Exhibit 10.1

AMPIO PHARMACEUTICALS, INC.

5445 DTC Parkway, P4

Greenwood Village, Colorado 80111

ATTENTION: CONTAINS SHARE ISSUANCE INSTRUCTIONS

IRREVOCABLE INSTRUCTIONS TO TRANSFER AGENT

Date: March 10, 2011

Corporate Stock Transfer, Inc.

3200 Cherry Creek Drive South, Suite 430

Denver, Colorado 80209

 

Re: Instructions to Issue Shares

Ladies and Gentlemen:

Reference is made to those certain Senior Unsecured Mandatorily Convertible
Debentures and Senior Convertible Unsecured Debentures dated at various times
from August 2010 through January 2011 (collectively, the “Debentures;” certain
terms used herein and not defined herein are used herein as defined in the
Debentures), by and between Ampio Pharmaceuticals, Inc., a Delaware corporation
(the “Company” or “Ampio”) and the holders of the Debentures identified on
Exhibit A hereto (the “Holders” or the “Purchasers”). Pursuant to the terms of
the Debentures, the Debentures were to automatically convert into shares of
common stock of the Company at the lower of $1.75 per share or the price of an
underwritten offering, on the earlier of (1) completion of an underwritten
offering of the Company’s common stock in the amount of $10 million or more, or
(2) March 31, 2010. However, pursuant to mutual agreements entered into between
the Company and all of the Holders, the Holders have agreed to an immediate
conversion of the Debentures at $1.75 per share. On February 28, 2011, the Board
of Directors of the Company authorized the issuance of an aggregate of 1,281,852
shares of the Company’s common stock, par value $0.0001 per share (the
“Conversion Shares”), in extinguishment of the outstanding principal of the
Debentures and accrued interest thereon to February 22, 2011. The Company will
be making a cash payment of interest on the Debentures for the period from
February 22, 2011 to February 28, 2011.

Reference also is made to that certain Warrant to purchase shares of common
stock dated as of the date of the Debentures (the “Warrants”), issued by the
Company, pursuant to which the Holders may purchase up to an aggregate of
256,389 shares of the Company’s Common Stock., which are referred to herein as
the “Warrant Shares.” The Conversion Shares, together with the Warrant Shares
are hereinafter referred to as the “Shares.”

This irrevocable letter of instructions shall serve as the authorization and
direction of the Company to Corporate Stock Transfer, Inc. (“you” or “your” or
“Corporate Stock Transfer”) to issue certificates of Ampio common stock
representing the Shares to the Holders (i) in connection with the conversion of
the Debentures, and (ii) on exercise of the Warrants, as follows:

1. Upon your receipt of these instructions, you shall as soon as practicable,
but in no event later than two (2) Trading Days (as defined below) after receipt
of such instructions, issue and surrender to a common carrier for overnight
delivery to the Purchasers at the addresses set forth on Exhibit A, the
certificates (collectively, the “Certificates”) representing the Conversion
Shares, registered in the name of the Purchasers. For purposes hereof, “Trading
Day” shall mean any day on which the New York Stock Exchange is open for
customary trading. The Certificates representing the Conversion Shares shall be
issued with a restrictive legend which provides substantially as follows:

The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (“Act”), and may not be offered or sold
except (i) pursuant to an effective registration statement under the Act,
(ii) to the extent applicable, pursuant to Rule 144 under the

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Corporate Stock Transfer, Inc.

March 10, 2011

 

Act (or any similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably satisfactory to counsel to the issuer, stating
that an exemption from registration under such Act is available.

2. Once the resale of the Conversion Shares by the Purchasers has been
registered with the Securities and Exchange Commission (the “SEC”) under the
Company’s registration statement on Form S-1 (the “Registration Statement”) to
be filed with the SEC shortly hereafter, and upon receipt of a legal opinion
from Richardson & Patel, LLP, counsel to the Company, that the Conversion Shares
have been so registered (which opinion shall also note that the Registration
Statement has been declared effective by the SEC) and upon tender of
Certificate(s) by one or more Purchasers to you with a request for legend
removal (the “Tender Notice”), you shall within three (3) Trading Days
thereafter (a) issue and deliver to each tendering Purchaser, via a common
carrier for overnight delivery, to the address as specified in the Tender
Notice, a certificate or certificates free of any restrictive legend and
registered in the name of the Purchaser or its designee, for the Conversion
Shares, up to the number of shares evidenced by the Certificate tendered, or
(b) on the request of the Purchaser in question, credit such aggregate number of
Conversion Shares to the Purchaser’s or its designees’ balance account with DTC
through the Deposit Withdrawal at Custodian (“DWAC”) system, provided the
Purchaser causes its bank or broker to initiate the DWAC transaction.
Notwithstanding the foregoing language, in the event the legal opinion is not
provided to you as described above, the Certificates representing the Conversion
Shares shall continue to bear the restrictive legend.

3. You shall issue the Warrant Shares to or at the direction of the Company upon
exercise of all or a portion of the Warrants held by the Purchasers (which also
are listed on Exhibit A hereto), upon delivery to you of (a) a properly
completed and duly executed Notice of Exercise (the “Notice of Exercise”) in the
form attached hereto as Exhibit B, (b) receipt by you of the Exercise Price or
confirmation from the Company that it received the Exercise Price, and the
expiration of sufficient time so as to allow clearing of any check or
confirmation of any wire by which such Exercise Price was paid, and (c) a legal
opinion as to the free transferability of the Shares from Company counsel dated
within 90 days from the exercise date; provided, however, that in the event the
legal opinion is not provided as described above, you will issue the Warrant
Shares subject to a restrictive legend. The form of delivery of the Warrant
Shares (whether by physical delivery or using the DWAC System) shall be
undertaken by you as may be requested by each Purchaser, subject to the prior
satisfaction of the conditions in (a), (b), and (c) immediately above.

4. The Company understands and agrees that Corporate Stock Transfer shall not be
required to perform any issuances or transfers of the Shares or to otherwise act
pursuant to these instructions if (a) the Company violates, or would be in
violation of, any terms of the Transfer Agent Agreement as a result of such
issuances or transfers, (b) such an issuance or transfer of Shares would be in
violation of any state or federal securities laws or regulations, or (c) the
issuances or transfer of the Shares is prohibited or stopped as required or
directed by a court order.

5. You understand that a delay in the delivery of Certificates or the crediting
of the Shares as described above, as the case may be, could result in economic
loss to the Purchasers and that time is of the essence in your processing of a
Tender Notice or Notice of Exercise.

6. By executing this letter in the space set forth at the bottom hereof you
agree on behalf of Corporate Stock Transfer that, to the extent the applicable
Shares being issued will be certificated pursuant to Paragraphs 1, 2 or 3 above,
if the date on which a Certificate is submitted to you is more than twelve
(12) months following the date of issuance of the Certificate and (i) the
Purchaser tenders to you a signed representation letter in the form set forth on
your web site, and (ii) the Company confirms these instructions at or about the
time of the Purchaser’s tender, the Certificate may then be reissued by you
without any legend restricting transfer and should not be subject to any
stop-transfer restrictions, and shall otherwise be freely transferable on the
books and records of the Company.

7. You shall rely exclusively on this letter, the Tender Notice, if given, and
the Notice of Exercise, if given, and shall have no liability for relying on
such instructions or on the Tender Notice or Notice of Exercise, subject to
receipt of the legal opinion referenced above and, in the case of a Notice of
Exercise, the Company’s receipt of cleared funds in payment of the Exercise
Price. Any Tender Notice or Notice of Exercise delivered hereunder shall
constitute an irrevocable instruction to you to process the Certificate in
accordance with the terms thereof. Such Tender Notice or Notice of Exercise may
be transmitted to you by fax or any commercially reasonable method.

 

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Corporate Stock Transfer, Inc.

March 10, 2011

 

8. The Company hereby confirms to you that no instruction other than as
contemplated herein will be given to you by the Company with respect to the
matters referenced herein, except as otherwise provided in Paragraph 6. The
Company hereby authorizes you, and you shall be obligated, to disregard any
contrary instruction received by or on behalf of the Company or any other person
purporting to represent the Company except Richardson & Patel, LLP.

9. The Certificates shall bear a restrictive legend as set forth below until
such time as the conditions set forth above are satisfied:

10. By signing below, each individual executing this letter on behalf of an
entity represents and warrants that he or she has authority to so execute this
letter on behalf of such entity and thereby bind such entity to the terms and
conditions hereof.

11. The Company agrees to indemnify you and your officers, directors,
principals, partners, agents and representatives, and hold each of them harmless
from and against any and all loss, liability, damage, claim or expense
(including the reasonable fees and disbursements of its attorneys) incurred by
or asserted against you or any of them arising out of or in connection
the instructions set forth herein, the performance of your duties hereunder and
otherwise in respect hereof, including the costs and expenses of defending
yourself or themselves against any claim or liability hereunder, except that the
Company shall not be liable hereunder as to matters in respect of which it is
determined that you have acted with gross negligence or in bad faith. You shall
have no liability to the Company in respect to any action taken or any failure
to act in respect of this if such action was taken or omitted to be taken in
good faith, and you shall be entitled to rely in this regard on the advice of
counsel.

12. The Company understands and agrees that it must be current in its account
with you at the time or times that you are requested to act in accordance with
these instructions and that failure to do so may result in your being unable to
execute these instructions. Furthermore, if Corporate Stock Transfer resigns or
is dismissed as the Company’s transfer agent, the Company agrees that this
Agreement must be assumed or transferred to another transfer agent duly
registered with the SEC under Section 17A(c) of the Securities Exchange Act of
1934, as amended, and the Company will take prompt action in order to effect
such assumption or transfer.

13. The Company will provide Corporate Stock Transfer with an overnight deliver
number to facilitate the delivery of Certificates representing the Shares that
are physically certificated.

[SIGNATURE PAGE FOLLOWS]

 

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Corporate Stock Transfer, Inc.

March 10, 2011

 

Very truly yours,

 

AMPIO PHARMACEUTICALS, INC.

By:  

/s/ Donald B. Wingerter, Jr.

Name: Donald B. Wingerter, Jr. Title: Chief Executive Officer

 

ACKNOWLEDGED AND AGREED: CORPORATE STOCK TRANSFER, INC.

/s/ Carylyn K. Bell

By: Carylyn K. Bell Title: President

 

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