Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - SANUWAVE Health, Inc. | snwv_8k.htm |
| EX-10.1 - SERIES D PREFERRED STOCK PURCHASE AGREEMENT, BY AND AMONG THE COMPANY AND THE AC - SANUWAVE Health, Inc. | snwv_ex101.htm |
Exhibit 3.1
SANUWAVE HEALTH, INC.
CERTIFICATE OF DESIGNATION OF PREFERENCES,
RIGHTS
AND LIMITATIONS
OF
SERIES
D CONVERTIBLE PREFERRED STOCK
PURSUANT
TO SECTION 78.1955 OF THE
NEVADA
REVISED STATUTES
The
undersigned, Kevin A. Richardson, II, does hereby certify
that:
1. They
are the Chief Executive Officer of SANUWAVE Health, Inc., a Nevada
corporation (the “Corporation”).
2. The
Corporation is authorized to issue 5,000,000 shares of preferred
stock, 6,558 of which are issued and 90 are currently
outstanding.
3. The
following resolutions were duly adopted by the board of directors
of the Corporation (the “Board of
Directors”):
WHEREAS, the Articles of Incorporation
of the Corporation provides for a class of its authorized stock
known as preferred stock, consisting of 5,000,000 shares, $0.001
par value per share, issuable from time to time in one or more
series;
WHEREAS, the Board of Directors is
authorized to fix the dividend rights, dividend rate, voting
rights, conversion rights, rights and terms of redemption and
liquidation preferences of any wholly unissued series of preferred
stock and the number of shares constituting any series and the
designation thereof, of any of them; and
WHEREAS, it is the desire of the Board
of Directors, pursuant to its authority as aforesaid, to fix the
rights, preferences, restrictions and other matters relating to a
series of the preferred stock, which shall consist of up to eight
(8) shares of the preferred stock which the Corporation has the
authority to issue, as follows:
NOW, THEREFORE, BE IT RESOLVED, that the
Board of Directors does hereby provide for the issuance of a series
of preferred stock for cash or exchange of other securities, rights
or property and does hereby fix and determine the rights,
preferences, restrictions and other matters relating to such series
of preferred stock as follows:
TERMS OF PREFERRED STOCK
Section
1. Definitions.
For the purposes hereof, the following terms shall have the
following meanings:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 of the Securities Act.
“Alternate Consideration”
shall have the meaning set forth in Section 7(d).
“Beneficial Ownership
Limitation” shall have the meaning set forth in
Section 6(d).
“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.
“Buy-In” shall have the
meaning set forth in Section 6(c)(iv).
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means the
Corporation’s common stock, par value $0.001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.
“Common Stock Equivalents”
means any securities of the Corporation or the Subsidiaries which
would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt, preferred stock,
rights, options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise
entitles the holder thereof to receive, Common Stock.
“Conversion Amount” means
the sum of the Stated Value at issue.
“Conversion Date” shall
have the meaning set forth in Section 6(a).
“Conversion Price” shall
have the meaning set forth in Section 6(b).
“Conversion Shares” means,
collectively, the shares of Common Stock issuable upon conversion
of the shares of Preferred Stock in accordance with the terms
hereof.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated
thereunder.
“Fundamental Transaction”
shall have the meaning set forth in Section 7(d).
“Holder” shall have the
meaning given such term in Section 2.
“Junior Securities” means
the Common Stock and all other Common Stock Equivalents of the
Corporation other than those securities which are explicitly senior
to or pari
passu with the
Preferred Stock in dividend rights or liquidation
preference.
“Liquidation” shall have
the meaning set forth in Section 5.
“New York Courts” shall
have the meaning set forth in Section 8(d).
“Notice of Conversion”
shall have the meaning set forth in Section 6(a).
“Original Issue Date”
means the date of the first issuance of any shares of the Preferred
Stock regardless of the number of transfers of any particular
shares of Preferred Stock and regardless of the number of
certificates which may be issued to evidence such Preferred
Stock.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Preferred Stock” shall
have the meaning set forth in Section 2.
“Purchase Agreement” means
that certain Series D Preferred Stock Purchase Agreement dated May
__, 2020 among the Corporation and the original Holders, as
amended, modified or supplemented from time to time in accordance
with its terms.
“Securities
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
“Share Delivery Date”
shall have the meaning set forth in Section 6(c).
“Shareholder Approval”
means the vote of holders of the requisite number of shares of
capital stock of the Corporation as required by Nevada law
to approve an increase in the number
of authorized shares of Common Stock to
permit conversion of all of the then outstanding shares
of Series D Preferred Stock into shares of Common Stock in
accordance with the terms of this Certificate.
“Stated Value” shall have
the meaning set forth in Section 2.
“Subsidiary” means any
Person (i) at least 50% of the outstanding voting securities of
which are at the time owned or controlled directly or indirectly by
the Corporation or (ii) with respect to which the Corporation
possesses, directly or indirectly, the power to direct or cause the
direction of the affairs or management of such Person.
“Successor Entity” shall
have the meaning set forth in Section 7(d).
“Trading Day” means a day
on which the principal Trading Market is open for
business.
“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE MKT,
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).
“Transaction Documents”
means the Purchase Agreement, this Certificate of Designation and
all exhibits and schedules thereto and hereto and any other
documents or agreements executed in connection with the
transactions contemplated hereunder
“Transfer Agent” means
Action Stock Transfer Corp, the current transfer agent for the
Common Stock, and any successor transfer agent of the
Corporation.
“Underlying Shares” means
the shares of Common Stock issued and issuable upon conversion of
the Preferred Stock.
Section
2. Designation,
Amount and Par Value. The series of preferred stock shall be
designated as Series D Convertible Preferred Stock (the
“Preferred
Stock”) and the number of shares so designated shall
be eight (8) (which shall not be subject to increase without the
written consent of the holders of a majority of the Underlying
Shares (each, a “Holder” and collectively,
the “Holders”)). Each share of
Preferred Stock shall have a par value of $0.001 per share and a
stated value equal to $25,000.00 (the “Stated
Value”).
Section
3. Dividends.
(a) Holders shall be
entitled to receive, and the Corporation shall pay, dividends on
shares of Preferred Stock equal (on an
as-if-converted-to-Common-Stock basis) to and in the same form as
dividends (other than dividends in the form of Common Stock)
actually paid on shares of the Common Stock when, as and if such
dividends (other than dividends in the form of Common Stock) are
paid on shares of the Common Stock. Other than as set forth in the
previous sentence, no other dividends shall be paid on shares of
Preferred Stock; and the Corporation shall pay no dividends (other
than dividends in the form of Common Stock) on shares of the Common
Stock unless it simultaneously complies with the previous
sentence.
(b) Other Securities. So long as
any Preferred Stock shall remain outstanding, the Corporation shall
not redeem, purchase or otherwise acquire directly or indirectly
more than a de minimis
amount of any Junior Securities other than as to repurchases of
Common Stock or Common Stock Equivalents from departing, officers,
directors or employees of the Corporation or any
Subsidiary.
Section
4. Voting
Rights. In addition to the voting rights provided by
applicable law, the Preferred Stock shall have the right to vote on
any matter on which the Common Stock is eligible to vote on an
as-if-converted-to-Common-Stock basis (as determined in Section
6(a) by dividing the Stated Value of such share of Preferred Stock
by the Conversion Price, regardless of whether or not the Preferred
Stock is then convertible into shares of Common Stock pursuant to
Section 6); provided that
each Holder shall only have the right to vote such shares of
Preferred Stock as are eligible for conversion without exceeding
the Beneficial Ownership Limitation.
Section
5. Liquidation.
Upon any liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary (a “Liquidation”), after the
satisfaction in full of the debts of the Corporation and the
payment of any liquidation preference owed to the holders of shares
of capital stock of the Corporation ranking prior to the Preferred
Stock upon liquidation, the Holders of the Preferred Stock shall
participate pari passu with the holders of the Common Stock (on an
as-if-converted-to-Common-Stock basis without regard to any
limitation in Section 6(d) on the conversion of the Preferred
Stock) in the net assets of the Corporation. The Corporation shall
mail written notice of any such Liquidation, not less than forty
five (45) days prior to the payment date stated therein, to each
Holder.
Section
6. Conversion.
(a) Conversions at Option of
Holder. At any time and from time to time after the
date that the Corporation shall have amended its Articles of
Incorporation to increase the number of shares of Common Stock
authorized for issuance thereunder or effect a reverse stock split
of the outstanding shares of Common Stock by a sufficient amount to
permit the conversion of all Preferred Stock into shares
of Common Stock
(such date, the “Initial Convertibility Date”),
each issued and outstanding share of Preferred Stock shall be
convertible at the option of the Holder thereof into that number of
whole shares of Common Stock (subject to the limitations set forth
in Section 6(d)) determined by dividing the Stated Value of such
share of Preferred Stock by the Conversion Price and rounding to
the nearest whole share. Holders shall effect conversions by
providing the Corporation with the form of conversion notice
attached hereto as Annex
A (a “Notice
of Conversion”). Each Notice of Conversion shall
specify the number of shares of Preferred Stock to be converted,
the number of shares of Preferred Stock owned prior to the
conversion at issue, the number of shares of Preferred Stock owned
subsequent to the conversion at issue and the date on which such
conversion is to be effected, which date may not be prior to the
date the applicable Holder delivers by facsimile such Notice of
Conversion to the Corporation (such date, the “Conversion Date”). If no
Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion to
the Corporation is deemed delivered hereunder. The calculations and
entries set forth in the Notice of Conversion shall control in the
absence of manifest or mathematical error. No ink-original Notice
of Conversion shall be required, nor shall any medallion guarantee
(or other type of guarantee or notarization) of any Notice of
Conversion form be required. To effect conversions of shares of
Preferred Stock, a Holder shall not be required to surrender the
certificate(s) representing the shares of Preferred Stock to the
Corporation unless all of the shares of Preferred Stock represented
thereby are so converted, in which case such Holder shall deliver
the certificate representing such shares of Preferred Stock
promptly following the Conversion Date at issue. Shares of
Preferred Stock converted into Common Stock or redeemed in
accordance with the terms hereof shall be canceled and shall not be
reissued.
(b) Conversion Price. The
conversion price for the Preferred Stock shall equal $0.14, subject
to adjustment herein (the “Conversion
Price”).
(c) Mechanics of
Conversion
(i) Delivery of Certificate Upon
Conversion. Not later than three (3) Trading Days after each
Conversion Date (the “Share Delivery Date”),
the Corporation shall deliver, or cause to be delivered, to the
converting Holder (A) a certificate or certificates representing
the Conversion Shares which, on or after the six month anniversary
of the Original Issue Date, shall be free of restrictive legends
and trading restrictions (other than those which may then be
required by the Purchase Agreement) representing the number of
Conversion Shares being acquired upon the conversion of the
Preferred Stock (including, if the Corporation has given continuous
notice pursuant to Section 3(b) for payment of dividends in shares
of Common Stock at least twenty (20) Trading Days prior to the date
on which the Notice of Conversion is delivered to the Corporation,
shares of Common Stock representing the payment of accrued
dividends otherwise determined pursuant to Section 3(a) but
assuming that the Dividend Notice Period is the twenty (20) Trading
Days period immediately prior to the date on which the Notice of
Conversion is delivered to the Corporation and excluding for such
issuance the condition that the Corporation deliver the Dividend
Share Amount as to such dividend payment prior to the commencement
of the Dividend Notice Period), and (B) a bank check in the amount
of accrued and unpaid dividends (if the Corporation has elected or
is required to pay accrued dividends in cash). On or after the
earlier of the six month anniversary of the Original Issue Date,
the Corporation shall use its best efforts to deliver any
certificate or certificates required to be delivered by the
Corporation under this Section 6 electronically through the
Depository Trust Company or another established clearing
corporation performing similar functions (a “DWAC
Delivery”).
(ii) Failure
to Deliver Certificates. If, in the case of any Notice of
Conversion, such certificate or certificates are not delivered to
or as directed by the applicable Holder by the Share Delivery Date,
the Holder shall be entitled to elect by written notice to the
Corporation at any time on or before its receipt of such
certificate or certificates, to rescind such Conversion, in which
event the Corporation shall promptly return to the Holder any
original Preferred Stock certificate delivered to the Corporation
and the Holder shall promptly return to the Corporation the Common
Stock certificates issued to such Holder pursuant to the rescinded
Conversion Notice.
(iii) Obligation
Absolute. The Corporation’s obligation to issue and
deliver the Conversion Shares upon conversion of Preferred Stock in
accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by a Holder 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 such
Holder or any other Person of any obligation to the Corporation or
any violation or alleged violation of law by such Holder or any
other person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Corporation to such
Holder in connection with the issuance of such Conversion Shares;
provided, however, that
such delivery shall not operate as a waiver by the Corporation of
any such action that the Corporation may have against such Holder.
In the event a Holder shall elect to convert any or all of the
Stated Value of its Preferred Stock, the Corporation may not refuse
conversion based on any claim that such Holder or anyone associated
or affiliated with such Holder has been engaged in any violation of
law, agreement or for any other reason, unless an injunction from a
court, on notice to Holder, restraining and/or enjoining conversion
of all or part of the Preferred Stock of such Holder shall have
been sought and obtained, and the Corporation posts a surety bond
for the benefit of such Holder in the amount of 150% of the Stated
Value of Preferred Stock which is subject to the injunction, which
bond shall remain in effect until the completion of
arbitration/litigation of the underlying dispute and the proceeds
of which shall be payable to such Holder to the extent it obtains
judgment. In the absence of such injunction, the Corporation shall
issue Conversion Shares and, if applicable, cash, upon a properly
noticed conversion. Nothing herein shall limit a 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 a Holder from seeking to enforce damages
pursuant to any other Section hereof or under applicable
law.
(iv) Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon
Conversion. In addition to any other rights available to the
Holder, if the Corporation fails for any reason to deliver to a
Holder the applicable certificate or certificates or to effect a
DWAC Delivery, as applicable, by the Share Delivery Date pursuant
to Section 6(c)(i), and if after such Share Delivery Date such
Holder is required by its brokerage firm to purchase (in an open
market transaction or otherwise), or the Holder’s brokerage
firm otherwise purchases, shares of Common Stock to deliver in
satisfaction of a sale by such Holder of the Conversion Shares
which such Holder was entitled to receive upon the conversion
relating to such Share Delivery Date (a “Buy-In”), then the
Corporation shall (A) pay in cash to such Holder (in addition to
any other remedies available to or elected by such Holder) the
amount, if any, by which (x) such Holder’s total purchase
price (including any brokerage commissions) for the Common Stock so
purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that such Holder was entitled to receive
from the conversion at issue multiplied by (2) the actual sale
price at which the sell order giving rise to such purchase
obligation was executed (including any brokerage commissions) and
(B) at the option of such Holder, either reissue (if surrendered)
the shares of Preferred Stock equal to the number of shares of
Preferred Stock submitted for conversion (in which case, such
conversion shall be deemed rescinded) or deliver to such Holder the
number of shares of Common Stock that would have been issued if the
Corporation had timely complied with its delivery requirements
under Section 6(c)(i). For example, if a Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of shares of
Preferred Stock with respect to which the actual sale price of the
Conversion Shares (including any brokerage commissions) giving rise
to such purchase obligation was a total of $10,000 under clause (A)
of the immediately preceding sentence, the Corporation shall be
required to pay such Holder $1,000. The Holder shall provide the
Corporation written notice indicating the amounts payable to such
Holder in respect of the Buy-In and, upon request of the
Corporation, evidence of the amount of such loss. Nothing herein
shall limit a Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or injunctive
relief with respect to the Corporation’s failure to timely
deliver certificates representing shares of Common Stock upon
conversion of the shares of Preferred Stock as required pursuant to
the terms hereof; provided, however, that the Holder shall
not be entitled to both (i) require the reissuance of the shares of
Preferred Stock submitted for conversion for which such conversion
was not timely honored and (ii) receive the number of shares of
Common Stock that would have been issued if the Corporation had
timely complied with its delivery requirements under Section
6(c)(ii).
(v) Reservation of Shares Issuable Upon
Conversion. The Corporation covenants that it will at all
times from and after the Initial 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 the
Preferred Stock and payment of dividends on the Preferred Stock,
each as herein provided, free from preemptive rights or any other
actual contingent purchase rights of Persons other than the Holder
(and the other holders of the Preferred Stock), not less than such
aggregate number of shares of the Common Stock as shall be issuable
(taking into account the adjustments and restrictions of Section 7)
upon the conversion of the then outstanding shares of Preferred
Stock and payment of dividends hereunder. The Corporation 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.
(vi) Fractional
Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of the
Preferred Stock. As to any fraction of a share which the Holder
would otherwise be entitled to purchase upon such conversion, the
Corporation shall at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction
multiplied by the Conversion Price or round up to the next whole
share.
(vii) Transfer
Taxes and Expenses. The issuance of certificates for shares
of the Common Stock on conversion of the Preferred Stock shall be
made without charge to any Holder for any documentary stamp or
similar taxes that may be payable in respect of the issue or
delivery of such certificates, provided that the Corporation shall
not be required to pay any tax that may be payable in respect of
any transfer involved in the issuance and delivery of any such
certificate upon conversion in a name other than that of the
Holders of such shares of Preferred Stock and the Corporation shall
not be required to issue or deliver such certificates unless or
until the Person or Persons requesting the issuance thereof shall
have paid to the Corporation the amount of such tax or shall have
established to the satisfaction of the Corporation that such tax
has been paid. The Corporation shall pay all Transfer Agent fees
required for same-day processing of any Notice of
Conversion.
(d) Beneficial Ownership
Limitation. The
Corporation shall not effect any conversion of the Preferred Stock,
and a Holder shall not have the right to convert any portion of the
Preferred Stock, to the extent that, after giving effect to the
conversion set forth on the applicable Notice of Conversion, such
Holder (together with such Holder’s Affiliates, and any
Persons acting as a group together with such Holder or any of such
Holder’s Affiliates) would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of
the foregoing sentence, the number of shares of Common Stock
beneficially owned by such Holder and its Affiliates shall include
the number of shares of Common Stock issuable upon conversion of
the Preferred Stock with respect to which such determination is
being made, but shall exclude the number of shares of Common Stock
which are issuable upon (i) conversion of the remaining,
unconverted Stated Value of Preferred Stock beneficially owned by
such Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other
securities of the Corporation subject to a limitation on conversion
or exercise analogous to the limitation contained herein
(including, without limitation, the Preferred Stock) beneficially
owned by such Holder or any of its Affiliates. Except as set forth
in the preceding sentence, for purposes of this Section 6(d),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder. To the extent that the limitation contained in this
Section 6(d) applies, the determination of whether the Preferred
Stock is convertible (in relation to other securities owned by such
Holder together with any Affiliates) and of how many shares of
Preferred Stock are convertible shall be in the sole discretion of
such Holder, and the submission of a Notice of Conversion shall be
deemed to be such Holder’s determination of whether the
shares of Preferred Stock may be converted (in relation to other
securities owned by such Holder together with any Affiliates) and
how many shares of the Preferred Stock are convertible, in each
case subject to the Beneficial Ownership Limitation. To ensure
compliance with this restriction, each Holder will be deemed to
represent to the Corporation each time it delivers a Notice of
Conversion that such Notice of Conversion has not violated the
restrictions set forth in this paragraph and the Corporation shall
have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 6(d), in
determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock
as stated in the most recent of the following: (i) the
Corporation’s most recent periodic or annual report filed
with the Commission, as the case may be, (ii) a more recent public
announcement by the Corporation or (iii) a more recent written
notice by the Corporation or the Transfer Agent setting forth the
number of shares of Common Stock outstanding. Upon the written
or oral request of a Holder, the Corporation shall within two
Trading Days confirm orally and in writing to such Holder the
number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined
after giving effect to the conversion or exercise of securities of
the Corporation, including the Preferred Stock, by such Holder or
its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 9.99% of the number of
shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon
conversion of Preferred Stock held by the applicable Holder. The
provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this
Section 6(d) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial
Ownership Limitation contained herein or to make changes or
supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply
to a successor holder of Preferred Stock.
Section
7. Certain
Adjustments.
(a) Stock Dividends and Stock
Splits. If the Corporation, at any time while the Preferred
Stock is outstanding: (i) pays a stock dividend or otherwise makes
a distribution or distributions payable in shares of Common Stock
on shares of Common Stock or any other Common Stock Equivalents
(which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Corporation upon conversion of, or
payment of a dividend on, the Preferred Stock), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares,
(iii) combines (including by way of a reverse stock split)
outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues, in the event of a reclassification of shares of the
Common Stock, any shares of capital stock of the Corporation, then
the Conversion Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding
any treasury shares of the Corporation) outstanding immediately
before such event, and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to this Section 7(a) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or
re-classification.
(b) Subsequent Rights Offerings. In
addition to any adjustments pursuant to Section 7(a) above, if at
any time the Corporation grants, issues or sells any Common Stock
Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
shares of Common Stock (the “Purchase Rights”), then
the Holder will be entitled to acquire, upon the terms applicable
to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of
shares of Common Stock acquirable upon complete conversion of such
Holder’s Preferred Stock (without regard to any limitations
on exercise hereof, including without limitation, the Beneficial
Ownership Limitation) immediately before the date on which a record
is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the
grant, issue or sale of such Purchase Rights (provided, however, to the extent that
the Holder’s right to participate in any such Purchase Right
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation).
(c) Pro Rata Distributions. During
such time as the Preferred Stock is outstanding, if the Corporation
declares or makes any dividend or other distribution of its assets
(or rights to acquire its assets) to holders of shares of Common
Stock, by way of return of capital or otherwise (including, without
limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any
time after the issuance of the Preferred Stock, then, in each such
case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete Conversion of the Preferred
Stock (without regard to any limitations on Conversion hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which
the record holders of shares of Common Stock are to be determined
for the participation in such Distribution (provided, however, to the extent that
the Holder’s right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Distribution to such extent (or in the beneficial ownership of
any shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
(d) Fundamental Transaction. If, at
any time while the Preferred Stock is outstanding, (i) the
Corporation, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Corporation
with or into another Person, (ii) the Corporation, directly or
indirectly, effects any sale, lease, license, assignment, transfer,
conveyance or other disposition of all or substantially all of its
assets in one or a series of related transactions, (iii) any,
direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Corporation or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of fifty percent
(50.0%) or more of the outstanding Common Stock, (iv) the
Corporation, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or
recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property,
or (v) the Corporation, directly or indirectly, in one or more
related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person whereby such other Person
acquires more than fifty percent (50.0%) of the outstanding shares
of Common Stock (not including any shares of Common Stock held by
the other Person or other Persons making or party to, or associated
or affiliated with the other Persons making or party to, such stock
or share purchase agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent conversion of
the Preferred Stock, the Holder shall have the right to receive,
for each Conversion Share that would have been issuable upon such
conversion immediately prior to the occurrence of such Fundamental
Transaction (without regard to any limitation in Section 6(d) on
the conversion of the Preferred Stock), the number of shares of
Common Stock of the successor or acquiring corporation or of the
Corporation, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which the Preferred
Stock is convertible immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 6(d) on
the conversion of the Preferred Stock). For purposes of any such
conversion, the determination of the Conversion Price shall be
appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and
the Corporation shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to
the Alternate Consideration it receives upon any conversion of the
Preferred Stock following such Fundamental Transaction. To the
extent necessary to effectuate the foregoing provisions, any
successor to the Corporation or surviving entity in such
Fundamental Transaction shall file a new Certificate of Designation
with the same terms and conditions and issue to the Holders new
preferred stock consistent with the foregoing provisions and
evidencing the Holders’ right to convert such preferred stock
into Alternate Consideration. The Corporation shall cause any
successor entity in a Fundamental Transaction in which the
Corporation is not the survivor (the “Successor Entity”) to
assume in writing all of the obligations of the Corporation under
this Certificate of Designation and the other Transaction Documents
(as defined in the Purchase Agreement) in accordance with the
provisions of this Section 7(d) pursuant to written agreements in
form and substance reasonably satisfactory to the Holder and
approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the holder of
the Preferred Stock, deliver to the Holder in exchange for the
Preferred Stock a security of the Successor Entity evidenced by a
written instrument substantially similar in form and substance to
the Preferred Stock which is convertible for a corresponding number
of shares of capital stock of such Successor Entity (or its parent
entity) equivalent to the shares of Common Stock acquirable and
receivable upon conversion of the Preferred Stock (without regard
to any limitations on the conversion of the Preferred Stock) prior
to such Fundamental Transaction, and with a conversion price which
applies the conversion price hereunder to such shares of capital
stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value
of such shares of capital stock, such number of shares of capital
stock and such conversion price being for the purpose of protecting
the economic value of the Preferred Stock immediately prior to the
consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Certificate of Designation and the other Transaction Documents
referring to the “Corporation” shall refer instead to
the Successor Entity), and may exercise every right and power of
the Corporation and shall assume all of the obligations of the
Corporation under this Certificate of Designation and the other
Transaction Documents with the same effect as if such Successor
Entity had been named as the Corporation herein.
(e) Calculations. All calculations
under this Section 7 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be. For purposes of
this Section 7, the number of shares of Common Stock deemed to be
issued and outstanding as of a given date shall be the sum of the
number of shares of Common Stock (excluding any treasury shares of
the Corporation) issued and outstanding.
(f) Notice to the
Holders.
(i) Adjustment to Conversion Price.
Whenever the Conversion Price is adjusted pursuant to any provision
of this Section 7, the Corporation shall promptly deliver to each
Holder a notice setting forth the Conversion Price after such
adjustment and setting forth a brief statement of the facts
requiring such adjustment.
(ii) Notice
to Allow Conversion by Holder. If (A) the Corporation shall
declare a dividend (or any other distribution in whatever form) on
the Common Stock, (B) the Corporation shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock,
(C) the Corporation shall authorize the granting to all holders of
the Common Stock of rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Corporation shall be required
in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Corporation is a party, any
sale or transfer of all or substantially all of the assets of the
Corporation, or any compulsory share exchange whereby the Common
Stock is converted into other securities, cash or property, or (E)
the Corporation shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation, then, in each case, the Corporation shall cause to be
filed at each office or agency maintained for the purpose of
conversion of the Preferred Stock, and shall cause to be delivered
to each Holder at its last address as it shall appear upon the
stock books of the Corporation, at least twenty (20) calendar days
prior to the applicable record or effective date hereinafter
specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption,
rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled
to such dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected
to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be
entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share
exchange, provided that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information
regarding the Corporation or any of the Subsidiaries, the
Corporation shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Holder
shall remain entitled to convert the Conversion Amount of the
Preferred Stock (or any part hereof) during the 20-day period
commencing on the date of such notice through the effective date of
the event triggering such notice except as may otherwise be
expressly set forth herein.
Section
8. Mandatory
Redemption of Preferred Stock.
(a) Redemption Obligation.
Notwithstanding any other provision hereof to the contrary, if the
Corporation, for any reason or no reason, shall not have obtained
Shareholder Approval on or before December 31, 2020, or if, having
so obtained such Shareholder Approval, shall not have amended its
Articles of Incorporation to increase its authorized Common Stock
to provide for conversion in full of all issued and outstanding
shares of Preferred Stock (either such event, an
“Authorization
Failure”), then the Corporation shall be obligated to
redeem from each Holder all shares of Preferred Stock held by such
Holder in accordance with the provisions of this Section
8.
(b) Redemption Procedure. Not later
than thirty (30) days following an Authorization Failure, the
Corporation shall redeem, to the extent of its funds then lawfully
available therefor, all then-issued and outstanding shares of
Preferred Stock from the Holders thereof. The redemption repurchase
price per share of Preferred Stock (the “Redemption Price”) shall
be the greater of (i) two hundred percent (200%) of the Stated
Value of such share, and (ii)(A) the volume-weighted average sale
price of a share of Common Stock reported on the Trading Market for
the thirty (30) consecutive Trading Days immediately preceding the
date of the Authorization Failure, multiplied by (B) the number of
shares of Common Stock each share of Preferred Stock would be
convertible into as of the date of such Authorization Failure had
such Authorization failure not occurred. The Corporation shall
notify in writing each Holder, promptly following an Authorization
Failure, of its obligation to redeem such Holder’s shares of
Preferred Stock pursuant to this Section 8, which Corporation
notice shall specify a date, not later than thirty (30) days
following such Authorization Failure (the “Redemption Date”), for
the closing of such redemption (the “Redemption Closing”),
which shall occur at the principal offices of the Corporation. At
the Redemption Closing, each Holder shall sell and deliver to the
Corporation, free and clear of all liens, claims and encumbrances,
all shares of Preferred Stock then held by such Holder, together
with all certificates (if any) representing such shares of
Preferred Stock, duly endorsed for transfer on the books of the
Corporation or accompanied by duly executed stock powers, against
receipt from the Corporation of the aggregate Redemption Price
therefor in a single installment of immediately available
funds.
(c) Partial Redemption. If the
funds legally available on the Redemption Date for redemption of
the Preferred Stock shall be insufficient to permit the payment to
all Holders the full aggregate Redemption Price, then the
Corporation shall effect such redemption pro rata among the Holders so that each
Holder shall receive a redemption payment equal to a fraction of
the aggregate amount available for redemption, the numerator of
which is the number of shares of Preferred Stock held by such
Holder multiplied by the Redemption Price of each share of
Preferred Stock held by such Holder, and the denominator of which
is the number of shares of Preferred Stock outstanding multiplied
by the Redemption Price of each such outstanding share of Preferred
Stock. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of shares
Preferred Stock, such funds will immediately be used to redeem the
balance of the shares of Preferred Stock not theretofore
redeemed.
(d) Rights as Holders. From and
after the Redemption Date, unless there shall have been a default
in payment of the Redemption Price, all rights of the Holders as
holders of Preferred Stock (except the right to receive the
Redemption Price without interest) shall cease, and no shares of
Preferred Stock shall thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose
whatsoever.
Section
9. Miscellaneous.
(a) Notices. Any and all notices or
other communications or deliveries to be provided by the Holders
hereunder including, without limitation, any Notice of Conversion,
shall be in writing and delivered personally, by facsimile, or sent
by a nationally recognized overnight courier service, addressed to
the Corporation, at the address set forth above Attention: Chief Financial Officer, or
at any facsimile number or other address as the Corporation may
specify for such purposes by notice to the Holders delivered in
accordance with this Section 9. Any and all notices or other
communications or deliveries to be provided by the Corporation
hereunder shall be in writing and delivered personally, by
facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number or address
of such Holder appearing on the books of the Corporation, or if no
such facsimile number or address appears on the books of the
Corporation, at the principal place of business of such Holder, as
set forth in the Purchase Agreement. Any notice or other
communication or deliveries hereunder shall be deemed given and
effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile
number set forth in this Section prior to 5:30 p.m. (New York City
time) on any date, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth in this Section on a
day that is not a Trading Day or later than 5:30 p.m. (New York
City time) on any Trading Day, (iii) the second Trading Day
following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual receipt
by the party to whom such notice is required to be
given.
(b) Absolute Obligation. Except as
expressly provided herein, no provision of this Certificate of
Designation shall alter or impair the obligation of the
Corporation, which is absolute and unconditional, to pay liquidated
damages, accrued dividends and accrued interest, as applicable, on
the shares of Preferred Stock at the time, place, and rate, and in
the coin or currency, herein prescribed.
(c) Lost or Mutilated Preferred Stock
Certificate. If a Holder’s Preferred Stock certificate
shall be mutilated, lost, stolen or destroyed, the Corporation
shall execute and deliver, in exchange and substitution for and
upon cancellation of a mutilated certificate, or in lieu of or in
substitution for a lost, stolen or destroyed certificate, a new
certificate for the shares of Preferred Stock so mutilated, lost,
stolen or destroyed, but only upon receipt of evidence of such
loss, theft or destruction of such certificate, and of the
ownership hereof reasonably satisfactory to the
Corporation.
(d) Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Certificate of Designation shall be governed
by and construed and enforced in accordance with the internal laws
of the State of Nevada, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal
proceedings concerning the interpretation, enforcement and defense
of the transactions contemplated by any of the Transaction
Documents (whether brought against a party hereto or its respective
Affiliates, directors, officers, shareholders, employees or agents)
shall be commenced in the state and federal courts sitting in the
City of New York, Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of such New York Courts, or such New York Courts are
improper or inconvenient venue for such proceeding. Each party
hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Certificate of
Designation and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve
process in any other manner permitted by applicable law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted
by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Certificate of
Designation or the transactions contemplated hereby. If any party
shall commence an action or proceeding to enforce any provisions of
this Certificate of Designation, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or
proceeding.
(e) Waiver. Any waiver by the
Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a
waiver by any other Holders. The failure of the Corporation or a
Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of
the right thereafter to insist upon strict adherence to that term
or any other term of this Certificate of Designation on any other
occasion. Any waiver by the Corporation or a Holder must be in
writing.
(f) Severability. If any provision
of this Certificate of Designation is invalid, illegal or
unenforceable, the balance of this Certificate of Designation shall
remain in effect, and if any provision is inapplicable to any
Person or circumstance, it shall nevertheless remain applicable to
all other Persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due
hereunder shall automatically be lowered to equal the maximum rate
of interest permitted under applicable law.
(g) Next Business Day. Whenever any
payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next
succeeding Business Day.
(h) Headings. The headings
contained herein are for convenience only, do not constitute a part
of this Certificate of Designation and shall not be deemed to limit
or affect any of the provisions hereof.
(i) Status of Converted or Redeemed
Preferred Stock. Shares of Preferred Stock may only be
issued pursuant to the Purchase Agreement. If any shares of
Preferred Stock shall be converted, redeemed or reacquired by the
Corporation, such shares shall resume the status of authorized but
unissued shares of preferred stock and shall no longer be
designated as Series D Convertible Preferred Stock.
*********************
RESOLVED, FURTHER, that the Chairman,
the president or any vice-president, and the secretary or any
assistant secretary, of the Corporation be and they hereby are
authorized and directed to prepare and file this Certificate of
Designation of Preferences, Rights and Limitations in accordance
with the foregoing resolution and the provisions of Nevada
law.
IN WITNESS WHEREOF, the undersigned has
executed this Certificate this 14th day of May,
2020.
|
By:
|
_/s/Kevin A. Richardson
II___
|
|
Name:
|
Kevin A. Richardson,
II
|
|
Title:
|
Acting Chief Executive
Officer
|
ANNEX A
NOTICE OF CONVERSION
(To be
Executed by the Registered Holder in order to Convert Shares of
Preferred Stock)
The
undersigned hereby elects to convert the number of shares of Series
D Convertible Preferred Stock indicated below into shares of common
stock, par value $0.001 per share (the “Common Stock”), of
SANUWAVE Health, Inc., a Nevada corporation (the
“Corporation”),
according to the conditions hereof, as of the date written below.
If shares of Common Stock are to be issued in the name of a Person
other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto and is delivering herewith such
certificates and opinions as may be required by the Corporation in
accordance with the Purchase Agreement. No fee will be charged to
the Holders for any conversion, except for any such transfer
taxes.
Conversion
calculations:
|
Date to Effect
Conversion:
|
_________________________________
|
|
Number of shares of
Preferred Stock owned prior to Conversion:
|
_________________________________
|
|
Number of shares of
Preferred Stock to be Converted:
|
_________________________________
|
|
Stated Value of
shares of Preferred Stock to be Converted:
|
_________________________________
|
|
Number of shares of
Common Stock to be Issued:
|
_________________________________
|
|
Applicable
Conversion Price:
|
_________________________________
|
|
Number of shares of
Preferred Stock subsequent to Conversion:
|
_________________________________
|
|
Address for
Delivery:
or
|
_________________________________
|
|
DWAC
Instructions:
|
_________________________________
|
|
Broker
no:
|
_________________________________
|
|
Account
no:
|
_________________________________
|
[HOLDER]
By:
Name:
Title: