1018-00001 · Client 1018 · Closing Documents

transfer-agent-direction-letter.docx DOCUMENT Capital Markets

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PENTERRA PHARMACEUTICALS CORP. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540

October 16, 2023

Pinnacle Trust & Transfer Co.

Attention: Corporate Actions Department

1 Ashbury Asset Advisors Plaza, 30th Floor New York, NY 10004

Re: Direction Letter — Book-Entry Delivery of 6,250,000 Shares of Common Stock of Penterra Pharmaceuticals Corp. (CUSIP 70831X 10 5; Nasdaq: PNTR) in Connection with Registered Selling-Stockholder Secondary Offering

Reference is made to the appointment of Pinnacle Trust & Transfer Co. as transfer agent and registrar for the common stock, par value $0.001 per share, of Penterra Pharmaceuticals Corp., a Delaware corporation.

Ladies and Gentlemen:

Penterra Pharmaceuticals Corp. ("PPC" or the "Company") is writing to you in its capacity as the issuer of its common stock, par value $0.001 per share (the "Common Stock"). Pinnacle Trust & Transfer Co. ("Pinnacle" or the "Transfer Agent") serves as the duly appointed transfer agent and registrar for the Common Stock pursuant to that certain Transfer Agent and Registrar Agreement dated as of April 10, 2023, between the Company and Pinnacle, as amended from time to time (the "Transfer Agency Agreement").

The purpose of this letter is to provide direction and instruction to Pinnacle in connection with a registered selling-stockholder secondary offering (the "Offering") of 6,250,000 shares of Common Stock (the "Shares"). The Offering is being conducted pursuant to a prospectus supplement dated October 12, 2023 (the "Prospectus Supplement") to the base prospectus forming part of the Company's Registration Statement on Form S-3 (File No. 333-274851) (the "Registration Statement"), which was declared effective by the Securities and Exchange Commission (the "SEC") on August 22, 2023. The underwriters for the Offering are Ridgeline Securities LLC, as lead left book-running manager, Broadmark Capital Inc., as joint book-running manager, and Linden Groves & Co. and Harborview Partners LLC, as co-managers (collectively, the "Underwriters"), pursuant to that certain Underwriting Agreement dated October 12, 2023 (the "Underwriting Agreement"), by and among the Company, the Selling Stockholders (as defined below), and the Underwriters.

We respectfully request that you review this direction letter carefully and take the actions described herein in connection with the settlement of the Offering on the Closing Date (as defined below).

1. Background on the Offering

The selling stockholders in the Offering are as follows: Dr. Elena Castellano, Dr. Riccardo Castellano, Dr. Marco Castellano, and Castellano Family Holdings LLC (collectively, the "Selling Stockholders"). Each of the Selling Stockholders is a current stockholder of the Company and is the registered or beneficial holder of shares of Common Stock that were acquired prior to or in connection with the Company's initial public offering.

The Selling Stockholders are selling an aggregate of 6,250,000 shares of Common Stock at a public offering price of $41.60 per share, for aggregate gross proceeds of $260,000,000.00 (before deducting underwriting discounts and commissions and other offering expenses payable by the Selling Stockholders). The Company is not selling any shares of Common Stock in the Offering and will not receive any proceeds from the sale of the Shares by the Selling Stockholders.

In addition, the Selling Stockholders have granted the Underwriters a 30-day option (exercisable in whole or in part through November 11, 2023) to purchase up to an additional 937,500 shares of Common Stock (the "Over-Allotment Shares") on the same terms and conditions as set forth in the Underwriting Agreement, solely to cover over-allotments, if any.

Settlement of the base offering is scheduled for October 17, 2023 (T+3 from the date of pricing) (the "Closing Date"). Settlement is expected to occur through the facilities of The Depository Trust Company ("DTC") in accordance with DTC's standard settlement procedures, as further described in this letter.

2. Share Allocation Among Selling Stockholders

The following table sets forth the number of shares of Common Stock to be delivered by each Selling Stockholder at the base closing on the Closing Date:

In the event that the Underwriters exercise the over-allotment option in whole or in part, the Over-Allotment Shares would be allocated among the Selling Stockholders as set forth below (subject to a separate supplemental direction letter to be delivered to Pinnacle at the time of any such exercise, as further described in Section 5 of this letter):

The foregoing allocations of Over-Allotment Shares represent the maximum number of additional shares that may be purchased by the Underwriters from each Selling Stockholder upon a full exercise of the over-allotment option. In the event of a partial exercise, the allocation among Selling Stockholders will be specified in the supplemental direction letter delivered at that time.

3. Direction to Facilitate Book-Entry Delivery Through DTC

The Company hereby directs and authorizes Pinnacle, in its capacity as Transfer Agent and registrar for the Common Stock, to take all actions necessary and appropriate to facilitate the book-entry delivery of the 6,250,000 Shares through the facilities of DTC for settlement on the Closing Date of October 17, 2023. Without limiting the generality of the foregoing, the Company specifically instructs Pinnacle to take the following actions:

(a) Debit Selling Stockholder Accounts. Debit the respective accounts of each Selling Stockholder (or their respective custodial DTC participant accounts, as applicable) in the amounts specified in Section 2 above, such that the aggregate number of shares debited from the Selling Stockholders' accounts equals 6,250,000 shares of Common Stock. To the extent any Selling Stockholder holds shares in certificated form or through the direct registration system maintained by Pinnacle, Pinnacle is directed to convert such shares to book-entry form within the DTC system in advance of the Closing Date, as necessary to facilitate delivery.

(b) Credit Underwriter Account. Credit the DTC account of Ridgeline Securities LLC (DTC Participant Number 0421), as representative of the Underwriters, or such other DTC participant account or accounts as may be designated by Ridgeline Securities LLC in writing to Pinnacle prior to settlement, with 6,250,000 shares of Common Stock, in book-entry form, free of any legends, restrictive notations, or transfer restrictions, against payment of the aggregate purchase price in accordance with the terms of the Underwriting Agreement. Pinnacle shall ensure that the Shares are delivered free and clear of any stop transfer orders, restrictive legends, or other impediments to transfer.

(c) DWAC or Direct Registration System Delivery. Ensure that all Shares are delivered in good deliverable form through the DTC DWAC (Deposit/Withdrawal at Custodian) system or the DTC direct registration system, as applicable and as may be coordinated with Ridgeline Securities LLC and DTC. Pinnacle shall process any necessary DWAC instructions in a timely manner to ensure that settlement occurs on the Closing Date without delay.

(d) Coordination with DTC. Coordinate with DTC and all relevant DTC participants to ensure that settlement of the Shares occurs on October 17, 2023, in accordance with DTC's standard settlement procedures, including but not limited to DTC's same-day funds settlement system. Pinnacle shall respond promptly to any inquiries or requests from DTC or its participants in connection with the settlement of the Shares and shall take all commercially reasonable steps to resolve any issues that may arise in connection with the book-entry delivery process.

The Company further represents and confirms that David Orenstein, General Counsel and Corporate Secretary of the Company, has been appointed attorney-in-fact for the Selling Stockholders pursuant to a Power of Attorney and Custody Agreement dated October 12, 2023, a copy of which is enclosed herewith. Pursuant to such Power of Attorney and Custody Agreement, Mr. Orenstein is fully authorized to give, and is hereby giving, the instructions set forth in this letter on behalf of each of the Selling Stockholders, including the direction to debit each Selling Stockholder's account and to credit the Underwriters' account, as set forth above. Pinnacle is entitled to rely on the authority of Mr. Orenstein as attorney-in-fact for the Selling Stockholders without further inquiry or investigation.

4. Confirmation of DTC Eligibility

In connection with the foregoing, the Company requests that Pinnacle confirm, in writing or by electronic communication directed to the contacts identified in Section 7 below, each of the following:

(a) The Common Stock of the Company (CUSIP 70831X 10 5) is and remains eligible for book-entry delivery and settlement through the facilities of DTC, and there are no pending or threatened actions, proceedings, or inquiries by DTC that would reasonably be expected to adversely affect the DTC eligibility of the Common Stock.

(b) The Common Stock is listed on The Nasdaq Global Select Market under the ticker symbol "PNTR," and Pinnacle is not aware of any delisting proceedings, notices, or inquiries from The Nasdaq Stock Market LLC that would affect the listing status of the Common Stock.

(c) There are no stop transfer orders, restrictions, holds, freezes, or other impediments on Pinnacle's records that would prevent or delay the delivery of the Shares through DTC on the Closing Date, and no conditions exist on Pinnacle's records that would require the imposition of any restrictive legend or other notation on the Shares to be delivered.

(d) The total number of shares of Common Stock outstanding as of the date hereof is 120,000,000 shares, par value $0.001 per share, and the transfer of the Shares in the Offering will not result in any issuance of new shares of Common Stock, as this is a secondary offering of existing outstanding shares held by the Selling Stockholders. The delivery of the Shares as contemplated by this letter will not cause the total number of shares of Common Stock outstanding to increase or decrease.

The Company requests that Pinnacle provide such confirmation no later than 10:00 a.m. Eastern Time on October 17, 2023, or as soon as practicable prior to the commencement of settlement on the Closing Date.

5. Over-Allotment Option Shares

In the event that the Underwriters exercise their over-allotment option in whole or in part (on or before November 11, 2023, the expiration date of the option), the Company will provide Pinnacle with a supplemental direction letter (the "Supplemental Direction Letter") specifying: (i) the number of Over-Allotment Shares to be delivered; (ii) the allocation of such Over-Allotment Shares among the Selling Stockholders; (iii) the applicable closing date for the delivery of such Over-Allotment Shares (which, in the case of a full exercise, is expected to be November 16, 2023, or such other date as may be mutually agreed upon by the Selling Stockholders and the Underwriters); and (iv) the DTC delivery instructions for such Over-Allotment Shares, including the DTC participant account(s) to be credited.

Pinnacle is requested to be prepared to facilitate the delivery of up to 937,500 additional shares of Common Stock upon receipt of such Supplemental Direction Letter, in the same manner and in accordance with the same procedures as described in Section 3 above with respect to the base closing. The Company will endeavor to deliver the Supplemental Direction Letter to Pinnacle at least two (2) business days prior to the applicable closing date for the Over-Allotment Shares.

6. Representations and Acknowledgments

In connection with the instructions set forth herein, the Company represents and acknowledges to Pinnacle as follows:

(a) Valid Issuance. The Shares (including the Over-Allotment Shares, if and when delivered) are validly issued, fully paid, and non-assessable. No personal liability attaches to the ownership of the Shares under the laws of the State of Delaware or the certificate of incorporation or bylaws of the Company.

(b) Registration Under the Securities Act. The Shares are registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the Registration Statement on Form S-3 (File No. 333-274851), which was declared effective by the SEC on August 22, 2023, and remains effective as of the date hereof. The Prospectus Supplement, together with the base prospectus, has been filed with the SEC pursuant to Rule 424(b) of the Securities Act. To the knowledge of the Company, no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for that purpose have been initiated or threatened by the SEC.

(c) Authorization of Sale. The sale and delivery of the Shares by the Selling Stockholders have been duly authorized by all necessary corporate action on the part of the Company (to the extent such authorization is required) and by all necessary action on the part of the Selling Stockholders. The Underwriting Agreement has been duly executed and delivered by the Company and the Selling Stockholders and constitutes a valid and binding obligation of each party thereto.

(d) Waiver of Lock-Up Restrictions. The lock-up restrictions applicable to the Selling Stockholders under the lock-up agreements entered into by the Selling Stockholders in connection with the Company's initial public offering on April 17, 2023 (the "Lock-Up Agreements") have been waived with respect to the Shares (and the Over-Allotment Shares, if applicable), effective as of October 12, 2023, by all applicable lock-up parties, including Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co., each in their capacity as the underwriters for the Company's initial public offering. Accordingly, the transfer and delivery of the Shares as contemplated by this direction letter will not violate or breach any Lock-Up Agreement or any other contractual restriction on transfer applicable to the Selling Stockholders. Copies of the applicable lock-up waiver letters are available upon request.

The Company further acknowledges that Pinnacle is acting solely in its capacity as transfer agent and registrar for the Common Stock and is not acting as an underwriter, placement agent, dealer, or finder in connection with the Offering. Pinnacle shall have no obligation to independently verify the accuracy of any of the representations set forth herein or to make any independent determination regarding the legality or propriety of the transactions contemplated hereby.

7. Contact Information for Coordination

For questions or coordination regarding this direction letter and the settlement mechanics for the Offering, please contact the following individuals:

Company Contact: David Orenstein General Counsel & Corporate Secretary Penterra Pharmaceuticals Corp. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540 Telephone: (609) 555-4820

Email: dorenstein@penterrapharma.com

Issuer's Counsel: Audrey Zhou Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, NY 10006 Telephone: (212) 555-7300

Email: azhou@calderwoodharkness.com

Lead Book-Running Manager — Syndicate Desk: Angela Ferris Vice President, Syndicate Desk Ridgeline Securities LLC 383 Madison Avenue New York, NY 10017 Telephone: (212) 555-9140

Email: aferris@ridgelinesecurities.com

Pinnacle is requested to direct all communications regarding the settlement of the Shares to the contacts identified above and to promptly notify each of the foregoing individuals in the event of any issue, discrepancy, or delay that may affect the timely delivery of the Shares on the Closing Date.

8. Authorization and Indemnification

Pinnacle is hereby authorized and directed to rely upon this letter, and the instructions contained herein, in taking the actions described in this letter. Pinnacle shall be entitled to act in accordance with this letter without further inquiry or investigation, and without requiring any additional documentation, opinions, or authorizations, except as expressly provided herein.

The Company agrees to indemnify and hold harmless Pinnacle, and its officers, directors, employees, agents, and affiliates, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses) arising out of or relating to Pinnacle's good faith compliance with the instructions set forth in this direction letter, except to the extent that such losses, claims, damages, liabilities, costs, or expenses result from Pinnacle's own gross negligence, willful misconduct, or bad faith. This indemnification obligation shall survive the completion of the transactions contemplated by this letter and shall be in addition to, and not in limitation of, any indemnification obligations of the Company under the Transfer Agency Agreement.

This direction letter supersedes any prior instructions from the Company or any other party that may be inconsistent with the instructions contained herein with respect to the Shares and the transactions contemplated by this letter. In the event of any conflict between this letter and any prior instruction or direction, the terms of this letter shall control.

9. Governing Law

This direction letter shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles thereof.

We appreciate your prompt attention to this matter and your cooperation in facilitating the settlement of the Offering. Please do not hesitate to contact David Orenstein or any of the other individuals identified in Section 7 above if you have any questions or require any additional information.

Very truly yours,

PENTERRA PHARMACEUTICALS CORP.

By: ________

Name: David Orenstein

Title: General Counsel & Corporate Secretary

Signing on behalf of the Company, and in his capacity as attorney-in-fact for the Selling Stockholders pursuant to the Power of Attorney and Custody Agreement dated October 12, 2023

cc:

Dr. Elena Castellano Dr. Riccardo Castellano Dr. Marco Castellano Castellano Family Holdings LLC Jennifer Kwon, Calderwood & Harkness LLP Jonathan Pryce-Hall, Ridgeline Securities LLC Samuel Okonkwo, Broadmark Capital Inc. Margaret Hui, Caldwell, Pearce & Strauss LLP Patricia Velázquez, Whitfield & Garza LLP

Enclosures:

1. Copy of executed Power of Attorney and Custody Agreement dated October 12, 2023

2. Copy of Underwriting Agreement dated October 12, 2023 (relevant excerpts)

Selling Stockholder	Shares to Be Delivered at Base Closing
Dr. Elena Castellano	3,000,000
Dr. Riccardo Castellano	2,500,000
Dr. Marco Castellano	500,000
Castellano Family Holdings LLC	250,000
Total	6,250,000
Selling Stockholder	Maximum Over-Allotment Shares
Dr. Elena Castellano	450,000
Dr. Riccardo Castellano	375,000
Dr. Marco Castellano	75,000
Castellano Family Holdings LLC	37,500
Total Over-Allotment	937,500

PENTERRA PHARMACEUTICALS CORP. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540
October 16, 2023
Pinnacle Trust & Transfer Co.
Attention: Corporate Actions Department
1 Ashbury Asset Advisors Plaza, 30th Floor New York, NY 10004
Re: Direction Letter — Book-Entry Delivery of 6,250,000 Shares of Common Stock of Penterra Pharmaceuticals Corp. (CUSIP 70831X 10 5; Nasdaq: PNTR) in Connection with Registered Selling-Stockholder Secondary Offering
Reference is made to the appointment of Pinnacle Trust & Transfer Co. as transfer agent and registrar for the common stock, par value $0.001 per share, of Penterra Pharmaceuticals Corp., a Delaware corporation.
Ladies and Gentlemen:
Penterra Pharmaceuticals Corp. ("PPC" or the "Company") is writing to you in its capacity as the issuer of its common stock, par value $0.001 per share (the "Common Stock"). Pinnacle Trust & Transfer Co. ("Pinnacle" or the "Transfer Agent") serves as the duly appointed transfer agent and registrar for the Common Stock pursuant to that certain Transfer Agent and Registrar Agreement dated as of April 10, 2023, between the Company and Pinnacle, as amended from time to time (the "Transfer Agency Agreement").
The purpose of this letter is to provide direction and instruction to Pinnacle in connection with a registered selling-stockholder secondary offering (the "Offering") of 6,250,000 shares of Common Stock (the "Shares"). The Offering is being conducted pursuant to a prospectus supplement dated October 12, 2023 (the "Prospectus Supplement") to the base prospectus forming part of the Company's Registration Statement on Form S-3 (File No. 333-274851) (the "Registration Statement"), which was declared effective by the Securities and Exchange Commission (the "SEC") on August 22, 2023. The underwriters for the Offering are Ridgeline Securities LLC, as lead left book-running manager, Broadmark Capital Inc., as joint book-running manager, and Linden Groves & Co. and Harborview Partners LLC, as co-managers (collectively, the "Underwriters"), pursuant to that certain Underwriting Agreement dated October 12, 2023 (the "Underwriting Agreement"), by and among the Company, the Selling Stockholders (as defined below), and the Underwriters.
We respectfully request that you review this direction letter carefully and take the actions described herein in connection with the settlement of the Offering on the Closing Date (as defined below).
1. Background on the Offering
The selling stockholders in the Offering are as follows: Dr. Elena Castellano, Dr. Riccardo Castellano, Dr. Marco Castellano, and Castellano Family Holdings LLC (collectively, the "Selling Stockholders"). Each of the Selling Stockholders is a current stockholder of the Company and is the registered or beneficial holder of shares of Common Stock that were acquired prior to or in connection with the Company's initial public offering.
The Selling Stockholders are selling an aggregate of 6,250,000 shares of Common Stock at a public offering price of $41.60 per share, for aggregate gross proceeds of $260,000,000.00 (before deducting underwriting discounts and commissions and other offering expenses payable by the Selling Stockholders). The Company is not selling any shares of Common Stock in the Offering and will not receive any proceeds from the sale of the Shares by the Selling Stockholders.
In addition, the Selling Stockholders have granted the Underwriters a 30-day option (exercisable in whole or in part through November 11, 2023) to purchase up to an additional 937,500 shares of Common Stock (the "Over-Allotment Shares") on the same terms and conditions as set forth in the Underwriting Agreement, solely to cover over-allotments, if any.
Settlement of the base offering is scheduled for October 17, 2023 (T+3 from the date of pricing) (the "Closing Date"). Settlement is expected to occur through the facilities of The Depository Trust Company ("DTC") in accordance with DTC's standard settlement procedures, as further described in this letter.
2. Share Allocation Among Selling Stockholders
The following table sets forth the number of shares of Common Stock to be delivered by each Selling Stockholder at the base closing on the Closing Date:
In the event that the Underwriters exercise the over-allotment option in whole or in part, the Over-Allotment Shares would be allocated among the Selling Stockholders as set forth below (subject to a separate supplemental direction letter to be delivered to Pinnacle at the time of any such exercise, as further described in Section 5 of this letter):
The foregoing allocations of Over-Allotment Shares represent the maximum number of additional shares that may be purchased by the Underwriters from each Selling Stockholder upon a full exercise of the over-allotment option. In the event of a partial exercise, the allocation among Selling Stockholders will be specified in the supplemental direction letter delivered at that time.
3. Direction to Facilitate Book-Entry Delivery Through DTC
The Company hereby directs and authorizes Pinnacle, in its capacity as Transfer Agent and registrar for the Common Stock, to take all actions necessary and appropriate to facilitate the book-entry delivery of the 6,250,000 Shares through the facilities of DTC for settlement on the Closing Date of October 17, 2023. Without limiting the generality of the foregoing, the Company specifically instructs Pinnacle to take the following actions:
(a) Debit Selling Stockholder Accounts. Debit the respective accounts of each Selling Stockholder (or their respective custodial DTC participant accounts, as applicable) in the amounts specified in Section 2 above, such that the aggregate number of shares debited from the Selling Stockholders' accounts equals 6,250,000 shares of Common Stock. To the extent any Selling Stockholder holds shares in certificated form or through the direct registration system maintained by Pinnacle, Pinnacle is directed to convert such shares to book-entry form within the DTC system in advance of the Closing Date, as necessary to facilitate delivery.
(b) Credit Underwriter Account. Credit the DTC account of Ridgeline Securities LLC (DTC Participant Number 0421), as representative of the Underwriters, or such other DTC participant account or accounts as may be designated by Ridgeline Securities LLC in writing to Pinnacle prior to settlement, with 6,250,000 shares of Common Stock, in book-entry form, free of any legends, restrictive notations, or transfer restrictions, against payment of the aggregate purchase price in accordance with the terms of the Underwriting Agreement. Pinnacle shall ensure that the Shares are delivered free and clear of any stop transfer orders, restrictive legends, or other impediments to transfer.
(c) DWAC or Direct Registration System Delivery. Ensure that all Shares are delivered in good deliverable form through the DTC DWAC (Deposit/Withdrawal at Custodian) system or the DTC direct registration system, as applicable and as may be coordinated with Ridgeline Securities LLC and DTC. Pinnacle shall process any necessary DWAC instructions in a timely manner to ensure that settlement occurs on the Closing Date without delay.
(d) Coordination with DTC. Coordinate with DTC and all relevant DTC participants to ensure that settlement of the Shares occurs on October 17, 2023, in accordance with DTC's standard settlement procedures, including but not limited to DTC's same-day funds settlement system. Pinnacle shall respond promptly to any inquiries or requests from DTC or its participants in connection with the settlement of the Shares and shall take all commercially reasonable steps to resolve any issues that may arise in connection with the book-entry delivery process.
The Company further represents and confirms that David Orenstein, General Counsel and Corporate Secretary of the Company, has been appointed attorney-in-fact for the Selling Stockholders pursuant to a Power of Attorney and Custody Agreement dated October 12, 2023, a copy of which is enclosed herewith. Pursuant to such Power of Attorney and Custody Agreement, Mr. Orenstein is fully authorized to give, and is hereby giving, the instructions set forth in this letter on behalf of each of the Selling Stockholders, including the direction to debit each Selling Stockholder's account and to credit the Underwriters' account, as set forth above. Pinnacle is entitled to rely on the authority of Mr. Orenstein as attorney-in-fact for the Selling Stockholders without further inquiry or investigation.
4. Confirmation of DTC Eligibility
In connection with the foregoing, the Company requests that Pinnacle confirm, in writing or by electronic communication directed to the contacts identified in Section 7 below, each of the following:
(a) The Common Stock of the Company (CUSIP 70831X 10 5) is and remains eligible for book-entry delivery and settlement through the facilities of DTC, and there are no pending or threatened actions, proceedings, or inquiries by DTC that would reasonably be expected to adversely affect the DTC eligibility of the Common Stock.
(b) The Common Stock is listed on The Nasdaq Global Select Market under the ticker symbol "PNTR," and Pinnacle is not aware of any delisting proceedings, notices, or inquiries from The Nasdaq Stock Market LLC that would affect the listing status of the Common Stock.
(c) There are no stop transfer orders, restrictions, holds, freezes, or other impediments on Pinnacle's records that would prevent or delay the delivery of the Shares through DTC on the Closing Date, and no conditions exist on Pinnacle's records that would require the imposition of any restrictive legend or other notation on the Shares to be delivered.
(d) The total number of shares of Common Stock outstanding as of the date hereof is 120,000,000 shares, par value $0.001 per share, and the transfer of the Shares in the Offering will not result in any issuance of new shares of Common Stock, as this is a secondary offering of existing outstanding shares held by the Selling Stockholders. The delivery of the Shares as contemplated by this letter will not cause the total number of shares of Common Stock outstanding to increase or decrease.
The Company requests that Pinnacle provide such confirmation no later than 10:00 a.m. Eastern Time on October 17, 2023, or as soon as practicable prior to the commencement of settlement on the Closing Date.
5. Over-Allotment Option Shares
In the event that the Underwriters exercise their over-allotment option in whole or in part (on or before November 11, 2023, the expiration date of the option), the Company will provide Pinnacle with a supplemental direction letter (the "Supplemental Direction Letter") specifying: (i) the number of Over-Allotment Shares to be delivered; (ii) the allocation of such Over-Allotment Shares among the Selling Stockholders; (iii) the applicable closing date for the delivery of such Over-Allotment Shares (which, in the case of a full exercise, is expected to be November 16, 2023, or such other date as may be mutually agreed upon by the Selling Stockholders and the Underwriters); and (iv) the DTC delivery instructions for such Over-Allotment Shares, including the DTC participant account(s) to be credited.
Pinnacle is requested to be prepared to facilitate the delivery of up to 937,500 additional shares of Common Stock upon receipt of such Supplemental Direction Letter, in the same manner and in accordance with the same procedures as described in Section 3 above with respect to the base closing. The Company will endeavor to deliver the Supplemental Direction Letter to Pinnacle at least two (2) business days prior to the applicable closing date for the Over-Allotment Shares.
6. Representations and Acknowledgments
In connection with the instructions set forth herein, the Company represents and acknowledges to Pinnacle as follows:
(a) Valid Issuance. The Shares (including the Over-Allotment Shares, if and when delivered) are validly issued, fully paid, and non-assessable. No personal liability attaches to the ownership of the Shares under the laws of the State of Delaware or the certificate of incorporation or bylaws of the Company.
(b) Registration Under the Securities Act. The Shares are registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to the Registration Statement on Form S-3 (File No. 333-274851), which was declared effective by the SEC on August 22, 2023, and remains effective as of the date hereof. The Prospectus Supplement, together with the base prospectus, has been filed with the SEC pursuant to Rule 424(b) of the Securities Act. To the knowledge of the Company, no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for that purpose have been initiated or threatened by the SEC.
(c) Authorization of Sale. The sale and delivery of the Shares by the Selling Stockholders have been duly authorized by all necessary corporate action on the part of the Company (to the extent such authorization is required) and by all necessary action on the part of the Selling Stockholders. The Underwriting Agreement has been duly executed and delivered by the Company and the Selling Stockholders and constitutes a valid and binding obligation of each party thereto.
(d) Waiver of Lock-Up Restrictions. The lock-up restrictions applicable to the Selling Stockholders under the lock-up agreements entered into by the Selling Stockholders in connection with the Company's initial public offering on April 17, 2023 (the "Lock-Up Agreements") have been waived with respect to the Shares (and the Over-Allotment Shares, if applicable), effective as of October 12, 2023, by all applicable lock-up parties, including Ridgeline Securities LLC, Broadmark Capital Inc., and Morningstar Zanthor & Co., each in their capacity as the underwriters for the Company's initial public offering. Accordingly, the transfer and delivery of the Shares as contemplated by this direction letter will not violate or breach any Lock-Up Agreement or any other contractual restriction on transfer applicable to the Selling Stockholders. Copies of the applicable lock-up waiver letters are available upon request.
The Company further acknowledges that Pinnacle is acting solely in its capacity as transfer agent and registrar for the Common Stock and is not acting as an underwriter, placement agent, dealer, or finder in connection with the Offering. Pinnacle shall have no obligation to independently verify the accuracy of any of the representations set forth herein or to make any independent determination regarding the legality or propriety of the transactions contemplated hereby.
7. Contact Information for Coordination
For questions or coordination regarding this direction letter and the settlement mechanics for the Offering, please contact the following individuals:
Company Contact: David Orenstein General Counsel & Corporate Secretary Penterra Pharmaceuticals Corp. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540 Telephone: (609) 555-4820
Email: dorenstein@penterrapharma.com
Issuer's Counsel: Audrey Zhou Calderwood & Harkness LLP One Liberty Plaza, 52nd Floor New York, NY 10006 Telephone: (212) 555-7300
Email: azhou@calderwoodharkness.com
Lead Book-Running Manager — Syndicate Desk: Angela Ferris Vice President, Syndicate Desk Ridgeline Securities LLC 383 Madison Avenue New York, NY 10017 Telephone: (212) 555-9140
Email: aferris@ridgelinesecurities.com
Pinnacle is requested to direct all communications regarding the settlement of the Shares to the contacts identified above and to promptly notify each of the foregoing individuals in the event of any issue, discrepancy, or delay that may affect the timely delivery of the Shares on the Closing Date.
8. Authorization and Indemnification
Pinnacle is hereby authorized and directed to rely upon this letter, and the instructions contained herein, in taking the actions described in this letter. Pinnacle shall be entitled to act in accordance with this letter without further inquiry or investigation, and without requiring any additional documentation, opinions, or authorizations, except as expressly provided herein.
The Company agrees to indemnify and hold harmless Pinnacle, and its officers, directors, employees, agents, and affiliates, from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses) arising out of or relating to Pinnacle's good faith compliance with the instructions set forth in this direction letter, except to the extent that such losses, claims, damages, liabilities, costs, or expenses result from Pinnacle's own gross negligence, willful misconduct, or bad faith. This indemnification obligation shall survive the completion of the transactions contemplated by this letter and shall be in addition to, and not in limitation of, any indemnification obligations of the Company under the Transfer Agency Agreement.
This direction letter supersedes any prior instructions from the Company or any other party that may be inconsistent with the instructions contained herein with respect to the Shares and the transactions contemplated by this letter. In the event of any conflict between this letter and any prior instruction or direction, the terms of this letter shall control.
9. Governing Law
This direction letter shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles thereof.
We appreciate your prompt attention to this matter and your cooperation in facilitating the settlement of the Offering. Please do not hesitate to contact David Orenstein or any of the other individuals identified in Section 7 above if you have any questions or require any additional information.
Very truly yours,
PENTERRA PHARMACEUTICALS CORP.
By: ________
Name: David Orenstein
Title: General Counsel & Corporate Secretary
Signing on behalf of the Company, and in his capacity as attorney-in-fact for the Selling Stockholders pursuant to the Power of Attorney and Custody Agreement dated October 12, 2023
cc:
Dr. Elena Castellano Dr. Riccardo Castellano Dr. Marco Castellano Castellano Family Holdings LLC Jennifer Kwon, Calderwood & Harkness LLP Jonathan Pryce-Hall, Ridgeline Securities LLC Samuel Okonkwo, Broadmark Capital Inc. Margaret Hui, Caldwell, Pearce & Strauss LLP Patricia Velázquez, Whitfield & Garza LLP
Enclosures:
1. Copy of executed Power of Attorney and Custody Agreement dated October 12, 2023
2. Copy of Underwriting Agreement dated October 12, 2023 (relevant excerpts)
Selling Stockholder | Shares to Be Delivered at Base Closing
Dr. Elena Castellano | 3,000,000
Dr. Riccardo Castellano | 2,500,000
Dr. Marco Castellano | 500,000
Castellano Family Holdings LLC | 250,000
Total | 6,250,000
Selling Stockholder | Maximum Over-Allotment Shares
Dr. Elena Castellano | 450,000
Dr. Riccardo Castellano | 375,000
Dr. Marco Castellano | 75,000
Castellano Family Holdings LLC | 37,500
Total Over-Allotment | 937,500

PENTERRA PHARMACEUTICALS CORP. 400 Meridian Parkway, Suite 1200 Princeton, NJ 08540

PENTERRA PHARMACEUTICALS CORP.

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