Careview Communications, Inc. 8-K [crvw-8k_062615.htm]

 

 

Exhibit 10.08

 

Execution Copy

 

SEVENTH AMENDMENT TO
NOTE AND WARRANT PURCHASE AGREEMENT

 

This SEVENTH AMENDMENT TO NOTE AND WARRANT PURCHASE AGREEMENT, dated as of June
26, 2015 (this “Amendment”), is made by and among CAREVIEW COMMUNICATIONS, INC.,
a Nevada corporation (the “Company”), and the undersigned Majority Investors (as
defined below).

 

WITNESSETH:

 

WHEREAS, the Company, HealthCor Partners Fund, L.P. (“HealthCor Partners”),
HealthCor Hybrid Offshore Master Fund, L.P. (“HealthCor Hybrid” and, together
with HealthCor Partners, the “HealthCor Parties”), and certain additional
investors (collectively with the HealthCor Parties, the “Investors”) are party
to that certain Note and Warrant Purchase Agreement, dated as of April 21, 2011
(as amended from time to time, including without limitation pursuant to that
certain Note and Warrant Amendment Agreement dated December 30, 2011, that
certain Second Amendment to Note and Warrant Purchase Agreement dated January
31, 2012, that certain Third Amendment to Note and Warrant Purchase Agreement
dated August 20, 2013, that certain Fourth Amendment to Note and Warrant
Purchase Agreement dated January 16, 2014, that certain Fifth Amendment to Note
and Warrant Purchase Agreement dated December 15, 2014, and that certain Sixth
Amendment to Note and Warrant Purchase Agreement dated March 31, 2015, the
“Purchase Agreement”); and

 

WHEREAS, the HealthCor Parties are the record and beneficial owners of Notes and
Warrants representing a majority of the shares of Common Stock issued or
issuable (on an as converted basis) upon conversion of all Notes and Warrants
held by any Investor (in such capacity, the “Majority Investors”), and Section
7.9 of the Purchase Agreement provides that amendments to the Purchase Agreement
may be made pursuant to a written instrument executed by the Company and the
Majority Investors;

 

WHEREAS, the Company intends to enter into (i) that certain Credit Agreement,
dated on or about the date hereof, among the Company, CareView Communications,
Inc., a Texas corporation and a wholly-owned subsidiary of the Company, as the
borrower (“CareView TX”), PDL BioPharma, Inc., a Delaware corporation, as the
lender (“PDL”), and PDL, not individually, but as the agent (the “PDL Credit
Agreement”) and (ii) that certain Guarantee and Collateral Agreement dated on or
about the date hereof by and among the Company, CareView TX and certain
subsidiary guarantors party thereto, as grantors, in favor of PDL, as collateral
agent (the “PDL Collateral Agreement”);

 

WHEREAS, in connection with the PDL Credit Agreement, the Company intends to
issue to PDL a warrant to purchase up to 4,444,445 shares of Common Stock, as
adjusted from time to time pursuant to the terms of such warrant, at an exercise
price of $0.45 per share (as may be amended, restated, supplemented or otherwise
modified from time to time, the “PDL Warrant”);

 

 

 

 

WHEREAS, pursuant to Section 7.9 of the Purchase Agreement and subject to the
terms and conditions contained herein, the parties hereto desire to amend the
Purchase Agreement as set forth herein for the purposes of, among other things,
permitting the Company and its subsidiaries to enter into the PDL Credit
Agreement, the PDL Collateral Agreement and the transactions contemplated
thereby.

 

NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties and covenants contained herein and in the Purchase Agreement, which
represent integral components of the transactions contemplated hereby and
thereby and shall be fully enforceable by the parties hereto, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Investors mutually agree as follows:

 

1.            Definitions. Capitalized terms used in this Amendment but not
defined in this Amendment shall have the meanings ascribed to them in the
Purchase Agreement.

 

2.            Amendments to Purchase Agreement.

 

a.              Section 6.4 (Investments) of the Purchase Agreement is hereby
amended and restated in its entirety as follows:

 

6.4            Investments and Acquisitions. Other than Permitted Investments,
the Company shall not invest in, acquire any interest in (including the
acquisition of assets out of the ordinary course of business), or otherwise
divert any of the funds of the Company to, any Person, provided that the Company
may make investments permitted by Sections 7.10(e), (f), (g), (h), (i) or (j) of
the PDL Credit Agreement.

 

b.              Section 6.8 (Guarantees and Loans) of the Purchase Agreement is
hereby amended and restated in its entirety as follows:

 

6.8           Guarantees and Loans. The Company shall not guarantee or endorse
any obligation of, or make any advance or loan to, any Person, or assume any
contingent liability of any Person; provided that the Company may guarantee the
obligations of any of its Subsidiaries arising under the PDL Credit Agreement as
contemplated by the PDL Collateral Agreement.

 

c.              Section 6.9 (Related Party Transactions) of the Purchase
Agreement is hereby amended and restated in its entirety as follows:

 

6.9            Related Party Transactions. The Company shall not enter into, or
commit directly or indirectly to, any transaction, agreement or arrangement with
any Affiliate of the Company or with any manager, member, shareholder, officer,
director or employee of the Company or any Affiliate of the Company unless such
transaction, agreement or arrangement is consummated on arms-length terms and is
approved by the Company’s Board of Directors; provided that the Company may
enter into, without the foregoing limitations, any transactions, agreements or
arrangements with any Affiliate of the Company or with any manager, member,
shareholder, officer, director or employee of the Company or any Affiliate of
the Company that are otherwise permitted by (i) Section 6.4 or Section 6.10 of
this Agreement or (ii) Section 7.7(c) of the PDL Credit Agreement.

 

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d.              Section 6.10 (Distributions; Redemptions) of the Purchase
Agreement is hereby amended and restated in its entirety as follows:

 

6.10          Distributions; Redemptions. The Company shall not directly or
indirectly (a) declare or pay any dividend or distribution to any equityholder
of the Company, provided that the Company may declare or pay any dividend or
distribution permitted under Sections 7.3(c) or (d) of the PDL Credit Agreement;
or (b) redeem, purchase, retire or otherwise extinguish any shares of the
Company’s capital stock or securities convertible into shares of the Company’s
capital stock (except as required by any of the Transaction Documents), provided
that the Company may repurchase outstanding shares of its capital stock pursuant
to a stock repurchase program approved by the Board of Directors, including the
Investor Designee, and provided, further, each such repurchase is in compliance
with the Company’s covenants under the PDL Credit Agreement and any other
Indebtedness.

 

e.              The first paragraph of Section 6.12 (Equity Issuance) of the
Purchase Agreement is hereby amended by inserting, immediately prior to the
period (.) therein, a semi-colon (;) followed by the following proviso:

 

and provided, further that the Company shall be permitted to issue, without
requiring any such consent, (i) the PDL Warrant and (ii) the shares of Common
Stock issuable upon exercise of the PDL Warrant

 

f.               Section 6.13 (Sale of Assets) of the Purchase Agreement is
hereby amended and restated in its entirety as follows:

 

6.13          Sale of Assets. The Company shall not sell, lease or otherwise
transfer any assets used or held for use in the Company’s business outside of
the ordinary course of business, provided that the Company may effect any sale,
lease or other transfer of assets permitted under Section 7.4 of the PDL Credit
Agreement.

 

g.              Clause (b) of the definition of “Permitted Encumbrances” in
Section 7.1(j) of the Purchase Agreement is hereby replaced in its entirety with
the following:

 

(j)             “Permitted Encumbrances” means (a) Liens in favor of and for the
benefit of the Investors; (b) Liens in favor of and for the benefit of PDL
BioPharma, Inc., as agent under the PDL Collateral Agreement; (c) Liens
permitted under Sections 7.2(d), (g), (i), (k), (l), (m) or (n) of the PDL
Credit Agreement; (d) non-exclusive licenses of the Company’s or its
Subsidiaries’ intellectual property granted to hospitals in the ordinary course
of the Company’s or its Subsidiaries’ business pursuant to the Company’s or its
Subsidiaries’ hospital contracts; (e) non-exclusive licenses of the Company’s or
its Subsidiaries’ intellectual property granted to Subsidiaries of the Company
in connection with existing joint venture transactions and future joint venture
transactions entered into by the Company or its Subsidiaries to the extent
involving new hospitals, new businesses or international markets; (f) Liens in
favor and for the benefit of joint venture partners arising from joint venture
transactions entered into by the Company or its Subsidiaries to the extent
involving new hospitals, new businesses or international markets; (g) Liens for
Charges not delinquent or being contested in good faith and by appropriate
proceedings and with respect to which proper reserves have been established by
the Company on its financial statements in accordance with GAAP; (h) deposits or
pledges to secure obligations under workers’ compensation, social security or
similar laws, or with respect to unemployment insurance; (i) bonded and
statutory Liens of landlords, mechanics, workers, materialmens or other like
Liens arising in the ordinary course of the business with respect to obligations
which are not delinquent; (j) Liens placed upon tangible assets hereafter
acquired to secure payment of the purchase price thereof, provided that any such
Lien shall not encumber any other property of the Company or its Subsidiaries;
and (k) zoning restrictions and easements, licenses, covenants and other
restrictions that do not individually, or in the aggregate, materially and
adversely affect the use of the Company’s or its Subsidiaries’ owned, leased or
licensed real property for its intended purpose in connection with the business.

 

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h.              The definition of “Permitted Indebtedness” in Section 7.1(k) of
the Purchase Agreement is hereby replaced in its entirety with the following:

 

(k)            “Permitted Indebtedness” shall mean (i) the indebtedness arising
under the PDL Credit Agreement, in an amount not to exceed the “First Lien Cap
Amount” as such term is defined in the PDL Subordination Agreement, (ii) any
indebtedness permitted under Sections 7.1(d), (e), (g), (h), (j) or (k) of the
PDL Credit Agreement and (iii) purchase money indebtedness (including, but not
limited to, mortgages, credit card indebtedness and automobile loans) of the
Company or its Subsidiaries or Capital Lease Obligations not to exceed the
amount of $2,000,000.00 in the aggregate.

 

i.               Section 7.1 (Definitions) is hereby amended to add the
following paragraphs thereto:

 

(o)            “PDL” means PDL BioPharma, Inc., a Delaware corporation, together
with its permitted successors and assignees.

 

(p)            “PDL Collateral Agreement” means that certain Guarantee and
Collateral Agreement dated on or about June 26, 2015 by and among the Company,
CareView Communications, Inc., a Texas corporation and a wholly owned subsidiary
of the Company (“CareView Texas”) and certain subsidiary guarantors party
thereto, as grantors, in favor of PDL, as collateral agent, and its permitted
successors and assignees, as amended, modified, supplemented or restated from
time to time.

 

(q)            “PDL Credit Agreement” means that certain Credit Agreement, dated
on or about June 26, 2015, by and among the Company, CareView Texas, as the
borrower, PDL, as the lender, and PDL, not individually, but as the agent, as
amended, modified, supplemented or restated from time to time.

 

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  (r)             “PDL Subordination Agreement” means that certain Subordination
and Intercreditor Agreement, dated on or about June 26, 2015, by and among PDL,
as agent for the first lien claimholders described therein, and each of the
Investors, as initial second lien claimholders therein, as amended, modified,
supplemented or restated from time to time.

 

3.              Section 7.1 (Definitions) is hereby amended by deleting in its
entirety the defined term “Revolving Debt Facility”.

 

4.              No Further Amendments. Except as amended by this Amendment, the
Purchase Agreement shall remain in full force and effect in accordance with its
terms.

 

5.              Miscellaneous.

 

a.              Ratification and Confirmation. The Company acknowledges, agrees
and confirms that: (x) the Purchase Agreement and each of the other Transaction
Documents, as amended and otherwise modified by the amendments and other
modifications specifically provided herein or contemplated hereby, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed; and (y) without limiting the generality of the foregoing clause
(x), all obligations, liabilities and Indebtedness of the Company under the
Transaction Documents, as amended hereby, constitute “Obligations” (as defined
in the Security Agreement) secured by and entitled to the benefits of the
security set forth in the Security Agreement and the IP Security Agreement, and
the liens and security interests granted in favor of the Investors under the
terms of the Security Agreement and the IP Security Agreement are and remain
perfected, effective, enforceable and valid and such liens and security
interests are hereby in all respects ratified and confirmed, it being understood
that such liens and security interests granted in favor of the Investors are
subject to the PDL Subordination Agreement to the extent described therein.

 

b.              Expenses. The Company will pay and bear full responsibility for
the reasonable legal fees and other out-of-pocket costs and expenses of the
Investors attributable to the negotiation and consummation of the transactions
contemplated hereby.

 

c.              Further Assurances. The Company shall duly execute and deliver,
or cause to be duly executed and delivered, at its own cost and expense, such
further instruments and documents and to take all such action, in each case as
may be necessary or proper in the reasonable judgment of the Investors to carry
out the provisions and purposes of this Amendment.

 

d.              Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any party hereto,
the execution and delivery of this Amendment and the closing of the transactions
contemplated hereby.

 

e.              Governing Law. All questions concerning the construction,
interpretation and validity of this Amendment shall be governed by and construed
and enforced in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule
(whether in the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware. In furtherance of the foregoing, the internal law of the State of
Delaware will control the interpretation and construction of this Amendment,
even if under such jurisdiction’s choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily or necessarily
apply.

 

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f.              Construction. The Company and the Investors acknowledge that the
Company and its independent counsel and the Investors and their independent
counsel have jointly reviewed and drafted this document, and agree that any rule
of construction and interpretation to the effect that drafting ambiguities are
to be resolved against the drafting party shall not be employed.

 

g.             Counterparts; Facsimile and Electronic Signatures. This Amendment
may be executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such counterparts together
shall constitute but one agreement. Counterpart signatures to this Amendment
delivered by facsimile or other electronic transmission shall be acceptable and
binding.

 

h.             Headings. The section and paragraph headings contained in this
Amendment are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Amendment.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, each of the undersigned has duly executed this Seventh
Amendment to Note and Warrant Purchase Agreement as of the date first written
above. 

          COMPANY:             CareView Communications, Inc., A Nevada
corporation           By:     /s/ Steven G. Johnson       Name: Steven G.
Johnson       Title:   President  

        MAJORITY INVESTORS:           HealthCor Partners Fund, L.P.     By:
HealthCor Partners Management L.P., as Manager     By: HealthCor Partners
Management, G.P., LLC, as General Partner  

            By:     /s/ Jeffrey C. Lightcap     Name: Jeffrey C. Lightcap    
Title: Senior Managing Director             Address: HealthCor Partners      
Carnegie Hall Towers       152 West 57th Street       New York, NY 10019  

            HealthCor Hybrid Offshore Master Fund, L.P.   By: HealthCor Hybrid
Offshore G.P., LLC, as General Partner           By:     /s/ Joseph P. Healey  
  Name: Joseph P. Healey     Title: Co-CEO             Address: HealthCor
Partners       Carnegie Hall Towers       152 West 57th Street       New York,
NY 10019  

 

 

 

 

ACKNOWLEDGED AND AGREED:

 

CareView Communications, Inc., a Texas corporation 

        By:   /s/ Steven G. Johnson       Name: Steven G. Johnson       Title:
  President  

        By:   /s/ Steven G. Johnson       Name: Steven G. Johnson       Title:
  President