Lone Star Value Management SC 13D/A ATRM Holdings, Inc.

Exhibit 99.1

SECURITIES PURCHASE AGREEMENT

SECURITIES PURCHASE AGREEMENT (this“Agreement”), dated as of January 12, 2018,byand between ATRM Holdings, Inc., aMinnesota corporation (the“Company”), and LoneStarValue Co-InvestI,LP(“Purchaser”).

WITNESSETH:

WHEREAS, Purchaser holds342,776 shares of Series B CumulativePreferred Stockof theCompany;and Lone StarValue Investors, LP(“LSVI”), an affiliate ofPurchaser, owns 1,067,885shares of theCompany’s common stock,par value $0.001per share (“CommonStock”), and holds203,689 shares of Series B CumulativePreferred Stockof theCompany;

WHEREAS, Lone Star Value Management, LLC (“LSVM”) is investment manager of Purchaser, LSVI, and a certain separately managedaccount holding 10,000 shares of Common Stock;

WHEREAS, Jeffrey E.Eberwein, the Chairman of theCompany’s Board of Directors (the “Board”),serves as themanager ofLone Star ValueInvestors GP, LLC, the generalpartner ofLSVI and Purchaser,and as the sole member ofLSVM, which serves as theinvestment manager ofLSVI, and therefore may be deemed to beneficially own the securitiesheld byPurchaser, LSVI, and acertain separately managed account;and

WHEREAS, subject to theterms and conditions of thisAgreement andpursuant toSection 4(a)(2)of theSecurities Act of 1933,as amended (the“Securities Act”), the Companydesires to issueand sell toPurchaser, and Purchaser desires topurchase from theCompany, a Promissory Note in theoriginal principalamount of $500,000(the “Note”).

NOW THEREFORE,inconsideration of themutual promisesand representations, warranties, covenants andagreements set forthherein, theparties hereto, intending to be legally bound, herebyagree as follows:

1.       Purchase and Sale of Securities.

1.1       Purchase and Sale. On theterms and subject to the conditionsset forth in thisAgreement, at the Closing(as defined below), the Company willsell and Purchaser will purchase the Note. Theterms and provisions of the Note are more fully setforth in theform of Promissory Note attachedhereto asExhibit A.The purchase price to be paid byPurchaser to the Company toacquire the Noteshall be $500,000 (the“Purchase Price”). At theClosing, Purchaser shall pay the PurchasePrice to the Company by wire transfer of immediatelyavailable funds toan account designated by the Companyand the Companyshall deliver toPurchaser an executedPromissory Note.

1.2       Closing. On the termsand subject to the conditionsset forth in thisAgreement, the closingof thetransactions contemplatedby thisAgreement (the“Closing”) shall take place remotely via theexchange ofelectronic copiesof documents, andshall be deemed tohave taken place simultaneously with theexecution and delivery of thisAgreement and thesatisfaction of the obligations of theparties underSection 1.1.

2.       Representations and Warrantiesof the Company. The Companyrepresents and warrants to Purchaseras follows:

2.1       Corporate Organization. The Company is acorporation dulyorganized, validly existingand ingood standing under thelaws of the State ofMinnesota, and has all requisite corporate powerand authority to own,operate and lease itsproperties and to carry on itsbusiness as and in theplaces where suchproperties are nowowned, operatedand leased orsuch business is nowbeing conducted.

2.2       Authorization. The Company has therequisite power and authority toenter intoand perform thisAgreement andany otheragreements, documentsand instruments delivered together with thisAgreementor inconnection herewith (the“Transaction Documents”)and toperform itsobligations hereunderand thereunder, none of which shall violate the terms of any existing agreement. The execution, deliveryand performanceof theTransaction Documents by the Companyand the consummationby it of thetransactions contemplated herebyand therebyhave beenduly authorizedbyall necessarycorporate action,and nofurther consentor authorization of theBoard,any committee of theBoard,or theCompany’s stockholders isrequired. TheTransaction Documentshave beenduly authorized,executed and deliveredby the Companyand constitute valid and binding obligations of theCompany, enforceable against the Company inaccordance with their respectiveterms, subject tobankruptcy, insolvency, fraudulent transfer,reorganization, moratoriumand similar laws ofgeneral applicability relating to oraffecting creditors’ rights generally and togeneral principles ofequity.

2.3       Approvals and Consents.The Company and/or its affiliates are notrequired to obtain anyconsent, authorization ororder of, or make any filing orregistration with, any court orgovernmental agencyor lenderinorder for it toexecute, deliver orperform any of itsobligations under theTransaction Documents or to issueand sell the Note inaccordance with theterms hereof, provided that for purposes of therepresentation made in thissentence, the Company isassuming and relying upon the accuracy of therelevant representations and agreements ofPurchaser herein.

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2.4       Dueand Valid Issuance. TheNote, when issued and fullypaid for inaccordance with the terms of thisAgreement, will be validlyissued, fullypaid and non-assessable.

2.5       Material Compliance withApplicable Laws. Neither the Company nor any of itssubsidiaries is inmaterial violation of,and neither the execution,delivery norperformance of any of theTransaction Documentshas or willresult in a violation of, anyfederal, state, local orforeign law,rule, regulation, order, judgment ordecree applicable to the Company or any of itssubsidiaries.

2.6       Finders. The Company has notretainedanyfinder, broker,agent, financial advisoror other intermediary inconnection with thetransactions contemplatedby thisAgreement. The Companyagrees to indemnifyand hold harmlessPurchaser, itsofficers, directors, affiliates, subsidiaries, employees andagents (as applicable) from liability foranycompensation toany such intermediaryretainedby the Companyand thefees and expenses ofdefending againstsuch liability oralleged liability.

2.7       Survival. Theforegoing representations, warranties and agreements shall survive theexecution of thisAgreement indefinitely.

3.       Representations and Warranties ofPurchaser. Purchaser herebyrepresents andwarrants toand agrees with the Companyas follows:

3.1       Organization ofPurchaser. Purchaser is a limitedpartnershipdulyorganized, validly existingand ingood standing under thelaws of thejurisdiction of itsorganization and has therequisite entity power to own itsassets and to carry on itsbusiness.

3.2       Authorization.Purchaser has therequisite powerand authority toenter intoand perform theTransaction Documents and topurchase the Note being sold to ithereunder. The execution, deliveryand performanceof theTransaction DocumentsbyPurchaser and theconsummationby it of thetransactions contemplated herebyand thereby havebeendulyauthorizedbyall necessary entityaction, and nofurther consent or authorization ofPurchaser or itspartners ormembers, as the casemaybe, isrequired. TheTransaction Documents have been dulyauthorized, executedand delivered by Purchaserand constitute, orshall constitute when executed and delivered, valid and bindingobligations ofPurchaser enforceable againstPurchaser inaccordance with theterms thereof, subjecttobankruptcy, insolvency, fraudulent transfer, reorganization, moratoriumand similar laws ofgeneral applicability relating to oraffecting creditors’ rights generally and togeneral principles ofequity.

3.3       Approvals and Consents.Purchaser is not required to obtainanyconsent, authorization ororder of, or makeany filing orregistration with, any court orgovernmental agency inorder for it toexecute, deliver orperform any of itsobligations under theTransaction Documents or to purchase the Note inaccordance with theterms hereof, provided that forpurposes of the representation made in thissentence, Purchaser is assumingand relying upon the accuracyof therelevant representations and agreements of the Companyherein, including representations as to other lenders of the Company.

3.4       Investment. Purchaser is acquiring the Note for its ownaccount asprincipal, notas anomineeor agent, for investmentpurposes only,and not with a view to, or for,resale, distribution orfractionalization thereof in whole or inpart and no otherperson or entityhas adirect orindirect beneficial interest in theNote. Purchaser does nothaveanycontract, undertaking, agreement orarrangement withany person or entity tosell, transfer orgrant participations tosuch person or entity or to any thirdperson or entity withrespect to theNote.

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3.5       ExemptionFrom Registration. Purchaser acknowledges that thesale of the Note isintended tobe exemptfrom registration under the SecuritiesActby virtue ofSection4(a)(2) of theSecurities Act.Infurtherance thereof, Purchaser representsand warrants to the Companyas follows:

(i)       Purchaser realizes that thebasis for theexemption from registration under the SecuritiesActmay not bepresent if, notwithstandingany representationand/or warranty to the contrarycontained in thisAgreement, Purchaserhas in mind merely acquiring the Note for a fixed ordeterminable period of time;

(ii)       Purchaser has thefinancial ability to bear the economic risk of itsinvestment in theNote, has adequatemeans for providing for itscurrent needsand contingencies and has no need for liquidity withrespect to itsinvestment in theCompany; and

(iii)       Purchaser has such knowledgeand experience infinancial and business matters as to becapable ofevaluating themerits and risks ofan investment in theNote.

3.6       Accredited Investor. Purchaser isan “accredited investor,”as that term isdefined in Rule 501 ofRegulation D.

3.7       Available Information. Purchaser:

(i)       Has beenfurnishedby the Company in connection with thesaleof the Note withall informationregarding theCompany, the termsand conditions of thesale of the Noteandanyadditional information thatPurchaser, itsrepresentative, attorney and/oraccountant hasrequested areasonable time priorto thedate hereof;

(ii)       Has been providedan opportunity for a reasonable time prior to thedate hereof to obtainadditional information concerning thesale of theNote, the Companyand all otherinformation to theextent theCompany possesses such information orcan acquire it withoutunreasonable effort orexpense;

(iii)       Has been given the opportunity for a reasonable time prior to thedate hereof toask questions of,and receiveanswers from, the Company or itsrepresentatives concerning theterms andconditions of thesale of the Noteand othermatters pertaining toan investment in theNote, or thatwhich was otherwiseprovided in order for them to evaluate themerits and risks of apurchase of the Note to the extent the Company possessessuch information orcan acquire it withoutunreasonable effort orexpense;

(iv)       Has notbeen furnished with any oralrepresentation ororal information inconnection with thesale of the Note; and

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(v)       Has determined that the Note is asuitable investment forPurchaser and thatat this timePurchaser could bear acomplete loss of itsinvestment in theNote.

3.8       Purchaser Representative. Purchaser is not relying onanystatementsorrepresentations madeby the Company or itsaffiliates oranypurchaser representative withrespect toeconomic considerations involved in aninvestment in theNote.

3.9       Transfer Restrictions.Purchaser shall notsell orotherwise transfer the Note withoutregistration under the SecuritiesAct or subject toan exemptiontherefrom, and Purchaser fully understandsand agrees thatPurchaser mustbear the economic risk ofPurchaser’s purchase because, among otherreasons, the Notehas not beenregistered under the Securities Act orunder the securities laws of any stateand, therefore, cannot be resold,pledged, assigned orotherwise disposed of unless they are subsequentlyregistered under the SecuritiesAct and under theapplicable securitieslaws ofsuch states, or unless exemptionsfrom such registration requirements are available. Inparticular, Purchaser isaware that the Notefalls within thedefinition of“restricted securities,” as such term isdefined in Rule 144promulgated under theSecurities Act. Purchaser further understands thatsale ortransfer of the Note isfurther restricted by state securitieslaws and theprovisions of thisAgreement.

3.10       EntireAgreement. Norepresentation or warranty has been made toPurchaserby theCompany, oranyofficer, director,employee, agent, affiliate or subsidiary of the Company other than thosecontained herein and,inpurchasing theNote, Purchaser is notrelying upon anyrepresentations other than those containedherein or mentioned herein.

3.11       Purchaser Information. Any information thatPurchaser has previouslyfurnished, or is now furnishing to the Company withrespect toPurchaser’s financial positionand businessexperience iscorrect and complete as of thedate of thisAgreement and, ifthere should be anymaterial change insuch information, Purchaser will immediatelyfurnish revised orcorrected information to theCompany.

3.12       Legends. Purchaser understandsand acknowledges that that the Notemay beendorsed with substantially the followinglegend:

(i)       “THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, ASAMENDED (“ACT”), ORUNDER ANY STATE SECURITIES LAW AND THESESECURITIES MAYNOT BE PLEDGED,SOLD, ASSIGNED ORTRANSFERRED INTHE ABSENCE OF ANEFFECTIVE REGISTRATION STATEMENT WITH RESPECTTHERETO UNDER THE ACTAND ANY APPLICABLE STATE SECURITIES LAW, OR UNLESSTHE COMPANYRECEIVES ANOPINION OFCOUNSEL, SATISFACTORY TOTHE COMPANY, THAT SUCHREGISTRATION ISNOT REQUIRED.”; and

(ii)       any otherlegends requiredbyapplicable state orfederal securities laws or anyapplicable statelaws regulating theCompany’s business.

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3.13       Non-Marketable Investments. Purchaser’s overall commitment toinvestments thatare not readily marketable is notdisproportionate toPurchaser’s net worth, and an investment in the Note will notcause such overallcommitment tobecome excessive.

3.14       Finders. Purchaserhas notretainedany finder,broker, agent, financial advisor or otherintermediary inconnection with thetransactions contemplatedby thisAgreement and agrees to indemnify and holdharmless theCompany, its officers,directors, affiliates, subsidiaries, employees and agents from liability for anycompensation to anysuch intermediaryretainedby Purchaser and thefees and expenses ofdefending against such liability oralleged liability.

3.15       Survival. Theforegoing representations, warranties and agreements shall survive theexecution of thisAgreement indefinitely.

4.       Covenants.

4.1       Use ofProceeds. Theproceeds from the purchaseand sale of the Noteshall beusedby the Company forgeneral working capital purposes.

4.2       Indemnificationby theCompany. The Company herebyagrees toreimburse, defend, indemnifyand hold harmlessPurchaser and itsaffiliates and itsand theirrespective directors, officers, employees, stockholders, members, managers, partners, agents, attorneys, representatives, successors and permittedassigns (the“Purchaser Indemnified Parties”)from and against any andall losses, damages, actions,proceedings, causes ofaction, liabilities, claims, encumbrances, penalties, demands, assessments, settlements, judgments, costs and expenses, including courtcosts and reasonable attorneys’ fees and disbursements, incurred by thePurchaser Indemnified Partiesrelating to, based upon,resulting from orarising out of (a) any inaccuracy orbreach of any of therepresentations orwarranties made by the Company in thisAgreement or (b) anybreach of or failure toperform anycovenant oragreement madeby the Company in thisAgreement.

5.       General Provisions.

5.1       EntireAgreement; Amendmentand Waiver.This Agreement, together with theNote, constitutes theentire agreement between the partieshereto withrespect to thesubject matter containedherein and supersedesall priororal orwritten agreements, ifany, between the parties hereto withrespect tosuch subjectmatter, and, except as otherwise expresslyprovided herein, is notintended toconfer upon any other person anyrights orremedies hereunder. Anyfailure by the Company orPurchaser toenforce anyrights hereunder shall not bedeemed awaiver of suchrights. This Agreement may not beamended ormodified or the provisionshereof waived(either generally or in aparticular instanceand either retroactively orprospectively) without the priorwritten consent of the party against whomsuch amendment, modification, orwaiver issought to be enforced.

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5.2       Notices.Allnotices and othercommunications hereunder shall beinwriting and shallbe deemedgiven whendelivered personally,onedayafter beingdeliveredto a nationallyrecognized overnight courier or on the business dayreceived(or the next business day ifreceived after 5:00 p.m.localtime or on aweekend orday onwhich banks are closed) when sent viafacsimile (with a confirmatory copy sentbyovernightcourier) to theparties at the followingaddresses(or at suchother address for a partyasshall be specifiedby like notice):

If toPurchaser:

LoneStarValue Co-InvestI,LP
53Forest Avenue,1st Floor
OldGreenwich, Connecticut 06870
Attn: Jeffrey E. Eberwein, Manager

If to theCompany:

ATRM Holdings,Inc.
5215 Gershwin Avenue N.
Oakdale, Minnesota 55128
Attn: Daniel M. Koch, President and Chief Executive Officer
Fax: (651)770-7975

With a copy to(which shall not constitutenotice):

Olshan FromeWoloskyLLP
1325Avenueof theAmericas
New York, New York 10019
Attn:Adam Finerman, Esq.
Fax: (212)451-2222 

5.3       Governing Law. ThisAgreement shall begovernedbyand construed inaccordancewith thelaws of the State of New Yorkapplicable tocontracts madeand performed insuch State, withoutreferencetoconflict of law rules that wouldrequiretheapplication of thelaws ofanother jurisdiction.

5.4       Binding Effect; Assignment. ThisAgreement shall be binding uponand inure to thebenefit of theparties and theirrespective successors and permitted assigns. Noassignmentof this Agreement or ofanyrights orobligations hereundermay be made by the Company orPurchaser, directlyor indirectly(byoperation of law orotherwise), without the priorwritten consent of the otherpartyhereto, andanyattempted assignment without therequired consents shall be void;provided,however, thatPurchasermayassign itsrights, interests and obligations hereunder to anyaffiliate;provided,further, that noassignment of anyobligations hereunder shall relieve theparties hereto ofanysuch obligations. Upon anysuch permittedassignment, thereferences in thisAgreement toPurchaser shall also apply toany such assignee unless thecontext otherwise requires.

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5.5       Expenses; Litigation Costs. Allcosts and expenses incurred inconnection with thisAgreement and thetransactions contemplated herebyshall bepaidby the Company.Inanyaction broughtby a partyhereto toenforce theobligations of any other partyhereto, theprevailingpartyshall be entitled tocollect from the opposing party to suchaction such party’s reasonablelitigation costs andattorney’s fees and expenses (including courtcosts, reasonable fees ofaccountants and experts,and otherexpenses incidental to thelitigation).

5.6       Headings. Theheadings orcaptions contained in thisAgreement are forreference purposes onlyand shall notaffect in anyway themeaning orinterpretation of thisAgreement.

5.7       Pronouns.Whenever thepronouns “it” or“its” areused herein,theyshall also bedeemed to mean“he” or“his” or “she” or“hers” whenever applicable. Words in thesingular shall beread andconstrued as though in the pluraland words in theplural shall beread and construed as thoughin thesingular inall cases wherethey would soapply.

5.8       Severability.Ifany term or other provisionof thisAgreement is invalid,illegal, orincapableof beingenforcedbyany law or publicpolicy, all otherterms and provisions of thisAgreement shall nevertheless remain in fullforce and effect so longas theeconomic orlegal substance of thetransactions contemplated hereby is notaffected inany manner materiallyadverse toanyparty. Uponsuch determination thatany term or other provision is invalid,illegal, orincapable of beingenforced, the parties heretoshall negotiate ingood faith to modify thisAgreement soas toeffect theoriginal intent ofthe parties as closelyas possible inan acceptable manner in order that thetransactions contemplated herebyare consummatedas originallycontemplated to thegreatest extent possible.

5.9       Information Confidential.Purchaser acknowledges that the informationreceivedby it pursuantheretomay beconfidential and is for its useonly.Purchaser agrees that it will not usesuch information inviolation of the Securities Exchange Act of 1934, as amended, orreproduce, discloseordisseminate such information to any otherperson, unless the Company has madesuch information available to the publicgenerally.

5.10       Counterparts. ThisAgreementmay be executed in two or morecounterparts, eachof whichshall bedeemed tobean original copy of thisAgreement and allofwhich, when taken together, shall bedeemed to constitute oneand the same agreement, and photostatic, .pdf orfacsimile copies of fully-executedcounterparts of thisAgreement shall begiven the sameeffect asoriginals.

[SIGNATURE PAGE FOLLOWS]

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[SIGNATURE PAGE TOSECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the parties have caused thisAgreement to be executed as of the day and year first above written. 

ATRM HOLDINGS, INC.
By:	/s/ Daniel M. Koch
	Name:	DanielM. Koch
	Title:	President andChief Executive Officer

LONE STAR VALUECO-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