Item 1.01
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Entry into a Material Definitive Agreement
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Registered Direct Offering
On March 30, 2020, CHF Solutions, Inc. (the “Company”) entered into a placement agency agreement (the “Placement Agency Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Placement Agent”). Pursuant to the terms
of the Placement Agency Agreement, the Placement Agent has agreed to use its reasonable best efforts to arrange for the sale of an aggregate of 5,130,228 shares of the Company’s common stock (the “Shares”). The Company will pay to the Placement Agent
a cash fee equal to 8% of the gross proceeds from the sale of the Shares and reimburse the Placement Agent for certain of its expenses in an amount not to exceed $35,000. The Company intends to use the net proceeds of this offering for general
corporate purposes, including the continued investment in commercialization efforts and increasing production of the Aquadex SmartFlow™ system.
The Placement Agency Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the
parties, and termination provisions.
The offering of the Shares (the “Registered Offering”) is being made pursuant to the Company’s effective shelf registration statement (the “Registration Statement”) on Form S-3 (Registration No. 333-224881), including
the prospectus dated May 23, 2018 contained therein, and a prospectus supplement that the Company intends to file on March 30, 2020.
On March 30, 2020, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with the purchasers of the Shares. The Purchase Agreement provides for the sale and issuance by the Company of an
aggregate of 5,130,228 Shares, at an offering price of $0.434 per share for gross proceeds of approximately $2,226,000, before deducting the Placement Agent’s fees and related offering expenses. The Purchase Agreement contains customary
representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company, other obligations of the parties and termination provisions.
Private Placement
The Purchase Agreement also provides for a concurrent private placement (the “Private Placement”) of warrants to purchase the Company’s common stock (the “Warrants”) with the purchasers in the Registered Offering. The
Warrants will be exercisable for an aggregate of 2,565,114 shares of common stock. The Warrants will have an exercise price of $0.3715 per share, will be exercisable on the issuance date (the “Initial Exercise Date”), and will expire five and a half
years following the Initial Exercise Date. Subject to limited exceptions, a holder of a Warrant will not have the right to exercise any portion of its Warrants if the holder, together with its affiliates, would beneficially own in excess of 4.99%
(or, at the election of a holder prior to the date of issuance, 9.99%) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise (the “Beneficial Ownership Limitation”); provided, however, that upon prior
notice to the Company, the holder may increase or decrease the Beneficial Ownership Limitation, provided further that in no event shall the Beneficial Ownership Limitation exceed 9.99% and any increase in the beneficial ownership limitation will not
be effective until 61 days following notice to us.
In connection with the Private Placement, the Company has agreed to file a registration statement registering for resale the shares of Common Stock issuable upon exercise of the Warrants within thirty days of the
closing of the Private Placement.
The Placement Agency Agreement, Purchase Agreement and form of Warrant are filed as Exhibits 1.1, 10.1 and 4.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The above
descriptions of the terms of the Placement Agency Agreement, Purchase Agreement and Warrants are qualified in their entirety by reference to such exhibits.