares are listed and trade on Nasdaq under the symbol “HARP.” As a result of the Merger, Harpoon will cease to be a publicly traded company and will become a wholly owned subsidiary of Merck. Prior to the Effective Time, we will cooperate with Merck to delist the Company Shares from Nasdaq and deregister the Company Shares under the Exchange Act, provided that such delisting and termination will not be effective until after the Effective Time. Upon such delisting and deregistration, we will no longer be a publicly traded company and will no longer be required to file periodic reports with the SEC, in each case in accordance with applicable law, rules and regulations. If the Merger is consummated, you will not own any shares of the capital stock of the Surviving Corporation or Merck.

Effect on Harpoon if the Merger Is Not Consummated

If the Merger Agreement is not adopted by the holders of a majority of the issued and outstanding Company Shares entitled to vote as of the Record Date or if the Merger is not consummated for any other reason, Company Stockholders will not receive any payment for their Company Shares pursuant to the Merger Agreement. Instead, Harpoon will remain a public company, the Company Shares will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and we will continue to file periodic reports with the SEC.

Furthermore, if the Merger is not consummated, depending on the circumstances that caused the Merger not to be consummated, the price of the Company Shares may decline significantly. If that were to occur, it is uncertain when, if ever, the price of the Company Shares would return to the price at which the Company Shares traded prior to the public announcement of the execution of the Merger Agreement on January 8, 2024 or as of the date of this proxy statement.

Accordingly, if the Merger is not consummated, there can be no assurance as to the effect of these risks and opportunities on the future value of your Company Shares. If the Merger is not consummated, the Board will continue to evaluate and review our business, operations, assets, operating results, financial condition, prospects and business strategy, among other things, and make such changes as are deemed appropriate and continue to seek to enhance stockholder value. If the Merger Agreement is not adopted by the Company Stockholders or if the Merger is not consummated for any other reason, there can be no assurance that any other transaction acceptable to Harpoon will be offered or that our business, prospects or results of operations will not be adversely impacted.

In addition, upon termination of the Merger Agreement, under specified circumstances, Harpoon may be required to pay Merck a termination fee, as described under the section titled “The Merger Agreement—Termination Fee; Certain Expenses” beginning on page 93 of this proxy statement.

Merger Consideration

At the Effective Time, each Company Share and share of Company Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares) will be cancelled and

 

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automatically cease to exist and will be converted into the right to receive (a) in the case of the Company Shares, $23.00 per share in cash, without interest and subject to applicable withholding taxes and (b) in the case of the Company Series A Preferred Stock, an amount in respect of each such share determined in accordance with the terms of the Company Series A Preferred Stock, as amended, altered or modified and in effect as of immediately prior to the Effective Time, subject to applicable withholding taxes. The terms of the Company Series A Preferred Stock provide that, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or the occurrence of any event that is a Deemed Liquidation Event (as defined in the Certificate of Designation for the Company Series A Preferred Stock and which includes the Merger), the holders of shares of Company Series A Preferred Stock then outstanding will be entitled to be paid an amount per share of Company Series A Preferred Stock equal to the greater of: (1) the redemption price per share (which, as defined in the Certificate of Designation, is equal to the product of the stated value of $1,000 and a return factor equal to 3.5, plus accrued and unpaid dividends, whether or not declared) and (2) the amount per share such holder would have been entitled to receive had such holder exchanged the share of Company Series A Preferred Stock for a number of Company Shares equal to $1,000 plus all accrued but unpaid dividends, divided by $7.251. As of the date of this proxy statement and based on accrued dividends on the Company Series A Preferred Stock through March 11, 2024, the amount to be paid to the holders of the Company Series A Preferred Stock in the Merger is approximately $3,577.56 per share of Company Series A Preferred Stock or $89,438,889 in the aggregate.

Each Company Share or share of Company Series A Preferred Stock held in the treasury of Harpoon or owned by Merck or Merger Sub or any direct or indirect wholly owned subsidiary of Merck or Harpoon immediately prior to the Effective Time will automatically be cancelled without any conversion and will cease to exist and no payment or distribution will be made.

Each outstanding and unexercised Harpoon stock option will, to the extent unvested, become fully vested and exercisable immediately prior to the Effective Time. At the Effective Time, (1) each In the Money Option will be cancelled and, in exchange therefor, each former holder thereof will be entitled to receive the Option Consideration and (2) each Harpoon stock option other than an In the Money Option that is then outstanding and unexercised will be cancelled with no consideration payable in respect thereof.

Each Harpoon RSU that is outstanding immediately prior to the Effective Time will be cancelled and converted automatically into the right to receive the RSU Consideration.

Each Harpoon warrant that is outstanding and unexercised immediately prior to the Effective Time will, in accordance with its terms, cease to represent a warrant exercisable for Company Shares and automatically will become a warrant exercisable for the Merger Consideration that such holder would have been entitled to receive if such Harpoon Warrant had been exercised immediately prior to the Effective Time. Following the Effective Time, no holder of any Harpoon warrant will have any right to acquire any Harpoon securities or any securities in the Surviving Corporation, Merck or any of their respective affiliates.

After the Merger is consummated, under the terms of the Merger Agreement, you will have the right to receive the Merger Consideration, but you will no longer have any rights as a Harpoon stockholder as a result of the Merger (except that any holder of Appraisal Shares (as defined in the Merger Agreement) will have those rights granted under Section 262 of the DGCL), nor will you be entitled to receive any shares in Merck or the Surviving Corporation.

Each of the paying agent, the Surviving Corporation, Merger Sub, and Merck will be entitled to deduct and withhold from any amounts payable pursuant to the Merger Agreement such amounts as are required to be deducted and withheld therefrom under applicable tax laws. If the paying agent, the Surviving Corporation, Merger Sub, or Merck, as the case may be, so deducts and withholds amounts and timely and properly remits such amounts to the applicable governmental authority, such amounts will be treated for all purposes under the Merger Agreement as having been paid to the person to whom such amounts would otherwise have been paid.

 

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Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the Board, the Transactions Committee or the representatives of Harpoon, Merck and other parties.

Harpoon is a clinical-stage immunotherapy company developing a novel class of T-cell engagers designed to harness the power of the body’s immune system to treat patients suffering from cancer and other diseases. Using its proprietary Tri-specific T cell Activating Construct (TriTAC®) platform, Harpoon is developing a pipeline of novel TriTACs initially focused on the treatment of certain types of solid tumors and hematologic malignancies. Harpoon also has developed a proprietary ProTriTAC platform, which applies a prodrug concept to its TriTAC platform to create a therapeutic T-cell engager that is designed to remain inactive until it reaches the tumor. Harpoon’s third proprietary technology platform, extended release TriTAC-XR, is designed to mitigate cytokine release syndrome. Harpoon’s lead candidate, HPN328, is a T-cell engager targeting delta-like ligand 3 (DLL3), an inhibitory canonical Notch ligand that is expressed at high levels in small cell lung cancer (SCLC) and neuroendocrine tumors. Additional pipeline candidates include HPN217 targeting B-cell maturation antigen (BCMA), currently in Phase 1 clinical development for the treatment of patients with relapsed/refractory multiple myeloma, and several preclinical stage candidates, including HPN601, a conditionally activated targeting epithelial cell adhesion molecule (EpCAM) for the treatment of certain patients with EpCAM expressing tumors.

Harpoon senior management and the Board regularly review Harpoon’s performance and prospects in light of its business and developments in the biotechnology and pharmaceutical industries. From time to time these reviews have included consideration of potential partnerships, collaborations and other strategic transactions to enhance shareholder value. For instance, in January 2020 and as part of its on-going business development activities, Harpoon entered into a mutual confidentiality agreement with Merck to facilitate discussions regarding a possible business relationship with respect to Harpoon’s pipeline programs and/or TriTAC platform and related technologies. In January 2021, Harpoon and Merck amended the confidentiality agreement to expand the scope of discussions between the parties and extend the term. Harpoon did not enter into any other agreement or arrangement with Merck as a result of these discussions.

On September 15, 2022, the Board formed a transactions committee of the Board (the “Transactions Committee”) to oversee prospective financings and/or the early evaluation of other business development and strategic opportunities. The Transactions Committee consisted of the following independent directors: Jonathan Drachman, M.D.; Scott Myers, the Chair of the Board; Andrew Robbins; and Lauren Silvernail.

Commencing in August 2023, Harpoon senior management contacted 19 large global pharmaceutical companies, including Merck, Party A and Party B, and seven Chinese biopharmaceutical companies regarding interest in a potential partnering relationship with respect to HPN328. Eleven of these parties, including Merck, Party A and Party B, expressed interest in entering into a confidentiality agreement with Harpoon to facilitate further discussions. With respect to Merck, on September 21, 2023, the parties entered into an extension of the existing confidentiality agreement between the parties to facilitate these discussions. None of these confidentiality agreements included a standstill provision. Each of the parties that entered into a confidentiality agreement with Harpoon was given access to due diligence information regarding HPN328, and Harpoon senior management engaged in discussions with, and responded to due diligence requests from, such parties from time to time.

On October 21, 2023, Harpoon announced the presentation of positive interim tolerability and response data for HPN328 in certain patients with SCLC and neuroendocrine tumors at the ESMO Congress 2023. Following the announcement of this data, Harpoon senior management continued discussions with certain parties that had expressed interest with respect to a potential partnership arrangement involving HPN328. However, Harpoon did not receive any proposals relating to such an arrangement, and as of November 8, 2023, all of these parties had

 

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passed or indicated that they were likely to pass on the opportunity except Merck, Party A and Party B. The parties that declined to pursue a transaction with Harpoon cited one or more of the following reasons: (1) lack of fit with such party’s strategic priorities and goals; (2) the early stage of Harpoon’s clinical programs and need to see additional clinical data in order to better assess clinical differentiation and competitive positioning; and/or (3) limited financial capacity for business development.

On October 20, 2023, Julie Eastland, President, Chief Executive Officer and a director of Harpoon, Luke Walker, M.D., Chief Medical Officer, and Haibo Wang, Senior Vice President of Business Development, met with Merck’s Senior Vice President, Clinical Research and other team members of Merck at the ESMO conference to provide a confidential presentation of the HPN328 data being presented at the conference.

On October 23, 2023, representatives of Merck requested focused scientific due diligence materials regarding Harpoon with emphasis on the clinical, safety, regulatory, chemistry, manufacturing and controls (“CMC”), and intellectual property review of HPN328, and the parties engaged in multiple discussions thereafter regarding these matters. During these discussions, representatives of Merck informed Harpoon that Merck would not be in a position to determine whether they wished to proceed with a proposal regarding a potential transaction between the parties until they had completed the review of all of their priority scientific due diligence items, including site visits at the third-party contract development and manufacturing organizations utilized by Harpoon and additional clinical data review materials that Merck had requested with respect to HPN328.

Between November 9, 2023 and November 14, 2023, Ms. Eastland, following consultation with Mr. Myers, engaged in discussions with potential legal and financial advisors to assist Harpoon in the event of a potential strategic transaction. On November 14, 2023, Harpoon entered into a confidentiality agreement with Centerview, which thereafter provided initial guidance and support.

On November 16, 2023, Ms. Eastland provided an update to the Transactions Committee regarding business development activity and identification of potential advisors.

On November 29, 2023, a representative of Centerview, as instructed by Harpoon management and the Transactions Committee, had a conversation with a senior Merck representative, who indicated that Merck was thinking about a broader strategic transaction involving the acquisition of Harpoon, but reiterated that Merck would not be in a position to make a decision in that regard until Merck had completed the review of all of its priority due diligence items.

Also on November 29, 2023, Ms. Eastland provided an update to the Transactions Committee regarding business development activity, and the meeting participants discussed the selection of financial and legal advisors to assist the Board in a review of strategic alternatives, including in the event that Merck were to indicate interest in a potential transaction with Harpoon, based on, among other factors, each advisor’s qualifications, professional reputation and industry expertise.

On December 1, 2023, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin Procter LLP, Harpoon’s outside counsel (“Goodwin”), were present. At this meeting, the representatives of Centerview reported on the recent conversation with Merck’s senior representative regarding Merck’s potential interest in an acquisition of Harpoon. The representatives of Goodwin reviewed the fiduciary duties of the directors in the event that Harpoon were to receive an offer from Merck to acquire the company and the scope of the committee’s authority in light of its original purpose to oversee prospective financings and/or the early evaluation of other business development and strategic opportunities. The Transactions Committee also had a discussion regarding whether any other pharmaceutical and biotechnology companies might have interest in a potential strategic transaction with Harpoon, including weighing the potential benefits of outreach to other potential counterparties against the potential risks, including the risk of leaks inherent in such a process and the potential impact on Harpoon’s business of such leaks. As part of this discussion, the Transactions Committee considered the prior interactions

 

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between Harpoon management and other industry participants, including the results of the recent partnering process. At the conclusion of this discussion, the Transactions Committee determined that outreach should include those parties that would be most likely to have interest in Harpoon, be able to move decisively, and have the ability to consummate a transaction of this size and nature. Accordingly, based on this criteria, the Transactions Committee determined that Party A and Party B should be contacted at the appropriate time with respect to their potential interest in an acquisition of Harpoon. The Transactions Committee then discussed Merck’s request for additional priority due diligence items and authorized management to provide Merck with such items.

On December 6, 2023, members of senior management of Harpoon had a meeting with representatives of Party A to provide a clinical update. During the discussion of potential next steps, Harpoon management informed Party A that there was potential interest from another party and that Centerview was assisting Harpoon in its review of strategic alternatives.

On December 8, 2023, a representative of Party A contacted Harpoon and indicated that Party A was not interested in further discussions with Harpoon regarding a potential transaction given Party A’s recent pipeline priorities.

Also on December 8, 2023, Harpoon and Merck executed an amendment to their existing confidentiality agreement, which included a customary standstill provision that prohibited Merck, for an agreed-upon period from the date of the amendment, from offering to acquire or acquiring Harpoon, and from taking certain other actions, including soliciting proxies, without the prior consent of Harpoon. The amendment provided for the termination of the standstill provision upon Harpoon’s entry into a definitive agreement with a third party providing for a sale of Harpoon, and also allowed Merck to make confidential acquisition proposals to the Board or Harpoon’s Chief Executive Officer at any time. Thereafter, and over the next few weeks, Harpoon provided Merck with access to the priority scientific due diligence items that Merck had requested.

On December 11, 2023, members of senior management of Harpoon had a meeting with representatives of Party B to provide a clinical update.

On December 14, 2023, the Board held a regularly-scheduled meeting at which members of senior management of Harpoon and representatives of Goodwin were present. At this meeting, management provided an overview of the partnering process with respect to HPN328 and feedback received from the various parties contacted, and an update regarding the status of discussions with Merck, Party A and Party B, noting that Party A was not interested in pursuing a transaction with Harpoon. The representatives of Goodwin reviewed the fiduciary duties of the directors in the event that Harpoon were to receive an offer to acquire the company. The representatives of Goodwin also reviewed the terms of the proposed engagement of Centerview as Harpoon’s financial advisor and customary relationship disclosures regarding any relationship between Centerview and each of Merck, Party A and Party B during the preceding two-year period made available by Centerview. Following review of this information, the Board determined that the disclosed information would not impact Centerview’s ability to act effectively as financial advisor to Harpoon. As part of this discussion, the Board, together with the representatives of Goodwin, also discussed the importance of identifying any potential conflicts or the appearance of potential conflicts of interest with respect to the directors of Harpoon. The Board discussed the fact that entities affiliated with director Ronald Hunt held, in addition to Company Shares and warrants to acquire Company Shares, preferred stock in Harpoon which would be treated differently in a transaction than the Company Shares pursuant to the terms of Harpoon’s charter, and also that Mr. Hunt was not a member of the Transactions Committee. The Board discussed expanding the authority of the Transactions Committee and, thereafter, the Board approved resolutions delegating to the Transactions Committee the authority to finalize the engagement terms with Centerview and also expanding the authority of the Transactions Committee to include: (1) considering and evaluating any proposals received by Harpoon in connection with a possible sale, strategic partnership or collaboration, or other business transaction or series of transactions involving a significant portion of Harpoon’s equity or assets; (2) considering and evaluating any alternatives, including, without limitation,

 

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Harpoon continuing to operate as an independent, publicly traded company; (3) monitoring and directing the process and procedures related to the review of any such transaction or other alternatives; (4) participating in and directing the negotiation of the material terms and conditions of any such transaction or other alternative; (5) recommending to the Board the advisability of entering into a definitive agreement (and any ancillary agreements relating thereto) with respect to any such transaction or the advisability of pursuing any other alternative, in each case subject to applicable law; and (6) performing any other activities or responsibilities incidental to the foregoing. In addition, the Board appointed Mr. Myers as Chair of the Transactions Committee. Representatives of Centerview also attended a portion of the meeting and reviewed with the Board their perspectives on the M&A environment and strategic landscape, including Merck. Also at the meeting, management provided business, portfolio, quality/CMC and financial updates to the Board. The meeting participants discussed Harpoon’s prospects and the strategic, financial, operational and competitive challenges facing Harpoon, including the macro-economic, industry and market conditions impacting clinical-stage biotechnology companies such as Harpoon.

On December 17, 2023, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Goodwin were present. At this meeting, management provided an update regarding the status of discussions with Merck, current timelines and potential next steps. The Transactions Committee also discussed the formal engagement of Centerview as Harpoon’s financial advisor in connection with a potential strategic transaction. Representatives of Goodwin reviewed with the Transactions Committee the final terms of Centerview’s engagement. The Transactions Committee, pursuant to their delegated authority from the Board, thereafter authorized Harpoon to formally engage Centerview on the terms presented at the meeting.

On December 19, 2023, Harpoon and Centerview entered into the related engagement letter.

On December 21, 2023, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the Transactions Committee reviewed, discussed and provided feedback with respect to management’s preliminary standalone, long-range plan, including the related methodology for preparation of the plan, the underlying assumptions and related risks, and the preliminary financial projections for 2024 through 2043 that had been prepared based on such long-range plan. The meeting participants also discussed that Harpoon may in the future seek to enter into collaborations, partnering or other similar arrangements and the potential impact that such an arrangement could have on the long-range plan. Centerview also reviewed with the Transactions Committee certain public market perspectives regarding Harpoon. In addition, management updated the Transactions Committee on the status of Merck’s priority due diligence review of Harpoon. Following discussion of timing considerations, the Transactions Committee directed Centerview to contact Party B regarding its potential interest in a strategic transaction involving the acquisition of Harpoon.

Subsequent to the Transactions Committee meeting, a representative of Centerview, at the direction of the Transactions Committee, contacted Party B to inquire as to whether Party B would be interested in a potential strategic transaction involving the acquisition of Harpoon. Representatives of Party B indicated that they were not interested in engaging with Harpoon with respect to either a partnering or acquisition transaction at that time given the early stage of Harpoon’s clinical programs and the need to see additional clinical data before proceeding.

On January 1, 2024, a senior representative of Merck called Ms. Eastland and informed her of Merck’s interest in exploring a potential acquisition of Harpoon and an intent to send a proposal letter to this effect. During this conversation, Merck’s representative indicated that Merck would be offering to acquire all of the outstanding Company Shares, on a fully diluted basis, at a price of $18.50 per Company Share in cash. Merck’s representative also noted that Merck was focused on completing a transaction expeditiously, with a target execution date of January 6, 2024. Ms. Eastland indicated that she would discuss the proposal with the Board.

 

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Following the conversation between Ms. Eastland and Merck’s senior representative, Merck sent a letter to Ms. Eastland containing a non-binding proposal to acquire all of the outstanding Company Shares, on a fully diluted basis, for $18.50 per share in cash, subject to the completion of corporate due diligence and the negotiation of a definitive agreement. The proposal was not subject to a financing condition. The letter also indicated that Merck believed it was imperative that the parties target an execution date of January 6, 2024, if not sooner. The proposal was accompanied by an initial draft of the Merger Agreement.

Later on January 1, 2024, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, Ms. Eastland reported to the Transactions Committee on her recent conversation with Merck’s senior representative and receipt of Merck’s non-binding proposal to acquire Harpoon. Representatives of Goodwin reviewed the fiduciary duties of the directors in this context. Representatives of Centerview reviewed a summary of the proposal. The Transactions Committee also continued its discussion of management’s preliminary long-range plan, including the related methodology, the underlying assumptions and related risks, and the preliminary financial projections for 2024 through 2043 that had been prepared based on such long-range plan, as to which management had made minor revisions based on the feedback provided by the Transactions Committee at the meeting held on December 21, 2023 (see the “Projections” in the section of this proxy statement titled “—Certain Unaudited Prospective Financial Information”). Following discussion of these matters, the Transactions Committee determined to recommend to the Board the approval of the Projections for the reliance and use by Centerview in connection with providing its financial analysis with respect to the Board’s evaluation of a potential transaction and preparing any opinion as requested by the Board. The representatives of Centerview then reviewed certain preliminary financial analyses related to Merck’s proposal. The Transactions Committee then discussed potential responses to Merck regarding its proposal and related process considerations. Following this discussion, the Transactions Committee authorized Centerview to make a counteroffer to Merck of $25.00 per Company Share.

Following the meeting, on January 1, 2024, a representative of Centerview contacted the senior representative of Merck and communicated the counteroffer of $25.00 per Company Share as authorized by the Transactions Committee. Merck’s representative indicated that the counteroffer was not in the range acceptable to Merck and offered instead $21.00 per Company Share.

Shortly thereafter, on January 1, 2024, the Board and the Transactions Committee held a joint meeting (with a majority of directors in attendance), at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the representatives of Centerview updated the directors on Merck’s revised proposal of $21.00 per Company Share. The representatives of Centerview also reviewed a summary of Merck’s revised proposal. The meeting participants discussed potential responses to Merck regarding its revised proposal and related process considerations.

Later in the day, on January 1, 2024, the Transactions Committee held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the Transactions Committee continued their discussion of potential responses to Merck regarding its revised proposal and related process considerations. Following this discussion, the Transactions Committee authorized Centerview to make a counteroffer to Merck of $23.00 per Company Share.

Following the meeting, a representative of Centerview contacted the senior representative of Merck and communicated the counteroffer of $23.00 per Company Share as authorized by the Transactions Committee. Merck’s representative indicated that such counteroffer was acceptable to Merck.

In the evening of January 1, 2024, the Board held a meeting at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present. At this meeting, the Board discussed management’s long-range plan as presented earlier in the day to the Transactions Committee, including the related methodology, the underlying assumptions and related risks, and the Projections. Following discussion of

 

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these matters, the Board, taking into account the recommendation of the Transactions Committee, approved the Projections for the reliance and use by Centerview in connection with providing its financial analysis with respect to the Board’s evaluation of a potential transaction and preparing any opinion as requested by the Board. The representatives of Centerview reviewed certain preliminary financial analyses related to Merck’s proposal. Ms. Eastland described the negotiations during the day with Merck and Merck’s request to target execution of the definitive agreement by the end of the week. The Board further discussed Harpoon’s prospects and the strategic, financial, operational and competitive challenges facing Harpoon, as well as the recent discussions conducted by Harpoon with other industry participants, the outcome of those discussions, and the fact that none of these parties, other than Merck, had expressed interest in a transaction with Harpoon. After discussion, the Board agreed that it was in the best interests of Harpoon and the holders of Company Shares to proceed with Merck’s revised proposal to acquire the Company Shares for $23.00 per share in cash, subject to satisfactory negotiation of the Merger Agreement, and directed senior management and Harpoon’s advisors to endeavor to meet Merck’s proposed timetable.

In addition, on January 1, 2024, Covington & Burling LLP, outside counsel to Merck (“Covington”), provided Goodwin with an initial draft of a voting support agreement in support of the Merger Agreement sent earlier that day by Merck, proposed to be executed by Harpoon’s directors, executive officers and certain of their affiliates.

On January 2, 2024, Harpoon provided representatives of Merck and its advisors access to corporate due diligence with respect to Harpoon materials in a virtual data room. Thereafter, Merck sent a further list of requested due diligence items to Harpoon. In addition to its review of the data room, during the remainder of that week, Merck and its advisors participated in multiple conference calls with senior management and representatives of Harpoon as part of its due diligence investigation on topics including intellectual property, human resources, tax, finance and accounting, and legal due diligence. Merck and its advisors continued to perform due diligence through the execution of the Merger Agreement.

On January 3, 2024, Goodwin sent a revised draft of the Merger Agreement to Covington. Thereafter, Goodwin, on behalf of Harpoon, and Covington, on behalf of Merck, conducted a number of conference calls and exchanged drafts of the Merger Agreement. Among other items, the parties negotiated (1) the definition of “Company Material Adverse Effect”, which generally defines the standard for closing risk, (2) Harpoon’s representations, warranties and interim operating covenants, (3) the provisions relating to the rights of the Board to change its recommendation to stockholders with respect to the transaction with Merck and to accept a “Superior Proposal”, (4) the amount and terms of the termination fee payable by Harpoon in the event that Harpoon were to terminate the Merger Agreement to accept a Superior Proposal and in certain other circumstances, (5) the outside date for closing the Merger under the Merger Agreement, and (6) the covenants regarding employee benefit matters applicable to Harpoon employees generally. In addition, Harpoon reached out to Merck regarding initial proposals for transaction bonus and severance programs for Harpoon employees as authorized by the Board, which included a transaction bonus pool and severance guidelines for non-executive employees to be honored by Merck for the remainder of 2024. At the request of Merck, representatives of Harpoon and Merck also discussed a potential post-closing retention program for Harpoon employees.

On the morning of January 7, 2024, representatives of Goodwin and Covington finalized the open items in the Merger Agreement.

Later on January 7, 2024, the Compensation Committee of the Board held a meeting at which representatives of senior management of Harpoon, Goodwin and Holland & Knight LLP, Harpoon’s outside compensation and benefits counsel, were present. The Compensation Committee had held a series of meetings throughout the fall of 2023 as part of its annual compensation planning in the ordinary course, at which the Compensation Committee, with the assistance of its independent compensation consultant, reviewed Harpoon’s compensation programs against benchmarking data. At this meeting, the Compensation Committee approved (1) the payouts for the 2023 annual incentive bonus program based on achievement of the related corporate goals, (2) annual salary and target bonus amounts for 2024, (3) amendments to the severance arrangements for certain officers to align the severance payable upon a change-in-control with the market median, which, with respect to

 

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the executive officers of Harpoon, included an increase in Ms. Eastland’s severance amount related to her annual target bonus from one to 1.5 times and (4) grants of the annual equity awards in the ordinary course. The Compensation Committee also approved a transaction bonus pool for allocation to certain officers of Harpoon as described in the section of this proxy statement titled “—Interests of the Directors and Executive Officers of Harpoon in the Merger.”

On January 7, 2024, the Board and the Transactions Committee held a joint meeting, at which members of senior management of Harpoon and representatives of Centerview and Goodwin were present, to consider approval of the proposed transaction with Merck. At the meeting, representatives of Centerview reviewed with the Board Centerview’s financial analysis of the Merger Consideration and rendered to the Board Centerview’s oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 7, 2024 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under the caption “—Opinion of Centerview Partners LLC”. Representatives of Goodwin reviewed with the Board the fiduciary duties of the directors in this context and the terms of the final proposed Merger Agreement with Merck. Following additional discussion and consideration of the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement (including the factors described in “—Recommendation of the Harpoon Board of Directors and Reasons for the Merger”), the Transactions Committee unanimously adopted resolutions recommending to the Board that the Board: (1) determine that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to and in the best interests of Harpoon and the Company Stockholders; (2) adopt, approve and declare advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approve the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger; and (3) recommend that the Company Stockholders vote to approve the adoption of the Merger Agreement. Thereafter, the Board, based upon the recommendation of the Transactions Committee, unanimously adopted resolutions: (1) determining that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to and in the best interests of Harpoon and the Company Stockholders; (2) adopting, approving and declaring advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approving the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger; and (3) resolving to recommend that the Company Stockholders vote to approve the adoption of the Merger Agreement.

Later on January 7, 2024, Harpoon, Merck and Merger Sub executed the Merger Agreement and the directors and executive officers of Harpoon and certain of their affiliates executed the Support Agreements. See the section of this proxy statement titled “The Support Agreements”.

Before the opening of trading of the stock markets on January 8, 2024, Harpoon and Merck issued a joint press release announcing the execution of the Merger Agreement.

Recommendation of the Harpoon Board of Directors and Reasons for the Merger

At a special meeting held on January 7, 2024, the Board, upon the recommendation of the Transactions Committee, unanimously: (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to and in the best interests of Harpoon and the Company Stockholders; (2) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL; (3) approved the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger; and (4) resolved to recommend that the Company Stockholders vote to approve the

 

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adoption of the Merger Agreement. Accordingly, the Board recommends that the Company Stockholders vote “FOR” the Merger Proposal and “FOR” the Adjournment Proposal.

In its determinations and in reaching its recommendations, each of the Board and the Transactions Committee, as described in the section titled “—Background of the Merger” of this proxy statement, held a number of meetings, consulted with Harpoon senior management and its outside legal and financial advisors, and considered a number of factors and a substantial amount of information, including, but not limited to, the following (not necessarily presented in order of relative importance) that weighed in favor of the Merger:

Consideration. The Board considered:

 

   

the historical market prices, volatility and trading information with respect to the Company Shares;

 

   

the recent historical trading prices of the Company Shares on Nasdaq, as compared to the proposed $23.00 per share consideration for the Company Shares, including the fact that the proposed consideration of $23.00 per share represented: (1) a 118% premium to the closing price of $10.55 on January 5, 2024, the last trading day before public announcement of the Merger Agreement; (2) a 121% premium to the trailing volume-weighted average price of $10.40 for the 30-day period ended on January 5, 2024; and (3) a 68% premium to the 52-week high closing price of $13.70 on February 7, 2023; and

 

   

that in the Board’s view it had obtained Merck’s best and final offer, and that, as of the date of the Merger Agreement, the proposed consideration of $23.00 per Company Share represented the highest per share consideration reasonably obtainable.

Harpoon’s Operating and Financial Condition and Prospects. The Board considered Harpoon’s limited operating history, the fact that Harpoon has incurred significant operating losses since its inception and expects to incur significant losses for the foreseeable future, and the risk that Harpoon may not be able to generate sufficient revenue to achieve and maintain profitability. In considering the prospects of Harpoon, the Board reviewed certain financial projections for Harpoon prepared by Harpoon senior management, which reflect an application of various assumptions of management. The Board considered the inherent uncertainty of achieving management’s financial projections, as set forth under the heading titled “ —Certain Unaudited Prospective Financial Information,” and that, as a result, Harpoon’s actual financial results in future periods could differ materially from such financial projections. The Board considered that Harpoon stockholders would continue to be subject to the risks and uncertainties of Harpoon executing on its business plan if it remained independent, including the current and prospective business environment in which Harpoon operates, industry and market conditions negatively impacting valuations of and the outlook for clinical-stage biotechnology companies such as Harpoon with lead programs in clinical trials, the regulatory environment and the significant time before regulatory advancements could be made, competition, and the likely effect of these factors on Harpoon and its prospects as a standalone company.

Potential Strategic Alternatives. The Board reviewed the possible alternatives to the Merger, including the execution of management’s standalone plan. The Board considered the risks inherent in the development of drug products, including (1) the stage of development of Harpoon’s programs, (2) risks related to designing, conducting and compiling data from clinical trials and preclinical studies, (3) challenges with respect to patient enrollment, (4) potential difficulties or delays in the commencement or completion, or termination or suspension, of Harpoon’s ongoing or planned clinical trials, (5) the risks related to seeking approval for marketing from the FDA and other regulatory authorities, (6) competition, and (7) other factors affecting the potential revenues, profitability and cash flows of biotechnology companies generally. The Board also considered the fact that none of Harpoon’s product candidates have been approved yet for marketing by the FDA or any similar non-U.S. regulatory body, as well as the status and prospects for Harpoon’s current portfolio of product candidates and development programs.

 

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Existing Resources. The Board considered the fact that Harpoon will require significant additional capital in order to complete the remaining clinical development for its product candidates and potentially commercialize its product candidates, as well as fund its other ongoing operations, and the challenges that Harpoon has faced in the past in raising necessary capital. The Board also took into consideration that, while Harpoon may seek additional funding through future debt and equity financing, collaborations or strategic partnerships, any such fundraising could be highly dilutive to Harpoon’s existing securityholders, might be available only on unfavorable terms, or might not be available at all at the times or in the amounts necessary or desirable.

Negotiation Process. The Board considered the fact that the terms of the Merger Agreement were the result of arm’s-length negotiations conducted by Harpoon with the knowledge and at the direction of the Board (including through the Transactions Committee) and with the assistance of its financial and legal advisors. The Board also considered the enhancements that Harpoon and its advisors were able to obtain as a result of arm’s-length negotiations with Merck, including the increase in the valuation offered by Merck from the time of its initial offer to the end of the negotiations, a number of changes in the terms and conditions of the Merger Agreement from the version initially proposed by Merck that were favorable to Harpoon, and the inclusion of provisions in the Merger Agreement that the Board believes increase the likelihood of completing the Merger.

Potentially Interested Counterparties. The Board considered the process conducted by Harpoon to identify potential acquirors, taking into account (1) the expected interest of such parties in immunotherapy targeting patients suffering from cancer and other diseases, (2) their financial capability to consummate a transaction of this size, and (3) their ability to move quickly and efficiently in a process. In particular, the Board considered the recent discussions conducted by Harpoon with other industry participants, the outcome of those discussions, and the fact that none of these parties, other than Merck, had expressed interest in a transaction with Harpoon. In addition, the Board noted that the other global pharmaceutical companies that were considered reasonably likely to have potential interest in acquiring Harpoon had declined to engage with Harpoon regarding a potential transaction at the time of the proposed Merger.

Centerview’s Opinion and Analysis. The Board considered the oral opinion of Centerview rendered to the Board on January 7, 2024, which was subsequently confirmed by delivery of a written opinion dated January 7, 2024 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below under the caption “—Opinion of Centerview Partners LLC”.

The Merger Agreement; Ability to Consider, Receive and Respond to Unsolicited Proposals. The Board considered the provisions of the Merger Agreement, including (1) the ability of Harpoon under certain circumstances to entertain unsolicited proposals for an acquisition that constitutes or could reasonably be expected to lead to an offer that is superior to the Merger, (2) the ability of the Board under certain circumstances to withdraw or modify its recommendation that Company Stockholders vote to adopt the Merger Agreement and to terminate the Merger Agreement in order to accept a Superior Proposal and enter into a definitive agreement with respect to such Superior Proposal, and (3) the $23,860,000 termination fee payable by Harpoon under certain circumstances, which the Board believed was reasonable relative to termination fees in transactions of a similar size, would not likely preclude competing bids, and would not likely be payable unless Harpoon entered into a definitive agreement for a Superior Proposal.

Conditions to the Consummation of the Merger; Likelihood of Completion. The Board considered the likelihood of completing the Merger, particularly in light of the terms of the Merger Agreement, including (1) the conditions to the Merger being specific and limited, (2) the exceptions contained within the “Company Material Adverse Effect” definition, which generally defines the standard for closing risk, and (3) the likelihood of obtaining the required regulatory approval and the outside date for closing the Merger under the Merger

 

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Agreement, which is anticipated to allow for sufficient time to consummate the Merger. The Board also considered the fact that there is no financing condition to the completion of the Merger, and Harpoon’s ability to obtain specific enforcement of the obligations of Merck and Merger Sub under the Merger Agreement, thereby ensuring that Harpoon has an appropriate remedy in the event Merck and Merger Sub were to decline to comply with their obligations under the Merger Agreement.

Business Reputation of Merck. The Board considered the business reputation and capabilities of Merck and its management and the substantial financial resources of Merck and, by extension, Merger Sub, which the Board believed supported the conclusion that a transaction with Merck and Merger Sub was likely to be completed in a timely and orderly manner.

Certainty of Consideration. The Board considered the all-cash nature of the consideration to be paid in the Merger, which allows Harpoon’s securityholders to realize immediate value, in cash, for their investment in Harpoon, while avoiding Harpoon’s clinical, regulatory, commercialization and other business risks, and while also providing such holders with certainty of value and liquidity for their Harpoon securities.

Appraisal Rights. The Board considered the availability of statutory appraisal rights to the holders of Company Common Stock and Company Series A Preferred Stock who object to the Merger and otherwise comply with all required procedures under the DGCL.

In the course of its deliberations, the Board also considered a variety of material risks and other countervailing factors related to entering into the Merger Agreement, including, but not limited to, the following (which are not necessarily presented in order of relative importance):

 

   

the fact that Harpoon’s securityholders will not be entitled to participate in any potential future benefit from the execution of Harpoon management’s standalone business plan;

 

   

the effect of the public announcement of the Merger Agreement, including effects on Harpoon’s business relationships and Harpoon’s ability to attract and retain key management and personnel;

 

   

the fact that the Merger Agreement precludes Harpoon from actively soliciting alternative acquisition proposals and requires payment by Harpoon of a $23,860,000 termination fee to Merck under certain circumstances, including in the event that the Merger Agreement is terminated by Harpoon to accept a Superior Proposal;

 

   

the possibility that the Merger might not be consummated, and the fact that if the Merger is not consummated, Harpoon’s directors, management and other employees will have expended extensive time and effort and will have experienced significant distractions from their work during the pendency of the Merger, and Harpoon’s relationships with its suppliers, vendors, partners, employees and other third parties may be adversely affected;

 

   

the restrictions imposed by the Merger Agreement on the conduct of Harpoon’s business prior to completion of the Merger, which could delay or prevent Harpoon from undertaking certain business opportunities that may arise during that time;

 

   

the fact that significant transaction and opportunity costs have been and will continue to be incurred in connection with negotiating and entering into the Merger Agreement and completing the Merger;

 

   

the risk of transaction-related litigation; and

 

   

the treatment of the consideration to be received by the holders of Company Shares in the Merger as taxable to such holders for U.S. federal income tax purposes.

In addition, the Board was aware of and considered the interests of Harpoon’s directors and executive officers that may be different from, or in addition to, the interests of Company Stockholders generally when approving the Merger Agreement and recommending that Company Stockholders vote to adopt the Merger Agreement. For more information, see the section of this proxy statement titled “—Interests of the Directors and Executive Officers of Harpoon in the Merger.”

 

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The foregoing discussion of the information and factors considered by the Board and the Transactions Committee in reaching their respective conclusions and recommendations is intended to be illustrative and not exhaustive. In light of the variety of factors considered in connection with their evaluation of the Merger and the complexity of these matters, the Board and the Transactions Committee did not find it practicable to, and did not, quantify or otherwise attempt to rank or assign relative weights to the various factors considered in reaching their respective determinations. In considering the factors described above and any other factors, individual members of the Board may have viewed factors differently or given different weight, merit or consideration to different factors. In addition, the Board and the Transactions Committee did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of the Board or the Transactions Committee, but rather the Board and the Transactions Committee conducted an overall review of the factors described above, including discussions with Harpoon’s senior management and legal and financial advisors.

The foregoing discussion of the reasoning and consideration of certain factors by the Board and the resulting determinations and recommendation, and certain other information presented in this section, as well as similar information included in this proxy statement, is forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section of this proxy statement titled “Cautionary Note Regarding Forward-Looking Statements.” For the reasons described above, and in light of other factors that the Board believed were appropriate to consider, the Board approved the Merger Agreement and the transactions contemplated thereby, including the Merger, and recommends that the Company Stockholders vote in favor of the Merger Proposal and the Adjournment Proposal.

Opinion of Centerview Partners LLC

Harpoon retained Centerview as financial advisor in connection with the Merger. In connection with this engagement, the Board requested that Centerview evaluate the fairness, from a financial point of view, to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. On January 7, 2024, Centerview rendered to the Board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 7, 2024 that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated January 7, 2024, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex C and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety by the full text of Centerview’s written opinion attached as Annex C. Centerview’s financial advisory services and opinion were provided for the information and assistance of the members of the Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Merger and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. Centerview’s opinion did not address any other term or aspect of the Merger Agreement or the Merger and does not constitute a recommendation to any Harpoon stockholder or any other person as to how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Merger or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

 

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In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

 

   

an execution version of the Merger Agreement dated January 7, 2024;

 

   

Annual Reports on Form 10-K of Harpoon for the years ended December 31, 2022, December 31, 2021 and December 31, 2020;

 

   

certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Harpoon;

 

   

certain publicly available research analyst reports for Harpoon;

 

   

certain other communications from Harpoon to its stockholders; and

 

   

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Harpoon, including certain financial forecasts, analyses and projections relating to Harpoon prepared by Harpoon management and furnished to Centerview by Harpoon for purposes of Centerview’s analysis (referred to in this section as the “Projections” and which are summarized in the section below captioned “—Certain Unaudited Prospective Financial Information”) (collectively referred to in this summary of Centerview’s opinion as the “Internal Data”).

Centerview also participated in discussions with members of the senior management and representatives of Harpoon regarding their assessment of the Internal Data, and conducted such financial studies and analyses and took into account such information as Centerview deemed appropriate.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with the consent of the Board, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at the Board’s direction, that the Internal Data (including, without limitation, the Projections) were reasonably prepared on bases reflecting the best currently available estimates and judgments of Harpoon management as to the matters covered thereby and Centerview relied, at the direction of the Board, on the Internal Data for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to the Internal Data or the assumptions on which it was based. In addition, at the Board’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Harpoon, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Harpoon. Centerview assumed, at the direction of the Board, that the final executed Merger Agreement would not differ in any respect material to Centerview’s analysis or opinion from the execution version reviewed by Centerview. Centerview also assumed, at the direction of the Board, that the Merger will be consummated on the terms set forth in the Merger Agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Merger, no delay, limitation, restriction, condition or other change will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of Harpoon, or the ability of Harpoon to pay its obligations when they come due, or as to the impact of the Merger on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview’s opinion expressed no view as to, and did not address, Harpoon’s underlying business decision to proceed with or effect the Merger, or the relative merits of the Merger as compared to any alternative business strategies or transactions that might be available to Harpoon or in which Harpoon might engage.

 

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Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) of the Merger Consideration to be paid to such holders pursuant to the Merger Agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the Merger Agreement or the Merger, including, without limitation, the structure or form of the Merger, or any other agreements or arrangements contemplated by the Merger Agreement or entered into in connection with or otherwise contemplated by the Merger, including, without limitation, the fairness of the Merger or any other term or aspect of the Merger to, or any consideration to be received in connection therewith by, or the impact of the Merger on, the holders of any other class of securities, creditors or other constituencies of Harpoon or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Harpoon or any party, or class of such persons in connection with the Merger, whether relative to the Merger Consideration to be paid to the holders of Company Shares pursuant to the Merger Agreement or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview’s opinion does not constitute a recommendation to any Harpoon stockholder or any other person as to how such stockholder or other person should vote with respect to the Merger or otherwise act with respect to the Merger or any other matter. Centerview’s financial advisory services and its opinion were provided for the information and assistance of the Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Merger. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Board in connection with Centerview’s opinion, dated January 7, 2024. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of Harpoon. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Harpoon or any other parties to the Merger. None of Harpoon, Merck, Merger Sub or Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of Harpoon do not purport to be appraisals or reflect the prices at which Harpoon may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before January 5, 2024 (the last trading day before the public announcement of the Merger) and is not necessarily indicative of current market conditions.

Discounted Cash Flow Analysis

Centerview performed a discounted cash flow analysis of Harpoon based on the Projections, which reflect certain assumptions and future financing needs of Harpoon. A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset or set of assets by calculating the “present value” of estimated

future cash flows of the asset or set of assets. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

 

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In performing this analysis, Centerview calculated a range of equity values for the Company Shares by (a) discounting to present value as of December 31, 2023 using discount rates ranging from 14.0% to 16.0% (based on Centerview’s analysis of Harpoon’s weighted average cost of capital) and using a mid-year convention: (i) the forecasted risk-adjusted, after-tax unlevered free cash flows of Harpoon over the period beginning on January 1, 2024 and ending on December 31, 2043, as set forth in the Projections, (ii) an implied terminal value of Harpoon, calculated by Centerview by assuming that (as directed by Harpoon management) Harpoon’s unlevered free cash flows would decline in perpetuity after December 31, 2043 at a rate of free cash flow decline of 40% year over year, and (iii) tax savings from usage of Harpoon’s federal net operating losses as of December 31, 2022 and Harpoon’s estimated future losses, as set forth in the Internal Data, (b) adding to the foregoing results, Harpoon’s estimated cash of $110 million and subtracting an estimated $89 million payable to holders of Company Series A Preferred Stock upon redemption thereof, in each case as of December 31, 2023, as set forth in the Internal Data and (c) subtracting from the foregoing results the present value, as of December 31, 2023, of the impact of assumed equity raises in 2024, 2025 and 2026, as set forth in the Internal Data.

Centerview then calculated a range of implied equity values per Company Share by dividing the result of the foregoing calculations by Harpoon’s fully diluted outstanding Company Shares calculated on a treasury stock method basis (taking into account unvested restricted stock units, unvested performance-vesting restricted stock units, outstanding in-the-money stock options and warrants) as of January 5, 2024 and as set forth in the Internal Data. The resulting range of implied equity values per Company Share was $14.35 to $18.15, rounded to the nearest $0.05. Centerview then compared the results of the above analysis to the $23.00 per Company Share value of the Merger Consideration to be paid to the holders of Company Shares (other than Excluded Shares and any Company Shares held by any affiliate of Harpoon or Merck) pursuant to the Merger Agreement.

Other Factors

Centerview noted for the Board certain additional factors solely for reference and informational purposes only, including, among other things, the following:

 

   

Historical Stock Trading Price Analysis. Centerview reviewed historical closing trading prices of the Company Shares during the 52-week period ended January 5, 2024 (the last trading day before the public announcement of the Merger), which reflected low and high stock closing prices for Harpoon during such period of approximately $3.29 to $13.70 per Company Share.

 

   

Analyst Price Target Analysis. Centerview reviewed stock price targets for the Company Shares in publicly available Wall Street research analyst reports as of January 5, 2024 (the last trading day before the public announcement of the Merger), which indicated low and high stock price targets for Harpoon ranging from $8.00 to $30.00 per Company Share.

 

   

Precedent Premiums Paid Analysis. Centerview performed an analysis of premiums paid in selected transactions involving publicly traded biopharmaceutical companies with an offer value between $100 million and $1.0 billion for which premium data were available. The premiums in this analysis were calculated by comparing the per share acquisition price in each transaction to the closing price of the target company’s common stock for the date one day prior to the date on which the trading price of the target’s common stock was perceived to be affected by a potential transaction. Based on such analysis and other considerations that Centerview deemed relevant in its professional judgment, Centerview applied a range of 50% to 110% to Harpoon’s closing stock price on January 5, 2024 (the last trading day before the public announcement of the Merger) of $10.55, which resulted in an implied price range of approximately $15.85 to $22.15 per Company Common Share, rounded to the nearest $0.05.

General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the

 

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particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Board in its evaluation of the Merger. Consequently, the analyses described above should not be viewed as determinative of the views of the Board or Harpoon management with respect to the Merger Consideration or as to whether the Board would have been willing to determine that a different consideration was fair. The consideration for the Merger was determined through arm’s-length negotiations between Harpoon and Merck and was approved by the Board. Centerview provided advice to Harpoon during these negotiations. Centerview did not, however, recommend any specific amount of consideration to Harpoon or the Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, except for its current engagement in connection with the Merger, Centerview had not been engaged to provide financial advisory or other services to Harpoon, and Centerview did not receive any compensation from Harpoon during such period. In the two years prior to the date of its written opinion, Centerview had been engaged to provide financial advisory services unrelated to Harpoon, to Merck Parent, including in connection with Merck Parent’s spin-off of Organon & Co. in 2021 and other strategic matters, and Centerview received between $15 million and $25 million in aggregate compensation from Merck Parent during such period. Centerview may provide financial advisory and other services to or with respect to Harpoon, Merck Parent, Merck, or their respective affiliates in the future, for which Centerview may receive compensation. Certain (i) of Centerview’s and its affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, Harpoon, Merck Parent, Merck, or any of their respective affiliates, or any other party that may be involved in the Merger.

Harpoon selected Centerview as its financial advisor in connection with the Merger based on, among other factors, its qualifications, professional reputation and industry expertise. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger.

In connection with Centerview’s services as the financial advisor to Harpoon, Harpoon has agreed to pay Centerview an aggregate fee of approximately $22.5 million, $1 million of which was payable upon the rendering of Centerview’s opinion (regardless of the conclusion reached in the opinion) and the remainder of which will be paid upon, and subject to, consummation of the Merger. In addition, Harpoon has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

Certain Unaudited Prospective Financial Information

Harpoon does not, as a matter of course, publicly disclose financial forecasts or projections as to future revenues or other results of its operations due to, among other reasons, the uncertainty, unpredictability and subjectivity of the underlying assumptions and estimates. However, in connection with the evaluation of the proposed transaction with Merck and the other strategic alternatives considered by the Board, in December 2023, Harpoon’s senior management prepared certain risk-adjusted financial projections for fiscal years 2024 through 2043 (which we refer to as the “Projections”). The Projections were presented to the Board in connection with its

consideration of the Merger, and were provided to Centerview and, at the instruction and with the approval of the Board, were relied upon and used by Centerview in connection with rendering its opinion to the Board and

 

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performing the related financial analyses as described in the section of this proxy statement captioned “—Opinion of Centerview Partners LLC” and were the only financial projections with respect to Harpoon used by Centerview in performing such financial analyses.

The Projections were prepared based on Harpoon’s continued operation as a standalone company and do not take into account the Merger, including the effect of any business or strategic decision or action that has been or will be taken as a result of the execution of the Merger Agreement.

Harpoon is summarizing the Projections in this proxy statement solely to provide stockholders with access to certain financial projections that were made available to the Board, the Transactions Committee and Centerview for the purposes described above, and are not included in this proxy statement to influence a Harpoon stockholder’s decision whether to vote to adopt the Merger Agreement or for any other purpose. The Projections were not provided to Merck.

Cautionary Note About the Projections

The Projections were prepared by Harpoon senior management based on certain estimates and assumptions with respect to general business, economic, competitive, regulatory, reimbursement and other market and financial conditions and other future events, all of which are difficult to predict and many of which are beyond Harpoon’s control. As a result, there can be no assurance that the Projections accurately reflect future trends or accurately estimate the future market for Harpoon’s product candidates. The Projections, while necessarily presented with numerical specificity, were based on numerous variables and financial, operating and commercial assumptions, developed solely using the information available to Harpoon’s management at the time, that were inherently uncertain. Important factors that may affect actual results and cause the Projections not to be achieved include: (1) the pursuit or success of preclinical studies and/or clinical trials (including the funding for such studies or trials, anticipated patient enrollment, clinical outcomes, timing or associated costs); (2) regulatory approvals and related timelines; (3) the timing of launch of commercial sales of product candidates, if approved; (4) the market acceptance of potential products and product candidates; (5) development of potential products and product candidates for different indications; (6) risks associated with the development of product candidates in combination with other therapies; (7) the impact of competitive products and pricing; (8) the effect of regulatory actions; (9) the availability of licensing arrangements on favorable terms or at all; (10) the ability to establish and maintain intellectual property protection for products or avoid or defend claims of infringement; (11) uncertainties in contractual relationships, including collaborations, partnerships, licensing or other arrangements, and the performance of third-party suppliers and manufacturers; (12) the effect of global economic conditions and conditions in the biotechnology industry; (13) conditions in the financing markets and access to sufficient capital; (14) changes in applicable laws, rules and regulations; (15) accuracy of certain accounting assumptions; and (16) other risk factors described in Harpoon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, subsequent Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as well as the section titled “Cautionary Note Regarding Forward-Looking Statements” in this proxy statement.

The Projections also reflect assumptions as to certain business decisions that are subject to change. In addition, the Projections do not take into account any circumstances or events occurring after the date that they were prepared, including the announcement of the Merger, and do not give effect to the Merger or any changes to Harpoon’s operations or strategy that may be implemented following the consummation of the Merger or to any costs incurred in connection with the Merger. As a result, there can be no assurance that the Projections will be realized, and actual results may be materially better or worse than those contained in the Projections. The Projections cover multiple years, and such information by its nature becomes less reliable with each successive year.

The inclusion of the Projections in this proxy statement should not be regarded as an indication that Harpoon or any of its affiliates, advisors or representatives considered or consider the Projections to be predictive of actual future events, and the Projections should not be relied upon as such or construed as financial guidance.

 

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The Projections may differ from publicly available analyst estimates. None of Harpoon or any of its affiliates or Centerview assume any responsibility for the accuracy of this information. Harpoon does not intend to make publicly available any update or other revision to the Projections, except as otherwise required by law. Moreover, Harpoon does not intend to update or otherwise revise the projections to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying the Projections are no longer appropriate.

Neither Harpoon nor any of its affiliates, advisors, officers, directors or representatives has made or makes any representation or warranty to any holders of Harpoon securities or other person regarding the ultimate performance of Harpoon compared to the information contained in the Projections or that the Projections will be achieved. Harpoon has made no representation to Merck or Merger Sub, in the Merger Agreement or otherwise, concerning the Projections. The Projections are subjective in many respects and are thus subject to interpretation.

The Projections were not prepared with a view toward public disclosure and, accordingly, do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts, or GAAP. In addition, the Projections were not prepared with the assistance of, or reviewed, compiled or examined by, independent accountants. The Projections include non-GAAP financial measures such as EBIT and unlevered free cash flow (each as defined below). Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Harpoon may not be comparable to similarly titled amounts used by other companies. The financial measures included in the Projections are not subject to SEC rules regarding disclosures of non-GAAP financial measures, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure. Reconciliations of non-GAAP financial measures were not provided to or relied upon or used by the Board or Centerview.

The Projections were based on assumptions about Harpoon’s continued operation as a standalone, publicly-traded company, including with respect to the continued research, development and commercialization of Harpoon’s product candidates, including with respect to HPN328, HPN217 and HPN601, while also accounting for risk and probability adjustments reflecting Harpoon senior management’s assessment as to the probability of success of Harpoon’s pipeline programs as of the time such Projections were prepared. The Projections include assumptions regarding asset-specific probabilities of technical and regulatory success, timing of the clinical development plan, indications to be pursued, timing of commercial launch, sales ramp, market size, market share, peak sales, duration, pricing, relative positioning versus competition, licensing arrangements, market exclusivity, estimated costs and expenses, effective tax rate and utilization of net operating losses, future equity raises conducted by Harpoon, expected cash burn rate, and other relevant factors related to Harpoon’s long-range operating plan. The foregoing is a summary of certain key assumptions and does not purport to be a comprehensive or exhaustive overview of all metrics and assumptions included or reflected in the Projections.

The Projections summarized below reflect the final projections reviewed and approved by the Board. On December 21, 2023, prior to receipt of Merck’s initial proposal, the Transactions Committee reviewed management’s preliminary standalone, long-range plan, including preliminary financial projections for 2024 through 2043, and provided feedback to management. See the section of this proxy statement titled “—Background of the Merger”. Thereafter, based on such feedback, senior management revised certain assumptions underlying the preliminary projections, including extending the duration of therapy with respect to certain indications for HPN328 and increasing the year-over-year decline in sales for all product candidates included in the projections following the estimated loss of exclusivity from 20% to 40% to align more closely with industry benchmarks. Such changes resulted in (a) estimated risk-adjusted revenue related to HPN328 increasing in each of 2026 through 2039 and (b) estimated risk-adjusted revenue decreasing in each of 2040 through 2043 following the estimated loss of exclusivity for HPN328, the net result of which was that estimated risk-adjusted cumulative revenue related to HPN328 over the projection period of 2024 to 2043 increased by 1%. The preliminary projections also were revised to align estimated 2024 operating expenses with the Board approved budget for the first half of the year.

 

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The following tables present a summary of the Projections (USD in millions):

 

     2024E     2025E     2026E     2027E     2028E     2029E     2030E     2031E     2032E     2033E  

Net Revenue

   $ 20     $ 15     $ 31     $ 144     $ 310     $ 378     $ 392     $ 417     $ 453     $ 499  

Gross Profit

   $ 20     $ 15     $ 24     $ 114     $ 264     $ 321     $ 333     $ 355     $ 385     $ 425  

Total R&D Expenses

   ($ 65   ($ 90   ($ 94   ($ 33   ($ 22   ($ 26   ($ 23   ($ 15   ($ 15   ($ 15

Total S&M Expenses

     —      ($ 13   ($ 55   ($ 83   ($ 86   ($ 90   ($ 115   ($ 127   ($ 133   ($ 139

Total G&A Expenses

   ($ 17   ($ 17   ($ 17   ($ 12   ($ 12   ($ 13   ($ 14   ($ 15   ($ 16   ($ 16

EBIT (1)

   ($ 62   ($ 105   ($ 142   ($ 13   $ 143     $ 192     $ 182     $ 198     $ 222     $ 255  
     2034E     2035E     2036E     2037E     2038E     2039E     2040E     2041E     2042E     2043E  

Net Revenue

   $ 556     $ 623     $ 687     $ 709     $ 732     $ 749     $ 532     $ 404     $ 329     $ 197  

Gross Profit

   $ 474     $ 531     $ 586     $ 604     $ 624     $ 637     $ 453     $ 344     $ 280     $ 168  

Total R&D Expenses

   ($ 15   ($ 15   ($ 15   ($ 15   ($ 12   ($ 6   ($ 5   ($ 3   ($ 3   ($ 2

Total S&M Expenses

   ($ 145   ($ 152   ($ 158   ($ 166   ($ 173   ($ 179   ($ 123   ($ 90   ($ 69   ($ 42

Total G&A Expenses

   ($ 18   ($ 19   ($ 20   ($ 22   ($ 23   ($ 24   ($ 17   ($ 9   ($ 6   ($ 4

EBIT (1)

   $ 296     $ 345     $ 392     $ 402     $ 416     $ 429     $ 309     $ 242     $ 202     $ 121  

 

(1)

EBIT is a non-GAAP financial measure defined as earnings before interest expenses and taxes.

At the direction of Harpoon’s management and the Board, Centerview calculated, solely based on the Projections, which were approved by the Board for reliance upon and use by Centerview in connection with the rendering of its opinion to the Board and in performing the related financial analyses as described in the section of this proxy statement captioned “—Opinion of Centerview Partners LLC,” and based on information and assumptions provided by Harpoon’s management, unlevered free cash flow as set forth below, which has been reviewed and approved by the Board for reliance upon and use by Centerview in connection with the rendering of its opinion to the Board and in performing the related financial analyses as described in the section of this proxy statement captioned “—Opinion of Centerview Partners LLC.” For purposes of calculating the discounted cash flow, Centerview calculated per Harpoon management the estimated (1) benefit from usage of net operating losses (“NOLs”) based on U.S. federal net operating losses of $208 million as of December 31, 2022 and estimated future losses and (2) impact of the cost of future potential capital raises of $100 million in 2024, $100 million in 2025, and $150 million in 2026. The values in the tables below do not take into account the effect of federal NOL usage and the cost of future capital raises.

The following tables present a summary of the unlevered free cash flows (USD in millions):

 

     2024E     2025E     2026E     2027E     2028E     2029E     2030E     2031E     2032E     2033E  

EBIT (1)

   ($ 62   ($ 105   ($ 142   ($ 13   $ 143     $ 192     $ 182     $ 198     $ 222     $ 255  

Less: Tax Expense (2)

     —        —        —        —      ($ 30   ($ 40   ($ 38   ($ 42   ($ 47   ($ 54

Less: Capital Expenditures

   ($ 0   ($ 0   ($ 0   ($ 1   ($ 1   ($ 1   ($ 1   ($ 1   ($ 1   ($ 1

Plus: Depreciation & Amortization

   $ 0     $ 0     $ 0     $ 0     $ 1     $ 1     $ 1     $ 1     $ 1     $ 1  

Less: Change in Net Working Capital

     —        —      ($ 3   ($ 11   ($ 15   ($ 7   ($ 1   ($ 2   ($ 3   ($ 4

Unlevered Free Cash Flow (3)

   ($ 62   ($ 105   ($ 145   ($ 24   $ 98     $ 145     $ 142     $ 154     $ 172     $ 197  
     2034E     2035E     2036E     2037E     2038E     2039E     2040E     2041E     2042E     2043E  

EBIT (1)

   $ 296     $ 345     $ 392     $ 402     $ 416     $ 429     $ 309     $ 242     $ 202     $ 121  

Less: Tax Expense (2)

   ($ 62   ($ 73   ($ 82   ($ 84   ($ 87   ($ 90   ($ 65   ($ 51   ($ 42   ($ 25

Less: Capital Expenditures

   ($ 1   ($ 1   ($ 1   ($ 1   ($ 1   ($ 1   ($ 1   ($ 0   ($ 0   ($ 0

Plus: Depreciation & Amortization

   $ 1     $ 1     $ 1     $ 1     $ 1     $ 1     $ 1     $ 1     $ 0     $ 0  

Less: Change in Net Working Capital

   ($ 5   ($ 6   ($ 6   ($ 2   ($ 2   ($ 2   $ 20     $ 12     $ 7     $ 12  

Unlevered Free Cash Flow (3)

   $ 229     $ 267     $ 303     $ 315     $ 326     $ 336     $ 264     $ 203     $ 167     $ 108  

 

(1)

EBIT is a non-GAAP financial measure defined as earnings before interest expenses and taxes.

(2)

Assumes a tax rate of 21%.

 

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(3)

As set forth in these tables, unlevered free cash flow is a non-GAAP financial measure defined as EBIT, less tax expense (if profitable), less capital expenditures, plus depreciation and amortization, and less change in net working capital.

In light of the foregoing factors and the uncertainties inherent in the Projections, stockholders are cautioned not to place undue reliance on the Projections or any other forward-looking information included in this section of the proxy statement.

Interests of the Directors and Executive Officers of Harpoon in the Merger

Certain of Harpoon’s executive officers and directors may have financial interests in the Merger that are different from, or in addition to, the interests of Company Stockholders generally. The Board was aware of these potential interests and considered them, among other matters, in evaluating and negotiating the Merger Agreement and in reaching its decision to approve the Merger Agreement and the Merger, and to recommend that the Company Stockholders approve the Merger Agreement as more fully discussed in “—Recommendation of the Harpoon Board of Directors and Reasons for the Merger.”

Harpoon’s current executive officers and their respective positions are as follows:

 

   

Name

  

Position

    
  Julie Eastland    Chief Executive Officer   
  Luke Walker, M.D.    Chief Medical Officer   
  James B. Bucher, J.D.    Chief Legal Officer   

Harpoon’s current non-employee directors are as follows:

 

   

Name

   
  Joseph S. Bailes, M.D.  
  Mark Chin  
  Jonathan Drachman, M.D.  
  Ronald Hunt  
  Scott Myers  
  Andrew Robbins  
 

Lauren P. Silvernail

 

The disclosure below does not include Georgia Erbez, former Chief Financial Officer, Natalie Sacks, M.D., former Chief Medical Officer, or Holger Wesche, Ph.D., former Chief Science Officer, each of whom was a named executive officer in Harpoon’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 27, 2023, as they are not entitled to any compensation in connection with the Merger except with respect to any Company Shares or equity awards held by them in the same manner as described below. See the section of this proxy statement titled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 100.

Treatment of Equity and Equity-Based Awards

Harpoon’s directors and executive officers who own Company Shares will receive the Merger Consideration on the same terms and conditions, as the other holders of Company Shares in the Merger. The following table sets forth the number of Company Shares owned, as of January 7, 2024, by each of Harpoon’s executive officers and non-employee members of the Board (which, for this purpose, excludes (1) shares underlying Harpoon stock options, whether or not currently exercisable, (2) shares subject to outstanding and unvested Harpoon RSUs, and (3) shares held by affiliated entities of such persons).

 

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Name

   Shares Owned
(#)
     Value of Shares Owned
($)
 

Julie Eastland

     3,503        80,569  

Luke Walker, M.D.

     —         —   

James B. Bucher, J.D.

     —         —   

Non-Employee Directors

     

Joseph S. Bailes, M.D.

     —         —   

Mark Chin

     7,800        179,400  

Jonathan Drachman, M.D.

     —         —   

Ronald Hunt

     7,800        179,400  

Scott Myers

     17,665        406,295  

Andrew Robbins

     —         —   

Lauren P. Silvernail

     —         —   

Harpoon Stock Options

Each outstanding and unexercised Harpoon stock option will, to the extent unvested, become fully vested and exercisable immediately prior to the Effective Time. At the Effective Time, (1) each In the Money Option will be cancelled and, in exchange therefor, each former holder thereof will be entitled to receive the Option Consideration and (2) each Harpoon stock option other than an In the Money Option that is then outstanding and unexercised will be cancelled with no consideration payable in respect thereof.

The following table sets forth, for each of Harpoon’s executive officers and the non-employee members of the Board, (a) the aggregate number of Company Shares underlying vested Harpoon stock options held by such individual as of January 7, 2024, (b) the aggregate number of Company Shares underlying unvested Harpoon stock options as of January 7, 2024 and (c) the estimated value that the executive officers and non-employee members of the Board will receive in respect of such Harpoon stock options in connection with the Merger.

 

Name

   Unvested
Stock
Options

(#)
     Value of
Unvested
Stock
Options
($)
     Vested
Stock
Options
(#)
     Value of
Vested
Stock
Options
($)
 

Julie Eastland

     47,757        436,959        34,404        142,871  

Luke Walker, M.D.

     28,467        361,547        12,033        151,553  

James B. Bucher, J.D.

     110,000        1,287,000        —         —   

Non-Employee Directors

           

Joseph S. Bailes, M.D.

     2,300        37,589        7,207        12,058  

Mark Chin

     2,300        37,589        10,462        16,038  

Jonathan Drachman, M.D.

     2,300        37,589        10,309        32,244  

Ronald Hunt

     2,300        37,589        10,758        16,038  

Scott Myers

     4,600        75,178        6,097        5,896  

Andrew Robbins

     2,300        37,589        4,065        2,946  

Lauren P. Silvernail

     3,655        46,803        678        4,610  

Harpoon Restricted Stock Units

Each Harpoon RSU that is outstanding immediately prior to the Effective Time will be cancelled and converted automatically into the right to receive the RSU Consideration. With respect to the Harpoon RSU granted to Ms. Eastland in April 2022 that vests based upon the achievement of certain performance-related metrics, the performance-related metrics will be deemed to have been achieved at 125% of the target performance level pursuant to the terms of the award agreement governing such Harpoon RSU.

 

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The following table sets forth, for each of Harpoon’s executive officers and the non-employee members of the Board, (1) the aggregate number of Company Shares underlying Harpoon RSUs held as of January 7, 2024, and (2) the estimated value that the executive officers and non-employee members of the Board will receive in respect of such Harpoon RSUs in connection with the Merger.

 

Name

   Harpoon RSUs
(#)
     Value of Harpoon
RSUs ($)
 

Julie Eastland

     259,750        5,974,250  

Luke Walker, M.D.

     135,000        3,105,000  

James B. Bucher, J.D.

     —         —   

Non-Employee Directors

     

Joseph S. Bailes, M.D.

     5,000        115,000  

Mark Chin

     5,000        115,000  

Jonathan Drachman, M.D.

     5,000        115,000  

Ronald Hunt

     5,000        115,000  

Scott Myers

     5,000        115,000  

Andrew Robbins

     5,000        115,000  

Lauren P. Silvernail

     5,000        115,000  

Transaction Bonuses

At the time of the execution of the Merger Agreement, the Compensation Committee of the Board approved a transaction bonus pool of $2,000,000 and granted transaction bonuses to Ms. Eastland, in the amount of $1,000,000, and to Dr. Walker, in the amount of $400,000 (the “Transaction Bonuses”). The Transaction Bonuses were approved by the Compensation Committee of the Board to recognize significant contributions to Harpoon and towards the consummation of the Merger. The Transaction Bonuses are contingent and payable only upon the closing of the Merger, provided that the executive remains continuously employed by Harpoon through the Closing Date.

Severance Entitlements

Each of Ms. Eastland, Dr. Walker and Mr. Bucher has entered into an employment agreement with Harpoon (each, an “Employment Agreement”) and, pursuant to the terms of the Merger Agreement, Harpoon was permitted to amend Ms. Eastland’s Employment Agreement to modify the bonus component of the severance payable thereunder from one to 1.5 times her annual target bonus. Each Employment Agreement provides for certain payments and benefits if the executive’s employment with Harpoon is terminated by Harpoon without “cause,” and other than as a result of the executive’s death or disability, or by the executive for “good reason,” in any case, within the period commencing 60 days prior to and ending 24 months following a “change in control” of Harpoon (as such terms are defined in the applicable Employment Agreement) (any such termination, a “CIC Termination”). The Merger will qualify as a “change in control” under the Employment Agreements.

Upon a CIC Termination, each of Ms. Eastland, Dr. Walker and Mr. Bucher is entitled to receive the following payments and benefits:

 

   

cash severance equal to 12 months of the executive’s base salary then in effect plus one times the executive’s target bonus (or, for Ms. Eastland, 18 months of base salary and 1.5 times target bonus), payable in a lump sum on the 60th day following the date of termination of employment;

 

   

in the event that the executive elects continued group medical coverage under COBRA, reimbursement by Harpoon of payments for COBRA coverage (in an amount not to exceed the amount that Harpoon then pays for health insurance coverage for active employees), until the earliest of (1) 12 months following the termination of employment (or 18 months for Ms. Eastland), (2) the expiration of the executive’s eligibility for the continuation coverage under COBRA, or (3) the date the executive enrolls for health insurance coverage in connection with new employment or self-employment; and

 

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acceleration of vesting of all outstanding equity awards.

All of the severance payments and benefits described above are subject to, among other things, the executive’s timely execution and non-revocation of a general release of claims. The Employment Agreements also provide that payments and benefits payable to each executive officer will be reduced so that no portion of such payments and benefits are subject to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), unless the executive officer would be better off on an after-tax basis receiving all such payments and benefits.

The following table sets forth the potential amounts payable to Harpoon’s executive officers upon a CIC Termination under the Employment Agreements, other than the value of accelerated Harpoon stock options and Harpoon RSUs, which are detailed above.

 

Name

   Cash Severance ($)      Value of COBRA
Benefits ($)
 

Julie Eastland

     1,441,500        40,765  

Luke Walker, M.D.

     700,000        27,587  

James B. Bucher, J.D.

     630,000        32,901  

Vesting of November 2023 Retention Award

In November 2023, the Compensation Committee of the Board granted cash retention awards (the “November Retention Awards”) to certain key employees of Harpoon in recognition of their services to Harpoon and whose efforts would be needed to build the organization in readiness for late-stage development. November Retention Awards were granted to Ms. Eastland and Dr. Walker in the amounts of $338,250 and $200,000, respectively. The November Retention Awards vest and become payable as to 50% of the award on the six-month anniversary of the date of grant and as to the remaining 50% on the one-year anniversary of the date grant, but accelerate and become payable upon a “change in control” of Harpoon that occurs while such executive remains employed at Harpoon or the executive’s termination of employment without “cause” (but not for death or “disability” (as defined in the executive’s retention award agreement)) or resignation for “good reason” (as such terms are defined in the executive’s Employment Agreement).

New Merck Arrangements

Certain of Harpoon’s executive officers may continue to provide employment or other services to Merck after the Effective Time and may enter into new agreements, arrangements or understandings with Merck to set forth the terms and compensation of such post-Effective Time service. As of the date of this proxy statement, no such agreements, arrangements or understandings with Merck exist, except that Merck intends to implement a post-closing retention program for Harpoon employees but has not specified whether any executive officers will participate.

280G Mitigation Actions

Under the Merger Agreement, Harpoon may, in consultation with Merck, take reasonable actions to mitigate the possible impact of Sections 280G and 4999 of the Code; provided that Harpoon may not make, or agree to make, any related tax gross-up payment.

Continuing Employee Benefits

The Merger Agreement provides that until the end of the calendar year in which the Closing Date occurs, but not beyond the date on which the individual’s employment terminates with Merck, the Surviving Corporation, Harpoon or any of their respective subsidiaries (such period being the “benefits continuation period”), Merck will provide or cause to be provided, to each employee of Harpoon who is retained by Merck

 

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(the “Continuing Employees”), (1) base salary or hourly wages and annual bonus targets that are, in each case, no less favorable than those provided to such Continuing Employee immediately prior to the Closing Date and (2) employee benefits that are substantially comparable in the aggregate to either (in the discretion of Merck) (a) the employee benefits provided to the Continuing Employees immediately prior to the Closing Date or (b) employee benefits provided to similarly situated employees of Merck and its affiliates (in the case of either clause (a) or clause (b), excluding any equity, equity-based, change in control or severance benefits, or defined benefit retirement benefits).

Indemnification

Each of Harpoon’s executive officers and directors is entitled to the indemnification and insurance benefits in favor of Harpoon’s directors and executive officers, as described in more detail in “The Merger Agreement Indemnification; Directors’ and Officers’ Insurance.”

Section 16 Matters

The Board has taken, or prior to the Effective Time, will take, all actions reasonably necessary to cause the dispositions of shares of the Company’s capital stock (including derivative securities) in connection with the Merger, by each individual who is a director or officer of Harpoon and their affiliated entities, in each case that are subject to the reporting requirements of Section 16(a) of the Exchange Act, to be exempt under Rule 16b-3 under the Exchange Act.

Ownership of Other Securities

In addition to Company Shares, as of January 7, 2024, entities affiliated with New Leaf Venture Partners owned 10,000 shares of the Company Series A Preferred Stock and a warrant to purchase 299,430 Company Shares issued in Harpoon’s March 2023 financing, and warrants to purchase 771,750 shares issued in Harpoon’s October 2023 financing. Ronald Hunt, a non-employee member of the Board, is affiliated with New Leaf Ventures. For further information, see the section of this proxy statement titled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 100. In addition, as of January 7, 2024, Arix Bioscience Holdings Limited owned 3,500 shares of the Company Series A Preferred Stock and warrants to purchase 104,800 Company Shares issued in the Company’s March 2023 financing. Mark Chin, a non-employee member of the Board, was affiliated with Arix Bioscience at the time that such securities were acquired, but was no longer affiliated with Arix Bioscience at the time that the Board approved the Merger Agreement and transactions contemplated thereby.

Financing of the Merger

The Merger Agreement is not conditioned upon receipt of financing by Merck. We anticipate that the total amount of funds necessary to consummate the Merger and the related transactions, not including fees and expenses, will be approximately $680 million, including the estimated funds needed to (1) pay our stockholders the consideration due to them under the Merger Agreement and (2) make payments in respect of outstanding equity awards and warrants of Harpoon in accordance with their terms and pursuant to the Merger Agreement.

We understand that Merck expects to fund amounts needed for the acquisition of Harpoon under the Merger Agreement through the use of cash on hand or existing credit facilities. Merck has represented in the Merger Agreement that it has access to, and will cause Merger Sub to have, at the Effective Time and at the Closing, sufficient funds for the consummation of the Merger and the other transactions contemplated by the Merger Agreement, including payment in cash of the aggregate Merger Consideration on the Closing Date, and to pay all related fees and expenses required to be paid by Merck and Merger Sub pursuant to the terms of the Merger Agreement.

 

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Closing and Effective Time of the Merger

The closing of the Merger will take place remotely by electronic exchange of executed agreements and documents and other deliverables, at 8:00 a.m. Eastern Time on a date to be specified by the parties, which will be no later than the second business day after the date the conditions set forth in the Merger Agreement (other than any such conditions which by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted, waiver of those conditions at the Closing) have been satisfied or, to the extent permitted, waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time, or on such other date as Merck and Harpoon may mutually agree in writing.

As soon as practicable on the Closing Date, the parties will cause the Merger to be consummated by filing with the Secretary of State of the State of Delaware the certificate of merger in such form as required by, and executed in accordance with, the relevant provisions of the DGCL and will make all other filings or recordings required under the DGCL to consummate the Merger. The Merger will become effective at such time as the certificate of merger is duly filed with such Secretary of State, or at such later time as Merck and Harpoon agree and specify in the certificate of merger.

Appraisal Rights

If the Merger is consummated, stockholders who do not wish to accept the applicable merger consideration are entitled to seek appraisal of their Company Shares or shares of Company Series A Preferred Stock under Section 262 of the DGCL and, if all procedures described in Section 262 are strictly complied with, to receive payment in cash for the fair value of their Company Shares or shares of Company Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value. The “fair value” of Company Shares or shares of Company Series A Preferred Stock as determined by the Delaware Court of Chancery may be more or less than, or the same as, the consideration that such holder of Company Shares or shares of Company Series A Preferred Stock may receive in the Merger. These rights are known as “appraisal rights.” This proxy statement serves as a notice of such appraisal rights pursuant to Section 262.

Persons who exercise appraisal rights under Section 262 of the DGCL will not receive the consideration that they would otherwise be entitled to receive pursuant to the Merger Agreement. They will receive an amount determined to be the “fair value” of their Company Shares or shares of Company Series A Preferred Stock, as applicable, following petition to, and an appraisal by, the Delaware Court of Chancery. Persons considering seeking appraisal should recognize that the fair value of their Company Shares or shares of Company Series A Preferred Stock determined under Section 262 could be more than, the same as or less than the consideration they would otherwise be entitled to receive pursuant to the Merger Agreement. Strict compliance with the procedures set forth in Section 262 is required. Failure to comply strictly with all of the procedures set forth in Section 262 may result in the withdrawal, loss or waiver of appraisal rights. Consequently, and in view of the complexity of the provisions of Section 262, persons wishing to exercise appraisal rights are urged to consult their legal and financial advisors before attempting to exercise such rights.

A copy of Section 262 of the DGCL is attached to this proxy statement as Annex D. The following summary is not a complete statement of the law relating to appraisal rights and is qualified in its entirety by reference to Section 262 of the DGCL and any amendments thereto after the date of this proxy statement. Any person who desires to exercise his, her or its appraisal rights should review carefully Section 262 of the DGCL and is urged to consult his, her or its legal advisor before electing or attempting to exercise such rights. The following summary does not constitute legal or other advice, nor does it constitute a recommendation that persons seek to exercise their appraisal rights under Section 262 of the DGCL. A person who loses his, her or its appraisal rights will be entitled to receive the Merger Consideration under the Merger Agreement.

 

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A holder of record of Company Shares or shares of Company Series A Preferred Stock and a beneficial owner who (1) continuously holds or beneficially owns, as applicable, such shares through the Effective Time, (2) has not consented to the Merger in writing or otherwise voted in favor of the Merger or otherwise withdrawn, lost or waived appraisal rights, (3) strictly complies with the procedures under Section 262 of the DGCL, (4) does not thereafter withdraw his, her or its demand for appraisal of such shares and (5) in the case of a beneficial owner, a person who (A) reasonably identifies in his, her or its demand the holder of record of the shares for which the demand is made, (B) provides documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be and (C) provides an address at which such beneficial owner consents to receive notices given by Harpoon and to be set forth on the Chancery List (as defined below), will be entitled to receive the fair value of his, her or its Company Shares or shares of Series A Preferred Stock exclusive of any element of value arising from the accomplishment or expectation of the Merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be the fair value.

Section 262 of the DGCL requires that where a proposed merger is to be submitted for approval at a meeting of stockholders, the corporation must notify stockholders that appraisal rights will be available not less than 20 days before the meeting to vote on the Merger. Such notice must include either a copy of Section 262 of the DGCL or information directing the stockholders to a publicly available electronic resource at which Section 262 of the DGCL may be accessed without subscription or cost. This proxy statement constitutes Harpoon’s notice to our stockholders that appraisal rights are available in connection with the Merger, in compliance with the requirements of Section 262 of the DGCL. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 of the DGCL, which is attached to this proxy statement as Annex D. Failure to comply timely and properly with the requirements of Section 262 of the DGCL will result in the loss of your appraisal rights under the DGCL.

If you elect to demand appraisal of your Company Shares or shares of Company Series A Preferred Stock, you must satisfy each of the following conditions: you must deliver to Harpoon a written demand for appraisal of your Company Shares or shares of Company Series A Preferred Stock, as applicable, prior to the Special Meeting, which must (1) reasonably inform us of the identity of the holder of record of such shares who intends to demand appraisal of his, her or its shares (and, for beneficial owners only, such demand is accompanied by documentary evidence of such beneficial owner’s beneficial ownership and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by Harpoon and to be set forth on the Chancery List), and (2) that you intend to demand the appraisal of your shares. In addition, as described above, you must not vote or submit a proxy in favor of the proposal to adopt the Merger Agreement; you must hold or beneficially own, as applicable, your Company Shares or shares of Company Series A Preferred Stock continuously through the effective date; and you must comply with the other applicable requirements of Section 262 of the DGCL.

A stockholder of Harpoon who elects to exercise appraisal rights must mail or deliver his, her or its written demand for appraisal to the following address:

Harpoon Therapeutics, Inc.

611 Gateway Boulevard

South San Francisco, California 94080

Attention: Corporate Secretary

Within 10 days after the Effective Time, the Surviving Corporation must give written notice that the Merger has become effective to each stockholder of any class or series of stock of Harpoon who is entitled to appraisal rights that the Merger was approved and that appraisal rights are available for any or all shares of such class or series of stock.

Within 120 days after the Effective Time, but not thereafter, the Surviving Corporation and any person who has properly and timely demanded appraisal and otherwise complied with Section 262 of the DGCL may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on

 

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the Surviving Corporation in the case of a petition filed by a person, demanding a determination of the fair value of the Company Shares or shares of Company Series A Preferred Stock held by all persons that have demanded appraisal. There is no present intent on the part of Harpoon or the Surviving Corporation to file an appraisal petition and persons seeking to exercise appraisal rights should assume that Harpoon and the Surviving Corporation will not file such a petition or initiate any negotiations with respect to the fair value of Company Shares or shares of Company Series A Preferred Stock. Accordingly, persons who desire to have their Company Shares or shares of Company Series A Preferred Stock appraised should initiate any petitions necessary for the perfection of their appraisal rights within the time periods and in the manner prescribed in Section 262 of the DGCL. If, within 120 days after the Effective Time, no petition has been filed as provided above, all rights to appraisal will cease and any person that previously demanded appraisal will become entitled only to the Merger Consideration under the Merger Agreement.

At any time within 60 days after the Effective Time, any person who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the demand and accept the Merger Consideration specified by the Merger Agreement for that person’s Company Shares or shares of Company Series A Preferred Stock by delivering to the Surviving Corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the Effective Time will require written approval of the Surviving Corporation. Unless the demand is properly withdrawn by the person within 60 days after the effective date, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any person without the approval of the Delaware Court of Chancery, with such approval conditioned upon such terms as the Delaware Court of Chancery deems just. If the Surviving Corporation does not approve a request to withdraw a demand for appraisal when that approval is required, or if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the person will be entitled to receive only the fair value of such person’s Company Shares or shares of Company Series A Preferred Stock determined by the Delaware Court of Chancery in any such appraisal proceeding, which value could be less than, equal to or more than the Merger Consideration offered pursuant to the Merger Agreement.

In addition, within 120 days after the Effective Time, any person who has theretofore complied with the applicable provisions of Section 262 of the DGCL will be entitled, upon written request, to receive from the Surviving Corporation a statement setting forth the aggregate number of Company Shares or shares of Company Series A Preferred Stock not consented in writing or otherwise voted in favor of the Merger and with respect to which demands for appraisal were received by the Surviving Corporation and the aggregate number of holders of such shares. Such statement must be given within 10 days after the written request therefor has been received by the Surviving Corporation or within 10 days after the expiration of the period for the delivery of demands as described above, whichever is later.

Upon the filing of a petition by a person, service of a copy of such petition shall be made upon the Surviving Corporation. The Surviving Corporation shall be required to, within 20 days after such service, file in the office of the Register in Chancery in which the petition was filed a duly verified list containing the names and addresses of all persons who have demanded appraisal of their Company Shares or shares of Company Series A Preferred Stock and with whom the Surviving Corporation has not reached agreements as to the value of such shares (the “Chancery List”). The Register in Chancery, if so ordered by the Delaware Court of Chancery, shall give notice of the time and place fixed for the hearing of such petition by registered or certified mail to the Surviving Corporation and to all such persons set forth on the Chancery List.

If a petition for an appraisal is timely filed by a person, at the hearing on such petition, the Delaware Court of Chancery will determine which persons have complied with Section 262 of the DGCL and have become entitled to appraisal rights provided thereby. The Delaware Court of Chancery may require the persons who have demanded an appraisal of their Company Shares or shares of Company Series A Preferred Stock and who hold such shares represented by certificates to submit their certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any person fails to comply with such direction, the Delaware Court of Chancery may dismiss the proceedings as to such person.

 

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Upon application by the Surviving Corporation or any person entitled to participate in the appraisal proceedings, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to appraisal. Any person whose name appears on the Chancery List and may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights under Section 262 of the DGCL.

Where proceedings are not dismissed, the appraisal proceeding shall be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceedings the Delaware Court of Chancery shall determine the fair value of Company Shares or shares of Company Series A Preferred Stock taking into account all relevant factors, exclusive of any element of value arising from the accomplishment or expectation of the Merger, together with interest, if any, to be paid upon the amount determined to be the fair value. Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the Effective Time through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the Effective Time and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the Surviving Corporation may pay to each person entitled to appraisal an amount in cash, in which case interest shall accrue after such payment only on the sum of (1) the difference, if any, between the amount so paid and the fair value of the Company Shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid at that time.

When the fair value of the Company Shares or shares of Company Series A Preferred Stock is determined, the Delaware Court of Chancery will direct the payment of such value, with interest thereon, if any, to the persons entitled to receive the same.

Although Harpoon believes that the Merger Consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and persons should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the Merger Consideration. Moreover, the Surviving Corporation does not anticipate offering more than the Merger Consideration to any person exercising appraisal rights and reserves the right to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the “fair value” of the relevant shares is less than the Merger Consideration.

In determining “fair value,” the Delaware Court of Chancery is required to take into account all relevant factors. In Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court has stated that in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts which were known or could be ascertained as of the date of the Merger which throw any light on future prospects of the merged corporation. The Delaware Supreme Court has indicated that transaction price is one of the relevant factors the Delaware Court of Chancery may consider in determining “fair value” and that absent deficiencies in the sale process the transaction price should be given “considerable weight.” Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the Merger.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Delaware Supreme Court construed Section 262 of the DGCL to mean that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the Merger and not the product of speculation, may be considered.”

The cost of the appraisal proceeding may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable in the circumstances. However, costs do not

 

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include attorneys’ and expert witness fees. Each person is responsible for his, her or its attorneys’ and expert witness fees, although, upon application of a person whose name appears on the Chancery List who participated in the proceeding and incurred expenses in connection therewith, the Delaware Court of Chancery may order that all or a portion of such expenses, including, without limitation, reasonable attorneys’ and expert witness fees, be charged pro rata against the value of all Company Shares entitled to appraisal not dismissed pursuant to Section 262(k) of the DGCL or subject to such an award pursuant to a reservation of jurisdiction under Section 262(k) of the DGCL. Determinations by the Delaware Court of Chancery are subject to appellate review by the Delaware Supreme Court.

Any person who has duly demanded appraisal in compliance with Section 262 of the DGCL will not be entitled to vote for any purpose any Company Shares or shares of Company Series A Preferred Stock subject to such demand or to receive payment of dividends or other distributions on such shares, except for dividends or distributions payable to stockholders of record at a date prior to the Effective Time.

To the extent there are any inconsistencies between the foregoing summary, on the one hand, and Section 262, on the other hand, Section 262 will govern.

Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL will result in the loss of a stockholder’s statutory appraisal rights.

Material U.S. Federal Income Tax Consequences of the Merger to Holders of Company Shares

The following discussion is a summary of certain material U.S. federal income tax consequences of the Merger that may be relevant to holders of Company Shares whose Company Shares are converted into the right to receive cash pursuant to the Merger. This discussion is based upon the Code, Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service (the “IRS”), and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations at any time, possibly with retroactive effect. This discussion is limited to holders that hold their Company Shares as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes). This summary of material U.S. federal income tax consequences is not a complete description of all potential U.S. federal income tax consequences of the Merger. This summary does not describe any of the tax consequences arising under the laws of any state, local or non-U.S. tax jurisdiction and does not consider any aspects of U.S. federal tax law other than income taxation (e.g., state, gift or alternative minimum tax, the Medicare net investment income surtax, or any withholding considerations under the Foreign Account Tax Compliance Act of 2010 (including regulations issued thereunder and intergovernmental agreements entered into pursuant thereto or in connection therewith)). In addition, this summary does not address the U.S. federal income tax consequences to holders of Company Shares that exercise appraisal rights under the DGCL. For purposes of this discussion, a “holder” means either a U.S. Holder or a Non-U.S. Holder or both, as the context may require.

This discussion is for general information only and does not address all of the U.S. federal income tax considerations that may be relevant to holders in light of their particular facts and circumstances, including, but not limited to:

 

   

holders that may be subject to special treatment under U.S. federal income tax laws, such as: financial institutions, tax-exempt organizations, governmental organizations, S corporations, partnerships or any other entities or arrangements treated as pass-through entities or partnerships for U.S. federal income tax purposes or any investor therein, banks, insurance companies, mutual funds, brokers or dealers in stocks, securities, commodities or currencies, traders in securities that elect to use the mark-to-market method of accounting for their securities, regulated investment companies, real estate investment trusts, or certain former citizens or long-term residents of the United States;

 

   

holders that are corporations that accumulate earnings to avoid U.S. federal income tax;

 

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holders holding their Company Shares as part of a hedging, straddle or other risk reducing transaction or as part of a conversion transaction or other integrated investment;

 

   

holders deemed to have sold their Company Shares under the constructive sale provisions of the Code;

 

   

holders that received their Company Shares in compensatory transactions;

 

   

holders that hold their Company Shares through individual retirement or other tax-deferred accounts;

 

   

holders that own an equity interest, actually or constructively, in Merck;

 

   

U.S. Holders whose “functional currency” is not the U.S. dollar;

 

   

holders that are required to report income no later than when such income is reported in an “applicable financial statement”; or

 

   

holders that own or have owned (actually or constructively) 5% or more of the Company Shares.

If a partnership (including an entity or arrangement classified as a partnership for U.S. federal income tax purposes) is a beneficial owner of Company Shares, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding Company Shares and partners therein should consult their tax advisors regarding the particular tax consequences to them of the Merger.

We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in the following summary. No assurance can be given that the IRS will agree with the views expressed in this summary, or that a court will not sustain any challenge by the IRS in the event of litigation.

THIS DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE TO ANY HOLDER. A HOLDER SHOULD CONSULT ITS TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR OTHER TAX LAWS.

U.S. Holders

For purposes of this proxy statement, a “U.S. Holder” is a beneficial owner of Company Shares who or that is, or is treated as, for U.S. federal income tax purposes:

 

   

An individual who is a citizen or resident of the United States;

 

   

A domestic corporation;

 

   

An estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

A trust (i) that is subject to the primary supervision of a court within the United States and the control of one or more United States persons as defined in Section 7701(a)(30) of the Code or (ii) that has a valid election in effect under applicable Treasury Regulations to be treated as a United States person for U.S. federal income tax purposes.

The receipt of cash by a U.S. Holder in exchange for Company Shares pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder will recognize gain or loss equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the Company Shares surrendered pursuant to the Merger. A U.S. Holder’s adjusted tax basis generally will equal

 

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the amount that such U.S. Holder paid for the Company Shares. Any such gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such Company Shares is more than one year at the time of the consummation of the Merger. If a U.S. Holder acquired different blocks of Company Shares at different times or different prices, such U.S. Holder must determine its adjusted tax basis and holding period separately with respect to each block of Company Shares. A reduced tax rate on capital gains generally will apply to long-term capital gains of non-corporate U.S. Holders, including individuals. There are limitations on the deductibility of capital losses.

Payments made to a U.S. Holder in exchange for Company Shares pursuant to the Merger may be subject to information reporting to the IRS and backup withholding at a rate of 24%. To avoid backup withholding on such payments, U.S. Holders that do not otherwise establish an exemption must complete and return to the exchange agent a properly executed IRS Form W-9 certifying under penalties of perjury that such holder is a United States person for U.S. federal income tax purposes, that the taxpayer identification number provided is correct and that such holder is not subject to backup withholding. Certain types of U.S. Holders (including, with respect to certain types of payments, corporations) generally are not subject to backup withholding.

Backup withholding is not an additional tax. Any amounts withheld from payments to a U.S. Holder under the backup withholding rules generally will be allowed as a refund or a credit against such U.S. Holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS. U.S. Holders should consult their tax advisors regarding their qualification for an exemption from backup withholding and the procedures for obtaining such an exemption.

Non-U.S. Holders

For purposes of this proxy statement, the term “Non-U.S. Holder” means a beneficial owner of Company Shares that is neither a U.S. Holder nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes.

Non-U.S. Holders should consult their tax advisors to determine the U.S. federal, state, local, non-U.S. and other tax consequences that may be relevant to them in light of their particular circumstances.

Any gain realized by a Non-U.S. Holder pursuant to the Merger generally will not be subject to U.S. federal income tax unless:

 

   

the gain is effectively connected with a trade or business of such Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment maintained by such Non-U.S. Holder in the United States), in which case the Non-U.S. Holder generally will be subject to United States federal income tax on a net income basis with respect to such gain in the same manner as if such Non-U.S. Holder were a resident of the United States, and, if the Non-U.S. Holder is a corporation, such gain may also be subject to an additional branch profits tax at a rate of 30% (or a lower rate specified under an applicable tax treaty);

 

   

such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition, and certain other specified conditions are met, in which case such gain will be subject to U.S. federal income tax at a rate of 30% (or a lower rate specified under an applicable tax treaty), which may be offset by U.S.-source capital losses of such Non-U.S. Holder recognized in the same taxable year (if any) provided the Non-U.S. Holder timely files U.S. federal income tax returns with respect to such losses; or

 

   

Company Shares held by such Non-U.S. Holder constitute a United States real property interest (a “USRPI”) by reason of Harpoon’s status as a “United States real property holding corporation” within the meaning of Section 897(c)(2) of the Code (a “USRPHC”), at any time during the shorter of the five-year period ending on the date of the Effective Time or the period that the Non-U.S. Holder held the applicable Company Shares.

 

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With respect to the third bullet point above, Harpoon believes it is not a USRPHC. Because the determination of whether Harpoon is a USRPHC depends, however, on the fair market value of its USRPIs relative to the fair market value of its non-U.S. real property interests and other business assets, there can be no assurance Harpoon is not a USRPHC. Even if Harpoon is a USRPHC, gain arising from the sale or other taxable disposition of Harpoon common stock by a Non-U.S. Holder will not be subject to U.S. federal income tax if Harpoon common stock is “regularly traded,” as defined by applicable Treasury Regulations, on an established securities market and such Non- U.S. Holder owned, actually and constructively, 5% or less of Harpoon common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S. Holder’s holding period.

Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

Payments made to Non-U.S. Holders in exchange for Company Shares pursuant to the Merger may be subject to information reporting to the IRS and backup withholding at a rate of 24%. Non-U.S. Holders generally can avoid information reporting and backup withholding by providing the exchange agent with the applicable and properly completed and executed IRS Form W-8 certifying the holder’s non-U.S. status or by otherwise establishing an exemption. Copies of information returns that are filed with the IRS may be made available under an applicable tax treaty or information exchange agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.

Regulatory Approvals Required for the Merger

HSR Act and U.S. Antitrust Matters

Under the HSR Act, and the rules promulgated thereunder by the Federal Trade Commission (the “FTC”), the Merger cannot be consummated until Harpoon and Merck each file a notification and report form with the FTC and the Antitrust Division of the U.S. Department of Justice (the “DOJ”) under the HSR Act and the applicable waiting period thereunder has expired or been terminated. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filing of their respective HSR Act notification forms or the early termination of that waiting period. Harpoon and Merck filed their respective HSR Act notifications on January 22, 2024. The waiting period under the HSR Act is set to expire at 11:59 p.m., Eastern Time, on February 21, 2024. The DOJ or the FTC may extend the 30 day waiting period by issuing a Request for Additional Information and documentary materials (a “Second Request”). If either agency issues a Second Request, the waiting period will be extended until 30 days after the parties substantially comply with the request.

At any time before or after consummation of the Merger, notwithstanding the expiration or termination of the waiting period under the HSR Act, the Antitrust Division of the DOJ or the FTC could take such action under applicable antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Merger, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or terminate existing relationships and contractual rights. At any time before or after the consummation of the Merger, and notwithstanding the expiration or termination of the waiting period under the HSR Act, any state could take such action under its applicable antitrust laws as it deems necessary or desirable in the public interest. Such action could include seeking to enjoin the consummation of the Merger or seeking divestiture of substantial assets of the parties. Private parties may also seek to take legal action under applicable antitrust laws under certain circumstances.

 

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General

Subject to the terms and conditions of the Merger Agreement, each party agrees to use (and will cause its respective subsidiaries to use) its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other transactions contemplated by the Merger Agreement, including (a) preparing and filing as promptly as practicable with any governmental authority all documentation to effect all necessary notices, reports and other filings and (b) obtaining as promptly as practicable and maintaining all authorizations necessary or advisable to be obtained from any governmental authority in order to consummate the Merger and the other transactions contemplated by the Merger Agreement; provided that in no event will Merck or Merger Sub be obligated to, and Harpoon will not, without the prior written consent of Merck, agree to or proffer, any consent fee, concession or other modification to the terms and conditions of any contract in order to obtain the authorizations contemplated by clause (b). Harpoon, Merck and Merger Sub agree that they will consult with each other with respect to the obtaining of all such necessary authorizations and (1) Harpoon will have the right to review and approve in advance all characterizations of the information relating to Harpoon; (2) Merck will have the right to review and approve in advance all characterizations of the information relating to Merck, Merger Sub or any of their respective affiliates; and (3) each of Harpoon and Merck will have the right to review and approve in advance all characterizations of the information relating to the transactions contemplated by the Merger Agreement, in each case, that appear in any material filing made in connection with the transactions. Other than the filings required under the HSR Act as described above, we currently do not expect that any clearance, approval or consent would be required under any other applicable antitrust law in connection with the Merger.

Litigation Related to the Merger

As of February 7, 2024, one complaint has been filed by a purported Harpoon stockholder against Harpoon and the Harpoon board of directors in connection with the proposed Merger. The complaint is captioned Mistry v. Harpoon Therapeutics, Inc., et al., No. 3:24-cv-00721 (N.D. Cal., filed Feb. 7, 2024) (the “Complaint”). The Complaint alleges that the defendants filed or caused to be filed a materially incomplete and misleading preliminary proxy statement with the SEC and asserts claims under Sections 14(a) and 20(a) of the Exchange Act seeking a variety of relief, including but not limited to an injunction against the Merger and rescission of the transaction or damages if the Merger is consummated. In addition, Harpoon and the Harpoon board of directors have received four additional demands from purported Harpoon stockholders seeking additional disclosures in the proxy statement (collectively, the “Demands”). Harpoon cannot predict the outcome of the Complaint or the Demands. Harpoon intends to vigorously defend against the allegations and claims asserted in the Complaint and the Demands. Additional lawsuits and demand letters arising out of the Merger may also be filed or received in the future. Harpoon does not intend to update this description of complaints and demand letters relating to the Merger unless those new complaints or letters contain material differences from those received to date.

Delisting and Deregistration of Company Shares

If the Merger is consummated, following the Effective Time, the Company Shares will cease trading on Nasdaq and will be deregistered under the Exchange Act. As such, we would no longer file periodic reports with the SEC.

 

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THE MERGER AGREEMENT

The following summary describes certain material provisions of the Merger Agreement. This summary is not complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. We encourage you to read the Merger Agreement carefully in its entirety because this summary may not contain all the information about the Merger Agreement that is important to you. The rights and obligations of the parties are governed by the express terms of the Merger Agreement and not by this summary or any other information contained in this proxy statement.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary of its terms have been included to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about Harpoon contained in this proxy statement or in Harpoon’s public reports filed with the SEC may supplement, update or modify the factual disclosures about Harpoon contained in the Merger Agreement and described in this summary. The representations, warranties, covenants, and agreements made in the Merger Agreement by Harpoon and Merck were qualified and subject to important limitations agreed to by Harpoon and Merck in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations, warranties, covenants, and agreements contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations, warranties, covenants, and agreements were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right to not close the Merger if the representations and warranties of the other party prove to be untrue (or such covenants and agreements were not complied with), due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. The representations, warranties, covenants, and agreements may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and reports and documents filed with the SEC, and in some cases were qualified by disclosures contained in the disclosure letter delivered by Harpoon to Merck in connection with the Merger Agreement (the “Disclosure Letter”), which disclosures are not reflected in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the Merger Agreement, and subsequent developments or new information qualifying a representation or warranty may have been included in this proxy statement or in the respective public filings made by each of Harpoon or Merck with the SEC. For the foregoing reasons, the representations, warranties, covenants, and agreements and any descriptions of those provisions should not be read alone or relied upon as characterizations of the actual state of facts or condition of Harpoon, Merck or any of their respective subsidiaries or affiliates. Instead, such provisions or descriptions should be read only in conjunction with the other information provided elsewhere in this proxy statement or incorporated by reference into this proxy statement.

Additional information about Harpoon may be found elsewhere in this proxy statement and Harpoon’s other public filings. See “Where You Can Find More Information” beginning on page 106 of this proxy statement.

When the Merger Becomes Effective

The closing of the Merger will take place remotely by electronic exchange of executed agreements and documents and other deliverables, at 8:00 a.m. Eastern Time on a date to be specified by the parties, which shall be no later than the second business day after the date the conditions set forth in the Merger Agreement (other than any such conditions which by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted, waiver of those conditions at the Closing) have been satisfied or, to the extent permitted, waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time, or on such other date as Merck and Harpoon may mutually agree in writing.

 

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As soon as practicable on the Closing Date, the parties will cause the Merger to be consummated by filing the certificate of merger with the Secretary of State of the State of Delaware in such form as required by, and executed in accordance with, the relevant provisions of the DGCL and will make all other filings or recordings required under the DGCL to consummate the Merger. The Merger will become effective at such time as the certificate of merger is duly filed with such Secretary of State, or at such later time as Merck and Harpoon shall agree and specify in the certificate of merger.

Structure of the Merger; Certificate of Incorporation; Bylaws; Directors and Officers

At the Effective Time, on the terms and subject to the conditions of the Merger Agreement and in accordance with the DGCL, Merger Sub will be merged with and into Harpoon, with Harpoon surviving the Merger as a wholly owned subsidiary of Merck. At the Effective Time, the certificate of incorporation of the Surviving Corporation will be amended and restated in its entirety as set forth on Exhibit A of the Merger Agreement and such amended and restated certificate of incorporation will be the certificate of incorporation of the Surviving Corporation until thereafter amended, restated or amended and restated as provided therein and under the DGCL. The bylaws of Merger Sub, as in effect immediately prior to the Effective Time, will be the bylaws of the Surviving Corporation, except that references to Merger Sub’s name will be replaced with references to the Surviving Corporation’s name, until thereafter amended, restated or amended and restated as provided therein and under the DGCL.

The directors of Merger Sub immediately prior to the Effective Time will, from and after the Effective Time, be the initial directors of the Surviving Corporation and will serve until the earlier of their resignation, removal or death or until their respective successors have been duly elected or appointed and qualified, as the case may be.

The officers of Merger Sub immediately prior to the Effective Time will, from and after the Effective Time, be the initial officers of the Surviving Corporation and will serve until the earlier of their resignation, removal or death or until their respective successors have been duly elected or appointed and qualified, as the case may be.

Effect of the Merger on Company Shares and Series A Preferred Stock

At the Effective Time, each Company Share and share of Company Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (other than Excluded Shares) will be cancelled and cease to exist and will be converted automatically into the right to receive (a) in the case of the Company Shares, $23.00 per share in cash, without interest and subject to applicable withholding taxes and (b) in the case of the Company Series A Preferred Stock, an amount in respect of each such share determined in accordance with the terms of the Company Series A Preferred Stock, as amended, altered or modified and in effect as of immediately prior to the Effective Time, subject to applicable withholding taxes.

Each Company Share or Company Series A Preferred Stock held in the treasury of Harpoon and each Company Share or Company Series A Preferred Stock owned by Merck or Merger Sub or any direct or indirect wholly owned Subsidiary of Merck or Harpoon immediately prior to the Effective Time will automatically be cancelled without any conversion thereof and will cease to exist and no payment or distribution will be made.

In the event that, during the Pre-Closing Period, the number of Company Shares or Company Series A Preferred Stock or securities convertible into or exchangeable or exercisable for Company Shares or Company Series A Preferred Stock changes into a different number of shares or securities or a different class, including as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, merger, issuer tender or exchange offer or other similar transaction, then the Merger Consideration and any other amounts payable pursuant to the Merger Agreement will be equitably adjusted, without duplication, to reflect such change.

 

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Treatment of Company Series A Preferred Stock

At the Effective Time, each share of Company Series A Preferred Stock issued and outstanding immediately prior to the Effective Time will automatically be cancelled and the holder will be entitled to receive an amount in respect of each such share determined in accordance with the terms of the Company Series A Preferred Stock, as amended, altered or modified and in effect as of immediately prior to the Effective Time, subject to applicable withholding taxes. The terms of the Company Series A Preferred Stock provide that, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, or the occurrence of any event that is a Deemed Liquidation Event (as defined in the Certificate of Designation for the Company Series A Preferred Stock and which includes the Merger), the holders of shares of Company Series A Preferred Stock then outstanding will be entitled to be paid an amount per share of Company Series A Preferred Stock equal to the greater of: (1) the redemption price per share (which, as defined in the Certificate of Designation, is equal to the product of the stated value of $1,000 and a return factor equal to 3.5, plus accrued and unpaid dividends, whether or not declared) and (2) the amount per share such holder would have been entitled to receive had such holder exchanged the share of Company Series A Preferred Stock for a number of Company Shares equal to $1,000 plus all accrued but unpaid dividends, divided by $7.251. As of the date of this proxy statement and based on accrued dividends on the Company Series A Preferred Stock through March 11, 2024, the amount to be paid to the holders of the Company Series A Preferred Stock in the Merger is approximately $3,577.56 per share of Company Series A Preferred Stock or $89,438,889 in the aggregate.

Treatment of Equity Awards and the ESPP

Options. Under the Merger Agreement, each outstanding and unexercised Harpoon stock option will, to the extent unvested, become fully vested and exercisable immediately prior to, and contingent upon, the Effective Time. At the Effective Time, (a) each Harpoon stock option that is outstanding and unexercised immediately prior to the Effective Time and that has a per share exercise price that is less than the Merger Consideration (each, an “In the Money Option”) will be cancelled and, in exchange therefor, each former holder thereof will be entitled to receive a payment in cash (without interest and subject to any applicable withholding or other taxes required by applicable law) equal to the product of (1) the total number of Company Shares subject to such In the Money Option and (2) the excess, if any, of an amount in cash equal to $23.00, without interest, for each Company Share owned over the per share exercise price payable for such In the Money Option and (b) each Harpoon stock option other than an In the Money Option that is then outstanding and unexercised will be cancelled with no consideration payable in respect thereof.

Restricted Stock Units. Under the Merger Agreement, at the Effective Time, each Harpoon RSU that is outstanding immediately prior to the Effective Time will be cancelled and converted automatically into the right to receive a payment in cash (without interest and subject to any applicable withholding or other taxes required by applicable law) equal to the product of (1) the Merger Consideration multiplied by (2) the total number of Company Shares subject to such Harpoon RSU immediately prior to the Effective Time, with the number of Company Shares subject to any such Harpoon RSU that vests based on the achievement of performance goals determined in accordance with the applicable award agreement. 

Stock Plans. Under the Merger Agreement, as of the Effective Time, all Stock Plans (as defined in the Merger Agreement) and all outstanding equity and equity-based awards granted thereunder will terminate, and no further Company Shares, Harpoon stock options, Harpoon RSUs, equity interests or other rights with respect to shares of stock of Harpoon will be granted under the Stock Plans. Promptly following January 7, 2024, Harpoon and the Board (or, if appropriate, any committee thereof) will adopt appropriate resolutions and take all other actions necessary, prior to the Effective Time, to effect the treatment of Harpoon stock options and Harpoon RSUs under the Merger Agreement.

ESPP. Under the Merger Agreement, Harpoon will take all actions necessary to ensure that (a) no new participants are permitted to participate in the ESPP and participants may not increase their payroll deductions or

 

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purchase elections and (b) except for the offering or purchase period under the ESPP in effect on January 7, 2024, no offering or purchase period will be authorized, continued, or commenced following January 7, 2024. If the Effective Time occurs during the Final Offering Period, the Final Offering Period will terminate no later than the date that is five days prior to the Closing Date, and Harpoon will cause the exercise date applicable to the Final Offering Period to accelerate and occur on such termination date with respect to any then outstanding purchase rights. All amounts allocated to each participant’s account under the ESPP at the end of the Final Offering Period will be used to purchase whole Company Shares under the terms of the ESPP for such offering period, which Company Shares will be cancelled at the Effective Time in exchange for the right to receive the Merger Consideration in accordance with the terms of the Merger Agreement and Harpoon will return to each participant the funds, if any, that remain in such participant’s account after such purchase.

Treatment of Company Warrants

Under the Merger Agreement, at the Effective Time, each Harpoon warrant that is outstanding and unexercised immediately prior to the Effective Time will, in accordance with its terms, cease to represent a warrant exercisable for Company Shares and automatically will become a warrant exercisable for the Merger Consideration that such holder would have been entitled to receive if such Harpoon warrant had been exercised immediately prior to the Effective Time. Following the Effective Time, no holder of any Harpoon warrant shall have any right to acquire any Harpoon securities or any securities in the Surviving Corporation, Merck or any of their respective affiliates.

Appraisal Shares

The Merger Agreement provides that Appraisal Shares will not be converted into the right to receive Merger Consideration, but instead will entitle the holder to payment for such Appraisal Shares in accordance with and to the extent provided by Section 262 of the DGCL. If any holder of Appraisal Shares fails to perfect or otherwise waives, withdraws or loses the right to appraisal under Section 262 of the DGCL, such Appraisal Shares will automatically be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive, Merger Consideration.

Payment for Company Shares

At or promptly following the Effective Time, Merck will deposit, or cause to be deposited, with a paying agent designated by Merck that is reasonably acceptable to Harpoon, for payment to and for the benefit of holders of Company Shares and Company Series A Preferred Stock (other than any Excluded Shares) pursuant to the provisions of the Merger Agreement, cash in an amount equal to the aggregate consideration to which such stockholders are entitled under the Merger Agreement.

As promptly as practicable (but no later than two business days) after the Effective Time, Merck and the Surviving Corporation will cause the paying agent to mail to each holder of record of a certificate representing any Company Shares (each a “Certificate”) whose shares were converted into the right to receive the Merger Consideration and each holder of shares of Company Series A Preferred Stock: (1) a letter of transmittal, which will specify that delivery will be effected, and risk of loss and title, will pass, only upon proper delivery of the Certificates (or effective affidavits in lieu thereof) or Company Series A Preferred Stock to the paying agent and which will be in such form and have such other provisions as Merck may reasonably specify and (2) instructions for use in surrendering the Certificates or Company Series A Preferred Stock in exchange for the consideration payable with respect thereto.

Upon surrender to the paying agent of a Certificate (or effective affidavits in lieu thereof) or Company Series A Preferred Stock for cancelation, together with a duly completed and validly executed letter of transmittal, the holder of such Certificate or Company Series A Preferred Shares will promptly receive in exchange for the amount of cash consideration that such holder is entitled to receive and the Certificate or Company Series A Preferred Stock so surrendered will then be cancelled.

 

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Any holder of non-certificated Company Shares represented by book-entry (“Book-Entry Shares”) will not be required to deliver a Certificate or an executed letter of transmittal to receive the Merger Consideration payable with respect to such Book-Entry Shares. Upon receipt of an “agent’s message” by the paying agent (or such other evidence, if any, of transfer as the paying agent may reasonably request), Merck will cause the paying agent to promptly pay the Merger Consideration to the holder of any such Book-Entry Shares and the Book-Entry Shares so surrendered will then be cancelled. No interest will be paid or will accrue on any cash payable to holders of Certificates, Book-Entry Shares or shares of Company Series A Preferred Stock. In the event of a transfer of ownership of Company Shares or Company Series A Preferred Stock that is not registered in the transfer records of Harpoon, payment may be made to a person other than the person in whose name the Certificate, Book-Entry Shares or Company Series A Preferred Stock so surrendered are registered if such Certificate will be properly endorsed or otherwise be in proper form for transfer or such Book-Entry Shares or Company Series A Preferred Stock will be properly transferred and the person requesting such issuance will pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of such Certificate, Book-Entry Shares or Company Series A Preferred Stock or establish to the satisfaction of Merck that such tax has been paid or is not applicable.

If any Certificate is lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Merck or the paying agent, the posting by such person of a bond in such reasonable amount as Merck or the paying agent, as the case may be, may direct as indemnity against any claim that may be made against it with respect to such Certificate, the paying agent will, other than the surrender of a Certificate, issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration payable with respect to the Company Shares represented by such Certificate.

Representations and Warranties

The Merger Agreement contains representations and warranties of each of Harpoon, Merck and Merger Sub (subject to certain qualifications or exceptions in the Merger Agreement and related schedules) as to, among other things:

 

   

corporate organization, existence, good standing and corporate power and authority to conduct its business as currently conducted;

 

   

corporate power and authority to enter into the Merger Agreement, to perform its obligations thereunder and to consummate the transactions contemplated thereby;

 

   

required regulatory filings or actions and authorizations, consents or approvals of governmental entities and other persons;

 

   

the absence of certain violations, defaults or consent requirements under certain contracts, organizational documents, applicable requirements of Nasdaq, and applicable law, in each case arising out of the execution, delivery or performance of, or consummation of the transactions contemplated by, the Merger Agreement;

 

   

the absence of certain litigation, orders and judgments and governmental proceedings and investigations pending against the parties;

 

   

matters relating to information to be included in required filings with the SEC, including this proxy statement, in connection with the Merger; and

 

   

the absence of any fees owed by Harpoon and Merck to investment bankers or brokers in connection with the Merger, other than those specified in the Merger Agreement.

The Merger Agreement also contains representations and warranties of Harpoon (subject to certain qualifications or exceptions in the Merger Agreement and related schedules) as to, among other things:

 

   

the qualification and good standing of Harpoon as a foreign corporation in each jurisdiction where the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary;

 

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the absence of any subsidiaries of Harpoon and that Harpoon does not own any capital stock or other voting securities of, or ownership interests in, or equity interest in any person;

 

   

the capitalization of Harpoon;

 

   

documents filed with the SEC, compliance with applicable SEC filing requirements and accuracy of information contained in such documents;

 

   

preparation of Harpoon financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”);

 

   

the absence of certain changes from December 31, 2023 through January 7, 2024, including the conduct of the business of Harpoon in the ordinary course consistent with past practice, and the absence of a Company Material Adverse Effect;

 

   

Harpoon’s employee benefit plans and other agreements with its employees;

 

   

employment matters;

 

   

the receipt of a fairness opinion from Centerview;

 

   

the payment of taxes, filing of tax returns, absence of tax audits or proceedings and other tax matters;

 

   

environmental matters, including compliance with environmental laws by Harpoon;

 

   

the compliance by Harpoon with applicable laws and the possession by Harpoon of all permits necessary to conduct its business;

 

   

Harpoon’s intellectual property rights;

 

   

certain categories of specified material contracts;

 

   

certain regulatory matters, including with respect to regulatory approvals from the U.S. Food and Drug Administration (the “FDA”), and the compliance with various applicable rules of the FDA and health care laws applicable to the conduct of the business of Harpoon;

 

   

real property leased by Harpoon;

 

   

insurance policies maintained by Harpoon;

 

   

transactions with affiliates of Harpoon;

 

   

non-applicability of certain anti-takeover laws to the Merger Agreement and the Merger;

 

   

good and marketable title to, or good and valid leasehold interests in, all of the material tangible assets reflected as owned, leased or used by it on Harpoon’s most recent consolidated balance sheet;

 

   

books and records maintained by Harpoon;

 

   

compliance with anti-bribery and anti-corruption laws, rules and regulations, including the Foreign Corrupt Practices Act of 1977;

 

   

Harpoon’s compliance with data privacy and protection laws and the absence of material failures of Harpoon’s information technology systems; and

 

   

sanctions matters and compliance with import-export matters.

The Merger Agreement also contains representations and warranties of Merck and Merger Sub (subject to certain qualifications or exceptions in the Merger Agreement) as to, among other things:

 

   

the absence of any ownership by Merck, Merger Sub or any of their respective affiliates of Company Shares or securities convertible into or exchangeable for Company Shares;

 

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the availability to Merck and Merger Sub, as of the Closing Date, of sufficient funds to consummate the Merger and the other transactions contemplated by the Merger Agreement that require payment on the Closing Date; and

 

   

actions of Merger Sub prior to the Closing Date.

Some of the representations and warranties in the Merger Agreement are qualified by materiality qualifications or a “Company Material Adverse Effect” clause.

For purposes of the Merger Agreement, a “Company Material Adverse Effect” means any event, effect, condition, change, occurrence, development, circumstance or state of facts, individually or in the aggregate with all other events, effects, conditions, changes, occurrences, developments, circumstances or state of facts, that has had, or would reasonably be expected to have, a material adverse effect on (1) the business, operations, assets, properties, liabilities, condition (financial or otherwise) or results of operations of Harpoon, or (2) the ability of Harpoon to consummate the transactions contemplated by the Merger Agreement on or before the Outside Date; provided that no such event, effect, condition, change, occurrence, development, circumstance or state of facts shall be considered in determining whether a Company Material Adverse Effect has occurred, or would reasonably be expected to occur, for purposes of clause (1) above to the extent that it results from the below (except in the case of the first through fifth bullets below, to the extent the Company is disproportionately affected relative to other similarly situated companies in the biopharmaceutical industry):

 

   

changes or proposed changes in any applicable law or in GAAP (or in either case, the interpretation thereof) occurring after January 7, 2024;

 

   

changes generally affecting the United States or global economy, political conditions, or financial or securities markets (including changes in interest rates or exchange rates);

 

   

general conditions in the biopharmaceutical industry;

 

   

acts of terrorism, war, armed hostilities, natural disasters, weather-related events, fire or other force majeure events, or any escalation or worsening thereof;

 

   

any epidemic, pandemic or disease outbreak (including COVID-19), or any escalation or worsening thereof;

 

   

changes in the market price or trading volume of Company Shares (it being understood and agreed that the facts and circumstances giving rise to such changes may be taken into account in determining whether there has been a Company Material Adverse Effect unless otherwise excluded by another clause hereof);

 

   

any failure, in and of itself, by Harpoon to meet any internal or published industry analyst projections or forecasts or estimates of revenues, earnings or cash flows for any period ending on or after January 7, 2024 (it being understood and agreed that the facts and circumstances giving rise to such failure may be taken into account in determining whether there has been a Company Material Adverse Effect unless otherwise excluded by another clause hereof);

 

   

the announcement, pendency or consummation of the transactions contemplated by the Merger Agreement (including any loss of or adverse change in the relationship of Harpoon with its employees, contractors, customers, partners, licensors, licensees or suppliers) (it being understood and agreed that this will not apply with respect to any representation or warranty the purpose of which is to address the consequences of the execution and delivery of the Merger Agreement, the consummation of the transactions or the performance of obligations under the Merger Agreement);

 

   

action taken by Harpoon that is expressly required by, or the omission of any action that is expressly prohibited by, the Merger Agreement, or any action taken or omitted to be taken by Harpoon at the express written request of Merck; or

 

   

any transaction litigation.

 

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Conduct of Business Pending the Merger

The Merger Agreement provides that, during the Pre-Closing Period, except (1) as set forth in the related schedules, (2) as required or permitted by the express terms of the Merger Agreement, (3) with the prior written consent of Merck (which consent shall not be unreasonably withheld, conditioned, or delayed) or (4) as required by applicable law, Harpoon will (a) conduct its business in the ordinary course consistent in all material respects with past practice, and (b) use commercially reasonable efforts to preserve intact its present business organizations and assets, maintain in effect all of its material authorizations, keep available the services of its directors, officers, key employees and contractors and maintain satisfactory relationships with collaboration partners and others having material business relationships with Harpoon.

Except to the extent set forth in the related schedules or required or permitted by the express terms of the Merger Agreement or by applicable law, Harpoon will not, during the Pre-Closing Period, directly or indirectly, do any of the following without the prior written consent of Merck (which consent shall not be unreasonably withheld, conditioned, or delayed):

 

   

sell, pledge, dispose of, assign, lease, sublease, license, sublicense, dedicate to the public, or otherwise transfer, abandon or permit to lapse, or create or incur any lien on, any of Harpoon’s material assets (including any owned Harpoon intellectual property, exclusively licensed intellectual property, or other material Harpoon intellectual property), securities, properties, interests or businesses, other than (1) (except in the case of any Harpoon intellectual property) sales of obsolete equipment in the ordinary course of business consistent with past practice, (2) dispositions of marketable securities in the ordinary course of business consistent with past practice, or (3) non-exclusive grants of rights to use Harpoon intellectual property that are incidental to and not material to performance under the applicable agreement, which agreement is entered into in the ordinary course of business consistent with past practice, such as a clinical trial agreement or a supply agreement that Harpoon enters into with a supplier;

 

   

acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses, other than the purchase of materials from suppliers or vendors in the ordinary course of business consistent with past practice;

 

   

merge or consolidate Harpoon with any person or adopt a plan of complete or partial liquidation or resolutions providing for a complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of Harpoon (other than the Merger);

 

   

adopt or implement any stockholder rights plan or similar arrangement;

 

   

amend, waive, rescind or otherwise modify Harpoon’s organizational documents;

 

   

(1) split, combine or reclassify any shares of its capital stock; (2) establish a record date for, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except for the accrual of dividends with respect to Company Series A Preferred Stock in accordance with its terms as of January 7, 2024, or (3) redeem, repurchase or otherwise acquire, or offer to redeem, repurchase or otherwise acquire, directly or indirectly, any Harpoon securities, other than (a) as required pursuant to the terms (as in effect as of January 7, 2024) of Company Series A Preferred Stock, the Harpoon warrants or the Stock Plans and related award agreements or (b) any Harpoon securities withheld to cover taxes associated with the exercise of any Harpoon stock option or settlement of any Harpoon RSU that is outstanding on January 7, 2024 or that is granted after January 7, 2024 not in contravention of the Merger Agreement;

 

   

(1) issue, sell, grant, or authorize any of the foregoing actions in connection with, any Harpoon securities, other than the issuance of any shares of Company Shares upon the exercise of Harpoon stock options, Harpoon Warrants or purchase rights under the ESPP or upon the settlement of Harpoon RSUs, in each case, that are outstanding on January 7, 2024 (or, in the case of the ESPP, made pursuant to elections in effect on January 7, 2024) or that are granted after January 7, 2024 not in contravention

 

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of the Merger Agreement in accordance with their terms on January 7, 2024; (2) amend any term of any Harpoon security (whether by merger, consolidation or otherwise) or (3) enter into any agreement with respect to the voting or registration of any Harpoon securities;

 

   

create, incur, assume, suffer to exist or otherwise become liable (whether directly, contingently or otherwise) with respect to any indebtedness for borrowed money or guarantees thereof, other than letters of credit to secure lease obligations in the ordinary course of business consistent with past practice, or issue or sell any debt securities or options, warrants, calls or other rights to acquire any debt securities of Harpoon;

 

   

make any loans, advances or capital contributions to, or investments in, any other person (other than investments in marketable securities in the ordinary course of business consistent with past practice), or re-invest any funds or monies in any assets or securities with a credit rating lower than those assets or securities into which such funds or monies are invested as of January 7, 2024, other than advances to its employees in the ordinary course of business consistent with past practice;

 

   

except as required pursuant to an existing Harpoon employee benefit plan in effect on January 7, 2024 or established after January 7, 2024 not in contravention of the Merger Agreement, (1) with respect to any director, officer or employee of Harpoon or any contractor, (A) grant or increase any severance, change of control, retention, termination or similar pay, compensation, bonus or benefits, or amend any existing arrangement relating thereto, or (B) enter into any employment, consulting, severance, retention, change in control, termination, retirement, deferred compensation or other similar agreement (or amend or terminate any such existing agreement) other than entering into employment or consulting agreements with newly hired or engaged employees or contractors in the ordinary course of business consistent with past practice; (2) establish, adopt or amend any Harpoon employee benefit plan, including any collective bargaining agreement except for changes made in the ordinary course of business that do not materially increase the costs related to a Harpoon employee benefit plan; (3) recognize any union, works council or similar employee representative with respect to any such individual; (4) enter into any trust, annuity or insurance contract or similar contract or take any other action to fund or otherwise secure the payment of any compensation or benefit; (5) establish, adopt or enter into any plan, agreement or arrangement, or otherwise commit to, gross up or indemnify, or otherwise reimburse any current or former service provider for any tax incurred by such service provider, including under Section 409A or Section 4999 of the Code or (6) hire or engage the services of any individual as a director, officer, employee or contractor with an annual base salary or rate in excess of $100,000, in the ordinary course of business consistent with past practice, or terminate the service of any officer or employee other than for cause;

 

   

commence any new offering or offering period under the ESPP;

 

   

grant, amend or modify, or exercise any discretionary authority to accelerate the vesting of any awards under any Stock Plan;

 

   

(1) forgive any loans to directors, officers, employees or any of their respective affiliates or (2) enter into any transactions or contracts with any affiliates or other person that would be required to be disclosed by Harpoon under Item 404 of Regulation S-K of the SEC;

 

   

(1) waive, release, pay, discharge or satisfy any material liabilities or obligations (absolute, accrued, contingent or otherwise), except in the ordinary course of business consistent with past practice and in accordance with the terms thereof; (2) accelerate or delay collection in any material respect of notes or accounts receivable in advance of or beyond their regular due dates or the dates when the same would have been collected in the ordinary course of business consistent with past practice or (3) delay or accelerate in any material respect payment of any account payable in advance of its due date or the date such liability would have been paid in the ordinary course of business consistent with past practice or vary its inventory practices in any material respect;

 

   

make any material change in Harpoon’s methods of accounting, except as required by GAAP, Regulation S-X of the Exchange Act or applicable rules and regulations of the SEC;

 

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(1) make, change or rescind any material tax election; (2) change any annual tax accounting period; (3) adopt or change any method of tax accounting; (4) amend any income or other material tax returns; (5) file any claim for or surrender any right to claim a material refund of tax (other than by reason of the passage of time); (6) extend the statute of limitations with respect to any income or other material tax return; (7) enter into any closing agreement with respect to any tax of Harpoon; or (8) settle or compromise any material tax claim, audit or assessment with respect to Harpoon;

 

   

write up, write down or write off the book value of any assets, in the aggregate, except in accordance with GAAP consistently applied;

 

   

commence, compromise, settle, or offer or propose to settle, any proceeding or other claim (except with respect to matters that involve the payment of monetary damages covered by insurance policies or otherwise not in excess of $250,000 in the aggregate and do not (1) include any other obligation to be performed by, or limitation upon, Harpoon, Merck, Merger Sub or their affiliates that is, individually or in the aggregate, material to Harpoon, Merck, Merger Sub or their affiliates or (2) result in any (a) imposition of equitable relief on, or the admission of wrongdoing by, Harpoon or (b) actual or potential violation of any law);

 

   

(1) voluntarily terminate or cancel, assign, renew or agree to any material amendment of, material change in or material waiver under any material contract; (2) enter into any contract that, if existing on January 7, 2024, would be a material contract or (3) amend or modify any contract in existence on January 7, 2024 that, after giving effect to such amendment or modification, would be a material contract; provided that this clause will not prohibit or restrict Harpoon from entering into, renewing, amending, modifying or waiving any right under any contract to the extent such entry, renewal, amendment, modification or waiver implements a transaction or action that is specifically permitted by another specific clause of the Merger Agreement;

 

   

incur or authorize any capital expenditures or any obligations or liabilities in respect thereof in an aggregate amount in excess of $250,000;

 

   

convene any regular or special meeting (or any adjournment or postponement thereof) of the Harpoon stockholders other than, to the extent required by applicable law or a judgment of a court of competent jurisdiction, an annual meeting of stockholders for purposes of election of directors, ratification of Harpoon’s auditors and other routine matters;

 

   

fail to keep in full force and effect any material insurance policies or replacement or revised provisions providing insurance coverage in a manner materially consistent with past practice with respect to the assets, operations and activities of Harpoon as are currently in effect;

 

   

(1) extend, amend, condition, restrict, waive, cancel, abandon, withdraw, fail to renew, permit to lapse, modify or otherwise alter any rights in or to any Harpoon intellectual property in a manner that is adverse to Harpoon; (2) fail to diligently prosecute any material patent application or to maintain any issued patent, in each case, owned by Harpoon or fail to diligently prosecute or maintain any material Harpoon intellectual property as to which Harpoon controls the prosecution or maintenance thereof, as applicable; (3) fail to renew (to the extent renewable at the option of Harpoon) or voluntarily terminate any contract under which material Harpoon intellectual property is licensed to Harpoon or (4) disclose to any third party, other than under a confidentiality agreement or other legally binding confidentiality undertaking, any trade secret of Harpoon that is included in Harpoon intellectual property in a way that results in loss of material trade secret protection thereon, except for any such disclosures made as a result of publication of a patent application filed by Harpoon or in connection with any required regulatory filing;

 

   

(1) commence any clinical trial other than those set forth in the related schedules (provided that Harpoon may take actions in preparation for the commencement of a clinical trial); (2) unless mandated by any governmental authority, discontinue, terminate or suspend any ongoing clinical trial

 

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or (3) make any material change to, discontinue, terminate or suspend any ongoing IND-enabling preclinical study without first consulting Merck in good faith; or

 

   

agree, resolve or commit to do any of the foregoing.

Notwithstanding the foregoing, nothing in the Merger Agreement is intended to give Merck or Merger Sub, directly or indirectly, the right to control or direct the business or operations of Harpoon at any time prior to the Effective Time. Prior to the Effective Time, Harpoon shall exercise, consistent with the terms and conditions of the Merger Agreement, complete control and supervision over its business and operations.

Other Covenants and Agreements

Special Meeting and Related Actions

Unless the Merger Agreement is terminated in accordance with its terms, Harpoon must, as promptly as practicable after January 7, 2024 duly call, give notice of, convene and hold the Special Meeting for the purpose of obtaining Company Stockholder approval of the Merger Proposal which meeting date will be no later than 35 days after (i) the 10th day after this proxy statement has been filed with the SEC (or if such date is not a Business Day, the next succeeding Business Day) in preliminary form or (ii) if by such 10th day the SEC has informed Harpoon that it intends to review this proxy statement, the date on which the SEC confirms that is has no further comments on this proxy statement. Harpoon may postpone or adjourn the Special Meeting if (1) Harpoon is required to postpone or adjourn the Special Meeting by applicable law, or (2) the Board or any authorized committee thereof determines in good faith (after consultation with outside legal counsel) that it is necessary or appropriate to postpone or adjourn the Special Meeting in order to give the Company Stockholders sufficient time to evaluate any information or disclosure that Harpoon has sent or otherwise made available to such holders by issuing a press release, filing materials with the SEC or otherwise (in each case so long as any such information or disclosure was made in compliance in all material respects with the Merger Agreement). However, Harpoon will be permitted to postpone or adjourn the Special Meeting under the preceding clause (2) on no more than two occasions and no such adjournment or postponement will delay the Special Meeting by more than 10 days from the prior-scheduled date on or to a date on or after the fifth business day preceding the Outside Date.

Subject to Harpoon’s right to effect a Company Adverse Recommendation Change and to terminate the Merger Agreement in accordance with its terms, Harpoon’s obligations related to the Special Meeting will not be affected by the commencement, public proposal, public disclosure or communication to Harpoon or any other person of any Acquisition Proposal or by any event constituting or that could constitute an Intervening Event. Unless the Merger Agreement is validly terminated, Harpoon will submit the Merger Agreement to the Company Stockholders for approval at the Special Meeting, and the only matters to be voted upon at the Special Meeting will be the adoption of the Merger Agreement and routine proposals required in connection with such vote (and not any other matters, including any Acquisition Proposal).

Access and Information

During the Pre-Closing Period, Harpoon will afford to Merck, Merger Sub and their respective representatives reasonable access to its officers, employees, agents, properties, facilities, books, records, contracts and other assets. Harpoon will promptly furnish to Merck, Merger Sub and their respective representatives copies of all existing financial, operating and other data and information as such persons may from time to time reasonably request. During the Pre-Closing Period, Harpoon will use reasonable best efforts to, at Merck’s request, facilitate site visits by any of Merck, Merger Sub or their respective representatives at any facility of a third party contract manufacturer of Harpoon.

Harpoon is not required to disclose any information to Merck if such disclosure would, in Harpoon’s reasonable discretion (1) jeopardize any attorney client or other legal privilege (provided that Harpoon will use

 

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its reasonable best efforts to provide Merck and Merck’s applicable representatives with appropriate information regarding the factual basis underlying any circumstances that resulted in the preparation of such privileged analyses so long as such privilege will not be jeopardized thereby) or (2) contravene any applicable law, fiduciary duty or binding agreement entered into prior to January 7, 2024, including any confidentiality agreement to which Harpoon is a party (provided that Harpoon will use its reasonable best efforts to obtain the consent of any such agreement’s counterparty to such inspection or disclosure). Harpoon and Merck will each use its reasonable best efforts to make appropriate substitute arrangements to permit reasonable disclosure under circumstances in which the restrictions of the preceding sentence apply.

Cooperation

During the Pre-Closing Period, subject to applicable law, Harpoon will provide Merck with advance notice of any meetings or scheduled videoconferences or calls that Harpoon has with any regulatory authority or any advisory committee thereof, and to the extent practicable (1) provide Merck the opportunity to attend or participate in any such meeting or substantive conversation with any such regulatory authority or advisory committee thereof and (2) prior to attending any such meeting or scheduled videoconference or call, Harpoon will, and will, as necessary, cause its representatives to, consult with Merck and consider in good faith the views and comments of Merck promptly provided in connection with, and to the extent practicable, reasonably in advance of, any such meeting or scheduled videoconference or call.

During the Pre-Closing Period, subject to applicable law, Harpoon will also promptly (1) notify Merck of any notice or other substantive communication to Harpoon from any regulatory authority or any advisory committee thereof; (2) provide Merck with notice and the opportunity to consult with Harpoon with respect to any notice, submission or response or other substantive communication to any regulatory authority or any advisory committee thereof from Harpoon, and shall consider in good faith any comments or other input timely provided by Merck in respect of the foregoing and (3) furnish Merck with non-confidential copies of all substantive correspondence, filings and written communications between Harpoon on one hand, and any such regulatory authority or its staff on the other hand. However, in no event shall Harpoon be required to take any action or refrain from taking any action that would cause Harpoon to fail to meet a specific submission deadline, if any, imposed by any regulatory authority or any advisory committee thereof.

Nothing contained in the Merger Agreement is intended to give Merck, directly or indirectly, the right to control or direct the regulatory strategy of Harpoon prior to the Closing Date.

No Solicitation; Company Acquisition Proposals; Board Recommendation Change

During the Pre-Closing Period, Harpoon may not, and may not authorize or knowingly permit its representatives to, directly or indirectly (other than with respect to Merck or Merger Sub):

 

   

solicit, initiate, propose or take any action to knowingly encourage any inquiries or the submission of any proposal or offer that constitutes, or could reasonably be expected to lead to, an Acquisition Proposal or otherwise knowingly facilitate any effort or attempt to make an Acquisition Proposal;

 

   

except as otherwise expressly permitted by the Merger Agreement, enter into, continue or otherwise participate in any discussions or negotiations regarding, furnish to any third party any information or data relating to, afford access to the business, personnel, properties, assets, books or records of Harpoon in connection with, or otherwise cooperate with any person with respect to, any Acquisition Proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an Acquisition Proposal (except to provide notice as to the existence of these provisions or solely to the extent necessary to clarify the terms and conditions of any Acquisition Proposal);

 

   

grant any waiver, amendment or release of or under, or fail to enforce, any confidentiality, standstill or similar agreement (or any confidentiality, standstill or similar provision of any other

 

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contract) with respect to any potential Acquisition Proposal, unless the Board determines in good faith, after consultation with Harpoon’s outside legal counsel, that the failure to take such action would be inconsistent with the fiduciary duties of the Board under applicable law;

 

   

enter into any letter of intent, contract, commitment or agreement in principle with respect to an Acquisition Proposal (other than an Acceptable Confidentiality Agreement entered into in accordance with the terms of the Merger Agreement) or enter into any contract or commitment requiring Harpoon to abandon, terminate or fail to consummate the transactions contemplated by the Merger Agreement or that would otherwise materially impede the ability of Merck and Merger Sub to consummate the Merger;

 

   

take any action or exempt any third party from the restriction on “business combinations” or any similar provision contained in applicable takeover provisions or Harpoon’s organizational documents or grant a waiver under Section 203 of the DGCL; or

 

   

resolve, propose or agree to do any of the foregoing.

Notwithstanding the foregoing, if before obtaining Company Stockholder approval of the Merger Proposal, Harpoon or any of its representatives has received an unsolicited bona fide written Acquisition Proposal made by a third party after January 7, 2024 and prior to obtaining such approval, in circumstances not involving a breach of Harpoon’s obligations under the non-solicit provisions of the Merger Agreement, and the Board determines in good faith (after consultation with outside legal counsel and a financial advisor of nationally recognized reputation) that such Acquisition Proposal constitutes, or could reasonably be expected to lead to, a Superior Proposal and that the failure to take action would be inconsistent with its fiduciary duties under applicable law, then Harpoon may, subject to certain requirements:

 

   

enter into an Acceptable Confidentiality Agreement with the third party making such an Acquisition Proposal and thereafter;

 

   

furnish information and data with respect to Harpoon and afford access to the business, personnel, properties, assets, books or records of Harpoon, in each case, pursuant to such Acceptable Confidentiality Agreement; and

 

   

enter into, maintain and participate in discussions or negotiations with, the third party making the Acquisition Proposal and its representatives.

Harpoon is required, as promptly as practicable, and in any event no later than 24 hours after receipt thereof, to notify Merck, orally and in writing, of any Acquisition Proposal or any inquiry, proposal or offer that expressly contemplates or could reasonably be expected to lead to an Acquisition Proposal, which notification shall include (1) a copy of the applicable written Acquisition Proposal, inquiry, proposal or offer (or, if oral, a summary of the material terms and conditions of such Acquisition Proposal, inquiry, proposal or offer) and (2) the identity of the third party making such Acquisition Proposal. Harpoon will thereafter keep Merck reasonably informed on a reasonably current basis of the status of, or any material developments, discussions or negotiations regarding, any such inquiry, proposal, offer or Acquisition Proposal, and the material terms and conditions thereof (including any change in price or form of consideration or other material amendment thereto), including by providing a copy of material documentation and summary of any substantive communications (which shall include any proposals or offers) relating thereto that is exchanged between the third party (or its representatives) making such inquiry, proposal, offer or Acquisition Proposal and Harpoon (or any representative of Harpoon) within 24 hours after the receipt or delivery thereof.

Except in certain circumstances, neither the Board nor any committee thereof may (a) (1) withhold, fail to include in (or remove from) this proxy statement, withdraw, qualify or modify in a manner adverse to Merck (or publicly propose or resolve to withhold, fail to include in (or remove from) this proxy statement, withdraw, qualify or modify in a manner adverse to Merck) the Board Recommendation; (2) adopt, approve, recommend, submit to the Company Stockholders or declare advisable (or publicly propose to adopt, approve, recommend,

 

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submit to the Company Stockholders or declare advisable) any Acquisition Proposal; (3) fail to (A) reaffirm Board Recommendation and (B) recommend against acceptance of a tender or exchange offer by the Company Stockholders pursuant to Rule 14d-2 under the Exchange Act for outstanding Company Shares or Company Series A Preferred Stock, in each case, within 10 business days after receipt of a written request of Merck following an Acquisition Proposal that has been publicly announced (in the case of clause (A)) or the commencement of such tender offer or exchange offer (in the case of clause (B)); provided that the taking of no position or a neutral position by the Board in respect of the acceptance of any such tender offer or exchange offer as of the end of such period will constitute a failure to recommend against acceptance of any such offer; or (4) take any action to exempt any person (other than Merck or its subsidiaries) or any action taken by any person (other than Merck or its subsidiaries) from any takeover provision of applicable law; (b) cause or allow Harpoon to enter into a Specified Agreement or (c) resolve, propose or agree to take any such action described in clause (a) or (b).

Notwithstanding the limitations in the preceding paragraphs or any other provision in the Merger Agreement, at any time prior to obtaining Company Stockholder approval of the Merger Proposal, the Board may effect a Company Adverse Recommendation Change in connection with an Acquisition Proposal or terminate the Merger Agreement to enter into a Specified Agreement, in each case if, and only if, (a) such Acquisition Proposal did not result from a breach of the non-solicitation provisions of the Merger Agreement, (b) the Board determines in good faith, after consultation with Harpoon’s outside legal counsel, that the failure to make a Company Adverse Recommendation Change or terminate the Merger Agreement to enter into a Specified Agreement would be inconsistent with the fiduciary duties of the Board under applicable law, (c) Harpoon has given Merck written notice of the Board’s intention to make a Company Adverse Recommendation Change or terminate the Merger Agreement to enter into a Specified Agreement not earlier than 11:59 p.m. New York time on the fourth business day after Merck receives such written notice, (d) the decision to make a Company Adverse Recommendation Change is in connection with an Acquisition Proposal or with Harpoon’s intent to terminate the Merger Agreement to enter into a Specified Agreement, and Harpoon complied with clauses (1) through (5), as follows: (1) prior to giving effect to clauses (2) through (5), the Board determined that such Acquisition Proposal is a Superior Proposal; (2) Harpoon made available to Merck in writing the material terms and conditions of such Acquisition Proposal and a copy of the most current draft of any contract relating to such Acquisition Proposal; (3) Harpoon negotiated in good faith with Merck (and caused its representatives to so negotiate with Merck), to the extent that Merck desires to negotiate, during such four business day period with respect to such proposed revisions to the Merger Agreement or other proposals made by Merck, if any, so that the Acquisition Proposal would no longer constitute a Superior Proposal; (4) after considering the results of negotiations with Merck and taking into account the proposals made by Merck, if any, after consultation with its outside legal counsel and a financial advisor of nationally recognized reputation, the Board shall have determined in good faith that such Acquisition Proposal remains a Superior Proposal, and, after consultation with its outside legal counsel, that the failure to make a Company Adverse Recommendation Change or terminate the Merger Agreement to enter into a Specified Agreement would be inconsistent with the fiduciary duties of the Board under applicable law and (5) if Harpoon intends to terminate the Merger Agreement to enter into a Specified Agreement, Harpoon has complied with the related termination section of the Merger Agreement. The provisions of the Merger Agreement described in this paragraph will also apply to any amendment to the financial terms or any other material amendment to such Acquisition Proposal (except that any reference to four business days will instead be two business days) or any successive Acquisition Proposals.

Prior to obtaining Company Stockholder approval of the Merger Proposal, the Board may make a Company Adverse Recommendation Change with respect to an Intervening Event, if and only if: (a) the Board determines in good faith, after consultation with Harpoon’s outside legal counsel, that the failure to make such Company Adverse Recommendation Change would be inconsistent with the fiduciary duties of the Board under applicable law; (b) Merck received from Harpoon written notice not later than 11:59 p.m. New York time on the fourth business day prior to the making of any Company Adverse Recommendation Change, describing the Intervening Event in reasonable detail; (c) during such four business day period provided in the foregoing clause (b), Harpoon negotiated in good faith with Merck (and caused its representatives to negotiate with Merck), to the

 

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extent that Merck desires to negotiate, with respect to any proposed revisions to the Merger Agreement or other proposals made by Merck, if any, that would obviate the requirement to make a Company Adverse Recommendation Change; and (d) after considering the results of negotiations with Merck and taking into account the proposals made by Merck, if any, after consultation with its outside legal counsel, the Board determined in good faith that the failure to make Company Adverse Recommendation Change would be inconsistent with the fiduciary duties of Harpoon Board under applicable law. The provisions of the Merger Agreement described in this paragraph will also apply to any material change to the facts and circumstances relating to such Intervening Event (except that any reference to four business days will instead be two Business Days).

Notwithstanding the restrictions described above, Harpoon is not prohibited from (1) taking and disclosing a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or complying with Item 1012(a) of Regulation M-A under the Exchange Act; (2) making any required disclosure to the Company Stockholders, if the Board determines in good faith, after consultation with outside legal counsel, that the failure to make such disclosure would be inconsistent with its fiduciary duties under applicable law or any disclosure requirement under applicable law or (3) making any disclosure that constitutes a “stop, look and listen” communication pursuant to Rule 14d-9(f) promulgated under the Exchange Act; provided that any such disclosure shall state that the Board Recommendation continues to be in effect unless, prior to the time of such disclosure, a Company Adverse Recommendation Change has been made in compliance with the Merger Agreement.

As of the execution of the Merger Agreement, Harpoon was required to, and also to cause its representatives to, (1) immediately cease and cause to be terminated any existing solicitations, encouragements, facilitations, discussions or negotiations with any third party conducted on or prior to January 7, 2024 by Harpoon or its representatives with respect to an Acquisition Proposal; (2) immediately terminate access to any physical or electronic data rooms relating to a possible Acquisition Proposal and (3) promptly (but in no event later than two business days following the execution of the Merger Agreement) request and use reasonable best efforts to obtain the return from all such persons, or cause the destruction, of all copies of confidential information previously provided to such persons by or on behalf of Harpoon or its representatives in accordance with the terms of the applicable confidentiality agreement with such person.

For purposes of the Merger Agreement:

 

   

Acceptable Confidentiality Agreement” means a customary confidentiality agreement (1) containing provisions limiting the disclosure or use of nonpublic information of or with respect to Harpoon that are not, in the aggregate, less favorable to Harpoon than those contained in the confidentiality agreement with Merck, (2) that does not include any provision calling for any exclusive right to negotiate with any third party and (3) that does not prevent Harpoon from providing any information to Merck, its affiliates and their respective representatives in accordance with the Merger Agreement or otherwise complying with its obligations under the Merger Agreement.

 

   

Acquisition Proposal” means any inquiry, offer, proposal or indication of interest (in writing or otherwise) from any third party relating to any transaction or series of related transactions involving (a) any acquisition or purchase by any third party, directly or indirectly, of 15% or more of the outstanding Company Shares, or any tender offer or exchange offer that, if consummated, would result in any third party beneficially owning 15% or more of the outstanding Company Shares; (b) any merger, amalgamation, consolidation, share exchange, business combination, liquidation, dissolution, recapitalization, reorganization or similar transaction involving Harpoon that, if consummated, would result in any third party, directly or indirectly, (1) acquiring 15% or more of Harpoon’s consolidated assets (measured on a fair market value basis as of the date thereof) or (2) beneficially owning 15% or more of the outstanding Company Shares or any class of outstanding voting securities of the surviving entity or of the resulting direct or indirect parent of Harpoon or such surviving entity; (c) any acquisition involving 15% or more of Harpoon’s consolidated assets (measured on a fair market value basis as of the date thereof); (d) any acquisition or license (other than any non-exclusive and

 

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non-material license granted by Harpoon in the ordinary course of business consistent with past practice or expressly permitted to be granted by Harpoon under the terms of the Merger Agreement), or joint venture, collaboration or other similar transaction with respect to, HPN328 or HPN217 or (e) any combination of the foregoing.

 

   

Intervening Event” means any event, effect, condition, change, occurrence, development, circumstance or state of facts occurring or arising after January 7, 2024 that materially affects Harpoon, and that was neither known to, nor reasonably foreseeable by, the Board as of or prior to January 7, 2024, and that becomes known to the Board after January 7, 2024 and prior to the date of the Special Meeting (as it may be adjourned or postponed in accordance with the Merger Agreement); provided that in no event shall any of the following constitute an Intervening Event: (1) the receipt, existence of or terms of an Acquisition Proposal or any inquiry or communications relating thereto or any consequences thereof; (2) any event, effect, condition, change, occurrence, development, circumstance or state of facts with respect to Merck or any of its affiliates; (3) the timing of any authorizations required pursuant to the Merger Agreement to be obtained prior to the Closing in connection with the transactions contemplated by the Merger Agreement (including clearance of the Merger under the HSR Act); or (4) any changes, in and of itself, in the market price or trading volume of the shares of Company Shares or the fact, in and of itself, that Harpoon meets or exceeds any internal or published industry analyst projections or forecasts or estimates of revenues or earnings for any period ending on or after January 7, 2024 (however, the facts and circumstances giving rise to any such change may be taken into account in determining whether there has been an Intervening Event).

 

   

Superior Proposal” means a bona fide written Acquisition Proposal made by any third party after January 7, 2024 and not as a result of Harpoon’s breach of the non-solicitation provisions of the Merger Agreement that (1) would result in such third party (or in the case of a direct merger between such third party and Harpoon, the shareholders of such third party) becoming the beneficial owner, directly or indirectly, of more than 50% of the outstanding shares of Company Shares or more than 50% of Harpoon’s consolidated assets (measured on a fair market value basis as of the date thereof) and (2) is on terms that the Board determines in good faith (after consultation with outside legal counsel and a financial advisor of nationally recognized reputation), taking into account all legal, financial, regulatory and other aspects of the Acquisition Proposal, the likelihood of consummation and the third party making the Acquisition Proposal, (a) would, if consummated, result in a transaction that is more favorable to the Company Stockholders (solely in their capacity as such) from a financial point of view than the transactions contemplated by the Merger Agreement (including any revisions to the terms of the Merger Agreement proposed by Merck) and (b) is reasonably likely to be consummated on the terms proposed.

Employee Matters

Until the end of the calendar year in which the Closing Date occurs, but not beyond the date on which the individual’s employment terminates with Merck, the Surviving Corporation, Harpoon or any of their respective subsidiaries (such period being the “benefits continuation period”), Merck agrees to provide, or to cause one of its affiliates (including after the Closing, Harpoon) to provide, each individual employed by Harpoon immediately prior to the Closing who is retained by Merck (each, a “Continuing Employee”):

 

   

base salary or hourly wages and annual bonus targets that are, in each case no less favorable than those provided to the Continuing Employee immediately prior to the Closing; and

 

   

employee benefits that are substantially comparable in the aggregate to either (in the discretion of Merck) (1) the employee benefits provided to the Continuing Employee immediately prior to the Closing or (2) employee benefits provided to similarly-situated employees of Merck and its affiliates (in the case of either clause (1) or (2), excluding any equity, equity-based, change in control or severance benefits or any defined benefit retirement benefits).

 

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Nothing will prevent Merck or any of its affiliates (including, after the Closing, Harpoon or any of its subsidiaries) from terminating the employment of any Continuing Employee during the benefits continuation period in compliance with applicable law.

In addition, Merck will assume and honor, and shall cause the Surviving Corporation and their respective affiliates to assume and honor, the terms of Harpoon’s severance guidelines and provide the severance payments and benefits required thereunder to any applicable Continuing Employee that experiences a qualifying termination of employment during the benefits continuation period, provided that (1) there will be no duplication of benefits, (2) Merck may, in its discretion, condition any such severance payments on the execution and non-revocation of a release of claims, and (3) Merck may, in its discretion, accelerate any such severance to the extent there would be no adverse tax consequences to the Continuing Employee under Section 409A of the Code.

Following the Effective Time, Merck will, subject to applicable law, give each Continuing Employee full credit for prior service with Harpoon for purposes of vesting and eligibility to participate in employee benefit plans maintained by Merck or its affiliates for which the Continuing Employee is otherwise eligible to participate (but such service credit shall not be provided for purposes of benefit accrual, except for vacation and severance, as applicable); provided that service of a Continuing Employee prior to the Effective Time will not be recognized for the purpose of any entitlement to participate in, or receive benefits with respect to, any retiree medical programs or other retiree welfare benefit programs or any defined benefit plan maintained by Merck or its affiliates in which any Continuing Employee participates after the Effective Time. In no event will there be any duplication of benefits for the same period of service. In addition, Merck will use commercially reasonable efforts to (1) waive, or cause to be waived, any limitations on benefits relating to pre-existing conditions to the same extent such limitations are waived under any comparable plan of Harpoon applicable to such Continuing Employee prior to the Effective Time and (2) recognize, for purposes of annual deductible and out-of-pocket limits under its medical and dental plans, deductible and out-of-pocket expenses paid by Continuing Employees in the calendar year in which the Effective Time occurs.

Unless otherwise requested by Merck at least seven days prior to the Effective Time, the Board (or the appropriate committee thereof) shall take all actions necessary to terminate, or terminate Harpoon’s participation in, Harpoon’s 401(k) plan, such termination to be effective as of the day prior to the Closing Date and contingent upon the occurrence of the Effective Time.

If requested by Merck at least 10 days prior to the Closing Date, Harpoon will take all actions necessary to terminate Harpoon’s participation in any health, welfare, or fringe benefit plan, as permitted by applicable law and if such termination is not materially adverse to Harpoon’s employees, such terminations to be effective no later than the day immediately prior to the Closing Date, in each case, in accordance with terms of such plan and applicable law.

Efforts to Consummate the Merger

Subject to the terms and conditions in the Merger Agreement, each party agrees to use (and will cause its respective subsidiaries to use) its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by the Merger Agreement, including (1) preparing and filing as promptly as practicable with any governmental authority all documentation to effect all necessary notices, reports and other filings and (2) obtaining as promptly as practicable and maintaining all authorizations necessary or advisable to be obtained from any governmental authority in order to consummate the Merger and the other transactions contemplated by the Merger Agreement; provided that in no event will Merck or Merger Sub be obligated to, and Harpoon will not, without the prior written consent of Merck, agree to or proffer, any consent fee, concession or other modification to the terms and conditions of any contract in order to obtain the authorizations contemplated by clause (2).

 

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Harpoon, Merck and Merger Sub agree that they will consult with each other with respect to the obtaining of all such necessary authorizations and (1) Harpoon will have the right to review and approve in advance all characterizations of the information relating to Harpoon; (2) Merck will have the right to review and approve in advance all characterizations of the information relating to Merck, Merger Sub or any of their respective affiliates and (3) each of Harpoon and Merck will have the right to review and approve in advance all characterizations of the information relating to the transactions contemplated by the Merger Agreement, in each case, that appear in any material filing made in connection with the transactions contemplated by the Merger Agreement.

Each of Harpoon and Merck (and their respective controlled affiliates, if applicable) will: (1) as promptly as practicable (and no later than 10 business days after January 7, 2024, or such other date as mutually agreed by the parties in writing), file or cause to be filed with the United States Federal Trade Commission and the United States Department of Justice any notifications required to be filed under the HSR Act with respect to the transactions contemplated by the Merger Agreement; (2) as promptly as practicable after January 7, 2024 make required filings pursuant to any other applicable antitrust law with respect to the transactions contemplated by the Merger Agreement and (3) supply as promptly as practicable any additional information and documentary material that may be requested and use their reasonable best efforts to take all other actions necessary to cause the expiration or termination of the applicable waiting periods or obtain any required authorizations under such antitrust laws as soon as practicable.

Each party will (1) cooperate in all respects with each other in connection with any filing or submission to any governmental authority (including the form and content of any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made or submitted by or on behalf of any party in connection with proceedings under or relating to any antitrust law prior to their submissions) and in connection with any investigation or other inquiry with respect to the transactions contemplated by the Merger Agreement; (2) promptly notify the other party of any communication received from, or given to, any governmental authority with respect to the transactions contemplated by the Merger Agreement and keep the other parties reasonably informed as to the status of any such request, inquiry, investigation, or other communication; (3) subject to applicable law, and to the extent practicable, permit the other party to review in advance any proposed communication by it to any governmental authority with respect to the transactions, and incorporate the other party’s reasonable comments; (4) not agree to participate in any substantive meeting or discussion with any governmental authority in respect of any filing, investigation or inquiry concerning the Merger Agreement or the transactions unless it consults with the other party in advance and, to the extent permitted by such governmental authority and to the extent practicable, gives the other party the opportunity to attend; (5) pull and re-file any notice under the HSR Act only if the other party agrees and (6) promptly notify the other of, and if in writing, furnish the other party with non-confidential copies of (or, in the case of oral communications, advise the other of) correspondence, filings and communications between them and their affiliates and their respective representatives, on the one hand, and any such governmental authority or its staff, on the other hand, with respect to the Merger Agreement or the transactions.

At Merck’s request, Harpoon will give any notices to third parties, and use reasonable best efforts to obtain any third party consents, approvals or waivers required to be obtained under any material contracts in connection with consummation of the transactions; provided that Harpoon will not, without the prior written consent of Merck, agree to, or proffer, any consent fee, concession or other modification to the terms and conditions of any contract in order to obtain any such consent. Harpoon will coordinate and cooperate with Merck in determining whether any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts in connection with consummation of the transactions and seeking any such actions, consents, approvals or waivers.

Notwithstanding the foregoing or any other provision of the Merger Agreement, (a) the above obligations will not limit any applicable rights a party may have to terminate the Merger Agreement so long as such party has up to then complied in all material respects with its obligations and (b) in no event will Merck or Merger Sub

 

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be required to offer, accept or agree to, and Harpoon will not, without Merck’s prior written consent, offer, accept or agree to (1) sell, divest, lease, license, transfer, dispose of or otherwise encumber or hold separate any portion of the businesses, operations, assets or product lines of Merck, Harpoon or any of Merck’s subsidiaries (or a combination of the respective businesses, operations, assets or product lines of Merck, Harpoon or any of Merck’s subsidiaries); (2) terminate, relinquish, modify, transfer, assign, restructure, or waive rights under any existing contracts, collaborations, ventures or other relationships or other arrangements of Merck, Merger Sub or Harpoon or their respective affiliates; (3) restrict, prohibit or limit the ability of Merck, Harpoon or any of their respective subsidiaries to conduct its business or own its assets; (4) restrict, prohibit or limit the ownership or operation by Harpoon, Merck or any of their respective affiliates of all or any portion of the business or assets of Merck, Harpoon, the Surviving Corporation or any of their respective affiliates in any part of the world; (5) cause Merck or any of its subsidiaries to divest any shares of Company Shares; (6) impose limitations on the ability of Merck or any of its affiliates effectively to acquire, hold or exercise full rights of ownership of, any shares of Company Shares, including the right to vote Company Shares acquired or owned by Merck or any of its affiliates on all matters properly presented to Company Shares or (7) any other behavioral undertakings or commitments (any such action described in this clause (b), a “Non-Required Remedy”).

In no event will Merck or any of its affiliates be obligated to (A) enter into any settlement, undertaking, consent decree, stipulation or agreement with any governmental authority in connection with the transactions contemplated by the Merger Agreement or (B) litigate, participate in the litigation of, or otherwise contest, defend or appeal any proceeding, whether judicial or administrative, brought by any governmental authority challenging or seeking to restrain, prohibit or place conditions on the consummation of the Merger or the other transactions contemplated by the Merger Agreement or the ownership or operation by Merck, Harpoon or any of their respective affiliates of all or any portion of their respective businesses as presently conducted and as currently proposed to be conducted.

Merck, upon consultation with Harpoon and after taking into consideration in good faith all reasonable comments of Harpoon, shall (1) control the strategy and timing for, and make all decisions (and will take the lead in all meetings and communications with any governmental authority) for obtaining any approvals, consents, registrations, waivers, permits, authorizations, orders and other confirmations from any governmental authority in connection with the transactions contemplated by the Merger Agreement and (2) control the overall development of the positions to be taken and any regulatory actions to be requested in any filing or submission with a governmental authority in connection with the transactions and in connection with any investigation or other inquiry or proceeding by or before, or any negotiations with, a governmental authority relating to the transactions and of all other regulatory matters incidental thereto. Subject to applicable law, Harpoon will not (a) agree to extend any waiting period under the HSR Act without the prior written consent of Merck or (b) enter into any agreement with any governmental authority not to consummate the transactions without the prior written consent of Merck.

Indemnification of Directors and Officers; Insurance

From the Effective Time until the sixth anniversary of the Closing Date, Merck will, and Merck will cause the Surviving Corporation to, fulfill and honor all rights and obligations to exculpation and indemnification by Harpoon (including advancement of expenses) existing in favor of each person who is now, or has been at any time prior to January 7, 2024 or who becomes prior to the Effective Time an officer or director of Harpoon (each an “Indemnified Party”) as provided in Harpoon’s organizational documents or pursuant to any other contract, accurate and complete copies of which had been made available to Merck, in each case as in effect on January 7, 2024.

From the Effective Time until the sixth anniversary of the Closing Date, Merck will, and Merck will cause the Surviving Corporation to, to the fullest extent permitted under applicable law, indemnify, defend and hold harmless each Indemnified Party against any and all losses, claims, damages, liabilities, costs, fees, expenses (including fees and expenses of legal counsel, which shall be advanced as they are incurred), judgments, fines,

 

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penalties or liabilities (including amounts paid in settlement or compromise) in connection with or arising in whole or in part out of actions, omissions, suits or other proceedings (whether civil, regulatory, administrative or criminal, and including any proceeding before any administrative or legislative body) in which such Indemnified Party may be involved or with which he or she may be threatened (regardless of whether as a named party or as a participant other than as a named party, including as a witness) (an “Indemnified Proceeding”) by reason of such Indemnified Party’s being or having been a director or officer of Harpoon at, or at any time prior to, the Effective Time or in connection with any action taken or not taken by such Indemnified Party at the request of Harpoon at, or at any time prior to, the Effective Time (including any Indemnified Proceeding relating in whole or in part to the transactions contemplated by the Merger Agreement or relating to the enforcement of this provision or any other indemnification or advancement right of any Indemnified Party).

From the Effective Time until the sixth anniversary of the Closing Date, the Surviving Corporation will, and Merck will cause the Surviving Corporation to, maintain the officers’ and directors’ liability insurance in respect of acts or omissions occurring on or prior to the Effective Time covering each such person currently covered by the Harpoon’s officers’ and directors’ liability insurance policies on terms with respect to coverage and amount no less favorable than those of such policies in effect prior to January 7, 2024; provided that in satisfying its obligation under the Merger Agreement, the Surviving Corporation will not be obligated to pay an amount per year in excess of 350% of the annual premium Harpoon paid in the policy year prior to the Effective Time (the “Maximum Amount”) and if such insurance is unavailable or the premium for such insurance would at any time exceed the Maximum Amount, then the Surviving Corporation will cause to be maintained policies of insurance that, in the Surviving Corporation’s good faith judgment, provide the maximum coverage available at an annual premium equal to the Maximum Amount. The provisions of the immediately preceding sentence shall be deemed to have been satisfied if prepaid “tail” or “runoff” policies have been obtained by Harpoon prior to the Effective Time, which policies provide such directors and officers with coverage for an aggregate period of six years with respect to claims arising from acts or omissions that occurred on or before the Effective Time, including, in respect of the transactions contemplated by the Merger Agreement; provided, however, that the amount paid for such prepaid policies does not exceed the Maximum Amount, and if such prepaid policies are unavailable or the premium for such insurance would exceed the Maximum Amount, then Harpoon will procure the maximum coverage available for the Maximum Amount. If such prepaid policies have been obtained by Harpoon prior to the Effective Time, Merck will, and Merck will cause the Surviving Corporation to, maintain such policies in full force and effect for their full term, and continue to honor the obligations thereunder.

Upon receiving written notice of any proceeding in which any claims are made in respect of which such Indemnified Party would be entitled to indemnification advancement of expenses or other protections pursuant to the Merger Agreement, any Indemnified Party wishing to claim such advancement, indemnification or other protection shall promptly notify Merck thereof in writing, but the failure to so notify will not relieve Merck or the Surviving Corporation of any liability it may have to such Indemnified Party except to the extent such failure materially prejudices Merck or the Surviving Corporation. In the event of any such proceeding for which advancement of expenses is sought by an Indemnified Party, the Indemnified Party will make an undertaking to repay all such fees, costs or expenses paid by Merck or the Surviving Corporation if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final non-appealable judgment that the Indemnified Party is not entitled to be indemnified by Merck or the Surviving Corporation. Such undertaking will be unsecured and made without reference to an Indemnified Party’s ability to repay such advancements or ultimate entitlement to indemnification. No other form of undertaking will be required. Merck and the Surviving Corporation will not be liable for any settlement for which indemnification is sought by an Indemnified Party effected without their prior written consent, such consent not to be unreasonably withheld.

 

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Miscellaneous Covenants

The Merger Agreement contains additional agreements among Harpoon, Merck and Merger Sub relating to, among other matters:

 

   

the filing by Harpoon of this proxy statement with the SEC and cooperation in response to any comments from the SEC with respect to this proxy statement;

 

   

notification upon the occurrence or non-occurrence of certain matters;

 

   

the coordination of press releases and other public announcements or filings relating to the Merger;

 

   

actions necessary to cause Merger Sub to perform its obligations under the Merger Agreement;

 

   

requirements under Section 16 of the Exchange Act;

 

   

the delisting of the Company Shares from Nasdaq and the deregistration of the Company Shares under the Exchange Act;

 

   

anti-takeover statutes that may become applicable to the transactions; and

 

   

any litigation against Harpoon or its directors or its officers relating to or in connection with the Merger Agreement, the Merger or any other transactions contemplated by the Merger Agreement.

Conditions to the Merger

The respective obligations of Harpoon, Merck and Merger Sub to consummate the Merger are subject to the satisfaction (or, to the extent permitted by applicable law, waiver by Harpoon and Merck) on or prior to the Closing Date of the following conditions:

 

   

Company Stockholder approval of the Merger Proposal shall have been obtained;

 

   

no governmental restraints enjoining, making illegal or otherwise prohibiting the consummation of the Merger shall be in effect; and

 

   

any waiting period (including any extensions thereof) applicable to the consummation of the Merger under the HSR Act shall have been terminated or shall have expired.

The obligations of Merck and Merger Sub to consummate the Merger are subject to the satisfaction (or to the extent permitted by applicable law, waiver by Merck) on or prior to the Closing Date of the following conditions:

 

   

the representations and warranties made by Harpoon in the Merger Agreement with respect to the occurrence of a Company Material Adverse Effect being true and correct as of January 7, 2024 and as of the Closing Date as though made as of such date;

 

   

except for any inaccuracies that are, individually or in the aggregate, de minimis in the context of the transactions contemplated by the Merger Agreement, certain specified representations and warranties made by Harpoon in the Merger Agreement with respect to the capitalization of Harpoon being true and correct as of January 7, 2024 and as of the Closing Date as though made as of such date;

 

   

the representations and warranties made by Harpoon in the Merger Agreement with respect to corporate organization, authorization, no conflict, broker’s or finder’s fees, opinion of financial advisor and takeover provisions being true and correct in all material respects as of January 7, 2024 and as of the Closing Date as though made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

   

except where any failures of any such representations and warranties to be true and correct would not have, and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, the other representations and warranties made by Harpoon in the Merger

 

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Agreement being true and correct (without giving effect to any qualification as to “materiality” or Company Material Adverse Effect qualifiers set forth therein) as of January 7, 2024 and as of the Closing Date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, at and as of such earlier date);

 

   

Harpoon shall have performed or complied in all material respects with all of the obligations, agreements and covenants required to be performed or complied with by it under the Merger Agreement prior to the Closing;

 

   

since January 7, 2024, there shall have not occurred any event, effect, condition, change, occurrence, development, circumstance or state of facts that has had, or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect;

 

   

the delivery by Harpoon of a certificate signed by the Chief Executive Officer or the Chief Financial Officer of Harpoon, certifying that the conditions described in the preceding six bullets have been satisfied; and

 

   

there shall have not been instituted, pending or threatened in writing any proceeding by any governmental authority seeking to (1) prevent, prohibit or make illegal the consummation of the Merger; (2) prohibit or materially limit Merck’s ability to own, control, direct, manage or operate Harpoon or (3) otherwise impose any Non-Required Remedy (as defined under “—Other Covenants and Agreements—Efforts to Consummate the Merger” beginning on page 86 of this proxy statement).

The obligations of Harpoon to consummate the Merger are subject to the satisfaction (or, to the extent permitted by applicable law, waiver by Harpoon) on or prior to the Closing Date of the following conditions:

 

   

the representations and warranties of Merck or Merger Sub made in the Merger Agreement with respect to corporate organization, authorization, no conflict, and broker’s or finder’s fees being true and correct in all material respects as of January 7, 2024 and as of the Closing Date as though made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such earlier date);

 

   

the other representations and warranties of Merck or Merger Sub made in the Merger Agreement being true and correct (without giving effect to any qualification as to “materiality” qualifiers set forth therein) as of January 7, 2024 and as of the Closing Date as though made as of such date (except to the extent expressly made as of an earlier date, in which case, at and as of such earlier date), except, in each case, where the failure to be so true and correct would not, and would not reasonably be expected to, have, individually or in the aggregate, a material adverse effect on the ability of Merck or Merger Sub to consummate the transactions contemplated by the Merger Agreement on or before the Outside Date;

 

   

Merck shall have performed or complied in all material respects with all of the obligations, agreements and covenants required to be performed or complied with by it under the Merger Agreement prior to the Closing; and

 

   

the delivery by Merck of a certificate signed on behalf of Merck by an authorized representative certifying that the conditions described in the preceding three bullets have been satisfied.

Termination

The Merger Agreement may be terminated and the transactions contemplated thereby may be abandoned at any time prior to the Effective Time as follows:

 

   

by mutual written agreement of Harpoon and Merck;

 

   

by either Harpoon or Merck, if:

 

   

the Effective Time shall not have occurred on or before July 8, 2024 (the “Outside Date”); however, if at the time of the original Outside Date, all of the conditions to Closing have been

 

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satisfied (other than those conditions that by their nature are to be satisfied at the Closing, but such conditions are then capable of being satisfied) except for the conditions related to the receipt of antitrust approval, then either Merck or Harpoon, upon written notice to the other prior to the original Outside Date, shall be entitled to extend the Outside Date to October 7, 2024, provided that such right to terminate the Merger Agreement will not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the primary cause of, or resulted in, the failure of the Effective Time to have occurred on or prior to the Outside Date;

 

   

any governmental restraint enjoining, making illegal or otherwise prohibiting the consummation of the Merger shall have become final and non-appealable, provided that such right to terminate the Merger Agreement will not be available to any party if the issuance, entry of or failure to lift such governmental restraint was primarily caused by or the result of the failure of such party to perform any of its obligations under the Merger Agreement; or

 

   

the Special Meeting shall have been held and Company Stockholder approval of the Merger Proposal shall not have been obtained;

 

   

by Merck, if:

 

   

at any time prior to obtaining Company Stockholder approval of the Merger Proposal, if a Company Adverse Recommendation Change shall have occurred; or

 

   

at any time prior to the Effective Time, for a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Harpoon set forth in the Merger Agreement that would cause the conditions to closing with respect to the accuracy of representations and warranties or the performance of covenants of Harpoon not to be satisfied, provided that, if such a breach is curable by Harpoon within the earlier of the Outside Date and 20 business days after the date Merck gives Harpoon notice of such breach, then Merck may not terminate the Merger Agreement on account of such breach unless such breach remains uncured upon the earlier of the Outside Date and the expiration of such 20 business day period; provided further that Merck will not be entitled to terminate the Merger Agreement on account of such breach if either Merck or Merger Sub is in breach of its obligations under the Merger Agreement such that Harpoon would be entitled to terminate the Merger Agreement as the result of an uncured breach by Merck or Merger Sub.

 

   

by Harpoon, if:

 

   

at any time prior to obtaining Company Stockholder approval of the Merger Proposal, in order to accept a Superior Proposal and enter into a Specified Agreement, subject to certain conditions; or

 

   

at any time prior to the Effective Time, for a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Merck or Merger Sub set forth in the Merger Agreement that would cause the conditions to closing with respect to the accuracy of representations and warranties or the performance of covenants of Merck and Merger Sub not to be satisfied provided that, if such a breach is curable by Merck within the earlier of the Outside Date and 20 business days after the date Harpoon gives Merck notice of such breach, then Harpoon may not terminate the Merger Agreement on account of such breach unless such breach remains uncured upon the earlier of the Outside Date and the expiration of such 20 business day period; provided further that Harpoon will not be entitled to terminate the Merger Agreement on account of such breach if Harpoon is in breach of its obligations under the Merger Agreement such that Merck would be entitled to terminate the Merger Agreement as the result of an uncured breach by Harpoon.

Any party terminating the Merger Agreement pursuant to the foregoing shall give prompt written notice of such termination to the other party or parties to the Merger Agreement, as applicable.

 

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Termination Fee; Certain Expenses

Harpoon must pay to Merck a termination fee equal to $23,860,000 (the “Termination Fee”) by wire transfer of immediately available funds to an account designated by Merck in the event that the Merger Agreement is terminated:

 

   

by Merck, if a Company Adverse Recommendation Change occurs at any time prior to obtaining Company Stockholder approval of the Merger Proposal;

 

   

by Harpoon, at any time prior to obtaining Company Stockholder approval of the Merger Proposal, in order to accept a Superior Proposal and enter into the Specified Agreement relating to such Superior Proposal, if (1) such Superior Proposal has not resulted from any breach of the non-solicitation provisions of the Merger Agreement with respect to such Superior Proposal and any Acquisition Proposal that was a precursor thereto, (2) the Board, after satisfying all of the requirements set forth in the Merger Agreement, authorized Harpoon to enter into a Specified Agreement and (3) Harpoon paid the Termination Fee, and entered into the Specified Agreement, substantially concurrently with the termination of the Merger Agreement; and

 

   

by Merck or Harpoon if:

 

   

the Merger Agreement is terminated (1) by Merck or the Company as a result of the failure to consummate the Merger by the Outside Date (except where any condition related to the receipt of antitrust approval is not then satisfied), (2) by Merck or the Company as a result of the failure to obtain Company Stockholder approval of the Merger Proposal at the Special Meeting or (3) by Merck as a result of an uncured breach of Harpoon’s representations, warranties or covenants set forth in the Merger Agreement;

 

   

an Acquisition Proposal is made, proposed or otherwise communicated to Harpoon or the Company Stockholders or becomes publicly known after January 7, 2024 and is not withdrawn prior to (A) the date of such termination, with respect to any termination pursuant to clauses (1) and (3) of the preceding bullet or (B) the date of the Special Meeting pursuant to clause (2) of the preceding bullet; and

 

   

within 12 months after such termination, Harpoon consummates, or enters into a binding written definitive agreement with respect to, an Acquisition Proposal (replacing “15%” in the definition thereof with “50%” and disregarding clause (d) of such definition).

In no event will Harpoon be required to pay the Termination Fee on more than one occasion, whether or not the applicable termination fee would be payable under more than one provision of the Merger Agreement at the same or at different times.

The Merger Agreement further provides that if Harpoon fails to make payment of the Termination Fee within the applicable time period specified in the Merger Agreement, and Merck commences a proceeding to collect such amount that results in a judgment against Harpoon, Harpoon will reimburse Merck for its out-of-pocket fees and expenses (including reasonable attorneys’ fees and expenses) incurred in connection with such proceeding and will pay interest on the amount of the payment at the prime rate as published in The Wall Street Journal in effect on the date the amount was payable pursuant to the Merger Agreement, with such interest to accrue beginning on the date such amount first was payable pursuant to the Merger Agreement, to the date of payment.

Except in the case of common law fraud or a Willful Breach (as defined in the Merger Agreement), in the event that Merck receives full payment of the Termination Fee, then receipt of the Termination Fee will be Merck’s sole remedy for the related termination of the Merger Agreement.

 

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Expenses Generally

Except as otherwise described in this proxy statement, whether or not the Merger is consummated, Harpoon, Merck and Merger Sub are each responsible for all of their respective costs and expenses incurred in connection with the Merger and the transactions contemplated by the Merger Agreement.

Specific Performance

The parties to the Merger Agreement are entitled (in addition to any other remedy to which they may be entitled in law or equity) to an injunction to prevent breaches or threatened breaches of the Merger Agreement and to seek to enforce specifically the terms and provisions of the Merger Agreement.

Amendments; Waiver

Any provision of the Merger Agreement may be amended or waived prior to the Effective Time if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to the Merger Agreement or, in the case of a waiver, by each party against whom the waiver is to be effective.

Governing Law and Jurisdiction

The Merger Agreement will be governed by, and construed in accordance with, and all disputes arising out of or in connection with the Merger Agreement or the transactions contemplated thereby shall be resolved under, the law of the State of Delaware regardless of the law that might otherwise govern under applicable principles of conflicts of laws thereof.

The parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, the Merger Agreement or the transactions contemplated thereby (whether brought by any party or any of its affiliates or against any party or any of its affiliates) will be brought in the Delaware Chancery Court or, if such court shall not have jurisdiction, any federal court located in the State of Delaware or other Delaware state court, and each of the parties irrevocably consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably and unconditionally waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.

 

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THE SUPPORT AGREEMENTS

In connection with the execution of the Merger Agreement, Harpoon’s directors, executive officers, except for James B. Bucher who joined Harpoon as Chief Legal Officer on December 20, 2023, and certain of their affiliated entities, referred to as the “Specified Stockholders,” entered into Support Agreements with Merck and Merger Sub. The following is a summary of the material provisions of the Support Agreement, a copy of which is attached as Annex B to this proxy statement and is incorporated into this proxy statement by reference.

As of the close of business on the Record Date, the Specified Stockholders beneficially owned in the aggregate approximately 1,895,937 Company Shares, representing approximately 8.86% of the total voting power of the outstanding Company Shares entitled to vote at the Special Meeting. In the event any Specified Stockholder acquires record ownership or beneficial ownership of Company Shares after the execution of the Support Agreement, such additional shares will automatically become subject to the Support Agreement. The Company Shares subject to the Support Agreement are referred to in this section as “Covered Shares.”

Voting Provisions

Under the Support Agreements, each Specified Stockholder agreed to vote or cause to be voted all Covered Shares: (1) in favor of (A) the adoption of the Merger Agreement, the Merger and the approval of all agreements related to the Merger and any actions related thereto; (B) without limitation of the preceding clause (A), the approval of any proposal to adjourn or postpone any such meeting to a later date if there are not sufficient votes for adoption of the Merger Agreement on the date on which such meeting is held and (C) each of the other transactions contemplated by the Merger Agreement; (2) against any Acquisition Proposal; (3) against any (A) merger, amalgamation, consolidation, combination, share exchange, business combination, sale of material assets, reorganization, recapitalization, dissolution, liquidation or winding up of or by, or any other extraordinary corporate transaction involving, Harpoon, (B) sale, lease, license or transfer of a material amount of assets (including, for the avoidance of doubt, any company product or intellectual property) of Harpoon or agreement relating to the foregoing (other than the Merger Agreement and the transactions contemplated thereby) or (C) any change in or to the Board that is not recommended or approved by the Board; and (4) against any proposal, action or agreement that would reasonably be expected to (A) prevent, nullify or result in a breach of any provision of the Support Agreement, (B) result in any of the conditions to the Merger set forth in Article 7 of the Merger Agreement not being satisfied on or prior to the Outside Date, or (C) materially impede, interfere with, delay or prevent the consummation of the transactions contemplated by the Merger Agreement.

Each Specified Stockholder also has agreed that at any meeting of the Company Stockholders, however called, or at any adjournment or postponement thereof, or in any other circumstance in which the vote, consent or other approval of the Company Stockholders is sought (including the Special Meeting), will appear (in person or by proxy) at each such meeting or otherwise cause all Covered Shares to be counted as present thereat for purposes of calculating a quorum. Each Specified Stockholder also appointed Merck as attorney-in-fact and proxy, in its name, place and stead, to vote, express consent or dissent or issue instructions to the holder of record of any Covered Shares to vote such Covered Shares in accordance with the Support Agreement at any meeting of the Company Stockholders, and grant or withhold, or issue instructions to the holder of record of any Covered Shares to grant or withhold, in accordance with the Support Agreement, all written consents with respect to the Covered Shares.

Restrictions on Transfer

Pursuant to the Support Agreement, subject to certain limited exceptions, each Specified Stockholder agreed that, during the term of the Support Agreement, it will not sell (including short sale), assign, transfer, tender, pledge, encumber, grant participation interest in, hypothecate, place in trust or other disposition of (whether by sale, merger, consolidation, liquidation, dissolution, dividend, distribution, gift or otherwise) of such Covered Share or the beneficial ownership thereof, whether voluntarily or by operation of law, limit the right, title or

 

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interest or right to vote in any manner with respect thereto, offer to make such a transfer or other disposition, or enter into any option, agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing.

Waiver of Appraisal Rights and Certain Other Actions

Under the Support Agreement, the Specified Stockholders (1) irrevocably waived and agree not to exercise any and all rights of appraisal or rights to dissent from the Merger that the Specified Stockholder may have and (2) agreed not to commence or join in, and to take all actions necessary to opt out of, any class in any class action with respect to any claim, derivative or otherwise, against Merck, Merger Sub, Harpoon, Harpoon’s directors or any of their respective affiliates or successors, in each case, relating to the negotiation, execution or delivery of the Support Agreement or the Merger Agreement or the consummation of the Merger, including any claim (A) challenging the validity of, or seeking to enjoin the operation of, any provision of the Support Agreement or the Merger Agreement, (B) alleging a breach of any fiduciary duty of the Board in connection with the Merger Agreement or any of the transactions contemplated thereby, (C) with respect to SEC disclosure (or other disclosure to the holders of Company Shares) in connection with the Support Agreement or the Merger Agreement or the transactions contemplated thereby or (D) against Merck, Merger Sub or their respective representatives in connection with the Support Agreement or the Merger Agreement or the transactions contemplated thereby.

Termination

The Support Agreements will terminate automatically, without any notice or other action by any person, upon the earliest of (1) the mutual written consent of Merck and the Specified Stockholder, (2) the Effective Time, and (3) the termination of the Merger Agreement in accordance with its terms.

Stockholder Capacity Only

Each of the Specified Stockholders has entered into a Support Agreement solely in such Specified Stockholder’s capacity as a stockholder of Harpoon, and not in such Specified Stockholder’s capacity as a director, officer or employee of Harpoon. Nothing in the Support Agreement will be construed to prohibit the Specified Stockholder from taking any action (or failure to act) in his or her capacity as an officer or member of the Board or from taking any action with respect to any Acquisition Proposal solely in their capacity as such an officer or director or in the exercise of his or her fiduciary duties in his or her capacity as director or officer of Harpoon, or prevent or be construed to create any obligation on the part of any director or officer of Harpoon from taking any action in his or her capacity as such director or officer.

 

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PROPOSAL NO. 1: APPROVAL OF THE MERGER PROPOSAL

The Merger Proposal

We are asking Company Stockholders to approve a proposal to adopt the Merger Agreement, which we refer to as the “Merger Proposal.” For a detailed discussion of the terms and conditions of the Merger Agreement, see “The Merger Agreement” beginning on page 70 of this proxy statement. A copy of the Merger Agreement is attached to this proxy statement as Annex A. You are urged to read the Merger Agreement carefully and in its entirety. See also “The Merger” beginning on page 36 of this proxy statement.

Vote Required

As described under “The Merger—Recommendation of the Harpoon Board of Directors and Reasons for the Merger” beginning on page 44 of this proxy statement, after considering various factors described in such section, the Board unanimously (1) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable, fair to, and in the best interests of Harpoon and the Company Stockholders, (2) adopted, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, in accordance with the DGCL, and approved the execution, delivery and performance by Harpoon of the Merger Agreement and the consummation by Harpoon of the transactions contemplated thereby, including the Merger, and (3) recommends that you vote “FOR” the Merger Proposal and the Adjournment Proposal.

Under Delaware law, approval of the Merger Proposal requires the affirmative vote of the holders of a majority of the issued and outstanding Company Shares as of the Record Date. Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. If a stockholder signs and returns a proxy card and does not indicate how he, she or it wishes to vote on the Merger Proposal, such stockholder’s Company Shares will be voted in favor of the Merger Proposal.

Abstentions and broker non-votes, if any, will have the same effect as a vote “AGAINST” the Merger Proposal.

Board Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE MERGER PROPOSAL.

 

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PROPOSAL NO. 2: ADJOURNMENT OF THE SPECIAL MEETING

The Adjournment Proposal

We are asking you to approve a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting, which we refer to as the “Adjournment Proposal.” If our stockholders approve the Adjournment Proposal, we could adjourn the Special Meeting to solicit additional proxies in favor of the Merger Proposal, including the solicitation of proxies from stockholders that have previously returned properly executed proxies voting against the Merger Proposal. In addition, the chairperson of the Special Meeting could adjourn the Special Meeting if under our amended and restated bylaws a quorum is not present for the meeting.

Notwithstanding the foregoing, Harpoon’s right to adjourn or postpone the Special Meeting, and the number of times that Harpoon may adjourn or postpone the Special Meeting, and the duration of any such adjournment or postponement, is subject to the terms of the Merger Agreement as described further under “The Merger Agreement—Other Covenants and Agreements—Special Meeting and Related Actions” beginning on page 80 of this proxy statement.

If the Special Meeting is adjourned or postponed to solicit additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to their use at the Special Meeting as adjourned or postponed. Harpoon does not intend to call a vote on the Adjournment Proposal if the Merger Proposal is approved at the Special Meeting.

The Board believes that it is in the best interests of Harpoon and our stockholders to be able to adjourn the Special Meeting if necessary or appropriate for the purpose of soliciting additional proxies in respect of the Merger Proposal if there are insufficient votes to approve the Merger Proposal at the time of the Special Meeting.

Vote Required

Approval of the Adjournment Proposal requires the affirmative vote of the holders of a majority of voting power of the Company Shares present in person or represented by proxy at the Special Meeting. Each Company Share issued and outstanding as of the close of business on the Record Date is entitled to one vote at the Special Meeting. If a stockholder signs and returns a proxy card and does not indicate how he, she or it wishes to vote on the Adjournment Proposal, such stockholder’s Company Shares will be voted in favor of the Adjournment Proposal. If a Company Stockholder abstains from voting, it will have the effect of a vote “AGAINST” the Adjournment Proposal. If a Company Stockholder fails to vote, it will have no effect on the Adjournment Proposal. Broker non-votes, if any, will have no effect on the Adjournment Proposal.

The vote on the Adjournment Proposal is a vote separate and apart from the vote on the Merger Proposal. Accordingly, you may vote to approve the Merger Proposal and vote against or abstain with respect to the Adjournment Proposal and vice versa.

Board Recommendation

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADJOURNMENT PROPOSAL.

 

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MARKET PRICES AND DIVIDEND DATA

The Company Shares are listed on Nasdaq under the symbol “HARP.”

As of February 6, 2024, which is the Record Date for the Special Meeting, there were 21,397,205 Company Shares issued and outstanding, held by approximately 17 stockholders of record.

We have never declared or paid any cash dividends on the Company Shares, and we do not currently intend to pay, nor under the Merger Agreement may we pay without the prior written consent of Merck, any cash dividends on our capital stock (other than the accrual of dividends on the Company Series A Preferred Stock in accordance with its terms). On January 5, 2024, the last trading day before we publicly announced the execution of the Merger Agreement, the high and low sale prices for the Company Shares as reported on Nasdaq were $11.49 and $10.32 per share, respectively. The closing price of the Company Shares on Nasdaq on January 5, 2024 was $10.55 per share.

On February 7, 2024, the latest practicable trading day before the printing of this proxy statement, the closing price of the Company Shares on Nasdaq was $22.33 per share. You are encouraged to obtain current market quotations for Company Shares.

Upon the consummation of the Merger, there will be no further market for Company Shares and, as promptly as practicable thereafter, the Company Shares will cease trading on and be delisted from Nasdaq and deregistered under the Exchange Act. As a result, following the Merger and such deregistration, we will no longer file periodic reports with the SEC.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table and accompanying footnotes set forth certain information known to us with respect to the beneficial ownership of the Company Shares on January 7, 2024, for:

 

   

each of our directors;

 

   

each of our named executive officers;

 

   

all of our current directors and executive officers as a group; and

 

   

each person, or group of affiliated persons, who beneficially owned more than 5% of the Company Shares.

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Except as indicated by the footnotes below, we believe, based on information furnished to us, that the persons and entities named in the table below have sole voting and sole investment power with respect to all Company Shares that they beneficially own, subject to applicable community property laws. The Company Shares reflect a 1:10 reverse stock split effective September 1, 2023.

Applicable percentage ownership is based on 16,948,331 Company Shares issued and outstanding as of January 7, 2024 (the date of the Merger Agreement), which does not reflect subsequent vesting events or warrant exercises prior to the Record Date. In computing the number of Company Shares beneficially owned by a person and the percentage ownership of that person, we deemed to be issued and outstanding all Company Shares subject to options, warrants or other rights held by that person or entity that are currently exercisable within 60 days of January 7, 2024. We did not deem these shares issued and outstanding, however, for the purpose of computing the percentage ownership of any other person. Under the terms of the warrants referenced below, certain holders may not exercise the warrants to the extent such exercise would cause such holder, together with its affiliates and attribution parties, to beneficially own a number of Company Shares which would exceed 9.99% of the number of Company Shares outstanding following such exercise (for purposes of the denominator, immediately after giving effect to the issuance of the Company Shares to be issued upon the applicable exercise of such warrant). The numbers of Company Shares in the table below reflect these limitations.

 

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Unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Harpoon Therapeutics, Inc., 611 Gateway Boulevard, Suite 400, South San Francisco, California 94080.

 

     Number of Shares
Beneficially Owned
     Percent of Shares
Beneficially Owned
 

5% or Greater Stockholders

     

Entities associated with New Leaf Venture Partners (1)

     2,930,349        16.26

Entities associated with Cormorant Global (2)

     1,708,574        9.99

Entities associated with RA Capital Management, L.P. (3)

     1,714,574        9.99

Entities associated with Soleus Capital (4)

     1,789,975        9.99

Entities associated with Commodore Capital LP (5)

     1,714,574        9.99

Entities affiliated with Invus Public Equities, L.P. (6)

     1,736,771        9.99

Entities associated with Citadel Advisors LLC (7)

     1,027,959        5.95

Directors and Named Executive Officers (8)

     

Julie Eastland (9)

     45,309        *  

Luke Walker, M.D. (10)

     15,803        *  

Georgia Erbez (11)

     9,820        *  

Natalie Sacks, M.D. (12)

     4,574        *  

Holger Wesche, Ph.D. (13)

     40,708        *  

Joseph Bailes, M.D. (14)

     7,207        *  

Mark Chin (15)

     18,262        *  

Jonathan Drachman, M.D. (16)

     10,309        *  

Ronald Hunt (17)

     2,948,907        16.36

Scott Myers (18)

     23,762        *  

Andrew Robbins (19)

     4,065        *  

Lauren Silvernail (20)

     678        *  

All current executive officers and directors as a group (10 persons) (21)

     3,074,302        16.96

 

*

Represents beneficial ownership of less than 1%.

(1)

This information is based solely on information contained in the Form 4 filed by New Leaf Biopharma Opportunities II, L.P., with the SEC on October 27, 2023 and our Registration Statement on Form S-3 filed with the SEC on December 8, 2023. Consists of (a) 395,783 shares of common stock held by New Leaf Ventures III, L.P. (“New Leaf III”), (b) 1,463,386 shares of common stock held by New Leaf Biopharma Opportunities II, L.P. (“New Leaf BPO II”), and (c) warrants to acquire a total of 1,071,180 shares of common stock held by New Leaf III and New Leaf BPO II. New Leaf Venture Associates III, L.P. (“Associates III”) is the general partner of New Leaf Ventures III. New Leaf Venture Management III, L.L.C. (“Management III”) is the sole general partner of Associates III and ultimate general partner of New Leaf III. The Managing Directors of Management III, Mr. Hunt, a member of our Board, and Vijay K. Lathi, may each be deemed to share voting, investment and dispositive power over the shares held by New Leaf BPO II. New Leaf BPO Associates II, L.P. (“BPO Associates II”) is the general partner of New Leaf BPO II. New Leaf BPO Management II, L.L.C. (“BPO Management II”) is the sole general partner of BPO Associates II. The Managing Directors of BPO Management II, Mr. Hunt and Mr. Lathi, may each be deemed to share voting, investment and dispositive power of the shares held by New Leaf BPO II. The address for each of the entities listed in this footnote is c/o New Leaf Venture Partners, 7 Times Square, Suite 3502, New York, NY 10036.

(2)

This information is based solely on information contained in the Schedule 13G filed with the SEC on November 6, 2023. Consists of (a) 1,500,000 shares of common stock and warrants to acquire 154,514 shares of common stock held by Cormorant Global Healthcare Master Fund, L.P. (“Master Fund”), and (b) 54,060 shares of common stock held by Cormorant Private Healthcare Fund II, LP (“Fund II”). Master Fund owns warrants to acquire a total of 795,000 shares of common stock, the exercise of which is subject to a 9.99% beneficial ownership limit. Does not include warrants to acquire the additional 640,486 shares of

 

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  common stock held by Master Fund, which are not deemed beneficially owned by Master Fund due to the beneficial ownership limit. Cormorant Global Healthcare GP, LLC and Cormorant Private Healthcare GP II, LLC serve as the general partners of the Master Fund and Fund II, respectively. Cormorant Asset Management, LP serves as the investment manager to the Master Fund and Fund II. Bihua Chen serves as the managing member of Cormorant Global Healthcare GP, LLC and Cormorant Private Healthcare GP II, LLC and the general partner of Cormorant Asset Management, LP. Each of these entities and Bihua Chen disclaims beneficial ownership of the shares except to the extent of its or her pecuniary interest therein. The address of each of these entities and Bihua Chen is 200 Clarendon Street, 52nd Floor, Boston, MA 02116.
(3)

This information is based solely on information contained in the Schedule 13G filed with the SEC on November 6, 2023. Consists of 1,500,000 shares of common stock and warrants to acquire 214,574 shares of common stock held by R.A. Capital Healthcare Fund, L.P. (the “Fund”). The Fund owns warrants to acquire a total of 795,000 shares of common stock, the exercise of which is subject to a 9.99% beneficial ownership limit. Does not include warrants to acquire the additional 580,426 shares of common stock held by the Fund, which are not deemed beneficially owned by the Fund due to the beneficial ownership limit. RA Capital Healthcare Fund GP, LLC is the general partner of the Fund. The general partner of RA Capital is RA Capital Management GP, LLC, of which Peter Kolchinsky and Rajeev Shah are the controlling persons. RA Capital serves as investment adviser for the Fund and may be deemed a beneficial owner, for purposes of Section 13(d) of the Act, of any securities of Harpoon held by the Fund. The Fund has delegated to RA Capital the sole power to vote and the sole power to dispose of all securities held in the Fund’s portfolio, including the shares of common stock. Because the Fund has divested voting and investment power over the reported securities it holds and may not revoke that delegation on less than 61 days’ notice, the Fund disclaims beneficial ownership of the securities it holds for purposes of Section 13(d) of the Act. As managers of RA Capital, Dr. Kolchinsky and Mr. Shah may be deemed beneficial owners, for purposes of Section 13(d) of the Act, of any securities of the Issuer beneficially owned by RA Capital. RA Capital, Dr. Kolchinsky, and Mr. Shah disclaim beneficial ownership of the securities. The address of the principal business office of each of these entities and persons is c/o RA Capital Management, L.P., 200 Berkeley Street, 18th Floor, Boston, MA 02116.

(4)

This information is based solely on information contained in the Schedule 13G filed with the SEC on October 26, 2023 and our Registration Statement on Form S-3 filed with the SEC on December 8, 2023. Consists of (a) 289,875 shares of common stock and warrants to acquire 969,337 shares of common stock held by Soleus Private Equity Fund III, L.P. (“Soleus PE”), and (b) 530,763 shares of common stock held by Soleus Capital Master Fund, L.P. (“SCMF”). Soleus PE and SCMF own warrants to acquire a total of 3,326,500 shares of common stock, the exercise of which is subject to a 9.99% beneficial ownership limit. Does not include warrants to acquire the additional 2,357,163 shares of common stock held by Soleus PE and SCMF, which are not deemed beneficially owned by the Soleus entities due to the beneficial ownership limit. Soleus Private Equity GP III, LLC (“Soleus GP”) is the sole general partner of Soleus PE. Soleus GP holds voting and dispositive power over the shares held by Soleus PE. Soleus PE GP III, LLC is the sole manager of Soleus GP. Mr. Guy Levy is the sole managing member of Soleus PE GP III, LLC. Each of Mr. Guy Levy, Soleus PE GP III, LLC and Soleus GP disclaims beneficial ownership of these securities held by Soleus PE, except to the extent of their respective pecuniary interests therein. Soleus Capital, LLC is the sole general partner of SCMF and thus holds voting and dispositive power over the shares held by SCMF. Soleus Capital Group, LLC is the sole managing member of Soleus Capital, LLC. Mr. Guy Levy is the sole managing member of Soleus Capital Group, LLC. Each of Soleus Capital Group, LLC, Soleus Capital, LLC and Mr. Guy Levy disclaims beneficial ownership of these securities held by SCMF, except to the extent of their respective pecuniary interests therein. The address of each of these entities and Mr. Guy Levy is: 104 Field Point Road, 2nd Floor, Greenwich, CT 06830.

(5)

This information is based solely on information contained in the Schedule 13G filed with the SEC on November 3, 2023. Consists of 1,500,000 shares of common stock and warrants to acquire 214,574 shares of common stock held by Commodore Capital Master LP (“Commodore Master”). Commodore Master owns warrants to acquire a total of 1,567,500 shares of common stock, the exercise of which is subject to a 9.99% beneficial ownership limit. Does not include warrants to acquire the additional 1,352,926 shares of common stock held by Commodore Master, which are not deemed beneficially owned by Commodore

 

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  Master due to the beneficial ownership limit. Commodore Capital LP (“CC”) is the investment manager to Commodore Master, and may be deemed to beneficially own 1,714,574 shares of common stock. CC as the investment manager to Commodore Master, may be deemed to beneficially own these securities. Michael Kramarz and Robert Egen Atkinson are the managing partners of CC and exercise investment discretion with respect to these securities. The address of each of these entities and persons is: 444 Madison Avenue, Floor 35, New York, New York 10022.
(6)

This information is based solely on information provided by Invus Public Equities, L.P. (“Invus PE”) for inclusion in our Registration Statement on Form S-3 filed with the SEC on December 8, 2023. Consists of 1,300,000 shares of common stock and warrants to acquire 436,771 shares of common stock held by Invus PE. Invus PE owns warrants to acquire a total of 734,743 shares of common stock, the exercise of which is subject to a 9.99% beneficial ownership limit. Does not include warrants to acquire the additional 297,972 shares of common stock held by Invus PE, which are not deemed beneficially owned by Invus PE due to the beneficial ownership limit. Invus Public Equities Advisors, LLC (“Invus PE Advisors”) controls Invus PE, as its general partner and accordingly, may be deemed to beneficially own the Shares held by Invus PE. The Geneva branch of Artal International S.C.A. (“Artal International”) controls Invus PE Advisors, as its managing member and accordingly, may be deemed to beneficially own the Shares held by Invus PE. Artal International Management S.A. (“Artal International Management”), as the managing partner of Artal International, controls Artal International and accordingly, may be deemed to beneficially own the Shares that Artal International may be deemed to beneficially own. Artal Group S.A. (“Artal Group”), as the sole stockholder of Artal International Management, controls Artal International Management and accordingly, may be deemed to beneficially own the Shares that Artal International Management may be deemed to beneficially own. Westend S.A. (“Westend”), as the parent company of Artal Group, controls Artal Group and accordingly, may be deemed to beneficially own the shares that Artal Group may be deemed to beneficially own. Stichting Administratiekantoor Westend (the “Stichting”), as majority shareholder of Westend, controls Westend and accordingly, may be deemed to beneficially own the Shares that Westend may be deemed to beneficially own. Mr. Amaury Wittouck, as the sole member of the board of the Stichting, controls the Stichting and accordingly, may be deemed to beneficially own the Shares that the Stichting may be deemed to beneficially own. The address for Invus PE and Invus PE Advisors is 750 Lexington Avenue, 30th Floor, New York, NY 10022. The address for Artal International, Artal International Management, Artal Group, Westend and Mr. Wittouck is Valley Park, 44, Rue de la Vallée, L-2661, Luxembourg. The address for the Stichting is Claude Debussylaan, 46, 1082 MD Amsterdam, The Netherlands.

(7)

This information is based solely on information contained in the Schedule 13G filed with the SEC on November 6, 2023. Consists of (a) 685,000 shares of common stock and warrants to acquire 342,500 shares of common stock held by Citadel CMF Investments Ltd. (“CCIL”), and (b) 459 shares of common stock held by Citadel Securities LLC (“Citadel Securities”). Citadel Advisors LLC (“Citadel Advisors”) is the portfolio manager for CCIL. Citadel Advisors Holdings LP (“CAH”) is the sole member of Citadel Advisors. Citadel GP LLC (“CGP”) is the general partner of CAH. Citadel Securities Group LP (“CALC4”) is the non-member manager of Citadel Securities. Citadel Securities GP LLC (“CSGP”) is the general partner of CALC4. Kenneth Griffin is the President and Chief Executive Officer of CGP, and owns a controlling interest in CGP and CSGP. Mr. Griffin may be deemed to share voting and dispositive power over the shares held by these entities. The address for each of these entities and Mr. Griffin is Southeast Financial Center, 200 S. Biscayne Blvd., Suite 3300, Miami, Florida 33131.

(8)

According to a Schedule 13D filed on January 17, 2024, each of Merck Parent, Merck and Merger Sub may be deemed to have beneficial ownership of the Company Shares listed in this table as being beneficially owned by the directors and executive officers of Harpoon as a result of the execution of the Support Agreements described in the section of this proxy statement titled “The Support Agreements” beginning on page 95. The Schedule 13D included a statement indicating that such filing should not be construed as an admission by Merck Parent, Merck or Merger Sub that they are, for the purposes of Section 13(d) of the Exchange Act, the beneficial owners of such shares. The address for each of these entities is 126 East Lincoln Avenue, Rahway, NJ, 07065.

(9)

Consists of (a) 3,503 shares of common stock held directly by Ms. Eastland and (b) 41,806 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

 

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(10)

Consists of 15,803 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

(11)

Consists of (a) 7,229 shares of common stock directly held by Ms. Erbez, (b) 1,921 shares of common stock held indirectly through Georgia Leigh Erbez Charles Schwab & Co Inc. Cust. IRA Contributory (the “Georgia IRA”), and (c) 670 shares held indirectly through David Milan Erbez Charles Schwab & Co Inc. Cust. IRA Contributory (the “David IRA”). Ms. Erbez resigned as our Chief Financial Officer effective August 31, 2022.

(12)

Consists of 4,574 shares of common stock held directly by Dr. Sacks. Dr. Sacks resigned as our Chief Medical Officer effective June 1, 2022.

(13)

Consists of (a) 5,662 shares of common stock held directly by Dr. Wesche, and (b) 35,442 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024. Dr. Wesche was our Chief Science Officer until January 31, 2023.

(14)

Consists of 7,207 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

(15)

Consists of (a) 7,800 shares of common stock held directly by Mr. Chin, and (b) 10,462 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

(16)

Consists of 10,309 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

(17)

Consists of (a) 395,783 shares of common stock held indirectly through New Leaf III, (b) 1,463,386 shares of common stock held indirectly through New Leaf BPO II, (c) warrants to acquire at total of 1,071,180 shares of common stock held by New Leaf III and New Leaf BPO II, (d) 7,800 shares of common stock held directly by Mr. Hunt, and (e) 10,758 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024 held directly by Mr. Hunt. Associates III is the general partner of New Leaf Ventures III. Management III is the sole general partner of Associates III and ultimate general partner of New Leaf III. BPO Associates II is the general partner of New Leaf BPO II. BPO Management II is the sole general partner of BPO Associates II. Mr. Hunt is a Managing Director of Management III, which is the sole general partner of Associates III, and ultimate the general partner of New Leaf III. He is also a managing director of BPO Management II, which is the sole general partner of BPO Associates II, and ultimate general partner of New Leaf BPO II. As such, Mr. Hunt may be deemed to share voting, investment, and dispositive power with respect to the shares held by New Leaf III and New Leaf BPO II. The address for each of the entities listed in this footnote is c/o New Leaf Venture Partners, 7 Times Square, Suite 3502, New York, NY 10036.

(18)

Consists of (a) 17,665 shares of common stock held directly by Mr. Myers and (b) 6,097 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

(19)

Consists of 4,065 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

(20)

Consists of 678 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024.

(21)

Consists of (a) 1,895,937 shares of common stock, of which 36,768 shares of common stock are held directly by the directors and officers as a group and pursuant to footnote 17 above, 1,859,169 shares of common stock are held in the aggregate, and indirectly, through New Leaf III and New Leaf BPO II, (b) 107,185 shares of common stock issuable pursuant to options exercisable within 60 days of January 7, 2024, and (c) warrants to acquire 1,071,180 shares of common stock held in the aggregate, and indirectly, through New Leaf III and New Leaf BPO II.

 

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FUTURE STOCKHOLDER PROPOSALS

If the Merger is consummated, we will have no public stockholders and there will be no public participation in any future meetings of our stockholders. However, if the Merger is not consummated, our stockholders will continue to be entitled to attend and participate in meetings of our stockholders.

We intend to hold an annual meeting of stockholders in 2024 only if the Merger is not consummated.

Stockholders who intended to have a proposal considered for inclusion in our proxy materials for presentation at our annual meeting of stockholders to be held in 2024 pursuant to Rule 14a-8 under the Exchange Act must have submitted the proposal to our Corporate Secretary at our offices at 611 Gateway Boulevard, Suite 400, South San Francisco, California 94080 in writing not later than December 29, 2023, which is 120 days prior to the one-year anniversary of the mailing date of Harpoon’s proxy statement for its annual meeting of stockholders held on June 22, 2023, unless the date of the 2024 annual meeting of stockholders is changed by more than 30 days from the anniversary of our 2023 annual meeting, in which case the deadline for such proposals will be a reasonable time before we begin to print and send our proxy materials. These proposals must comply with the requirements as to form and substance established by the SEC in Rule 14a-8 of the Exchange Act for such proposals to be included in the proxy statement.

Stockholders intending to present a proposal at the 2024 annual meeting of stockholders, but not to include the proposal in our proxy statement, or to nominate a person for election as a director, must comply with the requirements set forth in our amended and restated bylaws. To be timely, we must receive the notice not less than 90 days nor more than 120 days prior to the first anniversary of the 2023 annual meeting of stockholders, that is, between February 23, 2024 and March 24, 2024; provided, however, that in the event that the date of the 2024 annual meeting of stockholders is more than 30 days before or more than 30 days after such anniversary date, we must receive your notice (a) no earlier than the close of business on the 120th day prior to the 2024 annual meeting of stockholders and (b) no later than the close of business on the later of the 90th day prior to the 2024 annual meeting of stockholders or the close of business on the 10th day following the day on which we first make a public announcement of the date of the 2024 annual meeting of stockholders. SEC rules permit management to vote proxies in its discretion in certain cases if the stockholder does not comply with this deadline and, in certain other cases, notwithstanding the stockholder’s compliance with this deadline. Stockholders are advised to review our amended and restated bylaws which also specify requirements as to the form and content of a stockholder’s notice. The written notice must contain specific information required in Section 5 of our amended and restated bylaws.

In addition to satisfying the foregoing requirements under our amended and restated bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than Harpoon’s nominees must have provided notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 23, 2024, which is 60 days prior to the one-year anniversary of the preceding year’s annual meeting, unless the date of the 2024 annual meeting of stockholders changes by more than 30 days from the anniversary of the 2023 annual meeting of stockholders, in which case, notice must be provided by the later of 60 days prior to the date of the 2024 annual meeting of stockholders or the 10th day following the date on which public disclosure of the date of such meeting is first made by us.

We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these or other applicable requirements.

 

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WHERE YOU CAN FIND MORE INFORMATION

The SEC allows us to “incorporate by reference” information into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except for any information superseded by information in this proxy statement or incorporated by reference subsequent to the date of this proxy statement. This proxy statement incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us and our business and financial condition and are incorporated by reference into this proxy statement. Statements contained in this proxy statement, or in any document incorporated by reference into this proxy statement, regarding the contents of any contract or other document, are not necessarily complete and each such statement is qualified in its entirety by reference to that contract or other document filed as an exhibit with the SEC.

The following Harpoon filings with the SEC are incorporated by reference (in each case excluding any information furnished and not filed):

 

   

Harpoon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 27, 2023;

 

   

Harpoon’s Quarterly Reports on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May  11, 2023, the quarter ended June 30, 2023, filed with the SEC on August 9, 2023, and the quarter ended September 30, 2023 filed with the SEC on November 9, 2023;

 

   

Harpoon’s Definitive Proxy Statement on Schedule 14A filed with the SEC on April 27, 2023; and

 

   

Harpoon’s Current Reports on Form 8-K filed with the SEC on March 27, 2023, March 31, 2023, June  23, 2023, September 1, 2023, September 13, 2023, September 29, 2023, October  23, 2023, October 24, 2023, November 24, 2023, November 28, 2023, January  8, 2024, January 26, 2024 and January 29, 2024.

We also incorporate by reference into this proxy statement any documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act between the date of this proxy statement and the earlier of the date of the Special Meeting or the termination of the Merger Agreement (in each case excluding any information furnished and not filed). Information furnished under Item 2.02 or Item 7.01 of any Current Report on Form 8-K, including related exhibits, is not and will not be incorporated by reference into this proxy statement.

Stockholders may obtain free copies of the documents filed with the SEC by Harpoon through the SEC’s website, www.sec.gov, or through the Investors section of our website, ir.harpoontx.com/investors, and the “SEC Filings” section therein. The information included on our website is not incorporated by reference into this proxy statement.

You may obtain any of the documents incorporated by reference into this proxy statement, excluding any exhibits to those documents unless the exhibit is specifically incorporated by reference into those documents, without charge, by requesting them in writing or by telephone from us at the following address:

Harpoon Therapeutics, Inc.

611 Gateway Boulevard, Suite 400

South San Francisco, California 94080

Attention: Corporate Secretary

Call: (650) 443-7400

If you would like to request documents from us, please do so by February 23, 2024, to receive them before the Special Meeting. If you request any documents from us, we will mail them to you by first class mail or another equally prompt method, within one business day after we receive your request.

 

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MISCELLANEOUS

Harpoon has supplied all information relating to Harpoon, and Merck has supplied, and Harpoon has not independently verified, all of the information relating to Merck and Merger Sub contained in “Summary—The Companies” beginning on page 13 of this proxy statement and “The Companies” beginning on page 28 of this proxy statement.

If you hold any certificates representing Company Shares, you should not send in such certificates until you receive transmittal materials after the Merger is consummated.

You should rely only on the information contained in this proxy statement, the annexes to this proxy statement and the documents incorporated by reference into this proxy statement to vote on the Merger. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated February 8, 2024. You should not assume that the information contained in this proxy statement is accurate as of any date other than that date (or as of an earlier date if so indicated in this proxy statement) and the mailing of this proxy statement to stockholders does not create any implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make a proxy solicitation.

 

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Annex A

Execution Version

AGREEMENT AND PLAN OF MERGER

DATED AS OF JANUARY 7, 2024

AMONG

MERCK SHARP & DOHME LLC,

HAWAII MERGER SUB, INC.

AND

HARPOON THERAPEUTICS, INC.


Table of Contents

Table of Contents

 

          Page  

ARTICLE 1 DEFINITIONS; INTERPRETATION

     A-1  

  

 

SECTION 1.1.

  

Definitions

     A-1  
 

SECTION 1.2.

  

Interpretation

     A-11  

ARTICLE 2 THE MERGER

     A-12  
 

SECTION 2.1.

  

The Merger

     A-12  
 

SECTION 2.2.

  

Effects of the Merger

     A-12  
 

SECTION 2.3.

  

Closing

     A-12  
 

SECTION 2.4.

  

Effective Time

     A-12  
 

SECTION 2.5.

  

Surviving Corporation

     A-12  

ARTICLE 3 CONSIDERATION; EXCHANGE OF SHARES

     A-13  
 

SECTION 3.1.

  

Merger Sub Capital Stock

     A-13  
 

SECTION 3.2.

  

Company Common Stock and Company Series A Preferred Stock

     A-13  
 

SECTION 3.3.

  

Exchange of Shares

     A-14  
 

SECTION 3.4.

  

Company Equity Awards and Warrants

     A-15  
 

SECTION 3.5.

  

Employee Stock Purchase Plan

     A-17  
 

SECTION 3.6.

  

Adjustments to Prevent Dilution

     A-17  
 

SECTION 3.7.

  

Withholding Rights

     A-17  
 

SECTION 3.8.

  

Appraisal Rights

     A-17  

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     A-18  
 

SECTION 4.1.

  

Organization

     A-18  
 

SECTION 4.2.

  

Capitalization

     A-18  
 

SECTION 4.3.

  

Authorization; No Conflict

     A-19  
 

SECTION 4.4.

  

Subsidiaries

     A-20  
 

SECTION 4.5.

  

SEC Documents

     A-21  
 

SECTION 4.6.

  

Company Financial Statements

     A-22  
 

SECTION 4.7.

  

Absence of Material Adverse Effect

     A-22  
 

SECTION 4.8.

  

Proceedings

     A-23  
 

SECTION 4.9.

  

Information Supplied

     A-23  
 

SECTION 4.10.

  

Broker’s or Finder’s Fees

     A-23  
 

SECTION 4.11.

  

Employee Plans

     A-23  
 

SECTION 4.12.

  

Employment Matters

     A-25  
 

SECTION 4.13.

  

Opinion of Financial Advisor

     A-27  
 

SECTION 4.14.

  

Taxes

     A-27  
 

SECTION 4.15.

  

Environmental Matters

     A-29  
 

SECTION 4.16.

  

Compliance

     A-29  
 

SECTION 4.17.

  

Intellectual Property

     A-30  
 

SECTION 4.18.

  

Material Contracts

     A-32  
 

SECTION 4.19.

  

Regulatory Matters

     A-34  
 

SECTION 4.20.

  

Real Property

     A-36  
 

SECTION 4.21.

  

Insurance

     A-36  
 

SECTION 4.22.

  

Affiliate Transactions

     A-37  
 

SECTION 4.23.

  

Takeover Provisions

     A-37  
 

SECTION 4.24.

  

Assets

     A-37  
 

SECTION 4.25.

  

Books and Records

     A-37  
 

SECTION 4.26.

  

Anti-Corruption Compliance

     A-37  

 

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SECTION 4.27.

  

Data Protection

     A-38  
 

SECTION 4.28.

  

Sanctions

     A-39  

  

 

SECTION 4.29.

  

No Other Representations or Warranties

     A-39  

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     A-39  
 

SECTION 5.1.

  

Organization

     A-39  
 

SECTION 5.2.

  

Merger Sub

     A-39  
 

SECTION 5.3.

  

Authorization; No Conflict

     A-39  
 

SECTION 5.4.

  

Information Supplied

     A-40  
 

SECTION 5.5.

  

Sufficient Funds

     A-40  
 

SECTION 5.6.

  

Proceedings

     A-40  
 

SECTION 5.7.

  

Ownership of Company Common Stock

     A-41  
 

SECTION 5.8.

  

Broker’s or Finder’s Fees

     A-41  
 

SECTION 5.9.

  

No Other Representations or Warranties

     A-41  

ARTICLE 6 COVENANTS

     A-41  
 

SECTION 6.1.

  

Conduct of the Company

     A-41  
 

SECTION 6.2.

  

Proxy Statement; Stockholders’ Meeting

     A-44  
 

SECTION 6.3.

  

Employee Matters

     A-46  
 

SECTION 6.4.

  

Further Assurances

     A-48  
 

SECTION 6.5.

  

Public Statements

     A-48  
 

SECTION 6.6.

  

Standard of Efforts; Governmental Approvals

     A-48  
 

SECTION 6.7.

  

Notification of Certain Matters; Other Actions

     A-50  
 

SECTION 6.8.

  

Access to Information; Confidentiality

     A-51  
 

SECTION 6.9.

  

No Solicitation

     A-52  
 

SECTION 6.10.

  

Indemnification and Insurance

     A-55  
 

SECTION 6.11.

  

Section 16 Matters

     A-56  
 

SECTION 6.12.

  

Transaction Litigation

     A-56  
 

SECTION 6.13.

  

Deregistration; Stock Exchange Delisting

     A-57  
 

SECTION 6.14.

  

Takeover Provisions

     A-57  
 

SECTION 6.15.

  

Obligations of Merger Sub

     A-57  
 

SECTION 6.16.

  

Tax Matters

     A-57  
 

SECTION 6.17.

  

Merger Sub Stockholder Consent

     A-57  
 

SECTION 6.18.

  

Certain Pre-Closing Actions

     A-57  

ARTICLE 7 CONDITIONS

     A-58  
 

SECTION 7.1.

  

Conditions to Each Party’s Obligations to Effect the Merger

     A-58  

  

 

SECTION 7.2.

  

Conditions to Parent’s and Merger Sub’s Obligations to Effect the Merger

     A-58  
 

SECTION 7.3.

  

Conditions to the Company’s Obligations to Effect the Merger

     A-59  

ARTICLE 8 TERMINATION

     A-59  
 

SECTION 8.1.

  

Termination

     A-59  
 

SECTION 8.2.

  

Effect of Termination

     A-61  
 

SECTION 8.3.

  

Termination Fee and Expenses

     A-61  

ARTICLE 9 GENERAL PROVISIONS

     A-62  
 

SECTION 9.1.

  

Notices

     A-62  
 

SECTION 9.2.

  

Amendments and Waivers

     A-63  
 

SECTION 9.3.

  

Representations and Warranties

     A-63  
 

SECTION 9.4.

  

Governing Law; Jurisdiction

     A-64  
 

SECTION 9.5.

  

WAIVER OF JURY TRIAL

     A-64  
 

SECTION 9.6.

  

Counterparts; Effectiveness

     A-64  

 

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SECTION 9.7.

  

Assignment; Third Party Beneficiaries

     A-64  
 

SECTION 9.8.

  

Severability

     A-65  
 

SECTION 9.9.

  

Entire Agreement; No Reliance

     A-65  
 

SECTION 9.10.

  

Enforcement

     A-65  
 

SECTION 9.11.

  

Remedies

     A-65  

Exhibit A   Form of Certificate of Incorporation of the Surviving Corporation

 

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AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of January 7, 2024, among MERCK SHARP & DOHME LLC, a New Jersey limited liability company (“Parent”), HAWAII MERGER SUB, INC., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and HARPOON THERAPEUTICS, INC., a Delaware corporation (the “Company”).

INTRODUCTION

WHEREAS, on the terms and subject to the conditions set forth herein, the parties intend that Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned Subsidiary of Parent, on the terms and subject to the conditions set forth in this Agreement and in accordance with the General Corporation Law of the State of Delaware (the “DGCL”);

WHEREAS, the board of directors of the Company (the “Company Board”) has unanimously (i) determined that this Agreement and the Transactions, including the Merger, are advisable, fair to and in the best interests of the Company and the holders of shares of common stock, par value $0.0001 per share, of the Company (such stock, the “Company Common Stock” and such holders, the “Company Common Stockholders”); (ii) adopted, approved and declared advisable this Agreement and the Transactions, including the Merger, in accordance with the DGCL, and approved the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Transactions, including the Merger; and (iii) resolved to recommend that the Company Common Stockholders vote to approve the adoption of this Agreement (collectively, the “Company Recommendation”);

WHEREAS, the respective boards of directors of Parent and Merger Sub have adopted, approved and declared advisable this Agreement and the Transactions, including the Merger; and

WHEREAS, concurrently with the execution and delivery of this Agreement, as a condition and inducement to the willingness of Parent and Merger Sub to enter into this Agreement, certain Stockholders are entering into a support agreement with Parent and Merger Sub (the “Support Agreements”), pursuant to which each such Stockholder has, among other things, agreed to vote all of the shares of Company Common Stock beneficially owned by such Stockholder in favor of the adoption of this Agreement and take certain other actions in furtherance of the Transactions, in each case, subject to the terms and conditions thereof.

NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants and agreements set forth in this Agreement, the parties agree as follows:

ARTICLE 1

DEFINITIONS; INTERPRETATION

SECTION 1.1. Definitions.

(a) As used in this Agreement, the following terms have the respective meanings set forth below:

Acquisition Proposal” means any inquiry, offer, proposal or indication of interest (in writing or otherwise) from any Third Party relating to any transaction or series of related transactions involving (i) any acquisition or purchase by any Third Party, directly or indirectly, of 15% or more of the outstanding Company Common Stock, or any tender offer or exchange offer that, if consummated, would result in any Third Party beneficially owning 15% or more of the outstanding Company Common Stock; (ii) any merger, amalgamation, consolidation, share exchange, business combination, liquidation, dissolution, recapitalization, reorganization or similar transaction involving the Company that, if consummated, would result in any Third Party, directly or indirectly, (1) acquiring 15% or more of the Company’s consolidated assets (measured on a fair market value

 

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basis as of the date thereof) or (2) beneficially owning 15% or more of the outstanding Company Common Stock or any class of outstanding voting securities of the surviving entity or of the resulting direct or indirect parent of the Company or such surviving entity; (iii) any acquisition involving 15% or more of the Company’s consolidated assets (measured on a fair market value basis as of the date thereof); (iv) any acquisition or license (other than any non-exclusive and non-material license granted by the Company in the ordinary course of business consistent with past practice or expressly permitted to be granted by the Company by Section 6.1(b)) of, or joint venture, collaboration or other similar transaction with respect to, HPN328 or HPN217 or (v) any combination of the foregoing.

Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, or is controlled by, or is under common control with, such Person. For this purpose, “control (including, with its correlative meanings, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a Person, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise.

Business Day” means any day other than Saturday, Sunday or any day on which commercial banks in New York, New York are authorized or required by applicable Law to remain closed, or, solely for purposes of determining the Closing Date, the Secretary of State of Delaware is authorized or required by applicable Law to remain closed.

Code” means the Internal Revenue Code of 1986.

Collaboration Partners” means any of the Company’s licensees or licensors or any Third Party with which the Company has entered into a Contract that relates to the research, development, supply, manufacturing, testing, di