Item 1.01
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Entry Into a Material Definitive Agreement
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On November 29, 2018, Pulmatrix, Inc., a Delaware corporation (the Company), entered into a Securities Purchase Agreement (the Purchase
Agreement) with an institutional investor (the Purchaser), pursuant to which the Company agreed to issue and sell, in a registered direct offering (the Offering), an aggregate of 2,400,000 shares (the
Shares) of common stock, par value $0.0001 per share, of the Company (Common Stock) at an offering price of $0.32 per share for gross proceeds of $768,000 before the deduction of offering expenses. In addition, the Company
sold
pre-funded
warrants (the
Pre-Funded
Warrants) to purchase 6,975,000 shares of Common Stock (and the shares of Common Stock issuable upon exercise of the
Pre-Funded
Warrants), in lieu of shares of Common Stock to prevent the Purchaser, together with its affiliates and certain related parties, from beneficially owning more than 4.99% of the Companys Common
Stock. The
Pre-Funded
Warrants were sold at an offering price of $0.31 per share for gross proceeds of $2,162,250 before deduction of offering expenses. The Shares and the
Pre-Funded
Warrants are being offered by the Company pursuant to a shelf registration statement on Form
S-3
(File
No. 333-212546),
which was initially filed with the Securities and Exchange Commission (the Commission) on July 15, 2016 and was declared effective by the Commission on August 3,
2016 (the Registration Statement), and a related prospectus.
In a concurrent private placement (the Private Placement), the
Company agreed to issue to the Purchaser, for each share of common stock and
pre-funded
warrant purchased in the Offering, a common warrant, each to purchase one share of Common Stock (the Common
Warrants). The Common Warrants are initially exercisable six months following issuance, and terminate five and
one-half
years following issuance. The Common Warrants have an exercise price of $0.39 per
share and are exercisable to purchase an aggregate of 9,375,000 shares of Common Stock. A holder of a Common Warrant will not have the right to exercise any portion of its warrants if the holder, together with its affiliates, would beneficially own
in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise (the Beneficial Ownership Limitation); provided, however, that upon 61 days prior notice to the Company, the
holder may increase or decrease the Beneficial Ownership Limitation, provided that in no event shall the Beneficial Ownership Limitation exceed 9.99%.
The Common Warrants and the shares of our Common Stock issuable upon the exercise of the Common Warrants are not being registered under the Securities Act of
1933, as amended (the Securities Act), are not being offered pursuant to the Registration Statement and are being offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) promulgated
thereunder. We will be required to file a registration statement on Form
S-1 within
120 calendar days of the issuance of the Common Warrants to provide for the resale of the shares of Common Stock
issuable upon the exercise of the Common Warrants and will be obligated to use our best efforts to cause such registration statement to be declared effective as soon as practicable thereafter. Additionally, the Company is obligated to maintain the
effectiveness of such registration statement until the earliest of (i) the date on which all of the shares of commons stock issuable upon the exercise of the Common Warrants have been sold under the registration statement or Rule 144 under the
Securities Act, (ii) the date on which the shares of Common Stock issuable upon the exercise of the Common Warrants may be sold without volume or
manner-of-sale
restrictions pursuant to Rule 144 under the Securities Act and (iii) the termination of the Common Warrants.
The closing of the Offering and the
Private Placement is subject to satisfaction of customary closing conditions set forth in the Purchase Agreement and is expected to occur on or around December 3, 2018. The representations, warranties and covenants contained in the Purchase
Agreement were made solely for the benefit of the parties to the Purchase Agreement. In addition, such representations, warranties and covenants (i) are intended as a way of allocating the risk between the parties to the Purchase Agreement and
not as statements of fact, and (ii) may apply standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors in, the Company. Accordingly, the Purchase Agreement is filed with this
report only to provide investors with information regarding the terms of transaction, and not to provide investors with any other factual information regarding the Company. Stockholders should not rely on the representations, warranties and
covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase
Agreement, which subsequent information may or may not be fully reflected in public disclosures.
The forms of the Purchase Agreement, the
Pre-Funded
Warrants and the Common Warrants are filed as Exhibits 10.1, 4.1 and 4.2 to this Current Report on Form
8-K,
respectively. The foregoing summaries of the terms of
the Purchase