Document:

Exhibit 4.1

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of August 5, 2016 by and between SUNSHINE HEART, INC., a Delaware corporation (the “Company”), and GAMBRO UF SOLUTIONS, INC., a Delaware corporation (“Gambro”).  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the Asset Purchase Agreement by and between the parties hereto, dated as of August 5, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “Asset Purchase Agreement”).

 

WHEREAS:

 

A.            Upon the terms and subject to the conditions of the Asset Purchase Agreement, the Company has agreed to issue to Gambro (or one or more of its Affiliates as designated by Gambro), and Gambro has agreed to purchase (or cause its Affiliate designee(s) to purchase) 1,000,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) (the “Purchased Shares”) in partial consideration for the assets transferred to the Company pursuant to the Asset Purchase Agreement; and

 

B.            To induce Gambro to enter into the Asset Purchase Agreement, the Company has agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Gambro hereby agree as follows:

 

1.             DEFINITIONS.

 

As used in this Agreement, the following terms shall have the following meanings:

 

a.             “Person” means any person or entity including any corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental or political subdivision thereof or a governmental agency.

 

b.             “Principal Market” means the Nasdaq Capital Market; provided  however, that in the event the Company’s Common Stock is ever listed or traded on the New York Stock Exchange, the NYSE Amex Equities, the Nasdaq Global Select Market, the NASDAQ Global Market, or either one of the OTCQB or the OTCQX market places of the OTC Markets, then the “Principal Market” shall mean such other market or exchange on which the Company’s Common Stock is then listed or traded.

 

c.             “Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus, including post-effective amendments, and all other material incorporated by reference in such prospectus.

 

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d.             “Register,” “registered,” and “registration” refer to a registration effected by preparing and filing one or more registration statements of the Company in compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of such registration statement(s) by the U.S. Securities and Exchange Commission (the “SEC”).

 

e.             “Registrable Securities” means the Purchased Shares, the New Securities (as defined in the Asset Purchase Agreement) purchased by or issued to Gambro or any of its Affiliates, and any other shares of capital stock issued or issuable with respect to the Purchased Shares or any such New Securities as a result of any stock split, stock dividend, recapitalization, exchange or similar event; provided, however, any New Securities that are issued to Gambro or any of its Affiliates that have been registered with the SEC shall not be included within the definition of Registrable Securities for so long as such registration is effective and such New Securities may be resold thereunder in substantially the same manner as would be permitted pursuant to an effective registration hereunder.

 

f.             “Registration Statement” means a registration statement of the Company covering only the sale of the Registrable Securities, including the related Prospectus and any amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference into such registration statement.

 

g.             “Underwritten Offering” means a registration in which Registrable Securities are directly or indirectly sold, assigned or otherwise transferred to an underwriter or underwriters on a firm commitment basis for reoffering to the public.

 

2.             REGISTRATION.

 

a.             Demand Registration Rights.  At any time prior to the earlier of (1) the later of (A) the date on which the Registrable Securities may be sold under Rule 144 without any volume limitation and (B) the first anniversary of the date hereof, and (2) the fifth anniversary of the date hereof, Gambro or any of its Affiliates then holding any of the Registrable Securities (“Selling Affiliates”) that it wishes to sell shall have the right to request that the Company file a Registration Statement with the SEC on the appropriate registration form for all or part of the Registrable Securities held by Gambro or such Selling Affiliates, by delivering a written request thereof to the Company specifying the number of shares of Registrable Securities it wishes to register (a “Demand Registration”). The Company shall (i) use its reasonable best efforts to prepare and file the Registration Statement as expeditiously as possible but in any event within 30 days of such request, and (ii) use its reasonable best efforts to cause the Registration Statement to become effective in respect of each Demand Registration in accordance with the intended method of distribution set forth in the written request delivered by Gambro or its Selling Affiliates. Gambro and its Selling Affiliates may collectively make a total of two Demand Registration (it being understood that a single Registration Statement covering Registrable Securities held by more than one such entity shall only constitute a single Demand Registration) requests pursuant to this Section 2(a).

 

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b.             Following notice to Gambro in accordance with this Section 2(b), for the shortest period reasonably practicable and in any event for not more than forty-five (45) consecutive calendar days, the Company may (i) delay the filing or effectiveness of a Registration Statement or (ii) prior to the pricing of any offering of Registrable Securities pursuant to a Registration Statement delay such offering (and, if permitted, withdraw any Registration Statement that has been filed), but in each case described in clauses (i) and (ii) only if the Company’s Board of Directors (acting on the advice of legal counsel) determines in its reasonable judgment that proceeding with such an offering would (A) require the Company to disclose material, non-public information regarding any bona fide material financing, acquisition, disposition or other similar transaction involving the Company then under consideration that would not otherwise be required to be disclosed at such time and (B) materially and adversely affect the Company’s ability to complete such bona fide material financing, acquisition, disposition or other similar transaction.  Any period during which the Company has delayed a filing, effectiveness or an offering pursuant to this Section 2(b), but beginning only on the date on which Gambro receives notice thereof in accordance with the immediately following sentence, is herein called a “Suspension Period”.  The Company shall provide prompt written notice to Gambro of the commencement and termination of any Suspension Period (and any withdrawal of a Registration Statement pursuant to this Section 2(b)), but shall disclose the reasons therefor if Gambro requests such information, in which case Gambro shall keep such information confidential unless (i) disclosure of such information is required by court or administrative order or in connection with an audit or examination by, or a blanket document request from, a regulatory or self-regulatory authority, bank examiner or auditor, (ii) disclosure of such information, in the reasonable judgment of Gambro, is required by law or applicable legal process (including in connection with the offer and sale of securities pursuant to the rules and regulations of the SEC), (iii) such information is or becomes generally available to the public other than as a result of a non-permitted disclosure or failure to safeguard by Gambro in violation of this Agreement or (iv) such information (A) was known to Gambro (prior to its disclosure by the Company) from a source other than the Company when such source, to the knowledge of Gambro, was not bound by any contractual, legal or fiduciary obligation of confidentiality to the Company with respect to such information, (B) becomes available to Gambro from a source other than the Company when such source, to the knowledge of Gambro, is not bound by any contractual, legal or fiduciary obligation of confidentiality to the Company with respect to such information or (C) was developed independently by Gambro or their respective representatives without the use of, or reliance on, information provided by the Company.  In no event (x) may the Company deliver notice of a Suspension Period to the Selling Affiliates more than one (1) time during any 180-day period; and (y) shall a Suspension Period or Suspension Periods be in effect for an aggregate of seventy-five (75) days or more in any twelve (12) month period.

 

c.             Underwritten Offerings.

 

(i)            In the event of an Underwritten Offering, Gambro promptly shall select the underwriter(s) as well as counsel for the underwriter(s), provided that the same are reasonably acceptable to the Company.

 

(ii)           If requested by the managing underwriter(s) for an Underwritten Offering, the Company shall enter into an underwriting agreement with such underwriter(s) for such

 

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Underwritten Offering, in form and substance reasonably satisfactory to the Company, Gambro and the underwriter(s). Such agreement shall contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type.  Gambro and any applicable Selling Affiliates shall enter into such underwriting agreement at the request of the Company, which agreement shall contain such reasonable representations and warranties by Gambro and such Selling Affiliates, and such other reasonable terms as are generally prevailing in agreements of that type.

 

(iii)          In the event of a sale of the Registrable Securities in an Underwritten Offering, the Company shall agree, and it shall cause its executive officers and directors to agree, if requested by the managing underwriter or underwriters in such Underwritten Offering not to effect any sale or distribution (including any offer to sell, contract to sell, short sale or any option to purchase) of any securities that are of the same type as those being registered in connection with such public offering and sale, or any securities convertible into or exchangeable or exercisable for such securities, during the period beginning five days before, and ending 90 days (or such lesser period as may be permitted by the managing underwriter or underwriters) after, the effective date of the Registration Statement filed in connection with such registration (or, if later, the date of the Prospectus), to the extent timely notified in writing by the managing underwriter or underwriters. The Company also agrees to execute an agreement evidencing the restrictions in this Section 2(c)(iii) in customary form, which form is reasonably satisfactory to the Company and the underwriter(s); provided, that such restrictions alternatively may be included in the underwriting agreement.  The Company may impose stop-transfer instructions with respect to the securities subject to the foregoing restriction until the end of the required stand-off period.

 

(iv)          If the managing underwriter or underwriters of a proposed Underwritten Offering of Registrable Securities inform(s) Gambro in writing that, in its or their opinion, the number of securities requested to be included in such registration exceeds the number that can be sold in such offering without being likely to have a significant adverse effect on the price, timing or distribution of the securities offered or the market for the securities offered, the number of Registrable Securities to be included in such registration shall be reduced to the maximum number recommended by the managing underwriter or underwriter; provided, that Gambro may notify the Company in writing that the Registration Statement shall be abandoned or withdrawn, in which event the Company shall abandon or withdraw such Registration Statement. In the event Gambro notifies the Company that such Registration Statement shall be abandoned or withdrawn, Gambro and its Selling Affiliates shall not be deemed to have requested a Demand Registration pursuant to this Section 2.

 

d.             All Offerings.

 

(i)            The Registration Statement shall register only the Registrable Securities (or portion thereof requested for inclusion by Gambro and the Selling Affiliates) and no other securities of the Company.

 

(ii)           Gambro shall furnish all information regarding Gambro (or, as applicable, Gambro’s Selling Affiliates) as is reasonably requested by the Company for inclusion in the Registration Statement.

 

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(iii)          The Company shall, as required by applicable securities regulations, from time to time file with the SEC, a Prospectus, if any, to be used in connection with sales of the Registrable Securities under the Registration Statement.

 

(iv)          The Company shall use its commercially reasonable efforts to have the Registration Statement or any amendment declared effective by the SEC as soon as practicable.  Subject to Section 3(e), the Company shall use commercially reasonable efforts to keep the Registration Statement effective pursuant to Rule 415 promulgated under the 1933 Act and available for sales of all of the Registrable Securities at all times through the Registration Period.  The Company shall be deemed to have effected a registration for purposes of this Agreement if the Registration Statement is declared effective by the SEC or becomes effective upon filing with the SEC and remains effective until the earlier of (A) the date when all Registrable Securities thereunder have been sold and (B) 60 days from the effective date of the Registration Statement (the “Registration Period”). No registration shall be deemed to have been effective if the conditions to closing specified in the underwriting agreement or dealer manager agreement, if any, entered into in connection with such registration are not satisfied by reason of a wrongful act, misrepresentation or breach of such applicable underwriting agreement or dealer manager agreement by the Company or any of its Affiliates.  If during the Registration Period, such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental authority or the need to update or supplement the Registration Statement, the Registration Period shall be extended on a day-for-day basis. The Registration Statement (including any amendments or supplements thereto and Prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

3.             RELATED OBLIGATIONS.

 

With respect to the Registration Statement and whenever any Registrable Securities are to be registered pursuant to Section 2, the Company shall use its commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations:

 

a.             The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to any Registration Statement and the Prospectus used in connection with such Registration Statement, as may be necessary to keep the Registration Statement effective at all times during the Registration Period, subject to Section 3(e) hereof and, during such period, comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement.  Should the Company file a post-effective amendment to the Registration Statement, the Company will use its commercially reasonable efforts to have such filing declared effective by the SEC within twenty (20) consecutive Business Days as of the date of filing, which such period shall be extended for an additional twenty (20) Business Days if the Company receives a comment letter from the SEC in connection therewith.

 

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b.             The Company shall submit to (i) Gambro for review and comment any disclosure in the Registration Statement and all amendments and supplements thereto (other than any Prospectus that consists only of a copy of a filed Form 10-Q, Form 10-K or a Current Report on Form 8-K) containing information provided by Gambro for inclusion in such document and any descriptions or disclosure regarding Gambro or any of its Affiliates then holding Registrable Securities, the Asset Purchase Agreement, including the transaction contemplated thereby, or this Agreement at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form to which Gambro reasonably and timely objects and (ii) the underwriter(s), if any, for review and comment any disclosure in the Registration Statement and all amendments and supplements thereto (other than any Prospectus that consists only of a copy of a filed Form 10-Q, Form 10-K or a Current Report on Form 8-K) containing information provided by the underwriter(s) for inclusion in such document and any descriptions or disclosure regarding the underwriter(s) or the underwriting agreement at least two (2) Business Days prior to their filing with the SEC, and not file any document in a form to which the underwriter(s) reasonably and timely objects.  Upon request of Gambro or the underwriter(s), if any, the Company shall provide to Gambro and the underwriter(s), if any, all disclosure in the Registration Statement and all amendments and supplements thereto (other than any Prospectus that consists only of a copy of a filed Form 10-Q, Form 10-K or Current Report on Form 8-K) at least one (1) Business Day prior to their filing with the SEC, and not file any document in a form to which Gambro or the underwriter(s) reasonably and timely objects, which consent shall not be unreasonably withheld, conditioned or delayed.  Gambro and the underwriter(s), if any, shall use their respective commercially reasonable efforts to comment upon the Registration Statement and any amendments or supplements thereto within two (2) Business Days from the date they receives the final version thereof.  The Company shall furnish to Gambro and the underwriter(s), if any, without charge, any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to the Registration Statement.

 

c.             Upon request of Gambro or the underwriter(s), if any, the Company shall furnish to Gambro and the underwriter(s), as applicable: (i) promptly after the same is prepared and filed with the SEC, at least one copy of the Registration Statement and any amendment(s) thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits, (ii) upon the effectiveness of a Registration Statement, a copy of the Prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies as Gambro or the underwriter(s) may reasonably request) and (iii) such other documents, including copies of any preliminary or final Prospectus, as Gambro or the underwriter(s) may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities by Gambro and its Selling Affiliates or the underwriter(s), if any.

 

d.             The Company shall use commercially reasonable efforts to (i) register and qualify, unless an exemption from registration and qualification is available, the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as Gambro or the underwriter(s), if any, reasonably requests, (ii) prepare and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to

 

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qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction.  The Company shall promptly notify Gambro and the underwriter(s), if any, of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

e.             As promptly as practicable after becoming aware of such event or facts, the Company shall notify Gambro and the underwriter(s), if any, in writing if the Company has determined that the Registration Statement or the Prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and promptly prepare a prospectus supplement or amendment to such Registration Statement to correct such untrue statement or omission, and deliver a copy of such prospectus supplement or amendment to Gambro and the underwriter(s), if any.  In providing this notice to Gambro and the underwriter(s), if any, the Company shall not include any other information about the facts underlying the Company’s determination and shall not in any way communicate any material nonpublic information about the Company or the Common Stock to Gambro, the underwriter(s), if any, or any of their respective Affiliates.  The Company shall also promptly notify Gambro and the underwriter(s), if any, in writing (i) when a Prospectus or any prospectus supplement or post-effective amendment has been filed, and when a Registration Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Gambro and the underwriter(s), if any, by facsimile or e-mail on the same day of such effectiveness), (ii) of any request by the SEC for amendments or supplements to any Registration Statement or related prospectus or related information, (iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate, (iv) if at any time the representations and warranties of the Company (written or oral) contained in any underwriting agreement cease to be true and correct in all material respects, and (v) of receipt by the Company of any notification with respect to the suspensions or the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.

 

f.             The Company shall use its commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of any Registration Statement, or the suspension of the qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest practical time and to notify Gambro and the underwriter(s), if any, of the issuance of such order and the resolution thereof or its receipt of actual notice of the initiation or threat of any proceeding for such purpose.

 

g.             The Company shall (i) cause all the Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted under the

 

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rules of such exchange, or (ii) secure designation and quotation of all the Registrable Securities if the Principal Market is an automated quotation system.  The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section.

 

h.             The Company shall cooperate with Gambro, the Selling Affiliates and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered pursuant to any Registration Statement and enable such certificates to be in such denominations or amounts as Gambro, the Selling Affiliates or the underwriter(s), if any, may reasonably request and registered in such names as Gambro, the Selling Affiliates or the underwriter(s) may request.

 

i.              The Company shall at all times provide a transfer agent and registrar with respect to its Common Stock.

 

j.              If reasonably requested by Gambro or the underwriter(s), if any, the Company shall (i) promptly incorporate in a prospectus supplement or post-effective amendment to the Registration Statement such information as Gambro or the underwriter(s) believes should be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect to the number of Registrable Securities being sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities; (ii) make all required filings of such prospectus supplement or post-effective amendment promptly after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii) supplement or make amendments to any Registration Statement.

 

k.             The Company shall use its commercially reasonable efforts to cause the Registrable Securities covered by any Registration Statement to be registered with or approved by such other governmental agencies or authorities in the United States as may be necessary to consummate the disposition of such Registrable Securities.

 

l.              Within one (1) Business Day after any Registration Statement is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies to Gambro and the underwriter(s), if any) confirmation that such Registration Statement has been declared effective by the SEC in the form attached hereto as Exhibit A.  Thereafter, if reasonably requested by Gambro or the underwriter(s), if any, at any time, the Company shall require its counsel to deliver to Gambro a written confirmation of whether or not the effectiveness of such Registration Statement has lapsed at any time for any reason (including, without limitation, the issuance of a stop order) and whether or not the Registration Statement is current and available to Gambro and its Affiliates or the underwriter(s), if any, holding any such Registrable Securities for sale of all of the Registrable Securities.

 

m.           The Company shall cooperate and assist in any filings required to be made with the Financial Industry Regulatory Authority and each securities exchange, if any, on which any of the Company’s securities are then listed or quoted and on each inter-dealer quotation system on which any of the Company’s securities are then quoted, and in the performance of any due diligence investigation by any underwriter (including any “qualified independent

 

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underwriter”) that is required to be retained in accordance with the rules and regulations of each such exchange, and use its reasonable best efforts to cause the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the sale of such Registrable Securities.

 

n.             The Company shall obtain for delivery to and addressed to Gambro, its Selling Affiliates and to the underwriter(s), if any, opinions from the general counsel of the Company, in each case dated the effective date of the Registration Statement or, in the event of an Underwritten Offering, the date of the closing under the underwriting agreement, and in each such case in customary form and content.

 

o.             In the case of an Underwritten Offering, the Company shall obtain for delivery to and addressed to the Company, Gambro, the Selling Affiliates and the managing underwriter(s), if any, a cold comfort letter from the Company’s independent registered public accounting firm in customary form and content for the type of Underwritten Offering, dated the date of execution of the underwriting agreement and brought down to the closing.

 

p.             In the case of an Underwritten Offering, the Company shall cause its senior executive officers to participate at reasonable times and for reasonable periods in the customary “road show” presentations that may be reasonably requested by the managing underwriter(s), if any, and otherwise to facilitate, cooperate with, and participate in each proposed offering contemplated herein and customary selling efforts related thereto, except to the extent that such participation materially interferes with the management of the Company’s business; provided, that the effectiveness period for any Demand Registration shall be increased on a day-for-day basis by the period of time that management cannot participate.

 

q.             The Company agrees to take all other reasonable actions as necessary and requested by Gambro and the underwriter(s), if any, to expedite and facilitate disposition by Gambro, the Selling Affiliates and the underwriter(s), if any, of Registrable Securities pursuant to any Registration Statement.

 

4.             OBLIGATIONS OF GAMBRO.

 

a.             Gambro has furnished to the Company in Exhibit B hereto such information regarding itself (and any Affiliates holding any such Registrable Securities), the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it or its applicable Affiliates as required to effect the registration of such Registrable Securities (assuming such sale and offer of Registrable Securities is not an Underwritten Offering) and shall execute such documents in connection with such registration as the Company may reasonably request.  The Company shall notify Gambro in writing of any other information the Company reasonably requires from Gambro or its applicable Affiliates in connection with any Registration Statement hereunder.  Gambro will as promptly as practicable notify the Company of any material change in the information set forth in Exhibit B, other than changes in its ownership of the Common Stock.

 

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b.             Gambro and its Selling Affiliates agree to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any amendments and supplements to any Registration Statement hereunder.

 

c.             Gambro agrees that, upon receipt of any notice from the Company of the happening of any event or existence of facts of the kind described in Section 3(f) or any notice of the kind described in the first sentence of Section 3(e), Gambro will immediately discontinue (and will cause its Affiliates holding any Registrable Securities to immediately discontinue) disposition of Registrable Securities pursuant to any registration statement(s) covering such Registrable Securities until Gambro’s receipt (which may be accomplished through electronic delivery) of the copies of the filed supplemented or amended prospectus contemplated by Section 3(f) or the first sentence of Section 3(e).  In addition, upon receipt of any notice from the Company of the kind described in the first sentence of Section 3(e), Gambro will immediately discontinue (and will cause its Affiliates holding any Registrable Securities to immediately discontinue) purchases or sales of any securities of the Company unless such purchases or sales are in compliance with applicable U.S. securities laws.

 

5.             EXPENSES OF REGISTRATION.

 

All Registration Expenses of the Company, other than sales or brokerage commissions, incurred in connection with registrations, filings or qualifications pursuant to Sections 2 and 3 shall be paid by the Company.  For purposes hereof, “Registration Expenses” means all expenses incident to the Company’s performance of or compliance with this Agreement, including all (a) registration, qualification and filing fees, (b) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications within the United States of any Registrable Securities being registered), (c) printing expenses, messenger, telephone and delivery expenses, (d) internal expenses of the Company (including all salaries and expenses of employees of members of the Company performing legal or accounting duties), (e) fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by the Company’s independent certified public accountants of comfort letters customarily requested by underwriters) and (f) fees and expenses of listing any Registrable Securities on any securities exchange on which the shares of Common Stock are then listed and Financial Industry Regulatory Authority registration and filing fees.

 

6.             INDEMNIFICATION.

 

a.             To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend Gambro, its Affiliates, each Person, if any, who controls Gambro or any of its Affiliates, the members, the directors, officers, partners, employees, agents, representatives of Gambro and its Affiliates, and each Person, if any, who controls Gambro or any of its Affiliates within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the “1934 Act”) (each, an “Indemnified Person”), against any losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement (with the consent of the Company, such consent not to be unreasonably withheld) or reasonable expenses (collectively, “Claims”) reasonably incurred in

 

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investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency or body or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in the Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the Registration Statement (the matters in the foregoing clauses (i) through (iii) being, collectively, “Violations”).  The Company shall reimburse each Indemnified Person promptly as such expenses are incurred and are due and payable, for any reasonable legal fees or other reasonable expenses incurred by them in connection with investigating or defending any such Claim.  Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a): (A) shall not apply to a Claim by an Indemnified Person arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company; (B) with respect to any superseded prospectus, shall not inure to the benefit of any such person from whom the person asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to the benefit of any other Indemnified Person) if the untrue statement or omission of material fact contained in the superseded prospectus was corrected in the revised prospectus, as then amended or supplemented, if such revised prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e), and Gambro was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a violation; (C) shall not be available to the extent such Claim is based on a failure of Gambro to deliver or to cause to be delivered the Prospectus made available by the Company, if such Prospectus was theretofore made available by the Company pursuant to Section 3(c) or Section 3(e); and (D) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld.  Such indemnity shall remain in full force and effect and shall survive the transfer of the Registrable Securities by Gambro or any of its Affiliates pursuant to Section 10.

 

b.             In connection with the Registration Statement, Gambro agrees to indemnify, hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers who signs the Registration Statement, each Person, if any, who controls the Company within the meaning of the 1933 Act or

 

11

 

the 1934 Act (collectively and together with an Indemnified Person, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any Violation, in each case to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity with written information about Gambro or any of its Affiliates set forth on Exhibit B attached hereto or updated from time to time in writing by Gambro and furnished to the Company by Gambro expressly for use in in the Registration Statement or from the failure of Gambro to deliver or to cause to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to Section 3(c) or Section 3(e); and, subject to Section 6(d), Gambro will reimburse any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of Gambro, which consent shall not be unreasonably withheld; provided, further, however, that Gambro shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to Gambro or its Affiliates as a result of the sale of Registrable Securities pursuant to such registration statement.  Such indemnity shall remain in full force and effect and shall survive the transfer of the Registrable Securities by Gambro or any of its Affiliates pursuant to Section 10.  For the avoidance of doubt and notwithstanding anything to the contrary in this Agreement, in no case shall the Company or any of its Affiliates be deemed to be Affiliates of Gambro or any of its Affiliates for purposes of this Agreement.

 

c.             Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding (including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be, and upon such notice, the indemnifying party shall not be liable to the Indemnified Person or Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Person or Party in connection with the defense thereof; provided, however, that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified Party and any other party represented by such counsel in such proceeding.  The Indemnified Party or Indemnified Person shall cooperate with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which relates to such action or claim.  The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised as to the status of the defense or any settlement negotiations with respect thereto.  No indemnifying

 

12

 

party shall be liable for any settlement of any action, claim or proceeding effected without its written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the consent of the Indemnified Party or Indemnified Person, consent to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation.  Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that the indemnifying party is prejudiced in its ability to defend such action.

 

d.             The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or Indemnified Damages are incurred.

 

e.             The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

 

7.             CONTRIBUTION.

 

To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.

 

8.             REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

 

With a view to making available to Gambro and its Affiliates the benefits of Rule 144 promulgated under the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit Gambro or any of its Affiliates to sell securities of the Company to the public without registration (“Rule 144”), the Company agrees, at the Company’s sole expense, to:

 

a.             make and keep public information available, as those terms are understood and defined in Rule 144;

 

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b.             file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such requirements and the filing of such reports and other documents as required to satisfy the current public information requirements of Rule 144;

 

c.             furnish to Gambro so long as Gambro or any of its Affiliates owns Registrable Securities, as promptly as practicable at Gambro’s request, (i) a written statement by the Company that it has complied in all material respects with the requirements of Rule 144(c)(1)(i) and (ii), and (ii) such other information, if any, as may be reasonably requested to permit Gambro and its Affiliates to sell such securities pursuant to Rule 144 without registration; and

 

d.             take such additional action as is requested by Gambro to enable Gambro and its Affiliates to sell the Registrable Securities pursuant to Rule 144, including, without limitation, delivering all such legal opinions, consents, certificates, resolutions and instructions to the Company’s transfer agent as may be reasonably requested from time to time by Gambro and otherwise fully cooperate with Gambro and Gambro’s (or its applicable Affiliate’s) broker to effect such sale of securities pursuant to Rule 144.

 

The Company agrees that damages may be an inadequate remedy for any breach of the terms and provisions of this Section 8 and that Gambro and its Affiliates shall, whether or not it is pursuing any remedies at law, be entitled to seek, at its sole cost and expense, equitable relief in the form of a preliminary or permanent injunctions, upon any breach or threatened breach of any such terms or provisions.

 

9.             TERM OF AGREEMENT.

 

This Agreement shall terminate upon the earlier of (a) the later of (i) the date on which the Registrable Securities may be sold under Rule 144 without any volume limitation and (ii) the first anniversary of the date hereof, and (b) the fifth anniversary of the date hereof, Gambro or any of its Affiliates then holding any of the Registrable Securities; provided, that the provisions of Sections 5, 6, 8 (which shall continue for so long as the Registrable Securities are held by Gambro or any of its Affiliates), 9, 12 and the last sentence of Section 3(g) shall survive any such termination

 

10.          ASSIGNMENT OF REGISTRATION RIGHTS.

 

The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of Gambro.  Gambro may not assign its rights under this Agreement without the written consent of the Company, provided that Gambro may assign any or all of its rights under this Agreement to any Affiliate of Gambro without the Company’s consent.

 

11.          AMENDMENT OF REGISTRATION RIGHTS.

 

Provisions of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and Gambro.

 

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12.          MISCELLANEOUS.

 

a.             Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Business Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Sunshine Heart, Inc.

12988 Valley View Road

Eden Prairie, MN 55344

Telephone:       (952) 345-4201

Facsimile:         (952) 224-0181

Attention:         Chief Executive Officer and Chairman

 

With a copy (which shall not constitute notice) to:

 

Honigman Miller Schwartz and Cohn LLP

Columbia Plaza

350 East Michigan Avenue, Suite 300

Kalamazoo, Michigan 49007-3800

Attention:         Phillip D. Torrence

Telephone:       (269) 337-7702

Facsimile:         (269) 337-7703

Attention:         Phillip D. Torrence

 

If to Gambro:

 

Gambro UF Solutions, Inc.

c/o Baxter Healthcare Corporation

One Baxter Parkway

Deerfield, Illinois 60015

Telephone: 224-948-2400

Facsimile:  224-948-2450

Attention: Global Franchise Head, Acute

 

With a copy (which shall not constitute notice) to:

 

Faegre Baker Daniels LLP

311 S. Wacker Drive, Suite 4300

Chicago, IL 60606

Telephone:       312-212-6500

Facsimile:         312-212-6501

 

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Attention:         Roger D. Rhoten

 

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.  Any party to this Agreement may give any notice or other communication hereunder using any other means (including messenger service, ordinary mail or electronic mail), but no such notice or other communication shall be deemed to have been duly given unless it actually is received by the party for whom it is intended.

 

b.             No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

 

c.             The corporate laws of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders.  All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of Illinois, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Illinois or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Illinois.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Chicago for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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d.             This Agreement, the Asset Purchase Agreement and the other documents entered into as referenced therein constitute the entire understanding among the parties hereto with respect to the subject matter hereof and thereof.  There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.  This Agreement, the Asset Purchase Agreement and the other documents entered into as referenced therein supersede all other prior oral or written agreements between Gambro, the Company, their Affiliates and persons acting on their behalf with respect to the subject matter hereof and thereof.

 

e.             Subject to the requirements of Section 10, this Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.

 

f.             The headings in this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

 

g.             This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile or pdf (or other electronic reproduction of a) signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile or pdf (or other electronic reproduction of a) signature.

 

h.             Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

i.              The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party.

 

j.              This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

* * * * *

 

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IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of day and year first above written.

 

	
 
    	
THE   COMPANY:
    
	
 
    	
 
    
	
 
    	
SUNSHINE   HEART, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   JOHN ERB
    
	
 
    	
Name: John Erb
    
	
 
    	
Title: CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GAMBRO:
    
	
 
    	
 
    
	
 
    	
GAMBRO   UF SOLUTIONS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   W. RICHARD MARRITT
    
	
 
    	
Name: W. Richard Marritt
    
	
 
    	
Title: Global Franchise Head
    

 

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

, 20

 

[Transfer Agent]

[Address]

[Address]

Attn: [Contact]

 

Re: SUNSHINE HEART, INC.

 

Ladies and Gentlemen:

 

We refer to that certain Asset Purchase Agreement, dated as of August 5, 2016 (the “Asset Purchase Agreement”), entered into by and between SUNSHINE HEART, INC., a Delaware corporation (the “Company”) and GAMBRO UF SOLUTIONS, INC. (“Gambro”) pursuant to which the Company has issued to [Gambro // Gambro and certain of its Affiliates // certain Affiliates of Gambro] 1,000,000 shares of the Company’s Common Stock, par value $0.0001 per share (the “Common Stock”), in accordance with the terms of the Asset Purchase Agreement.  The Company has registered with the U.S. Securities and Exchange Commission (the “SEC”) the sale by [Gambro // Gambro and certain of its Affiliates // certain Affiliates of Gambro] of up to [1,000,000] shares of Common Stock (the “Purchased Shares.”).

 

The Company has filed a Registration Statement (File No. 333-            ) (the “Registration Statement”) with the SEC relating to the sale by [Gambro // Gambro and certain of its Affiliates // certain Affiliates of Gambro] of the Purchased Shares.  Accordingly, we advise you that (i) the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at         P.M. on              , 20   and (ii) the Company has no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and (iii) the Purchased Shares are available for sale under the 1933 Act pursuant to the Registration Statement and may be issued without any restrictive legend.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
SUNSHINE   HEART, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
CC:         Gambro UF   Solutions, Inc.
    	
 
    

 

 

EXHIBIT B

 

Information About Gambro Furnished To The Company By Gambro

Expressly For Use In Connection With The Registration Statement and Prospectus in a Non-Underwritten Offering

 

Plan of Distribution

 

The common stock may be sold or distributed from time to time by the selling stockholder directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed.  The sale of the common stock offered by this prospectus may be effected in one or more of the following methods:

 

·      ordinary brokers’ transactions;

 

·      transactions involving cross or block trades;

 

·      through brokers, dealers, or underwriters who may act solely as agents;

 

·      “at the market” into an existing market for the common stock;

 

·      in other ways not involving market makers or established business markets, including direct sales to purchasers or sales effected through agents;

 

·      in privately negotiated transactions; or

 

·      any combination of the foregoing.

 

In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers.  In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the registration or qualification requirement is available and complied with.

 

The selling stockholder may also sell shares of common stock under Rule 144 promulgated under the Securities Act, if available, rather than under this prospectus.  In addition, the selling stockholder may transfer the shares of common stock by other means not described in this prospectus.

 

Brokers, dealers, underwriters, or agents participating in the distribution of the shares as agents may receive compensation in the form of commissions, discounts, or concessions from the selling stockholder and/or purchasers of the common stock for whom the broker-dealers may act as agent.  Gambro has informed us that each such broker-dealer will receive commissions from Gambro or its affiliates which will not exceed customary brokerage commissions.

 

We have advised Gambro that while it is engaged in a distribution of the shares included in this prospectus it is required to comply with Regulation M promulgated under the Securities

 

 

Exchange Act of 1934, as amended.  With certain exceptions, Regulation M precludes the selling stockholder, any affiliated purchasers, and any broker-dealer or other person who participates in the distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete.  Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security.  All of the foregoing may affect the marketability of the shares offered hereby this prospectus.

 

We may suspend the sale of shares by Gambro or its affiliates pursuant to this prospectus for certain periods of time for certain reasons, including if the prospectus is required to be supplemented or amended to include additional material information.

 

This offering will terminate on the date that all shares offered by this prospectus have been sold by Gambro or its affiliates.Exhibit 10.1

 

PATENT LICENSE AGREEMENT

 

This agreement (this “AGREEMENT”) is effective August 5, 2016 (“EFFECTIVE DATE”) by and between GAMBRO UF SOLUTIONS, INC., a Delaware corporation (“Licensor”), and SUNSHINE HEART, INC., a Delaware corporation (“Licensee”).

 

WHEREAS, Licensor, and Licensee have executed an Asset Purchase Agreement dated August 5, 2016 (the “PURCHASE AGREEMENT”) wherein Licensee purchased certain retail product lines from Licensor; and;

 

WHEREAS the PURCHASE AGREEMENT requires Licensor to license certain patent rights pertaining to the manufacture and sale of the products listed in Schedule 1 (hereinafter “ACQUIRED PRODUCTS”).

 

NOW, THEREFORE, Licensor and Licensee agree as follows:

 

1.             DEFINITIONS:

 

1.1          Purchase Agreement.  Defined terms not defined in this AGREEMENT, but instead defined in the PURCHASE AGREEMENT, shall have the meanings provided for in the PURCHASE AGREEMENT.

 

1.2          Certain Definitions.  For all purposes of this AGREEMENT, the following definitions shall apply (in addition to those terms defined throughout the AGREEMENT):

 

“AFFILIATE” means, with respect to any PERSON, any PERSON directly or indirectly controlling, controlled by, or under common control with, such other PERSON at any time during the period for which the determination of affiliation is being made.  For purposes of this definition, the term “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any PERSON, means the possession, directly or indirectly, of the power to direct or cause the direction of management policies of such PERSON, whether through the ownership of voting securities or by contract or otherwise.

 

“CONTROL” and “CONTROLLED” means possession of the ability to grant a license or forbear from the filing of an infringement action as provided for herein without violating the terms of any agreement or other arrangement with any third party.

 

“EXCLUSIVE PATENTS” means the patents and/or patent applications set forth in Schedule 1 and identified not already licensed for use by a third party.

 

“FIELD OF USE” means the field of use set forth in Schedule 1.

 

1

 

“GOVERNMENTAL ENTITY” means any federal, state, political subdivision or other governmental agency, court or instrumentality, foreign or domestic.

 

“LICENSED PATENTS” means collectively the EXCLUSIVE PATENTS and the NON-EXCLUSIVE PATENTS.

 

“LICENSED PRODUCT” means a product for which the making, having made, using, offering for sale, selling or importing would absent this Agreement or any other agreement (including any assignment agreement), infringe a Valid Claim.

 

“NON-EXCLUSIVE PATENTS” means the patents and/or patent applications set forth in Schedule 1 that have already been licensed for use by a third party.

 

“PERSON” means an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization, a government or any agency or political subdivision thereof or any other entity or organization.

 

“REQUIRED MAINTENANCE PATENTS” MEANS the patents listed as such on Schedule 1.

 

“VALID CLAIM” means a claim in any unexpired issued Licensed Patent which has not been rejected, disclaimed or held invalid by a decision beyond the right of review.

 

2.             GRANT OF LICENSE

 

2.1          Scope of License — EXCLUSIVE PATENTS.  Licensor grants Licensee a world-wide, exclusive license with the right to sub-license to third Party manufacturers manufacturing the PRODUCTS for Licensee, under the EXCLUSIVE PATENTS, to make, have made, use, sell, offer for sale and import, LICENSED PRODUCTS in the FIELD OF USE, under the terms set forth below.

 

2.2          Scope of License — NON-EXCLUSIVE PATENTS.  Licensor grants Licensee a world-wide, non-exclusive license with the right to sub-license to third Party manufacturers manufacturing the PRODUCTS for Licensee, under the NON-EXCLUSIVE PATENTS, to make, have made, use, sell, offer for sale and import, LICENSED PRODUCTS in the FIELD OF USE, under the terms set forth below.

 

2.3          No other licenses.  Other than the express license grants of Sections 2.1 and 2.2 above, no other rights or licenses (whether by implication or estoppel) are granted by Licensor to Licensee hereunder.  All rights not expressly granted to Licensee under this AGREEMENT are reserved to Licensor.

 

2

 

3.             MAINTAINING AND ENFORCING THE LICENSED PATENTS

 

3.1          Maintenance.

 

(a)           Licensor shall use commercially reasonable efforts to continue maintenance of the REQUIRED MAINTENANCE PATENTS.  Licensee shall promptly reimburse Licensor for all fees, costs and expenses (internal or external) incurred by Licensor or its affiliates to maintain the REQUIRED MAINTENANCE PATENTS.

 

(b)           Licensor shall keep Licensee promptly and fully informed of the course of patent prosecution, maintenance or other proceedings pertaining to the REQUIRED MAINTENANCE PATENTS including by providing Licensee with copies of important, substantive communications, search reports and third party observations submitted to or received from patent offices throughout the world. Without limiting the foregoing, Licensor shall promptly share with Licensee copies of all communications (including, without limitation, office actions, notices of rejection or allowance) with or from patent offices in connection with prosecution and maintenance efforts with respect to the REQUIRED MAINTENANCE PATENTS. Without limiting the foregoing, Licensor shall promptly share with Licensee the complete texts of all interference, opposition, reexamination, reissue, revocation, nullification or any official proceeding involving the REQUIRED MAINTENANCE PATENTS anywhere in the world. Licensee shall have the right to assume responsibility for any patent or any part thereof of the REQUIRED MAINTENANCE PATENTS, which Licensor intends to abandon or otherwise cause or allow to be forfeited, provided that Licensor will retain a world-wide, perpetual and irrevocable, royalty free, license with right to grant sublicenses to make, have made, use, sell, offer for sale and import products and services outside the Field of Use under any REQUIRED MAINTENANCE PATENT for which responsibility is assumed by Licensee under this Section.

 

3.2          Discontinuance.  In the event that Licensor wishes to discontinue efforts to maintain any Licensed Patent other than the REQUIRED MAINTENANCE PATENTS, Licensor shall provide Licensee with notice of such discontinuance.

 

3.3          Infringement by Third Parties.

 

(a)           Each party agrees to reasonably assist the other in protecting the LICENSED PATENTS, including (but not limited to) reporting to the other party any infringement, misappropriation or violation of the LICENSED PATENTS it becomes aware of and cooperating with the other party and lending reasonable assistance as requested by the other party.

 

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(b)           Licensee Right to Prosecute.  So long as Licensee remains the exclusive licensee of the EXCLUSIVE PATENTS, Licensee, to the extent permitted by law, shall have the right, under its own control and at its own expense, to prosecute any third party infringement of the EXCLUSIVE PATENTS in the FIELD OF USE, including the right to sue for past infringements.  If required by law, Licensor shall permit any action under this Section 3.3(b) to be brought in its name, including being joined as a third-party plaintiff, provided that Licensee shall hold Licensor harmless from, and indemnify Licensor against, any costs, expenses, or liability that Licensor incurs in connection with such action. Any recovery obtained shall belong to Licensee. Licensee shall not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Section 3.3(b) which would restrict Licensor’s enjoyment of the EXCLUSIVE PATENTS or otherwise interfere with Licensor’s business without the prior written consent of Licensor, which will not be unreasonably withheld or delayed.

 

(c)           Licensor Right to Prosecute.  In the event that Licensee declines to pursue any alleged infringer of the EXCLUSIVE PATENTS in the FIELD OF USE, or fails to have initiated an infringement action within a reasonable time, not to exceed 60 days, after Licensee first becomes aware of the basis for such action, or for infringement of the NON-EXCLUSIVE PATENTS, Licensor shall have the right, at its sole discretion, to prosecute such infringement under its sole control and at its sole expense.  In such event, any recovery obtained shall belong to Licensor.  Licensor shall hold Licensee harmless from, and indemnify Licensee against, any costs, expenses, or liability that Licensor incurs in connection with such action and for any order for costs that may be made against Licensee in any such proceeding.

 

4.             MARKING:

 

4.1          Marking.  Licensee shall mark all LICENSED PRODUCTS in accordance with the provisions of 35 U.S.C. §287(a).

 

5.             WARRANTIES AND INDEMNIFICATIONS:

 

5.1          Licensee Warranties.  Licensee warrants that it shall comply with all applicable governmental and industry safety standards in connection with the design, manufacture and marketing of Licensed Products.

 

5.2          Licensor Warranties.  Licensor warrants that it has the right to grant the licenses being granted in this Agreement. Except for the preceding sentence and except as set forth in the PURCHASE AGREEMENT, the LICENSED PATENTS are being licensed on an AS IS basis and Licensor makes no warranties or representations of any kind.

 

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5.3          Survival.  The representations and warranties of the parties hereto in this AGREEMENT shall survive the execution and delivery hereof and the delivery of all of the documents executed in connection herewith and shall continue in full force and effect after the date hereof.

 

5.4          Indemnification by Licensee. From and after the EFFECTIVE DATE, subject to the provisions of this Section 5, Licensee shall indemnify Licensor, its AFFILIATES and each of their respective officers, directors, employees, agents and representatives against and hold them harmless from any LOSS suffered or incurred by any such indemnified party to the extent arising out of the manufacture, distribution, use, sale or marketing of its (or its other Licensee’s) LICENSED PRODUCTS, including (except as set forth below) any unauthorized use of any patent, process, idea, method or device, or unfair trade practice, false advertising, trademark infringement, or the like, but excluding (i) items for which Licensee has a claim for indemnification under the PURCHASE AGREEMENT, and (ii) intellectual property claims arising out of Licensee’s use of the LICENSED PATENTS in accordance with this AGREEMENT .

 

6.             TERM

 

6.1          Duration. Upon execution by both parties, this AGREEMENT shall become effective as of the EFFECTIVE DATE, and shall continue unless terminated by mutual written agreement; provided, however, that with respect to any particular LICENSED PATENT, the license grant (but not any other provisions, including those related to enforcement and recovery of damages) shall expire when such LICENSED PATENT no longer has any VALID CLAIMS in any country.

 

6.2          Reversion.  If Licensee ceases operating the Business or files for, has filed against it, or otherwise undertakes any bankruptcy, reorganization, insolvency, moratorium or other similar proceeding, the rights granted under the license will immediately and automatically revert to Licensor.

 

7.             EXCLUSIONS:  Except as set forth in this AGREEMENT or in the PURCHASE AGREEMENT, this AGREEMENT does not:

 

(i)            Convey a warranty or representation by Licensor as to the validity or scope of any Licensed Patent;

 

(ii)           Impose an obligation upon Licensor to file any patent application, secure any patent, or maintain any patent or patent application in force other than as specified in Section 3.1;

 

(iii)          Convey a warranty or representation by Licensor that anything made, used, sold, offered for sale, imported, or otherwise disposed of under the license granted in this Agreement will or will not infringe patents of third parties;

 

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(iv)          Impose an obligation upon Licensor to bring or prosecute actions or suits against third parties for infringement of the Licensed Patent other than as specified in Section 3.3;

 

(v)           Impose an obligation upon Licensor to work as a consultant or employee of Licensee;

 

(vi)          Convey to Licensee, by implication, estoppel or otherwise, any ownership, license or other right under any patent or patent application, except the license expressly granted to Licensee herein; or

 

(vii)         Convey to Licensee by implication, estoppel or otherwise, any license or other right to use, in advertising, publicity or otherwise, any name, trade name, trademark, certification mark or any contraction, abbreviation or simulation thereof.

 

8.             ASSIGNMENT

 

8.1          This AGREEMENT is not assignable without Licensor’s prior written consent for two (2) years post-Closing, such consent not to be unreasonably withheld, conditioned or delayed.  For the avoidance of doubt, it will not be unreasonable for Licensor to withhold consent if the assignee is Medtronic, Johnson & Johnson, St. Jude, Pfizer, Fresenius, B. Braun or Abbot, or any successors or affiliate of any of the foregoing.  For purposes of this Section 8, a change of control of Licensee shall be deemed to be a prohibited assignment of this Agreement.

 

8.2          After the period specified in Section 8.1, this AGREEMENT may be assigned, transferred or otherwise delegated (collectively, an “ASSIGNMENT”) by Licensee without the prior written consent of Licensor; provided, however, that prior to an ASSIGNMENT (which for purposes of this proviso only shall not include any pledge of this Agreement to a lender providing financing to Licensee until such time as the lender exercises it rights under applicable pledge agreements, security agreements or other collateral documents), any proposed assignee of this AGREEMENT must agree in writing, delivered to Licensor, that it shall be bound by the terms and provisions of this AGREEMENT.

 

8.3          This AGREEMENT may be assigned, transferred, sublicensed or otherwise delegated by Licensor without the prior written consent of Licensee; provided, however, that prior to an ASSIGNMENT any proposed assignee of this AGREEMENT must agree in writing, delivered to Licensee, that it shall be bound by the terms and provisions of this AGREEMENT.

 

8.4          This AGREEMENT and all of the provisions hereof shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.

 

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8.5          Any attempted assignment or delegate in contravention hereof shall be null and void.

 

9.             BREACH, CURE AND REMEDIES

 

9.1          Breach and Cure. If a party materially violates any of the terms or conditions of this AGREEMENT, the other party may send written notice to the breaching party, particularly specifying the breach.  The breaching party shall have thirty (30) days to cure the specified breach.  If the breaching party does not cure the breach within such period of time, then the non-breaching party may pursue such remedies as may be available to it under applicable law, including but not limited to both equitable and damages remedies, but excluding termination of this AGREEMENT.  In formulating appropriate remedies commensurate with the nature and extent of any such uncured breach, the court shall take into account, in addition to all other pertinent factors, each party’s inability to terminate this AGREEMENT for breach.  The parties also agree that, subject to its equitable powers to decide otherwise, a court shall award to the prevailing party in any litigation under this section the prevailing party’s costs and reasonable attorneys’ fees in pursuing the matter.  Either party’s failure to send a notice of breach or to pursue legal remedies available to it shall not constitute or be construed as a waiver or acquiescence, and each party expressly reserves the right to subsequently pursue such remedies for the same or any other breach, either of the same or different character.

 

9.2          Limitation of Liability.  Notwithstanding any other provision of this agreement, neither party shall be liable to the other party for lost profit, lost revenue or any other form of indirect, incidental, special, consequential or punitive damages, even if that party has been informed of the possibility of such damages.

 

10.          MISCELLANEOUS

 

10.1        Confidentiality of Agreement.  The parties agree that this Agreement and the terms of this Agreement are to be strictly confidential, and neither party shall disclose this Agreement or anything with respect to the terms of this Agreement to any third party except:  (i) to legal counsel; (ii) to auditors; (iii) to the extent, if any, required by law (e.g., a governmental filing); (iv) in accordance with the terms of a protective or other order duly entered in a legal proceeding; or (v) with the prior written consent of the other party.  If disclosure of this Agreement or the terms and conditions thereof is required to be made in a governmental filing (e.g., a filing with the Securities and Exchange Commission), the other party shall be notified of that fact at least forty-five (45) days prior to any such disclosure , and if requested by such other party within thirty (30) days of receipt of such notice, the disclosing party shall request confidential treatment of the terms and conditions of this Agreement and use its best efforts to ensure that confidential treatment is so afforded to such terms and conditions, as may be permitted under the rules of the applicable governmental agency.

 

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10.2        Governing Law and Dispute Resolution.  This Agreement shall be governed and interpreted in accordance with the substantive laws of the State of Delaware irrespective of any choice of law rules in the State of Delaware or in any other jurisdiction.  The parties agree that any action for relief based in whole or in part on this Agreement (or the breach thereof) or otherwise relating in whole or in part to this Agreement shall be filed in, and the parties consent to personal jurisdiction and venue in, the Federal and State Courts of the State of Delaware having subject matter jurisdiction over such action.  In any such action between the parties, the prevailing party shall be entitled to recover (in addition to any other relief awarded or granted) its reasonable costs and expenses (including attorneys’ fees) incurred in the proceeding.

 

10.3        Notices.  All notices provided for in this Agreement shall be effective when they are received by personal delivery, telecopier or telex, or one business day after they are received by courier or by registered or certified airmail at the following address:

 

If to Licensor:

 

c/o Baxter Healthcare Corporation
 One Baxter Parkway
 Deerfield, Illinois 60015
 Attn:  Richard Marritt

 

with a copy to (which shall not constitute notice to Provider):

 

Faegre Baker Daniels LLP
 311 S. Wacker, Suite 4300
 Chicago, Illinois 60606
 Attn: Roger D. Rhoten
 Telephone: (312) 356-5113
 Telecopy:   (312) 212-6501

 

If to Licensee:

 

Sunshine Heart, Inc.

12988 Valley View Road

Eden Prairie, MN 55344

Attention: John L. Erb

Chairman and Chief Executive Officer

Telephone: (952) 345-4201

Telecopy:   (952) 224-0181

 

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with a copy to (which shall not constitute notice to Licensee):

 

Honigman Miller Schwartz and Cohn LLP

Columbia Plaza

350 East Michigan Avenue, Suite 300

Kalamazoo, Michigan 49007-3800

Attention:              Phillip D. Torrence

Telephone:            (269) 337-7702

Telecopy:              (269) 337-7703

 

10.4        Invalidity of Provision.  If any of the provisions of this Agreement shall be held by a court or administrative agency of competent jurisdiction to contravene the laws of any country, it is agreed that such invalidity or illegality should not invalidate the whole Agreement, but this Agreement shall be construed as if it did not contain the provision or provisions held to be invalid or illegal in the particular jurisdiction concerned, and insofar as such construction does not affect the substance of this Agreement and the rights and obligations of the parties hereto, it shall be construed and enforced accordingly.  In the event, however, that such invalidity or illegality shall substantially alter the relationship between the parties hereto, affecting adversely the interest of either party, then the parties hereto shall negotiate a mutually acceptable alternative provision not conflicting with such laws.

 

10.5        Entire Agreement, Amendments, Waivers.  This Agreement represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous negotiations, representations and agreements made by and between such parties.  The parties acknowledge that they have not relied upon any representation whatsoever of the other which is not contained in this Agreement.  There are no understandings, obligations, representations or warranties except as herein provided for and no rights are granted except as expressly set forth in this Agreement.  Any waiver by either party of the breach or default of any of the terms or conditions of this Agreement by the other party will not be considered as a continuing waiver or a waiver of any other prior, contemporaneous or subsequent breach or default, whether the same as or similar to or different from, the breach or default waived.  No alteration, amendment, variation, supplementation, modification or waiver of any of the terms or provisions of this Agreement shall be binding or effective for any purpose unless made pursuant to an instrument in writing signed by Licensor and Licensee; provided, however, that waiver by either party hereto of compliance by the other party with any provision hereof or of any breach or default by such other party need be signed only by the party waiving such provision, breach or default.

 

[REMAINDER OF PAGE IS BLANK — SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Licensor and the Licensee have caused this Agreement to be executed on the date first written above by their respective duly authorized officers.

 

 

	
Licensor
    	
GAMBRO   UF SOLUTIONS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/   W. Richard Marritt
    
	
 
    	
Name:
    	
W.   Richard Marritt
    
	
 
    	
Title:
    	
Global   Franchise Head
    
	
 
    	
 
    
	
 
    	
 
    
	
Licensee
    	
SUNSHINE   HEART, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/   John Erb
    
	
 
    	
Name:
    	
John   Erb
    
	
 
    	
Title:
    	
CEO
    

 

[Signature Page to Patent License Agreement]

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