snwv_ex105





 







EXHIBIT 10.5


 


 


 


SANUWAVE
HEALTH, INC.


 

 


NOTE
AND WARRANT PURCHASE AND SECURITY AGREEMENT

 


Issue
Date: August 6, 2020

 


$15,000,000

 


 




 





1








 






This
NOTE AND WARRANT PURCHASE AND SECURITY AGREEMENT (this
“Agreement”) is entered into as of August 6, 2020, by
and among NH EXPANSION CREDIT FUND
HOLDINGS LP (“North
Haven Expansion”), as agent (in such capacity,
together with its successors or permitted assigns,
“Agent”), the
Holders from time to time signatory hereto, including North Haven
Expansion in its capacity as a Holder (each, a “Holder” and collectively, the
“Holders”), and
SANUWAVE
HEALTH, INC.,
a Nevada corporation (“Issuer”).

 



RECITALS

 


WHEREAS, Issuer
wishes to issue the Notes and the Warrants (each as defined below),
and the Holders desire to purchase from Issuer the Notes and the
Warrants. This Agreement sets forth the terms on which the Holders
will (i) purchase the Notes and Warrants from Issuer and Issuer
will issue the Notes and Warrants, and (ii) repay the amounts owing
to the Holders under the Notes.

 




1.


Note Terms





 

1.1 Payments
and Prepayments

 

(a) Purchase.
Subject to the terms and conditions of this Agreement, on the Issue
Date, each Holder shall purchase secured promissory notes, in the
form attached hereto as Exhibit D (as amended,
restated, amended and restated, supplemented or otherwise modified
from time to time, the “Notes,” and each, a
“Note”), in an
aggregate original principal amount of Fifteen Million Dollars
($15,000,000), in accordance with each Holder’s Commitment as
set forth on Schedule
1.1 hereto, and warrants to purchase shares of common stock
of Issuer in an aggregate amount of two percent (2.00%) of
Issuer’s fully-diluted capital stock as of the Issue Date,
after giving effect to the Celularity Acquisition and the Equity
Financing, in the form attached hereto as Exhibit E, and on terms, and
subject to adjustments, as set forth therein (as amended, restated,
amended and restated, supplemented or otherwise modified from time
to time, the “Warrants,” and each, a
“Warrant”).

 

(b) Payment.
All unpaid principal and accrued interest is due and payable in
full on the Maturity Date. The Notes may not be prepaid, except as
set forth in subsection
(d).

 

(c) Mandatory
Prepayment Upon an Acceleration. If the Notes are
accelerated following the occurrence of an Event of Default, Issuer
shall immediately pay to Holders an amount equal to the sum of: (i)
all outstanding principal of the Notes plus accrued but unpaid
interest on the Notes, (ii) (x) the Prepayment Fee, if such
acceleration occurs after the Initial Prepayment Date, or (y) the
Prepayment Amount, if such acceleration occurs prior to the Initial
Prepayment Date and (iii) all other sums, if any, that shall have
become due and payable pursuant to the Note Documents, including
interest at the Default Rate with respect to any past due amounts,
and the Put Amount (unless the Warrant was earlier exercised in
full and the Put Amount paid).

 

(d) Permitted
Prepayment of the Notes. Issuer shall have the option to
prepay the Notes, in whole but not in part, provided Issuer
provides written notice to Holders of its election to prepay the
Notes at least five (5) Business Days prior to such prepayment. In
the case of any prepayment pursuant to this Section 1.1(d), Issuer shall
pay, on the date of such prepayment, (A) all outstanding principal
of the Notes plus accrued but unpaid interest on the Notes, (B) (x)
the Prepayment Fee, if such prepayment occurs after the Initial
Prepayment Date, or (y) the Prepayment Amount, if such prepayment
occurs prior to the Initial Prepayment Date, and (C) all other
sums, if any, that shall become due and payable, including interest
at the Default Rate with respect to any past due
amounts.

 



 

2







 





 

(e) AHYDO
Catch-Up Payment. Notwithstanding anything to the contrary
contained herein, commencing with the first accrual period (as
defined in IRC Section 1272(a)(5)) following the fifth
(5th)
anniversary of the “issue date” of the Notes (as
defined in Treasury Regulations Section 1.1273-2(a)(2)), and
continuing with each accrual period thereafter, the Issuer shall be
permitted to pay in respect of the Notes, on or before the end of
such accrual period, an amount in cash equal to (but not exceeding)
the amount required to be paid to the extent necessary to prevent
the Notes from being treated as an “applicable high yield
discount obligation” within the meaning of the IRC, such
amount to be determined by Issuer in consultation with
Holder.

 

1.2 Interest

 

(a) Interest
Rate. Subject to Section 1.2(b), the principal
amount outstanding on the Notes shall accrue interest, consisting
of (i) interest payable in cash quarterly in arrears on the last
day of each fiscal quarter (each, a “Payment Date”), at a per annum
rate equal to the sum of (A) the greater of (x) the Prime Rate in
effect as of each Payment Date, and (y) three percent (3.00%), plus
(B) nine percent (9.00%); and (ii) interest (I) not paid when due
in accordance with Section 1.2(a)(i) above for any reason,
including but not limited to any blockage under any intercreditor
or subordination agreement, and (II) at a rate of three percent
(3.00%) per annum (collectively, the “Deferred Interest”), which shall
be compounded by being added to the principal amount of the Notes
on each Payment Date and which shall be payable in cash upon the
earliest to occur of (x) the Maturity Date, (y) prepayment of the
Notes, or (z) acceleration of the maturity of the Notes upon an
Event of Default.

 

(b) Default
Rate. Immediately upon the occurrence and during the
continuance of an Event of Default, Obligations shall bear interest
at a rate per annum equal to five (5) percent (5.00%) above the
rate that is otherwise applicable thereto (the “Default Rate”). Payment or
acceptance of the increased interest rate provided in this
Section 1.2(b) is
not a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of Agent or any
Holder.

 

(c) 360-Day
Year. Interest shall be computed on the basis of a 360-day
year for the actual number of days elapsed.

 

(d) Payments.
Agent will invoice Issuer for payments of any amounts due
hereunder, and Issuer shall promptly pay such amounts invoiced
within three (3) Business Days. Payments received after 3:00 p.m.
Eastern time are considered received at the opening of business on
the next Business Day. When a payment is due on a day that is not a
Business Day, the payment is due the next Business Day and
additional fees or interest, as applicable, shall continue to
accrue. Payments received by Agent with respect to Obligations will
be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any
Governmental Authority (including any interest, additions to tax or
penalties applicable thereto) (“Taxes”) except as required by any
Governmental Authority, applicable law, regulation or international
agreement, in which case, except to the extent such withholding or
deduction is on account of Excluded Taxes, the amount due with
respect to such payment or other sum payable hereunder will be
increased to the extent necessary to ensure that, after the making
of such required withholding or deduction (including any
withholding or deduction made with respect to such additional
amounts payable pursuant to this sentence), each Holder receives a
net sum equal to the sum which it would have received had no
withholding or deduction been required. Issuer will, upon request,
furnish each Holder with proof reasonably satisfactory to each
Holder indicating that Issuer has made such withholding payment;
provided, however, that Issuer need not make any withholding
payment if the amount or validity of such withholding payment is
contested in good faith by appropriate and timely proceedings and
as to which payment in full is bonded or reserved against by
Issuer. The agreements and obligations of Issuer contained in this
Section 1.2(d) shall survive the termination of this
Agreement.

 

(e) Expense
Deposit. Issuer has paid to Agent an expense deposit of
Thirty-Five Thousand Dollars ($35,000) (the “Expense Deposit”) to initiate
Holders’ due diligence review process. The Expense Deposit
shall be applied to the payment of Holder Expenses incurred through
the Issue Date, with any remaining amounts promptly remitted to
Issuer.

 

1.3 Fees.
Issuer shall pay to Agent, for disbursement to Holders (except
otherwise indicated) according to their pro rata percentage of the
Commitment:

 

(a) Origination
Fee. A fully earned, non-refundable fee in an amount of two
percent (2.00%) of the original principal amount of each Note, on
the Issue Date;

 



 

3







 





 

(b) Prepayment
Amount. The Prepayment Amount, if due pursuant to
Section 1.1(c) or
Section
1.1(d);

 

(c) Prepayment
Fee. The Prepayment Fee, if due pursuant to Section 1.1(c) or Section 1.1(d);

 

(d) Monitoring
Fee. A fully earned, non-refundable monitoring fee in an
amount of Thirty Thousand Dollars ($30,000) (i) on the Issue Date
and (ii) on each anniversary thereof; provided that such fee shall
be (x) solely for the account of and payable to North Haven
Expansion; and (y) pro-rated based on the number of days elapsed
for any period not constituting a full year (and refunded to the
extent of any excess payment); and

 

(e) Holder
Expenses. All Holder Expenses incurred through and after the
Issue Date promptly upon request.

 




2.

CONDITIONS TO NOTE
ISSUANCE.





 


The
obligation of each Holder to purchase the Note(s) under this
Agreement on the Issue Date (as set forth in Section 1.1(a)) is subject to
the satisfaction (or waiver) of the conditions to issuance set
forth on Schedule 1 hereto; provided that each Holder that has
signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or
other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to such Holder.

 




3.


CREATION OF SECURITY INTEREST





 


Issuer
hereby grants to Agent, for the ratable benefit of each Holder, to
secure the payment and performance in full of all of the
Obligations, a continuing security interest in, and pledges to
Agent, the Collateral, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products
thereof. Issuer hereby authorizes Agent to file financing
statements, without notice to Issuer, at Issuer’s expense,
with all appropriate jurisdictions to perfect or protect
Agent’s interest or rights hereunder. If this Agreement is
terminated, Agent’s Lien in the Collateral granted hereunder
shall continue until the Obligations (other than inchoate indemnity
obligations, and any other obligations which, by their terms, are
to survive the termination of this Agreement) are repaid in full in
cash. Upon payment in full in cash of the Obligations (other than
inchoate indemnity obligations, and any other obligations which, by
their terms, are to survive the termination of this Agreement),
Agent’s Lien shall be automatically released and all rights
therein shall revert to Issuer, at which time Agent shall promptly
execute and deliver to Issuer, at Issuer’s expense, all
documents (including relevant certificates, securities and other
instruments) that Issuer shall reasonably request to evidence such
termination or release and shall perform such other actions
reasonably requested by Issuer to effect such release, including
delivery of certificates, securities and instruments.

 


Without
limiting the foregoing: Issuer hereby pledges, assigns and grants
to Agent, for the ratable benefit of each Holder, a security
interest in all the Shares, together with all proceeds and
substitutions thereof, all cash, stock and other moneys and
property paid thereon, all rights to subscribe for securities
declared or granted in connection therewith, and all other cash and
noncash proceeds of the foregoing, as security for the performance
of the Obligations. Subject to the prior satisfaction of the Senior
Debt, or upon the written consent of the Senior Lender, the
certificate or certificates for the Shares (if any) will be
delivered to Agent, accompanied by an instrument of assignment duly
executed in blank by Issuer. To the extent required by the terms
and conditions governing the Shares, Issuer shall cause the books
of each entity whose Shares are part of the Collateral and any
transfer agent to reflect the pledge of the Shares. Upon the
occurrence and during the continuance of an Event of Default
hereunder, but subject to the prior satisfaction of the Senior
Debt, Agent may effect the transfer of any securities included in
the Collateral (including but not limited to the Shares) into the
name of Agent and cause new (as applicable) certificates
representing such securities to be issued in the name of Agent or
its transferee. Subject to the prior satisfaction of the Senior
Debt, or upon the written consent of the Senior Lender, Issuer will
execute and deliver such documents, and take or cause to be taken
such actions, as Agent may reasonably request to perfect or
continue the perfection of Agent’s security interest in the
Shares. Unless an Event of Default shall have occurred and be
continuing, Issuer shall be entitled to exercise any voting rights
with respect to the Shares and to give consents, waivers and
ratifications in respect thereof, provided that no vote shall be
cast or consent, waiver or ratification given or action taken which
would be inconsistent with any of the terms of this Agreement or
which would constitute or create any violation of any of such
terms. All such rights to vote and give consents, waivers and
ratifications shall terminate upon the occurrence and continuance
of an Event of Default. Agent reserves the right, subject to the
prior satisfaction of the Senior Debt, or upon the written consent
of the Senior Lender, to take such steps in any jurisdiction of
organization of any Foreign Subsidiary to perfect and maintain the
perfection of any security interest granted with respect to the
Shares (and any assets, as applicable) of any Foreign Subsidiary.
Notwithstanding anything herein to the contrary, Issuer shall not
be required to take any steps to obtain, perfect or maintain the
perfection of any Lien granted with respect to the Collateral if
and for so long as, in the sole judgment of Agent, the cost,
difficulty, burden or consequences of obtaining, perfecting or
maintaining a Lien in such Collateral exceeds the practical
benefits to the Holders afforded thereby.

 



 

4







 





 




4.

REPRESENTATIONS AND
WARRANTIES.





 


Issuer
represents and warrants as follows:

 

(a) Due
Organization and Qualification. Issuer and each Subsidiary
is duly existing and in good standing in its jurisdiction of
organization or formation and is qualified and licensed to do
business and is in good standing in any jurisdiction in which the
conduct of its business or its ownership of property requires that
it be qualified except where the failure to do so could not
reasonably be expected to have a material adverse effect on its
business.

 

(b) Authorization,
Power and Authority. The execution, delivery and performance
by Issuer of the Note Documents to which it is a party:
(i) have been duly authorized, and constitute legal, valid and
binding obligations of Issuer, enforceable in accordance with their
respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency or other similar laws of general
application relating to or affecting the enforcement of
creditor’s rights or by general principles of equity; (ii) do
not conflict with Issuer’s organizational documents; (iii) do
not contravene, conflict or violate any applicable order, writ,
judgment, injunction, decree, determination or award of any
Governmental Authority by which Issuer or any of its Subsidiaries
or any of their property or assets may be bound or affected; (iv)
do not require any action by, or approval from, any Governmental
Approval from, any Governmental Authority (except such Governmental
Approvals which have already been obtained and are in full force
and effect); and (v) do not conflict with, contravene, constitute a
default or breach under, or result in or permit the termination or
acceleration of, any material agreement by which Issuer is
bound.

 

(c) Collateral.
Issuer has good title to, rights in, and the power to transfer each
item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all Liens except Permitted
Liens. Issuer has no Collateral Accounts at or with any bank or
financial institution except for the Collateral Accounts described
in the Perfection Certificate delivered to the Holders in
connection herewith and which Issuer has taken such actions as are
reasonably necessary to give Agent a perfected security interest
therein. The Accounts are bona fide, existing obligations of the
Account Debtors.

 

(d) Intellectual
Property. Issuer is the sole owner of the Intellectual
Property which it owns or purports to own except for (a)
non-exclusive licenses granted to its customers in the ordinary
course of business, (b) over-the-counter software that is
commercially available to the public, and (c) material Intellectual
Property licensed to Issuer and noted on the Perfection
Certificate. Each Patent which it owns or purports to own and which
is material to Issuer’s business is valid and enforceable,
and no part of the Intellectual Property which Issuer owns or
purports to own and which is material to Issuer’s business
has been judged invalid or unenforceable, in whole or in part.
Issuer has not received any written notice of any claim that any
part of the Intellectual Property violates the rights of any third
party except to the extent such claim would not reasonably be
expected to have a material adverse effect on Issuer’s
business. All Intellectual Property material to the business of
Issuer and its Subsidiaries that is owned by Issuer or a Subsidiary
is set forth in the Perfection Certificate.

 

(e) Financial
Statements, Financial Condition. All consolidated financial
statements for Issuer and its Subsidiaries delivered to Agent
fairly present in all material respects Issuer’s consolidated
financial condition and results of operations as of the date
thereof and for the period represented thereby, and there has not
been any material deterioration in Issuer’s consolidated
financial condition since the date of the most recent financial
statements submitted to Agent.

 

(f) Solvency.
The fair salable value of Issuer’s consolidated assets
(including goodwill minus disposition costs) exceeds the fair value
of its consolidated liabilities; Issuer is not left with
unreasonably small capital after the transactions in this
Agreement; and Issuer and its Subsidiaries as a whole are able to
pay their debts (including trade debts) as they
mature.

 

(g) Perfection
Certificate. All information set forth on the Perfection
Certificate is accurate and complete in all material respects,
provided that Issuer may from time to time update certain
information in the Perfection Certificate after the Issue Date to
reflect updated information resulting from changes not restricted
by this Agreement or as otherwise approved in writing by Holders,
and, from and after such update, all references to the Perfection
Certificate in this Agreement shall be the Perfection Certificate
as so updated; provided, however, any
representations, warranties or covenants in this Agreement
specifically relating to a date certain (including the Issue Date)
shall not be so modified by such updates to the Perfection
Certificate.

 



 

5







 





 

(h) Material
Agreements. Neither Issuer nor any of its Subsidiaries is in
default under any agreement to which it is a party or by which it
is bound in which the default could reasonably be expected to have
a material adverse effect on Issuer’s or such
Subsidiary’s business.

 

(i) Compliance
with Sanctions, Anti-Money Laundering and Anti-Corruption
Laws. Issuer and its Subsidiaries, Affiliates, directors,
officers, employees, agents, or representatives will not, directly
or, to the knowledge of Issuer and its Subsidiaries, indirectly,
use the proceeds from any Note, or lend, contribute or otherwise
make available such proceeds to any Subsidiary, joint venture
partner or any other person (i) to fund or facilitate any
activities or business of or with any individual, entity or
government that is, or is owned or controlled by one or more
persons that are, at the time of such funding or facilitation, the
subject of any economic or financial sanctions or trade embargoes
administered or enforced by the U.S. Department of Treasury’s
Office of Foreign Assets Control, the United Nations Security
Council, the Council of the European Union or Her Majesty’s
Treasury (United Kingdom), or any other relevant sanctions
authority) (collectively, “Sanctions”), or resident, located
or organized in any country or territory that is the subject of
comprehensive territorial Sanctions (currently including, Crimea,
Cuba, Iran, North Korea, and Syria) (each, a “Sanctioned Jurisdiction”); or (ii)
in any other manner that would result in a violation of any
Sanctions by Issuer, any Holder or any other person. Neither Issuer
nor any of its Subsidiaries nor, to the knowledge of Issuer, any
Affiliates, directors, officers, or employees of Issuer or any of
its Subsidiaries, is the subject of any Sanctions or resident,
located or organized in a Sanctioned Jurisdiction. Issuer and its
Subsidiaries have conducted their businesses in compliance with (i)
Sanctions; (ii) applicable anti-corruption laws, rules, and
regulations, including without limitation the U.S. Foreign Corrupt
Practices Act and the U.K. Bribery Act, each as may be amended, and
any rules or regulations thereunder (collectively,
“Anti-Corruption
Laws”); and (iii) applicable anti-money laundering
laws, rules, and regulations, including without limitation the
Money Laundering Control Act of 1986, as amended from time
(collectively, “Anti-Money
Laundering Laws”). Neither Issuer nor its
Subsidiaries, Affiliates, directors, officers, employees, agents,
or representatives will use, directly or, to the knowledge of
Issuer and its Subsidiaries, indirectly, the proceeds of the
financing in any manner or for any purpose that would result in a
violation of any Anti-Corruption Laws or Anti-Money Laundering Laws
by Issuer, or its Subsidiaries or Affiliates, any Holder or any
other person or entity. Issuer has instituted and maintained and
will continue to maintain policies, procedures and controls
reasonably designed to promote and achieve compliance with all
Sanctions, Anti-Corruption Laws, and Anti-Money Laundering Laws and
with the representations and warranties contained in this
subsection.

 

(j) Regulatory
Compliance. Issuer is not an “investment
company” or a company “controlled” by an
“investment company” under the Investment Company Act
of 1940, as amended. Issuer is not engaged as one of its important
activities in extending credit for margin stock (under Regulations
X, T and U of the Federal Reserve Board of Governors). Issuer (a)
has complied in all respects with all Requirements of Law the
noncompliance with which could reasonably be expected to have a
material adverse effect on its business, and (b) has not violated
any Requirements of Law the violation of which could reasonably be
expected to have a material adverse effect on its business. None of
Issuer’s or any of its Subsidiaries’ properties or
assets has been used by Issuer or any Subsidiary or, to
Issuer’s knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous
substance other than legally. Issuer and each of its Subsidiaries
have obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all
Governmental Authorities that are necessary to continue their
respective businesses as currently conducted, except to the extent
that failure to obtain, make or file the same could not reasonably
be expected to have a material adverse effect on its
business.

 

(k) Investments.
Issuer does not own any stock, partnership, or other ownership
interest or other equity securities except for Permitted
Investments.

 

(l) Tax
Returns and Payments. Issuer has timely filed all required
tax returns and reports, and Issuer has timely paid all foreign,
federal, state and local taxes, assessments, deposits and
contributions owed by Issuer except (a) to the extent such taxes
are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as such
reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor, (b)
if such taxes, assessments, deposits and contributions do not,
individually or in the aggregate, exceed Twenty-Five Thousand
Dollars ($25,000) or (c) to the extent that such filings and
payments may be made pursuant to automatic extensions. Issuer is
unaware of any claims or adjustments proposed for any of
Issuer’s prior tax years which could result in additional
taxes becoming due and payable by Issuer in excess of Twenty-Five
Thousand Dollars ($25,000).

 



 

6







 





 

(m) Shares.
Issuer has full power and authority to create a first lien on the
Shares (subject only to Permitted Liens that are permitted pursuant
to the terms of this Agreement to have superior priority to
Agent’s Lien in this Agreement) and no disability or
contractual obligation exists that would prohibit Issuer from
pledging the Shares pursuant to this Agreement. Except with respect
to the Lien in favor of the Senior Lender, to Issuer’s
knowledge, there are no subscriptions, warrants, rights of first
refusal or other restrictions on transfer relative to, or options
exercisable with respect to the Shares. The Shares have been and
will be duly authorized and validly issued, and are fully paid and
non-assessable. To Issuer’s knowledge, the Shares are not the
subject of any present or threatened suit, action, arbitration,
administrative or other proceeding, and Issuer knows of no
reasonable grounds for the institution of any such
proceedings.

 

(n) Full
Disclosure. No written representation, warranty or other
statement of Issuer or any Subsidiary in any certificate or written
statement given to Agent or any Holder, as of the date such
representation, warranty, or other statement was made, taken
together with all such written certificates and written statements
given to Agent or any Holder, contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not
misleading (it being recognized by Agent and the Holders that the
projections and forecasts provided by Issuer in good faith and
based upon reasonable assumptions are not viewed as facts and that
actual results during the period or periods covered by such
projections and forecasts may differ from the projected or
forecasted results).

 

(o) Definition
of “Knowledge.” For purposes of the Note
Documents, whenever a representation or warranty is made to
Issuer’s knowledge or awareness, to the “best of”
Issuer’s knowledge, or with a similar qualification,
knowledge or awareness means the actual knowledge, after reasonable
investigation, of any Responsible Officer.

 




5.


AFFIRMATIVE COVENANTS





 

5.1 Government
Compliance. Issuer shall, and shall cause each Subsidiary,
to (i) maintain its legal existence and good standing in its
jurisdiction of organization or formation and maintain
qualification in each jurisdiction in which the failure to so
qualify could reasonably be expected to have a material adverse
effect on Issuer’s or such Subsidiary’s business or
operations; (ii) comply with all laws, ordinances and regulations
to which it is subject; provided, that any such
noncompliance that could not reasonably be expected to have a
material adverse effect on Issuer’s business shall not be
deemed to be a breach of the foregoing covenant (iii) obtain all
material Governmental Approvals necessary for the performance by
Issuer or any Subsidiary of its obligations under the Note
Documents to which it is a party, promptly provide copies of any
such obtained Governmental Approvals to Agent; (iv) timely file all
required material tax returns and reports, and pay prior to
delinquency all federal and state and material foreign and local
taxes, assessments, deposits and contributions owed by Issuer or
such Subsidiary, except to the extent payment is deferred in
connection with taxes being contested by appropriate proceedings
promptly and diligently instituted and conducted with notification
to Agent and posting a bond or taking any other steps required to
prevent the governmental authority levying such contested taxes
from obtaining a Lien upon any of the Collateral that is other than
a “Permitted Lien”, and (v) maintain and comply with,
and shall cause each of its Subsidiaries to maintain and comply
with, in force all licenses, approvals and agreements, the loss of
which or failure to comply with which would reasonably be expected
to have a material adverse effect on Issuer’s business or
operations.

 



 

7







 





 

5.2 Financial
Statements, Reports, Certificates.

 


Issuer
shall:

 

(a) Deliver
to each Holder for as long as this Agreement is outstanding: (i) as
soon as available, but no later than forty-five (45) days after the
last day of each of the first three fiscal quarters of each fiscal
year, a company prepared consolidated balance sheet, income
statement and cash flow statement covering Issuer’s
consolidated operations for such quarter certified by a Responsible
Officer and in a form reasonably acceptable to Agent; (ii) as soon
as available, but in any event within ninety (90) days after the
end of Issuer’s fiscal year, audited consolidated financial
statements of Issuer prepared in accordance with GAAP, consistently
applied, together with an unqualified opinion on such financial
statements from an independent certified public accounting firm
reasonably acceptable to Agent (it being understood that
Issuer’s accounting firm as of the Issue Date shall be
acceptable to Agent); (iii) promptly after approval by
Issuer’s board of directors (but in no event later than
thirty (30) days after last day of Issuer’s fiscal year), and
promptly but in any event within ten (10) days after any update
from time to time thereto, annual operating budgets for such fiscal
year (including income statements, balance sheets and cash flow
statements, by month) as approved by Issuer’s board of
directors, together with annual financial projections for such
fiscal year (on a quarterly basis) as approved by Issuer’s
board of directors, and any related business forecasts used in the
preparation of such annual financial projections; (iv) a prompt
report of any legal actions pending or threatened in writing
against Issuer or any of its Subsidiaries that could result in
damages or costs to Issuer or any of its Subsidiaries of
Seventy-Five Thousand Dollars ($75,000) or more or invalidation of
any material Intellectual Property; (v) a prompt report of all
returns, recoveries, disputes and claims, individually or in the
aggregate in excess of Fifty Thousand Dollars ($50,000), with
Account Debtors of Issuer or any Subsidiary; (vi) prompt notice of
an event that materially and adversely affects the value of the
Intellectual Property owned by Issuer or any Subsidiary or could
have a material adverse effect on Issuer’s business; (vii)
any financial statements, notices, reports or other information not
delivered pursuant to this Agreement provided to Senior Lender or
holders of Subordinated Debt and any amendments or other agreements
entered into with respect to the Senior Debt or Subordinated Debt;
and (viii) any budgets, sales projections, operating plans and
other information or reports as Agent may reasonably request from
time to time. In the event that Issuer becomes subject to the
reporting requirements under the Exchange Act, within five (5) days
of filing, Issuer shall deliver to Holders all reports on Form
10-K, 10-Q and 8-K filed with the Securities and Exchange
Commission or notify Holders that a link thereto has been posted on
Issuer’s or another website on the Internet. Notwithstanding
anything herein to the contrary, in the case of documents required
to be delivered pursuant to this Section 5.2(a) and included in
materials otherwise filed with the SEC, (x) Issuer shall be deemed
to satisfy the requirements of this Section 5.2(a) to the extent
such documents are included in materials filed with the SEC in
compliance with the reporting requirements under the Exchange Act,
and (y) such documents may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date on
which Issuer posts such documents, or provides a link thereto, on
Issuer’s website on the internet at Issuer’s website
address; provided, however, Issuer shall promptly notify Agent in
writing (which may be by electronic mail) of the posting of any
such documents.

 

(b) Together
with financial statements pursuant to Section 5.2(a)(i) and (ii),
deliver a duly completed Compliance Certificate signed by a
Responsible Officer.

 

(c) Allow
Agent to audit or inspect Issuer’s Collateral at reasonable
times during normal business hours and upon reasonable advance
notice to Issuer. Such audits or inspections shall be conducted no
more often than once every twelve (12) months, unless an Event of
Default has occurred and is continuing, in which case such
inspections and audits shall occur as often as Agent shall
determine is necessary.

 

(d) [reserved].

 

(e) Deliver
to Agent a copy of Issuer’s Articles of Incorporation, as
amended in connection with such equity financing and an updated
capitalization table in form acceptable to Agent in connection with
the next Compliance Certificate.

 

(f) Deliver
to Agent, within five (5) Business Days after the same are sent or
received, copies of all material correspondence, reports, documents
and other filings with any Governmental Authority that could
reasonably be expected to have a material adverse effect on any of
the Governmental Approvals material to Issuer’s or any
Subsidiary’s business or otherwise could reasonably be
expected to have a Material Adverse Change.

 



 

8







 





 

(g) Allow
representatives of Agent to attend (to the extent in person, one
person reasonably acceptable to Issuer at the sole cost and expense
of Issuer, or by conference call) all meetings of Issuer’s
board of directors in a non-voting observer capacity, and provide
such representatives with copies of all notices, minutes, written
consents, and other materials that it provides to members of
Issuer’s board of directors, at the time it provides them to
such members, provided that Issuer may redact (i) any portions of
such materials that are subject to attorney-client privilege, and
(ii) any portions of such materials result in a conflict of
interest between any Holder and its representative or their
respective affiliates or representatives, on the one hand, and
Issuer or its affiliates or representatives on the other hand,
concerning the financing transaction between Issuer and Holders or
other matters involving any Holder or their affiliates.
Notwithstanding the foregoing, Issuer may exclude such
representatives from portions of any meeting if (i) the attendance
by such representatives during such portion of the meeting would
jeopardize or otherwise impair the attorney-client privilege, or
(ii) if attendance at such meeting could result in a conflict of
interest between Holders and its representative or their respective
affiliates or representatives, on the one hand, and Issuer or its
affiliates or representatives on the other concerning the financing
transaction between Issuer and Holders or other matters involving
Holders or their Affiliates.

 

5.3 Collateral.
Issuer shall, and shall cause each Subsidiary, to (i) maintain good
title to, rights in, and the power to transfer each item of the
Collateral upon which it purports to grant a Lien hereunder, free
and clear of any and all Liens except Permitted Liens; (ii)
maintain possession of all Collateral, except for third party
bailees in the ordinary course of business, Inventory in transit
and movable items of personal property such as laptop computers;
and (iii) maintain all Equipment and personal property in good
operating condition and Inventory in good marketable condition,
free from material defects.

 

5.4 Inventory;
Returns. Issuer shall, and shall cause its Subsidiaries to,
keep all Inventory in good and marketable condition, free from
material defects. Returns and allowances between Issuer or a
Subsidiary and its Account Debtors shall follow Issuer’s
customary practices as they exist at the Issue Date.

 

5.5 Insurance.
Issuer shall, and shall cause each Subsidiary to, keep its business
and the Collateral insured for risks and in amounts standard for
companies in Issuer’s industry and location. Insurance
policies shall be in a form, with financially sound and reputable
insurance companies that are not Affiliates of Issuer, and in
amounts that are standard for companies in Issuer’s industry
and location and reasonably satisfactory to Agent; it being
understand that Issuer’s insurance in effect as of the Issue
Date is acceptable to Agent. All property policies covering real
and personal property with respect to Issuer shall have a lender
loss payable endorsement showing Agent as lender loss payee, and
all commercial general, products and auto liability policies shall
show, or have endorsements showing, Agent as an additional insured.
Notwithstanding the foregoing, (a) so long as no Event of Default
has occurred and is continuing, Issuer shall have the option of
applying proceeds with respect to any Collateral of any casualty
policy of Issuer in an amount up to Three Hundred Fifty Thousand
Dollars ($350,000) toward the replacement or repair of destroyed or
damaged property, or the purchase of property that is otherwise
useful to Issuer’s business; provided that any such replaced
or repaired property (i) shall be of equal or like value as the
replaced or repaired Collateral and (ii) shall be deemed Collateral
in which Agent has been granted a security interest, subject to
Permitted Liens, and (b) after the occurrence and during the
continuance of an Event of Default, except to the extent required
to be applied to the prepayment of any Senior Debt, all proceeds
with respect to Collateral payable under such casualty policy
shall, at the option of Agent, be payable to Agent, for the ratable
benefit of each Holder, on account of the Obligations.

 

5.6 Collateral
Accounts. Issuer shall not, and shall not permit any
Subsidiary to, maintain Collateral Accounts other than those
described in the Perfection Certificate delivered to Holders in
connection herewith, or of which Issuer has given Holders notice
and taken such actions as are necessary to give Agent a perfected
security interest therein pursuant to a Control Agreement in
accordance with this Section. For each Collateral Account that
Issuer or any Subsidiary at any time maintains, Issuer shall cause
the applicable bank or financial institution at or with which any
Collateral Account is maintained to execute and deliver a Control
Agreement with respect to such Collateral Account to perfect
Holder’s Lien in such Collateral Account. Notwithstanding the
foregoing, Issuer shall be permitted to maintain, and shall not be
required to deliver Control Agreements with respect to, its
Collateral Accounts with SunTrust Bank (the “SunTrust Accounts”), provided that
(i) the SunTrust Accounts shall not at any time maintain more than
Three Hundred Thousand Dollars ($300,000) in the aggregate and (ii)
the SunTrust Accounts must be closed, and the balances therein
transferred to a Collateral Account subject to a Control Agreement
in favor of Agent, by no later than August 14, 2020.

 

5.7 Litigation
Cooperation. From the date hereof and continuing through the
termination of this Agreement, Issuer shall, and shall cause any
Subsidiary, to make available to Holders, without expense to any
Holder, Issuer, its Subsidiaries, and its officers, employees and
agents and books and records, to the extent that any Holder may
deem them reasonably necessary to prosecute or defend any
third-party suit or proceeding instituted by or against any Holder
with respect to any Collateral or relating to Issuer or its
Subsidiaries.

 



 

9







 





 

5.8 Intellectual
Property. Issuer shall, and shall cause its Subsidiaries to
(a) protect, defend and maintain the validity and enforceability of
the Intellectual Property that is material to its business; (b)
promptly advise Agent in writing of infringements of its
Intellectual Property that could reasonably be expected to
materially and adversely affect the value of its Intellectual
Property; and (c) not allow any Intellectual Property material to
Issuer’s or any Subsidiary’s business to be abandoned,
forfeited or dedicated to the public without Agent’s written
consent. Issuer and Guarantors are and shall remain the sole owner
of its Intellectual Property, except for (a) non-exclusive licenses
granted to its customers in the ordinary course of business, (b)
over-the-counter software that is commercially available to the
public, and (c) material Intellectual Property licensed to Issuer
and noted on the Perfection Certificate. Except as noted on the
Perfection Certificate, no Issuer or Subsidiary is a party to, nor
is it bound by, any Restricted License. Issuer shall provide
written notice to Agent within thirty (30) days of it or any
Subsidiary entering or becoming bound by any Restricted License
(other than over-the-counter software that is commercially
available to the public). Issuer shall take such steps as Agent may
reasonably request to obtain the consent of, or waiver by, any
person whose consent or waiver is necessary for (i) any Restricted
License to be deemed “Collateral” and for Agent to have
a security interest in it that might otherwise be restricted or
prohibited by law or by the terms of any such Restricted License,
whether now existing or entered into in the future, and (ii) Agent
to have the ability in the event of a liquidation of any Collateral
to dispose of such Collateral in accordance with Agent’s
rights and remedies under this Agreement and the other Note
Documents. As used in this Agreement, the term “non-exclusive
license” shall include any license that provides limited
exclusivity to the licensee based on geography outside the United
States or distinct market segments (provided, in all events, such
license is not actually, tantamount to, or deemed to be for
accounting purposes, a sale or other transfer of the underlying
Intellectual Property).

 


If
Issuer or any Subsidiary (i) obtains any patent, registered
trademark or servicemark, registered copyright, registered mask
work, or any pending application for any of the foregoing, or (ii)
applies for any patent or the registration of any trademark or
servicemark, then Issuer shall provide written notice thereof in
the Compliance Certificate delivered to Agent pursuant to
Section 5.2(b) and
shall execute such IP Agreements and other documents and take such
other actions as Agent shall reasonably request to perfect and
maintain a perfected security interest (subject to Permitted Liens)
in favor of Agent for the ratable benefit of the Holders in such
property. Issuer shall upon Agent’s request provide to Agent
copies of all applications that filed by it or a Subsidiary for
patents or for the registration of trademarks, servicemarks,
copyrights or mask works, together with evidence of the recording
of the IP Agreement necessary for Agent to perfect and maintain a
perfected security interest (subject to Permitted Liens) in such
property. If Issuer or any Subsidiary decides to register any
copyrights or mask works in the United States Copyright Office
which Issuer determines to be material to Issuer’s or such
Subsidiary’s business, Issuer shall: (x) provide Agent with
at least fifteen (15) days prior written notice of Issuer’s
intent to register such copyrights or mask works together with a
copy of the application it intends to file with the United States
Copyright Office (excluding exhibits thereto); (y) execute an IP
Agreement and such other documents and take such other actions as
Agent may reasonably request in its good faith business judgment to
perfect and maintain a perfected security interest (subject to
Permitted Liens) in favor of Agent for the ratable benefit of
Holders in the copyrights or mask works intended to be registered
with the United States Copyright Office; and (z) record such IP
Agreement with the United States Copyright Office contemporaneously
with filing the copyright or mask work application(s) with the
United States Copyright Office. Upon Agent’s request, Issuer
shall provide to Agent copies of all applications filed by it or a
Subsidiary for patents or for the registration of trademarks,
servicemarks, copyrights or mask works, together with evidence of
the recording of the IP Agreement necessary for Agent to perfect
and maintain a perfected security interest (subject to Permitted
Liens) in such property.

 

5.9 Use
of Proceeds. Issuer shall use the proceeds of the Notes: (i)
as working capital and to fund its general corporate and business
requirements and not for personal, family, household or
agricultural purposes, (ii) to repay the Existing Indebtedness in
full on the Issue Date and (iii) to finance a portion of the
Celularity Acquisition.

 

5.10 Holder
Meetings. Issuer will, (i) within ninety (90) days after the
close of each fiscal year of Issuer, at the request of any Holder,
hold a meeting (at a mutually agreeable location and time or, at
the option of any Holder, by conference call), at which meeting
shall be reviewed the financial results of the previous fiscal
year, the financial condition of Issuer and its Subsidiaries and
the projections and business plan for the following fiscal year, as
well as the prospects of the business of Issuer and its
Subsidiaries and any other matters that any Holder may wish to
discuss, and (ii) within forty-five (45) days after the close of
the first three fiscal quarters of each fiscal year, at the request
of any Holder and upon reasonable prior notice, participate in a
conference call to review the financial results of the fiscal
quarter then ended, as well as prospects of the business of Issuer
and its Subsidiaries and any other matters that any Holder may wish
to discuss.

 

5.11 Formation
or Acquisition of Subsidiaries. If Issuer forms any new
Subsidiary or acquires any new Subsidiary after the Issue Date,
Issuer shall (a) cause such Subsidiary to provide to Agent a
Guaranty of this Agreement, together with such appropriate
collateral security documents, including any Control Agreements,
all in form and substance reasonably satisfactory to Agent, (b)
provide to Agent appropriate certificates and powers and financing
statements, pledging all of the direct or beneficial ownership
interest held in such Subsidiary, in form and substance reasonably
satisfactory to Agent, and (c) provide to Agent all other
documentation in form and substance reasonably satisfactory to
Agent. Without limiting the foregoing, Agent reserves the right to
take appropriate steps, as Agent reasonably determines, to perfect
the security interest granted over the assets of, or equity
interests in, any Foreign Subsidiary, in each case, in the relevant
jurisdiction of organization of such Foreign
Subsidiary.

 



 

10







 





 

5.12 SBA
PPP Loan.

 

() Issuer shall use
all of the proceeds of the SBA PPP Loan exclusively for CARES
Forgivable Uses in the manner required under the CARES Act to
obtain forgiveness of the largest possible amount of the SBA PPP
Loan, which as of the date hereof requires that Issuer use not less
than sixty percent (60.00%) of the SBA PPP Loan proceeds for CARES
Payroll Costs.

 

(a) On the date of
delivery of each Compliance Certificate following the SBA PPP Loan
Date, Issuer shall deliver to Agent (x) a report on the use of the
proceeds of the SBA PPP Loan and supporting documentation with
respect thereto, in each case in form and substance reasonably
satisfactory to Agent or (y) such other, similar report and/or
documentation as is provided to the SBA and/or the SBA PPP Loan
Lender related.

 

(b) Issuer shall (i)
maintain all records required to be submitted in connection with
the forgiveness of the SBA PPP Loan, (ii) apply for forgiveness of
the SBA PPP Loan in accordance with regulations implementing
Section 1106 of the CARES Act within thirty (30) days after the
last day of the eight (8) week period immediately following the SBA
PPP Loan Date and (iii) provide Holder with a copy of its
application for forgiveness and all supporting documentation
required by the SBA or the SBA PPP Loan Lender in connection with
the forgiveness of the SBA PPP Loan.

 


5.13 Further Assurances. Subject to the last
sentence of Section
3, Issuer shall execute any further instruments and take
further action as Agent may reasonably request to perfect or
continue Agent’s Lien in the Collateral or to effect the
purposes of this Agreement.

 




6.


NEGATIVE COVENANTS





 


Issuer
shall not, and shall not permit any Subsidiary to, do any of the
following, without Holders’ prior written
consent:

 

6.1 Dispositions.
Convey, sell, lease, transfer or otherwise dispose of
(collectively, “Transfer”) all or any part of its
business or property, except for Transfers (a) of Inventory in the
ordinary course of business, (b) of Accounts in the ordinary course
of business (and otherwise made in accordance with this Agreement),
(c) of worn-out, unused, obsolete or surplus Equipment; (d) in
connection with Permitted Liens and Permitted Investments; (e) made
in accordance with Section 6.3, (f) by any Subsidiary that is not a
Guarantor to (x) Issuer or any Guarantor and (y) any other
Subsidiary which is not a Guarantor; and (g) other Transfers in an
aggregate amount not to exceed One Hundred Thousand ($100,000) in
any fiscal year.

 

6.2 Changes
in Business, Management, Ownership, or Business Locations.
(a) Engage in any business other than the businesses currently
engaged in by Issuer or such Subsidiary, as applicable, or
reasonably related thereto or contemplated by Issuer’s
research and development plan as approved by its board of
directors; (b) cease doing business, liquidate or dissolve; (c)
suffer Issuer’s chief executive officer to cease holding such
office without a replacement being appointed within ninety (90)
days; (d) permit or suffer a Change in Control of Issuer or any
Subsidiary. Issuer shall not, without at least ten (10) days’
prior written notice to Agent: (1) add any new offices or business
locations, unless such new offices or business locations contain
less than One Hundred Thousand Dollars ($100,000) in Issuer’s
assets or property, (2) change its jurisdiction of organization,
(3) change its organizational structure or type, (4) change its
legal name, or (5) change any organizational number (if any)
assigned by its jurisdiction of organization.

 



 

11







 





 

6.3 Mergers
or Acquisitions. Merge or consolidate with any other Person,
or acquire all or substantially all of the capital stock or
property of another Person, except that a Subsidiary may merge or
consolidate into another Subsidiary or into Issuer, provided that
if a Guarantor or Issuer is a party to such transaction, such
Guarantor or Issuer shall be the surviving entity.

 

6.4 Indebtedness:
Encumbrance; Investments; Distributions. (a) Create, incur,
assume, or be liable for any Indebtedness other than Permitted
Indebtedness; (b) create, incur, assume or suffer to exist any Lien
of any kind upon any of its property, whether now owned or
hereafter acquired except Permitted Liens; (c) make any Investment
except for Permitted Investments; and (d) pay any dividends or make
any distribution or payment or redeem, retire or purchase any
capital stock except for Permitted Distributions.

 

6.5 Minimum
Liquidity. Issuer and its Subsidiaries shall at all times
maintain Liquidity, on a consolidated basis, of at least Five
Million Dollars ($5,000,000); provided, that, the proceeds of the
SBA PPP Loan shall not be considered for purposes of compliance
with this Section 6.5.

 

6.6 Transactions
with Affiliates. Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of Issuer,
except for (i) transactions with any Affiliate of Issuer that are
in the ordinary course of Issuer’s business (including but
not limited to the payment of ordinary course compensation and
benefits to Issuer’s or such Subsidiary’s employees),
upon fair and reasonable terms that are no less favorable to Issuer
or such Subsidiary than would be obtained in an arm’s length
transaction with a non-affiliated Person, (ii) transactions between
or among Issuer and its Subsidiaries which are expressly permitted
by this Agreement and any other, (iii) equity and bridge financings
constituting Subordinated Debt with Issuer’s existing
investors and (iv) the Subordinated Notes. The participation of any
then-existing investors of Issuer in future bona fide equity
financings and subordinated note financings of Issuer and
transactions between Issuer and its Subsidiaries that are not
otherwise restricted pursuant hereto shall not be deemed to be a
violation of this Section (including any equity financings or
subordinated note financings led by such investors of
Issuer).

 

6.7 Subordinated
Debt. (a) Make or permit any payment on any Subordinated
Debt, except (i) under the terms of the subordination,
intercreditor, or other similar agreement to which such
Subordinated Debt is subject and (ii) in the case of any cash
payment on any Subordinated Note, solely to the extent that (A)
immediately prior, and after giving pro forma effect, to such
payment, no Potential Default or Event of Default has occurred and
is continuing or could reasonably be expected to result therefrom,
including with respect to Section 6.5, and (B) such payment shall
be made solely with the proceeds from an substantially
contemporaneous equity financing consummated after the Issue Date,
or (b) amend any provision in any document relating to the
Subordinated Debt which would increase the amount thereof, provide
for earlier or greater principal, interest, or other payments
thereon, or adversely affect the subordination thereof to
Obligations owed to Holders, except as may be permitted by the
subordination, intercreditor or other similar agreement to which
such Subordinated Debt is subject; provided, however, that the
issuance of equity securities upon conversion of Subordinated Debt
shall not be prohibited by the foregoing.

 

6.8 Compliance.
Become an “investment company” or a company controlled
by an “investment company” under the Investment Company
Act of 1940, as amended or undertake as one of its important
activities extending credit to purchase or carry margin stock (as
defined in Regulation U of the Board of Governors of the Federal
Reserve System), or use the proceeds of the Notes for that purpose;
fail to (a) meet the minimum funding requirements of the ERISA, (b)
permit a Reportable Event or Prohibited Transaction, as defined in
ERISA, to occur; or (c) comply with the Federal Fair Labor
Standards Act or any other law or regulation; if the failure of any
of the conditions described in clauses (a) through (c) could
reasonably be expected to have a material adverse effect on
Issuer’s business or operations or could reasonably be
expected to cause a Material Adverse Change.

 




7.


EVENTS OF DEFAULT





 


Any one
of the following shall constitute an event of default (an
“Event of
Default”) under this Agreement:

 

7.1 Payment
Default. Issuer fails to (a) make any payment of principal
or interest due under any Note on its due date, or (b) pay any
other Obligations within three (3) Business Days of the date when
due (which three (3) Business Day grace period shall not apply to
payments due on the Maturity Date or the date of acceleration
pursuant to section 8.1 hereof).

 



 

12







 





 

7.2 Covenant
Default.

 

(a) Issuer
fails or neglects to perform any obligation in Sections 5.2, 5.5, 5.6, 5.8 or
5.10 or violates any covenant in Section 6; or

 

(b) Issuer
fails or neglects to perform, keep, or observe any other term,
provision, condition, covenant or agreement contained in this
Agreement or any other Note Documents, and as to any such default
other than those specified in Section 7.1 or 7.2 (a), Issuer has failed to
cure such default within ten (10) days of the occurrence of such
default; and as to any default (other than those specified in this
Section 7) under such other term, provision, condition, covenant or
agreement that can be cured, has failed to cure the default within
ten (10) days after the occurrence thereof; provided, however, that
if the default cannot by its nature be cured within the ten (10)
day period or cannot after diligent attempts by Issuer be cured
within such ten (10) day period, and such default is likely to be
cured within a reasonable time, then Issuer shall have an
additional period (which shall not in any case exceed thirty (30)
days) to attempt to cure such default, and within such reasonable
time period the failure to cure the default shall not be deemed an
Event of Default (but no credit extensions shall be made during
such cure period).

 

7.3 Material
Adverse Change. A Material Adverse Change
occurs.

 

7.4 Attachment;
Levy; Restraint on Business. (a) (i) The service of process
seeking to attach, by trustee or similar process, any funds of
Issuer or any Subsidiary, or (ii) a notice of lien, levy, or
assessment is filed against any of Issuer’s or a
Subsidiary’s assets by any Government Authority, and the same
under subclauses (i) and (ii) hereof are not, within twenty (20)
days after the occurrence thereof, discharged or stayed (whether
through the posting of a bond or otherwise); (b) any material
portion of Issuer’s or a Subsidiary’s assets is
attached, seized, levied on, or comes into possession of a trustee
or receiver, or any court order enjoins, restrains, or prevents
Issuer or a Subsidiary from conducting any part of its business; or
(c) the delivery of a notice of foreclosure or exclusive control to
any entity holding or maintaining Issuer’s or a
Subsidiary’s deposit accounts or accounts holding securities
by any Person (other than by Agent or any Holder) seeking to
foreclose or attach any such accounts or securities.

 

7.5 Insolvency.
(a) Issuer or any Subsidiary is unable to pay its debts (including
trade debts) as they become due or otherwise becomes insolvent; (b)
Issuer or any Subsidiary begins an Insolvency Proceeding; or (c) an
Insolvency Proceeding is begun against Issuer or any Subsidiary and
is not dismissed or stayed within forty-five
(45) days.

 

7.6 Other
Agreements. There is a default in any agreement to which
Issuer is a party with a third party or parties which consists of
the failure to pay any Indebtedness at maturity or which results in
a right by such third party or parties, whether or not exercised,
to accelerate the maturity of Indebtedness in an aggregate amount
in excess of One Million Dollars ($1,000,000); provided, however,
that (i) the Event of Default under this Section 7.6 caused by the
occurrence of a breach or default under such other agreement shall
be cured or waived for purposes of this Agreement upon Agent
receiving written notice from the party asserting such breach or
default of such cure or waiver of the breach or default under such
other agreement, if at the time of such cure or waiver under such
other agreement (x) Agent has not declared an Event of Default
under this Agreement and/or exercised any rights with respect
thereto; (y) any such cure or waiver does not result in an Event of
Default under any other provision of this Agreement or any other
Note Document; and (z) in connection with any such cure or waiver
under such other agreement, the terms of any agreement with such
third party are not modified or amended in any manner which could
in the good faith business judgment of Agent be materially less
advantageous to Issuer or any Guarantor; and (ii) this Section 7.6 shall not apply to
any Subordinated Debt or Subordinated Note, any breach or default
with respect to which shall be governed by Section 7.10.

 

7.7 Judgments.
One or more judgments, orders, or decrees for the payment of money
in an amount, individually or in the aggregate, of at least One
Million Dollars ($1,000,000) shall be rendered against Issuer and
shall remain unsatisfied, unvacated, or unstayed for a period of
ten (10) days after the entry thereof.

 

7.8 Misrepresentations.
Issuer or any Person acting for Issuer makes any representation,
warranty, or other statement now or later in this Agreement, any
other Note Document or in any writing delivered to Agent or any
Holder or to induce Agent or any Holder to enter this Agreement or
any other Note Document, and such representation, warranty, or
other statement is incorrect in any material respect when
made.

 



 

13







 





 

7.9 Senior
Debt. A default or breach occurs and is continuing under any
agreement with respect to Senior Debt and all applicable cure
periods have elapsed; provided, however, that the Event of Default
under this Section
7.9 caused by the occurrence of a breach or default with
respect to the Senior Debt shall be cured or waived for purposes of
this Agreement upon Agent receiving written notice from the Senior
Lender of such cure or waiver of the breach or default with respect
to the Senior Debt, if at the time of such cure or waiver with
respect to the Senior Debt (x) Agent has not declared an Event of
Default under this Agreement and/or exercised any rights with
respect thereto; (y) any such cure or waiver does not result in an
Event of Default under any other provision of this Agreement or any
other Note Document; and (z) in connection with any such cure or
waiver with respect to the Senior Debt, the terms of the Senior
Debt are not modified or amended in any manner which could in the
good faith business judgment of Agent be materially less
advantageous to Issuer or any Guarantor.

 

7.10 Subordinated
Debt. Any document, instrument, or agreement evidencing the
subordination of any Subordinated Debt shall for any reason be
revoked or invalidated or otherwise cease to be in full force and
effect; any Person shall be in breach thereof or contest in any
manner the validity or enforceability thereof or deny that it has
any further liability or obligation thereunder; or there shall
occur any default or event of default (howsoever defined) under any
Subordinated Note.

 

7.11 Guaranty.
(a) Any Guaranty terminates or ceases for any reason to be in full
force and effect; (b) any Guarantor does not perform any obligation
or covenant under any Guaranty within any applicable cure or grace
period in any Guaranty; (c) the liquidation, winding up, or
termination of existence of any Guarantor; (d) there is a material
impairment in the perfection or priority of Agent’s Lien in
the Collateral, taken as a whole, provided by Guarantor or in the
value of such Collateral; or (e) if any of the circumstances
described in Section 7.3 through 7.8 occurs with respect to a
Guarantor.

 

7.12 Governmental
Approvals. Any Governmental Approval material to Issuer or
any Subsidiary’s business shall have been (a) revoked,
rescinded, suspended, modified in an adverse manner or not renewed
in the ordinary course for a full term, or (b) subject to any
decision by a Governmental Authority that designates a hearing with
respect to any applications for renewal of any of such Governmental
Approval or that could result in the Governmental Authority taking
any of the actions described in clause (a) above, and such decision
or such revocation, rescission, suspension, modification or
non-renewal (i) will cause, or could reasonably be expected to
cause, a Material Adverse Change, or (ii) adversely affects the
legal qualifications of Issuer or any Subsidiary to hold such
Governmental Approval in any applicable jurisdiction and such
revocation, rescission, suspension, modification or non-renewal
could reasonably be expected to affect the status of or legal
qualifications of Issuer or any Subsidiary to hold any Governmental
Approval in any other jurisdiction, that will cause, or could
reasonably be expected to cause, a Material Adverse
Change.

 



 

14







 





 




8.


AGENT’S RIGHTS AND REMEDIES





 

8.1 Rights
and Remedies. While an Event of Default occurs and continues
Agent may, without notice or demand, do any or all of the
following: (a) declare all Obligations immediately due and payable
(but if an Event of Default described in Section 7.5 occurs all
Obligations are immediately due and payable without any action by
Agent or any Holder); (b) stop extending credit for Issuer’s
benefit under this Agreement or under any other agreement between
Issuer and any Holder; (c) settle or adjust disputes and claims
directly with Account Debtors for amounts on terms and in any order
that Agent consider advisable, notify any Person owing Issuer money
of Agent’s security interest in such funds, and verify the
amount of such account; (d) make any payments and do any acts it
considers necessary or reasonable to protect the Collateral and/or
its security interest in the Collateral; (e) apply to the
Obligations any amount held by any Holder owing to or for the
credit or the account of Issuer; (f) ship, reclaim, recover, store,
furnish, maintain, repair, prepare for sale, advertise for sale,
and sell the Collateral; (g) deliver a notice of exclusive control,
any entitlement order, or other directions or instructions pursuant
to any Control Agreement or similar agreements providing control of
any Collateral; (h) demand and receive possession of Issuer’s
Books; and (i) exercise all rights and remedies available to Agent
under the Note Documents or at law or equity, including all
remedies provided under the Code (including disposal of the
Collateral pursuant to the terms thereof). Issuer shall assemble
the Collateral if Agent requests and make it available as Agent
designates. Agent may enter premises where the Collateral is
located, take and maintain possession of any part of the
Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and
pay all expenses incurred. Issuer grants Agent a license to enter
and occupy any of its premises, without charge, to exercise any of
Agent’s rights or remedies. Agent is hereby granted a
non-exclusive, royalty-free license or other right, solely pursuant
to the provisions of this Section 8.1, to use, without charge,
Issuer’s labels, patents, copyrights, mask works, rights of
use of any name, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any similar property as it
pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection
with Agent’s exercise of its rights under this Section,
Issuer’s rights under all licenses and all franchise
agreements inure to Agent’s benefit; provided such license
and rights shall only be exercisable in connection with the
disposition of Collateral upon Agent’s exercise of its
remedies hereunder. Issuer hereby irrevocably appoints Agent as its
lawful attorney-in-fact, exercisable only upon the occurrence and
only during the continuance of an Event of Default, to: (i) endorse
Issuer’s name on any checks or other forms of payment or
security; (ii) sign Issuer’s name on any invoice or bill of
lading for any Account or drafts against Account Debtors; (iii)
settle and adjust disputes and claims about the Accounts directly
with Account Debtors, for amounts and on terms Agent determines
reasonable; (iv) make, settle, and adjust all claims under
Issuer’s insurance policies; (v) pay, contest or settle any
Lien, charge, encumbrance, security interest, and adverse claim in
or to the Collateral, or any judgment based thereon, or otherwise
take any action to terminate or discharge the same; and (vi)
transfer the Collateral into the name of Agent or any Holder or a
third party as the Code permits. Issuer hereby appoints Agent as
its lawful attorney-in-fact to sign Issuer’s name on any
documents necessary to perfect or continue the perfection of
Agent’s security interest in the Collateral regardless of
whether an Event of Default has occurred until all Obligations
(other than inchoate indemnity obligations, and any other
obligations which, by their terms, are to survive the termination
of this Agreement) have been satisfied in full. Agent’s
foregoing appointment as Issuer’s attorney in fact, and all
of Agent’s rights and powers, coupled with an interest, are
irrevocable until all Obligations (other than inchoate indemnity
obligations, and any other obligations which, by their terms, are
to survive the termination of this Agreement) have been fully
repaid and performed. Issuer waives demand, notice of default or
dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension,
or renewal of accounts, documents, instruments, chattel paper, and
guarantees held by Agent on which Issuer is liable. If Issuer fails
to pay any amounts or furnish any required proof of payment due to
third persons or entities, as required under the terms of this
Agreement, then Agent or any Holder may do any or all of the
following: (x) make payment of the same or any part thereof; or (y)
obtain and maintain insurance policies of the type discussed in
Section 5.5, and
take any action with respect to such policies as Agent or such
Holder deems prudent. Any amounts paid or deposited by Agent or any
Holder shall constitute Holder Expenses, shall be immediately due
and payable, shall bear interest at the Default Rate and shall be
secured by the Collateral. Any payments made by Agent or any Holder
shall not constitute an agreement by Agent or any Holder to make
similar payments in the future or a waiver by Agent or any Holder
of any Event of Default under this Agreement.

 

8.2 Application
of Payments and Proceeds. All payments received by Agent or
any Holder prior to an Event of Default shall be applied as
follows: (1) first, to Holder Expenses then due and owing; and (2)
second to all payments on each Note then due and owing
(provided,
however, if such
payments are not sufficient to pay the whole amount then due, such
payments shall be applied first to fees, then unpaid interest, then
to the remaining amount then due). After the occurrence and during
the continuance of an Event of Default, Agent and Holders may apply
any funds in its possession, whether from payments, proceeds
realized as the result of any collection of Accounts or other
disposition of the Collateral, or otherwise, to the Obligations in
such order as Agent shall determine in its sole discretion. Any
surplus shall be paid to Issuer or other Persons legally entitled
thereto; Issuer shall remain liable to Agent and Holders for any
deficiency. If Agent or any Holder, in its good faith business
judgment, directly or indirectly enters into a deferred payment or
other credit transaction with any purchaser at any sale of
Collateral, Agent and Holders shall have the option, exercisable at
any time, of either reducing the Obligations by the principal
amount of the purchase price or deferring the reduction of the
Obligations until the actual receipt by Agent and Holders of cash
therefor.

 



 

15







 





 

8.3 Agent’s
and Holders’ Liability for Collateral. So long as
Agent complies with the Code regarding the safekeeping of the
Collateral (including Section 9-207 of the Code) in the possession
or under the control of Agent, neither Agent nor any Holder shall
be liable or responsible for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any
diminution in the value of the Collateral; or (d) any act or
default of any carrier, warehouseman, bailee, or other Person.
Issuer bears all risk of loss, damage or destruction of the
Collateral.

 

8.4 No
Waiver; Remedies Cumulative. Agent’s and
Holders’ failure, at any time or times, to require strict
performance by Issuer of any provision of this Agreement or any
other Note Document shall not waive, affect, or diminish any right
of Agent and Holders thereafter to demand strict performance and
compliance herewith or therewith. No waiver hereunder shall be
effective unless signed by Agent and the Required Holders and then
is only effective for the specific instance and purpose for which
it is given. Agent’s and Holders’ rights and remedies
under this Agreement and the other Note Documents are cumulative.
Holder has all rights and remedies provided under the Code, by law,
or in equity. Agent’s or Holders’ exercise of one right
or remedy is not an election, and Agent’s or Holders’
waiver of any Event of Default is not a continuing waiver.
Agent’s or Holders’ delay in exercising any remedy is
not a waiver, election, or acquiescence.

 

8.5 Share
Collateral. Issuer recognizes that Agent may be unable to
effect a public sale of any or all the Collateral comprising shares
of Issuer’s Subsidiaries, by reason of certain prohibitions
contained in federal securities laws and any other applicable
securities laws or otherwise, and may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view
to the distribution or resale thereof or other applicable
restrictions. Issuer acknowledge and agree that any such private
sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to
have been made in a commercially reasonable manner. Holder shall be
under no obligation to delay a sale of any of the Shares for the
period of time necessary to permit the issuer thereof to register
such securities for public sale under federal securities laws or
under applicable state or foreign securities laws.

 




9.

NOTICES.





 


All
notices or other communication by any party to this Agreement or
any other Note Document must be in writing and shall be deemed to
have been validly served, given, or delivered: (a) upon the earlier
of actual receipt and three (3) Business Days after deposit in the
U.S. mail, first class, registered or certified mail return receipt
requested, with proper postage prepaid; (b) upon transmission, when
sent by electronic mail or facsimile transmission; (c) one (1)
Business Day after deposit with a reputable overnight courier with
all charges prepaid; or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be
notified and sent to the address, facsimile number, or email
address indicated below its signature block on the signature page
hereof. Agent or Issuer may change its mailing or electronic mail
address or facsimile number by giving the other parties written
notice thereof in accordance with the terms of this Section 9.

 




10.


CHOICE OF LAW, VENUE, JURY TRIAL WAIVER





 


New
York law governs the Note Documents without regard to principles of
conflicts of law. Issuer, Agent and each Holder each submit to the
exclusive jurisdiction of the State and Federal courts in New York
County, City of New York, New York; provided, however, that nothing
in this Agreement shall be deemed to operate to preclude Agent or
any Holder from bringing suit or taking other legal action in any
other jurisdiction to realize on the Collateral or any other
security for the Obligations, or to enforce a judgment or other
court order in favor of Agent or any Holder. Issuer expressly
submits and consents in advance to such jurisdiction in any action
or suit commenced in any such court, and Issuer hereby waives any
objection that it may have based upon lack of personal
jurisdiction, improper venue, or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is
deemed appropriate by such court.

 


TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ISSUER, AGENT AND
EACH HOLDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE
NOTE DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT,
TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR ALL PARTIES TO ENTER INTO THIS AGREEMENT.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS
AGREEMENT OR ANYWHERE ELSE, EACH PARTY AGREES THAT IT SHALL NOT
SEEK FROM ANY OTHER PARTY UNDER ANY THEORY OF LIABILITY (INCLUDING
ANY THEORY IN TORTS), ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

 


This
Section 10 shall
survive the termination of this Agreement.

 



 

16







 





 




11.


GENERAL PROVISIONS





 

11.1 Successors
and Assigns. This Agreement binds and is for the benefit of
the successors and permitted assigns of each party hereto. Issuer
may not assign this Agreement or any rights or obligations under it
without Agent’s prior written consent (which may be granted
or withheld in Agent’s discretion).

 

11.2 Indemnification.
Issuer agrees to indemnify, defend and hold Agent and each Holder
and their respective directors, officers, employees, agents or
attorneys, or any other Person affiliated with or representing
Agent or any Holder (each, an “Indemnified Person”) harmless
against: (a) all obligations, demands, claims, and liabilities
(collectively, “Claims”) asserted by any other
party in connection with the transactions contemplated by the Note
Documents; and (b) all losses or Holder Expenses incurred, or paid
by such Indemnified Person from, following, or arising from
transactions between Agent, any Holder and Issuer (including
reasonable and documented out-of-pocket attorneys’ fees and
expenses), except, in the case of clauses (a) and (b), for Claims
and/or losses directly caused by such Indemnified Person’s
gross negligence, bad faith or willful misconduct.

 

11.3 Amendments
in Writing; Integration. All amendments to this Agreement
must be in writing and signed by the Required Holders and Issuer.
This Agreement and the other Note Documents represent the entire
agreement about this subject matter and supersede prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations among the parties
hereto about the subject matter of this Agreement and the other
Note Documents merge into this Agreement and the other Note
Documents. Issuer acknowledges that it is not relying on any
representation or agreement made by Agent or any Holder or any
employee, attorney or agent thereof, other than the specific
agreements set forth in this Agreement and the Note
Documents.

 

11.4 Miscellaneous.
All sums payable by Issuer pursuant to this Agreement or any of the
other Note Documents shall be payable without notice or demand and
shall be payable in United States Dollars without set-off or
reduction of any manner whatsoever. This Agreement may be executed
in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, are an
original, and all taken together, constitute one Agreement. All
covenants, representations and warranties made in this Agreement
continue in full force until this Agreement has terminated pursuant
to its terms and all Obligations (other than inchoate indemnity
obligations and any other obligations which, by their terms, are to
survive the termination of this Agreement) have been satisfied. The
obligation of Issuer in Section 11.2 to indemnify Agent
and each Holder shall survive until the statute of limitations with
respect to such claim or cause of action shall have
run.

 

11.5 Register.
MS Expansion Credit GP, L.P., acting solely for this purpose as an
agent of Issuer, shall maintain at one of its offices a copy of any
assignment with respect to the Note Documents delivered to it and a
register for the recordation of the names and addresses of any
Holder of any Note from time to time (the “Register”). The entries in the
Register shall be conclusive absent manifest error, and Issuer,
Agent and each Holder shall treat each Person whose name is
recorded in the Register pursuant to the terms hereof as the Holder
of each Note for all purposes hereof and thereof. The Register
shall be available for inspection by Issuer, Agent and any Holder
from time to time, at any reasonable time and from time to time
upon reasonable prior notice. If a Holder sells a participation,
such Holder shall, acting solely for this purpose as a
non-fiduciary agent of Issuer, maintain a register on which it
enters the name and address of each such participant and the
principal amounts (and stated interest) of each participant’s
interest in the Notes or other obligations under the Note Documents
(the “Participant
Register”); provided that a Holder shall not have any
obligation to disclose all or any portion of the Participant
Register (including the identity of any participant or any
information relating to a participant’s interest in this
Agreement or any other obligations under any Note Document) to any
Person except to the extent that such disclosure is necessary to
establish that such obligation is in registered form under Section
5f.103-1(c) of the United States Treasury Regulations. The entries
in the Participant Register shall be conclusive absent manifest
error, and Issuer Agent and each Holder shall treat each Person
whose name is recorded in the Participant Register as the owner of
such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.

 

11.6 Purchase
Price Allocation. Issuer and each Holder acknowledges and
agrees that the Notes and Warrants are parts of an investment unit
within the meaning of Section 1273(c)(2) of the IRC. Issuer and
each Holder further agree as between them, that the fair market
value of each Warrant is Two Million One Hundred Forty-Two Thousand
Nine Hundred Seventy Dollars ($2,142,970) and that, pursuant to
Treas. Reg. § 1.1273-2(h), Two Million One Hundred Forty-Two
Thousand Nine Hundred Seventy Dollars ($2,142,970) of the issue
price of the investment unit of each Holder will be allocable to
the Warrant of such Holder and the balance shall be allocable to
the Note issued to such Holder. Issuer and each Holder agree to
prepare their federal income tax returns in a manner consistent
with the foregoing. Issuer agrees that it shall not (and shall
cause its Subsidiaries not to) challenge or support any challenge
to the agreed-upon value of the Warrants.

 

11.7 Time
of Essence. Time is of the essence for the performance of
all Obligations in this Agreement.

 

11.8 Severability
of Provisions. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any
provision.

 



 

17







 





 

11.9 Correction
of Note Documents. Agent may correct patent errors and fill
in any blanks in the Note Documents consistent with the agreement
of the parties hereto so long as Agent provides Issuer with prior
written notice of such correction and allows Issuer at least ten
(10) days to object to such correction. In the event of such
objection, such correction shall not be made except by an amendment
signed by Agent and Issuer.

 

11.10 Confidentiality.
In handling any confidential information, Agent and each Holder
shall exercise the same degree of care that it exercises for its
own proprietary information, but disclosure of information may be
made: (a) to its Subsidiaries or Affiliates so long as such
Subsidiaries or Affiliates are subject to this Section 11.10; (b)
to prospective transferees or purchasers of any interest in this
Agreement (provided, however, that any prospective transferee or
purchaser shall have entered into an agreement containing
provisions substantially the same as this Section 11.10); (c) as
required by law, regulation, subpoena, or other order; (d) to its
regulators or as otherwise required in connection with its
examination or audit; (e) as it consider appropriate in exercising
remedies under the Note Documents; and (f) to its third-party
service providers so long as such service providers are subject to
the same or similar confidentiality requirements. Confidential
information does not include information that either: (i) is in the
public domain or in Agent’s or any Holder’s possession
when disclosed to it, or becomes part of the public domain after
disclosure to Agent or any Holder; or (ii) is disclosed to Agent or
any Holder by a third party, if Agent or a Holder does not know
that the third party is prohibited from disclosing the
information.

 




12.


THE AGENT





 

12.1 Appointment,
Powers and Immunities. Each Holder hereby irrevocably
appoints and authorizes North Haven Expansion to act as its agent
hereunder and under the other Note Documents with such powers as
are specifically delegated to Agent by the terms of this Agreement
and the other Note Documents, together with such other powers as
are reasonably incidental thereto. Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement
and the other Note Documents and shall not be a trustee for any
Holder. Agent shall not be responsible to the Holders for any
recitals, statements, representations or warranties contained in
this Agreement or the other Note Documents, or in any certificate
or other document referred to or provided for in, or received by
any of them under, this Agreement or the other Note Documents, or
for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement, the other Note Documents, or any
other document referred to or provided for herein or therein, or
for the collectability of the Obligations or for the validity,
effectiveness or value of any interest or security granted herein
or for the value of any Collateral or for the validity or
effectiveness of any assignment, mortgage, pledge, security
agreement, financing statement, document or instrument, or for any
failure by any Issuer to perform any of its obligations hereunder
or under the other Note Documents. Agent may employ agents and
attorneys-in-fact and shall not be answerable, except as to money
or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care. Neither Agent nor any of its
directors, officers, members, managers, employees or agents shall
be liable or responsible for any action taken or omitted to be
taken by it or them hereunder or under the other Note Documents or
in connection herewith or therewith, except for its or their own
gross negligence, willful misconduct, or breach of this
Agreement.

 

12.2 Reliance
by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof
by telephone, facsimile transmission, or email) believed by it to
be genuine and correct and to have been signed or sent by or on
behalf of the proper person or persons, and upon advice and
statements of legal counsel, independent accountants and other
experts selected by Agent. As to any matters not expressly provided
for by this Agreement or the other Note Documents, Agent shall in
all cases be fully protected in acting, or in refraining from
acting, hereunder or under the Note Documents in accordance with
instructions signed by the Required Holders, and such instructions
of the Required Holders and any action taken or failure to act
pursuant thereto shall be binding on all of the
Holders.

 

12.3 Knowledge
of Default; Cross Defaults. Agent shall not be deemed to
have knowledge of the occurrence of a Potential Default or Event of
Default, unless Agent has received notice from a Holder or an
Issuer specifying such default or event of default and stating that
such notice is a “Notice of Default.” If Agent receives
such a notice of the occurrence of a Potential Default or Event of
Default, Agent shall give notice thereof to the Holders. Upon
becoming aware of the occurrence of a Potential Default or Event of
Default, a Holder shall give notice thereof to Agent.

 

12.4 Rights
as a Holder. With respect to its Commitment and its Notes,
Agent, in its capacity as a Holder hereunder, shall have the same
rights and powers hereunder as any other Holder and may exercise
the same as though it were not acting as an Agent, and the term
“Holder” or “Holders” shall, unless the
context otherwise indicates, include Agent in its individual
capacity.

 

12.5 Indemnification.
The Holders shall indemnify Agent ratably in accordance with the
aggregate principal amount of the Notes made by the Holders, for
all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted
against Agent in any way relating to or arising out of this
Agreement or any of the other Note Documents or any other documents
contemplated by or referred to herein or therein or the
transactions contemplated by or referred to herein or therein or
the transactions contemplated hereby and thereby (but excluding,
unless a default or event of default has occurred and is
continuing, normal administrative costs and expenses incident to
the performance of its agency duties hereunder) or the enforcement
of any of the terms hereof or of any such other documents, provided
that no Holder shall be liable for any of the foregoing to the
extent they arise from the gross negligence, breach of the Note
Documents, or willful misconduct of the party to be
indemnified.

 

12.6 Failure
to Act. Except for action expressly required of Agent
hereunder, Agent shall in all cases be fully justified in failing
or refusing to act hereunder or thereunder unless it shall be
indemnified to its satisfaction by the Holders against any and all
liability, cost and expense that may be incurred by it by reason of
taking or continuing to take any such action.

 



 

18







 





 

12.7 Resignation
or Removal of Agent. If at any time Agent deems it
advisable, in its sole discretion, it may submit to each of the
Holders a written notification of its resignation as Agent under
this Agreement, such resignation to be effective on the thirtieth
(30th) day after the date of such notice. Agent may be removed at
any time, with or without cause, by vote of the Required Holders.
Upon any such resignation or removal, the Required Holders shall
have the right to appoint a successor Agent from among the Holders.
If no successor Agent shall have been so appointed by the Required
Holders and accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the
retiring Agent may, on behalf of Holders, appoint a successor
Agent, which successor Agent shall be either an existing Holder or
a commercial bank organized under the laws of the United States of
America or of any State thereof and having a combined capital and
surplus of at least $100,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor
Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and
obligations under this Agreement. Issuer and the Holders shall
execute such documents as shall be necessary to effect such
appointment. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Section 12.7 shall inure to its
benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.

 

12.8 Purchase
Decision. Each Holder acknowledges that none of Agent or the
other Holders has made any representation or warranty to it, and
that no act by Agent or a Holder hereinafter taken, including any
review of the affairs of any Issuer, shall be deemed to constitute
any representation or warranty by Agent or such Holder to any other
Holder. Each Holder represents to the other Holders that it has,
independently and without reliance upon any other Holder and based
on such documents and information as it has deemed appropriate,
made its own appraisal of, and investigation into, the business,
prospects, operations, property, financial and other condition and
creditworthiness of Issuer, and all applicable bank, lending,
interest rate and securities regulatory laws relating to the
transactions contemplated hereby, and made its own decision to
enter into this Agreement and to purchase Notes hereunder. Each
Holder also represents that it will, independently and without
reliance upon any other Holder and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Note
Documents, and to make such investigations as it deems necessary to
inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of Issuer.
Except for any notices, reports and other documents expressly
herein required to be furnished to other Holders by a Holder, such
Holder shall not have any duty or responsibility to provide such
other Holders with any credit or other information concerning the
business, prospects, operations, property, financial and other
condition or creditworthiness of any Issuer which may come into the
possession of any of such Holder.

 

12.9 Holders'
Representations Regarding IRS Withholding; Delivery of Tax
Forms. Each Holder represents and agrees as
follows:

 

(a) Such
Holder will furnish to Agent and Issuer, upon request, such forms,
certifications, statements and other documents as Agent and Issuer
may request from time to time to evidence such Holder's exemption
from the withholding of any tax imposed by any jurisdiction or to
enable Agent and Issuer to comply with any applicable laws or
regulations relating thereto;

 

(b) Without
limiting the effect of the foregoing, if such Holder is not created
or organized under the laws of the United States or any state
thereof, such Holder further represents and warrants (i) that it is
engaged in the conduct of a business within the United States and
that the payments made hereunder are or are reasonably expected to
be effectively connected with the conduct of that trade or business
and are or will be includible in its gross income; or (ii) if such
Holder is not engaged in a U.S. trade or business with which such
payments are effectively connected, that such Holder is entitled to
the benefits of a tax convention which exempts the income from U.S.
withholding tax and that it has satisfied all requirements to
quality for the exemption from tax;

 

(c) Such
Holder will, immediately upon the request of Agent or Issuer,
furnish to it Form W-8ECI or Form W-8BEN-E of the Internal Revenue
Service, or such other forms, certifications, statements or
documents, duly executed and completed by Holder as evidence of
such Holder's exemption from the withholding of U.S. tax with
respect thereto. If such Holder determines that, as a result of any
change in applicable law, regulation, or treaty or in any official
application or interpretation thereof, it ceases to quality for
exemption from any tax imposed by any jurisdiction with respect to
payments made hereunder, such Holder shall promptly notify Agent
and Issuer of such fact and Agent and Issuer may, but shall not be
required to withhold the amount of any such applicable tax from
amounts paid to such Holder hereunder. Issuer and Agent shall not
be obligated to make any payments hereunder to such Holder in
respect of such Holder's Note or Notes until such Holder shall have
furnished to Issuer and Agent the requested form, certification,
statement or document and may withhold the amount of such
applicable tax from amounts paid to such Holder hereunder;
and

 

(d) Such
Holder shall reimburse, indemnify and hold Issuer and Agent
harmless for all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed
upon, incurred by or asserted against Issuer and Agent due to its
reliance upon the representation hereby made that such Holder is
exempt from withholding of tax. Unless Agent and Issuer receive
written notice to the contrary, such Holder shall be deemed to have
made the representations contained in this Section 12.9 and in each
subsequent tax year of such Holder.

 



 

19







 





 

12.10 Expenses
of Agent; Annual Agent Fee.

 

(a) Except
as otherwise expressly provided in this Agreement, Agent shall not
be entitled to compensation or reimbursement of expenses from the
Holders, unless such expenses are approved by the Required Holders,
but may receive compensation or reimbursement of expenses from
Issuer under a separate agreement with Issuer.

 

(b) If
the Holders at any time replace North Haven Expansion as Agent with
a Person that is not an Affiliate of the Holders, then Issuer shall
be jointly and severally obligated to reimburse such Agent for its
fees charged and expenses incurred in serving as Agent to the
extent that they do not exceed Forty Thousand Dollars ($40,000)
during any year.

 




13.


DEFINITIONS





 

13.1 Definitions.
Accounting terms not defined in this Agreement shall be construed
following GAAP. Calculations and determinations must be made
following GAAP (except for (i) non-compliance with FAS 123R in
monthly reporting and (ii) with respect to unaudited financial
statements, for the absence of footnotes and subject to year-end
audit adjustments), provided that if at any time any change in GAAP
would affect the computation of any financial ratio or covenant
requirement set forth in any Note Documents, and either Issuer.
Agent or any Holder shall so request, Issuer, Agent and the Holders
shall negotiate in good faith to amend such ratio or covenant
requirement to preserve the original intent thereof in light of
such change in GAAP; provided, further, that until so amended, (a)
such ratio or covenant requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (b) Issuer
shall provide Agent and the Holders financial statements and other
documents required under this Agreement or as reasonably requested
hereunder setting forth a reconciliation between calculations of
such ratio or requirement made before and after giving effect to
such change in GAAP), provided, however, that (x) any obligations
of a Person under a lease (whether existing now or entered into in
the future) that is not (or would not be) a capital lease
obligation under GAAP as in effect on the Issue Date shall not be
treated as a capital lease obligation solely as a result of the
adoption of changes in GAAP. As used in this Agreement, the
following terms have the meanings set forth below. All other terms
contained in this Agreement, unless otherwise indicated, shall have
the meaning provided by the Code to the extent such terms are
defined therein.

 


“Account” is any
“account” as defined in the Code with such additions to
such term as may hereafter be made, and includes, without
limitation, all accounts receivable and other sums owing to a
Person.

 


“Account Debtor” is any
“account debtor” as defined in the Code with such
additions to such term as may hereafter be made.

 


“Affiliate” of any Person is a
Person that owns or controls directly or indirectly the Person, any
Person that controls or is controlled by or is under common control
with the Person, and each of that Person’s senior executive
officers, directors, partners and, for any Person that is a limited
liability company, that Person’s managers and
members.

 


“Agent” is defined in the
preamble.

 


“Anti-Corruption Laws” has the
meaning set forth in Section 4(i).

 


“Anti-Money Laundering Laws” has
the meaning set forth in Section 4(i).

 


“Books” are all books and records
including ledgers, federal and state tax returns, records regarding
a Person’s assets or liabilities, the Collateral, business
operations or financial condition, and all computer programs or
storage or any equipment containing such information.

 


“Business Day” is any day that is
not a Saturday, Sunday or a day on which banks in New York City are
closed.

 



 

20







 





 


“CARES Act” means the Coronavirus
Aid, Relief, and Economic Security Act (H.R. 748), or the CARES Act
and applicable rules and regulations, promulgated under the Small
Business Act (in each case as amended from time to
time).

 


“CARES Payroll Costs” means
“payroll costs” as defined in 15 U.S.C.
636(a)(36)(A)(viii) (as added to the Small Business Act by Section
1102 of the CARES Act).

 


“CARES Forgivable Uses” means uses
of proceeds of an SBA PPP Loan that are eligible for forgiveness
under Section 1106 of the CARES Act.

 


“Cash Equivalents” means (a)
marketable direct obligations issued or unconditionally guaranteed
by the United States or any agency or any State thereof having
maturities of not more than one (1) year from the date of
acquisition; (b) commercial paper maturing no more than one (1)
year after its creation and having the highest rating from either
Standard & Poor’s Ratings Group or Moody’s
Investors Service, Inc.; (c) certificates of deposit, time deposits
or bankers’ acceptances maturing no more than one (1) year
after issue; and (d) any market fund that has at least ninety-five
percent (95%) of its assets invested in Cash Equivalents of the
kinds described in clauses (a) through (c) of this
definition.

 


“Celularity” means Celularity Inc.,
a Delaware corporation.

 


“Celularity Acquisition” means the
acquisition by Issuer of certain assets under, as defined in, and
subject to the terms of the Celularity Acquisition
Documents.

 


“Celularity Acquisition Documents”
means that certain Asset Purchase Agreement, dated as of August 6,
2020, by and between Issuer, as purchaser, and Celularity, as
seller, together with all exhibits and schedules thereto, and all
principal instruments and agreements and/or other agreements
executed and/or delivered in connection therewith; all in form and
content reasonably acceptable to Agent and substantially in the
forms attached hereto as Annex Y.

 


“Celularity Subordinated Note”
means that certain Convertible Promissory Note, dated as of August
6, 2020, by and between Issuer and Celularity, in the original
principal amount of Four Million Dollars ($4,000,000); provided the
same is subject to a subordination agreement in form and content
reasonably acceptable to Agent.

 


“Change in Control” means any
event, transaction, or occurrence (other than (i) the sale or
issuance of Issuer’s equity securities and/or Subordinated
Debt in a bona fide private equity financing or series of private
equity financings with Issuer’s existing investors as of the
Issue Date and (ii) the Equity Financing) as a result of which (i)
with respect to Issuer, any “person” (as such term is
defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act that
is not a stockholder of Issuer as of the Issue Date (other than a
trustee or other fiduciary holding securities under an employee
benefit plan of Issuer) is or becomes a beneficial owner (within
the meaning Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of securities of Issuer, representing
forty-nine percent (49.00%) or more of the combined voting power of
Issuer’s then outstanding securities (determined on a fully
diluted basis), or with respect to a Subsidiary, such Subsidiary
ceases to be wholly-owned by Issuer or a Subsidiary; or (ii) during
any period of twelve (12) consecutive calendar months, individuals
(x) who were members of that board or equivalent governing body on
the first day of such period, (y) whose election or nomination to
that board or equivalent governing body was approved by individuals
referred to in clause (x) above constituting at the time of such
election or nomination at least a majority of that board or
equivalent governing body or (z) whose election or nomination to
that board or other equivalent governing body was approved by
individuals referred to in clauses (x) and (y) above constituting
at the time of such election or nomination at least a majority of
that board or equivalent governing body, cease for any reason other
than death or disability to constitute a majority of the directors
then in office.

 


“Code” is the Uniform Commercial
Code, as the same may, from time to time, be enacted and in effect
in the State of New York; provided, that, to the extent that the
Code is used to define any term herein or in any Note Document and
such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or
Division 9 shall govern; provided further, that in the event that,
by reason of mandatory provisions of law, any or all of the
attachment, perfection, or priority of, or remedies with respect
to, Agent’s Lien on any Collateral is governed by the Uniform
Commercial Code in effect in a jurisdiction other than the State of
New York, the term “Code” shall mean the Uniform
Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes on the provisions thereof relating to such
attachment, perfection, priority, or remedies and for purposes of
definitions relating to such provisions.

 


“Collateral” is any and all
properties, rights and assets of Issuer described on Exhibit A.

 


“Collateral Account” is any Deposit
Account, Securities Account, or Commodity Account of Issuer or any
Domestic Subsidiary.

 



 

21







 





 


“Commodity Account” is any
“commodity account” as defined in the Code with such
additions to such term as may hereafter be made.

 


“Compliance Certificate” is that
certain certificate in the form attached hereto as Exhibit C.

 


“Commitment” means, with respect to
a Holder, the commitment of such Holder to purchase Notes from
Issuer for the aggregate purchase price set forth opposite such
Holder’s name on Schedule 1.1 hereto, as the
same may be amended from time to time.

 


“Contingent Obligation” is, for any
Person, any direct or indirect liability, contingent or not, of
that Person for (a) any indebtedness, lease, dividend, letter of
credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or
sold with recourse by that Person, or for which that Person is
directly or indirectly liable; (b) any obligations for undrawn
letters of credit for the account of that Person; and (c) all
obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity
prices; but “Contingent Obligation” does not include
endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or,
if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may
not exceed the maximum of the obligations under any guarantee or
other support arrangement.

 


“Control Agreement” is any control
agreement entered into among the depository institution at which
Issuer or a Domestic Subsidiary maintains a Deposit Account or the
securities intermediary or commodity intermediary at which Issuer
maintains a Securities Account or a Commodity Account, Issuer or
such Domestic Subsidiary, and Agent pursuant to which Agent obtains
control (within the meaning of the Code) over such Deposit Account,
Securities Account, or Commodity Account.

 


“Copyrights” are any and all
copyright rights, copyright applications, copyright registrations
and like protections in each work of authorship and derivative work
thereof, whether published or unpublished and whether or not the
same also constitutes a trade secret.

 


“Corporate Resolutions” are those
resolutions substantially in the form attached hereto as
Exhibit
B.

 


“Default Rate” is defined in
Section
1.2(b).

 


“Deferred Interest” has the meaning
set forth in Section
1.2(a) of this Agreement.

 


“Deposit Account” is any
“deposit account” as defined in the Code with such
additions to such term as may hereafter be made.

 


“Dollars,” “dollars” and “$” each mean lawful money of the
United States.

 


“Domestic Subsidiary” is any
Subsidiary which is not a Foreign Subsidiary.

 


“Disbursement Letter” is that
certain form attached hereto as Annex X.

 



 

22







 





 


“Equipment” is all
“equipment” as defined in the Code with such additions
to such term as may hereafter be made, and includes without
limitation all machinery, fixtures, goods, vehicles (including
motor vehicles and trailers), and any interest in any of the
foregoing.

 


“Equity Financing” is
Issuer’s receipt of gross cash proceeds from the issuance of
its common stock, from investors reasonably acceptable to Agent, of
at least Twenty Three Million Five Hundred Thousand Dollars
($23,500,000); provided, that, at least Ten Million Dollars
($10,000,000) of the Equity Financing shall be used for
Issuer’s working capital needs.

 


“Equity Financing Documents” means
the documents evidencing the Equity Financing, in form and content,
and on terms and conditions, reasonably acceptable to
Agent.

 


“ERISA” is the Employee Retirement
Income Security Act of 1974, and its regulations.

 


“Event of Default” is defined in
Section
7.

 


“Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 


“Excluded Taxes” shall mean any of
the following Taxes imposed on or with respect to Agent or any
Holder (or any successor or assign of Agent or any Holder) or
required to be withheld or deducted from a payment to Agent or any
Holder (or any successor or assign of Agent or any Holder)
(a) any Taxes imposed on or measured by net income (however
denominated), franchise Taxes, and branch profits Taxes, in each
case, (ii) imposed as a result of Agent’s or any
Holder’s (or such successor’s or assign’s) being
organized under the laws of, or having its principal office or its
applicable lending office located in, the jurisdiction imposing
such Tax (or any political subdivision thereof) or
(ii) imposed as a result of a present or former connection
between Agent or any Holder (or such successor or assign) and the
jurisdiction imposing such Tax (other than connections arising from
Agent or any Holder (or such successor or assign) having executed,
delivered, become a party to, performed its obligations under,
received payments under, received or perfected a security interest
under, engaged in any other transaction pursuant to or enforced any
Note Document (other than the Warrants), or sold or assigned an
interest in the Note or any Note Document (other than the
Warrants)), (b) any U.S. federal withholding Taxes imposed
with respect to an applicable interest in any Obligation pursuant
to a law in effect on the date on which (i) Agent or any
Holder (or such successor or assign) acquires such interest in such
Obligation or (ii) Agent or any Holder (or such successor or
assign) changes its lending office, except in each case to the
extent that, pursuant to Section 1.2(d), amounts with respect to
such Taxes were payable either to such successor’s or
assign’s applicable predecessor or assignor immediately
before such successor or assign became a party hereto or to Agent
or any Holder (or such successor or assign) immediately before it
changed its lending office and (c) any U.S. federal
withholding Taxes imposed under Sections 1471 through 1474 of the
IRC, as of the date of this Agreement (or any amended or successor
version of such law that is substantively comparable and not
materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreement
entered into pursuant to Section 1471(b)(1) of the IRC; provided
that, following an Event of Default, subsections (b) and (c) shall
not be considered “Excluded Taxes” to the extent Agent
or any Holder (or any successor or assign of Agent or any Holder)
assigns its interests in the Note or any Note Document (other than
the Warrants) following such Event of Default.

 


“Existing HealthTronics Seller
Notes” means (a) that certain Promissory Note, dated
as of August 1, 2005, by and among SanuWave, Issuer and
HealthTronics, in the original principal amount of $2,000,000, and
(b) that certain Promissory Note, dated as of August 1, 2005, by
and among SanuWave, Issuer and HealthTronics, in the original
principal amount of $2,000,000, in each case, as amended, restated,
amended and restated, supplemented or otherwise modified from time
to time

 


“Existing Indebtedness” is the
indebtedness of Issuer in connection with (a) the Existing
HealthTronics Seller Notes; (b) the Short-Term Notes; and (c) the
Existing Line of Credit.

 


“Existing Line of Credit” means
that certain Line of Credit Agreement, dated as of December 29,
2017, in the original principal amount of Three Hundred Thousand
Seventy Dollars ($370,000), by and between Issuer and A. Michael
Stolarski, as amended, restated, amended and restated, supplemented
or otherwise modified from time to time.

 


“Existing Short-Term Notes” means
each of (a) that certain Promissory Note, dated as of June 5, 2020,
in the original principal amount of One Million Two Hundred Ten
Thousand Dollars ($1,210,000), issued by Issuer in favor of LGH
Investments, LLC, a Wyoming limited liability company, (b) that
certain promissory note, dated as of December 13, 2019, in the
original principal amount of One Hundred Ten Thousand Dollars
($110,000), issued by Issuer in favor of George Johnson, and (c)
that certain promissory note, dated as of December 13, 2019, issued
by Issuer in favor of Kerri Johnson, in the original principal
amount of One Hundred Thousand Dollars ($100,000); in each case, as
amended, restated, amended and restated, supplemented or otherwise
modified from time to time

 



 

23







 





 


“Expense Deposit” is defined in
Section
1.2.

 


“Foreign Subsidiary” is a
Subsidiary that is not an entity organized under the laws of the
United States, any state thereof or the District of
Columbia.


 


“GAAP” is generally accepted
accounting principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other
statements by such other Person as may be approved by a significant
segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.

 


“General Intangibles” is all
“general intangibles” as defined in the Code in effect
on the date hereof with such additions to such term as may
hereafter be made, and includes without limitation, all
Intellectual Property, payment intangibles, royalties, contract
rights, goodwill, franchise agreements, purchase orders, customer
lists, route lists, telephone numbers, domain names, claims, income
and other tax refunds, security and other deposits, options to
purchase or sell real or personal property, rights in all
litigation presently or hereafter pending (whether in contract,
tort or otherwise), insurance policies (including without
limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any
kind.

 


“Governmental Approval” is any
consent, authorization, approval, order, license, franchise,
permit, certificate, accreditation, registration, filing or notice,
of, issued by, from or to, or other act by or in respect of, any
Governmental Authority.

 


“Governmental Authority” is any
nation or government, any state or other political subdivision
thereof, any agency, authority, instrumentality, regulatory body,
court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange
and any self-regulatory organization.

 


“Guarantor” is any Person providing
a Guaranty in favor of Agent. As of the Issue Date,
“Guarantor” means each of SANUWAVE and SanuWave
Services.

 


“Guaranty” is that certain
Unconditional Guaranty executed as of the Issue Date by each
Guarantor in favor of Agent, guaranteeing payment and performance
of all Obligations, as the same may from time to time be amended,
restated, amended and restated, supplemented or otherwise modified
from time to time.

 


“HealthTronics” means
HealthTronics, Inc., a Georgia corporation.

 


“HealthTronics Subordinated Note”
means that certain Convertible Promissory Note, dated as of August
6, 2020, by and between Issuer and HealthTronics, in the original
principal amount of One Million Three Hundred Seventy Two Thousand
Seven Hundred Forty Three Dollars ($1,372,743); provided the same
is subject to a subordination agreement in form and content
reasonably acceptable to Agent.

 


“Holder” or “Holders” is defined in the
preamble hereof.

 


“Holder Expenses” are all
reasonable and documented out-of-pocket audit fees and expenses,
costs, and expenses (including reasonable and documented
out-of-pocket attorneys’ fees and expenses) for preparing,
amending, negotiating, administering, defending and enforcing the
Note Documents (including, without limitation, those incurred by
Agent’s or any Holder’s representatives in attending
Issuer’s board meetings, and in connection with appeals or
Insolvency Proceedings) or otherwise incurred by Agent or any
Holder with respect to Issuer.

 


“Indebtedness” is, with respect to
Issuer or any Subsidiary, (a) indebtedness for borrowed money or
the deferred price of property or services, such as reimbursement
and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar
instruments, (c) capital lease obligations, and (d) Contingent
Obligations with respect to Indebtedness described in clauses (a)
through (c) of this definition.

 



 

24







 





 


“Indemnified Person” is defined in
Section
11.2.

 


“Initial Prepayment Date” is
September 30,
2023.

 


“Insolvency Proceeding” is any
proceeding by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions,
extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

 


“Inventory” is all
“inventory” as defined in the Code in effect on the
date hereof with such additions to such term as may hereafter be
made, and includes without limitation all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in
process and finished products, including without limitation such
inventory as is temporarily out of Issuer’s custody or
possession or in transit and including any returned goods and any
documents of title representing any of the above.

 


“Investment” is any beneficial
ownership interest in any Person (including stock, partnership
interest or other securities), and any loan, advance or capital
contribution to any Person.

 


“Intellectual Property” means, with
respect to any Person, means all of such Person’s right,
title, and interest in and to the following:

 


(a)           its
Copyrights, Trademarks and Patents;

 


(b)           any
and all trade secrets and trade secret rights, including, without
limitation, any rights to unpatented inventions, know-how,
operating manuals;

 


(c)           any
and all source code;

 


(d)           any
and all design rights which may be available to such
Person;

 


(e)           any
and all claims for damages by way of past, present and future
infringement of any of the foregoing, with the right, but not the
obligation, to sue for and collect such damages for said use or
infringement of the Intellectual Property rights identified above;
and

 


(f)           all
amendments, renewals and extensions of any of the Copyrights,
Trademarks or Patents.

 


“IP Agreement” is each Intellectual
Property Security Agreement executed and delivered by Issuer and
each Guarantor to Agent dated as of the Issue Date, or any
subsequently delivered similar agreement.

 


“IRC” means the U.S. Internal
Revenue Code of 1986, as amended.

 


“Issue Date” is the date of
issuance of this Agreement, as indicated on the cover page
hereof.

 


“Issuer” is defined in the preamble
hereof.

 


“Lien” is a claim, mortgage, deed
of trust, levy, charge, pledge, security interest or other
encumbrance of any kind, whether voluntarily incurred or arising by
operation of law or otherwise against any property.

 



 

25







 





 


“Liquidity” is, at any time, the
sum of (i) the aggregate amount of unrestricted cash and Cash
Equivalents held at such time by Issuer and its Subsidiaries in
Deposit Accounts or Securities Accounts that are subject to Control
Agreements in favor of Agent and (ii) undrawn availability under
the Senior Debt.

 


“Material Adverse Change” is (a) a
material impairment in the perfection or applicable priority of
Agent’s Lien in the Collateral, taken as a whole, or in the
value of such Collateral; (b) a material adverse change in the
business, operations, or condition (financial or otherwise) of
Issuer and its Subsidiaries taken as a whole; or (c) a material
impairment of the prospect of repayment of any portion of the
Obligations.

 


“Maturity Date” is September 30,
2025.

 


“NFS Master Equipment Lease” means
that certain Master Equipment Lease, dated as of January 19, 2018,
by and between NFS Leasing, Inc., a Massachusetts corporation, and
Issuer, as amended, restated, amended and restated, supplemented or
otherwise modified from time to time; provided that, as of the
Issue Date, the principal amount of the Indebtedness thereunder is
Four Hundred Fifty Six Thousand One Hundred Thirty Nine Dollars and
Twenty Cents ($456,139.20); provided the same is subject to a
subordination agreement in form and content reasonably acceptable
to Agent.

 


“Note” is defined in the preamble
hereof.

 


 “Note
Documents” are, collectively, this Agreement, the
Warrants, the IP Agreements, the Perfection Certificate, any
Guaranty, the Security Agreement, the Disbursement Letter and any
other present or future agreement between Issuer any Guarantor
and/or for the benefit of Agent or any Holder in connection with
this Agreement, all as amended, restated, amended and restated,
supplemented or otherwise modified.

 


“Obligations” are Issuer’s
obligation to pay when due any debts, principal, interest, Holder
Expenses and other amounts Issuer owes Agent or any Holder now or
later under this Agreement or the other Note Documents (other than
the Warrants), including, without limitation, interest accruing and
Holder Expenses incurred after Insolvency Proceedings begin, and
the performance of Issuer’s duties under the Note Documents
(other than the Warrants), and including interest accruing after
Insolvency Proceedings begin and debts, liabilities, or obligations
of Issuer assigned to Agent or any Holder.

 


“Participant Register” has the
meaning set forth in Section 11.5.

 


“Patents” means all patents, patent
applications and like protections including without limitation
improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

 


“Payment Date” has the meaning set
forth in Section
1.2(a).

 


 “Perfection
Certificate” is the completed certificate signed by
Issuer and each Guarantor, entitled “Perfection
Certificate” delivered by Issuer to Holders in connection
with this Agreement, as updated by Issuer from time to time in
accordance with Section
4(g).

 


“Permitted Distributions”
are

 



 

26







 





 

(a) any
conversion of Issuer’s convertible securities into other
securities pursuant to the terms of such convertible securities or
otherwise in exchange thereof,

 

(b) the
payment of dividends solely in common stock by Issuer;

 

(c) the
payment of cash in lieu of the issuance of fractional
shares

 

(d) the
repurchase by Issuer of its stock from former employees, directors
or consultants pursuant to stock repurchase agreements so long as
an Event of Default does not exist at the time of such repurchase
and would not exist after giving effect to such repurchase,
provided such repurchase does not exceed in the aggregate of One
Hundred Thousand Dollars ($100,000) per fiscal year;
and

 

(e) any
distributions by a Subsidiary to Issuer.

 


“Permitted Indebtedness”
is:

 

(a) Issuer’s
Indebtedness to Holders under this Agreement and the other Note
Documents;

 

(b) Indebtedness
existing on the Issue Date and shown on the Perfection
Certificate;

 

(c) Indebtedness
with respect to surety bonds and similar obligations not to exceed
One Hundred Thousand Dollars ($100,000), in each case incurred in
the ordinary course of business;

 

(d) Indebtedness
incurred as a result of endorsing negotiable instruments received
in the ordinary course of business and Indebtedness to trade
creditors;

 

(e) Subordinated
Debt;

 

(f) Indebtedness
in an aggregate principal amount not to exceed One Hundred Thousand
Dollars ($100,000) secured by a Permitted Lien described in clause
(c) of the defined term “Permitted Liens”;

 


(g) Senior
Debt;

 



 

27







 





 


(h) Indebtedness
that constitutes a Permitted Investment under clause (f) of the
defined term “Permitted Investments”;

 


(i) unsecured
Indebtedness consisting of the SBA PPP Loan;

 


(j) unsecured
Indebtedness to trade creditors incurred in the ordinary course of
business and not past due;

 


(k) Indebtedness
incurred under that certain NFS Master Equipment Lease

 


(l) extensions,
refinancings, modifications, amendments and restatements of any
items of Permitted Indebtedness described in clause (b) above,
provided that the principal amount thereof is not increased other
than the amount of any reasonably premiums or the terms thereof,
taken as a whole, are not modified to impose materially more
burdensome terms upon Issuer or its Subsidiary, as the case may be;
and

 


(m) other unsecured
Indebtedness in an amount not to exceed One Hundred Thousand
Dollars ($100,000).

 


 “Permitted
Investments” are:

 

(a) Investments shown
on the Perfection Certificate and existing on the Issue
Date;

 

(b) Cash
Equivalents;

 

(c) Investments
consisting of the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of
Issuer;

 

(d) Investments
consisting of Deposit Accounts;

 

(e) Investments
accepted in connection with Transfers permitted by Section 6.1;

 

(f) Investments
(i) in any Subsidiary that is a Guarantor or in Issuer, (ii)
between Subsidiaries that are not Guarantors, and (iii) by Issuer
or a Subsidiary which is a Guarantor in a Subsidiary which is not a
Guarantor in an amount not to exceed Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate in any fiscal
year;

 

(g) Investments
consisting of (i) travel advances and employee relocation loans and
other employee loans and advances in the ordinary course of
business, and (ii) loans to employees, officers or directors
relating to the purchase of equity securities of Issuer pursuant to
employee stock purchase plans or agreements approved by
Issuer’s board of directors;

 

(h) Investments
(including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in
settlement of delinquent obligations of, and other disputes with,
customers or suppliers arising in the ordinary course of
business;

 



 

28







 





 

(i) Investments
consisting of notes receivable of, or prepaid royalties and other
credit extensions, to customers and suppliers who are not
Affiliates, in the ordinary course of business; provided that this
paragraph (i) shall not apply to Investments of Issuer in any
Subsidiary;

 

(j) joint
ventures or strategic alliances in the ordinary course of
Issuer’s business consisting of the non-exclusive licensing
of technology, the development of technology or the providing of
technical support, provided that any cash investments by Issuer do
not exceed Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate in any fiscal year;

 

(k) other
Investments in an amount not to exceed One Hundred Thousand Dollars
($100,000) in the aggregate outstanding at any time;
and

 

(l) the
Celularity Acquisition.

 


“Permitted Liens” are:

 

(a) Liens existing on
the Issue Date and shown on the Perfection Certificate or arising
under this Agreement and the other Note Documents;

 

(b) Liens
for taxes, fees, assessments or other government charges or levies,
either not delinquent or being contested in good faith and for
which Issuer maintains adequate reserves on its Books, provided that no notice of any
such Lien has been filed or recorded under the IRC and the Treasury
Regulations adopted thereunder;

 

(c) Purchase
money Liens upon any equipment or other personal property acquired
by Issuer to secure (i) the purchase price of such equipment or
other personal property, or (ii) lease obligations or indebtedness
incurred solely for the purpose of financing the acquisition of
such equipment or other personal property; provided that such Liens are
confined solely to the equipment or other personal property so
acquired and the amount secured does not exceed the acquisition
price thereof.

 

(d) Liens
of carriers, warehousemen, suppliers, or other Persons that are
possessory in nature arising in the ordinary course of business in
the aggregate so long as such Liens attach only to Inventory,
securing liabilities in the aggregate amount not to exceed One
Hundred Thousand Dollars ($100,000) and which are not delinquent or
remain payable without penalty or which are being contested in good
faith and by appropriate proceedings which proceedings have the
effect of preventing the forfeiture or sale of the property subject
thereto;

 

(e) Liens
to secure payment of workers’ compensation, employment
insurance, old-age pensions, social security and other like
obligations incurred in the ordinary course of business (other than
Liens imposed by ERISA);

 

(f) Liens
incurred in the extension, renewal or refinancing of the
indebtedness secured by Liens described in clauses (a) through (c)
above, provided
that any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness may not increase;

 

(g) leases
or subleases of real property granted in the ordinary course of
business, and leases, subleases, non-exclusive licenses or
sublicenses of property (other than real property or Intellectual
Property) granted in the ordinary course of Issuer’s business
(or, if referring to another Person, in the ordinary course of such
Person’s business), if the leases, subleases, licenses and
sublicenses do not prohibit granting Agent or any Holder a security
interest;

 

(h) Liens
securing Subordinated Debt;

 


(i) deposits to secure
the performance of leases, statutory obligations, stay, and appeal
bonds, and other obligations of a like nature incurred in the
ordinary course of business not representing an obligation for
borrowed money in an amount not to exceed One Hundred Thousand
Dollars ($100,000);

 

(j) non-exclusive
licenses of Intellectual Property granted to third parties in the
ordinary course of business and licenses of Intellectual Property
that could not result in a legal transfer of title of the licensed
property that may be exclusive in respects other than territory and
that may be exclusive as to territory only as to discrete
geographical areas outside of the United States;

 



 

29







 





 

(k) Liens
arising from attachments or judgments, orders, or decrees in
circumstances not constituting an Event of Default under
Sections 7.4 and
7.7;

 


(l) Liens
securing Senior Debt; and

 


(m) Liens
securing obligations under the NFS Master Equipment
Lease.

 


“Person” is any individual, sole
proprietorship, partnership, limited liability company, joint
venture, company, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

 


“Potential Default” means the
occurrence of any event or condition which, with the giving of
notice, the passage of time, or both, could constitute an Event of
Default.

 


“Prepayment Amount” means, for any
prepayment that occurs prior to the Initial Prepayment Date,
including in connection with a Change in Control or an acceleration
of the Notes prior to the Initial Prepayment Date, an amount equal
to the total of all the cash interest remaining to be paid from the
date of prepayment through the Initial Prepayment Date, with the
interest rate for the period from the date of prepayment through
the Initial Prepayment Date calculated at the then-current Prime
Rate, plus one hundred three percent (103.00%) of the principal
amount calculated to be outstanding on the Initial Prepayment Date
(including the accretion of the Deferred Interest through that
date); all as calculated by Holder and deemed to be correct absent
manifest error.

 


“Prepayment Fee” means, for any
prepayment that occurs on or after the Initial Prepayment Date, an
amount equal to one hundred percent (100.00%) of the accreted value
of the Notes then outstanding, plus all accrued but unpaid cash
interest, plus all Deferred Interest, at the time of such
prepayment, whether by mandatory or voluntary prepayment,
acceleration or otherwise.

 


 “Prime Rate” means the
Prime Rate published in the Money Rates section of the Eastern
Edition of The Wall Street Journal or any successor publication
thereto; provided
that if such rate of interest, as set forth from time to time in
the Money Rates section of the Eastern Edition of the Wall Street
Journal, becomes unavailable for any reason, as determined by
Agent, the “Prime Rate” shall mean such other rate of
interest publicly announced from time to time by Agent as the prime
rate. Any change in the Prime Rate shall take effect at the opening
of business on the day specified in the public announcement of a
change in the Prime Rate.

 


“Purchase Price” means Fifteen
Million Dollars ($15,000,000).

 


“Register” is defined in Section
11.5.

 


“Required Holders” means, at any
time, the Holders of at least a majority of the aggregate principal
amount of the Notes at the time outstanding; provided that, for so
long as North Haven Expansion is a holder of a Note, North Haven
Expansion shall be considered a Required Holder.

 


“Requirement of Law” is as to any
Person, the organizational or governing documents of such Person,
and any law (statutory or common), treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its
property is subject.

 


“Responsible Officer” is any of the
Chief Executive Officer, President, Chief Financial Officer, Chief
Operating Officer and Controller of Issuer.

 



 

30







 





 


“Restricted License” is any
material license agreement with respect to which Issuer or a
Subsidiary is the licensee (a) that validly prohibits or otherwise
restricts Issuer from granting a security interest in
Issuer’s or such Subsidiary’s interest in such license
or agreement or any other property, or (b) for which a default
under or termination of could interfere with Agent’s or a
Holder’s right to sell any Collateral.

 


“Sanctions” has the meaning set
forth in Section 4(i).

 


“SANUWAVE” means SANUWAVE, Inc., a
Delaware corporation.

 


“SanuWave Services” means SanuWave
Services, LLC, a Delaware limited liability company.

 


“SEC” means the Securities and
Exchange Commission.

 


“SBA” means the U.S. Small Business
Administration.

 


“SBA PPP Loan” means a loan
incurred by Issuer under 15 U.S.C. 636(a)(36) (as added to the
Small Business Act by Section 1102 of the CARES Act) in the
original principal amount of Four Hundred Fifty Four Thousand Three
Hundred Thirty Five Dollars ($454,335), as amended, restated,
amended and restated, supplemented or otherwise modified from time
to time.

 


“SBA PPP Loan Date” means the date
on which Issuer receives the proceeds of the SBA PPP
Loan.

 


“SBA PPP Loan Lender” means the
lender making the SBA PPP Loan.

 


“Securities Account” is any
“securities account” as defined in the Code with such
additions to such term as may hereafter be made.

 


“Security Agreement” is that
certain Security Agreement executed as of the Issue Date by each
Guarantor in favor of Agent, securing repayment of the
Unconditional Guaranty, as the same may from time to time be
amended, restated, amended and restated, supplemented or otherwise
modified from time to time.

 


“Senior Debt” means the
Indebtedness outstanding to Senior Lender on terms acceptable to
Agent, provided that (i) a Subordination Agreement is in effect,
and (ii) the aggregate principal amount outstanding thereunder
shall not exceed Five Million Dollars ($5,000,000).

 


“Senior Lender” means any bank
providing Senior Debt on terms acceptable to Agent.

 


“Shares” is one hundred percent
(100%) of the issued and outstanding capital stock, membership
units or other securities owned or held of record by Issuer or
Issuer’s Subsidiaries, in any Subsidiary.

 


“Small Business Act” means the
Small Business Act (15 U.S. Code Chapter 14A – Aid to Small
Business).

 


“Stolarski” means A. Michael
Stolarski, an individual.

 



 

31







 





 


“Stolarski Subordinated Note” means
that certain Convertible Promissory Note, dated as of August 6,
2020, by and between Issuer and Stolarski, in the original
principal amount of Two Hundred Twenty-Three Thousand Five Hundred
Eleven and 26/100 Dollars ($223,511.26); provided the same is
subject to a subordination agreement in form and content reasonably
acceptable to Agent.

 


“Subordination Agreement” means a
subordination agreement by and between Senior Lender and Holder
reasonably acceptable to Holder.

 


“Subordinated Debt” is indebtedness
incurred by Issuer subordinated to all of Issuer’s now or
hereafter indebtedness to Holders (pursuant to a subordination,
intercreditor, or other similar agreement in form and substance
reasonably satisfactory to Agent, and entered into between Agent
and the other creditor), on terms reasonably acceptable to Agent.
For the avoidance of doubt, “Subordinated Debt” shall
include the Subordinated Notes.

 


“Subordinated Notes” means each,
and “Subordinated
Note” means either, of (a) the Celularity Subordinated
Note, (b) the HealthTronics Subordinated Note and (c) the Stolarski
Subordinated Note.

 


“Subsidiary” means, with respect to
any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless the context
otherwise requires, each reference to a Subsidiary herein shall be
a reference to a Subsidiary of Issuer.

 


“SunTrust Accounts” is defined in
Section
5.6.

 


“Taxes” is defined in Section 1.2(d).

 


“Trademarks” means any trademark
and servicemark rights, whether registered or not, applications to
register and registrations of the same and like protections, and
the entire goodwill of the business of Issuer connected with and
symbolized by such trademarks.

 


“Transfer” is defined in
Section
6.1.

 


“Warrant” is defined in Section
1.1(a).

 


 


 


 



[Balance of Page Intentionally
Left Blank]




 

32








 






IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.

 


ISSUER:


 


SANUWAVE HEALTH,
INC.


 



By /s/ Lisa E.
Sundstrom                                            







Name: Lisa E.
Sundstrom                                                       







Title: Chief Financial
Officer                                                       






 


Address for
Notice:


SANUWAVE HEALTH,
INC.


3360
Martin Farm Road, Suite 100


Suwanee, Georgia
30024


Attn:
Lisa E. Sundstrom, Chief Financial Officer


Email:
lisa.sundstrom@sanuwave.com


 


with a
copy, not constituting notice, to:


 


Morrison &
Foerster LLP


425
Market Street


San
Francisco, CA 94105


Attention: Murray
Indick


Email:
MIndick@mofo.com


 


 


 



 

33







 






 


 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.

 


 



AGENT AND HOLDER:


 


NH
EXPANSION CREDIT FUND HOLDINGS LP


 


By: MS
Expansion Credit GP, L.P.


Its:
General Partner


 


By: MS
Expansion Credit GP Inc.


Its:
General Partner


 



By /s/ William
Reiland   








Name: William
Reiland   








Title: Managing
Director         








 


Address
for Notice:


1585
Broadway, 39th Floor


New
York, NY 10036


Attn:
Debra Abramovitz


Expansion_credit_reporting@morganstanley.com


 


with a
copy to:


 


1585
Broadway, 37th Floor


New
York, NY 10036


Attn:
William Reiland


 


and


 


555
California Street, 14th Floor


San
Francisco, CA 94104


Attn:
Melissa Daniels


 


with a
copy, not constituting notice, to:


 


Barnes
& Thornburg LLP


655 W.
Broadway, Suite 900


San
Diego, CA 92101


Attn:
Troy Zander


 

 




 

34








 







SCHEDULE 1

 



Conditions to Note Issuance

 


Issuer
shall have delivered to Agent and Holders or Agent and Holders
shall have received the following, in form and substance reasonably
satisfactory to Agent and Holders, duly executed by all parties
thereto, as applicable:

 




1.

this
Agreement;





 




2.

the
Note;





 




3.

the
Warrant;





 




4.

the IP
Agreement;





 





5.

the
Guaranty;





 





6.

the Security
Agreement;





 




7.

the Equity
Financing Documents;





 




8.

evidence of
Issuer’s receipt of the Equity Financing;;





 




9.

the Celularity
Acquisition Documents (including the Celularity Subordinated
Note);





 




10.

the HealthTronics
Subordinated Note;





 




11.

subordination
agreements with respect to each of (i) the Celularity Subordinated
Note; (ii) the HealthTronics Subordinated Note; (iii) the NFS
Master Equipment Lease; and (iv) the Stolarski Subordinated
Note;





 




12.

evidence of
Issuer’s consummation of the Celularity
Acquisition;





 




13.

one or more payoff
letters in respect of the Existing Indebtedness;





 



 

35







 





 




14.

evidence that
(i) the Existing Indebtedness will be satisfied in full from
the Note proceeds; (ii) any Liens securing the Existing
Indebtedness will be terminated; and (iii) any documents
and/or filings evidencing the perfection of such Liens, including
without limitation any financing statements and/or control
agreements, have or will, concurrently with the Note issuance, be
terminated;





 




15.

a Control Agreement
with respect to each Deposit Account and Securities Account
existing as of the Issue Date;





 




16.

a
landlord’s waiver (or consent) with respect to each of
Issuer’s leased locations; provided that Issuer shall (i)
deliver to Agent the same with respect to Issuer’s leased
location at 3360 Martin Farm Road, Suite 100, Suwanee, Georgia
30024 within five (5) Business Days of the Issue Date, or such
later date as Agent specifies in its sole discretion, and (ii) with
respect to the leased location at 11495 Valley View Road, Eden
Prairie, MN 55344, use commercially reasonable efforts to deliver
the same within sixty (60) days of the Issue Date, or such later
date as Agent specifies in its sole discretion;





 




17.

(i) Issuer’s
certificate of incorporation, as amended to date; and (ii) a copy
of its signed bylaws, as amended to date;





 




18.

duly executed
signatures to the completed Corporate Resolutions;





 




19.

the Perfection
Certificate;





 




20.

the Stolarski
Subordinated Note;





 




21.

legal opinions of
(x) Morrison & Foerster LLP, as counsel to Issuer and
Guarantors; and (y) Hutchinson & Steffon, PLLC, as Nevada
counsel to Issuer;





 




22.

evidence
satisfactory to Agent that the insurance policies required by
Section 5.5 hereof
are in full force and effect, together with, within ten (10)
Business Days of the Issue Date, or such later date as Agent
specifies in its sole discretion, appropriate evidence showing
Agent as loss payable and/or additional insured clauses or
endorsements in favor of Agent;





 




23.

payment of the fees
and Holder Expenses then due as specified in Section 1.3
hereof.





 




 

36








 







SCHEDULE 1.1

 


 

 



Holders and Commitments

 


	
 

	
 

	
 


	


Lender

	


Commitment Amount

	


Commitment Percentage


	

NH
EXPANSION CREDIT FUND HOLDINGS LP

	

$15,000,000.00

	

100.00%


	


TOTAL

	


$15,000,000.00

	


100.00%







 




 

37








 






 

 



EXHIBIT A

 


The
Collateral consists of all of Issuer’s right, title and
interest in and to the following personal property wherever
located, whether now owned or hereafter acquired or
arising:

 


All
goods, Accounts (including but not limited to health-care
receivables), Equipment, Inventory, contract rights or rights to
payment of money, leases, license agreements, franchise agreements,
General Intangibles, commercial tort claims, documents, instruments
(including any promissory notes), chattel paper (whether tangible
or electronic), cash, deposit accounts, fixtures, letters of credit
rights (whether or not the letter of credit is evidenced by a
writing), securities, and all other investment property, supporting
obligations, and financial assets, whether now owned or hereafter
acquired, wherever located, equity interests of any Subsidiary, and
all Issuer’s Books relating to the foregoing, and any and all
claims, rights and interests in any of the above and all
substitutions for, additions, attachments, accessories, accessions
and improvements to and replacements, products, proceeds and
insurance proceeds of any or all of the foregoing.

 




 

38








 







EXHIBIT B


 



OMNIBUS OFFICER’S CERTIFICATE


 



SANUWAVE HEALTH, INC.



SANUWAVE, INC.



SANUWAVE SERVICES, LLC


 


August
6, 2020


 


This
Omnibus Officer’s Certificate is being delivered pursuant to
Schedule 1 of
that certain Note and Warrant Purchase and Security Agreement,
dated as of the date hereof (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the
“NWPSA”), by
and among SANUWAVE Health, Inc., a Nevada corporation (the
“Issuer”), the
Holders from time to time party thereto and NH Expansion Credit
Fund Holdings LP, as the agent (in such capacity, together with it
successors and permitted assigns, the “Agent”). Each
of the Issuer, SANUWAVE, Inc., a Delaware corporation, and SanuWave
Services, LLC, a Delaware limited liability company, are
hereinafter referred to each as a “Company.”
Capitalized terms used herein and not otherwise defined shall have
the meanings given to such terms in the NWPSA. The undersigned
Chief Financial Officer of each Company hereby certifies, solely in
such capacity and not in any individual capacity, as
follows:


 




1.

I am the duly
elected and qualified Chief Financial Officer of each
Company.





 




2.

Attached hereto as
Exhibit A is a
true, correct and complete copy of the resolutions duly adopted by
the board of directors or sole member, as applicable, of each
Company authorizing the execution, delivery and performance of the
Note Documents to which such Company is a party; and such
resolutions have not been amended, modified, revoked or rescinded
and are in full force and effect as of the date
hereof.





 




3.

Attached hereto as
Exhibit B is a
true, correct and complete copy of the bylaws or limited liability
company agreement, as applicable, of each Company as in effect on
the date hereof and except as reflected therein there have been no
amendments, restatements or other modifications.





 




4.

Attached hereto as
Exhibit C is a
true, correct and complete copy of the certificate of
incorporation, restated certificate of incorporation or certificate
of formation, as applicable, of each Company as in effect on the
date hereof and except as reflected therein there have been no
amendments, restatements or other modifications.





 




5.

Attached hereto as
Exhibit D is a
good standing certificate for each Company issued by its
jurisdiction of organization.





 




6.

Attached hereto as
Exhibit E is a
true, correct and complete copy of the certificate of incumbency
for each Company certifying that the named individuals therein are
duly elected and appointed officers of such Company holding the
offices set forth opposite their names therein, and that such
officers are authorized to sign, execute, and deliver the Note
Documents and the signatures set out opposite the names of such
officers are their genuine signatures.





 


 

 




 

39








 






IN
WITNESS WHEREOF, I have hereunto set my hand as of the date first
set forth above.


 


 


 


____________________________________


Name:
Lisa E. Sundstrom


Title:
Chief Financial Officer


 


 


I,
Kevin A. Richardson II, in my capacity as Chief Executive Officer
of each Company, do hereby certify in the name and on behalf of
each Company that Lisa E. Sundstrom is the duly elected and
qualified Chief Financial Officer of each Company and that the
signature appearing above is her genuine signature.


 


 


 


____________________________________


Name:
Kevin A. Richardson II


Title:
Chief Executive Officer


 

 




 

40








 







Exhibit A


 



Resolutions


 


[See
attached]


 




 

41








 







Exhibit B


 



Governing Documents


 


[See
attached]


 




 

42








 







Exhibit C


 



Charters


 


[See
attached]


 




 

43








 







Exhibit D


 



Good Standing Certificates


 


[See
attached]


 




 

44








 







Exhibit E


 



Incumbency


 


[See
attached]

 




 

45








 






 

 



EXHIBIT C

 



COMPLIANCE CERTIFICATE

 



TO:            

NH EXPANSION CREDIT
FUND HOLDINGS LP 


Date:







FROM: 


SANUWAVE HEALTH,
INC.





 


This
Compliance Certificate (this “Certificate”),
for the period ended [__________] [__], 20[__], is furnished
pursuant to Section 5.2(b) of that
certain Note and Warrant Purchase and Security Agreement, dated as
of August 6, 2020 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the
“NWPSA”;
capitalized terms used herein and not otherwise defined shall have
the meaning ascribed to such terms in the NWPSA), by and among
SANUWAVE Health, Inc., a [Nevada][Delaware] corporation
(“Issuer”),
each Holder from time to time party thereto (collectively, the
“Holders”
and each individually, a “Holder”)
and NH Expansion Credit Fund Holdings LP, as agent (in such
capacity, together with its successors and permitted assigns, the
“Agent”).

 


The undersigned, a Responsible Officer of Issuer,
hereby certifies to Agent and the Holders, as applicable, on behalf
of Issuer (and not in any individual capacity),
that:

 


 (a)           all
representations and warranties set forth in the Agreement and the
Note Documents are true, accurate and complete, in all material
respects as of the date hereof, provided that the materiality
qualifier is not applicable to any representation or warranty that
is already qualified or modified by materiality in the text
thereof;

 


(b)           Issuer
is in compliance with the terms of the Note Documents to which it
is a party;

 


(c)           no
Event of Default exists under the Agreement;

 


(d)           [attached
hereto as Annex A is a list of any
intellectual property obtained by Issuer or any Subsidiary thereof,
in each case, in which a notice is required to be delivered in
accordance with the last paragraph of Section 5.8;]1;

 


(e)           [attached
hereto as Annex B is a report on the
use of proceeds of the SBA PPP Loan and supporting documentation
with respect thereto, or such other similar report and/or
documentation provided to the SBA and/or the SBA PPP Loan Lender,
in each case, in accordance with Section 5.12(b).]2

 


Attached are the
required documents supporting the certification.

 



Please indicate compliance status by circling Yes/No under
“Complies” column.

 


	


Reporting Covenant

	


Required

	


Complies


	

Quarterly
financial statements

	

Quarterly
within 45 days

	

Yes
No


	

Annual
financial statement (CPA Audited) + CC

	

FYE
within 90 days

	

Yes
No


	

Annual
operating budget (monthly) and projections (quarterly)

	

Within
30 days of FYE and 10 days after any update

	

Yes
No


	

10-Q,
10-K and 8-K

	

Within
5 days after filing with SEC

	

Yes
No


	


Financial Covenant

	


Required

	


Complies


	


Minimum Liquidity

	


$5,000,000, at all times

	


Yes No







 


 


 


 



[Balance of Page Intentionally
Left Blank]


1 To be included only
if an update is required under Section 5.8 of the
NWPSA.


2 To be included until
the SBA PPP Loan is repaid or forgiven.




 

46








 







Other Matters

 




1.

Are any legal
actions pending or threatened against Issuer or Subsidiary which
could reasonably be expected to result in damages of $75,000 or
more?






 



☐
Yes  


☐
No   


[If Yes, please
provide a brief summary.]






 




2.

Have there been any
material returns, recoveries, disputes and claims with Account
Debtors of Issuer or any Subsidiary






 



☐
Yes       


☐
No   


[If Yes, please
provide a brief summary.]






 




3.

Has there been any
event that materially and adversely affects value of IP (owned by
Issuer or Subsidiary)






 



☐
Yes     


☐
No  


[If Yes, please
provide a brief summary.]






 




4.

Since the last
Compliance Certificate Issuer has delivered, has Issuer changed:
(i) the address of its chief executive office, (ii) its legal name,
or (iii) its state of incorporation? If so, please give details
is:






  







5.

Have there been any
amendments of or other changes to the Operating Documents of
Issuer?






 



☐
Yes 

☐
No 

[If Yes, please
provide copies of any such amendments with this Compliance
Certificate.]






 




6.

Have there been any
amendments to or notices provided with respect to Senior Debt or
Subordinated Debt?






 



☐
Yes 

☐
No 

[If Yes, please
provide copies thereof with this Compliance
Certificate.]






 




7.

Has Issuer sent or
received any material correspondence, reports, documents or made
other filings with any Governmental Authority that could reasonably
be expected to have a material adverse effect on any of the
Governmental Approvals material to Issuer’s or any
Subsidiary’s business or that could otherwise reasonably be
expected to have a Material Adverse Change.






 



☐
Yes      


☐
No   


[If Yes, please
provide a brief summary.]





 







8.

Set forth below are
any new Collateral Accounts of Issuer and any Subsidiary not
previously disclosed to Agent and the Holders on a Perfection
Certificate or a previously delivered Compliance
Certificate:





 


	

Issuer
/ Subsidiary


 

	

Institution
Name and Address


 

	

Account
Number


 

	

Balance


 

	

Control
Agreement


 


	
 

	
 

	
 

	
 

	

☐ Yes ☐ No


 


	
 

	
 

	
 

	
 

	

☐ Yes ☐ No


 







 



[Signature Page
Follows]


 







 

47








 






The
following are the exceptions with respect to the certification
above: (If no exceptions exist, state “No exceptions to
note.”)

 


 


 


	

SANUWAVE
HEALTH, INC.


 


 


By:                                                       


Name:                                                       


Title:                                                      

	
 







 


 


 


 


 



[Signature Page to Compliance
Certificate]


 


 


 




 

48








 







ANNEX A


 


[See
attached]


 


 


 


 


 


 


 


 



[Annex A to Compliance
Certificate]


 




 

49








 






 


 



ANNEX B


 


[See
attached]


 


 


 


 


 



[Annex B to Compliance
Certificate]


 




 

50








 






 


 


 



EXHIBIT D


 



FORM OF SECURED PROMISSORY NOTE


 


 


 


 


 



 

51







 






  






SECURED PROMISSORY NOTE


 



$15,000,000.00                                                                                                 

AUGUST 6,
2020






 


FOR
VALUE RECEIVED, SANUWAVE HEALTH, INC., a Nevada corporation
(“Issuer”), hereby
unconditionally promises to pay to NH EXPANSION CREDIT FUND
HOLDINGS LP, a Delaware limited partnership (together with its
registered successors and permitted assigns, “Holder”), at the
Holder’s lending office, or at such other place as Holder may
from time to time designate in writing, in lawful money of the
United States of America and in immediately available funds, the
principal sum of Fifteen Million Dollars ($15,000,000.00), pursuant
to the terms of that certain Note and Warrant Purchase and Security
Agreement, dated as of the date hereof (as amended, restated,
amended and restated, supplemented or otherwise modified from time
to time, the “NWPSA”), by and among
Issuer, NH EXPANSION CREDIT FUND HOLDINGS LP, as Agent for the
noteholders, Holder and each other noteholder from time to time
party thereto. All capitalized terms used herein (which are not
otherwise specifically defined herein) shall be used in this
Secured Promissory Note (this “Note”) as defined in the
NWPSA.


 


This
Note is issued in accordance with the provisions of the NWPSA and
is entitled to the benefits and security of the NWPSA and the other
Note Documents, and reference is hereby made to the NWPSA for a
statement of the terms and conditions under which this Note was
made and is required to be repaid.


 


The
outstanding principal balance evidenced by this Note shall be
payable in full on the Maturity Date, or on such earlier date as
provided for in the NWPSA.


 


Issuer
promises to pay interest from the date hereof until payment in full
hereof on the unpaid principal balance of this Note at the per
annum rate or rates set forth in the NWPSA. Interest on the unpaid
principal balance of this Note shall be payable on the dates and in
the manner set forth in the NWPSA. Interest as aforesaid shall be
calculated in accordance with the terms of the NWPSA.


 


Upon
and after the occurrence of an Event of Default, and as provided in
the NWPSA, the principal outstanding under this Note may be
declared, and immediately upon such declaration shall become, due
and payable without demand, notice or legal process of any kind;
provided, however, that upon the occurrence of an Event of Default
pursuant to the provisions of Section 7.5(b) or Section 7.5(c) of
the NWPSA, the principal outstanding under this Note shall
automatically be due and payable, without demand, notice or
acceleration of any kind whatsoever.


 


Payments received
in respect of this Note shall be applied as provided in the
NWPSA.


 


Issuer
hereby waives presentment, demand, protest and notice of
presentment, demand, nonpayment and protest.


 


No
waiver by any Holder of any one or more defaults by Issuer in the
performance of any of its obligations under this Note shall operate
or be construed as a waiver of any future default or defaults,
whether of a like or different nature, or as a waiver of any
obligation of Issuer to any other Holder under the
NWPSA.


 


No
provision of this Note may be amended, waived or otherwise modified
unless such amendment, waiver or other modification is in writing
and is signed or otherwise approved by Issuer, Holder and the
Required Holders under the NWPSA, to the extent required under
Section 11.3 of the NWPSA.


 


THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW
PRINCIPLES.


 


 




 

52








 






 


Whenever possible
each provision of this Note shall be interpreted in such manner as
to be effective and valid under applicable law, but in case any
provision of or obligation under this Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.


 


Whenever in this
Note reference is made to Holder or Issuer, such reference shall be
deemed to include, as applicable, a reference to their respective
successors and permitted assigns. The provisions of this Note shall
be binding upon Issuer and its successors and permitted assigns,
and shall inure to the benefit of Holder and its successors and
permitted assigns.


 


In
addition to, and without limitation, of any of the foregoing, this
Note shall be deemed to be a Note Document and shall otherwise be
subject to all of the general terms and conditions contained in
Section 8.4 and Article 11 of the NWPSA, mutatis mutandis.


 


 


[Signature
Page Follows]




 

53








 






IN
WITNESS WHEREOF, Issuer has caused this Secured Promissory Note to
be executed as of the date first written above.


 


 


ISSUER:


 


SANUWAVE HEALTH,
INC.


 



By                                           







Name:                                           







Title:                                           






 


Address for
Notice:


SANUWAVE HEALTH,
INC.


3360
Martin Farm Road, Suite 100


Suwanee, Georgia
30024


Attn:
Lisa E. Sundstrom, Chief Financial Officer


Email:
lisa.sundstrom@sanuwave.com


 


 


 


 


 


 



[Signature Page to Secured
Promissory Note]



 

54







 






 



EXHIBIT E

 



FORM OF WARRANT TO PURCHASE STOCK


 


 


 


 




 

55








 










 



ANNEX X


(Form
of Disbursement Letter)


 


[see
attached]

 


 

 



 

56







 






 

 



DISBURSEMENT LETTER


 



August 6, 2020


The
undersigned, a Responsible Officer of SANUWAVE HEALTH, INC., a Nevada
corporation (“Issuer”),
hereby certifies to NH EXPANSION
CREDIT FUND HOLDINGS LP (“North Haven
Expansion”), as agent (in such capacity, together with
its successors and permitted assigns, the “Agent”), and the Holders from time
to time signatory to the NWPSA (as defined below), including North
Haven Expansion in its capacity as a Holder (each, a
“Holder”
and collectively, the “Holders”)
in connection with that certain Note and Warrant Purchase and
Security Agreement, dated as of the date hereof, by and among
Issuer, the Agent and the Holders from time to time party thereto
(as amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “NWPSA”;
capitalized terms used herein and not otherwise defined shall have
the meaning ascribed to such terms in the NWPSA) that:

 




1.

The representations
and warranties made by Issuer in Section 4 of the NWPSA and
in the other Note Documents are true and correct in all material
respects as of the date hereof.






 




2.

No event or
condition has occurred that would constitute an Event of Default
under the NWPSA or any other Note Document.






 




3.

Issuer is in
compliance with the covenants and requirements contained in
Sections 5 and
6 of the
NWPSA.






 




4.

All conditions
referred to in Section 3 of the NWPSA to
the purchase of the Notes to be made on or about the date hereof
have been satisfied or waived by Holder.






 




5.

No Material Adverse
Change has occurred and is continuing.






 





6.

The proceeds of the
Notes shall be disbursed pursuant to the instructions set forth on
Exhibit A
attached hereto.






 



[Balance of Page Intentionally Left Blank]




 

57








 






Dated
as of the date first set forth above.

 


	


ISSUER:

	
 

	
 


	
 

	
 

	
 


	

SANUWAVE
HEALTH, INC.

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 


	

By                                                                

	
 

	
 


	

Name:                                                                

	
 

	
 


	

Title:                                                                

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 








AGENT AND HOLDER:


 


NH
EXPANSION CREDIT FUND HOLDINGS LP


 


By: MS
Expansion Credit GP, L.P.


Its:
General Partner


 


By: MS
Expansion Credit GP Inc.


Its:
General Partner


 


 



By                                                                 







Name:                                                                 







Title:                                                                 






 


 


 



[Signature Page to Disbursement
Letter]




 

58








 







Exhibit A


 


[See
attached]


 


 


 



[Exhibit A to Disbursement
Letter]




 

59








 







ANNEX Y


(Celularity
Acquisition Documents)


 


[see
attached]

 




 

60