snwv_ex103





 







Exhibit 10.3


 


THIS
CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON THE
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS
SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.


 


CONVERTIBLE
PROMISSORY NOTE


	
 

	
 

	
 


	

$4,000,000

	
 

	

August
6, 2020







 


FOR
VALUE RECEIVED, SANUWAVE Health, Inc., a Nevada corporation (the
“Company”), hereby
promises to pay to the order of Celularity Inc., a Delaware
corporation (the “Seller”), on or before
August 6, 2021 (the “Maturity Date”), in
accordance with the terms of this Convertible Promissory Note (this
“Note”), the principal
amount of $4,000,000 or, if less, the aggregate unpaid principal
amount of the indebtedness evidenced by this Note (the
“Outstanding
Principal Balance”), together with interest on the
Outstanding Principal Balance at the rates and on the dates set
forth in this Note.

 


This
Note is issued in connection with the transactions contemplated by
the Asset Purchase Agreement dated as of the date hereof (as
amended, supplemented or otherwise modified, the
“Purchase
Agreement”), between the Company and the
Seller.

 


This
Note is expressly subordinate to the secured promissory notes
issued pursuant to the Note Purchase Agreement (as defined below)
(as amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Senior Debt”), pursuant
to and in accordance with the terms and conditions of that certain
Subordination Agreement dated as of the date hereof, by and between
Agent and the Seller (the “Subordination
Agreement”). The “Note Purchase Agreement”
shall mean and refer to that certain Note and Warrant Purchase and
Security Agreement dated as of August 6, 2020 by and among NH
Expansion Credit Fund Holdings LP (in such capacity,
“Agent”), the Company and the other parties
thereto.

 

1. Payment of Principal. The
Company shall repay the Outstanding Principal Balance in full on
the Maturity Date. The Company may prepay the Outstanding Principal
Balance in full upon two business days advance written notice to
the Seller, without premium or penalty. Notwithstanding the
foregoing, the Company shall not make any payments on the
Outstanding Principal Amount or accrued and unpaid interest to the
extent such payments would violate the Subordination Agreement;
provided, however, that the Company may use the
proceeds from an equity financing consummated after the date hereof
to repay the Outstanding Principal Amount and any accrued and
unpaid interest as long as the Company has not been informed that a
Potential Default or an Event of Default (each as defined in the
Note Purchase Agreement) has occurred and is
continuing.

 

2. The Company shall
pay all accrued and unpaid interest on the Outstanding Principal
Balance with any repayment or prepayments of principal. The Seller
shall record in its records the date and amount of any repayment or
prepayment of principal made pursuant to this Note and the
Outstanding Principal Balance so recorded is rebuttable presumptive
evidence of such principal amount owing and unpaid pursuant to this
Note. The Seller’s failure to so record any such amount or
any error in so recording any such amount does not limit or
otherwise affect the obligations of the Company under this Note to
repay the Outstanding Principal Balance together with all interest
accruing thereon.

 

3. Payment of Interest. The Note
shall accrue interest on the Outstanding Principal Balance at a
rate equal to 12.0% per annum. Accrued and unpaid interest shall be
payable at maturity. Following the occurrence of an Event of
Default (as defined in Section 6), the Note shall
accrue interest on the Outstanding Principal Balance from the date
of such Event of Default until such Event of Default has been
waived in writing at a rate equal to 5.0% per annum in excess of
the interest rate then applicable to the Outstanding Principal
Balance, such interest being payable on demand. All computations of
interest under this Note are made on the actual number of days
elapsed over a year of 360 days.

 



 

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4. Payment. The Company shall make
all payments required under this Note in lawful money of the United
States of America at the principal office of the Seller or at such
other place as the Seller may from time to time designate to the
Company.

 

5. Conversion.

 




(A)

At any time on or
after January 1, 2021 (the “Convertibility Date”), at
the election of the Seller at its sole discretion, the Outstanding
Principal Balance, together with any accrued but unpaid interest
thereon, will be convertible into a number of shares of the
Company’s common stock equal to the quotient obtained by
dividing (a) the Outstanding Principal Balance on the date of such
conversion, together with any accrued but unpaid interest thereon,
by (b) $0.10 (as adjusted for any subdivisions, combinations or
reclassifications of the Company’s common stock), and rounded
down to the nearest whole number (the “Conversion Shares”). For
the avoidance of doubt, the Seller may at any time after the
Maturity Date at its sole discretion elect for the Outstanding
Principal Balance, together with any accrued but unpaid interest
thereon, to be paid in full rather than electing a conversion of
the Outstanding Principal Balance pursuant to this Section ‎5.





 




(B)

The Seller may
effect a conversion pursuant to this Section ‎5 by giving the
Company 30 days prior written notice thereof (the
“Conversion
Notice”). The Conversion Notice shall notice shall
notify the Company of Seller’s intention to effectuate a
conversion pursuant to this Section 5 and shall indicate the date
of such conversion, which date shall be not less than 30 days from
the date of such Conversion Notice (the “Conversion Date”). No
original of the Conversion Notice shall be required. The Company
may prepay the Outstanding Principal Balance, together with any
accrued but unpaid interest thereon, prior to the Conversion
Date.





 




(C)

Mechanics of
Conversion





 




(i)

Not later than
three (3) Trading Days (as defined below) after the Conversion Date
(the “Share Delivery
Date”), the Company shall deliver, or cause to be
delivered, to the Seller a certificate representing the Conversion
Shares representing the number of Conversion Shares being acquired
upon conversion of this Note. Upon any conversion under this
Section 4, in lieu
of any fractional shares to which the Seller would otherwise be
entitled, the Company shall pay to the Seller cash equal to such
fraction multiplied by $0.10 (as adjusted for any subdivisions,
combinations or reclassifications of the Company’s common
stock). For purposes hereof, the term “Trading Day”
means a day on which the principal Trading Market (as defined
below) is open for business. The term “Trading Market”
means any of the following markets or exchanges on which the common
stock of the Company is listed or quoted for trading on the date in
question: the NYSE American, the Nasdaq Capital Market, the Nasdaq
Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange or the OTC Bulletin Board (or any successors to any of the
foregoing).





 




(ii)

Obligation Absolute. The
Company’s obligation to issue and deliver the Conversion
Shares upon conversion of this Note in accordance with the terms
hereof is absolute and unconditional, irrespective of any action or
inaction by the Seller to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Seller or any other Person of any
obligation to the Company or any violation or alleged violation of
law by the Seller or any other person, and irrespective of any
other circumstance which might otherwise limit such obligation of
the Company to the Seller in connection with the issuance of such
Conversion Shares; provided,
however, that such delivery shall not operate as a waiver by
the Company of any such action that the Company may have against
the Seller. In the event the Seller shall elect to effect a
conversion pursuant to this Section 5, the Company may not refuse
conversion based on any claim that the Seller or anyone associated
or affiliated with the Seller has been engaged in any violation of
law, agreement or for any other reason and the Company shall issue
the Conversion Shares, upon a properly noticed conversion. Nothing
herein shall limit the Seller’s right to pursue all remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief. The exercise of any such rights shall not prohibit the
Seller from seeking to enforce damages pursuant to any other
section hereof or under applicable law.





 



 

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(D)

The Company
covenants that it will at all times from and after the
Convertibility Date reserve and keep available out of its
authorized and unissued shares of common stock for the sole purpose
of issuance upon conversion of this Note, free from preemptive
rights or any other actual contingent purchase rights of Persons
other than the Seller, not less than such aggregate number of
shares of the common stock as shall be issuable upon the conversion
of this Note hereunder. The Company covenants that all shares of
Common Stock that shall be so issuable shall, upon issue, be duly
authorized, validly issued, fully paid and
non-assessable.





 




(E)

The issuance of
certificates for shares of the common stock on conversion of this
Note shall be made without charge to the Seller for any documentary
stamp or similar taxes that may be payable in respect of the issue
or delivery of such certificates.





 




(F)

Upon the conversion
of the Note, the Company will use commercially reasonable efforts
to cause the Conversion Shares to
be registered for resale on Form S-3 (or Form S-1 or any
other applicable form, at the sole discretion of the Company, if
Form S-3 is not available to the Company) as soon as practicable
after the Conversion Date, and to cause such registration statement
to remain effective until all of the Conversion Shares are sold or
the holder is entitled to sell all of the unsold Conversion Shares
pursuant to Rule 144 of the Securities Act of 1933, as amended,
without volume limitations.





 

6. Covenants. So long as any of
the Outstanding Principal Balance remains outstanding, the Company
shall not:

 




(A)

incur, create,
assume or become liable in any manner with respect to indebtedness
for borrowed money in excess of $30,000,000 (including indebtedness
hereunder);





 




(B)

directly or
indirectly, (i) make any dividend or distribution on or in respect
of any of its equity interests or (ii) redeem, repurchase or
otherwise retire any of its equity interests; or





 




(C)

be a party to any
merger, consolidation or exchange of stock, or sell or otherwise
transfer all or substantially all of its assets or equity
interests.





 

7. Default; Acceleration. Upon the
occurrence of any one of the following events (each an
“Event of
Default”):

 




(A)

the Company’s
failure to pay any portion of (i) the Outstanding Principal Balance
on the date such obligations are due or are declared due (whether
by scheduled maturity, acceleration, demand or otherwise) or (ii)
interest on the Outstanding Principal Balance within 30 days of the
date when such obligations are due or are declared due (whether by
scheduled maturity, acceleration, demand or
otherwise);





 




(B)

the Company fails
or neglects to perform, keep or observe any of its other covenants,
conditions or agreements contained in this Note and, in the case of
the covenants in Section
6, such failure or neglect continues for a period of 30 days
after the Company becomes aware of such failure or
neglect;





 




(C)

any representation
or warranty made in the Purchase Agreement by the Company proves to
be false or incorrect in any material respect;





 




(D)

the Company
(i) defaults in the payment of any indebtedness for borrowed
money (after expiration of any applicable cure period) or
(ii) defaults in the observance or performance of any
agreement or condition relating to any indebtedness for borrowed
money (after expiration of any applicable cure period), the effect
of which default is to cause, or to permit the holder or holders of
such indebtedness to cause, such indebtedness to become due prior
to its stated maturity;





 



 

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(E)

a proceeding under
any bankruptcy, reorganization, arrangement of debt, insolvency,
readjustment of debt or receivership law or statute is filed by or
against the Company; the Company makes an assignment for the
benefit of creditors or takes any action to authorize any of the
foregoing; or, in the case of an involuntary proceeding filed
against the Company, such proceeding is not discharged or dismissed
within 60 days; or





 




(F)

the Company
voluntarily or involuntarily dissolves or the Company is dissolved
or becomes insolvent or fails generally to pay its debts as they
become due;





 


the
Seller may declare the Outstanding Principal Balance, together with
all accrued and unpaid interest thereon, to be, and upon such
declaration all of such principal and interest shall become,
immediately due and payable without presentment, demand, protest or
further notice of any kind; provided that if an Event of
Default described in clause (E) above exists or
occurs, the Outstanding Principal Balance, together with all
accrued and unpaid interest thereon, automatically, without notice
of any kind, becomes immediately due and payable.


 

8. Expenses. The Company shall pay
all reasonable expenses, including reasonable attorneys’ fees
and legal expenses, incurred by the Seller in endeavoring to
collect any amounts payable under this Note which are not paid when
due, whether by declaration or otherwise, without duplication of
any similar amounts for which the Company is liable under the
Purchase Agreement.

 

9. Governing Law. This Note is
governed by, and construed in accordance with, the laws of the
State of New York.

 

10. Jurisdiction. The Company and
the Seller irrevocably submit to the exclusive personal
jurisdiction of the Court of Chancery of the State of Delaware or,
to the extent such court does not have subject matter jurisdiction,
the United States District Court for the District of Delaware (the
“Chosen
Courts”) solely in respect of the interpretation and
enforcement of the provisions of this Note and hereby waive, and
agree not to assert, as a defense in any Action (as defined in the
Purchase Agreement) for the interpretation or enforcement hereof or
of any such document, that it is not subject thereto or that such
Action may not be brought or is not maintainable in the Chosen
Courts or that the Chosen Courts are an inconvenient forum or that
the venue thereof may not be appropriate or that this Note or any
such document may not be enforced in or by the Chosen Courts, and
the Company and the Seller irrevocably agree that all claims
relating to such Action or transactions will be heard and
determined in the Chosen Courts.

 

11. JURY TRIAL. EACH OF
THE COMPANY AND THE SELLER ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE UNDER THIS NOTE IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS NOTE. EACH OF THE
COMPANY AND THE SELLER CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (B) SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER
VOLUNTARILY AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
NOTE BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION
10.

 

12. Amendments. Neither this Note
nor any provision hereof may be amended, modified or waived except
pursuant to an agreement or agreements in writing entered into by
the Company and the Seller.

 

13. Successors and Assigns. This
Note applies to, inures to the benefit of, and binds the successors
and assigns of the Company and the Seller. The Company may not
assign its obligations under this Note without the written consent
of the Seller.

 



 

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14. Notices. All notices and other
communications provided for in this Note must be in writing and
delivered in the manner provided in the Purchase
Agreement.

 

15. Severability. Any provision of
this Note held to be invalid, illegal or unenforceable in any
jurisdiction is, as to such jurisdiction, ineffective to the extent
of such invalidity, illegality or unenforceability without
effecting the validity, legality and enforceability of the
remaining provisions of this Note; and the invalidity of a
particular provision in a particular jurisdiction does not
invalidate such provision in any other jurisdiction.

 

16. No Implied Waivers. No failure
to exercise and no delay in exercising any right or remedy under
this Note operates as a waiver thereof. No single or partial
exercise of any right or remedy under this Note, or any abandonment
or discontinuance thereof, precludes any other or further exercise
thereof or the exercise of any other right or remedy. No waiver or
consent under this Note is applicable to any events, acts or
circumstances except those specifically covered
thereby.

 

17. Integration. This Note and the
Purchase Agreement constitute the entire contract between the
Company and the Seller relating to the subject matter hereof and
supersedes any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.

 

18. Lost, Stolen, Destroyed or Mutilated
Note. In case this Note shall be mutilated, lost, stolen or
destroyed, the Company shall issue a new Note of like date, tenor
and denomination and deliver the same in exchange and substitution
for and upon surrender and cancellation of any mutilated Note, or
in lieu of any Note lost, stolen or destroyed, upon receipt of
evidence satisfactory to the Company of the loss, theft or
destruction of such Note.

 


[Signature page
follows]

 




 

5








 






Executed and
delivered as of the date first written above.

 


 

 


	
 

	

SANUWAVE
HEALTH, INC.


	
 

	

By:
/s/ Kevin A. Richardson
II


	
 

	

Name:
Kevin A. Richardson II


	
 

	

Title:
CEO







 


 


 


 


 




SIGNATURE
PAGE TOCONVERTIBLE PROMISSORY NOTE


 

6