Document:

ex10_1.htm

ThereapeuticsMD, Inc. 8-K

 

Exhibit 10.1

 

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

THERAPEUTICSMD, INC.

 

	Warrant Shares: 1,250,000    	 Initial Exercise Date: October 31, 2013

 

 

This is to certify that, for the payment of $100 and other good and valuable consideration received, PLATO & ASSOCIATES, LLC (the “Holder”), or its registered assigns, is entitled, at any time from the Issuance Date (as hereinafter defined) to the Expiration Date (as hereinafter defined), to purchase from THERAPEUTICSMD, INC., a Nevada corporation (the “Company”), One Million Two Hundred Fifty Thousand Shares (1,250,000) shares of the Company's Common Stock (as hereinafter defined and subject to adjustment as provided herein), in whole or in part, including fractional parts, at a purchase price per share equal to $3.20 subject to any adjustments made to such amount pursuant to Section 4 hereto) on the terms and conditions and pursuant to the provisions hereinafter set forth.

 

	
1.

	
DEFINITIONS

 

As used in this Warrant, the following terms have the respective meanings set forth below:

 

“Additional Shares of Common Stock” shall mean all shares of Common Stock issued by the Company after the Closing Date, other than Warrant Stock.

 

“Book Value” shall mean, in respect of any share of Common Stock on any date herein specified, the consoli­dated book value of the Company as of the last day of any month immediately preceding such date, divided by the number of Fully Diluted Outstanding shares of Common Stock as deter­mined in accordance with GAAP (assuming the payment of the exercise prices for such shares) by a firm of independent certified public account­ants of recognized national standing selected by the Company and reasonably acceptable to the Holder.

 

“Business Day” shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York.

 

 “Commission” shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

 

  

  

  

 

“Common Stock” shall mean (except where the context otherwise indicates) the Common Stock, par value $0.001 per share, of the Company as constituted on the Closing Date, and any capital stock into which such Common Stock may there­after be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denomi­nated) issued to the holders of shares of Common Stock upon any reclassification thereof which is also not preferred as to dividends or assets over any other class of stock of the Company and which is not subject to redemption and (ii) shares of common stock of any successor or acquiring corporation received by or distributed to the holders of Common Stock of the Company in the circumstances contemplated by Section 4.3.

 

“Convertible Securities” shall mean evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event.

 

“Current Warrant Price” shall mean $3.20 subject to any adjustments to such amount made in accordance with Section 4 hereof.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

 

“Exercise Period” shall mean the period during which this Warrant is exercisable pursuant to Section 2.1.

 

“Expiration Date” shall mean January 31, 2019.

 

“Fully Diluted Outstanding” shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all shares of Common Stock Outstanding at such date and all shares of Common Stock issuable in respect of this Warrant, outstanding on such date, and other options or warrants to purchase, or securities convertible into, including without limitation the shares of Common Stock outstanding on such date which would be deemed out­stand­ing in accordance with GAAP for purposes of determining book value or net income per share.

 

“GAAP” shall mean generally accepted accounting principles in the United States of America as from time to time in effect.

 

 “Holder” shall mean the Person in whose name the Warrant or Warrant Stock set forth herein is registered on the books of the Company maintained for such purpose.

 

“Market Price” per Common Share means the average of the closing bid prices of the Common Shares as reported on the National Association of Securities Dealers Automated Quotation System for the National Market, (“NASDAQ”) or, if such security is not listed or admitted to trading on the NASDAQ, on the principal national security exchange or quotation system on which such security is quoted or listed or admitted to trading, or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the closing bid price of such security on the over-the-counter market on the day in question as reported by the National Association of Security Dealers, Inc., or a similar generally accepted reporting service, as the case may be, for the five (5) trading days immediately preceding the date of determination.

 

“Other Property” shall have the meaning set forth in Section 4.5.

 

  

  

  

 

“Outstanding” shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of the Company or any subsidiary thereof, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock.

 

“Person” shall mean any individual, sole proprie­tor­ship, partnership, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

 

“Restricted Common Stock” shall mean shares of Common Stock which are, or which upon their issuance on the exercise of this Warrant would be, evidenced by a certifi­cate bearing the restrictive legend set forth in Section 9.1(a).

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

“Transfer” shall mean any disposition of any Warrant or Warrant Stock or of any interest in either thereof, which would constitute a sale thereof within the meaning of the Securities Act.

 

“Transfer Notice” shall have the meaning set forth in Section 9.2.

 

“Vesting Date” shall mean October 31, 2013.

 

“Warrant Issuance Date” shall mean the date on which the Warrants are issued to the Holder.

 

“Warrants” shall mean this Warrant and all warrants issued upon transfer, division or combination of, or in substitution for, any thereof.  All Warrants shall at all times be identical as to terms and conditions and date, except as to the number of shares of Common Stock for which they may be exercised.

 

“Warrant Price” shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant pursuant to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of such exercise.

 

“Warrant Stock” shall mean the shares of Common Stock purchased by the holders of the Warrants upon the exercise thereof.

 

	
2.

	
EXERCISE OF WARRANT

 

2.1.           Manner of Exercise.  From and after the Vesting Date unless cancelled prior to such date and until 5:00 P.M., New York City time, on the Expiration Date, Holder may exercise this Warrant, on any Business Day, for all or any part of the number of shares of Common Stock purchasable hereunder.

 

  

  

  

 

In order to exercise this Warrant, in whole or in part, Holder shall deliver to the Company at the office or agency designated by the Company pursuant to Section 12, (i) a written notice of Holder’s election to exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased, (ii) payment by cash, check or bank draft payable to the Company of the Warrant Price in cash or by wire transfer or cashier’s check drawn on a United States bank for all shares then being purchased and (iii) this Warrant.  Such notice shall be substantially in the form of the subscription form appearing at the end of this Warrant as Exhibit 1, duly executed by Holder or its agent or attorney.  Upon receipt of the items referred to in clauses (i), (ii) and (iii) above, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute or cause to be executed and deliver or cause to be delivered to Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided.  The stock certificate or certificates so deliv­ered shall be, to the extent possible, in such denomination or denominations as Holder shall request in the notice and shall be registered in the name of Holder or, subject to Section 9, such other name as shall be designated in the notice.  This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Warrant Price.  If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Stock, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

The Holder shall be entitled to exercise the Warrant notwithstanding the commencement of any case under 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”).  In the event the Company is a debtor under the Bankruptcy Code, the Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. § 362 in respect of the Holder’s exercise right.  The Company hereby waives to the fullest extent permitted any rights to relief it may have under 11 U.S.C. § 362 in respect of the exercise of the Warrant.  The Company agrees, without cost or expense to the Holder, to take or consent to any and all action necessary to effectuate relief under 11 U.S.C. § 362.

 

2.2           Cashless Provision.  Holder may elect to exercise the Warrant through the method of cashless exercise as follows:

On the date of calculation of the cashless exercise, if the Market Price of one share of the Company's Common Stock is greater than the Exercise Price (as stated in the Holder's Warrant), in lieu of exercising the Warrant for cash, the holder may elect to receive shares equal to the value (as determined below) of the Warrant (or the portion thereof being exercised) by the surrender of the Warrant at the principle office of the Company together with a properly endorsed Notice of Exercise and notice of such election in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

X = Y (A-B)

           A

X= the number of shares of Common Stock to be issued to the Holder

Y = the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)

  

  

  

 

A= the Market Price of one share of the Company Common Stock (at the date of such calculation)

B= Exercise Price (as adjusted to the date of such calculation).

The fair market value per share shall be the average of the closing bid and asked prices of the Company's Common Stock quoted on the OTCQB, or the last reported sale price of the Common Stock, or the closing price quoted on the NASDAQ Stock Market or on any exchange on which the Company's Common Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the five (5) trading days prior to the date of the determination of the fair market value.

2.3.           Payment of Taxes and Charges.  All shares of Common Stock issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued, fully paid and nonassessable, and without any preemptive rights.  The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issue or delivery thereof.

2.4.           Fractional Shares.  The Company shall not be required to issue a fractional share of Common Stock upon exercise of any Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the same fraction of the Market Price per share of Common Stock on the relevant exercise date.

 

2.5.           Continued Validity.  A holder of shares of Common Stock issued upon the exercise of this Warrant, in whole or in part (other than a holder who acquires such shares after the same have been publicly sold pursuant to a Registration Statement under the Securities Act or sold pursuant to Rule 144 thereunder), shall continue to be entitled with respect to such shares to all rights to which it would have been entitled as Holder under Sections 9, 10 and 14 of this Warrant.  The Company will, at the time of exercise of this Warrant, in whole or in part, upon the request of Holder, acknowledge in writing, in form reasonably satisfactory to Holder, its continuing obligation to afford Holder all such rights; provided, however, that if Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to Holder all such rights.

 

	
3.

	
TRANSFER, DIVISION AND COMBINATION

 

3.1.           Transfer.  Subject to compliance with Section 9, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company referred to in Section 2.1 or the office or agency desig­nated by the Company pursuant to Section 12, together with a written assignment of this Warrant substantially in the form of Exhibit 2 hereto duly executed by Holder or its agent or attorney.  Upon such surren­der, the Company shall, subject to Section 9, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomi­na­tion specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned in compliance with Section 9, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new Warrant issued.

 

3.2.            Division and Combination.  Subject to Section 9, this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by Holder or its agent or attorney.  Subject to compliance with Section 3.1 and with Section 9, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

 

  

  

  

 

3.3.           Expenses.  The Company shall prepare, issue and deliver at its own expense the new Warrant or Warrants under this Section 3.

 

3.4.           Maintenance of Books.  The Company agrees to maintain, at its aforesaid office or agency, books for the registration and the registration of transfer of the Warrants.

 

	
4.

	
ADJUSTMENTS

 

The number of shares of Common Stock for which this Warrant is exercisable, or the price at which such shares may be purchased upon exercise of this Warrant, shall be subject to adjustment from time to time as set forth in this Section 4.  The Company shall give Holder notice of any event described below which requires an adjustment pursuant to this Section 4 at the time of such event.

 

4.1.           Stock Dividends, Subdivisions and Combinations.  If at any time the Company shall:

 

(a)           take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, Additional Shares of Common Stock,

 

(b)           subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

 

(c)           combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

 

then (i) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of  shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happen­ing of such event, and (ii) the Current Warrant Price shall be adjusted to equal (A) the Current Warrant Price multi­plied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares for which this Warrant is exercisable immediately after such adjustment.

 

4.2.           Other Provisions Applicable to Adjustments under this Section.  The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which this Warrant is exercisable and the Current Warrant Price provided for in this Section 4:

 

(a)           When Adjustments to Be Made.  The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur.  For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

 

(b)           Fractional Interests.  In computing adjust­ments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest 1/10th of a share.

 

  

  

  

 

(c)           When Adjustment Not Required.  If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stock­holders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

 

(d)           Challenge to Good Faith Determination.  Whenever the Board of Directors of the Company shall be required to make a determination in good faith of the fair value of any item under this Section 4, such determination may be challenged in good faith by the Holder, and any dispute shall be resolved by an investment banking firm of recognized national standing selected by the Holder and reasonably acceptable to the Company.

 

(e)           Proceeding Prior to Any Action Requiring Adjustment.  As a condition precedent to the taking of any action which would require an adjustment pursuant to this Section 4, the Company shall take any action which may be necessary, including obtaining regulatory approvals or exemptions, in order that the Company may thereafter validly and legally issue as fully paid and nonassessable all shares of Common Stock which the Holder is entitled to receive upon exercise hereof.

 

4.3.           Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.  In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature what­so­ever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Company, then Holder shall have the right thereafter to receive, upon exercise of the Warrant, the number of shares of common stock of the successor or acquir­ing corporation or of the Company, if it is the surviving corpo­ration, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable imme­diately prior to such event.  In case of any such reorgani­za­tion, reclassification, merger, consolidation or disposi­tion of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punc­tual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities here­under, subject to such modifications as may be deemed appropriate, subject to the Holder’s consent, in order to provide for adjustments of shares of Common Stock for which this Warrant is exer­cis­able which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 4.  For purposes of this Section 4.3, “common stock of the successor or acquiring corporation” shall include stock of such corpo­ra­tion of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or pur­chase any such stock.  The foregoing provisions of this Section 4.3 shall similarly apply to successive reorganiza­tions, reclassifications, mergers, consolidations or disposition of assets.

 

  

  

  

 

4.4.           Other Action Affecting Common Stock.  In case at any time or from time to time the Company shall take any action in respect of its Common Stock, other than any action taken in the ordinary course of the Company’s business or any action described in this Section 4, which would have a material adverse effect upon the rights of the Holder, the number of shares of Common Stock and/or the purchase price thereof shall be adjusted in such manner as may be equitable in the circumstances, as determined in good faith by an investment bank selected by Holder.

 

4.5.           Certain Limitations.  Notwithstanding any­thing herein to the contrary, the Company agrees not to enter into any transaction which, by reason of any adjustment hereunder, would cause the Current Warrant Price to be less than the par value per share of Common Stock.

 

4.6.           No Voting Rights.  This Warrant shall not entitle its Holder to any voting rights or other rights as a shareholder of the Company.

 

	
5.

	
NOTICES TO HOLDER

 

5.1.           Notice of Adjustments.  Whenever the number of shares of Common Stock for which this Warrant is exercis­able, or whenever the price at which a share of such Common Stock may be purchased upon exercise of the Warrants, shall be adjusted pursuant to Section 4, the Company shall forthwith prepare a certificate to be executed by an executive officer of the Company setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated, specifying the number of shares of Common Stock for which this Warrant is exercisable and describing the number and kind of any other shares of stock or Other Prop­erty for which this Warrant is exercisable, and any change in the purchase price or prices thereof, after giving effect to such adjustment or change.  The Company shall promptly cause a signed copy of such certificate to be delivered to the Holder in accordance with Section 14.2.  The Company shall keep at its office, or agency designated pursuant to Section 12, copies of all such certificates, and cause the same to be available for inspection at said office during normal business hours by the Holder, its representatives, or any prospective purchaser of a Warrant designated by the Holder.

 

5.2.           Notice of Corporate Action.  If at any time

 

(a)           the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribu­tion (whether in cash, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property of any nature whatsoever, or to receive any warrants or other rights (including, without limitation, rights to subscribe for or purchase any evidences of its indebtedness, any shares of its stock or any other securities or property of any nature whatsoever), or

 

(b)           there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation, or

 

(c)           there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

  

  

  

 

then, in any one or more of such cases, the Company shall give to Holder (i) at least thirty (30) Business Days’ prior written notice of the date on which a record date shall be selected for such divi­dend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassifica­tion, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquida­tion or winding up, at least thirty (30) Business Days’ prior written notice of the date when the same shall take place.  Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up.  Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accor­dance with Section 14.2.

 

A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4.1.

 

	
6.

	
NO IMPAIRMENT

 

The Company shall not by any action, including, with­out limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolida­tion, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder against impairment.  Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable there­for upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

 

Upon the request of Holder, the Company will at any time during the period this Warrant is outstanding acknowl­edge in writing, in form reasonably satisfactory to Holder, the contin­u­ing validity of this Warrant and the obligations of the Company hereunder.

 

	
7.

	
RESERVATION AND AUTHORIZATION OF COMMON STOCK

 

From and after the Closing Date, the Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants.  All shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrant and payment therefor in accordance with the terms of such Warrant, shall be duly and validly issued and fully paid and nonassessable, and not subject to preemptive rights.

 

  

  

  

 

Before taking any action which would cause an adjustment reducing the Current Warrant Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corpo­rate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Current Warrant Price.

 

Before taking any action which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Current Warrant Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

	
8.

	
TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

 

In the case of all dividends or other distribu­tions by the Company to the holders of its Common Stock with respect to which any provision of Section 4 refers to the taking of a record of such holders, the Company will in each such case take such a record as of the close of business on a Business Day.  The Company will not at any time close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant.

 

	
9.

	
RESTRICTIONS ON TRANSFERABILITY

 

The Warrants and the Warrant Stock shall not be transferred, hypothecated or assigned before satisfaction of the conditions specified in this Section 9, which conditions are intended to ensure compliance with the provisions of the Securities Act with respect to the Transfer of any Warrant or any Warrant Stock.  Holder, by acceptance of this Warrant, agrees to be bound by the provisions of this Section 9.

 

9.1.           Restrictive Legend.  The Holder by accepting this Warrant and any Warrant Stock agrees that this Warrant and the Warrant Stock issuable upon exercise hereof may not be assigned or otherwise transferred unless and until (i) the Company has received an opinion of counsel for the Holder that such securities may be sold pursuant to an exemption from registration under the Securities Act or (ii) a registration statement relating to such securities has been filed by the Company and declared effective by the Commission.

 

(a)           Each certificate for Warrant Stock issuable hereunder shall bear a legend substantially worded as follows unless such securities have been sold pursuant to an effective registration statement under the Securities Act:

 

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the “Act”) or any state securities laws.  The securities may not be offered for sale, sold, assigned, offered, transferred or otherwise distributed for value except (i) pursuant to an effective registration statement under the Act or any state securities laws or (ii) pursuant to an exemption from registration or prospectus delivery requirements under the Act or any state securities laws in respect of which the Company has received an opinion of counsel satisfactory to the Company to such effect.  Copies of the agreement covering both the purchase of the securities and restricting their transfer may be obtained at no cost by written request made by the holder of record of this certificate to the Secretary of the Company at the principal executive offices of the Company.”

  

  

  

(b)           Except as otherwise provided in this Sec­tion 9, the Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“This Warrant and the securities represented hereby have not been regis­tered under the Securities Act of 1933, as amended, or any state securities laws and may not be transferred in violation of such Act, the rules and regulations thereunder or any state securities laws or the provisions of this Warrant.”

 

9.2.           Notice of Proposed Transfers.  Prior to any Transfer or attempted Transfer of any Warrants or any shares of Restricted Common Stock, the Holder shall give five (5) days’ prior written notice (a “Transfer Notice”) to the Company of Holder’s intention to effect such Transfer, describing the manner and circumstances of the proposed Transfer, and obtain from counsel to Holder an opinion that the proposed Transfer of such Warrants or such Restricted Common Stock may be effected without registration under the Securities Act or state securities laws.  After the Company’s receipt of the Transfer Notice and opinion, such Holder shall thereupon be entitled to Transfer such Warrants or such Restricted Common Stock, in accordance with the terms of the Transfer Notice.  Each certificate, if any, evidencing such shares of Restricted Common Stock issued upon such Transfer and the Warrant issued upon such Transfer shall bear the restrictive legends set forth in Section 9.1, unless in the opinion of such counsel such legend is not required in order to ensure compliance with the Securities Act.

 

9.3.           Termination of Restrictions.  Notwithstand­ing the foregoing provisions of Section 9, the restrictions imposed by this Section upon the transferability of the Warrants, the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) and the legend requirements of Section 9.1 shall terminate as to any particular Warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) (i) when and so long as such security shall have been effectively registered under the Securities Act and applicable state securities laws and disposed of pursuant thereto or (ii) when the Company shall have received an opinion of counsel that such shares may be transferred with­out registration thereof under the Securities Act and applicable state securities laws.  Whenever the restrictions imposed by Section 9 shall terminate as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive from the Company upon written request of the Holder, at the expense of the Company, a new Warrant bearing the following legend in place of the restrictive legend set forth hereon:

 

“THE RESTRICTIONS ON TRANSFERABIL­ITY OF THE WITHIN WARRANT CONTAINED IN SECTION 9 HEREOF TERMINATED ON ________, 20__, AND ARE OF NO FURTHER FORCE AND EFFECT.”

 

All Warrants issued upon registration of transfer, division or combination of, or in substitution for, any Warrant or Warrants entitled to bear such legend shall have a similar legend endorsed thereon.  Whenever the restrictions imposed by this Section shall terminate as to any share of Restricted Common Stock, as hereinabove provided, the holder thereof shall be entitled to receive from the Company, at the Company’s expense, a new certificate representing such Common Stock not bearing the restrictive legends set forth in Section 9.1.

 

9.4.           Listing on Securities Exchange.  If the Company shall list any shares of Common Stock on any securities exchange, it will, at its expense, list thereon, maintain and, when necessary, increase such listing of, all shares of Common Stock issued or, to the extent permissible under the applicable securities exchange rules, issuable upon the exercise of this Warrant so long as any shares of Common Stock shall be so listed during the Exercise Period.

 

  

  

  

 

	
10.

	
SUPPLYING INFORMATION

 

The Company shall cooperate with Holder in supplying such information as may be reasonably necessary for Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Warrant or Restricted Common Stock.

 

	
11.

	
LOSS OR MUTILATION

 

Upon receipt by the Company from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to it (it being understood that the written agreement of the Holder shall be sufficient indemnity), and in case of mutilation upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to Holder; provided, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

	
12.

	
OFFICE OF THE COMPANY

 

As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant, such office to be initially located at 951 Broken Sound Parkway NW, Suite 320, Boca Raton, FL  33487, provided, however, that the Company shall provide prior written notice to Holder of a change in address no less than thirty (30) days prior to such change.

 

	
13.

	
LIMITATION OF LIABILITY

 

No provision hereof, in the absence of affirmative action by Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

	
14.

	
MISCELLANEOUS

 

14.1.           Non-waiver and Expenses.  No course of deal­ing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Expiration Date.  If the Company fails to make, when due, any payments provided for hereunder, or fails to comply with any other provision of this Warrant, the Company shall pay to Holder such amounts as shall be sufficient to cover any direct and indirect losses, damages, costs and expenses including, but not limited to, reasonable attor­neys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

14.2.           Notice Generally.  Except as may be otherwise provided herein, any notice or other communication or delivery required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified mail, postage prepaid, or by a nationally recognized overnight courier service, and shall be deemed given when so delivered personally or by overnight courier service, or, if mailed, three (3) days after the date of deposit in the United States mails, as follows:

 

  

  

  

 

(a)           if to the Company, to:                          TherapeuticsMD, Inc.

951 Broken Sound Parkway, Suite 321

Boca Raton, FL  33487

Attention:  Robert G. Finizio

Phone:   (561) 961-1911 Fax: (561) 431-3389

 (b)           if to the Holder to:                               Robert J. Smith, Managing Member

Plato & Associates, LLC

13652 Fiddlesticks Blvd.

Suite 202-324

Ft. Myers, FL  33912

The Company or the Holder may change the foregoing address by notice given pursuant to this Section 14.2.

14.3.           Successors and Assigns.  Subject to the provisions of Sections 3.1 and 9, this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and, with respect to Section 9 hereof, holders of Warrant Stock, and shall be enforceable by any such Holder or holder of Warrant Stock.

 

14.4.           Amendment.  This Warrant and all other Warrants may be modified or amended or the provisions hereof waived only with the prior written consent of the Company and the Holder.

 

14.5.           Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant.

 

14.6.           Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

14.7.           Governing Law.  This Warrant shall be governed by the laws of the State of Florida, without regard to the provisions thereof relating to conflict of laws. The Company consents to the jurisdiction of the federal courts whose districts encompass any part of Florida in connection with any dispute arising under this Warrant or any of the transactions contemplated hereby, and hereby waives, to the maximum extent permitted by law, any objection, including any objections based on forum non conveniens, to the bringing of any such proceeding in such jurisdictions.

[SIGNATURE PAGE FOLLOWS]

  

  

  

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and its corporate seal to be impressed hereon and attested by its Secretary or an Assistant Secretary.

 

 

	 Dated:  January 31, 2013	  	
THERAPEUTICSMD, INC.

	 	 	 
	  	  	  
	  	  	
By:

	
/s/ Robert F. Finizio

	  	  	
 

	 Robert F. Finizio
	  	  	
 

	 Chief Executive Officer

	
Attest:

	  
	  	  	  
	
By:

	

/s/ John C.K. Milligan, IV

	  
	
 

	John C.K. Milligan, IV	  
	
 

	Secretary	  

  

  

  

EXHIBIT 1

 

SUBSCRIPTION FORM

 

[To be executed only upon exercise of Warrant]

 

The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of ______ Shares of Common Stock of TherapeuticsMD, Inc., and herewith makes payment therefor in cash or by check or bank draft made payable to the Company, all at the price and on the terms and conditions specified in this Warrant and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to _____________ whose address is _________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned.

 

	  	  	
 

	  	  	(Name of Registered Owner)
	 	 	 
	 	 	 
	  	  	 
	  	  	
(Signature of Registered Owner)

	 	 	 
	 	 	 
	 	 	 
	 	 	(Street Address)
	 	 	 
	 	 	 
	  	  	 	 	  
	 	 	(City)	(State)	 (Zip Code)

  

  

  

 

NOTICE:                      The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

  

  

  

EXHIBIT 2

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Common Stock set forth below:

 

	 	 Name and Address of Assignee    	 	 No. of Shares of Common Stock
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

 

and does hereby irrevocably constitute and appoint ________________________ attorney-in-fact to register such transfer on the books of TherapeuticsMD, Inc. maintained for the purpose, with full power of substitution in the premises.

 

 

	 	  Dated:	 	 	Print Name:	
 

	 	  	 	  	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	  	 	  	 	 
	 	  	 	 	Signature:	
 

	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	Witness:	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 

NOTICE:                      The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.ex10-1.htm

Exhibit 10.1

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

 

This SETTLEMENT AGREEMENT AND MUTUAL RELEASE is entered into and effective as of this 31st day of January, 2013 (this “Agreement”), by and among:

 

	
  

	
(i)

	
The persons and entities listed on Schedule A hereto (individually and collectively, “Concerned Aetrium Shareholders”);

 

	
  

	
(ii)

	
The incumbent members of the Board of Directors of Aetrium Incorporated (individually and collectively, the “Incumbent Directors”); and,

 

	
  

	
(iii)

	
Aetrium Incorporated (the “Company”).

 

The Concerned Aetrium Shareholders, the Incumbent Directors, and the Company are sometimes referred to collectively herein as the “Parties” and individually as a “Party”.

 

BACKGROUND

 

WHEREAS, Concerned Aetrium Shareholders (a) filed a Schedule 13D with the Securities and Exchange Commission (the “SEC”), most recently amended as of October 9, 2012, relating to its beneficial ownership of shares of common stock of the Company, (b) requested a special meeting of shareholders of the Company (the “Special Meeting”), to, among other things, elect a slate of six (6) Concerned Aetrium Shareholders director nominees (the “CAS Slate”) to the Company’s board of directors (the “Board”), and (c) filed a definitive Proxy Statement on Schedule 14A with the SEC on November 8, 2012 in connection with the Special Meeting to solicit proxies for the election of the CAS Slate;

 

WHEREAS, the Company (a) called the Special Meeting on November 26, 2012, and (b) filed a definitive Proxy Statement on Schedule 14A with the SEC on November 16, 2012.

 

WHEREAS, on November 29, 2012 Concerned Aetrium Shareholders filed an action against the Company in a case styled Jeffrey E. Eberwein, et al. v Aetrium Incorporated, et al., Case No. 62-CV-12-9115 in the Second Judicial District Court in Ramsey County, Minnesota for injunctive relief and thereafter on December 27, 2012 made additional claims for monetary damages against the Incumbent Directors and the Company (the “Action”);

 

 WHEREAS, on each of December 20, 2012 and January 15, 2013 Concerned Aetrium Shareholders sent requests for additional special meetings of shareholders of the Company (collectively, the “Subsequent  Special Meeting Requests”); and

 

WHEREAS, Concerned Aetrium Shareholders, the Company and the Incumbent Directors now desire to avoid the expense, inconvenience and distraction of further litigation and intend to permanently settle and compromise any and all claims which Concerned Aetrium Shareholders or the Company or the Incumbent Directors have or may have against any other.

 

NOW THEREFORE, in consideration of the respective representations, warranties, covenants, agreements and conditions hereinafter set forth, for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged by each Party), and in consideration of the time, expense and uncertainty associated with the litigation of the Action, the Parties have determined it is in their mutual best interest to amicably resolve their disputes.

 

  

  

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

TERMS

 

	
(1)

	
Actions of the Parties. The Parties will act in accordance with the following provisions.

 

	
  

	
(a)

	
The Concerned Aetrium Shareholders hereby withdraw the second of their Subsequent Special Meeting Requests (the first such Subsequent Special Meeting Request having already been withdrawn).

 

	
  

	
(b)

	
Forthwith upon execution of this Agreement (and as a condition subsequent to the obligations of the Concerned Aetrium Shareholders and the effectiveness of their withdrawal of the second of their Subsequent Special Meeting Requests), the Incumbent Directors will:

 

	
  

	
(i)

	
pursuant to Article III, Section 2 of the Company’s bylaws, increase the size of the Board to a total of eleven (11) persons;

 

	
  

	
(ii)

	
pursuant to Article III, Section 3 of the Company’s bylaws and Section 302A.225(a)(2) of the Minnesota Business Corporation Act (the “MBCA”) appoint each of Jeffrey E. Eberwein, Alfred John Knapp, Jr., Richard K. Coleman, Jr., Galen Vetter and Charles Gillman (the “CAS Directors”) as a director of the Company to fill the five (5) newly created vacancies on the Board to serve as directors until the 2013 Annual Meeting or, if later, until his successor has been duly elected and qualified, or earlier death, resignation or removal;

 

	
  

	
(iii)

	
cause the chair of the Company’s 2013 annual meeting (“2013 Annual Meeting”) to honor any motion adopted by the vote of a majority of shares represented as present thereat to adjourn the meeting to a later time for purposes of obtaining quorum;

 

	
  

	
(iv)

	
fix the date of the 2013 Annual Meeting on May 15, 2013 (the “2013 Annual Meeting Date”);

 

	
  

	
(v)

	
take all usual and customary actions necessary to cause the 2013 Annual Meeting to be held on the 2013 Annual Meeting Date, including providing proper notice of the 2013 Annual Meeting Date to the Company’s shareholders;

 

	
  

	
(vi)

	
refrain from any actions respecting the removal of the CAS Directors other than in respect of a Competing Slate as contemplated by the provisions of Paragraphs 2(c) and 3; and,

 

	
  

	
(vii)

	
conduct the 2013 Annual Meeting timely in accordance with the provisions of this Agreement and, to the extent not provided in this Agreement, in accordance with the Company’s prior practices including, without limitation, the matters hereafter set forth in Paragraph 3.

 

  

2

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
  

	
(c)

	
From the date of this Agreement until the 2013 Annual Meeting, representative members of the CAS Directors will reasonably engage with management to receive the input of management respecting the business and affairs of the Company and the Incumbent Directors will reasonably facilitate such engagement.

 

	
  

	
(d)

	
From the date of this Agreement until the 2013 Annual Meeting, the Company and the Board will not:

 

	
  

	
(i)

	
Effect any change in the terms of employment of any executive officer of the Company (except as provided in paragraph 4(e));

	
  

	
(ii)

	
implement or change the Company’s poison pill or grant any rights or options respecting the capital stock of the Company;

	
  

	
(iii)

	
alter the structure of the Board (including the removal of any director); or,

	
  

	
(iv)

	
amend or alter the Company’s bylaws.

	
  

	
(e)

	
For avoidance of doubt, the resignation, death or disability of one or more of the CAS Directors or the Incumbent Directors prior to the 2013 Annual Meeting will not terminate the rights or obligations of the Parties under this Agreement.  In the event that any such occurrence involves a CAS Director, the remaining CAS Directors will have the right to name a replacement director to fill that vacant Board position and the Incumbent Directors will vote in favor of such replacement director.  In the event that any such occurrence involves an Incumbent Director, the Incumbent Directors will have the right to name a replacement director to fill that vacant Board position and the CAS Directors will vote in favor of such replacement director.

 

	
  

	
(f)

	
Prior to May 15, 2014, the Concerned Aetrium Shareholders will not, directly or indirectly, make any demand, nor will any member of the Concerned Aetrium Shareholders be a member of any other group that makes any demand, for a Special Meeting.

 

	
(2)

	
Procedures for Determining Nominees for Election to Board at the 2013 Annual Meeting. The Parties will comply with the following procedures in determining nominees for election to the Board at the 2013 Annual Meeting.

	
  

	
(a)

	
From and after the date of this Agreement, the Incumbent Directors and the Concerned Aetrium Shareholders will confer in good faith to determine whether the Incumbent Directors and the Concerned Aetrium Shareholders are able to reach an agreement for a mutually acceptable slate of director nominees to the 2013 Annual Meeting (a “Negotiated Slate”).

 

  

3

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
  

	
(b)

	
In the event the Parties are successful in agreeing to a Negotiated Slate, the Company, the Incumbent Directors, and the Concerned Aetrium Shareholders will (i) propose, recommend, support, and solicit proxies for the election of the Negotiated Slate at the 2013 Annual Meeting, and (ii) use their best efforts to cause all proxies received by the Company to be voted in favor of the Negotiated Slate.

 

	
  

	
(c)

	
In the event the Parties are unable to agree upon a Negotiated Slate on or before March 15, 2013, the Company and the Concerned Aetrium Shareholders may each, subject to all applicable SEC and Minnesota regulations and guidance, solicit proxies for the election of their own slate of five (5), and only five (5), director nominees for election to the Board at the 2013 Annual Meeting (collectively, the “Competing Slates”).

 

	
(3)

	
2013 Annual Meeting. The Company and the Incumbent Directors will cause the 2013 Annual Meeting to be conducted in accordance with the following provisions and the Concerned Aetrium Shareholders will comply with the following covenants:

 

	
  

	
(a)

	
The 2013 Annual Meeting will include a proposal to ratify the selection of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2013 fiscal year.  The Incumbent Directors and CAS Directors will support the proposal.

 

	
  

	
(b)

	
In determining the presence of a quorum, all shares of common stock represented by a properly signed and returned proxy card or ballot that is voted in any column with respect to a matter scheduled on the proxy for action at the 2013 Annual Meeting will be counted for the purpose of determining a quorum with respect to such matter and in the event a quorum is reached with respect to any such matter, the quorum requirement will be satisfied as to all matters.  For the avoidance of doubt, if a majority of the outstanding shares is cast with respect to a routine matter (such as ratification of the selection of Grant Thornton LLP), the quorum requirement will have been satisfied with respect to all matters scheduled to be considered at the 2013 Annual Meeting.

 

	
  

	
(c)

	
The 2013 Annual Meeting will include a proposal to fix the number of directors comprising the Board at five (5) (unless another number is agreed upon by the Incumbent Directors and the Concerned Aetrium Shareholders pursuant to Section 3(d) hereof), which proposal must be approved by the Company’s shareholders as required pursuant to MBCA 302A.181 Subd. 2.

 

  

4

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
  

	
(d)

	
Five (5) nominees (and only five (5) nominees) will be elected to the Board unless the Incumbent Directors and the Concerned Aetrium Shareholders mutually agree to some other number.

 

	
  

	
(e)

	
The election of the members of the Board will be determined by a plurality of votes cast.

 

	
  

	
(f)

	
For avoidance of doubt, the procedures to elect members of the Board will be uniformly applied whether nominees are nominated pursuant to a Negotiated Slate or a Competing Slate.

 

	
  

	
(g)

	
The Company and the Incumbent Directors will take no actions to delay or obstruct the (i) the nomination of a Competing Slate by the Concerned Aetrium Shareholders or (ii) the preparation and use of a definitive proxy statement by the Concerned Aetrium Shareholders; provided, however, the Company may submit written objections to the SEC in accordance with the rules and regulations of the SEC.

 

	
  

	
(h)

	
The Company and the Concerned Aetrium Shareholders will take no actions to delay or obstruct the (i) the nomination of a Competing Slate by the Company or (ii) the preparation and use of a definitive proxy statement by the Company; provided, however, the Concerned Aetrium Shareholders may submit written objections to the SEC in accordance with the rules and regulations of the SEC.

 

	
(4)

	
Termination of Action. The Action will be terminated on the following terms and conditions.

 

	
  

	
(a)

	
Each Party to the Action will dismiss all claims asserted by it in the action with prejudice and at its own cost.

 

	
  

	
(b)

	
The Company will contemporaneously herewith pay to the Concerned Aetrium Shareholders in funds immediately available in New York, New York US$85,000 (the “Settlement Payment”).

 

	
  

	
(c)

	
Subject only to the receipt by the Concerned Aetrium Shareholders of the Settlement Payment and the dismissal with prejudice of the claims of the Company set forth in the Action, the Concerned Aetrium Shareholders on behalf of themselves and each of its parents, affiliates, officers, employees, agents, successors or assigns (“CAS Releasing Parties”) hereby irrevocably release and forever discharge the Incumbent Directors, the Company and any of their parents, affiliates, officers, employees, agents, successors or assigns (“Company Released Parties”) from all claims, demands, obligations, actions, causes of action, rights, damages, costs, losses of services, expenses, profits, or compensation of any nature whatsoever, whether based on a tort, contract, warranty, contribution, indemnification or any other theory of recovery, and whether for compensatory, statutory, punitive, or other damages, whether known or unknown, that the CAS Releasing Parties now have against the Company Released Parties (“CAS Released Claims”); provided, however, the Concerned Aetrium Shareholders reserve their claim, if any, against the Company for reimbursement of their costs and expenses incurred in connection with (i) the Special Meeting of Shareholders held on November 26, 2012 (including the solicitation of proxies therefor), (ii) the Subsequent Special Meeting Requests dated December 20, 2013 and January 15, 2013, and (iii) the 2013 Annual Meeting (including the solicitation of proxies therefor).  The CAS Releasing Parties hereby covenant to the Company Released Parties not to directly or indirectly encourage, solicit, assist or participate in any way in the filing of a suit or claim against the Company Released Parties related to any CAS Released Claims.

 

  

5

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
  

	
(d)

	
The Company and the Concerned Aetrium Shareholders: (i) hereby acknowledge that the Company is obligated to pay Joseph Levesque and Douglas Hemer, without any defense or right or claim of setoff, all monies owed to them under, respectively, the letter agreement re: Compensation Arrangement dated November 30, 2011 by and between the Company and Joseph Levesque, as amended by letter agreement dated August 27, 2012 by and between such parties, and the letter agreement re: Retirement Benefit dated November 17, 2010 by and between the Company and Douglas Hemer as amended by letter agreement dated August 27, 2012 by and between such parties, (ii) the Company covenants to pay all amounts thereunder promptly when and as due; and (iii) the Concerned Aetrium Shareholders covenant not to take any action to interfere with the payment of such monies when due.

 

	
  

	
(e)

	
The Company and the Concerned Aetrium Shareholders hereby (i) acknowledge that the Company has entered into certain change-of control agreements with Daniel M. Koch, Gary A. Quasabart, Timothy A. McMullen, Timothy G. Foley and Paul H. Askegaard (and no others currently in force); (ii) agree that the CAS Directors do not become continuity directors as defined in Section 1.3(e) thereof by reason of their appointment as directors pursuant to paragraph 1(b)(ii) hereof or the agreement of the Incumbent Directors to this Agreement, and that the amendments promptly made hereafter to such agreements to such effect will, when and as so made, be valid and binding for all purposes; (iii) the Company covenants to pay all amounts and perform all of its obligations thereunder promptly when and as due; and (iv) the Concerned Aetrium Shareholders covenant not to take any action to interfere with the payment of any monies which may become due such persons pursuant to such agreements (and no others).

 

	
(5)

	
SEC Filings and Communications With the Public.

 

	
  

	
(a)

	
As soon as reasonably practicable following the execution and delivery of this Agreement, the Company and the Concerned Aetrium Shareholders will issue the joint press release attached hereto as Schedule B (the “Press Release”).

 

  

6

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
  

	
(b)

	
The Company and the Incumbent Directors acknowledge that the Concerned Aetrium Shareholders are obligated to make a Schedule 13D-A filing as a consequence of this Agreement.

 

	
  

	
(c)

	
The Concerned Aetrium Shareholders acknowledge that the Company is obligated to make a Form 8K filing as a consequence of this Agreement.

 

	
  

	
(d)

	
None of the Parties will make any public statements (including, for avoidance of doubt, any statement in any filing with the SEC) that are inconsistent with, or otherwise contrary to, the statements in the Press Release.  In addition, none of the Parties will make any public statements (including, for avoidance of doubt, any statement in any filing with the SEC) regarding one another, unless such statements are agreed to by the Parties, until such time as it is determined there will be a Competing Slate (and then any such statements will be in accordance with the SEC’s rules and regulations, including Exchange Act Rule 14a-9).

 

	
(6)

	
Miscellaneous Provisions. The following miscellaneous provisions will apply to this Agreement.

 

	
  

	
(a)

	
This Agreement will be subject to, and interpreted by and in accordance with, the laws (excluding conflict of law provisions) of the State of Minnesota.

 

	
  

	
(b)

	
This Agreement is the entire Agreement of the Parties respecting the subject matter hereof. There are no other agreements, representations or warranties, whether oral or written, respecting the subject matter hereof.

 

	
  

	
(c)

	
This Agreement, and all the provisions of this Agreement, will be deemed drafted by all of the Parties hereto.

 

	
  

	
(d)

	
This Agreement will not be interpreted strictly for or against any Party, but solely in accordance with the fair meaning of the provisions hereof to effectuate the purposes and intent of this Agreement.

 

	
  

	
(e)

	
Each Party hereto has entered into this Agreement based solely upon the agreements, representations and warranties expressly set forth herein and upon his or its own knowledge and investigation. No Party has relied upon any representation or warranty of any other Party hereto except any such representations or warranties as are expressly set forth herein.

 

	
  

	
(f)

	
Each of the persons signing below on behalf of a Party hereto represents and warrants that he has full requisite power and authority to execute and deliver this Agreement on behalf of the Party for whom he is signing and to bind such Party to the terms and conditions of this Agreement.

 

	
  

	
(g)

	
This Agreement may be executed in counterparts, each of which will be deemed an original. This Agreement will become effective only when all of the Parties hereto will have executed the original or counterpart hereof. This Agreement may be executed and delivered by a facsimile or digitized transmission of a counterpart signature page hereof.

 

  

7

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
  

	
(h)

	
In any action brought by a Party hereto to enforce the obligations of any other Party hereto, the prevailing Party will be entitled to collect from the opposing Party to such action such Party's reasonable litigation costs and attorneys’ fees and expenses (including court costs, reasonable fees of accountants and experts, and other expenses incidental to the litigation).

 

	
  

	
(i)

	
All sums of money required to be paid by the provisions of this Agreement that are not timely paid will bear ten percent (10%) interest per annum, compounded annually, until paid.

 

	
  

	
(j)

	
This Agreement will be binding upon and will inure to the benefit of the Parties and their respective successors and assigns.

 

	
  

	
(k)

	
This Agreement may not be assigned (including performance by subcontract) by any Party hereto.

 

	
  

	
(l)

	
Except with respect to paragraph 4 (c) and 4(e), which are intended for the benefit of and will be fully enforceable by the non-party persons named therein, this is not a third party beneficiary contract and no person or entity other than a Party signing this Agreement will have any rights under this Agreement.

 

	
  

	
(m)

	
This Agreement may be amended or modified only in writing that has been signed by the Parties hereto and that specifically references this Agreement.

 

	
  

	
(n)

	
A Party to this Agreement may decide or fail to require full or timely performance of any obligation arising under this Agreement. The decision or failure of a Party hereto to require full or timely performance of any obligation arising under this Agreement (whether on a single occasion or on multiple occasions) will not be deemed a waiver of any such obligation. No such decisions or failures will give rise to any claim of estoppel, laches, course of dealing, amendment of this Agreement by course of dealing, or other defense of any nature to any obligation arising hereunder.

 

	
  

	
(o)

	
Time is of the essence with respect to each obligation arising under this Agreement.

 

	
  

	
(p)

	
In the event any provision of this Agreement, or the application of such provision to any person or set of circumstances, will be determined to be invalid, unlawful, or unenforceable to any extent for any reason, the remainder of this Agreement, and the application of such provision to persons or circumstances other than those as to which it is determined to be invalid, unlawful, or unenforceable, will not be affected and will continue to be enforceable to the fullest extent permitted by law.

 

[Signature Page Follows]

 

  

8

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

 This Agreement has been entered into as of the date first set forth above.

 

	
COMPANY

	  
	
Aetrium Incorporated

 

/s/ Joseph Levesque

Joseph Levesque, President

	  
	  	  
	
CONCERNED AETRIUM

SHAREHOLDERS

	  
	
 

 

 

 

/s/ Galen Vetter

Galen Vetter

 

	
 

 

 

 

/s/ Jeffrey E. Eberwein

Jeffrey E. Eberwein

	
GLOBALTEL HOLDINGS LLC

 

 

 

/s/ Dilip Singh

Dilip Singh, Manager

	
ARCHER ADVISORS, LLC

 

 

 

/s/ Steven Markusen

Steven Markusen,

Managing Member

 

	
 

 

 

 

/s/ Dilip Singh

Dilip Singh

 

	
 

 

 

 

/s/ Steve Markusen

Steve Markusen

	
 

 

 

 

/s/ Richard K. Coleman Jr.

Richard K. Coleman Jr.

	
ARCHER FOCUS FUND, LLC

By:  Archer Advisors, LLC

 

 

/s/ Steven Markusen

Steven Markusen,

Managing Member

 

 

  

9

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
ANDOVER GROUP, Inc.

 

 

 

 

/s/ A. John Knapp Jr.

A. John Knapp Jr., President

	
ARCHER EQUITY FUND, LLC

By:  Archer Advisors, LLC

 

 

 

/s/ Steven Markusen

Steven Markusen, Managing Member

	
 

 

 

 

/s/ Alfred John Knapp Jr.

Alfred John Knapp Jr.

 

	  
	
 

 

 

 

/s/ Stephen J. Heyman

Stephen J. Heyman

	
BOSTON AVENUE CAPITAL LLC

 

 

 

/s/ Stephen J. Heyman

Stephen J. Heyman, Manager

 

	
 

 

 

 

/s/ James F. Adelson

James F. Adelson

 

	
BOSTON AVENUE CAPITAL LLC

 

 

 

/s/ James F. Adelson

James F. Adelson, Manager

	
 

 

 

 

/s/ Charles M. Gillman

Charles M. Gillman

	  

 

  

10

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

	
INCUMBENT DIRECTORS

	  
	
 

 

 

 

/s/ Joseph C. Levesque

Joseph C. Levesque

	  
	
 

 

 

 

/s/ Darnell L. Boehm

Darnell L. Boehm

	  
	
 

 

 

 

/s/ Daniel A. Carr

Daniel A. Carr

	  
	
 

 

 

 

/s/ Terrence W. Glarner

Terrence W. Glarner

	  
	
 

 

 

 

/s/ Douglas L. Hemer

Douglas L. Hemer

	  
	
 

 

 

 

/s/ Charles B. Westling

Charles B. Westling

	  

 

  

11

  

 

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

SCHEDULE A

 

Concerned Aetrium Shareholders

 

Jeffrey E. Eberwein

Archer Advisors, LLC

Archer Focus Fund, LLC

Archer Equity Fund, LLC

Steven Markusen

GlobalTel Holdings LLC

Dilip Singh

Richard K. Coleman, Jr.

Galen Vetter

Alfred John Knapp, Jr.

Andover Group, Inc.

Boston Avenue Capital LLC

Charles M. Gillman

James F. Adelson

Stephen J. Heyman

 

  

12

  

CONFIDENTIAL SETTLEMENT COMMUNICATION

 

 

SCHEDULE B

 

Press Release

 

Aetrium and Concerned Shareholders Reach Accord

 

ST. PAUL, MINNESOTA, [Date], 2013 (GLOBE NEWSWIRE) – Aetrium Incorporated (the “Company” or “Aetrium”) (NASDAQ: ATRM) and Concerned Aetrium Shareholders (“CAS”) jointly announce that the Company, the incumbent directors of the Company, and CAS have reached a settlement agreement allowing five members of CAS to immediately join Aetrium’s Board, resulting in an eleven member Board, and setting the date of the regular annual shareholder meeting for May 15, 2013 with voting to be conducted following the Company’s historical practices.

 

“This settlement will allow the Company to focus on its operations and will let the shareholders choose the ongoing directors at the May annual shareholder meeting.”  Joseph Levesque, Chief Executive Officer of the Company stated.

 

Jeffrey Eberwein, spokesman for CAS, stated “We are pleased to have reached an accommodation with the incumbent directors that provides our immediate participation on the Aetrium Board and will allow the shareholders to elect directors at the 2013 Annual Meeting without further complications.”

 

Pursuant to the settlement, five CAS nominees have been added to the Company’s Board of Directors, the 2013 Annual Meeting of the Company has been set for May 15, 2013, and the incumbent directors and CAS will confer to determine whether an agreement can be reached on a slate of directors to be submitted by the Company. If agreement cannot be reached, both the Company and CAS will be free to propose competing five member slates for a vote at the annual meeting.

 

The Company and CAS have each dismissed their competing claims filed in the pending litigation commenced by CAS. The Company is paying CAS $85,000 as part of settlement of the litigation.

 

Contact:

Paul Askegaard

651-704-1812 or

paskegaard@aetrium.com

13

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