UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934
Date
of report (Date of earliest event reported): September 18, 2014
Aetrium
Incorporated
(Exact Name of Registrant
as Specified in Its Charter)
Minnesota |
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0-22166 |
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41-1439182 |
(State or other Jurisdiction of Incorporation) |
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(Commission File Number) |
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(IRS Employer Identification
No.) |
2350
Helen Street, North St. Paul, Minnesota |
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55109 |
(Address of Principal
Executive Offices) |
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(Zip Code) |
Registrant’s telephone
number, including area code: (651) 770-2000
N/A |
(Former name or former
address if changed since last report) |
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the follow provisions:
[ ] Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. | Entry into a Material
Definitive Agreement. |
KBS Note Extension
On September 18, 2014,
KBS Builders, Inc. (“KBS Builders”), a wholly-owned subsidiary of Aetrium Incorporated (the “Company”),
entered into a letter agreement with KBS Building Systems, Inc. (“KBS Building Systems”) pursuant to which the parties
agreed to amend an unsecured promissory note, dated April 2, 2014, made by KBS Builders for the benefit of KBS Building Systems
in the original principal amount of $5.5 million (the “KBS Note”), to extend the maturity date thereunder from October
1, 2014 to December 1, 2014. All of the other terms of the KBS Note remain the same.
The KBS Note was issued
as partial consideration for the acquisition by KBS Builders of assets related to the business of manufacturing, selling, and
distributing modular housing units for residential and commercial use, and the original terms thereof are described in detail
in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 4, 2014.
Lone Star Financing
On September 19, 2014,
the Company entered into a Securities Purchase Agreement (the “LSV Purchase Agreement”) with Lone Star Value Co-Invest
I, LP (“LSV Co-Invest I”) pursuant to which LSV Co-Invest I purchased, for $2.0 million in cash, an unsecured promissory
note made by the Company in the principal amount of $2.0 million (the “LSV Note”), bearing interest at 10.0% per annum,
with interest payable semiannually and any unpaid principal and interest due on April 1, 2019. The Company may prepay the LSV
Note at any time after a specified amount of advance notice to LSV Co-Invest I.
The LSV Note provides
for customary events of default, the occurrence of any of which may result in the principal and unpaid interest then outstanding
becoming immediately due and payable.
The foregoing descriptions
of the LSV Purchase Agreement and the LSV Note are not complete and are qualified in their entirety by reference to the full text
of such documents, which are filed herewith as Exhibit 10.1 and Exhibit 4.1, respectively, and are incorporated
herein by reference.
LSV Co-Invest I also holds
a promissory note of the Company, dated July 21, 2014, in the original principal amount of $2,500,000. Additionally, Lone Star
Value Investors, LP (“LSVI”), an affiliate of LSV Co-Invest I, owns 60,588 shares of the Company’s common stock,
or approximately 5.6% of the shares outstanding, and holds a promissory note of the Company, dated April 1, 2014, in the original
principal amount of $6,000,000, and a convertible promissory note of the Company, dated April 1, 2014, in the original principal
amount of $500,000, convertible into shares of the Company’s common stock. Jeffrey E. Eberwein, the Company’s Chairman
of the Board, is the founder and Chief Executive Officer of Lone Star Value Management, LLC, the investment manager of LSVI, and
is the manager of Lone Star Value Investors GP, LLC, the general partner of LSVI and LSV Co-Invest I.
The Company’s entry
into the LSV Purchase Agreement was approved by a Special Committee of the Company’s Board of Directors consisting solely
of independent directors.
Item 2.03. | Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth
in Item 1.01 regarding the KBS Note and the LSV Note is incorporated into this Item 2.03 by reference.
Item 9.01. | Financial Statements
and Exhibits. |
Exhibit No. |
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Description |
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4.1 |
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Promissory Note, dated
September 19, 2014. |
10.1 |
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Securities Purchase
Agreement, dated September 19, 2014, by and between Aetrium Incorporated and Lone Star Value Co-Invest I, LP. |
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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Aetrium
Incorporated |
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Dated: September
22, 2014 |
By: |
/s/
Paul H. Askegaard |
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Name: |
Paul H. Askegaard |
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Title: |
Chief Financial Officer |
Exhibit
Index
Exhibit No. |
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Description |
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4.1 |
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Promissory Note, dated
September 19, 2014. |
10.1 |
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Securities Purchase
Agreement, dated September 19, 2014, by and between Aetrium Incorporated and Lone Star Value Co-Invest I, LP. |
Exhibit 4.1
THIS
NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR UNDER ANY STATE SECURITIES LAW
AND THIS NOTE MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS THE DEBTOR RECEIVES AN OPINION OF COUNSEL, SATISFACTORY
TO THE DEBTOR, THAT SUCH REGISTRATION IS NOT REQUIRED.
Aetrium
Incorporated
PROMISSORY
NOTE
$2,000,000.00 |
September
19, 2014 |
FOR
VALUE RECEIVED, Aetrium Incorporated, a Minnesota corporation (the “Debtor”),
promises to pay to the order of Lone Star Value Co-Invest I, LP (the “Holder”),
or its registered assigns, the principal amount of TWO MILLION DOLLARS ($2,000,000.00), in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the payment of public or private debts, together with interest
as set forth herein.
1. Payment
of Interest and Principal. All unpaid principal, together with any then accrued and unpaid interest and any other amounts
payable hereunder, shall be due and payable on April 1, 2019 (the “Maturity Date”). If any payment hereunder
becomes due and payable on a Saturday, Sunday or legal holiday under the laws of the United States of America or the State of
Minnesota, or both, the due date thereof shall be extended to the next business day and interest shall be payable for any principal
so extended for the period of such extension. Payments of principal and interest are to be made at the address provided herein
for the Holder (or at such other place as the Holder shall have notified the Debtor in writing at least five (5) days before such
payment is due) or by wire transfer pursuant to the Holder’s written instructions.
2. Interest. (a)
Interest shall accrue on the unpaid principal balance of this Note at the rate of ten percent (10.0%) per annum, and shall
be payable semiannually in cash on the third business day of each January and July in respect of the immediately preceding
semi-annual period. Interest shall be calculated from and include the date hereof and shall be calculated on an
actual/360-day basis.
(b) Notwithstanding
anything to the contrary contained herein, in no event shall this or any other provision herein permit the collection of any interest
which would be usurious under applicable law. If under any circumstances, whether by reason of advancement or acceleration of
the maturity of the unpaid principal balance hereof or otherwise, the aggregate amounts paid under this Note shall include amounts
which by law are deemed interest and which would exceed the maximum rate permitted by law, the Debtor stipulates that payment
and collection of such excess amounts shall have been and will be deemed to have been the result of a mistake on the part of both
the Holder and the Debtor, and the Holder shall promptly credit such excess (only to the extent such payments are in excess of
the maximum rate) against the unpaid principal balance hereof and any portion of such excess payments not capable of being so
credited shall be refunded to the Debtor.
3. Prepayment.
The Debtor shall be entitled to prepay the principal amount of this Note (in whole or in part) together with all interest under
this Note accrued and unpaid at the date of prepayment at any time without penalty or premium upon five (5) days prior written
notice to the Holder. The Debtor shall be obligated to effect such prepayment within three (3) days after the end of such notice
period.
4. Events
of Default. (a) Acceleration. Upon the occurrence of any of the following events (herein called “Events of
Default”):
(i) The
Debtor shall fail to make full and timely payment of principal of or interest on this Note when due and such failure continues
for a period of five (5) consecutive days;
(ii) (A)
The Debtor or any of its material subsidiaries shall commence any proceeding or other action relating to it in bankruptcy or seek
reorganization, arrangement, readjustment of its debts, receivership, dissolution, liquidation, winding-up, composition or any
other relief under any bankruptcy law, or under any other insolvency, reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or any other similar act or law, of any jurisdiction, domestic or foreign, now or hereafter existing; (B)
the Debtor or any of its material subsidiaries shall admit the material allegations of any petition or pleading in connection
with any such proceeding; (C) the Debtor or any of its material subsidiaries shall apply for, or consent or acquiesce to, the
appointment of a receiver, conservator, trustee or similar officer for it or for all or a substantial part of its property; or
(D) the Debtor or any of its material subsidiaries shall make a general assignment for the benefit of creditors;
(iii) (A)
The commencement of any proceedings or the taking of any other action against the Debtor or any of its material subsidiaries in
bankruptcy or seeking reorganization, arrangement, readjustment of its debts, liquidation, dissolution, arrangement, composition,
or any other relief under any bankruptcy law or any other similar act or law of any jurisdiction, domestic or foreign, now or
hereafter existing; (B) the appointment of a receiver, conservator, trustee or similar officer for the Debtor or any of its material
subsidiaries for any of its property; or (C) the issuance of a warrant of attachment, execution or similar process against any
of the property of the Debtor or any of its material subsidiaries, and the continuance of any such events for sixty (60) days
undismissed, unbonded or undischarged;
(iv) The
Debtor breaches any of its representations and warranties made under that certain Securities Purchase Agreement, dated as of the
date hereof (the “Purchase Agreement”), by and between the Debtor and the Holder;
(v) The
Debtor shall fail to comply with any of its covenants or obligations under this Note (other than such failure described subsection
(i) above) or the Purchase Agreement, which failure shall continue uncured for thirty (30) calendar days after notice thereof
to the Debtor; or
(vi) The
Debtor shall, directly or indirectly, in one or more related transactions, (A) consolidate or merge with or into (whether or not
Debtor is the surviving corporation) another person, (B) sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of Debtor to another person, (C) allow another person to make a purchase, tender or exchange offer
that is accepted by the holders of more than 50% of the outstanding shares of the Debtor’s common stock, par value $0.001
per share (the “Common Stock”) (not including any shares of Common Stock held by the person or persons making
or party to, or associated or affiliated with the persons making or party to, such purchase, tender or exchange offer), or (D)
consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization
or spin-off) with another person whereby such other person acquires more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated
with the other persons making or party to, such stock purchase agreement or other business combination);
then,
and in any such event, the Holder, at the Holder’s option and without written notice to the Debtor, may declare the entire
principal amount of this Note then outstanding together with accrued unpaid interest thereon immediately due and payable, and
the same shall forthwith become immediately due and payable without presentment, demand, protest, or other notice of any kind,
all of which are expressly waived. The Events of Default listed herein are solely for the purpose of protecting the interests
of the Holder of this Note. If this Note is not paid in full upon acceleration, as required above, interest shall accrue on the
outstanding principal of and interest on this Note from the date of the Event of Default up to and including the date of payment
at a rate equal to the lesser of twelve percent (12.0%) per annum compounded on the third Business Day of each January and July
or the maximum interest rate permitted by applicable law.
(b) Non-Waiver
and Other Remedies. No course of dealing or delay on the part of the Holder of this Note in exercising any right hereunder
shall operate as a waiver or otherwise prejudice the right of the Holder of this Note. No remedy conferred in this Note or the
Purchase Agreement is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy conferred herein or now or hereafter existing at law or equity or by statute or otherwise.
(c) Collection
Costs; Attorney’s Fees. In the case of an Event of Default, if this Note is turned over to an attorney for collection,
the Debtor agrees to pay all reasonable costs of collection, including reasonable attorney’s fees and expenses and all out-of-pocket
expenses incurred by the Holder in connection with such collection efforts.
5. Cancellation.
Upon full satisfaction of the Debtor’s obligations hereunder, the Holder shall promptly deliver or cause to be delivered
to the Debtor this Note for cancellation.
6. Amendment;
Waiver. This Note may not be amended or modified or the provisions hereof waived (either generally or in a particular instance
and either retroactively or prospectively) without the prior written consent of the party against whom such amendment, modification,
or waiver is sought to be enforced. All of the terms and provisions of this Note shall be applicable to and binding upon each
and every maker, Holder, endorser, surety, guarantor and all other persons who are or may become liable for the payment hereof
and their respective successors and assigns.
7. Lost
Documents. Upon receipt by the Debtor of evidence satisfactory to it of the loss, theft, destruction or mutilation of this
Note or any note exchanged for it, and (in the case of loss, theft or destruction) of indemnity reasonably satisfactory to it,
and upon surrender and cancellation of such note, if mutilated, the Debtor will make and deliver in lieu of such note a new note
of like tenor and unpaid principal amount and dated as of the original date of the original note.
8. Miscellaneous.
(a) Severability.
In case any one or more of the provisions contained in this Note should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired
thereby.
(b) Notices
and Addresses. All notices, offers, acceptances and any other acts under this Note (except payment) shall be in writing, and
shall be sufficiently given if delivered to the addressee in person, by FedEx or similar receipted delivery, by facsimile delivery
or, if mailed, postage prepaid, by certified mail, return receipt requested, as follows:
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To
Holder: |
Lone Star Value Co-Invest I, LP
53 Forest Avenue, 1st Floor
Old Greenwich, Connecticut 06870
Fax: (203) 990-0727 |
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To
the Debtor: |
Aetrium Incorporated
2350 Helen Street
North St. Paul, Minnesota 55109
Fax: (651) 770-7975 |
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With
a copy to (which shall not constitute notice): |
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Olshan
Frome Wolosky LLP
Park Avenue Tower
65 East 55th Street
New York, New York 10022
Attn: Adam Finerman, Esq.
Fax: (212) 451-2222 |
or
to such other address as any of them, by notice to the others may designate from time to time.
(c) Governing
Law. This Note and any dispute, disagreement, or issue of construction or interpretation arising hereunder, whether relating
to its execution, its validity, the obligations provided therein or performance, shall be governed and interpreted according to
the law of the State of Minnesota, without regard to principals of conflicts of law.
(d) Binding
Effect; Assignment. This Note and the various rights and obligations arising hereunder shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted assigns. The Debtor may not delegate, transfer or
assign any rights or obligations hereunder without the Holder’s prior written consent. The Holder may not assign or delegate
all or any portion of the rights of the Holder hereunder without the consent of the Debtor (such consent not to be unreasonably
withheld, conditioned or delayed), except that no such consent shall be required for an assignment or delegation to an affiliate
of the Holder or while an Event of Default has occurred and is continuing. Any transfer or assignment of any of the rights, interests
or obligations hereunder in violation of the terms hereof shall be void and of no force or effect.
(e) Jurisdiction
and Venue. Each of the Holder and the Debtor (i) agree that any legal suit, action or proceeding arising out of or relating
to this Note shall be instituted exclusively in the courts of Ramsey County in the State of Minnesota, (ii) waive any objection
to the venue of any such suit, action or proceeding and the right to assert that such forum is not a convenient forum, and (iii)
irrevocably consent to the jurisdiction of the courts of Ramsey County in the State of Minnesota in any such suit, action or proceeding,
and further agree to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding
and agree that service of process upon them mailed by certified mail to their respective addresses shall be deemed in every respect
effective service of process upon them in any such suit, action or proceeding.
(f) Section
Headings. Section headings herein have been inserted for reference only and shall not be deemed to limit or otherwise affect,
in any manner, or be deemed to interpret in whole or in part any of the terms or provisions of this Note.
(g) Waiver
of Presentment. Debtor and each surety, endorser and guarantor hereof hereby waive all demands for payment, presentations
for payment, notices of intention to accelerate maturity, notices of acceleration of maturity, demand for payment, protest, notice
of protest and notice of dishonor, to the extent permitted by law, except for those notices expressly provided for herein. No
extension of time for payment of this Note or any installment hereof, no alteration, amendment or waiver of any provision of this
Note shall release, modify, amend, waive, extend, change, discharge, terminate or affect the liability of Debtor under this Note.
(h) Forbearance.
Any forbearance by the holder of this Note in exercising any right or remedy hereunder or under any other agreement or instrument
in connection with this Note or otherwise afforded by applicable law shall not be a waiver or preclude the exercise of any right
or remedy by the holder of this Note. The acceptance by the holder of this Note of payment of any sum payable hereunder after
the due date of such payment shall not be a waiver of the right of the holder of this Note to require prompt payment when due
of all other sums payable hereunder or to declare a default for failure to make prompt payment.
(i) Acceleration.
At the election of the holder of this Note, all payments due hereunder may be accelerated, and this Note shall become immediately
due and payable without notice or demand, upon the occurrence of an Event of Default under this Note, which default is not cured
within any grace period expressly provided therefor. In addition to the rights and remedies provided herein, the holder of this
Note may exercise any other right or remedy in any other document, instrument or agreement evidencing or otherwise relating to
the indebtedness evidenced hereby in accordance with the terms thereof, or under applicable law, all of which rights and remedies
shall be cumulative.
(j) Construction.
This Note shall be construed without any regard to any presumption or rule requiring construction against the party causing such
instrument or any portion thereof to be drafted.
[SIGNATURE
PAGE OF Aetrium Incorporated PROMISSORY NOTE]
IN
WITNESS WHEREOF, the Debtor has caused this Note to be made and issued in its name on the date specified above.
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Aetrium Incorporated |
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By: |
/s/ Daniel M. Koch |
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Name: |
Daniel M. Koch |
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Title: |
President and Chief Executive Officer |
Exhibit
10.1
Securities
PURCHASE AGREEMENT
SECURITIES
PURCHASE AGREEMENT (this “Agreement”), dated as of September 19, 2014, by and between Aetrium Incorporated,
a Minnesota corporation (the “Company”), and Lone Star Value Co-Invest I, LP (“Purchaser”).
WITNESSETH:
WHEREAS,
Purchaser holds a promissory note of the Company, dated July 21, 2014, in the original principal amount of $2,500,000, and Lone
Star Value Investors, LP (“Lone Star”), an affiliate of Purchaser, owns 60,588 shares of the Company’s
common stock, par value $0.001 per share (“Common Stock”), and holds a promissory note of the Company, dated
April 1, 2014, in the original principal amount of $6,000,000, and a convertible promissory note of the Company, dated April 1,
2014, in the original principal amount of $500,000, convertible into shares of Common Stock;
WHEREAS,
Jeffrey E. Eberwein, the Chairman of the Company’s Board of Directors, serves as the manager of Lone Star Value Investors
GP, LLC, the general partner of Lone Star and Purchaser, and as the sole member of Lone Star Value Management, LLC, which serves
as the investment manager of Lone Star, and therefore may be deemed to beneficially own the securities held by Lone Star and Purchaser;
and
WHEREAS,
subject to the terms and conditions of this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to issue and sell to Purchaser, and Purchaser desires to purchase from
the Company, a Promissory Note in the original principal amount of $2,000,000 (the “Note”).
NOW
THEREFORE, in consideration of the mutual promises and representations, warranties, covenants and agreements set forth herein,
the parties hereto, intending to be legally bound, hereby agree as follows:
1.
Purchase and Sale of Securities.
1.1 Purchase
and Sale. On the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined below), the Company
will sell and Purchaser will purchase the Note. The terms and provisions of the Note are more fully set forth in the form of Promissory
Note attached hereto as Exhibit A. The purchase price to be paid by Purchaser to the Company to acquire the Note shall
be $2,000,000 (the “Purchase Price”). At the Closing, Purchaser shall pay the Purchase Price to the Company
by wire transfer of immediately available funds to an account designated by the Company and the Company shall deliver to Purchaser
an executed Promissory Note.
1.2 Closing.
On the terms and subject to the conditions set forth in this Agreement, the closing of the transactions contemplated by this Agreement
(the “Closing”) shall take place remotely via the exchange of electronic copies of documents, and shall be
deemed to have taken place simultaneously with the execution and delivery of this Agreement and the satisfaction of the obligations
of the parties under Section 1.1.
2. Representations
and Warranties of the Company. The Company represents and warrants to Purchaser as follows:
2.1 Corporate
Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State
of Minnesota, and has all requisite corporate power and authority to own, operate and lease its properties and to carry on its
business as and in the places where such properties are now owned, operated and leased or such business is now being conducted.
2.2 Authorization.
The Company has the requisite power and authority to enter into and perform this Agreement and any other agreements, documents
and instruments delivered together with this Agreement or in connection herewith (the “Transaction Documents”)
and to perform its obligations hereunder and thereunder. The execution, delivery and performance of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the Company’s Board of Directors (the “Board”),
any committee of the Board, or the Company’s stockholders is required. The Transaction Documents have been duly authorized,
executed and delivered by the Company and constitute valid and binding obligations of the Company, enforceable against the Company
in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles
of equity.
2.3 Approvals
and Consents. The Company is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction
Documents or to issue and sell the Note in accordance with the terms hereof, provided that for purposes of the representation
made in this sentence, the Company is assuming and relying upon the accuracy of the relevant representations and agreements of
Purchaser herein.
2.4 Due
and Valid Issuance. The Note, when issued and fully paid for in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable.
2.5 Material
Compliance with Applicable Laws. Neither the Company nor any of its subsidiaries is in material violation of, and neither
the execution, delivery nor performance of any of the Transaction Documents has or will result in a violation of, any federal,
state, local or foreign law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries,
except that as of the date hereof the Company has not filed with the Securities and Exchange Commission the financial statements
required by Item 9.01(a) and (b) of Form 8-K in connection with the Company’s acquisition of substantially all of the assets
of KBS Building Systems, Inc. and its related entities on April 2, 2014.
2.6 Finders.
The Company has not retained any finder, broker, agent, financial advisor or other intermediary in connection with the transactions
contemplated by this Agreement. The Company agrees to indemnify and hold harmless Purchaser, its officers, directors, affiliates,
subsidiaries, employees and agents (as applicable) from liability for any compensation to any such intermediary retained by the
Company and the fees and expenses of defending against such liability or alleged liability.
2.7 Survival.
The foregoing representations, warranties and agreements shall survive the execution of this Agreement indefinitely.
3. Representations
and Warranties of Purchaser. Purchaser hereby represents and warrants to and agrees with the Company as follows:
3.1 Organization
of Purchaser. Purchaser is a limited partnership duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite entity power to own its assets and to carry on its business.
3.2 Authorization.
Purchaser has the requisite power and authority to enter into and perform the Transaction Documents and to purchase the Note being
sold to it hereunder. The execution, delivery and performance of the Transaction Documents by Purchaser and the consummation by
it of the transactions contemplated hereby and thereby have been duly authorized by all necessary entity action, and no further
consent or authorization of Purchaser or its partners or members, as the case may be, is required. The Transaction Documents have
been duly authorized, executed and delivered by Purchaser and constitute, or shall constitute when executed and delivered, valid
and binding obligations of Purchaser enforceable against Purchaser in accordance with the terms thereof, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting
creditors’ rights generally and to general principles of equity.
3.3 Approvals
and Consents. Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under the Transaction
Documents or to purchase the Note in accordance with the terms hereof, provided that for purposes of the representation made in
this sentence, Purchaser is assuming and relying upon the accuracy of the relevant representations and agreements of the Company
herein.
3.4 Investment.
Purchaser is acquiring the Note for its own account as principal, not as a nominee or agent, for investment purposes only, and
not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part and no other person or entity
has a direct or indirect beneficial interest in the Note. Purchaser does not have any contract, undertaking, agreement or arrangement
with any person or entity to sell, transfer or grant participations to such person or entity or to any third person or entity
with respect to the Note.
3.5 Exemption
From Registration. Purchaser acknowledges that the sale of the Note is intended to be exempt from registration under the Securities
Act by virtue of Section 4(2) of the Securities Act. In furtherance thereof, Purchaser represents and warrants to the Company
as follows:
(i) Purchaser
realizes that the basis for the exemption from registration under the Securities Act may not be present if, notwithstanding any
representation and/or warranty to the contrary contained in this Agreement, Purchaser has in mind merely acquiring the Note for
a fixed or determinable period of time;
(ii) Purchaser
has the financial ability to bear the economic risk of its investment in the Note, has adequate means for providing for its current
needs and contingencies and has no need for liquidity with respect to its investment in the Company; and
(iii) Purchaser
has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an
investment in the Note.
3.6 Accredited
Investor. Purchaser is an “accredited investor,” as that term is defined in Rule 501 of Regulation D.
3.7 Available
Information. Purchaser:
(i) Has
been furnished by the Company in connection with the sale of the Note with all information regarding the Company, the terms and
conditions of the sale of the Note and any additional information that Purchaser, its representative, attorney and/or accountant
has requested a reasonable time prior to the date hereof;
(ii) Has
been provided an opportunity for a reasonable time prior to the date hereof to obtain additional information concerning the sale
of the Note, the Company and all other information to the extent the Company possesses such information or can acquire it without
unreasonable effort or expense;
(iii) Has
been given the opportunity for a reasonable time prior to the date hereof to ask questions of, and receive answers from, the Company
or its representatives concerning the terms and conditions of the sale of the Note and other matters pertaining to an investment
in the Note, or that which was otherwise provided in order for them to evaluate the merits and risks of a purchase of the Note
to the extent the Company possesses such information or can acquire it without unreasonable effort or expense;
(iv) Has
not been furnished with any oral representation or oral information in connection with the sale of the Note; and
(v) Has
determined that the Note is a suitable investment for Purchaser and that at this time Purchaser could bear a complete loss of
its investment in the Note.
3.8 Purchaser
Representative. Purchaser is not relying on any statements or representations made by the Company or its affiliates or any
purchaser representative with respect to economic considerations involved in an investment in the Note.
3.9 Transfer
Restrictions. Purchaser shall not sell or otherwise transfer the Note without registration under the Securities Act or subject
to an exemption therefrom, and Purchaser fully understands and agrees that Purchaser must bear the economic risk of Purchaser’s
purchase because, among other reasons, the Note has not been registered under the Securities Act or under the securities laws
of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered
under the Securities Act and under the applicable securities laws of such states, or unless exemptions from such registration
requirements are available. In particular, Purchaser is aware that the Note falls within the definition of “restricted securities,”
as such term is defined in Rule 144 promulgated under the Securities Act. Purchaser further understands that sale or transfer
of the Note is further restricted by state securities laws and the provisions of this Agreement.
3.10 Entire
Agreement. No representation or warranty has been made to Purchaser by the Company, or any officer, director, employee, agent,
affiliate or subsidiary of the Company other than those contained herein and, in purchasing the Note, Purchaser is not relying
upon any representations other than those contained herein.
3.11 Purchaser
Information. Any information that Purchaser has previously furnished, or is now furnishing to the Company with respect to
Purchaser’s financial position and business experience is correct and complete as of the date of this Agreement and, if
there should be any material change in such information, Purchaser will immediately furnish revised or corrected information to
the Company.
3.12 Legends.
Purchaser understands and acknowledges that that the Note may be endorsed with substantially the following legend:
(i) “THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR UNDER ANY STATE SECURITIES
LAW AND THESE SECURITIES MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
WITH RESPECT THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.”; and
(ii) any
other legends required by applicable state or federal securities laws or any applicable state laws regulating the Company’s
business.
3.13 Non-Marketable
Investments. Purchaser’s overall commitment to investments that are not readily marketable is not disproportionate to
Purchaser’s net worth, and an investment in the Note will not cause such overall commitment to become excessive.
3.14 Finders.
Purchaser has not retained any finder, broker, agent, financial advisor or other intermediary in connection with the transactions
contemplated by this Agreement and agrees to indemnify and hold harmless the Company, its officers, directors, affiliates, subsidiaries,
employees and agents from liability for any compensation to any such intermediary retained by Purchaser and the fees and expenses
of defending against such liability or alleged liability.
3.15 Survival.
The foregoing representations, warranties and agreements shall survive the execution of this Agreement indefinitely.
4. Covenants.
4.1 Use
of Proceeds. The proceeds from the purchase and sale of the Note shall be used by the Company for general working capital
purposes.
4.2 Indemnification
by the Company. The Company hereby agrees to reimburse, defend, indemnify and hold harmless Purchaser and its affiliates and
its and their respective directors, officers, employees, stockholders, members, managers, partners, agents, attorneys, representatives,
successors and permitted assigns (the “Purchaser Indemnified Parties”) from and against any and all losses,
damages, actions, proceedings, causes of action, liabilities, claims, encumbrances, penalties, demands, assessments, settlements,
judgments, costs and expenses, including court costs and reasonable attorneys’ fees and disbursements, incurred by the Purchaser
Indemnified Parties relating to, based upon, resulting from or arising out of (a) any inaccuracy or breach of any of the representations
or warranties made by the Company in this Agreement or (b) any breach of or failure to perform any covenant or agreement made
by the Company in this Agreement.
5. General
Provisions.
5.1 Entire
Agreement; Amendment and Waiver. This Agreement, together with the Note, constitutes the entire agreement between the parties
hereto with respect to the subject matter contained herein and supersedes all prior oral or written agreements, if any, between
the parties hereto with respect to such subject matter, and, except as otherwise expressly provided herein, is not intended to
confer upon any other person any rights or remedies hereunder. Any failure by the Company or Purchaser to enforce any rights hereunder
shall not be deemed a waiver of such rights. This Agreement may not be amended or modified or the provisions hereof waived (either
generally or in a particular instance and either retroactively or prospectively) without the prior written consent of the party
against whom such amendment, modification, or waiver is sought to be enforced.
5.2 Notices.
All notices and other communications hereunder shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to a nationally recognized overnight courier or on the business day received (or the next business day if
received after 5:00 p.m. local time or on a weekend or day on which banks are closed) when sent via facsimile (with a confirmatory
copy sent by overnight courier) to the parties at the following addresses (or at such other address for a party as shall be specified
by like notice):
If
to Purchaser:
Lone
Star Value Co-Invest I, LP
53
Forest Avenue, 1st Floor
Old Greenwich, Connecticut 06870
Fax: (203) 990-0727
If
to the Company:
Aetrium
Incorporated
2350 Helen Street
North St. Paul, Minnesota 55109
Fax: (651) 770-7975
With
a copy to (which shall not constitute notice):
Olshan
Frome Wolosky LLP
Park Avenue Tower
65
East 55th Street
New York, New York 10022
Attn: Adam Finerman, Esq.
Fax: (212) 451-2222
5.3 Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota applicable to
contracts made and performed in such State, without reference to conflict of law rules that would require the application of the
laws of another jurisdiction.
5.4 Binding
Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and permitted assigns. No assignment of this Agreement or of any rights or obligations hereunder may be made by the Company or
Purchaser, directly or indirectly (by operation of law or otherwise), without the prior written consent of the other party hereto,
and any attempted assignment without the required consents shall be void; provided, however, that Purchaser may
assign its rights, interests and obligations hereunder to any affiliate; provided, further, that no assignment of
any obligations hereunder shall relieve the parties hereto of any such obligations. Upon any such permitted assignment, the references
in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires.
5.5 Expenses;
Litigation Costs. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses. In any action brought by a party hereto to enforce the obligations
of any other party hereto, the prevailing party shall be entitled to collect from the opposing party to such action such party’s
reasonable litigation costs and attorney’s fees and expenses (including court costs, reasonable fees of accountants and
experts, and other expenses incidental to the litigation).
5.6 Headings.
The headings or captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
5.7 Pronouns.
Whenever the pronouns “it” or “its” are used herein, they shall also be deemed to mean “he”
or “his” or “she” or “hers” whenever applicable. Words in the singular shall be read and construed
as though in the plural and words in the plural shall be read and construed as though in the singular in all cases where they
would so apply.
5.8 Severability.
If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy,
all other terms and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable
manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
5.9 Information
Confidential. Purchaser acknowledges that the information received by it pursuant hereto may be confidential and is for its
use only. Purchaser agrees that it will not use such information in violation of the Exchange Act, or reproduce, disclose or disseminate
such information to any other person, unless the Company has made such information available to the public generally.
5.10 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original copy of this Agreement
and all of which, when taken together, shall be deemed to constitute one and the same agreement, and photostatic, .pdf or facsimile
copies of fully-executed counterparts of this Agreement shall be given the same effect as originals.
[Signature
Page FollowS]
[SIGNATURE
PAGE TO SECURITIES PURCHASE AGREEMENT]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the day and year first above written.
|
By: |
/s/
Daniel M. Koch |
|
Name: |
Daniel M. Koch |
|
Title: |
President and Chief Executive Officer |
|
Lone
Star Value Co-Invest I, LP |
|
|
|
|
By: |
Lone
Star Value Investors GP, LLC,
its General Partner |
|
By: |
/s/
Jeffrey E. Eberwein |
|
Name: |
Jeffrey E. Eberwein |
|
Title: |
Manager |
Exhibit
A
Form
of Promissory Note