1018-00001 · Client 1018 · Closing Documents

selling-stockholder-representation-letter.docx DOCUMENT Capital Markets

6 / 35 ← → ✕

Contract analysis Extract to table

October 12, 2023

Penterra Pharmaceuticals Corp. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540

Attention: David Orenstein, General Counsel & Corporate Secretary

Ridgeline Securities LLC as Representative of the Several Underwriters 383 Madison Avenue New York, NY 10017

Attention: Jonathan Pryce-Hall, Managing Director

Broadmark Capital Inc. as Representative of the Several Underwriters 200 Park Avenue New York, NY 10166

Attention: Samuel Okonkwo, Managing Director

Re: Selling Stockholder Representation Letter in Connection with the Registered Secondary Offering of 6,250,000 Shares of Common Stock of Penterra Pharmaceuticals Corp.

Ladies and Gentlemen:

Reference is hereby made to that certain Underwriting Agreement dated as of October 12, 2023 (the "Underwriting Agreement"), by and among Penterra Pharmaceuticals Corp., a Delaware corporation (the "Company" or "PPC"), the selling stockholders named therein (the "Selling Stockholders"), and Ridgeline Securities LLC, Broadmark Capital Inc., Linden Groves & Co., and Harborview Partners LLC (collectively, the "Underwriters"), relating to the registered secondary offering of 6,250,000 shares of the Company's common stock, par value $0.001 per share (the "Shares"), at a public offering price of $41.60 per share (the "Offering").

Reference is further made to the Prospectus Supplement dated October 12, 2023 (the "Prospectus Supplement"), filed pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended (the "Securities Act"), supplementing the base prospectus forming part of the Company's Registration Statement on Form S-3 (File No. 333-274851), which was declared effective by the Securities and Exchange Commission (the "SEC") on August 22, 2023 (the base prospectus, as so supplemented by the Prospectus Supplement, the "Prospectus").

The Offering is a selling-stockholder secondary offering. The Company will not receive any proceeds from the sale of the Shares by the Selling Stockholders. In connection with the Offering, the Selling Stockholders have granted to the Underwriters a 30-day option to purchase up to an additional 937,500 shares of Common Stock (the "Option Shares") on the same terms and conditions as the Shares, solely for the purpose of covering over-allotments, if any.

Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Underwriting Agreement.

Each of the undersigned Selling Stockholders makes the following representations, warranties, and agreements as a material inducement to the Company and the Underwriters to enter into the Underwriting Agreement and to proceed with the Offering. The Company and the Underwriters would not have entered into the Underwriting Agreement absent the representations, warranties, and agreements set forth herein, and each Selling Stockholder acknowledges and agrees that the Company and the Underwriters are relying upon the accuracy and completeness of such representations, warranties, and agreements in entering into the Underwriting Agreement and consummating the Offering.

Section 1: Identification of Selling Stockholders and Shares

Each of the undersigned Selling Stockholders is identified in the table set forth below, together with such Selling Stockholder's pre-Offering beneficial ownership of shares of Common Stock, the number of base Shares to be sold by such Selling Stockholder in the Offering, the number of Option Shares that may be sold by such Selling Stockholder if the Underwriters exercise their over-allotment option in full, and such Selling Stockholder's post-Offering beneficial ownership of shares of Common Stock assuming full exercise of the over-allotment option:

As of the date hereof, and based on 120,000,000 shares of Common Stock outstanding, the combined pre-Offering holdings of the Selling Stockholders represent approximately 33.4% of the outstanding shares of Common Stock. Following the sale of the base Shares in the Offering (and assuming no exercise of the over-allotment option), the combined holdings of the Selling Stockholders will represent approximately 28.2% of the outstanding shares of Common Stock. Following the sale of the base Shares and full exercise of the over-allotment option, the combined holdings of the Selling Stockholders will represent approximately 27.4% of the outstanding shares of Common Stock. The foregoing percentages are calculated without giving effect to any shares issuable upon the exercise of outstanding options, warrants, or other convertible securities of the Company.

Castellano Family Holdings LLC is a Delaware limited liability company (EIN: 87-2165438), with its principal address at c/o Penterra Pharmaceuticals Corp., 400 Meridian Parkway, Suite 1200, Princeton, NJ 08540. The managing member of Castellano Family Holdings LLC is Dr. Elena Castellano.

Section 2: Representations and Warranties of Each Selling Stockholder

Each of the undersigned Selling Stockholders, severally and not jointly, hereby represents and warrants to the Company and to each of the Underwriters as of the date hereof and as of the Closing Date (October 17, 2023), and, if the over-allotment option is exercised, as of the date of each delivery of Option Shares, as follows:

2.1 Beneficial Ownership and Title

Each Selling Stockholder represents and warrants that such Selling Stockholder is the sole beneficial owner of, and has good and valid title to, the number of shares of Common Stock set forth opposite such Selling Stockholder's name in the table in Section 1 above, in each case as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such shares are owned free and clear of all liens, encumbrances, equities, claims, security interests, pledges, charges, options, rights of first refusal, restrictions on transfer, preemptive rights, and other restrictions or limitations of any kind whatsoever, except for (a) restrictions on transfer arising under the Securities Act and applicable state securities laws, and (b) the lock-up agreements described in Section 5 below (including the waivers thereof as described therein).

Each Selling Stockholder further represents and warrants that, upon delivery of and payment for the Shares to the Underwriters at the Closing (expected to occur on October 17, 2023), as contemplated by the Underwriting Agreement, the Underwriters will acquire good and valid title to the Shares purchased by them, free and clear of all liens, encumbrances, equities, claims, security interests, pledges, charges, options, rights of first refusal, restrictions on transfer (other than restrictions arising under the Securities Act and applicable state securities laws), and other restrictions or limitations of any kind. The foregoing representation shall apply with equal force to any Option Shares delivered by such Selling Stockholder upon exercise of the over-allotment option.

2.2 Power and Authority

Each individual Selling Stockholder (namely, Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano) represents and warrants that such individual Selling Stockholder has full legal right, power, capacity, and authority to execute and deliver this Selling Stockholder Representation Letter, the Underwriting Agreement, the Selling Stockholder Power of Attorney and Custody Agreement, and the New Lock-Up Agreement (as defined in Section 5.2 below), and to sell, assign, transfer, and deliver the Shares to be sold by such Selling Stockholder as contemplated hereby and thereby. Each individual Selling Stockholder further represents and warrants that no spousal consent, community property consent, or other third-party consent is required in connection with the execution and delivery of this letter or the sale of the Shares.

Castellano Family Holdings LLC represents and warrants that it has been duly organized, is validly existing, and is in good standing under the laws of the State of Delaware. Castellano Family Holdings LLC has full limited liability company power and authority to execute and deliver this Selling Stockholder Representation Letter, the Underwriting Agreement, the Selling Stockholder Power of Attorney and Custody Agreement, and the New Lock-Up Agreement, and to sell, assign, transfer, and deliver the Shares to be sold by it as contemplated hereby and thereby.

The execution and delivery of this Selling Stockholder Representation Letter and the consummation of the transactions contemplated hereby by Castellano Family Holdings LLC have been duly authorized by all necessary limited liability company action on the part of Castellano Family Holdings LLC, including any and all required member approval and/or manager approval as may be required under its certificate of formation and limited liability company agreement, and no further action, approval, or consent is necessary on the part of Castellano Family Holdings LLC or any of its members or managers to authorize the execution, delivery, and performance of this letter and the related transaction documents.

2.3 No Conflicts

The execution, delivery, and performance by each Selling Stockholder of this Selling Stockholder Representation Letter, the Underwriting Agreement, the Selling Stockholder Power of Attorney and Custody Agreement, and the New Lock-Up Agreement, and the sale, assignment, transfer, and delivery of the Shares by such Selling Stockholder as contemplated hereby and thereby, do not and will not:

(a) violate, conflict with, or result in a breach of or default under any provision of any contract, agreement, instrument, lease, license, permit, order, judgment, decree, writ, injunction, or other obligation or restriction to which such Selling Stockholder is a party or by which such Selling Stockholder or any of such Selling Stockholder's properties or assets (including the Shares) are bound or subject;

(b) in the case of Castellano Family Holdings LLC, violate or conflict with any provision of its certificate of formation or limited liability company agreement, each as in effect on the date hereof; or

(c) result in the creation or imposition of any lien, charge, claim, encumbrance, security interest, pledge, or restriction of any kind upon any of the Shares, other than as contemplated by the Underwriting Agreement and the New Lock-Up Agreement.

2.4 No Consent Required

No consent, approval, authorization, order, registration, filing, or qualification of or with any court, governmental authority or body, regulatory agency, self-regulatory organization, stock exchange, or any other third party is required for the execution and delivery by each Selling Stockholder of this letter and the related transaction documents, or for the valid sale, assignment, transfer, and delivery of the Shares by such Selling Stockholder in the Offering, except for:

(a) filings under the Securities Act, including the filing of the Prospectus Supplement pursuant to Rule 424(b)(5) thereunder;

(b) filings under the Exchange Act, including the filing of Section 16 Form 4 reports with the SEC by each of Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano, which filings will be made on a timely basis following the Closing;

(c) filings, registrations, or qualifications required by applicable state securities or "blue sky" laws, which filings, registrations, or qualifications will be effected by the Company and the Underwriters as contemplated by the Underwriting Agreement; and

(d) consents, approvals, and waivers that have already been duly obtained, including the lock-up waivers described in Section 5.1 below.

2.5 Accuracy of Information Furnished for the Prospectus Supplement

Each Selling Stockholder represents and warrants that all information furnished by or on behalf of such Selling Stockholder to the Company or the Underwriters specifically for use in the Prospectus Supplement (including the Prospectus), including but not limited to (i) the selling stockholder table set forth in the Prospectus Supplement, (ii) the description of share ownership of such Selling Stockholder, (iii) the description of such Selling Stockholder's background, biographical information, and affiliations, (iv) the description of such Selling Stockholder's relationships with the Company and its directors and officers, and (v) any other information relating to such Selling Stockholder that is included in the Prospectus Supplement, is and was, as of the date of the Prospectus Supplement and as of the date hereof, true, correct, and complete in all material respects and does not and did not contain any untrue statement of a material fact or omit 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.

Each Selling Stockholder represents and warrants that such Selling Stockholder has reviewed and approved the Prospectus Supplement, including the information set forth under the headings "Selling Stockholders" and "Shares Eligible for Future Sale" (including all descriptions of lock-up arrangements applicable to the Selling Stockholders), and confirms that such information is accurate and complete in all material respects as it pertains to such Selling Stockholder.

2.6 No Stabilization or Manipulation

Each Selling Stockholder represents and warrants that no Selling Stockholder has taken, directly or indirectly, any action designed, or that could reasonably be expected, to cause or result in the stabilization or manipulation of the price of any security of the Company in order to facilitate the sale or resale of the Shares, including, without limitation, any action that would constitute a violation of Regulation M under the Exchange Act. Without limiting the generality of the foregoing, no Selling Stockholder has (i) effected any transaction in the shares of Common Stock of the Company during the applicable restricted period under Regulation M, (ii) bid for or purchased shares of Common Stock or any related securities, or (iii) attempted to induce any person to purchase any security of the Company, in each case in a manner that would violate Regulation M.

2.7 No Distribution of Offering Materials

Each Selling Stockholder represents and warrants that no Selling Stockholder has distributed, and no Selling Stockholder will distribute, any offering material or any document or communication in connection with the offer or sale of the Shares other than (i) the Prospectus, (ii) preliminary prospectus supplements, and (iii) any issuer free writing prospectus (as defined in Rule 433 under the Securities Act) that has been reviewed and approved in writing by the Company and the Representatives of the Underwriters prior to its use. Each Selling Stockholder agrees that such Selling Stockholder will not prepare, use, or distribute any issuer free writing prospectus or other offering material in connection with the Offering without the prior written consent of the Company and the Representatives of the Underwriters.

2.8 Selling Stockholder's Personal Counsel

Each Selling Stockholder acknowledges that such Selling Stockholder has been represented by Whitfield & Garza LLP (Patricia Velázquez, Partner; 590 Madison Avenue, 28th Floor, New York, NY 10022) as personal legal counsel in connection with the Offering and the transactions contemplated by the Underwriting Agreement and this letter. Each Selling Stockholder acknowledges and agrees that (i) Calderwood & Harkness LLP represents the Company in connection with the Offering and does not represent any Selling Stockholder, and (ii) Caldwell, Pearce & Strauss LLP represents the Underwriters in connection with the Offering and does not represent any Selling Stockholder. Each Selling Stockholder has not relied, and will not rely, upon Calderwood & Harkness LLP or Caldwell, Pearce & Strauss LLP for legal advice in connection with the Offering, the sale of the Shares, or any other matter contemplated by this letter or the Underwriting Agreement. Each Selling Stockholder has had the opportunity to consult with Whitfield & Garza LLP regarding the terms and conditions of the Offering and the legal consequences of the representations, warranties, and agreements set forth herein and in the Underwriting Agreement.

Section 3: Power of Attorney and Custody

Reference is hereby made to the Selling Stockholder Power of Attorney and Custody Agreement executed by each of the undersigned Selling Stockholders concurrently herewith (each, a "POA/Custody Agreement"), pursuant to which each Selling Stockholder has:

(a) appointed David Orenstein, General Counsel & Corporate Secretary of the Company, as attorney-in-fact (the "Attorney-in-Fact"), with full power and authority to execute and deliver any and all documents, instruments, and certificates on behalf of such Selling Stockholder in connection with the Offering, including the Underwriting Agreement, this Selling Stockholder Representation Letter, the Selling Stockholder Certificate to be delivered at the Closing, and any amendments or supplements thereto, and to take such other actions as may be necessary or desirable in connection with the consummation of the Offering; and

(b) appointed Pinnacle Trust & Transfer Co., located at 1 Ashbury Asset Advisors Plaza, 30th Floor, New York, NY 10004, as custodian (the "Custodian") for the Shares to be delivered at the Closing and, if applicable, upon exercise of the over-allotment option, with full power and authority to receive and hold such Shares and to deliver such Shares against payment therefor to the Underwriters in accordance with the terms of the Underwriting Agreement.

Each Selling Stockholder represents and warrants that such Selling Stockholder has not revoked, amended, or modified, and will not revoke, amend, or modify, the POA/Custody Agreement or the appointment of the Attorney-in-Fact or the Custodian thereunder, at any time prior to the completion of the Offering, including the completion of any exercise of the over-allotment option by the Underwriters (or the expiration of such option without exercise), without the prior written consent of the Company and the Representatives of the Underwriters. The powers granted under the POA/Custody Agreement are coupled with an interest and are irrevocable.

Section 4: Appointment of Attorney-in-Fact — Confirmation

Each of the undersigned Selling Stockholders hereby confirms that David Orenstein, in his capacity as Attorney-in-Fact, is duly authorized to act on behalf of each Selling Stockholder for the purposes of:

(a) executing and delivering the Underwriting Agreement on behalf of each Selling Stockholder;

(b) executing and delivering this Selling Stockholder Representation Letter on behalf of each Selling Stockholder;

(c) executing and delivering the Selling Stockholder Certificate to be delivered at the Closing (and any additional Selling Stockholder Certificate to be delivered upon exercise of the over-allotment option) on behalf of each Selling Stockholder;

(d) executing and delivering any amendments, modifications, or supplements to any of the foregoing documents on behalf of each Selling Stockholder; and

(e) taking any and all other actions as may be necessary or desirable in connection with the consummation of the Offering and the performance of each Selling Stockholder's obligations under the Underwriting Agreement and this letter.

Each Selling Stockholder hereby ratifies and confirms all actions heretofore taken by David Orenstein in his capacity as Attorney-in-Fact on behalf of such Selling Stockholder in connection with the Offering, and agrees that all such actions shall be deemed to be the actions of such Selling Stockholder as if taken by such Selling Stockholder directly.

Section 5: Lock-Up Representations and Agreements

5.1 IPO Lock-Up Waivers

Each Selling Stockholder represents and warrants that such Selling Stockholder was a party to a lock-up agreement (the "IPO Lock-Up Agreement") entered into in connection with the Company's initial public offering of Common Stock (the "IPO"), which IPO closed on April 17, 2023. Pursuant to the IPO Lock-Up Agreement, each Selling Stockholder agreed to restrictions on the offer, sale, pledge, or other disposition of shares of Common Stock (and securities convertible into or exercisable or exchangeable for shares of Common Stock) for a period of 180 days commencing on April 17, 2023 (the "IPO Lock-Up Period"), with such IPO Lock-Up Period scheduled to expire on October 14, 2023.

The counterparties to the IPO Lock-Up Agreements were Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. (600 Lexington Avenue, New York, NY 10022; Managing Director: Diane Chaudhary) (collectively, the "IPO Lock-Up Parties"), each in its capacity as a representative of the several underwriters of the IPO.

Each Selling Stockholder acknowledges and confirms the following with respect to the waiver of the IPO Lock-Up Agreements:

(a) On September 18, 2023, the Company, acting on behalf of the Selling Stockholders, submitted lock-up waiver request letters to each of the IPO Lock-Up Parties, requesting that the IPO Lock-Up Parties waive the restrictions under the IPO Lock-Up Agreements solely with respect to the Shares to be sold by the Selling Stockholders in the Offering (including any Option Shares that may be sold upon exercise of the over-allotment option);

(b) On September 29, 2023, each of Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. executed and delivered a waiver consent letter granting a waiver of the IPO lock-up restrictions, effective October 12, 2023, solely with respect to the Shares being sold in the Offering (including any Option Shares), subject to the condition that each Selling Stockholder execute the New Lock-Up Agreement described in Section 5.2 below; and

(c) The waiver consent letters from each of the IPO Lock-Up Parties are in full force and effect as of the date hereof, and no IPO Lock-Up Party has revoked, withdrawn, or modified its waiver consent.

Each Selling Stockholder further represents and warrants that, other than the waivers described above, the IPO Lock-Up Agreements remain in full force and effect with respect to all shares of Common Stock not being sold in the Offering (including shares retained by such Selling Stockholder following the Offering), through the natural expiration of the IPO Lock-Up Period on October 14, 2023. After October 14, 2023, the IPO Lock-Up Agreements will expire by their terms, and all shares of Common Stock held by the Selling Stockholders (other than shares subject to the New Lock-Up Agreement) will cease to be subject to the restrictions set forth in the IPO Lock-Up Agreements.

5.2 New Lock-Up Agreement (90-Day — Secondary Offering)

Each Selling Stockholder represents and warrants that, concurrently with the execution of the Underwriting Agreement, such Selling Stockholder has executed and delivered a new lock-up agreement (the "New Lock-Up Agreement") in favor of Ridgeline Securities LLC and Broadmark Capital Inc., as Representatives of the Several Underwriters, in the form attached as Exhibit A to the Underwriting Agreement. Pursuant to the New Lock-Up Agreement, each Selling Stockholder has agreed to restrictions on the offer, sale, contract to sell, pledge, grant of any option to purchase, or other disposition (or entry into any transaction that is designed to, or might reasonably be expected to, result in the disposition) of all shares of Common Stock beneficially owned by such Selling Stockholder and retained by such Selling Stockholder after the Offering, for a period of 90 days commencing on October 17, 2023 (the Closing Date), and expiring on January 15, 2024, subject to customary exceptions (including exceptions for gifts, transfers to family members or trusts for estate planning purposes, and transfers pursuant to a bona fide merger, consolidation, or other change-of-control transaction involving the Company, in each case subject to the transferee entering into a lock-up agreement on substantially similar terms).

Each Selling Stockholder represents and warrants that the New Lock-Up Agreement constitutes the valid and binding obligation of such Selling Stockholder, enforceable against such Selling Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

5.3 No Violation of Lock-Up

Each Selling Stockholder represents and warrants that such Selling Stockholder has not violated, and is not currently in violation of, any lock-up agreement, market standoff agreement, or similar agreement restricting the disposition of securities of the Company to which such Selling Stockholder is or has been a party at any time, including the IPO Lock-Up Agreement. No Selling Stockholder has engaged in any hedging transaction, short sale, or other arrangement (including any swap, collar, put, call, or forward transaction) with respect to shares of Common Stock that would constitute a violation of any such lock-up agreement or market standoff agreement.

Section 6: Tax Representations

Each Selling Stockholder represents and warrants that such Selling Stockholder is a "United States person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code"), for U.S. federal income tax purposes.

Each Selling Stockholder has provided, or will timely provide prior to the Closing, a properly completed and executed Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and Certification) to the Company, the Custodian, and the Underwriters, certifying that such Selling Stockholder is not subject to backup withholding.

Castellano Family Holdings LLC represents and warrants that, as of the date hereof, it is classified as either a partnership or a disregarded entity (as applicable) for U.S. federal income tax purposes, and has not elected to be classified as an association taxable as a corporation pursuant to Treasury Regulations Section 301.7701-3. Castellano Family Holdings LLC has provided, or will timely provide, all applicable tax forms and certifications as may be required by the Company, the Custodian, or the Underwriters in connection with the Offering, including IRS Form W-9 and, if applicable, any required partner or member certifications.

Section 7: ERISA Representations

Each Selling Stockholder represents and warrants that no Selling Stockholder is, and no portion of the assets used by any Selling Stockholder to acquire the shares of Common Stock being sold in the Offering constitutes assets of, (a) an "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is subject to Title I of ERISA, (b) a "plan" as defined in Section 4975(e)(1) of the Code, (c) an entity whose underlying assets are deemed to include "plan assets" of any such employee benefit plan or plan by reason of such employee benefit plan's or plan's investment in the entity (within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA), or (d) a governmental plan, church plan, or non-U.S. plan that is subject to any federal, state, local, or non-U.S. law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code. Accordingly, the sale of the Shares by the Selling Stockholders in the Offering will not constitute or give rise to a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

Section 8: Indemnification

Each Selling Stockholder hereby acknowledges and agrees to the indemnification provisions set forth in Section 8 of the Underwriting Agreement, pursuant to which each Selling Stockholder has agreed, severally and not jointly, to indemnify and hold harmless the Company, each Underwriter, and their respective directors, officers, employees, agents, affiliates, and each person who controls the Company or any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all losses, claims, damages, liabilities, and expenses (including reasonable costs of investigation and reasonable attorneys' fees and expenses) arising out of or based upon (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Prospectus (or any amendment or supplement thereto), or any issuer free writing prospectus, made in reliance upon and in conformity with written information furnished by or on behalf of such Selling Stockholder specifically for use therein, or (b) any omission or alleged omission to state a material fact in any such document 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, in each case to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished by or on behalf of such Selling Stockholder specifically for use therein.

Notwithstanding the foregoing, the maximum aggregate indemnification liability of each Selling Stockholder under Section 8 of the Underwriting Agreement and this Section 8 shall not exceed the net proceeds actually received by such Selling Stockholder from the sale of such Selling Stockholder's Shares (and, if applicable, Option Shares) in the Offering, after deducting underwriting discounts, commissions, and any transfer taxes paid or payable by such Selling Stockholder in connection therewith.

Section 9: Survival; Reliance

The representations, warranties, and agreements of each Selling Stockholder contained in this letter shall survive the Closing Date and shall remain in full force and effect regardless of (a) any investigation or statement as to the results thereof made by or on behalf of the Company, any Underwriter, or any person controlling the Company or any Underwriter, (b) acceptance of and payment for the Shares, or (c) any termination of the Underwriting Agreement (except as expressly provided therein with respect to the survival of representations and warranties following termination).

Each Selling Stockholder acknowledges that the Company and each of the Underwriters are entering into the Underwriting Agreement and proceeding with the Offering in reliance upon the representations, warranties, and agreements made by the Selling Stockholders herein and in the Underwriting Agreement. The representations, warranties, and agreements set forth herein are in addition to, and not in limitation of, any representations, warranties, and agreements made by the Selling Stockholders in the Underwriting Agreement, the POA/Custody Agreement, the New Lock-Up Agreement, or any other document or instrument executed and delivered by any Selling Stockholder in connection with the Offering.

Section 10: Miscellaneous Provisions

10.1 Governing Law

This letter shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

10.2 Counterparts. This letter may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this letter by facsimile transmission, electronic mail in portable document format (PDF), Brightwater Software, or other electronic means shall be effective as delivery of a manually executed counterpart of this letter.

10.3 Amendments. No amendment, modification, supplement, or waiver of any provision of this letter shall be effective unless set forth in a writing duly executed by each Selling Stockholder, the Company (acting through its General Counsel & Corporate Secretary or other duly authorized officer), and the Representatives of the Underwriters. Any such amendment, modification, supplement, or waiver shall be binding upon all parties hereto.

10.4 Notices. All notices, requests, demands, claims, consents, and other communications hereunder shall be in writing and shall be deemed given (a) when delivered personally, (b) when sent by confirmed facsimile or electronic mail (with receipt confirmed), (c) one business day after being sent by nationally recognized overnight courier, or (d) three business days after being mailed by certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

If to the Selling Stockholders:

c/o Whitfield & Garza LLP 590 Madison Avenue, 28th Floor New York, NY 10022

Attention: Patricia Velázquez, Partner

If to the Company:

Penterra Pharmaceuticals Corp. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540

Attention: David Orenstein, General Counsel & Corporate Secretary

with a copy (which shall not constitute notice) to:

Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, NY 10006

Attention: Jennifer Kwon

If to the Underwriters:

Ridgeline Securities LLC 383 Madison Avenue New York, NY 10017

Attention: Jonathan Pryce-Hall, Managing Director

with a copy (which shall not constitute notice) to:

Caldwell, Pearce & Strauss LLP 1251 Avenue of the Americas, 40th Floor New York, NY 10020

Attention: Margaret Hui

Any party may change its address for purposes of this Section 10.4 by giving written notice of such change to the other parties in accordance with the provisions of this Section 10.4.

[Signature Pages Follow]

IN WITNESS WHEREOF, each of the undersigned Selling Stockholders has executed and delivered this Selling Stockholder Representation Letter as of the date first set forth above.

INDIVIDUAL SELLING STOCKHOLDERS:

________________________________________

Dr. Elena Castellano, Individually

Date: October 12, 2023

________________________________________

Dr. Riccardo Castellano, Individually

Date: October 12, 2023

________________________________________

Dr. Marco Castellano, Individually

Date: October 12, 2023

CASTELLANO FAMILY HOLDINGS LLC

CASTELLANO FAMILY HOLDINGS LLC, a Delaware limited liability company

By: ________

Name: Dr. Elena Castellano

Title: Managing Member

Date: October 12, 2023

ACKNOWLEDGED AND AGREED:

PENTERRA PHARMACEUTICALS CORP.

PENTERRA PHARMACEUTICALS CORP., a Delaware corporation

By: ________

Name: David Orenstein

Title: General Counsel & Corporate Secretary

Date: October 12, 2023

RIDGELINE SECURITIES LLC, as Representative of the Several Underwriters

RIDGELINE SECURITIES LLC

By: ________

Name: Jonathan Pryce-Hall

Title: Managing Director

Date: October 12, 2023

BROADMARK CAPITAL INC., as Representative of the Several Underwriters

BROADMARK CAPITAL INC.

By: ________

Name: Samuel Okonkwo

Title: Managing Director

Date: October 12, 2023

Selling Stockholder	Shares Beneficially Owned Pre-Offering	Base Shares Offered	Option Shares	Shares Owned Post-Offering (Full Exercise)
Dr. Elena Castellano	14,200,000	3,000,000	450,000	10,750,000
Dr. Riccardo Castellano	12,800,000	2,500,000	375,000	9,925,000
Dr. Marco Castellano	4,500,000	500,000	75,000	3,925,000
Castellano Family Holdings LLC	8,600,000	250,000	37,500	8,312,500
Total	40,100,000	6,250,000	937,500	32,912,500

October 12, 2023
Penterra Pharmaceuticals Corp. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540
Attention: David Orenstein, General Counsel & Corporate Secretary
Ridgeline Securities LLC as Representative of the Several Underwriters 383 Madison Avenue New York, NY 10017
Attention: Jonathan Pryce-Hall, Managing Director
Broadmark Capital Inc. as Representative of the Several Underwriters 200 Park Avenue New York, NY 10166
Attention: Samuel Okonkwo, Managing Director
Re: Selling Stockholder Representation Letter in Connection with the Registered Secondary Offering of 6,250,000 Shares of Common Stock of Penterra Pharmaceuticals Corp.
Ladies and Gentlemen:
Reference is hereby made to that certain Underwriting Agreement dated as of October 12, 2023 (the "Underwriting Agreement"), by and among Penterra Pharmaceuticals Corp., a Delaware corporation (the "Company" or "PPC"), the selling stockholders named therein (the "Selling Stockholders"), and Ridgeline Securities LLC, Broadmark Capital Inc., Linden Groves & Co., and Harborview Partners LLC (collectively, the "Underwriters"), relating to the registered secondary offering of 6,250,000 shares of the Company's common stock, par value $0.001 per share (the "Shares"), at a public offering price of $41.60 per share (the "Offering").
Reference is further made to the Prospectus Supplement dated October 12, 2023 (the "Prospectus Supplement"), filed pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended (the "Securities Act"), supplementing the base prospectus forming part of the Company's Registration Statement on Form S-3 (File No. 333-274851), which was declared effective by the Securities and Exchange Commission (the "SEC") on August 22, 2023 (the base prospectus, as so supplemented by the Prospectus Supplement, the "Prospectus").
The Offering is a selling-stockholder secondary offering. The Company will not receive any proceeds from the sale of the Shares by the Selling Stockholders. In connection with the Offering, the Selling Stockholders have granted to the Underwriters a 30-day option to purchase up to an additional 937,500 shares of Common Stock (the "Option Shares") on the same terms and conditions as the Shares, solely for the purpose of covering over-allotments, if any.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Underwriting Agreement.
Each of the undersigned Selling Stockholders makes the following representations, warranties, and agreements as a material inducement to the Company and the Underwriters to enter into the Underwriting Agreement and to proceed with the Offering. The Company and the Underwriters would not have entered into the Underwriting Agreement absent the representations, warranties, and agreements set forth herein, and each Selling Stockholder acknowledges and agrees that the Company and the Underwriters are relying upon the accuracy and completeness of such representations, warranties, and agreements in entering into the Underwriting Agreement and consummating the Offering.
Section 1: Identification of Selling Stockholders and Shares
Each of the undersigned Selling Stockholders is identified in the table set forth below, together with such Selling Stockholder's pre-Offering beneficial ownership of shares of Common Stock, the number of base Shares to be sold by such Selling Stockholder in the Offering, the number of Option Shares that may be sold by such Selling Stockholder if the Underwriters exercise their over-allotment option in full, and such Selling Stockholder's post-Offering beneficial ownership of shares of Common Stock assuming full exercise of the over-allotment option:
As of the date hereof, and based on 120,000,000 shares of Common Stock outstanding, the combined pre-Offering holdings of the Selling Stockholders represent approximately 33.4% of the outstanding shares of Common Stock. Following the sale of the base Shares in the Offering (and assuming no exercise of the over-allotment option), the combined holdings of the Selling Stockholders will represent approximately 28.2% of the outstanding shares of Common Stock. Following the sale of the base Shares and full exercise of the over-allotment option, the combined holdings of the Selling Stockholders will represent approximately 27.4% of the outstanding shares of Common Stock. The foregoing percentages are calculated without giving effect to any shares issuable upon the exercise of outstanding options, warrants, or other convertible securities of the Company.
Castellano Family Holdings LLC is a Delaware limited liability company (EIN: 87-2165438), with its principal address at c/o Penterra Pharmaceuticals Corp., 400 Meridian Parkway, Suite 1200, Princeton, NJ 08540. The managing member of Castellano Family Holdings LLC is Dr. Elena Castellano.
Section 2: Representations and Warranties of Each Selling Stockholder
Each of the undersigned Selling Stockholders, severally and not jointly, hereby represents and warrants to the Company and to each of the Underwriters as of the date hereof and as of the Closing Date (October 17, 2023), and, if the over-allotment option is exercised, as of the date of each delivery of Option Shares, as follows:
2.1 Beneficial Ownership and Title
Each Selling Stockholder represents and warrants that such Selling Stockholder is the sole beneficial owner of, and has good and valid title to, the number of shares of Common Stock set forth opposite such Selling Stockholder's name in the table in Section 1 above, in each case as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such shares are owned free and clear of all liens, encumbrances, equities, claims, security interests, pledges, charges, options, rights of first refusal, restrictions on transfer, preemptive rights, and other restrictions or limitations of any kind whatsoever, except for (a) restrictions on transfer arising under the Securities Act and applicable state securities laws, and (b) the lock-up agreements described in Section 5 below (including the waivers thereof as described therein).
Each Selling Stockholder further represents and warrants that, upon delivery of and payment for the Shares to the Underwriters at the Closing (expected to occur on October 17, 2023), as contemplated by the Underwriting Agreement, the Underwriters will acquire good and valid title to the Shares purchased by them, free and clear of all liens, encumbrances, equities, claims, security interests, pledges, charges, options, rights of first refusal, restrictions on transfer (other than restrictions arising under the Securities Act and applicable state securities laws), and other restrictions or limitations of any kind. The foregoing representation shall apply with equal force to any Option Shares delivered by such Selling Stockholder upon exercise of the over-allotment option.
2.2 Power and Authority
Each individual Selling Stockholder (namely, Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano) represents and warrants that such individual Selling Stockholder has full legal right, power, capacity, and authority to execute and deliver this Selling Stockholder Representation Letter, the Underwriting Agreement, the Selling Stockholder Power of Attorney and Custody Agreement, and the New Lock-Up Agreement (as defined in Section 5.2 below), and to sell, assign, transfer, and deliver the Shares to be sold by such Selling Stockholder as contemplated hereby and thereby. Each individual Selling Stockholder further represents and warrants that no spousal consent, community property consent, or other third-party consent is required in connection with the execution and delivery of this letter or the sale of the Shares.
Castellano Family Holdings LLC represents and warrants that it has been duly organized, is validly existing, and is in good standing under the laws of the State of Delaware. Castellano Family Holdings LLC has full limited liability company power and authority to execute and deliver this Selling Stockholder Representation Letter, the Underwriting Agreement, the Selling Stockholder Power of Attorney and Custody Agreement, and the New Lock-Up Agreement, and to sell, assign, transfer, and deliver the Shares to be sold by it as contemplated hereby and thereby.
The execution and delivery of this Selling Stockholder Representation Letter and the consummation of the transactions contemplated hereby by Castellano Family Holdings LLC have been duly authorized by all necessary limited liability company action on the part of Castellano Family Holdings LLC, including any and all required member approval and/or manager approval as may be required under its certificate of formation and limited liability company agreement, and no further action, approval, or consent is necessary on the part of Castellano Family Holdings LLC or any of its members or managers to authorize the execution, delivery, and performance of this letter and the related transaction documents.
2.3 No Conflicts
The execution, delivery, and performance by each Selling Stockholder of this Selling Stockholder Representation Letter, the Underwriting Agreement, the Selling Stockholder Power of Attorney and Custody Agreement, and the New Lock-Up Agreement, and the sale, assignment, transfer, and delivery of the Shares by such Selling Stockholder as contemplated hereby and thereby, do not and will not:
(a) violate, conflict with, or result in a breach of or default under any provision of any contract, agreement, instrument, lease, license, permit, order, judgment, decree, writ, injunction, or other obligation or restriction to which such Selling Stockholder is a party or by which such Selling Stockholder or any of such Selling Stockholder's properties or assets (including the Shares) are bound or subject;
(b) in the case of Castellano Family Holdings LLC, violate or conflict with any provision of its certificate of formation or limited liability company agreement, each as in effect on the date hereof; or
(c) result in the creation or imposition of any lien, charge, claim, encumbrance, security interest, pledge, or restriction of any kind upon any of the Shares, other than as contemplated by the Underwriting Agreement and the New Lock-Up Agreement.
2.4 No Consent Required
No consent, approval, authorization, order, registration, filing, or qualification of or with any court, governmental authority or body, regulatory agency, self-regulatory organization, stock exchange, or any other third party is required for the execution and delivery by each Selling Stockholder of this letter and the related transaction documents, or for the valid sale, assignment, transfer, and delivery of the Shares by such Selling Stockholder in the Offering, except for:
(a) filings under the Securities Act, including the filing of the Prospectus Supplement pursuant to Rule 424(b)(5) thereunder;
(b) filings under the Exchange Act, including the filing of Section 16 Form 4 reports with the SEC by each of Dr. Elena Castellano, Dr. Riccardo Castellano, and Dr. Marco Castellano, which filings will be made on a timely basis following the Closing;
(c) filings, registrations, or qualifications required by applicable state securities or "blue sky" laws, which filings, registrations, or qualifications will be effected by the Company and the Underwriters as contemplated by the Underwriting Agreement; and
(d) consents, approvals, and waivers that have already been duly obtained, including the lock-up waivers described in Section 5.1 below.
2.5 Accuracy of Information Furnished for the Prospectus Supplement
Each Selling Stockholder represents and warrants that all information furnished by or on behalf of such Selling Stockholder to the Company or the Underwriters specifically for use in the Prospectus Supplement (including the Prospectus), including but not limited to (i) the selling stockholder table set forth in the Prospectus Supplement, (ii) the description of share ownership of such Selling Stockholder, (iii) the description of such Selling Stockholder's background, biographical information, and affiliations, (iv) the description of such Selling Stockholder's relationships with the Company and its directors and officers, and (v) any other information relating to such Selling Stockholder that is included in the Prospectus Supplement, is and was, as of the date of the Prospectus Supplement and as of the date hereof, true, correct, and complete in all material respects and does not and did not contain any untrue statement of a material fact or omit 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.
Each Selling Stockholder represents and warrants that such Selling Stockholder has reviewed and approved the Prospectus Supplement, including the information set forth under the headings "Selling Stockholders" and "Shares Eligible for Future Sale" (including all descriptions of lock-up arrangements applicable to the Selling Stockholders), and confirms that such information is accurate and complete in all material respects as it pertains to such Selling Stockholder.
2.6 No Stabilization or Manipulation
Each Selling Stockholder represents and warrants that no Selling Stockholder has taken, directly or indirectly, any action designed, or that could reasonably be expected, to cause or result in the stabilization or manipulation of the price of any security of the Company in order to facilitate the sale or resale of the Shares, including, without limitation, any action that would constitute a violation of Regulation M under the Exchange Act. Without limiting the generality of the foregoing, no Selling Stockholder has (i) effected any transaction in the shares of Common Stock of the Company during the applicable restricted period under Regulation M, (ii) bid for or purchased shares of Common Stock or any related securities, or (iii) attempted to induce any person to purchase any security of the Company, in each case in a manner that would violate Regulation M.
2.7 No Distribution of Offering Materials
Each Selling Stockholder represents and warrants that no Selling Stockholder has distributed, and no Selling Stockholder will distribute, any offering material or any document or communication in connection with the offer or sale of the Shares other than (i) the Prospectus, (ii) preliminary prospectus supplements, and (iii) any issuer free writing prospectus (as defined in Rule 433 under the Securities Act) that has been reviewed and approved in writing by the Company and the Representatives of the Underwriters prior to its use. Each Selling Stockholder agrees that such Selling Stockholder will not prepare, use, or distribute any issuer free writing prospectus or other offering material in connection with the Offering without the prior written consent of the Company and the Representatives of the Underwriters.
2.8 Selling Stockholder's Personal Counsel
Each Selling Stockholder acknowledges that such Selling Stockholder has been represented by Whitfield & Garza LLP (Patricia Velázquez, Partner; 590 Madison Avenue, 28th Floor, New York, NY 10022) as personal legal counsel in connection with the Offering and the transactions contemplated by the Underwriting Agreement and this letter. Each Selling Stockholder acknowledges and agrees that (i) Calderwood & Harkness LLP represents the Company in connection with the Offering and does not represent any Selling Stockholder, and (ii) Caldwell, Pearce & Strauss LLP represents the Underwriters in connection with the Offering and does not represent any Selling Stockholder. Each Selling Stockholder has not relied, and will not rely, upon Calderwood & Harkness LLP or Caldwell, Pearce & Strauss LLP for legal advice in connection with the Offering, the sale of the Shares, or any other matter contemplated by this letter or the Underwriting Agreement. Each Selling Stockholder has had the opportunity to consult with Whitfield & Garza LLP regarding the terms and conditions of the Offering and the legal consequences of the representations, warranties, and agreements set forth herein and in the Underwriting Agreement.
Section 3: Power of Attorney and Custody
Reference is hereby made to the Selling Stockholder Power of Attorney and Custody Agreement executed by each of the undersigned Selling Stockholders concurrently herewith (each, a "POA/Custody Agreement"), pursuant to which each Selling Stockholder has:
(a) appointed David Orenstein, General Counsel & Corporate Secretary of the Company, as attorney-in-fact (the "Attorney-in-Fact"), with full power and authority to execute and deliver any and all documents, instruments, and certificates on behalf of such Selling Stockholder in connection with the Offering, including the Underwriting Agreement, this Selling Stockholder Representation Letter, the Selling Stockholder Certificate to be delivered at the Closing, and any amendments or supplements thereto, and to take such other actions as may be necessary or desirable in connection with the consummation of the Offering; and
(b) appointed Pinnacle Trust & Transfer Co., located at 1 Ashbury Asset Advisors Plaza, 30th Floor, New York, NY 10004, as custodian (the "Custodian") for the Shares to be delivered at the Closing and, if applicable, upon exercise of the over-allotment option, with full power and authority to receive and hold such Shares and to deliver such Shares against payment therefor to the Underwriters in accordance with the terms of the Underwriting Agreement.
Each Selling Stockholder represents and warrants that such Selling Stockholder has not revoked, amended, or modified, and will not revoke, amend, or modify, the POA/Custody Agreement or the appointment of the Attorney-in-Fact or the Custodian thereunder, at any time prior to the completion of the Offering, including the completion of any exercise of the over-allotment option by the Underwriters (or the expiration of such option without exercise), without the prior written consent of the Company and the Representatives of the Underwriters. The powers granted under the POA/Custody Agreement are coupled with an interest and are irrevocable.
Section 4: Appointment of Attorney-in-Fact — Confirmation
Each of the undersigned Selling Stockholders hereby confirms that David Orenstein, in his capacity as Attorney-in-Fact, is duly authorized to act on behalf of each Selling Stockholder for the purposes of:
(a) executing and delivering the Underwriting Agreement on behalf of each Selling Stockholder;
(b) executing and delivering this Selling Stockholder Representation Letter on behalf of each Selling Stockholder;
(c) executing and delivering the Selling Stockholder Certificate to be delivered at the Closing (and any additional Selling Stockholder Certificate to be delivered upon exercise of the over-allotment option) on behalf of each Selling Stockholder;
(d) executing and delivering any amendments, modifications, or supplements to any of the foregoing documents on behalf of each Selling Stockholder; and
(e) taking any and all other actions as may be necessary or desirable in connection with the consummation of the Offering and the performance of each Selling Stockholder's obligations under the Underwriting Agreement and this letter.
Each Selling Stockholder hereby ratifies and confirms all actions heretofore taken by David Orenstein in his capacity as Attorney-in-Fact on behalf of such Selling Stockholder in connection with the Offering, and agrees that all such actions shall be deemed to be the actions of such Selling Stockholder as if taken by such Selling Stockholder directly.
Section 5: Lock-Up Representations and Agreements
5.1 IPO Lock-Up Waivers
Each Selling Stockholder represents and warrants that such Selling Stockholder was a party to a lock-up agreement (the "IPO Lock-Up Agreement") entered into in connection with the Company's initial public offering of Common Stock (the "IPO"), which IPO closed on April 17, 2023. Pursuant to the IPO Lock-Up Agreement, each Selling Stockholder agreed to restrictions on the offer, sale, pledge, or other disposition of shares of Common Stock (and securities convertible into or exercisable or exchangeable for shares of Common Stock) for a period of 180 days commencing on April 17, 2023 (the "IPO Lock-Up Period"), with such IPO Lock-Up Period scheduled to expire on October 14, 2023.
The counterparties to the IPO Lock-Up Agreements were Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. (600 Lexington Avenue, New York, NY 10022; Managing Director: Diane Chaudhary) (collectively, the "IPO Lock-Up Parties"), each in its capacity as a representative of the several underwriters of the IPO.
Each Selling Stockholder acknowledges and confirms the following with respect to the waiver of the IPO Lock-Up Agreements:
(a) On September 18, 2023, the Company, acting on behalf of the Selling Stockholders, submitted lock-up waiver request letters to each of the IPO Lock-Up Parties, requesting that the IPO Lock-Up Parties waive the restrictions under the IPO Lock-Up Agreements solely with respect to the Shares to be sold by the Selling Stockholders in the Offering (including any Option Shares that may be sold upon exercise of the over-allotment option);
(b) On September 29, 2023, each of Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co. executed and delivered a waiver consent letter granting a waiver of the IPO lock-up restrictions, effective October 12, 2023, solely with respect to the Shares being sold in the Offering (including any Option Shares), subject to the condition that each Selling Stockholder execute the New Lock-Up Agreement described in Section 5.2 below; and
(c) The waiver consent letters from each of the IPO Lock-Up Parties are in full force and effect as of the date hereof, and no IPO Lock-Up Party has revoked, withdrawn, or modified its waiver consent.
Each Selling Stockholder further represents and warrants that, other than the waivers described above, the IPO Lock-Up Agreements remain in full force and effect with respect to all shares of Common Stock not being sold in the Offering (including shares retained by such Selling Stockholder following the Offering), through the natural expiration of the IPO Lock-Up Period on October 14, 2023. After October 14, 2023, the IPO Lock-Up Agreements will expire by their terms, and all shares of Common Stock held by the Selling Stockholders (other than shares subject to the New Lock-Up Agreement) will cease to be subject to the restrictions set forth in the IPO Lock-Up Agreements.
5.2 New Lock-Up Agreement (90-Day — Secondary Offering)
Each Selling Stockholder represents and warrants that, concurrently with the execution of the Underwriting Agreement, such Selling Stockholder has executed and delivered a new lock-up agreement (the "New Lock-Up Agreement") in favor of Ridgeline Securities LLC and Broadmark Capital Inc., as Representatives of the Several Underwriters, in the form attached as Exhibit A to the Underwriting Agreement. Pursuant to the New Lock-Up Agreement, each Selling Stockholder has agreed to restrictions on the offer, sale, contract to sell, pledge, grant of any option to purchase, or other disposition (or entry into any transaction that is designed to, or might reasonably be expected to, result in the disposition) of all shares of Common Stock beneficially owned by such Selling Stockholder and retained by such Selling Stockholder after the Offering, for a period of 90 days commencing on October 17, 2023 (the Closing Date), and expiring on January 15, 2024, subject to customary exceptions (including exceptions for gifts, transfers to family members or trusts for estate planning purposes, and transfers pursuant to a bona fide merger, consolidation, or other change-of-control transaction involving the Company, in each case subject to the transferee entering into a lock-up agreement on substantially similar terms).
Each Selling Stockholder represents and warrants that the New Lock-Up Agreement constitutes the valid and binding obligation of such Selling Stockholder, enforceable against such Selling Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
5.3 No Violation of Lock-Up
Each Selling Stockholder represents and warrants that such Selling Stockholder has not violated, and is not currently in violation of, any lock-up agreement, market standoff agreement, or similar agreement restricting the disposition of securities of the Company to which such Selling Stockholder is or has been a party at any time, including the IPO Lock-Up Agreement. No Selling Stockholder has engaged in any hedging transaction, short sale, or other arrangement (including any swap, collar, put, call, or forward transaction) with respect to shares of Common Stock that would constitute a violation of any such lock-up agreement or market standoff agreement.
Section 6: Tax Representations
Each Selling Stockholder represents and warrants that such Selling Stockholder is a "United States person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended (the "Code"), for U.S. federal income tax purposes.
Each Selling Stockholder has provided, or will timely provide prior to the Closing, a properly completed and executed Internal Revenue Service Form W-9 (Request for Taxpayer Identification Number and Certification) to the Company, the Custodian, and the Underwriters, certifying that such Selling Stockholder is not subject to backup withholding.
Castellano Family Holdings LLC represents and warrants that, as of the date hereof, it is classified as either a partnership or a disregarded entity (as applicable) for U.S. federal income tax purposes, and has not elected to be classified as an association taxable as a corporation pursuant to Treasury Regulations Section 301.7701-3. Castellano Family Holdings LLC has provided, or will timely provide, all applicable tax forms and certifications as may be required by the Company, the Custodian, or the Underwriters in connection with the Offering, including IRS Form W-9 and, if applicable, any required partner or member certifications.
Section 7: ERISA Representations
Each Selling Stockholder represents and warrants that no Selling Stockholder is, and no portion of the assets used by any Selling Stockholder to acquire the shares of Common Stock being sold in the Offering constitutes assets of, (a) an "employee benefit plan" as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), that is subject to Title I of ERISA, (b) a "plan" as defined in Section 4975(e)(1) of the Code, (c) an entity whose underlying assets are deemed to include "plan assets" of any such employee benefit plan or plan by reason of such employee benefit plan's or plan's investment in the entity (within the meaning of 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA), or (d) a governmental plan, church plan, or non-U.S. plan that is subject to any federal, state, local, or non-U.S. law that is substantially similar to Section 406 of ERISA or Section 4975 of the Code. Accordingly, the sale of the Shares by the Selling Stockholders in the Offering will not constitute or give rise to a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.
Section 8: Indemnification
Each Selling Stockholder hereby acknowledges and agrees to the indemnification provisions set forth in Section 8 of the Underwriting Agreement, pursuant to which each Selling Stockholder has agreed, severally and not jointly, to indemnify and hold harmless the Company, each Underwriter, and their respective directors, officers, employees, agents, affiliates, and each person who controls the Company or any Underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all losses, claims, damages, liabilities, and expenses (including reasonable costs of investigation and reasonable attorneys' fees and expenses) arising out of or based upon (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Prospectus (or any amendment or supplement thereto), or any issuer free writing prospectus, made in reliance upon and in conformity with written information furnished by or on behalf of such Selling Stockholder specifically for use therein, or (b) any omission or alleged omission to state a material fact in any such document 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, in each case to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished by or on behalf of such Selling Stockholder specifically for use therein.
Notwithstanding the foregoing, the maximum aggregate indemnification liability of each Selling Stockholder under Section 8 of the Underwriting Agreement and this Section 8 shall not exceed the net proceeds actually received by such Selling Stockholder from the sale of such Selling Stockholder's Shares (and, if applicable, Option Shares) in the Offering, after deducting underwriting discounts, commissions, and any transfer taxes paid or payable by such Selling Stockholder in connection therewith.
Section 9: Survival; Reliance
The representations, warranties, and agreements of each Selling Stockholder contained in this letter shall survive the Closing Date and shall remain in full force and effect regardless of (a) any investigation or statement as to the results thereof made by or on behalf of the Company, any Underwriter, or any person controlling the Company or any Underwriter, (b) acceptance of and payment for the Shares, or (c) any termination of the Underwriting Agreement (except as expressly provided therein with respect to the survival of representations and warranties following termination).
Each Selling Stockholder acknowledges that the Company and each of the Underwriters are entering into the Underwriting Agreement and proceeding with the Offering in reliance upon the representations, warranties, and agreements made by the Selling Stockholders herein and in the Underwriting Agreement. The representations, warranties, and agreements set forth herein are in addition to, and not in limitation of, any representations, warranties, and agreements made by the Selling Stockholders in the Underwriting Agreement, the POA/Custody Agreement, the New Lock-Up Agreement, or any other document or instrument executed and delivered by any Selling Stockholder in connection with the Offering.
Section 10: Miscellaneous Provisions
10.1 Governing Law
This letter shall be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
10.2 Counterparts.  This letter may be executed in any number of counterparts, each of which shall be deemed to be an original, and all of which, when taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this letter by facsimile transmission, electronic mail in portable document format (PDF), Brightwater Software, or other electronic means shall be effective as delivery of a manually executed counterpart of this letter.
10.3 Amendments.  No amendment, modification, supplement, or waiver of any provision of this letter shall be effective unless set forth in a writing duly executed by each Selling Stockholder, the Company (acting through its General Counsel & Corporate Secretary or other duly authorized officer), and the Representatives of the Underwriters. Any such amendment, modification, supplement, or waiver shall be binding upon all parties hereto.
10.4 Notices.  All notices, requests, demands, claims, consents, and other communications hereunder shall be in writing and shall be deemed given (a) when delivered personally, (b) when sent by confirmed facsimile or electronic mail (with receipt confirmed), (c) one business day after being sent by nationally recognized overnight courier, or (d) three business days after being mailed by certified or registered mail, return receipt requested, postage prepaid, addressed as follows:
If to the Selling Stockholders:
c/o Whitfield & Garza LLP 590 Madison Avenue, 28th Floor New York, NY 10022
Attention: Patricia Velázquez, Partner
If to the Company:
Penterra Pharmaceuticals Corp. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540
Attention: David Orenstein, General Counsel & Corporate Secretary
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, NY 10006
Attention: Jennifer Kwon
If to the Underwriters:
Ridgeline Securities LLC 383 Madison Avenue New York, NY 10017
Attention: Jonathan Pryce-Hall, Managing Director
with a copy (which shall not constitute notice) to:
Caldwell, Pearce & Strauss LLP 1251 Avenue of the Americas, 40th Floor New York, NY 10020
Attention: Margaret Hui
Any party may change its address for purposes of this Section 10.4 by giving written notice of such change to the other parties in accordance with the provisions of this Section 10.4.
[Signature Pages Follow]
IN WITNESS WHEREOF, each of the undersigned Selling Stockholders has executed and delivered this Selling Stockholder Representation Letter as of the date first set forth above.
INDIVIDUAL SELLING STOCKHOLDERS:
________________________________________
Dr. Elena Castellano, Individually
Date: October 12, 2023
________________________________________
Dr. Riccardo Castellano, Individually
Date: October 12, 2023
________________________________________
Dr. Marco Castellano, Individually
Date: October 12, 2023
CASTELLANO FAMILY HOLDINGS LLC
CASTELLANO FAMILY HOLDINGS LLC, a Delaware limited liability company
By: ________
Name: Dr. Elena Castellano
Title: Managing Member
Date: October 12, 2023
ACKNOWLEDGED AND AGREED:
PENTERRA PHARMACEUTICALS CORP.
PENTERRA PHARMACEUTICALS CORP., a Delaware corporation
By: ________
Name: David Orenstein
Title: General Counsel & Corporate Secretary
Date: October 12, 2023
RIDGELINE SECURITIES LLC, as Representative of the Several Underwriters
RIDGELINE SECURITIES LLC
By: ________
Name: Jonathan Pryce-Hall
Title: Managing Director
Date: October 12, 2023
BROADMARK CAPITAL INC., as Representative of the Several Underwriters
BROADMARK CAPITAL INC.
By: ________
Name: Samuel Okonkwo
Title: Managing Director
Date: October 12, 2023
Selling Stockholder | Shares Beneficially Owned Pre-Offering | Base Shares Offered | Option Shares | Shares Owned Post-Offering (Full Exercise)
Dr. Elena Castellano | 14,200,000 | 3,000,000 | 450,000 | 10,750,000
Dr. Riccardo Castellano | 12,800,000 | 2,500,000 | 375,000 | 9,925,000
Dr. Marco Castellano | 4,500,000 | 500,000 | 75,000 | 3,925,000
Castellano Family Holdings LLC | 8,600,000 | 250,000 | 37,500 | 8,312,500
Total | 40,100,000 | 6,250,000 | 937,500 | 32,912,500

October 12, 2023

INDIVIDUAL SELLING STOCKHOLDERS:

CASTELLANO FAMILY HOLDINGS LLC

ACKNOWLEDGED AND AGREED:

PENTERRA PHARMACEUTICALS CORP.

RIDGELINE SECURITIES LLC

BROADMARK CAPITAL INC.

Record

Parties

Dates

Amounts