Explanatory Note
On May 16, 2019, Pulmatrix, Inc. (the “Company”) filed a Form8-K (the “Original Form8-K”) reporting under Item 5.02 the appointment of Teofilo Raad as the Company’s Chief Executive Officer. Compensation arrangements for Mr. Raad, other than the annual base salary and a target annual cash bonus, and amendments to his employment agreement to reflect the terms of service in his new role had not been determined as of the filing of the Original Form8-K. This Amendment No. 1 amends the Original Form8-K to disclose additional compensatory terms of Mr. Raad’s employment agreement, described in Item 5.02 below and to file Mr. Raad’s amended and restated employment agreement under Item 9.01. Except as specifically stated in this Explanatory Note, this Amendment No. 1 does not modify or update the Original Form8-K or the disclosures set forth therein or otherwise reflect events occurring after the filing thereof.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 16, 2019, the Board of Directors (the “Board”) of Pulmatrix, Inc. (the “Company”) appointed Teofilo Raad to serve as Chief Executive Officer and a Class II director of the Company. On June 28, 2019, the Company and Teofilo Raad entered into an amended and restated employment agreement (the “Agreement”), with Mr. Raad to serve as the Company’s president and chief executive officer. Mr. Raad’s employment with the Company is“at-will,” and the Agreement does not include a specified term. As previously reported, as consideration for his services as Chief Executive Officer, Mr. Raad is entitled to receive (i) an annual base salary of $450,000 and (ii) a target annual cash bonus equal to 45% of his base salary. Both Mr. Raad’s salary and bonus are subject to review and adjustment by the Company’s Board or an appropriate committee thereof. The actual bonus amount is based on both the Company and individual performance during the year.
As soon as practicable upon execution of the Agreement, the Company agreed to grant Mr. Raad an option to purchase 136,628 shares of the Company’s common stock, subject to the terms and conditions of the Pulmatrix, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan and Company’s standard form of stock option agreement, which agreement will expire in ten years.
If Mr. Raad’s employment is terminated (i) by the Company without cause or (ii) by Mr. Raad for good reason, then the Company must pay Mr. Raad, in addition to any then-accrued and unpaid obligations owed to him, (a) twelve (12) months of his then-current base salary, (b) apro-rated bonus in an amount equal to the target annual performance bonus to which Mr. Raad may have been entitled for the year in which the termination occurs, (c) a separation bonus equal to one hundred percent (100%) of the target annual performance bonus to which Mr. Raad may have been entitled for the year in which the termination occurs, and (d) up to twelve (12) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, all unvested equity awards held by Mr. Raad that would have vested during the twelve (12) months following the termination date will immediately vest and become exercisable. If Mr. Raad’s employment is terminated (i) by the Company without cause or (ii) by Mr. Raad for good reason, within twelve (12) months following a change in control, then Mr. Raad shall be entitled to receive, in addition to any then-accrued and unpaid obligations owed to him, (a) a lump sum payment equal to eighteen (18) months of his then-current base salary, (b) apro-rated bonus in an amount equal to the target annual performance bonus to which Mr. Raad may have been entitled for the year in which the termination occurs, (c) a separation bonus equal to one hundred percent (100%) of the target annual performance bonus to which Mr. Raad may have been entitled for the year in which the termination occurs, and (d) up to twelve (12) months of COBRA health insurance premiums at the Company’s then-normal rate of contribution. In addition, in that case, all unvested equity awards will immediately vest and become exercisable. Receipt of Dr. Clarke’s severance and other termination benefits is subject to his execution of a release of claims and his compliance with the restrictive covenants contained in his agreements with the Company.
Under Mr. Raad’s employment agreement, “good reason” is defined as (i) relocation of Mr. Raad’s principal business location to a location more than fifty (50) miles from his then-current business location; (ii) a material diminution in Mr. Raad’s duties, authority, responsibilities, or reporting lines in a manner whereby Mr. Raad no longer reports to
