Item 1.01
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Entry into a Material Definitive Agreement
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Registered Direct Offering
On October 23, 2019, 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 575,830 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 $85,000. The Company intends to use the net proceeds of this offering for
working capital purposes.
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 October 23, 2019.
On October 23, 2019, 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 575,830 Shares, at an offering price of $1.15 per share for gross proceeds of approximately $660,000, 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 575,830 shares of common stock. The Warrants will have an exercise price of $1.41 per share, will be exercisable beginning six months from the issuance date (the “Initial Exercise Date”), and
will expire on the fifth anniversary 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 sixty 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.