On May 1, 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 3,597,880 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(TM) system to address the COVID-19 pandemic.
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 May 4, 2020.
On May 1, 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 3,597,880 Shares,
at an offering price of $0.4725 per share for gross proceeds of approximately $1,700,000, 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 1,798,940 shares of common stock. The Warrants will have an exercise price of $0.41per 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.