Exhibit 10.14

EXECUTIVE EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”), made and entered into this 28th day
of April, 2017 (the “Effective Date”), by and between Pulmatrix, Inc., a
Delaware corporation (“Company”), and Teofilo Raad (“Executive”).

WHEREAS, Company wishes to employ Executive as its Chief Business Officer;

WHEREAS, Executive represents that Executive possesses the necessary skills to
perform the duties of this position and that Executive has no obligation to any
other person or entity which would materially prevent, limit or interfere with
Executive’s ability to do so; and

WHEREAS, Executive and Company desire to enter into a formal Employment
Agreement to assure the harmonious performance of the affairs of Company.

NOW, THEREFORE, in consideration of the mutual promises, terms, provisions, and
conditions contained herein, the parties agree as follows:

1. Roles and Duties. Subject to the terms and conditions of this Agreement,
Company shall employ Executive as its Chief Business Officer (“CBO”) reporting
to Company’s Chief Executive Officer (the “CEO”). Executive accepts such
employment upon the terms and conditions set forth herein, and agrees to perform
the duties normally associated with such position and as determined by Company
in its sole discretion. During Executive’s employment, Executive shall devote
all of Executive’s business time and energies to the business and affairs of
Company, provided that nothing contained in this Section 1 shall prevent or
limit Executive’s right to manage Executive’s personal investments on
Executive’s own personal time, including, without limitation the right to make
passive investments in the securities of: (a) any entity which Executive does
not control, directly or indirectly, and which does not compete with Company, or
(b) any publicly held entity so long as Executive’s aggregate direct and
indirect interest does not exceed two percent (2%) of the issued and outstanding
securities of any class of securities of such publicly held entity. During
Executive’s employment, Executive shall not engage in any other non-Company
related business activities of any nature whatsoever (including board
memberships) without Company’s prior written consent, except that Executive may
be involved in civic and charitable activities so long as such activities do not
interfere with Executive’s duties for Company, provided that Executive shall not
serve in any official capacity, including as a member of a board, without the
prior written approval of Company.

2. Term of Employment.

(a) Term. Subject to the terms hereof, Executive’s employment hereunder shall
commence on May 1, 2017 (the “Commencement Date”) and shall continue until
terminated hereunder by either party (such term of employment referred to herein
as the “Term”).

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(b) Termination. Notwithstanding anything else contained in this Agreement,
Executive’s employment hereunder shall terminate upon the earliest to occur of
the following:

 

  (i)

Death. Immediately upon Executive’s death;

 

  (ii)

Termination by Company.

(A) If because of Executive’s Disability (as defined below in Section 2(c)),
upon written notice by Company to Executive that Executive’s employment is being
terminated as a result of Executive’s Disability, which termination shall be
effective on the date of such notice or such later date as specified in writing
by Company;

(B) If for Cause (as defined below in Section 2(d)), upon written notice by
Company to Executive that Executive’s employment is being terminated for Cause
which termination shall be effective on the date of such notice or such later
date as specified in writing by Company; or

(C) If by Company for reasons other than under Sections 2(b)(ii)(A) or (B), upon
written notice by Company to Executive that Executive’s employment is being
terminated, which termination shall be effective immediately after the date of
such notice or such later date as specified in writing by Company.

 

  (iii)

Termination by Executive.

(A) If for Good Reason (as defined below in Section 2(e)), upon written notice
by Executive to Company that Executive is terminating Executive’s employment for
Good Reason and that sets forth the factual basis supporting the alleged Good
Reason; or

(B) If without Good Reason, written notice by Executive to Company that
Executive is terminating Executive’s employment, which termination shall be
effective at least thirty (30) days after the date of such notice.

Notwithstanding anything in this Section 2(b), Company may at any point
terminate Executive’s employment for Cause prior to the effective date of any
other termination contemplated hereunder.

(c) Definition of “Disability”. For purposes of this Agreement, “Disability”
shall mean as a result of Executive’s incapacity or inability, Executive’s
failure to have performed Executive’s duties and responsibilities as
contemplated herein for one hundred twenty (120) days or more within any one
(1) year period (cumulative or consecutive), because Executive’s physical or
mental health has become so impaired as to make it impossible or impractical for
Executive to perform the duties and responsibilities contemplated hereunder.
Determination of Executive’s physical or mental health shall be determined by
Company after consultation with a medical expert appointed by mutual agreement
between Company and Executive who has examined Executive. Executive hereby
consents to such examination and consultation regarding Executive’s health and
ability to perform as aforesaid.

 

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(d) Definition of “Cause”. As used herein, “Cause” shall include:
(i) Executive’s willful engagement in dishonesty, illegal conduct or gross
misconduct, which is, in each case, materially injurious to Company or any
affiliate; (ii) Executive’s refusal to follow the legal direction of the CEO;
(iii) Executive’s failure to attempt in good faith to perform his duties;
(iv) Executive’s unauthorized disclosure of confidential information;
(v) Executive’s embezzlement, misappropriation or fraud, whether or not related
to Executive’s employment with Company; (vi) Executive’s indictment for,
conviction of, or pleading guilty or nolo contendere to, a felony or another
crime involving moral turpitude; or (vii) Executive’s breach of a material
provision of any employment, non-disclosure, invention assignment,
non-competition, or similar agreement between Executive and Company. In all
cases, Company shall provide Executive with written notice of the specific
conduct or events that Company believes constitutes Cause and, in case of
(ii) and (iii) above, if such circumstance is capable of being cured, Executive
shall have thirty (30) days to effect a cure of the claimed conduct or events.

(e) Definition of “Good Reason”. As used herein, “Good Reason” shall mean:
(i) relocation of Executive’s principal business location to a location more
than fifty (50) miles from Executive’s then-current business location; (ii) a
material diminution in Executive’s duties, authority, responsibilities, or
reporting lines in a manner whereby Executive no longer reports to the Company’s
CEO, President or Chief Operating Officer; or (iii) a material reduction in
Executive’s Base Salary; provided that (A) Executive provides Company with
written notice that Executive intends to terminate Executive’s employment
hereunder for one of the circumstances set forth in this Section 2(e) within
thirty (30) days of such circumstance occurring, (B) if such circumstance is
capable of being cured, Company has failed to cure such circumstance within a
period of thirty (30) days from the date of such written notice, and
(C) Executive terminates Executive’s employment within sixty five (65) days from
the date that Good Reason first occurs. For purposes of clarification, the
above-listed conditions shall apply separately to each occurrence of Good Reason
and failure to adhere to such conditions in the event of Good Reason shall not
disqualify Executive from asserting Good Reason for any subsequent occurrence of
Good Reason. For purposes of this Agreement, “Good Reason” shall be interpreted
in a manner, and limited to the extent necessary, so that it is treated as an
“involuntary termination” with respect to Section 409A (“Section 409A”) of the
Internal Revenue Code of 1986, as amended (the “Code”), and any successor
statute, regulation and guidance thereto.

3. Compensation.

(a) Base Salary. Company shall pay Executive a base salary (the “Base Salary”)
at the annual rate of Three Hundred Forty Thousand Dollars ($340,000). The Base
Salary shall be payable in substantially equal periodic installments in
accordance with Company’s payroll practices as in effect from time to time.
Company shall deduct from each such installment all amounts required to be
deducted or withheld under applicable law or under any employee benefit plan in
which Executive participates. The Board or an appropriate committee thereof
shall review the Base Salary on an annual basis.

(b) Annual Performance Bonus. Executive shall be eligible to receive an annual
cash bonus (the “Annual Performance Bonus”), with the target amount of such
Annual Performance Bonus equal to Thirty Five Percent (35%) of Executive’s Base
Salary in the year to which the Annual Performance Bonus relates, provided that
the actual amount of the Annual Performance Bonus may be greater or less than
such target amount. The amount of the Annual Performance Bonus shall be
determined by the Board or an appropriate committee thereof in its sole

 

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discretion, and will be targeted for payment to Executive no later than March
15th of the calendar year immediately following the calendar year in which it
was earned. Executive must be employed by Company on the last day of the fiscal
year on which the Annual Performance Bonus is earned in order to be eligible
for, and to be deemed as having earned, such Annual Performance Bonus. Company
shall deduct from the Annual Performance Bonus all amounts required to be
deducted or withheld under applicable law or under any employee benefit plan in
which Executive participates. For the current calendar year, Executive shall be
eligible for an Annual Performance Bonus at the target amount subject to the
terms and conditions described above.

(c) Equity. Subject to approval of the Board or an appropriate committee
thereof, Company shall grant Executive on the Commencement Date or as soon as
practicable thereafter, pursuant to the terms of the Pulmatrix, Inc. 2013
Employee, Director and Consultant Equity Incentive Plan (the “Plan”), an option
to purchase 330,500 shares of common stock of Company, at a per share exercise
price equal to the Fair Market Value (as defined in the Plan) of Company’s
common stock on the date of grant, which option shall be, to the maximum extent
permissible, treated as an “incentive stock option” within the meaning of
Section 422 of the Code. Twenty five percent (25%) of the shares subject to the
option shall vest on the first (1st) anniversary of the Commencement Date, and
the remaining Seventy Five Percent (75%) of the shares shall vest in equal
installments on the last day of each of the thirty six (36) successive months
thereafter, provided that Executive remains employed by Company on the vesting
date, except as otherwise set forth herein or in the Plan. The option shall be
evidenced in writing by, and subject to the terms and conditions of, the Plan
and Company’s standard form of stock option agreement, which agreement shall
expire ten (10) years from the date of grant except as otherwise provided in the
stock option agreement or the Plan.

(d) Paid Time Off. Executive may take up to twenty (20) days of paid time off
(“PTO”) per year, to be scheduled to minimize disruption to Company’s
operations, pursuant to the terms and conditions of Company policy and practices
as applied to Company senior executives.

(e) Fringe Benefits. Executive shall be entitled to participate in all
benefit/welfare plans and fringe benefits provided to Company senior executives.
Executive understands that, except when prohibited by applicable law, Company’s
benefit plans and fringe benefits may be amended by Company from time to time in
its sole discretion.

(f) Reimbursement of Expenses. Company shall reimburse Executive for all
ordinary and reasonable out-of-pocket business expenses incurred by Executive in
furtherance of Company’s business in accordance with Company’s policies with
respect thereto as in effect from time to time. Executive must submit any
request for reimbursement no later than ninety (90) days following the date that
such business expense is incurred. All reimbursements provided under this
Agreement shall be made or provided in accordance with the requirements of
Section 409A including, where applicable, the requirement that (i) any
reimbursement is for expenses incurred during Executive’s lifetime (or during a
shorter period of time specified in this Agreement); (ii) the amount of expenses
eligible for reimbursement during a calendar year may not affect the expenses
eligible for reimbursement in any other calendar year; (iii) the reimbursement
of an eligible expense shall be made no later than the last day of the calendar
year following the year in which the expense is incurred; and (iv) the right to
reimbursement or in kind benefits is not subject to liquidation or exchange for
another benefit.

 

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(g) Attorneys’ Fees. Company shall reimburse Executive for attorneys’ fees
incurred in the negotiation of this Agreement, up to a maximum reimbursement of
Fifteen Thousand Dollars ($15,000), subject to the submission of a summary
invoice from Executive’s attorney, which for the avoidance of doubt shall not
include any confidential or privileged information, and provided that Executive
shall submit invoices to Company within ninety (90) days of incurrence of the
expense, and Company shall reimburse Executive within sixty (60) days
thereafter.

(h) Indemnification. Executive shall be entitled to indemnification with respect
to Executive’s services provided hereunder pursuant to Delaware law, the terms
and conditions of Company’s certificate of incorporation and/or by-laws,
Company’s directors and officers (“D&O”) liability insurance policy, and
Company’s standard indemnification agreement for directors and officers as
executed by Company and Executive.

(i) Relocation. The Company agrees to reimburse Executive for up to $110,000
(the “Relocation Amount”) (less all customary and required taxes and
employment-related deductions) of his reasonable and documented out-of-pocket
expenses incurred by Executive prior to March 1, 2018 in connection with
relocating his primary residence to the Massachusetts area. Such expenses may
include moving and storage costs (including packing and unpacking of household
goods), up to three months of temporary housing (and utility expenses for such
temporary housing), real estate commissions of up to five percent on the sale of
Executive’s current primary residence in the Chicago area, up to two trips for
Executive and his immediate family for house hunting purposes and closing costs
and fees associated with the purchase of a new home in the Massachusetts area.
Executive shall submit all documentation for any Relocation Amounts on or before
March 1, 2018 and all such Relocation Amounts shall be promptly paid to
Executive, but in no event later than March 15, 2018. Notwithstanding the
foregoing, in the event Executive terminates his employment without Good Reason
prior to the first anniversary of the Effective Date, Executive agrees to pay
Company 100% of the Relocation Amount previously paid by Company to Executive
within thirty (30) days of his termination of employment, and if Executive
terminates his employment without Good Reason after the first anniversary of the
Effective Date but prior to the second anniversary of the Effective Date,
Executive agrees to pay Company 50% of the Relocation Amount previously paid by
Company to Executive within thirty (30) days of his termination of employment.
Executive agrees that, to the extent not in violation of Section 409A, Company
may deduct any amounts due Company pursuant to this Section 3 from any other
remuneration due Executive at the time of his termination of employment without
Good Reason.

4. Payments Upon Termination.

(a) Definition of Accrued Obligations. For purposes of this Agreement, “Accrued
Obligations” means: (i) the portion of Executive’s Base Salary that has accrued
prior to any termination of Executive’s employment with Company and has not yet
been paid; and (ii) the amount of any expenses properly incurred by Executive on
behalf of Company prior to any such termination and not yet reimbursed and
Executive’s entitlement to any other compensation or

 

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benefit under any plan of Company shall be governed by and determined in
accordance with the terms of such plans and this Agreement, included but not
limited to a bonus for a completed prior year in the event of a termination by
Company without Cause, by Executive for Good Reason, or as a result of
Disability or death.

(b) Termination by Company for Cause, by Executive Without Good Reason, or as a
Result of Executive’s Disability or Death. If Executive’s employment hereunder
is terminated by Company for Cause, by Executive without Good Reason, or as a
result of Executive’s Disability or death, then Company shall pay the Accrued
Obligations to Executive in accordance with their terms, or, if none, promptly
following the effective date of such termination and shall have no further
obligations to Executive.

(c) Termination by Company Without Cause or by Executive For Good Reason.
Subject to Section 7 below, in the event that Executive’s employment is
terminated by action of Company other than for Cause, or Executive terminates
Executive’s employment for Good Reason, then, in addition to the Accrued
Obligations, Executive shall receive the following, subject to the terms and
conditions described in Section 4(e) (including Executive’s execution of a
release of claims):

(i) Severance Payments. Continuation of payments in an amount equal to
Executive’s then-current Base Salary for a nine (9) month period, less all
customary and required taxes and employment-related deductions, in accordance
with Company’s normal payroll practices (provided such payments shall be made at
least monthly), commencing on the first payroll date following the date on which
the release of claims required by Section 4(e) becomes effective and
non-revocable, but not after seventy (70) days following the effective date of
termination from employment; provided, that if the 67th day falls in the
calendar year following the year during which the termination or separation from
service occurred, then the payments will commence in such subsequent calendar
year; provided that in all cases, the first such payment shall be a lump sum in
an amount equal to the payments that would have come due since Executive’s
separation from service.

(ii) Separation Bonus. Payment of a separation bonus in an amount equal to
seventy-five percent (75%) of the target Annual Performance Bonus to which
Executive may have been entitled for the year in which Executive’s employment
terminates, such 75% amount to be prorated to reflect that portion of the year
in which Executive was employed prior to termination, less all customary and
required taxes and employment-related deductions, paid on the same date as the
initial payment under (i).

(iii) Equity Acceleration. On the date of termination of Executive’s employment,
Executive shall become fully vested in any and all outstanding equity awards
that would have vested during the nine (9) month period following the
termination date.

 

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(iv) Benefits Payments. Upon completion of appropriate forms and subject to
applicable terms and conditions under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”), Company shall continue to
provide Executive medical insurance coverage at no cost to Executive to the same
extent that such insurance continues to be provided to similarly situated
executives at the time of Executive’s termination, until the earlier to occur of
nine (9) months following Executive’s termination date or the date Executive
begins employment with another employer. Executive shall bear full
responsibility for applying for COBRA continuation coverage and Company shall
have no obligation to provide Executive such coverage if Executive fails to
elect COBRA benefits in a timely fashion. Notwithstanding anything to the
contrary herein, no payments for COBRA continuation coverage shall be made by
Company unless and until the release of claims is effective and on the same date
as in (i) a catch-up payment shall be made.

Payment of the above described severance payments and benefits are expressly
conditioned on Executive’s execution without revocation of the release of claims
under Section 4(e) and return of Company property under Section 6.

(d) Termination by Company Without Cause or by Executive For Good Reason
Following a Change of Control. Subject to Section 7 below, in the event that a
Change of Control (as defined below) occurs and within a period of one (1) year
following the Change of Control, either Executive’s employment is terminated
other than for Cause, or Executive terminates Executive’s employment for Good
Reason, then, in addition to the Accrued Obligations, Executive shall receive
the following, subject to the terms and conditions described in Section 4(e)
(including Executive’s execution of a release of claims):

(i) Lump Sum Severance Payment. Payment of a lump sum amount equal to twelve
(12) months of Executive’s then-current Base Salary, less all customary and
required taxes and employment-related deductions, paid on the first payroll date
following the date on which the release of claims required by Paragraph 4(e)
becomes effective and non-revocable, but not after seventy (70) days following
the effective date of termination from employment, provided that, if the 67th
day following termination falls in the calendar year following the year during
which the termination or separation of service occurred, then the payment shall
be made in such subsequent calendar year.

(ii) Separation Bonus. Payment of a separation bonus in an amount equal to the
target Annual Performance Bonus to which Executive may have been entitled for
the year in which Executive’s employment terminates, prorated to reflect that
portion of the year in which Executive was employed prior to termination, less
all customary and required taxes and employment-related deductions, paid at the
same time as the payment in (i) above.

(iii) Equity Acceleration. On the date of termination of Executive’s employment,
Executive shall become fully vested in any and all equity awards outstanding as
of the date of Executive’s termination.

 

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(iv) Benefit Payments. Upon completion of appropriate forms and subject to
applicable terms and conditions under COBRA, Company shall continue to provide
Executive medical insurance coverage at no cost to Executive to the same extent
that such insurance continues to be provided to similarly situated executives at
the time of Executive’s termination, until the earlier to occur of twelve
(12) months following Executive’s termination date or the date Executive begins
employment with another employer. Executive shall bear full responsibility for
applying for COBRA continuation coverage and Company shall have no obligation to
provide Executive such coverage if Executive fails to elect COBRA benefits in a
timely fashion. Notwithstanding anything to the contrary herein, no payments for
COBRA continuation coverage shall be made by Company unless and until the
release of claims is effective and on the same date as (i), a catch-up payment
shall be made.

Payment of the above described severance payments and benefits are expressly
conditioned on Executive’s execution without revocation of the release of claims
under Section 4(e) and return of Company property under Section 6. In the event
that Executive is eligible for the severance payments and benefits under this
Section 4(d), Executive shall not be eligible for and shall not receive any of
the severance payments and benefits as provided in Section 4(c).

As used herein, a “Change of Control” shall mean the occurrence of any of the
following events: (i) Ownership. Any “Person” (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the
“Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of Company representing fifty percent (50%) or more of
the total voting power represented by Company’s then outstanding voting
securities (excluding for this purpose any such voting securities held by
Company, or any affiliate, parent or subsidiary of Company, or by any employee
benefit plan of Company) pursuant to a transaction or a series of related
transactions which the Board does not approve; or (ii) Merger/Sale of Assets.
(A) A merger or consolidation of Company whether or not approved by the Board,
other than a merger or consolidation which would result in the voting securities
of Company outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity or the parent of such corporation) at least fifty percent (50%)
of the total voting power represented by the voting securities of Company or
such surviving entity or parent of such corporation, as the case may be,
outstanding immediately after such merger or consolidation; (B) the sale or
disposition by Company of all or substantially all of Company’s assets; or
(iii) Change in Board Composition. A change in the composition of the Board, as
a result of which fewer than a majority of the directors are Incumbent
Directors. “Incumbent Directors” shall mean directors who either (A) are
directors of Company as of the Commencement Date, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors, or by a committee of the Board made up of
at least a majority of the Incumbent Directors, at the time of such election or
nomination (but shall not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors). Notwithstanding the foregoing, no event shall constitute
a Change of Control unless it would also be a “change of control” within the
meaning of Section 409A of the Code and the regulations issued thereunder.

 

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(e) Execution of Release of Claims. Company shall not be obligated to pay
Executive any of the severance payments or benefits described in this Section 4
unless and until Executive has executed (without revocation) a timely release of
claims in a form that is reasonably acceptable to Company (which shall contain
no post employment obligations beyond those herein), which must be provided to
Executive within fifteen (15) days following separation from service, and signed
by Executive and returned to Company no later than sixty (60) days following
Executive’s separation from service (the “Review Period”), and which shall
include a general release of claims against Company and its affiliated entities
and each of their officers, directors, employees and others associated with
Company and its affiliated entities. If Executive fails or refuses to return
such agreement within the Review Period, Executive’s severance payments
hereunder and benefits shall be forfeited.

(f) No Other Payments or Benefits Owing. The payments and benefits set forth in
this Section 4 shall be the sole amounts owing to Executive upon termination of
Executive’s employment for the reasons set forth above and Executive shall not
be eligible for any other payments or other forms of compensation or benefits,
except with regard to indemnification in Section 3(h). The payments and benefits
set forth in Section 4 shall be the sole remedy, if any, available to Executive
in the event that Executive brings any claim against Company relating to the
termination of Executive’s employment under this Agreement.

5. Prohibited Competition And Solicitation. Executive expressly acknowledges
that: (a) there are competitive and proprietary aspects of the business of
Company; (b) during the course of Executive’s employment, Company shall furnish,
disclose or make available to Executive confidential and proprietary information
and may provide Executive with unique and specialized training; (c) such
Confidential Information and training have been developed and shall be developed
by Company through the expenditure of substantial time, effort and money, and
could be used by Executive to compete with Company; and (d) in the course of
Executive’s employment, Executive shall be introduced to customers and others
with important relationships to Company, and any and all “goodwill” created
through such introductions belongs exclusively to Company, including, but not
limited to, any goodwill created as a result of direct or indirect contacts or
relationships between Executive and any customers of Company. In light of the
foregoing acknowledgements, and as a condition of employment hereunder,
Executive agrees to execute and abide by Company’s Confidentiality, Assignment
of Inventions and Non-Competition Agreement.

6. Property and Records. Upon the termination of Executive’s employment
hereunder for any reason or for no reason, or if Company otherwise requests,
Executive shall: (a) return to Company all tangible business information and
copies thereof (regardless how such Confidential Information or copies are
maintained), and (b) deliver to Company any property of Company which may be in
Executive’s possession, including, but not limited to, devices, smart phones,
laptops, cell phones, products, materials, memoranda, notes, records, reports or
other documents or photocopies of the same. Executive may retain his address
books to the extent that they only contain contact information.

 

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7. Code Sections 409A and 280G.

(a) In the event that the payments or benefits set forth in Section 4 of this
Agreement constitute “non-qualified deferred compensation” subject to
Section 409A, then the following conditions apply to such payments or benefits:

(i) Any termination of Executive’s employment triggering payment of benefits
under Section 4 must constitute a “separation from service” under
Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) before
distribution of such benefits can commence. To the extent that the termination
of Executive’s employment does not constitute a separation of service under
Section 409A(a)(2)(A)(i) of the Code and Treas. Reg. §1.409A-1(h) (as the result
of further services that are reasonably anticipated to be provided by Executive
to Company at the time Executive’s employment terminates), any such payments
under Section 4 that constitute deferred compensation under Section 409A shall
be delayed until after the date of a subsequent event constituting a separation
of service under Section 409A(a)(2)(A)(i) of the Code and Treas. Reg.
§1.409A-1(h). For purposes of clarification, this Section 7(a) shall not cause
any forfeiture of benefits on Executive’s part, but shall only act as a delay
until such time as a “separation from service” occurs. In the event the time
period for the return of any release of claims described in Section 4 ends in
the calendar year following the year during which the termination or separation
from service occurred, then the payments under Section 4 with respect to such
termination or separation from service will commence in such subsequent calendar
year; provided further that if such payments commence in such subsequent year,
the first such payment shall be a lump sum in an amount equal to the payments
that would have come due since Executive’s separation from service.

(ii) Notwithstanding any other provision with respect to the timing of payments
under Section 4 if, at the time of Executive’s termination, Executive is deemed
to be a “specified employee” of Company (within the meaning of
Section 409A(a)(2)(B)(i) of the Code), then limited only to the extent necessary
to comply with the requirements of Section 409A, any payments to which Executive
may become entitled under Section 4 which are subject to Section 409A (and not
otherwise exempt from its application) shall be withheld until the first (1st)
business day of the seventh (7th) month following the termination of Executive’s
employment, at which time Executive shall be paid an aggregate amount equal to
the accumulated, but unpaid, payments otherwise due to Executive under the terms
of Section 4.

(b) It is intended that each installment of the payments and benefits provided
under Section 4 of this Agreement shall be treated as a separate “payment” for
purposes of Section 409A. Neither Company nor Executive shall have the right to
accelerate or defer the delivery of any such payments or benefits except to the
extent specifically permitted or required by Section 409A.

 

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(c) Notwithstanding any other provision of this Agreement to the contrary, this
Agreement shall be interpreted and at all times administered in a manner that
avoids the inclusion of compensation in income under Section 409A, or the
payment of increased taxes, excise taxes or other penalties under Section 409A.
The parties intend this Agreement to be in compliance with Section 409A.
Executive acknowledges and agrees that Company does not guarantee the tax
treatment or tax consequences associated with any payment or benefit arising
under this Agreement, including but not limited to consequences related to
Section 409A.

(d) If any payment or benefit Executive would receive under this Agreement, when
combined with any other payment or benefit Executive receives (for purposes of
this section, a “Payment”) would: (i) constitute a “parachute payment” within
the meaning of Section 280G the Code; and (ii) but for this sentence, be subject
to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
such Payment shall be either: (A) the full amount of such Payment; or (B) such
lesser amount as would result in no portion of the Payment being subject to the
Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local employments taxes, income taxes and the
Excise Tax, results in Executive’s receipt, on an after-tax basis, of the
greater amount of the Payment notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax. With respect to subsection (B), if
there is more than one method of reducing the payment as would result in no
portion of the Payment being subject to the Excise Tax, then Executive shall
determine which method shall be followed, provided that if Executive fails to
make such determination within thirty (30) days after Company has sent Executive
written notice of the need for such reduction, Company may determine the amount
of such reduction in its sole discretion.

8. Mediation/Dispute Resolution/Governing Law.

(a) Subject to Section 8(c) below, in the event of a dispute regarding any of
the terms and conditions of this Agreement, or otherwise relating to Executive’s
employment with Company, either party may request that the other party engage in
a mediation to resolve such dispute. If such request is made, the other party
shall respond in writing by no later than seven (7) business days thereafter,
stating whether such other party is willing to participate in such mediation,
and such mediation shall occur within thirty (30) days following such
notification. If the parties are unable to agree to a mediator, then the matter
shall be submitted to the mediation program conducted by the American
Arbitration Association in Boston, Massachusetts, and a mediator shall be
selected pursuant to the rules applicable to such program.

(b) Subject to Section 8(c) below, in the event that the other party declines to
participate in a mediation, either party may require that the dispute be
submitted to binding arbitration, and in such event the dispute shall be settled
by arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, except that both
parties agree that the matter shall be submitted to and resolved by a single
arbitrator. Such arbitration shall occur in Boston, Massachusetts. Each party
hereby agrees to a speedy hearing upon the matter in dispute, and the judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. Notwithstanding anything to the contrary in the rules
cited above, and unless prohibited by applicable law: (i) the costs and expenses
of the arbitration, including the arbitrator’s fees and expenses, shall be
evenly split between the parties; (ii) each party shall pay for and bear the
cost of his or its own experts, evidence and counsel; and (iii) no award of
punitive damages may be rendered by the arbitrator in such proceedings.

 

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(c) Notwithstanding the foregoing, Company and Executive expressly acknowledge
and agree that Company retains the right, and nothing herein shall be deemed to
limit Company’s right, to seek immediate judicial relief (including injunctive
relief) in a court of competent jurisdiction in the event of a claimed breach by
Executive of obligations under this Agreement, the Confidentiality, Assignment
of Inventions and Non-Competition Agreement, or other agreement related to
non-competition, non-solicitation, non-disclosure and/or intellectual property,
without the need to submit to arbitration or post any bond or other financial
guarantee in such court action.

9. General.

(a) Notices. Except as otherwise specifically provided herein, any notice
required or permitted by this Agreement shall be in writing and shall be
delivered as follows with notice deemed given as indicated: (i) by personal
delivery when delivered personally; (ii) by overnight courier upon written
verification of receipt; (iii) by telecopy or facsimile transmission upon
acknowledgment of receipt of electronic transmission; or (iv) by certified or
registered mail, return receipt requested, upon verification of receipt.

Notices to Executive shall be sent to the last known address in Company’s
records or such other address as Executive may specify in writing.

Notices to Company shall be sent to:

Pulmatrix, Inc.

99 Hayden Ave.

Lexington, MA 02421

Attn: Chief Executive Officer

or to such other Company representative as Company may specify in writing, with
a copy to:

Haynes and Boone, LLP

30 Rockefeller Plaza, 26th Floor

New York, NY

Attn: Rick Werner

(b) Modifications and Amendments. The terms and provisions of this Agreement may
be modified or amended only by written agreement executed by the parties hereto.

(c) Waivers and Consents. The terms and provisions of this Agreement may be
waived, or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions. No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.

 

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(d) Assignment. Company may, and only may, assign its rights and obligations
hereunder to any person or entity that succeeds to all or substantially all of
Company’s business. Executive may not assign Executive’s rights and obligations
under this Agreement without the prior written consent of Company.

(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the Commonwealth of Massachusetts,
without giving effect to any choice or conflict of law provision or rule, and
any legal action permitted by this Agreement to enforce an award or for a
claimed breach shall be governed by the laws of the Commonwealth of
Massachusetts and shall be commenced and maintained solely in any state or
federal court located in the Commonwealth of Massachusetts, and both parties
hereby submit to the jurisdiction and venue of any such court.

(f) Headings and Captions. The headings and captions of the various subdivisions
of this Agreement are for convenience of reference only and shall in no way
modify or affect the meaning or construction of any of the terms or provisions
hereof.

(g) Entire Agreement. This Agreement, together with the other agreements
specifically referenced herein, embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating to
the subject matter hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in this Agreement shall affect, or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement.

(h) Counterparts. This Agreement may be executed in two or more counterparts,
and by different parties hereto on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. For all purposes a signature by fax shall be treated as an original.

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

TEOFILO RAAD     PULMATRIX, INC.

/s/ Teofilo Raad

   

By:

 

/s/ Robert W. Clarke

Signature

        Name:  

Robert W. Clarke, Ph.D.

Address:

 

Mr. Teofilo Raad

      Title:  

President & Chief Executive Officer

 

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