snwv_ex107





 







Exhibit 10.7


 


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 UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE AND THE COMPANY SHALL HAVE RECEIVED FROM THE HOLDER
EVIDENCE OF SUCH EXEMPTION.


 


CONVERTIBLE
PROMISSORY NOTE


	
 

	
 

	
 


	

$1,372,743

	
 

	

August
6, 2020







 


FOR
VALUE RECEIVED, SANUWAVE Health, Inc., a Nevada corporation (the
“Company”), hereby
promises to pay to the order of HealthTronics, Inc. (the
“Holder”), 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 $1,372,743 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
that certain letter agreement dated as of the date hereof (as
amended, supplemented or otherwise modified, the
“Letter
Agreement”), among the Company, Sanuwave, Inc. and the
Holder.

 


This
Note is expressly subordinate and junior in right of payment and
collection to the secured promissory notes issued pursuant to that
certain Note and Warrant Purchase and Security Agreement dated as
of August 6, 2020 (the “NWPSA”) by and among NH
Expansion Credit Fund Holdings LP (in such capacity,
“Agent”), the Company and
the other parties thereto (as amended, restated, amended and
restated, supplemented or otherwise modified from time to time, the
“Senior
Debt”), as more particularly described in, and subject
to the terms and conditions of, that certain Subordination
Agreement dated as of the date hereof, by and between Agent and the
Holder. The Company has provided a true and complete copy of the
NWPSA to the Holder on the date hereof.

 

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 Holder, without premium or penalty. Notwithstanding the
foregoing, the Company shall not make any payments on the
Outstanding Principal Amount or accrued and unpaid interest until
the Senior Debt is paid in full; 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 is in compliance with all
covenants and obligations under the Senior Debt at such time and
will remain in compliance with all covenants and obligations under
the Senior Debt immediately following such repayment.

 



 

1







 





 

2. 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
paid by the Company at maturity and with any other repayment or
prepayments of any portion of the Outstanding Principal Balance.
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 2.0% 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.

 

3. 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 Holder or at such
other place as the Holder may from time to time designate to the
Company.

 

4. Conversion.

 




(A)

At any time on or
after January 1, 2021 (the “Convertibility Date”), at
the election of the Holder 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 (“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 Holder 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 and accrued and unpaid interest
pursuant to this Section
4.





 




(B)

The Holder may
effect a conversion pursuant to this Section ‎4 by giving the
Company at least ten days prior written notice thereof (the
“Conversion
Notice”). The Conversion Notice shall notify the
Company of Holder’s intention to effectuate a conversion
pursuant to this Section
4 and shall indicate the date of such conversion, which date
shall be not less than seven 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.
Notwithstanding the foregoing, if a conversion pursuant to this
Section 4 is being
made in connection with (i) a proposed public offering of any
Common Stock (or other securities of the Company), (ii) a proposed
sale transaction involving a sale or disposition of all or a
majority of the Company’s stock or assets (by way of stock
sale, asset sale, merger, consolidation, or other manner), or (iii)
a proposed sale of outstanding shares of Common Stock or any other
securities of the Company, then, at the election of the Holder,
such conversion may be conditioned upon the consummation of such
public offering, sale transaction, or sale of shares or other
securities, in which case such conversion shall be effective
immediately prior to the consummation of such public offering, sale
transaction, or sale of shares or other securities.





 




(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 Holder a certificate 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 Holder would otherwise be entitled,
the Company shall pay to the Holder 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).





 



 

2







 





 




(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 Holder to enforce the same, any waiver or consent
with respect to any provision hereof, the recovery of any judgment
against any individual or entity (each, a “Person”) or any action to
enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the
Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other
Person, and irrespective of any other circumstance which might
otherwise limit such obligation of the Company to the Holder 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 Holder. In the
event the Holder shall elect to effect a conversion pursuant to
this Section 4, the
Company may not refuse conversion based on any claim that the
Holder or anyone associated or affiliated with the Holder 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 Holder’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 Holder from seeking to enforce
damages pursuant to any other section hereof or under applicable
law.





 




(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 Holder, 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, and that
the issuance of such shares of Common Stock shall be free from
preemptive or similar rights on the part of the holders of any
shares of capital stock or securities of the Company or any other
Person, and free from all liens and charges with respect to the
issue thereof. The Company will take all such action as may be
necessary to assure that such shares of Common Stock will be so
issued without violation of any applicable law or regulation, or of
any applicable requirements of the National Association of
Securities Dealers, Inc. and of any Trading Market upon which the
Common Stock may be listed. At any such time as the Common Stock is
listed on any Trading Market, the Company will, at its expense,
obtain promptly and maintain the approval for listing on each such
Trading Market, upon official notice of issuance, the shares of
Common Stock issuable upon the conversion of this Note and maintain
the listing or quoting of such shares after their issuance so long
as the Common Stock is so listed or quoted.





 




(E)

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





 




(F)

Without limiting
Holder’s rights under the Letter Agreement, 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.





 

5. Covenants. So long as any of
the Outstanding Principal Balance or any accrued and unpaid
interest thereon remains outstanding, the Company shall
not:

 




(A)

incur, create,
assume or become liable in any manner with respect to indebtedness
for borrowed money other than (i) the Senior Debt and (ii)
“Permitted Indebtedness” (as such term is defined in
the NWPSA as in effect on the date hereof, without giving effect to
any subsequent amendment, modification or change thereto unless
approved in writing by the Holder (such approval not to be
unreasonably withheld, conditioned or delayed)), provided that for
purposes of this Section 5(A), Subordinated Debt (as such term is
defined in the NWPSA as in effect on the date hereof (without
giving effect to any subsequent amendment, modification or change
thereto)) shall not be deemed to be Permitted Indebtedness other
than with respect to the principal and interest under the
Convertible Promissory Note, dated as of the date hereof (the
“Celularity
Note”), issued by the Company in favor of Celularity,
Inc., a Delaware corporation;





 




(B)

prepay any
principal or interest under the Celularity Note unless the Company
concurrently prepays a corresponding amount (in the aggregate) of
principal and interest under this Note;





 



 

3







 





 




(C)

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





 




(D)

be, or permit any
subsidiary of the Company to be, a party to any merger,
consolidation or exchange of stock, or sell or otherwise transfer,
or permit any subsidiary of the Company to sell or otherwise
transfer, all or substantially all of the Company’s or such
subsidiary’s assets or equity interests.





 

6. 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 ten 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 5(A) or Section 5(B), such failure or
neglect continues for a period of 10 days after the Company becomes
aware of such failure or neglect;





 




(C)

the Company or any
subsidiary of 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;





 




(D)

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 or any of its subsidiaries; the Company or any
of its subsidiaries 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 or any of its subsidiaries, such proceeding is not
discharged or dismissed within 60 days; or





 




(E)

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





 


the
Holder 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 (D) or 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.


 



 

4







 






 

7. Expenses. The Company shall pay
all reasonable expenses, including reasonable attorneys’ fees
and legal expenses, incurred by the Holder in endeavoring to
collect any amounts payable under this Note which are not paid when
due, whether by declaration or otherwise.

 

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

 

9. Jurisdiction. The Company and
the Holder 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 (each, an
“Action”) 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 Holder
irrevocably agree that all claims relating to such Action or
transactions will be heard and determined in the Chosen
Courts.

 

10. JURY TRIAL. EACH OF
THE COMPANY AND THE HOLDER 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 HOLDER 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.

 

11. 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 Holder.

 

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

 

13. Notices. Any notice, request,
instruction or other document to be given hereunder by any party to
the others will be in writing and delivered personally or sent by
registered or certified mail, postage prepaid, by facsimile,
electronic mail or overnight courier:

 



 

5







 





 


If to Holder:

 


HealthTronics,
Inc.


9825
Spectrum Drive, Bldg 3


Austin,
TX 78717


Email:
russell.newman@healthtronics.com


 


Attention: Russell
Newman

 


with a
copy (which will not constitute notice) to:

 


HealthTronics,
Inc.


9825
Spectrum Drive, Bldg 3


Austin,
TX 78717


Email:
clint.davis@healthtronics.com

 


Attention: Clint
Davis

 


If to the Company:

 


SANUWAVE Health,
Inc.


3360
Martin Farm Road, Suite 100


Suwanee, GA
30024


Email:
Lisa Sundstrom


Attention:
lisa.sundstrom@sanuwave.com

 


with a
copy (which will not constitute notice) to:

 


Morrison &
Foerster LLP


425
Market Street


San
Francisco, CA 94105

 


Email:
mindick@mofo.com

 


Attention: Murray
A. Indick

 



 

6







 





 


or to
such other persons or addresses as may be designated in writing by
the party to receive such notice as provided above. Any notice,
request, instruction or other document given as provided above will
be deemed given to the receiving party upon actual receipt, if
delivered personally; three business days after deposit in the
mail, if sent by registered or certified mail; upon confirmation of
successful transmission if sent by facsimile or upon receipt of
electronic mail (provided that if given by
facsimile or electronic mail such notice, request, instruction or
other document will be followed up within one business day by
dispatch pursuant to one of the other methods described herein); or
on the next business day after deposit with an overnight courier,
if sent by an overnight courier.


 

14. 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.

 

15. 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.

 

16. Integration. This Note and the
Letter Agreement constitutes the entire contract between the
Company and the Holder relating to the subject matter hereof and
supersedes any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.

 

17. Certain Waivers. The Company
hereby waives, to the fullest extent permitted by applicable law,
diligence, presentment, protest and demand and notice of protest
and demand, dishonor and nonpayment of this Note, and expressly
agrees that this Note, or the payment of any principal or interest
hereunder, may be extended from time to time, without in any way
affecting the liability of the Company hereunder.

 

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]

 




 

7








 






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





8