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Careview Communicaions, Inc. 8-K [careview-8k_08312011.htm]
 
Exhibit 10.85
  
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 4 BELOW,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
PURSUANT TO RULE 144 OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
 
WARRANT TO PURCHASE STOCK
 
Corporation:
CAREVIEW COMMUNICATIONS, INC., a Nevada corporation
Number of Shares:
714,286
Class of Stock:
Common Stock, $0.001 par value per Share
Warrant Price:
$1.40 per share
Issue Date:
August 31, 2011
Expiration Date:
August 31, 2018 (Subject to Section 4.1)

 
THIS WARRANT TO PURCHASE STOCK (THIS “WARRANT”) CERTIFIES THAT, for good and
valuable consideration, the receipt of which is hereby acknowledged, COMERICA
BANK, a Texas banking association, or its assignee (“Holder”), is entitled to
purchase the number of fully paid and nonassessable shares of the Class of Stock
(the “Shares”) of CAREVIEW COMMUNICATIONS, INC. (the “Company”) at the Warrant
Price, all as set forth above and as adjusted pursuant to the terms of this
Warrant, subject to the provisions and upon the terms and conditions set forth
in this Warrant.  This warrant is one of a series of warrants (the “Loan
Warrants”)  issued by the Company on the Issue Date pursuant to a Loan and
Security Agreement with Comerica Bank and Bridge Bank, National Association
dated August 31, 2011.
 
ARTICLE 1
EXERCISE
 
1.1           Method of Exercise.  Holder may exercise this Warrant by a duly
executed Notice of Exercise in substantially the form attached as Appendix I to
the principal office of the Company (or such other appropriate location as
Holder is so instructed by the Company). Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company) or
other form of payment acceptable to the Company for the aggregate Warrant Price
for the Shares being purchased. Notwithstanding the foregoing,  Holder agrees
not to exercise this Warrant for one (1) year from the Issue Date unless, during
such one (1) year period (i) HealthCor Partners Fund, L.P. and/or HealthCor
Hybrid Offshore Master Fund, L.P. (either or both, together with their
affiliates, “HealthCor”) converts to equity securities of the Company the
indebtedness of the Company currently held by HealthCor; or (2) the Company’s
Common Stock reaches a trading price Five Dollars and 50/100 ($5.50).
 
1.2           Intentionally Omitted.
 
1.3           Delivery of Certificate and New Warrant.  Within 30 days after
Holder exercises this Warrant and the Company receives payment of the aggregate
Warrant Price, the Company shall deliver to Holder certificates for the Shares
acquired and, if this Warrant has not been fully exercised and has not expired,
a new warrant representing the Shares not so acquired.
 
1.4           Replacement of Warrants.  In the case of loss, theft or
destruction of this Warrant, upon delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of mutilation,
upon surrender and cancellation of this Warrant, the Company at its expense
shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor.
 
1.5           Acquisition of the Company.
 
 
 

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1.5.1        “Acquisition.”  For the purpose of this Warrant, “Acquisition”
means (a) any sale, license, or other disposition of all or substantially all of
the assets (including intellectual property) of the Company, or (b) any
reorganization, consolidation, merger of the Company with another entity in
which the Company is not the survivor.
 
1.5.2        Treatment of Warrant in the Event of an Acquisition.  The Company
shall give Holder written notice at least 20 days prior to the closing of any
proposed Acquisition (the “Acquisition Notice”).  The Company will use
commercially reasonable efforts to cause (i) the acquirer of the Company, (ii)
successor or surviving entity or (iii) parent entity in an Acquisition (the
“Acquirer”) to assume this Warrant as a part of the Acquisition.
 
(a)           If the Acquirer assumes this Warrant, then this Warrant shall be
exercisable for the same securities, cash, and property as would be payable for
the Shares issuable upon exercise of the  unexercised portion of this Warrant as
if such Shares were outstanding on the record date for the Acquisition and
subsequent closing.  The Warrant Price shall be adjusted accordingly, and the
Warrant Price and number and class of Shares shall continue to be subject to
adjustment from time to time in accordance with the provisions hereof.
 
(b)           If the Acquirer refuses to assume this Warrant in connection with
the Acquisition, the Company shall give Holder an additional written notice at
least ten (10) days prior to the closing of the Acquisition of such fact (unless
such fact is disclosed in the Acquisition Notice).  In such event,
notwithstanding any other provision of this Warrant to the contrary, Holder may
immediately exercise this Warrant in the manner specified in this Warrant with
such exercise effective immediately prior to closing of the Acquisition.  If
Holder elects not to exercise this Warrant, then this Warrant will terminate
immediately prior to the closing of the Acquisition.
 
ARTICLE 2
ADJUSTMENTS TO THE SHARES
 
2.1           Stock Dividends, Splits, Etc.  If the Company declares or pays a
dividend on its common stock payable in common stock, or other securities, or
subdivides the outstanding common stock into a greater amount of common stock,
then upon exercise of this Warrant, for each Share acquired, Holder shall
receive, without cost to Holder, the total number and kind of securities to
which Holder would have been entitled had Holder owned the Shares of record as
of the date the dividend or subdivision occurred.
 
2.2           Reclassification, Exchange or Substitution.  Upon any
reclassification, exchange, substitution, or other event that results in a
change of the number and/or class of the securities issuable upon exercise or
conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property
that Holder would have received for the Shares if this Warrant had been
exercised immediately before such reclassification, exchange, substitution, or
other event.  The Company or its successor shall promptly issue to Holder a new
warrant for such new securities or other property.  The new warrant shall
provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Article 2 including, without
limitation, adjustments to the Warrant Price, the number of securities or
property issuable upon exercise of the new warrant and expiration date.  The
provisions of this Section 2.2 shall similarly apply to successive
reclassifications, exchanges, substitutions, or other events.
 
2.3           Adjustments for Combinations, Etc.  If the outstanding Shares are
combined or consolidated, by reclassification, reverse split or otherwise, into
a lesser Number of Shares, the Warrant Price shall be proportionately
increased.  If the outstanding Shares are split or multiplied, by
reclassification or otherwise, into a greater Number of Shares, the Warrant
Price shall be proportionately decreased.
 
2.4           Intentionally Omitted.
 
2.5           No Impairment.  The Company shall not, by amendment of its
Articles or Certificate of Incorporation or through a reorganization, transfer
of assets, consolidation, merger, dissolution, issue, or sale of
 
 
 

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securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Warrant by the Company, but shall at all times in good faith assist in carrying
out all the provisions of this Article 2 and in taking all such action as may be
necessary or appropriate to protect Holder’s rights under this Article 2 against
impairment.
 
2.6           Certificate as to Adjustments.  Upon each adjustment of the
Warrant Price, the Company at its expense shall promptly compute such
adjustment, and furnish Holder with a certificate signed by its Chief Financial
Officer setting forth such adjustment and the facts upon which such adjustment
is based.  The Company shall, upon written request, furnish Holder a certificate
setting forth the Warrant Price in effect upon the date thereof and the series
of adjustments leading to such Warrant Price.
 
2.7           Fractional Shares.  No fractional Shares shall be issuable upon
exercise of this Warrant and the Number of Shares to be issued shall be rounded
down to the nearest whole Share.  If a fractional share interest arises upon any
exercise of this Warrant, the Company shall eliminate such fractional share
interest by paying Holder an amount computed by multiplying the fractional
interest by the fair market value, as determined by the Company’s Board of
Directors, of a full Share.
 
ARTICLE 3
REPRESENTATIONS AND COVENANTS OF THE COMPANY
 
3.1           Representations and Warranties.  The Company hereby represents and
warrants to, and agrees with, the Holder as follows:
 
3.1.1           The initial Warrant Price referenced on the first page of this
Warrant is not greater than the fair market value of the Shares as of the date
of this Warrant.
 
3.1.2           All Shares which may be issued upon the exercise of the purchase
right represented by this Warrant, and all securities, if any, issuable upon
conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable, and free of any liens and encumbrances
except for restrictions on transfer provided for herein or under applicable
federal and state securities laws.
 
3.1.3            The Company’s capitalization table delivered to Holder as of
the Issue Date is true and complete as of the Issue Date.
 
3.2           Notice of Certain Events.  If the Company proposes at any time (a)
to declare any dividend or distribution upon its stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b) to offer for subscription pro rata to the holders of any class or series of
its stock any additional shares of stock of any class or series or other rights;
(c) to effect any reclassification or recapitalization of stock; or (d) to merge
or consolidate with or into any other corporation, or sell, lease, license, or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up, then, in connection with each such event, the Company shall give Holder (1)
at least 20 days prior written notice of the date on which a record will be
taken for such dividend, distribution, or subscription rights (and specifying
the date on which the holders of stock will be entitled thereto) or for
determining rights to vote, if any, in respect of the matters referred to in (a)
and (b) above; and (2) in the case of the matters referred to in (c) and (d)
above at least 20 days prior written notice of the date when the same will take
place (and specifying the date on which the holders of stock will be entitled to
exchange their stock for securities or other property deliverable upon the
occurrence of such event).  Upon request, the Company shall provide Holder with
such information reasonably necessary for Holder to evaluate its rights as a
holder of this Warrant or Warrant Shares in the case of matters referred to (a),
(b), (c) and (d) herein above.
 
ARTICLE 4
MISCELLANEOUS
 
4.1           Term; Exercise Upon Expiration.  This Warrant is exercisable in
whole or in part, at any time and from time to time on or before the Expiration
Date set forth above.  The Company shall give Holder written notice of Holder’s
right to exercise this Warrant, in the form attached hereto as Appendix II, not
less than 90 days before
 
 
 

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the Expiration Date.  If the notice is not so given, the Expiration Date shall
automatically be extended until 90 days after the date the Company delivers such
notice to Holder.  The Company agrees that Holder may terminate this Warrant,
upon notice to the Company, at any time in its sole discretion.
 
4.2           Legends.  This Warrant and the Shares (and the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) shall
be imprinted with a legend in substantially the following form:
 
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 4 BELOW,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR
PURSUANT TO RULE 144 OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
 
4.3           Compliance with Securities Laws on Transfer.  This Warrant and the
Shares issuable upon exercise of this Warrant (and the securities issuable,
directly or indirectly, upon conversion of the Shares, if any) may not be
transferred or assigned in whole or in part without compliance with applicable
federal and state securities laws by the transferor and the transferee.  The
Company shall not require Comerica Bank (“Bank”) or a Bank Affiliate (as defined
herein) to provide an opinion of counsel or investment representation letter if
the transfer is to Bank’s parent company, Comerica Incorporated (“Comerica”), or
any other affiliate of Bank (“Bank Affiliate”).
 
4.4           Transfer Procedure.  After receipt of the executed Warrant, Bank
will transfer all of this Warrant to Comerica Ventures Incorporated, a
non-banking subsidiary of Comerica and a Bank Affiliate (“Ventures”).  Subject
to the provisions of Section 4.3, Holder may transfer all or part of this
Warrant or the Shares issuable upon exercise of this Warrant (or the securities
issuable, directly or indirectly, upon conversion of the Shares, if any) by
giving the Company notice of the portion of this Warrant being transferred
setting forth the name, address and taxpayer identification number of the
transferee and surrendering this Warrant to the Company for reissuance to the
transferee(s) (and Holder, if applicable); provided, however, that Holder may
transfer all or part of this Warrant to its affiliates, including, without
limitation, Ventures, at any time without notice or the delivery of any other
instrument to the Company, and such affiliate shall then be entitled to all the
rights of Holder under this Warrant, and the Company shall cooperate fully in
ensuring that any stock issued upon exercise of this Warrant is issued in the
name of the affiliate that exercises this Warrant.  The terms and conditions of
this Warrant shall inure to the benefit of, and be binding upon, the Company and
the holders hereof and their respective permitted successors and assigns.
 
4.5           Notices.  All notices and other communications from the Company to
the Holder, or vice versa, shall be deemed delivered and effective when given
personally or mailed by first-class registered or certified mail, postage
prepaid, or sent via a nationally recognized overnight courier service, fee
prepaid, or on the first business day after transmission by facsimile, at such
address or facsimile number as may have been furnished to the Company or the
Holder, as the case may be, in writing by the Company or such Holder from time
to time.  Effective upon the receipt of executed Warrant and initial transfer
described in Article 4.4 above, all notices to the Holder shall be addressed as
follows until the Company receives notice of a change of address in connection
with a transfer or otherwise:
 

Comerica Ventures Incorporated Attn:  Warrant Administrator 1717 Main Street,
5th Floor, MC 6406 Dallas, Texas 75201 Facsimile No. (214) 462-4459

 
 
 

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All
 notices to the Company shall be addressed as follows:

 

CAREVIEW COMMUNICATIONS, INC. 405 State Highway 121 Bypass, Suite B240 
Lewisville, Texas 75067  Attn:  Chief Financial Officer FAX:  (___) 

 
4.6           Amendments; Waiver.  This Warrant and any term hereof may be
amended, changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of such amendment, change,
waiver, discharge or termination is sought.
 
4.7           Attorneys’ Fees.  In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys’ fees.
 
[Balance of Page Intentionally Left Blank]
 
 
 

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4.8           Governing Law.  This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.
 

  CAREVIEW COMMUNICATIONS, INC.       By: /s/ Steven Johnson 

 

  Name: Steven Johnson

 

  Title: President/COO   

 

  By:  

 

  Name:  

 

  Title:  

 
[Signature Page to Warrant to Purchase Stock]
 
Comerica Bank
 
 
 

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APPENDIX I
 
NOTICE OF EXERCISE
 
 
 
1.           The undersigned hereby elects to purchase ______________ shares of
the Common Stock of CAREVIEW COMMUNICATIONS, INC. pursuant to the terms of the
attached Warrant, and tenders herewith payment of the purchase price of such
shares in full.
 
2.           Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:
 

  Comerica Ventures Incorporated   Attn:  Warrant Administrator   1717 Main
Street, 5th Floor, MC 6406   Dallas, Texas 75201   Facsimile No. (214) 462-4459

 
3.           The undersigned represents it is acquiring the shares solely for
its own account and not as a nominee for any other party and not with a view
toward the resale or distribution thereof except in compliance with applicable
securities laws.
 
COMERICA VENTURES INCORPORATED or
Assignee  
(Signature)
 
(Name and Title)
 
(Date)

 
Appendix I
Page 1
 
 
 

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APPENDIX II
 
Notice that Warrant Is About to Expire
 
[Insert Date of Notice]
 
To:
Comerica Ventures Incorporated

 
Attn:  Warrant Administrator

 
1717 Main Street, 5th Floor, MC 6406

 
Dallas, Texas 75201

 
Facsimile No. (214) 462-4459

 
The Warrant issued to you described below will expire on  ______________, ____.
 

Issuer:        Issue Date:  August 31, 2011     Class of Security Issuable: 
Common      Exercise Price per Share:  $         Number of Shares Issuable:     
    Procedure for Exercise:   

 
Please contact __________ at (___) ___-____ with any questions you may have
concerning exercise of the Warrant. This is your only notice of pending
expiration.
 

      (Name of Issuer)   By     Its:  

 
Appendix II
Page 1
 
 
 

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