| Item 1.01 |
Entry into a Material Definitive Agreement.
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Securities Purchase Agreement and Common Stock Warrant
On August 5, 2022, SANUWAVE Health, Inc. (the “Company”) entered into a Securities Purchase Agreement (the
“Purchase Agreement”), with the purchasers identified on the signature pages thereto (the “Purchasers”) for the sale by the Company in a private placement (the “Private Placement”) of (i) the Company’s future advance convertible promissory notes
in an aggregate principal amount of approximately $16.1 million (the “Notes”), consisting of $12.2 million
in newly raised capital and $3.8 million in rolled forward accrued expenses and fees, (ii) warrants to purchase an additional 403 million shares of common stock of the Company with an exercise price of $0.067 per share (the “First Warrants”) and (iii) warrants to purchase an additional 403 million shares of common stock of the Company with an exercise price of $0.04 per share (the “Second Warrants,” collectively with the First Warrants, the "Warrants"). The Notes will be convertible and the Warrants exercisable
on the earlier to occur of (1) completion of a reverse stock split and (2) December 31, 2022. The exercise price of the Warrants is subject to adjustment, including if the Company
issues or sells shares of common stock or Share Equivalents (as defined in the Warrants) for an effective consideration price less than the exercise price of the Warrants or if the Company lists its shares of common stock on the Nasdaq Capital
Market and the average volume weighted average price of such common stock for the five trading days preceding such listing is less than $0.04 per share; provided, however, that the exercise price of the Warrants shall never be less than
$0.01 per share. The Warrants have a five-year term. The closing of the Private Placement occurred on August 5, 2022 (the “Closing Date”). At the Closing Date, the Company received
total proceeds of $14.4 million.
The foregoing descriptions of the Purchase Agreement and the Warrants do not purport to be complete and are qualified in their entirety by reference to
the full text of the Purchase Agreement and the Warrants, which are filed as Exhibit 10.1 and Exhibit 4.2, respectively, and are incorporated herein by reference.
As described above, on August 5, 2022, the Company issued Notes to the Purchasers in an aggregate principal
amount of $16.1 million. Pursuant to the Notes, the Company promised to pay each Purchaser, its designee or registered assigns (the “Holder”) in cash and/or in shares of common
stock, at a conversion price of $0.04 (the "Conversion Price"), the principal amount (subject to reduction pursuant to the terms of the Note, the “Principal”) as may be advanced in disbursements (each, a “Disbursement” and together, the
“Disbursements” with total principal of outstanding Disbursements equaling Principal), and to pay interest at a rate of fifteen percent (15%) per annum (“Interest”) on any outstanding Principal at the applicable Interest rate from the date of the
Notes until the Notes are accelerated, converted, redeemed or otherwise. The Conversion Price of the Notes is subject to adjustment, including if the Company issues or sells shares of common stock for a price per share less than the Conversion
Price of the Notes or if the Company lists its shares of common stock on the Nasdaq Capital Market and the average volume weighted average price of such common stock for the five trading days preceding such listing is less than $0.04 per share;
provided, however, that the Conversion Price shall never by less than $0.01.
The Notes contain customary events of default and covenants, including limitations on incurrences of indebtedness and liens.
In connection with the Private Placement, on August 5, 2022 the Company entered into a security agreement in favor of each Purchaser
to secure the Company’s obligations under the Notes (the “Security Agreement”).
The rights of each Purchaser to receive payments under its Notes are subordinate to the rights of NH Expansion Credit Fund Holdings LP
(“North Haven Expansion”) pursuant to a subordination agreement, which the Company and the Purchasers entered into with North Haven Expansion on August 5, 2022 in connection with the Private Placement (the “Subordination Agreement”).
The foregoing descriptions of the Notes, the Subordination Agreement and the Security Agreement do not purport to be complete and are
qualified in their entirety by reference to the full text of the Notes, the Subordination Agreement and the Security Agreement, which are filed as Exhibit 4.1, Exhibit 10.2 and Exhibit 10.3, respectively, and are incorporated herein by reference.
Registration Rights Agreement
In connection with the Purchase Agreement, the Company entered into a registration rights agreement with the Purchasers on August 5, 2022 (the “Registration Rights Agreement”), pursuant to which the
Company agreed to file a registration statement (the “Registration Statement”) with the Securities and Exchange Commission no later than sixty (60) days following the Closing Date to register the resale of the number of shares of common stock
issuable upon conversion of the Notes and exercise of the Warrants issued pursuant to such Purchase Agreement (the “Registrable Securities”) and to cause the Registration Statement to become effective within one-hundred eighty (180) days following
the Closing Date. The Company shall use its best efforts to keep the Registration Statement continuously effective under the Securities Act of 1933, as amended (the “Securities Act”), until all Registrable Securities have been sold, or may be sold
without the requirement to be in compliance with Rule 144(c)(1) of the Securities Act and otherwise without restriction or limitation pursuant to Rule 144 of the Securities Act, as determined by the counsel to the Company.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Registration Rights Agreement,
which is filed hereto as Exhibit 10.4 and is incorporated herein by reference.
Side Letter Settlement Agreement
On August 5, 2022, the Company entered into a Side Letter Settlement Agreement (the “Settlement Agreement”) with Leviston Resources LLC (“Leviston”) to satisfy in full the indebtedness under the
Securities Purchase Agreement, dated April 20, 2021, as amended and restated and otherwise modified from time to time (the “2021 SPA”). Pursuant to the 2021 SPA, Leviston agreed to purchase (i) a Future Advance Convertible Promissory Note from the
Company in an aggregate principal amount of up to $4,217,217 and (ii) a warrant to purchase 16,666,667 shares of the Company’s common stock (the “Leviston Warrant”) with an exercise price of $0.18 per share.
Pursuant to the Settlement Agreement, upon receipt by Leviston of (i) 16,666,667 shares of common stock of the Company in exchange for the Leviston Warrant and (ii) the payment of $3,205,715, the
indebtedness under the 2021 SPA shall be automatically satisfied in full and irrevocably discharged, terminated and released, and all obligations under the 2021 SPA and other transaction documents shall be automatically terminated.
The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of
the Settlement Agreement, which is filed hereto as Exhibit 10.5 and is incorporated herein by reference.