Material Agreement Form 8 K

Item 1.01. Entry into a Material Definitive Agreement.

On September 16, 2024, Tenon Medical, Inc. (the "Company") entered into a warrant exercise inducement offer letter agreement (the "Inducement Letter") with a certain holder (the "Holder") of outstanding Common Stock purchase warrants exercisable for up to an aggregate of 1,222,850 shares (the "Existing Warrants") of the Company's common stock, par value $0.001 per share (the "Common Stock"), which Existing Warrants were issued by the Company on September 16, 2024, and are exercisable at an exercise price of $3.55 per share.

Pursuant to the Inducement Letter, the Holder agreed to exercise the Existing Warrants for cash at the exercise price of $3.55 per share in consideration for the Company's agreement to issue, for payment of $0.125 per New Warrant, (i) new unregistered five-year warrants (the "Series A Warrants") to purchase up to an aggregate of 1,222,850 shares of Common Stock at an exercise price of $4.28 per share and (ii) new unregistered three-year warrants (the "Series B Warrants," and together with the Series A Warrants, the "New Warrants") to purchase up to an aggregate of 1,222,850 shares of Common Stock at an exercise price of $4.28 per share (the "Inducement Transaction"). The Series A Warrants will be exercisable five years from effectiveness of the Resale Registration Statement, and the Series B Warrants will be exercisable three years from effectiveness of the Resale Registration Statement.

The Company entered into a financial advisory agreement (the "Financial Advisory Agreement") with A.G.P./Alliance Global Partners ("AGP") to act as its financial advisor in connection with the transactions summarized above. Pursuant to the Financial Advisory Agreement, the Company will pay AGP a cash fee of 7% of the aggregate gross proceeds. Additionally, the Company agreed to reimburse AGP for its documented accountable legal expenses.

If all of the Existing Warrants are exercised in full, the Company will receive aggregate gross proceeds of approximately $4.6 million (the "Warrant Inducement"). The Company intends to use the net proceeds for working capital and general corporate purposes.

The Company has agreed to file a registration statement on Form S-3 (or other appropriate form, including on Form S-1, if it is not eligible to utilize Form S-3) providing for the resale of the shares of Common Stock issuable upon the exercise of the New Warrants (the "Resale Registration Statement") within thirty (30) calendar days following the date of the Inducement Letter, and to use commercially reasonable efforts to cause the Resale Registration Statement to become effective within sixty (60) calendar days from the date of the Inducement Letter (or within 90 calendar days in case of "full review" of the Resale Registration Statement by the SEC). Pursuant to the Inducement Letter, the Company agreed not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any Common Stock or Common Stock equivalents or file any registration statement or any amendment or supplement to any existing registration statement, subject to certain exceptions, for a period of sixty (60) calendar days after the effectiveness of the Resale Registration Statement. Furthermore, the Company is also prohibited from entering into any agreement to issue Common Stock or Common Stock equivalents involving a Variable Rate Transaction (as defined in the Inducement Letter), subject to certain exceptions, for a six-month period commencing on September 16, 2024.

The Inducement Letter, Financial Advisory Agreement, and forms of Series A Warrant and Series B Warrant are attached as Exhibits 10.1, 10.2, 4.1, and 4.2 respectively. The description of the terms of the Inducement Letter and the Inducement Warrants is not intended to be complete and is qualified in its entirety by reference to such exhibits. The Inducement Letter contains customary representations, warranties and covenants by the Company which were made only for the purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.