Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. ATRM Holdings, Inc. (908598) 10-Q published on Aug 14, 2019 at 5:14 pm
Reporting Period: Jun 29, 2019
LSV Co-Invest I and LSVM Waivers
On July 17, 2019, ATRM entered into two waivers with LSV Co-Invest I and one waiver with LSVM, pursuant to which the parties thereto agreed (i) that the closing of the Merger would not constitute an event of default under the terms of two promissory notes issued by ATRM to LSV Co-Invest I on January 12, 2018 and June 1, 2018 for the principal amounts of $0.5 million and $0.9 million, respectively, or under the terms of a promissory note issued by ATRM to LSVM on December 17, 2018 for the principal amount of $0.3 million, (ii) that neither LSV Co-Invest I nor LSVM would be entitled to accelerate any payment under such notes as a result of the closing of the Merger and (iii) upon the closing of the Merger, ATRM would be permitted to amend its governing documents in accordance with the terms of the Merger Agreement.
At the effective time of the Merger, each share of Company common stock issued and outstanding immediately prior to the effective time (other than Excluded Shares) will be canceled and converted automatically into the right to receive 0.03 shares of Series A Preferred Stock.
Consummation of the Merger is subject to various closing conditions, including (i) approval by the Company’s shareholders, (ii) the absence of any order, injunction, statute, rule, regulation or decree prohibiting, precluding, restraining, enjoining or making illegal the consummation of the Merger, (iii) the accuracy of the representations and warranties of each party (including there not having occurred a material adverse effect), (iv) performance, in all material respects, of all obligations and compliance with, in all material respects, agreements and covenants to be performed or complied with by each party, (v) declaration of effectiveness of the Registration Statement on Form S-4 filed by Digirad, (vi) the completion of a $3.0 million private placement of Series A Preferred Stock by the Digirad and (vii) the execution of an agreement by and between the Digirad and Jeffrey Eberwein, the Chairman of the Company’s Board, pursuant to which Digirad shall have the right to require Mr. Eberwein to acquire 100,000 shares of Series A Preferred Stock at a price of $10 per share for aggregate proceeds of $1.0 million at any time, in Digirad’s discretion, during the 12 calendar months following the effective time of the Merger. If the Merger is not consummated by November 30, 2019, either party has the right to terminate the Merger Agreement, subject to certain conditions.
The Merger Agreement allows the Company and Digirad to terminate the Merger Agreement under certain circumstances. Digirad may terminate if: (i) the Board changes its recommendation to shareholders to vote in favor of the transaction in accordance with the Merger Agreement, (ii) the Company breaches the Merger Agreement, or (iii) if the Company enters into an acquisition agreement with a third party following the receipt of a superior proposal. The Company may terminate if it enters into an acquisition agreement with a third party following the receipt of a superior proposal or if Digirad breaches the Merger Agreement. Upon termination of the Merger Agreement under specified circumstances (including upon acceptance of a superior proposal or a change in recommendation under the “fiduciary out”), the Company must pay Digirad a termination fee of $0.7 million and reimburse Digirad for documented out-of-pocket expenses up to $0.2 million.
The representations, warranties and covenants of the Company contained in the Merger Agreement (i) have been made only for purposes of the Merger Agreement; (ii) have been qualified by (a) matters specifically disclosed in any reports filed by the Company with the Securities and Exchange Commission (the “SEC”) and (b) confidential disclosures made to Digirad and Merger Sub in connection with the Merger Agreement; (iii) are subject to materiality qualifications contained in the Merger Agreement that may differ from what may be viewed as “material” by investors; (iv) are made only as of the date of the Merger Agreement and as of the date the Merger closes, or such other date as is specified in the Merger Agreement; and (v) have been included in the Merger Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as facts. Accordingly, the Merger Agreement is included with this filing to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding the Company or its business. Investors should not rely on the representations, warranties or covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or any of its affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be reflected fully or at all in the Company’s public disclosures. The Merger Agreement should not be read alone, but must be read in conjunction with the other information regarding the Company that is or will be contained in, or incorporated by reference into, the annual, quarterly and current reports, proxy statements and other documents that the Company files or has filed with the SEC.
At the effective time of the Merger, each share of Company common stock issued and outstanding immediately prior to the effective time (other than shares (i) owned by the Company or any subsidiary, (ii) owned by Digirad or Merger Sub, or (iii) held by shareholders who have perfected and not withdrawn a demand for appraisal rights under Minnesota law (collectively (i), (ii) and (iii), “Excluded Shares”)) will be canceled and converted automatically into the right to receive 0.03 shares of a newly created Series A non-convertible perpetual preferred stock, par value $0.0001 per share, of Digirad (“Series A Preferred Stock”). Each share of the Company’s Series B Stock issued and outstanding immediately prior to the effective time (other than Excluded Shares) will be canceled and converted automatically into the right to receive 2.5 shares of Series A Preferred Stock.