Exhibit 10.1

 

PULMATRIX, INC.

 

July 9, 2020

 

Holder of Common Stock Purchase Warrants

 

Re: Inducement Offer to Exercise Common Stock Purchase Warrants

 

Dear Holder:

 

Pulmatrix, Inc. (the “Company”) is pleased to offer to you the opportunity to
exercise all of the warrants to purchase shares of the Company’s common stock,
par value $0.0001 per share (the “Common Stock”), issued to you on April 8, 2019
(the “Existing Warrants”), as set forth on the signature page hereto and
currently held by you (the “Holder”). The issuance of the shares of Common Stock
underlying the Existing Warrants (the “Warrant Shares”) has been registered
pursuant to the registration statements on Form S-1 (File Nos. 333-230395 and
333-230714) (collectively, the “Registration Statements”). The Registration
Statements are currently effective and, upon exercise of the Existing Warrants
pursuant to this letter agreement, will be effective for the issuance of the
Warrant Shares. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the applicable Existing Warrants.

 

In consideration for exercising the number of Existing Warrants set forth on the
Holder’s signature page hereto (the “Warrant Exercise”) at the Exercise Price
per Warrant Share as set forth in the Existing Warrants of $1.35, the Company
hereby offers to issue you or your designee:

 

a new unregistered Common Stock Purchase Warrant (“New Warrant”) pursuant to
Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”), to
purchase up to a number of shares (the “New Warrant Shares”) of Common Stock
equal to 100% of the number of Warrant Shares issued pursuant to the Warrant
Exercise hereunder, which New Warrant shall be substantially in the form as
reflected in Exhibit A hereto, will be exercisable immediately, and have a term
of exercise of five (5) years, and an exercise price per share equal to $1.80.

 

The original New Warrant certificate(s) will be delivered within two (2) Trading
Days following the date hereof. Notwithstanding anything herein to the contrary,
in the event that any Warrant Exercise would otherwise cause the Holder to
exceed the beneficial ownership limitations (“Beneficial Ownership Limitation”)
set forth in Section 2(e) of the Existing Warrants (or, if applicable and at the
Holder’s election, 9.99%), the Company shall only issue such number of Warrant
Shares to the Holder that would not cause the Holder to exceed the maximum
number of Warrant Shares permitted thereunder, as directed by the Holder, with
the balance to be held in abeyance until notice from the Holder that the balance
(or portion thereof) may be issued in compliance with such limitations, which
abeyance shall be evidenced through the Existing Warrants which shall be deemed
prepaid thereafter (including the payment in full of the exercise price), and
exercised pursuant to a Notice of Exercise in the Existing Warrant (provided no
additional exercise price shall be due and payable).

 

 

 

 

Expressly subject to the paragraph immediately following this paragraph below,
Holder may accept this offer by signing this letter below, with such acceptance
constituting Holder’s Warrant Exercise for an aggregate exercise price set forth
on the Holder’s signature page hereto (the “Warrants Exercise Price”) on or
before 8:30 a.m., Eastern Time, on July 9, 2020 (the “Execution Time”).

 

Additionally, the Company agrees to the representations, warranties and
covenants set forth on Annex A attached hereto. Holder represents and warrants
that, as of the date hereof it is, and on each date on which it exercises any
New Warrants it will be, an “accredited investor” as defined in Rule 501 of the
Securities Act, and agrees that the New Warrants will contain restrictive
legends when issued, and neither the New Warrants nor the shares of Common Stock
issuable upon exercise of the New Warrants will be registered under the
Securities Act, except as provided in Annex A attached hereto. Also, Holder is
acquiring the New Warrants as principal for its own account and has no direct or
indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of the New Warrants (this representation is not
limiting Holder’s right to sell the New Warrant Shares pursuant to an effective
registration statement under the Securities Act or otherwise in compliance with
applicable federal and state securities laws). Holder further acknowledges that
it has read and understands the supplemental disclosure set forth on Annex B
attached hereto.

 

The Holder understands that the New Warrants and the shares of Common Stock
underlying New Warrants are not, and may never be, registered under the
Securities Act, or the securities laws of any state and, accordingly, each
certificate, if any, representing such securities shall bear a legend
substantially similar to the following:

 

“THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.”

 

 

 

 

Certificates evidencing shares of Common Stock underlying the New Warrants shall
not contain any legend (including the legend set forth above), (i) while a
registration statement covering the resale of such Common Stock is effective
under the Securities Act, (ii) following any sale of such Common Stock pursuant
to Rule 144 under the Securities Act, (iii) if such Common Stock is eligible for
sale under Rule 144 (assuming cashless exercise of the New Warrant), without the
requirement for the Company to be in compliance with the current public
information required under Rule 144 as to such Common Stock and without volume
or manner-of-sale restrictions, (iv) if such Common Stock may be sold under Rule
144 (assuming cashless exercise of the New Warrant) and the Company is then in
compliance with the current public information required under Rule 144 as to
such Common Stock, or (v) if such legend is not required under applicable
requirements of the Securities Act (including judicial interpretations and
pronouncements issued by the staff of the Securities and Exchange Commission
(the “Commission”) and the earliest of clauses (i) through (v), the “Delegend
Date”)). The Company shall cause its counsel to issue a legal opinion to the
Transfer Agent promptly after the Delegend Date if required by the Company
and/or the Transfer Agent to effect the removal of the legend hereunder, or at
the request of the Holder, which opinion shall be in form and substance
reasonably acceptable to the Holder. From and after the Delegend Date, such
Common Stock shall be issued free of all legends. The Company agrees that
following the Delegend Date or at such time as such legend is no longer required
under this Section, it will, no later than two (2) Trading Days following the
delivery by the Holder to the Company or the Transfer Agent of a certificate
representing the Common Stock underlying the New Warrants issued with a
restrictive legend (such second (2nd) Trading Day, the “Legend Removal Date”),
deliver or cause to be delivered to the Holder a certificate representing such
shares that is free from all restrictive and other legends or, at the request of
the Holder shall credit the account of the Holder’s prime broker with the
Depository Trust Company System as directed by the Holder.

 

In addition to the Holder’s other available remedies, the Company shall pay to a
Holder, in cash, (i) as partial liquidated damages and not as a penalty, for
each $1,000 of New Warrant Shares (based on the VWAP of the Common Stock on the
date such New Warrant Shares are submitted to the Transfer Agent) delivered for
removal of the restrictive legend, $10 per Trading Day (increasing to $20 per
Trading Day five (5) Trading Days after such damages have begun to accrue) for
each Trading Day after the Legend Removal Date until such certificate is
delivered without a legend and (ii) if the Company fails to (a) issue and
deliver (or cause to be delivered) to the Holder by the Legend Removal Date a
certificate representing the New Warrant Shares so delivered to the Company by
the Holder that is free from all restrictive and other legends and (b) if after
the Legend Removal Date the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Holder of all or any portion of the number of shares of Common Stock, or a sale
of a number of shares of Common Stock equal to all or any portion of the number
of shares of Common Stock that the Holder anticipated receiving from the Company
without any restrictive legend, then, an amount equal to the excess of the
Holder’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including brokerage commissions and other out-of-pocket expenses, if any) (the
“Buy-In Price”) over the product of (A) such number of New Warrant Shares that
the Company was required to deliver to the Holder by the Legend Removal Date and
for which the Holder was required to purchase shares to timely satisfy delivery
requirements, multiplied by (B) the weighted average price at which the Holder
sold that number of shares of Common Stock.

 

 

 

 

From the date hereof until thirty (30) days after the Closing Date, neither the
Company nor any Subsidiary shall, (A) issue, enter into any agreement to issue
or announce the issuance or proposed issuance of any Common Stock or Common
Stock Equivalents or (B) file any registration statement or any amendment or
supplement to any existing registration statement (other than the resale
registration statement referred to herein or prospectus supplements to the
Registration Statements to reflect the transactions contemplated hereby).
Notwithstanding the foregoing, this paragraph shall not apply to the issuance of
(a) shares of Common Stock or options to employees, officers or directors of the
Company pursuant to any stock or option plan duly adopted for such purpose, by a
majority of the non-employee members of the Board of Directors of the Company or
a majority of the members of a committee of non-employee directors established
for such purpose for services rendered to the Company, (b) securities upon the
exercise or exchange of or conversion of any securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this letter agreement,
provided that such securities have not been amended since the date of this
letter agreement to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such securities (other
than in connection with stock splits or combinations) or to extend the term of
such securities, and (c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors of the
Company, provided that such securities are issued as “restricted securities” (as
defined in Rule 144) and carry no registration rights that require or permit the
filing of any registration statement in connection therewith during the
prohibition period set forth herein, and provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

 

If this offer is accepted and the transaction documents are executed by the
Execution Time, then on or before 9:00 a.m., Eastern Time, on July 9, 2020, the
Company shall issue a press release or file a Current Report on Form 8-K with
the Commission disclosing all material terms of the transactions contemplated
hereunder. From and after the issuance of such press release or the filing of
such Current Report on Form 8-K, as applicable, the Company represents to you
that it shall have publicly disclosed all material, non-public information
delivered to you by the Company, or any of its respective officers, directors,
employees or agents in connection with the transactions contemplated hereunder.
In addition, effective upon the issuance of such press release and/or Current
Report on Form 8-K, the Company acknowledges and agrees that any and all
confidentiality or similar obligations under any agreement, whether written or
oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates on the one hand, and you
and your Affiliates on the other hand, shall terminate. The Company represents,
warrants and covenants that, upon acceptance of this offer, the shares
underlying the Existing Warrants shall be issued free of any legends or
restrictions on resale by Holder.

 

 

 

 

No later than the second (2nd) Trading Day following the date hereof, the
closing shall occur at such location as the parties shall mutually agree. Unless
otherwise directed by H.C. Wainwright & Co., LLC (the “Placement Agent”),
settlement of the Warrant Shares shall occur via “Delivery Versus Payment”
(“DVP”) (i.e., on the Closing Date, the Company shall issue the Warrant Shares
registered in the Holders’ names and addresses and released by the Transfer
Agent directly to the account(s) at the Placement Agent identified by each
Holder; upon receipt of such Warrant Shares, the Placement Agent shall promptly
electronically deliver such Warrant Shares to the applicable Holder, and payment
therefor shall be made by the Placement Agent (or its clearing firm) by wire
transfer to the Company). The date of the closing of the exercise of the
Existing Warrants shall be referred to as the “Closing Date”.

 

The Company acknowledges and agrees that the obligations of the Holders under
this letter agreement are several and not joint with the obligations of any
other holder or holders of warrants to purchase Common Stock of the Company that
were issued by the Company on April 8, 2019 (each, an “Other Holder”) under any
other agreement related to the exercise of such warrants (“Other Warrant
Exercise Agreement”), and the Holder shall not be responsible in any way for the
performance of the obligations of any Other Holder or under any such Other
Warrant Exercise Agreement. Nothing contained in this letter agreement, and no
action taken by the Holders pursuant hereto, shall be deemed to constitute the
Holder and the Other Holders as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Holder and the
Other Holders are in any way acting in concert or as a group with respect to
such obligations or the transactions contemplated by this letter agreement and
the Company acknowledges that the Holder and the Other Holders are not acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this letter agreement or any Other Warrant Exercise Agreement.
The Company and the Holder confirm that the Holder has independently
participated in the negotiation of the transactions contemplated hereby with the
advice of its own counsel and advisors. The Holder shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this letter agreement, and it shall not be necessary for
any Other Holder to be joined as an additional party in any proceeding for such
purpose.

 

The Company hereby represents and warrants as of the date hereof and covenants
and agrees from and after the date hereof until ninety (90) days after the date
hereof, that none of the terms offered to any Other Holder with respect to any
Other Warrant Exercise Agreement (or any amendment, modification or waiver
thereof) relating to warrants that were sold concurrently with the Existing
Warrants, is or will be more favorable to such Other Holder than those of the
Holder and this letter agreement unless such terms are concurrently offered to
the Holder. If, and whenever on or after the date hereof until ninety (90) days
after the date hereof, the Company enters into an Other Warrant Exercise
Agreement relating to warrants that were sold concurrently with the Existing
Warrants, then (i) the Company shall provide notice thereof to the Holder
promptly following the occurrence thereof and (ii) the terms and conditions of
this letter agreement shall be, without any further action by the Holder or the
Company, automatically amended and modified in an economically and legally
equivalent manner such that the Holder shall receive the benefit of the more
favorable terms and/or conditions (as the case may be) set forth in such Other
Warrant Exercise Agreement (including the issuance of additional Warrant
Shares), provided that upon written notice to the Company at any time the Holder
may elect not to accept the benefit of any such amended or modified term or
condition, in which event the term or condition contained in this letter
agreement shall apply to the Holder as it was in effect immediately prior to
such amendment or modification as if such amendment or modification never
occurred with respect to the Holder. The provisions of this paragraph shall
apply similarly and equally to each such Other Warrant Exercise Agreement.

 

***************

 

 

 

 

  Sincerely yours,         PULMATRIX, INC.         By:                   Name:  
  Title:  

 

 

 

 

Accepted and Agreed to:

 

Name of Holder: ________________________________________________________

 

Signature of Authorized Signatory of Holder: _________________________________

 

Name of Authorized Signatory: _______________________________________________

 

Title of Authorized Signatory: ________________________________________________

 

Number of Existing Warrants: ______________

 

Aggregate Existing Warrant Exercise Price: ______________

 

New Warrants: (100% of total Existing Warrants being exercised): ___________

 

Beneficial Ownership Blocker: [  ] 4.99% or [  ] 9.99%

 

DTC Instructions:

 

 

 

 

Annex A

 

Representations, Warranties and Covenants of the Company. The Company hereby
makes the following representations and warranties to the Holder:

 

a)SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein “SEC Reports”).
As of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Exchange Act and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has never been an issuer subject to Rule
144(i) under the Securities Act.    b)Authorization; Enforcement. The Company
has the requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this letter agreement and otherwise to carry
out its obligations hereunder and thereunder. The execution and delivery of this
letter agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company and no further action is required by the
Company, its board of directors or its stockholders in connection therewith.
This letter agreement has been duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.    c)No Conflicts. The
execution, delivery and performance of this letter agreement by the Company and
the consummation by the Company of the transactions contemplated hereby do not
and will not: (i) conflict with or violate any provision of the Company’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents; or (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, result
in the creation of any liens, claims, security interests, other encumbrances or
defects upon any of the properties or assets of the Company in connection with,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any material
agreement, credit facility, debt or other material instrument (evidencing
Company debt or otherwise) or other material understanding to which such Company
is a party or by which any property or asset of the Company is bound or
affected; or (iii) conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company is subject (including
federal and state securities laws and regulations), or by which any property or
asset of the Company is bound or affected, except, in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be expected to
result in a material adverse effect upon the business, prospects, properties,
operations, condition (financial or otherwise) or results of operations of the
Company, taken as a whole, or in its ability to perform its obligations under
this letter agreement.    d)Registration Obligations. The Company shall prepare
and file with the Commission a registration statement relating to the resale of
the shares of Common Stock underlying the New Warrants by the holders of the New
Warrants under the Securities Act on or before the 30th calendar day following
the date hereof and use commercially reasonable best efforts to cause such
registration statement to be declared effective by the Commission as soon as
practical thereafter.    e)Nasdaq Corporate Governance. The transactions
contemplated under this letter agreement comply with all the rules and
regulations of the Nasdaq Capital Market.