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Careview Communications, Inc. 8-K [careview-8k_042611.htm]
 
Exhibit 10.73

 
NOTE AND WARRANT PURCHASE AGREEMENT
 
This Note and Warrant Purchase Agreement (this “Agreement”), dated as of April
21, 2011, is made by and among CareView Communications, Inc., a Nevada
corporation (the “Company”), and the investors identified on Annex I attached
hereto (together with their respective successors and permitted assigns, the
“Investors”).
 
WHEREAS, the Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D (“Regulation D”), as promulgated by the U.S.
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended (the “Act”); and
 
WHEREAS, the Investors wish to purchase from the Company, and the Company wishes
to sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, (i) senior secured convertible notes in the form attached hereto as
Exhibit A in the initial aggregate principal amount of $20,000,000 (the
“Notes”), and (ii) warrants to purchase an aggregate of up to 11,782,859 shares
of the Company’s common stock, $0.001 par value per share (the “Common Stock”),
at an exercise price per share equal to the lesser of (i) the closing price of
the Common Stock as quoted on the OTCQB Market on the Business Day immediately
preceding the Closing Date (as defined below) or (ii) $1.40, in each case
subject to adjustment as described therein, in the form attached hereto as
Exhibit B (the “Warrants,” and together with the Notes, the “Closing
Securities”); and
 
WHEREAS, contemporaneously with the sale of the Closing Securities, the parties
hereto will execute and deliver a (i) Registration Rights Agreement, in the form
attached hereto as Exhibit C (the “Registration Rights Agreement”), pursuant to
which the Company will agree to provide the Investors with certain registration
rights under the Act, and the rules and regulations promulgated thereunder, and
applicable state securities laws, (ii) a Pledge and Security Agreement, in the
form attached hereto as Exhibit D (the "Security Agreement"), pursuant to which
the Company and certain of its Subsidiaries will grant the Investors a security
interest in the Company's and such Subsidiaries’ tangible and intangible assets
securing the Company's performance of its obligations under the Notes, and (iii)
an Intellectual Property Security Agreement, in the form attached hereto as
Exhibit E (the "IP Security Agreement").
 
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties and covenants herein contained, which represent integral components
of the transactions contemplated hereby 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.  Capitalized terms used and not otherwise defined
herein shall have the meanings given such terms in the Notes.
 
ARTICLE 1
 
PURCHASE OF THE NOTES AND THE WARRANTS
 
1.1           Issuance of Closing Securities.  Subject to the terms and
conditions of this Agreement, on the Closing Date, each of the Investors listed
on Annex I shall severally, and not
 

 
 
 

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jointly, purchase from the Company, and the Company shall sell and issue to each
Investor, the Closing Securities in the respective amounts set forth opposite
each such Investor’s name on Annex I in exchange for a cash payment by each
Investor of the respective amounts set forth opposite each such Investor’s name
on Annex I (the “Purchase Price”).
 
1.2           Closing.  The closing (the “Closing”) of the purchase and sale of
the Closing Securities shall take place simultaneously with the execution of
this Agreement or at such other time as the Company and the Investors may
mutually agree (the date on which the Closing occurs, the “Closing Date”) at the
offices of Edwards Angell Palmer & Dodge LLP, 111 Huntington Avenue, Boston,
Massachusetts, 02199, or at such other location as the Company and the Investors
shall mutually agree.  At the Closing, the Company shall deliver to the
Investors the Notes and the Warrants, each registered in such name or names as
the Investors may designate.  On the Closing Date, the Investors shall deliver
the Purchase Price to the Company, payable by wire transfer in same day funds to
an account specified by the Company in writing.
 
ARTICLE 2
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
The Company represents and warrants to the Investors that, except as set forth
in the disclosure letter delivered to the Investors by the Company concurrently
with the Closing (the "Disclosure Letter") the statements contained in this
Article 2 are true and correct as of the Closing Date as though made as of the
Closing Date, except to the extent such representations and warranties are
specifically made as of a particular date (in which case such representations
and warranties are true and correct as of such other specified date).  The
Disclosure Letter shall be arranged in sections and subsections corresponding to
the numbered and lettered sections and subsections contained in this Article 2,
but any information disclosed under any section or subsection of the Disclosure
Letter shall be deemed to be disclosed into any other section or subsection to
the extent that such other section or subsection is reasonably cross-referenced
or the relevance to such other section or subsection is reasonably apparent on
the face of the disclosure.
 
2.1           Organization, Qualifications and Corporate Power.  The Company is
a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada and, except as set forth in Section 2.1 of the
Disclosure Letter, is duly licensed or qualified to transact business as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of the business transacted by it or the character of the properties owned
or leased by it requires such licensing or qualification.  The Company and each
of its Subsidiaries has the corporate power and authority to own and hold its
properties and to carry on its business as now conducted and as proposed to be
conducted, and to execute, deliver and perform its obligations under this
Agreement, the Notes, the Warrants, the Security Agreement, the IP Security
Agreement, the Registration Rights Agreement, and any other agreements
contemplated or necessitated hereby to which it is a party (collectively, the
“Transaction Documents”).  The Company has the corporate power and authority to
issue, sell and deliver the Closing Securities, to issue and deliver the shares
of Common Stock issuable upon conversion of the Notes (the
 

 
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“Note Shares”) and to issue and deliver the shares of Common Stock issuable upon
exercise of the Warrants (the “Warrant Shares”).
 
2.2           Authorization.
 
(a)           The execution and delivery by the Company of the Transaction
Documents, the performance by the Company of its obligations thereunder, the
issuance, sale and delivery of the Closing Securities by the Company and the
reservation of the Note Shares and Warrant Shares by the Company have been duly
authorized by all requisite corporate action and will not (i) violate any
provision of law, any order of any court or other agency of government, the
Certificate of Incorporation of the Company, as amended to date (the “Charter”),
or the By-laws of the Company, as amended to date (the “By-laws”), or any
provision of any indenture, agreement or other instrument to which the Company
or any of its Subsidiaries is a party or by which any of its properties or
assets is bound, (ii) conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument, or (iii) result in the creation or imposition of
any lien, charge, restriction, claim or encumbrance of any nature whatsoever
upon any of the properties or assets of the Company or any of its Subsidiaries.
 
(b)           The Closing Securities have been duly authorized and, when issued
and delivered pursuant to this Agreement, will have been duly executed, issued
and delivered and will constitute valid and legally binding obligations of the
Company, enforceable in accordance with their terms, subject, as to enforcement,
to (i) bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors’ rights and (ii) general equity
principles.
 
(c)           The execution and delivery by each Subsidiary of the Company of
the Transaction Documents to which it is a party, and the performance by such
Subsidiary of its obligations thereunder, have been duly authorized by all
requisite corporate action and will not (i) violate any provision of law, any
order of any court or other agency of government, the organizational documents
of such Subsidiary, as amended to date, or any provision of any indenture,
agreement or other instrument to which such Subsidiary is a party or by which
any of its properties or assets is bound, (ii) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
such indenture, agreement or other instrument, or (iii) result in the creation
or imposition of any lien, charge, restriction, claim or encumbrance of any
nature whatsoever upon any of the properties or assets of such Subsidiary.
 
2.3           Capitalization.
 
(a)           The Company is authorized by its Charter to issue up to
320,000,000 shares of capital stock, of which 300,000,000 shares are designated
as Common Stock and 20,000,000 shares are designated as preferred stock, par
value $0.001 per share (the “Preferred Stock”).  As of the Closing Date, there
are 129,583,045 shares of Common Stock issued and outstanding and there are no
shares of Preferred Stock issued and outstanding.  All of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; the Note Shares and Warrant Shares issuable
upon
 

 
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conversion of the Notes and exercise of the Warrants, respectively, have been
duly authorized and reserved for issuance and, when issued, delivered and paid
for in accordance with the provisions of the Notes and the Warrants,
respectively, will be validly issued, fully paid and non-assessable; and the
issuance of Note Shares and Warrant Shares upon conversion of the Notes and
exercise of the Warrants, respectively, will not be subject to any preemptive or
similar rights.
 
(b)           The designations, powers, preferences, rights, qualifications,
limitations and restrictions in respect of each class and series of authorized
capital stock of the Company are as set forth in the Company’s Charter, and all
such designations, powers, preferences, rights, qualifications, limitations and
restrictions are valid, binding and enforceable and in accordance with all
applicable laws.  Except as set forth in Section 2.3(b) of the Disclosure
Letter, there is no commitment by the Company or any of its Subsidiaries to
issue shares, subscriptions, warrants, options, convertible securities, or other
such rights or to distribute to holders of any of its equity securities any
evidence of indebtedness or asset.  Except as provided for in the Company’s
Charter or as set forth in Section 2.3(b) of the Disclosure Letter, (i) no
Person owns of record or is known to the Company to own beneficially any share
of Common Stock, (ii) no subscription, warrant, option, convertible security, or
other right (contingent or other) to purchase or otherwise acquire equity
securities of the Company or any of its Subsidiaries is authorized or
outstanding and (iii) neither the Company nor any of its Subsidiaries has any
obligation (contingent or other) to purchase, redeem or otherwise acquire any of
its equity securities or any interest therein or to pay any dividend or make any
other distribution in respect thereof.  Except as set forth in Section  2.3(b)
of the Disclosure Letter, to the Company’s knowledge there are no voting trusts
or agreements, stockholders’ agreements, pledge agreements, buy-sell agreements,
rights of first refusal, preemptive rights or proxies relating to any securities
of the Company or any of its Subsidiaries (whether or not the Company or such
Subsidiaries is a party thereto).  All of the outstanding securities of the
Company were issued in compliance with all applicable federal and state
securities laws.
 
(c)           The outstanding shares of Common Stock are traded on the OTCQB
Market.
 
(d)           Except as set forth in Section 2.3(d) of the Disclosure Letter,
the Company has not granted registration rights to any holder of Common Stock or
any holder of any right to acquire Common Stock (whether by subscription right,
warrant, option, convertible security or other right (contingent or otherwise)),
that would be triggered by the consummation of the transactions contemplated in
this Agreement or any of the other Transaction Documents, or the performance of
the Company’s obligations hereunder or thereunder, in each case that have not
been satisfied or waived prior to the Closing Date.
 
2.4           Subsidiaries.  Except as set forth in Section 2.4 of the
Disclosure Letter, the Company has no direct or indirect Subsidiaries.  Each
direct or indirect Subsidiary of the Company is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and has
all requisite power and authority to carry on its business as presently
conducted and as proposed to be conducted.  Each direct or indirect Subsidiary
of the Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure to so qualify would have a MAC.  Except
as set forth in Section 2.4 of the
 

 
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Disclosure Letter, each direct or indirect Subsidiary of the Company is directly
or indirectly wholly-owned by the Company.
 
2.5           Legal Proceedings.  Except as set forth in Section 2.5 of the
Disclosure Letter, there are no actions, suits or proceedings at law or in
equity or by or before any governmental instrumentality or other agency or
regulatory authority now pending, or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries which, if adversely
determined, would materially and adversely affect the business, assets,
operations or condition, financial or otherwise, of the Company or any of its
Subsidiaries.  There is no action, suit or proceeding by the Company or any of
its Subsidiaries currently pending or that the Company or any of its
Subsidiaries currently intends to initiate.
 
2.6           SEC Documents; Financial Statements.  Except as set forth in
Section 2.6 of the Disclosure Letter, during the five (5) years prior to the
date hereof, the Company has filed all reports, schedules, forms, statements and
other documents required to be filed by it with the Commission pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (the "Exchange Act") (all of
the foregoing filed prior to the date hereof and all exhibits included therein
and financial statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the “SEC Documents”).
Except for those portions of exhibits to documents filed with the Commission
with respect to which the Company requested confidential treatment under the
rules of the Commission, the Company has delivered to the Investors and/or their
representatives true, correct and complete copies of the SEC Documents not
available on the EDGAR system. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the Commission promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC, or as of the date of the last amendment thereof, if amended after
filing, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the Commission with respect thereto. All such financial
statements filed with the Commission have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (“GAAP”) (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
 
2.7           Absence of Changes. Since December 31, 2010, (a) there has not
been any change, effect, event or occurrence resulting in a material adverse
effect on the business, financial condition or results of operations of the
Company or any of its Subsidiaries that has not been disclosed in the Company’s
reports filed with the Commission prior to the date of this Agreement, and (b)
neither the Company nor any of its Subsidiaries has (i) declared or paid any
dividends, (ii) sold any assets, individually or in the aggregate, in excess of
$100,000 outside of
 

 
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the ordinary course of business or (iii) had capital expenditures outside of the
ordinary course of business in excess of $250,000 individually or in the
aggregate (provided that, for the avoidance of doubt, purchases of cable boxes
and related equipment for installation of the Company's products in hospitals
shall be considered capital expenditures within the ordinary course of the
Company’s business).  Neither the Company nor any of its Subsidiaries has taken
any steps to seek protection pursuant to any bankruptcy law nor does the Company
or any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The
Company and its Subsidiaries, individually and on a consolidated basis, are not
as of the date hereof, and after giving effect to the transactions contemplated
hereby to occur at the Closing, will not be Insolvent. For purposes of this
Section 2.7, “Insolvent” means, with respect to any Person, (w) the present fair
saleable value of such Person’s assets is less than the amount required to pay
such Person’s total indebtedness (other than any future lease liabilities as
such exist on the date hereof), (x) the Person is unable to pay its debts and
liabilities (other than any future lease liabilities as such exist on the date
hereof), subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured, (y) such Person intends to incur or believes that
it will incur debts (other than any future lease liabilities as such exist on
the date hereof) that would be beyond its ability to pay as such debts mature or
(z) such Person has unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted.
 
2.8           Title to Assets; Sufficiency of Assets. Except as set forth in
Section 2.8 of the Disclosure Letter, the Company and its Subsidiaries have
good, valid and marketable title to all real property and good, valid and
marketable title to all personal property owned by them which is material to the
business of the Company and its Subsidiaries taken as a whole, in each case free
and clear of all liens, encumbrances and material defects except for Permitted
Encumbrances and except such as would not materially affect the value of such
property to, or materially interfere with the use made and currently proposed to
be made of such property by, the Company and its Subsidiaries taken as a whole.
Any real property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.  The rights, properties and other assets presently owned, leased
or licensed by the Company and its Subsidiaries include all rights, properties
and other assets necessary to permit the Company and its Subsidiaries to conduct
the business in the same manner as such business is currently being conducted
and is currently proposed to be conducted.
 
2.9           Intellectual Property Rights. Except as set forth in Section 2.9
of the Disclosure Letter, the Company and its Subsidiaries own or possess
adequate rights or licenses to use (A) patents (and any renewals and extensions
thereof), patent rights (and any applications therefor), rights of priority and
other rights in inventions; (B) trademarks, service marks, trade names and trade
dress, and all registrations and applications therefor and all legal and
common-law equivalents of any of the foregoing; (C) copyrights and rights in
mask works (and any applications or registrations for the foregoing, and all
renewals and extensions thereof), common-law copyrights and rights of authorship
including all rights to exploit any of the foregoing in any media and by any
manner and means now known or hereafter devised; (D) industrial design rights,
and all registrations and applications therefor; (E) rights in data,
 

 
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collections of data and databases, and all legal or common-law equivalents
thereof; (F) rights in domain names and domain name reservations; (G) rights in
trade secrets, proprietary information and know-how (collectively, “Intellectual
Property Rights”), collectively with all licenses and other agreements providing
the Company or its Subsidiaries the Intellectual Property Rights material to the
operation of their businesses as now conducted and as described in the SEC
Documents. Except as set forth in Section 2.9 of the Disclosure Letter, none of
the Company or any of its Subsidiaries has knowledge that any of them has
infringed on any of the Intellectual Property Rights of any Person or has
knowledge that the Company or any of its Subsidiaries is infringing on any of
the Intellectual Property Rights of any Person. There is no action, suit,
hearing, claim, notice of violation, arbitration or other proceeding, hearing or
investigation that is pending, or to the Company’s knowledge, is threatened
against, the Company or any of its Subsidiaries regarding the infringement of
any of the Intellectual Property Rights. Neither the Company nor any of its
Subsidiaries is, to its knowledge, making unauthorized use of any confidential
information or trade secrets of any third party, and the neither Company nor any
of its Subsidiaries has received any notice of any asserted infringement (nor is
the Company aware of any reasonable basis for any third party asserting an
infringement) by the Company or any of its Subsidiaries of, any rights of a
third party with respect to any Intellectual Property Rights that if proven
would have or result in a MAC. The Company and its Subsidiaries have taken
reasonable measures to protect the secrecy, confidentiality and value of all of
their Intellectual Property Rights.
 
2.10           Subsidiary Rights. Except as provided in Section 2.10 of the
Disclosure Letter, the Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its Subsidiaries as
owned by the Company or such Subsidiary.
 
2.11           Internal Accounting and Disclosure Controls. Except as set forth
in Section 2.11 of the Disclosure Letter, the Company and each of its
Subsidiaries maintain a system of internal control over financial reporting
sufficient to provide reasonable assurance (i) that the records are maintained
in reasonable detail to accurately and fairly reflect the transactions and
dispositions of the assets of the Company and its Subsidiaries (ii) that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, (iii) that receipts and expenditures of the
Company and its Subsidiaries are being made only in accordance with
authorizations of management and directors of the Company and its Subsidiaries
and (iv) regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Company’s and its Subsidiaries’ assets that could have
a material effect on the financial statements of the Company.  Except as set
forth in Section 2.11 of the Disclosure Letter or as disclosed in the SEC
Documents, the Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 promulgated under the Exchange Act) that are
effective in ensuring that information required to be disclosed by the Company
in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms of the Commission, including, without limitation, controls and
procedures designed to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure.
 

 
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2.12           Insurance.  The Company and its Subsidiaries have in full force
and effect fire and casualty insurance policies with extended coverage,
sufficient in amount (subject to reasonable deductions) to allow them to replace
any of their properties that might be damaged or destroyed.  Section 2.12 of the
Disclosure Letter sets forth a true, correct and complete list of all insurance
policies maintained as of the Closing by or on behalf of the Company and its
Subsidiaries, indicating the type of coverage, name of insured, name of
insurance carrier or underwriter, premium thereon, policy limits,
deductibles/retentions and expiration date of each policy, and sets forth a list
of all claims made under such policies for the previous three (3) years.  All
such insurance policies are in full force and effect, and neither the Company
nor any of its Subsidiaries is in default with respect to any material
obligations under any such insurance policy so as to cause a loss of coverage,
including nonpayment of premiums.  Neither the Company nor any Subsidiary has
received written notice of cancellation, non-renewal or termination in respect
of any such policy, and neither the Company nor any Subsidiary has knowledge of
any basis for such cancellation, non-renewal, termination or loss of
coverage.  There have been no time periods in the last twenty-four (24) months
in which the Company or its Subsidiaries have lacked its customary coverage
under its insurance policies, as in effect from time to time during its
existence.
 
2.13           Brokers and Finders.  Except as set forth in Section 2.13 of the
Disclosure Letter, no agent, broker, investment banker, person or firm acting on
behalf of or under the authority of the Company or any of its Subsidiaries is or
will be entitled to any broker’s or finder’s fee or any other commission or
similar fee directly or indirectly from the Company or any of its Subsidiaries
in connection with any of the transactions contemplated by this Agreement or any
of the Transaction Documents.
 
2.14           Material Contracts.  Except as set forth in Section 2.14 of the
Disclosure Letter, neither the Company nor any of its Subsidiaries has, or is
bound by:
 
(a)           any agreement, contract or commitment relating to the employment
of any person by the Company or any of its Subsidiaries, or any bonus, deferred
compensation, pension, profit sharing, stock option, employee stock purchase,
retirement or other employee benefit plan;
 
(b)           any agreement, indenture or other instrument which contains
restrictions with respect to payment of dividends or any other distribution in
respect of its capital stock;
 
(c)           any loan or advance to, or investment in, any individual,
partnership, joint venture, corporation, trust, unincorporated organization,
government or other entity or any agreement, contract or commitment relating to
the making of any such loan, advance or investment;
 
(d)           any guarantee or other contingent liability in respect of any
indebtedness or obligation of any Person (other than the endorsement of
negotiable instruments for collection in the ordinary course of business);
 
(e)           any management service, consulting or any other similar type
contract;
 

 
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(f)           any agreement, contract or commitment limiting the freedom of the
Company or any of its Subsidiaries to engage in any line of business or to
compete with any Person;
 
(g)           any agreement, contract or commitment not entered into in the
ordinary course of business which involves $100,000 or more and is not
cancelable without penalty or premium within 30 days; or
 
(h)           any agreement, contract or commitment that might reasonably be
expected to have a potential adverse impact on the business or operations of the
Company or any of its Subsidiaries other than as a result of the application and
enforcement of any default provisions thereunder.
 
 
Each contract or agreement to which the Company or any of its Subsidiaries is a
party or by which it is bound, whether or not required to be set forth in
Section 2.14 of the Disclosure Letter, is in full force and effect and there
exists no default or event of default or event, occurrence, condition or act
(including the consummation of the transactions contemplated hereby) which, with
the giving of notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder.  Neither the
Company nor any of its Subsidiaries has violated any of the terms or conditions
of any contract or agreement to which it is a party or by which it is bound,
whether or not required to be set forth in Section 2.14 of the Disclosure
Letter, in any material respect, and, to the Company’s knowledge, all of the
covenants to be performed by any other party thereto have been fully performed.

2.15           Taxes.  Except as set forth in Section 2.15 of the Disclosure
Letter, the Company and its Subsidiaries have filed or caused to be filed,
within the times and within the manner prescribed by law, all federal, state,
local and foreign tax returns and tax reports which are required to be filed by,
or with respect to the Company and its Subsidiaries. Such returns and reports
reflect accurately all liability for taxes of the Company and its Subsidiaries
for the periods covered thereby. Except as set forth in Section 2.15 of the
Disclosure Letter, all federal, state, local and foreign income, profits,
franchise, employment, sales, use, occupancy, excise and other taxes and
assessments, stock and transfer taxes (including interest and penalties) payable
by, or due from, the Company and its Subsidiaries have been fully paid and fully
provided for in the books and financial statements of the Company. No
examination of any tax return of the Company or any of its Subsidiaries is
currently in progress. There are no outstanding agreements or waivers extending
the statutory period of limitation applicable to any tax return of the Company
or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is a
party to any tax sharing contracts, agreements or arrangements.
 
2.16           Disclosure. All disclosure provided to the Investors regarding
the Company and its Subsidiaries, their business and the transactions
contemplated hereby, including in the Disclosure Letter, taken as a whole,
furnished by or on behalf of the Company, is true and correct in all material
respects and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Each press release issued by the Company during the twelve (12) months preceding
the date of this Agreement did not at the time of release contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
 

 
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the light of the circumstances under which they were made, not misleading. No
event or circumstance has occurred or information exists (other than the
consummation of the transactions contemplated hereby) with respect to the
Company or any of its Subsidiaries or its or their business, properties,
prospects, operations or financial conditions, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.
 
ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
 
Each Investor, severally and not jointly, represents and warrants to the Company
that the statements contained in this Article 3 are true and correct as of the
Closing Date as though made as of the Closing Date, except to the extent such
representations and warranties are specifically made as of a particular date (in
which case such representations and warranties are true and correct as of such
other specified date).
 
3.1           Investor is an “accredited investor” as defined by Rule 501 of
Regulation D, and Investor is capable of evaluating the merits and risks of its
investment in the Closing Securities and has the ability and capacity to protect
its interests.
 
3.2           Investor understands that, except as provided in the Registration
Rights Agreement, the Closing Securities, the Note Shares and the Warrant Shares
have not been registered under the Act on the ground that the issuance thereof
is exempt under Section 4(2) of the Act and/or Regulation D as a transaction by
an issuer not involving any public offering and that, in the view of the
Commission, the statutory basis for the exception claimed would not be present
if any of the representations and warranties of Investor contained in this
Agreement are untrue or, notwithstanding the Investor’s representations and
warranties, the Investor currently has in mind acquiring any of the Closing
Securities for resale upon the occurrence or non-occurrence of some
predetermined event.
 
3.3           Investor is purchasing the Closing Securities and, in the event
that the Investor should acquire any Note Shares or Warrant Shares, will be
acquiring such Note Shares or Warrant Shares, as applicable, as principal for
its own account, and not for the benefit of any other Person, for investment
purposes and not with a view to distribution or resale, nor with the intention
of selling, transferring or otherwise disposing of all or any part thereof for
any particular price, or at any particular time, or upon the happening of any
particular event or circumstance, except selling, transferring, or disposing of
the Closing Securities, Note Shares and Warrant Shares, as applicable, in full
compliance with all applicable provisions of the Act, the rules and regulations
promulgated by the Commission thereunder, and applicable state securities laws;
and that an investment in the Closing Securities, Note Shares and Warrant Shares
is not a liquid investment.
 
3.4           Investor confirms that Investor has had the opportunity to ask
questions of, and receive answers from, the Company or any authorized Person
acting on its behalf concerning the Company and its business and to obtain any
additional information, to the extent possessed by the Company (or to the extent
it could have been acquired by the Company without unreasonable effort or
expense) necessary to verify the accuracy of the information received by
Investor.  In
 

 
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connection therewith, Investor acknowledges that Investor has had the
opportunity to discuss the Company’s business, management and financial affairs
with the Company’s management or any authorized Person acting on its
behalf.  Investor has received and reviewed all the information concerning the
Company and the Closing Securities, both written and oral, that Investor
desires.  Without limiting the generality of the foregoing, Investor has been
furnished with or has had the opportunity to acquire, and to review all
information, both written and oral, that Investor desires with respect to the
Company’s business, management, financial affairs and prospects.  In determining
whether to make this investment, Investor has relied solely on Investor’s own
knowledge and understanding of the Company and its business based upon
Investor’s own due diligence investigations and the Company’s filings with the
Commission.
 
3.5           Investor has all requisite legal and other power and authority to
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.  This Agreement constitutes a valid and
legally binding obligation of Investor enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors’ rights and to
general equity principles.
 
3.6           Investor has carefully considered and has discussed with its
legal, tax, accounting and financial advisors, to the extent the Investor has
deemed necessary, the suitability of this investment and the transactions
contemplated by this Agreement for the Investor’s particular federal, state,
provincial, local and foreign tax and financial situation and has independently
determined that this investment and the transactions contemplated by this
Agreement are a suitable investment for the Investor.  Investor understands that
it (and not the Company) shall be responsible for Investor’s own tax liability
that may arise as a result of the investment in the Closing Securities or the
transactions contemplated by this Agreement, except as provided in Section
7.2(c).
 
3.7           Investor acknowledges that an investment in the Closing Securities
is speculative and involves a high degree of risk and that Investor can bear the
economic risk of the acceptance of the Closing Securities, including a total
loss of its investment.  Investor recognizes and understands that no federal,
state, provincial or foreign agency has recommended or endorsed the purchase of
the Closing Securities.  Investor acknowledges that it has such knowledge and
experience in financial and business matters that Investor is capable of
evaluating the merits and risks of an investment in the Closing Securities and
of making an informed investment decision with respect thereto.
 
3.8           The principal place of business of the Investor is correctly set
forth below the Investor’s name on the signature page hereto.
 
ARTICLE 4
 
CONDITIONS RELATING TO THE CLOSING
 
4.1           Conditions to the Obligations of the Investors at the
Closing.  The several obligations of each Investor to consummate the
transactions contemplated hereby on the Closing
 

 
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Date are subject to the satisfaction of the following conditions as of the
Closing Date, unless any such conditions are waived by such Investor prior to or
on the Closing Date:
 
(a)           Investor Approvals.  The Investors shall have received all
requisite approvals to consummate the transactions contemplated by this
Agreement, including from their respective investment committees.
 
(b)           Due Diligence.  The Investors shall have completed all business,
legal, accounting and technical due diligence to their sole satisfaction.
 
(c)           Transaction Documents.  The Company shall have delivered to the
Investors a counterpart of each of the Transaction Documents, in each case duly
executed by an authorized representative of the Company, with each such
Transaction Document to be in a form mutually satisfactory to the Company and
the Investors.  The Subsidiaries of the Company shall have delivered to the
Investors a counterpart of each of the Transaction Documents to which each such
Subsidiary is a party, in each case duly executed by and authorized
representative of such Subsidiary, with each such Transaction Document to be in
a form mutually satisfactory to such Subsidiary and the Investors.
 
(d)           Absence of Certain Changes.
 
(i)           The Company shall have delivered to the Investors a certificate of
a duly appointed and acting officer of the Company, dated as of the Closing
Date, certifying on behalf of the Company the absence of:
 
(A)           any event that has occurred or circumstance that exists which has
had or could reasonably be expected to result in a MAC; and
 
(B)           any event that has occurred or circumstance that exists which has
had or could reasonably be expected to result in a Market MAC.
 
(ii)           The Investors shall not have become aware of any information
that, in the good faith determination of the Investors, could reasonably be
deemed to be materially unfavorable to the Company or any of its Subsidiaries.
 
(e)           Consents, Permits, and Waivers.  The Company shall have obtained
any and all approvals, consents, permits and waivers necessary or appropriate
for the consummation of the transactions contemplated by this Agreement and the
other Transaction Documents.
 
(f)           Authorizations.  All authorizations, approvals or permits, if any,
of any governmental authority or regulatory body that are required in connection
with the lawful issuance and sale of the Closing Securities pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of the
Closing Date.
 
(g)           Representations, Warranties and Covenants.  The representations
and warranties made by the Company in Article 2 hereof and in the other
Transaction Documents shall be true and correct when made, and shall be true and
correct as of the Closing Date with
 

 
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the same force and effect as if they had been made on and as of that date.  The
Company shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by itj on or prior to the Closing Date.  As of the Closing Date, Company
shall have delivered a certificate to the foregoing effect to the Investors,
duly executed on behalf of the Company by an authorized officer thereof.
 
(h)           Secretary's Certificate.  The Company and each of its wholly-owned
Subsidiaries shall have delivered to the Investors a certificate of the
Company’s or such Subsidiary’s Secretary dated as of the Closing Date,
certifying on behalf of the Company or such Subsidiary, as applicable, the
following:
 
(i)           Copies of all of the Company’s or such Subsidiary’s resolutions
adopted by the Company’s or such Subsidiary’s Board of Directors approving and
authorizing the transactions contemplated hereby and the other Transaction
Documents and, with respect to the Company, the issuance and sale of the Closing
Securities;
 
(ii)           Attesting as to the incumbency and signature of the officers of
the Company or such Subsidiary who have authority to execute this Agreement and
the other Transaction Documents;
 
(iii)           Certifying as being complete and correct the copies attached to
such certificate of the Company's Charter and Bylaws or such Subsidiary’s
organizational documents; and
 
(iv)           A Certificate of Good Standing of the Company or such Subsidiary
from the Secretary of State of their respective states of organization, dated as
of a date not earlier than three (3) days prior to the Closing Date.
 
(i)           Insurance Certificates.  The Company shall have delivered to the
Investors evidence of all insurance policies and endorsements thereto required
by Section 5.10 of this Agreement.
 
(j)           Account Control Agreements.  The Company and each of its
wholly-owned Subsidiaries shall have obtained account control agreements from
each depository bank where the Company or such wholly-owned Subsidiary maintains
a bank account, in each case for the benefit of the Investors, in form and
substance reasonably acceptable to the Investors, which shall become operative
on the Closing Date.
 
(k)           Other Documents.  The Company shall have delivered to the
Investors such other documents and instruments relating to the transactions
contemplated by this Agreement as the Investors or their counsel may reasonably
request.
 
(l)           Opinion of Counsel to the Company.  The Investors shall have
received an opinion of counsel to the Company reasonably satisfactory to the
Investors.
 

 
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ARTICLE 5
 
AFFIRMATIVE COVENANTS
 
For so long as any Note or Warrant remains outstanding or any Investor holds any
Note Shares or Warrant Shares, the Company shall comply with each of the
following affirmative covenants, unless, in any given instance, any such
affirmative covenant is waived in writing by the Investors:
 
5.1           Board of Directors; Director Designation Rights.
 
(a)           The Company shall cause the board of directors of the Company (the
“Board of Directors”) to consist of no more than seven (7) directors, and shall
cause the compensation committee and nominating committee (or committees serving
similar functions) of the Board of Directors to consist of no more than three
(3) directors, in each case without the Investors’ express written consent.
 
(b)           The Investors holding at least a majority of the Principal amount
of the Notes outstanding, voting as a separate class, shall have the right to
designate one (1) representative (the “Investor Designee”) to serve as a member
of the Company’s Board of Directors and as a member of the compensation
committee, if any, and nominating committee, if any (or committees serving
similar functions, if any) of the Board of Directors, who shall initially be
Jeff Lightcap.
 
(c)           The Investor Designee shall only be removed from the Board of
Directors by written request of the Investors holding at least a majority of the
Principal amount of the Notes outstanding, unless such removal is for cause,
provided that upon any resignation, removal, death or disability of the Investor
Designee, the Investors holding at least a majority of the Principal amount of
the Notes outstanding shall be entitled to designate a replacement Investor
Designee.
 
(d)           In the event that the Investor Designee is removed in accordance
with Section 5.1(c) or for any reason ceases to serve as a member of the Board
of Directors during his/her term of office, the resulting vacancy on the Board
of Directors shall be filled by the Investors in accordance with the terms of
Section 5.1(b) hereof.
 
(e)           Unless otherwise determined by the vote of a majority of the
directors then in office, the Board of Directors shall meet at least quarterly
in accordance with an agreed-upon schedule.
 
(f)           The Company shall pay the reasonable out-of-pocket travel, lodging
and other related expenses of the Investor Designee that are incurred in
connection with attendance at meetings of the Board of Directors or any
committee thereof or otherwise in connection with service thereon.
 
(g)           The Company shall obtain, within thirty (30) days of the Closing
Date, from financially sound and reputable insurers satisfactory to the Board of
Directors, Directors and Officers liability insurance in an amount and on terms
and conditions satisfactory to the
 

 
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Board of Directors, and the Company will use commercially reasonable efforts to
cause such insurance policies to be maintained until such time as the Board of
Directors determines that such insurance should be discontinued.  In the event
the Company merges with another entity and is not the survivor of such merger,
or in the event the Company transfers all or substantially all of its assets,
proper provision shall be made so that the successor to the Company shall assume
the Company's obligations with respect to the indemnification of the Company's
officers and directors.
 
(h)           The Company shall provide at least thirty (30) days’ prior written
notice of all intended mailings of notices to the stockholders of the Company
for a meeting at which directors are to be elected (or an action by written
consent pursuant to which directors are to be elected), and the Investors shall
notify the Company in writing, at least ten (10) days prior to such mailing, of
the person designated as the Investor Designee for election as a director in
accordance with this Section 5.1.  If the Investors shall fail to give notice to
the Company as provided above, it shall be deemed that the Investor Designee
then serving as a director shall be the Investors’ nominee for re-election.
 
(i)           The Investors agree to execute any written consents required to
effectuate the obligations of this Agreement.
 
(j)           The Company shall take such action as is necessary to convene
meetings of its Board of Directors and meetings for the election of the
directors (or to act by written consent) in order to elect and re-elect the
Investor Designee in accordance with this Section 5.1.
 
(k)           The Company hereby represents and warrants that as of the date
hereof the transactions contemplated hereby are not inconsistent with the
Company’s Charter or By-laws and agrees that until such time as the obligations
under this Section 5.1 have expired, the Company will not take any action or
amend its Charter or By-laws in a manner inconsistent with or in derogation of
this Agreement.  The Company shall at the next meeting of stockholders of the
Company recommend that the Charter be amended to the extent necessary to
implement the provisions of this Article 5, including, without limitation, to
set a maximum board size of seven (7) members and provide that one (1) member of
the Board of Directors is to be elected by the Investors holding at least a
majority of the Principal amount of the Notes outstanding, voting as a separate
class.  The Company shall take such action as is reasonably necessary to amend
its By-laws to implement the provisions of this Article 5 and the Charter
amendments described in this Section 5.1(k).
 
(l)           Neither the Investors nor any affiliate of the Investors, shall
have any liability as a result of designating a person for election as a
director or for any act or omission by such Investor Designee in his or her
capacity as a director of the Company, nor shall the Investors have any
liability as a result of voting for any such Investor Designee in accordance
with the provisions of this Agreement.
 
5.2           Information Rights.  For so long as the Investors have the right
to appoint a member of the Board of Directors pursuant to Section 5.1 of this
Agreement, the Company shall furnish to the Investors: (a) as soon as
practicable following the conclusion of each month, an
 

 
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unaudited, consolidated income statement and statement of cash flows for such
month, and an unaudited, consolidated balance sheet and statement of
stockholders’ equity as of the end of such month, which monthly financial
statements the Investors hereby acknowledge may not be prepared in accordance
with GAAP, together with a management report with respect thereto and such other
information as the Investors may reasonably request; and (b) as soon as
practicable following the conclusion of each quarter, an unaudited, consolidated
income statement and statement of cash flows for such quarter, and an unaudited,
consolidated balance sheet and statement of stockholders’ equity as of the end
of such quarter, prepared in accordance with GAAP (except that such financial
statements may (i) be subject to normal year-end audit adjustments and (ii) not
contain all notes thereto that may be required in accordance with GAAP),
together with a management report with respect thereto and such other
information as the Investors may reasonably request.  In addition to the
foregoing, the Investors, or representatives thereof, shall have the right, upon
advance notice and during normal business hours, to inspect the books and
records of the Company for any proper purpose.
 
5.3           Minimum Cash Balance. The Company shall at all times maintain a
minimum cash balance of $5,000,000 in one or more financial institutions;
provided, that in the event the Company’s cash balance falls below such amount,
the Company shall have thirty (30) days to cure the resulting default and
deposit sufficient funds to restore the requisite minimum cash balance (it being
understood, for the avoidance of doubt, that so long as any Notes are
outstanding, such thirty day period shall run concurrently and not consecutively
with any similar cure period afforded under the Notes, and shall not extend any
period under the Notes for purposes of determining whether an Event of Default,
as defined in the Notes, has occurred).
 
5.4           Preemptive Rights.
 
(a)           In the event of any offering of New Securities (as defined below)
by the Company, each Investor, for so long as the Notes, the Warrants or any
Note Shares or Warrant Shares remain outstanding, shall have the right to
purchase a percentage of the New Securities being offered that is equal to the
percentage of the outstanding Common Stock of the Company owned by such Investor
on an as-converted basis (treating for this purpose as outstanding all shares of
Common Stock issuable upon the full exercise of the Warrants and full conversion
of the Notes then outstanding, including conversion of the maximum amount of
Interest scheduled to accrue during the First Five Year Note Period (as defined
in the Notes)); provided, however, that this right shall not apply to (i) equity
compensation grants to employees, consultants, or directors pursuant to plans or
other arrangements approved by the Board of Directors of the Company, (ii)
securities issued upon the conversion or exercise of any convertible or
exercisable securities that are outstanding as of the date hereof on the terms
in effect on such date, (iii) the issuance of securities in connection with any
underwritten public offering (excluding, for the avoidance of doubt, registered
direct offerings); (iv) securities issued upon any split, dividend, combination
or other similar event with respect to the capital stock of the Company; (v)
securities subsequently issued upon conversion, exercise or exchange of those
securities that have been issued in compliance with, or on issuance were exempt
from the preemptive rights provided for in this Section 5.4, and (vi) shares of
Common Stock or convertible securities issued or issuable in connection with
mergers, acquisitions, strategic transactions and debt financings approved by
the Board of Directors of the Company, including the Investor Designee;
provided, further, that in connection with any
 

 
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underwritten public offering, the Company will use reasonable best efforts to
allow each Investor to purchase a sufficient amount of such offered securities
so as to maintain as closely as possible such Investor’s proportionate interest
in the Company on an as-converted basis as described above (disregarding any
allocations of such offered securities that may be made by the underwriters to
Affiliates of any Investor in the ordinary course investment business of such
Affiliates).  An Investor shall be deemed to have waived its rights under this
Section 5.4 if such Investor shall have not delivered to the Company its written
election to purchase such securities within ten (10) Business Days of receipt of
the Company’s notice of such offering describing the material terms thereof
(such ten (10) Business Day period, the “Offer Period”).  If the Investors fail
to exercise their purchase right pursuant to this Section 5.4, then the Company
shall have the right, until the expiration of one hundred eighty (180) days
commencing upon the expiration of the Offer Period, to issue such New Securities
to one (1) or more third parties on terms no more favorable to the purchasers
thereof than the terms specified in the Company’s notice of such offering to the
Investors, after which the terms of this Section 5.4 shall again apply to the
Company’s offering of such New Securities.
 
(b)           For purposes of this Agreement, the term “New Securities” shall
mean securities, contract rights, notes, obligations, options, warrants, or
other rights that are directly or indirectly exercisable for, convertible into,
or exchangeable for shares of Common Stock or other capital or voting stock of
the Company.
 
5.5           Use of Proceeds.  The Company will use the net proceeds from the
sale of the Closing Securities to (a) obtain the Revolving Debt Facility; (b)
recruit and employ executives and sales personnel with experience in the
healthcare/hospital space to establish contracts and pilot programs with
hospitals, (c) expand the Company's intellectual property portfolio, (d) repay
in full certain outstanding Indebtedness identified in Section 5.5 of the
Disclosure Letter, and (e) fund working capital for general corporate
purposes.  Pending the Company’s application of such net proceeds for the
aforementioned purposes, the Company shall be allowed to invest such proceeds
only in short-term, interest-bearing, investment-grade marketable securities or
money market obligations (“Permitted Investments”).
 
5.6           Corporate Existence. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises and the corporate existence, rights and
franchises of its Subsidiaries; provided that the Company shall not be required
to preserve any such Subsidiary’s corporate existence, rights or franchises if
the Company shall determine that the preservation thereof is no longer desirable
in the conduct of such Subsidiary’s business and that the loss thereof is not
disadvantageous in any material respect to the Investors.
 
5.7           Reports by the Company.  The Company covenants to make available
to the Investors, within 15 days after the Company is required to file the same
with the Commission, copies of the annual reports and of the information,
documents, and other reports (or copies of such portions of any of the foregoing
as the Commission may from time to time by rules and regulations prescribe)
which the Company may be required to file with the Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act, or if the Company is not
required to file information, documents, or reports pursuant to either of such
sections, then to deliver to the Investors, in accordance with rules and
regulations prescribed from time to time by the
 

 
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Commission, such of the supplementary and periodic information, documents, and
reports which may be required pursuant to Section 13 of the Exchange Act; or, in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations.  At any time
when the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon
request of the Investors, the Company will promptly furnish or cause to be
furnished to the Investors, copies of the information required to be delivered
to the Investors pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) in order to permit compliance with Rule 144A in
connection with resales by holders of securities such as the Closing Securities
or the shares of Common Stock issuable thereunder.  The Company will pay the
expenses of printing and distributing to the Investors all such
documents.  Delivery of such reports, information and documents to the Investors
is for informational purposes only and the Investors’ receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company’s
compliance with any of its covenants hereunder.  The Investors acknowledge that
the Company’s provision of such documents on the Commission’s Electronic Data
Gathering and Retrieval (EDGAR) website shall be deemed “delivery” of said
documents for purposes of this Section 5.7.
 
5.8           Reservation of Shares.  The Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, not less than 120% of the number of shares of Common Stock issuable
upon full conversion of the Notes and exercise of the Warrants (the “Required
Reserve Amount”).  If at any time while any Note and/or Warrant remains
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve the
Required Reserve Amount (an “Authorized Share Failure”), then the Company shall
take all action necessary to increase the Company’s authorized shares of Common
Stock to an amount sufficient to allow the Company to reserve the Required
Reserve Amount.  Without limiting the generality of the foregoing sentence, as
soon as practicable after the date of the occurrence of an Authorized Share
Failure, but in no event later than seventy-five (75) days after the occurrence
of such Authorized Share Failure, the Company shall hold a meeting of its
stockholders for the approval of an increase in the number of authorized shares
of Common Stock.  In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its commercially
reasonable efforts to solicit its stockholders’ approval of such increase in
authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal.
 
5.9           Registration Rights.  The Investors shall have the registration
rights set forth in the Registration Rights Agreement and the Company shall
comply in all respects with all of its obligations thereunder.
 
5.10           Insurance.  The Company and its Subsidiaries shall maintain, with
financially sound, reputable and solvent companies, insurance policies
reasonably acceptable to the Investors (a) insuring their assets against loss by
fire, theft and other risks and casualties as are customarily insured against by
companies engaged in the same or a similar business, (b) insuring them against
liability for personal injury and property damages relating to their assets,
such policies to be in such amounts and covering such risks as are usually
insured against by companies engaged in the same or a similar business, and
insuring such other matters as may
 

 
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from time to time be requested by the Investors, and (c) insuring them against
business interruption in such amounts as the Investors shall deem appropriate in
the Investors’ reasonable discretion.  All general liability insurance policies
shall be endorsed in favor of the Investors as additional insureds, and all
casualty policies shall be endorsed in favor of the Investors as loss
payees.  The Company and its Subsidiaries shall provide copies of all such
insurance policies (or evidence thereof acceptable to the Investor) to the
Investors within ten (10) Business Days following the Investors’ request for the
same.  The Company and its Subsidiaries shall (i) deliver all such policies to
the Investors promptly upon the Company’s or any such Subsidiary’s receipt
thereof, (ii) pay, or cause to be paid, all premiums for such insurance on or
before the date upon which such premiums become due, (iii) upon the Investors’
request furnish to the Investors satisfactory proof of the timely making of such
payments, (iv) deliver all renewal policies to the Investors promptly upon
receipt thereof, and (v) use its commercially reasonable efforts to cause such
policies to require the insurer to give notice to the Investors of termination
of any such policy at least thirty (30) days before such termination is to be
effective.  If the Company or any of its Subsidiaries fails to provide and pay
for any such insurance, the Investors may, at their option, but shall not be
required to, pay the same and charge the Company or the applicable Subsidiary
therefor.
 
5.11           Listing.  The Company shall promptly secure the listing of all of
the Registrable Securities (as defined in the Registration Rights Agreement)
upon each national securities exchange and automated quotation system, if any,
upon which the Common Stock is then listed (subject to official notice of
issuance) and shall maintain such listing of all such Registrable Securities
from time to time issuable under the terms of the Transaction Documents. The
Company shall maintain the Common Stock’s authorization for quotation on the
OTCQB Market at any time during which its Common Stock is not listed on a
registered national securities exchange.  Neither the Company nor any of its
Subsidiaries shall take any action which would be reasonably expected to result
in the delisting or suspension of the Common Stock on the OTCQB Market, except
in connection with a transfer to a registered national securities exchange.  The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 5.11.
 
5.12           Satisfaction of Certain Liens and Encumbrances.  The Company
shall, within one hundred and eighty (180) days following the Closing Date,
cause to be paid in full all amounts necessary to satisfy and discharge those
liens and encumbrances set forth in Section 5.12 of the Disclosure Letter;
provided, however, that the foregoing condition shall be deemed satisfied if,
and solely to the extent that, the Company provides evidence to the Investors
within such one hundred and eighty (180) day period, which evidence is
acceptable to the Investors in their sole discretion, that demonstrates that the
Company does not have, or has otherwise been released from, any liability with
respect to such liens and encumbrances.
 
5.13           Compliance With Laws.  The Company and its Subsidiaries shall at
all times be in compliance with the Foreign Corrupt Practices Act; the PATRIOT
Act, and all other applicable U.S. and non-U.S. anti-money laundering laws and
regulations; and the laws, regulations and Executive Orders and sanctions
programs administered by the OFAC, including, without limitation, the Anti-Money
Laundering/OFAC Laws
 

 
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5.14           Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Closing Securities as required under Regulation D and to provide
a copy thereof to the Investors promptly after such filing. The Company shall,
on or before the Closing Date, take such action as is necessary in order to
obtain an exemption for or to qualify the Closing Securities for sale to the
Investors at the Closing pursuant to this Agreement under applicable securities
or “Blue Sky” laws of the State of New York, and shall provide evidence of any
such exemption or qualification so taken to the Investors on or prior to the
Closing Date. The Company shall make all filings and reports relating to the
offer and sale of the Closing Securities required under applicable securities or
“Blue Sky” laws of the State of New York following the Closing Date.
 
5.15            Acknowledgement and Undertaking.  The Company agrees and
acknowledges that the transactions described in Article 1 and the issuance of
shares of Common Stock upon exercise or conversion of the Closing Securities are
intended to be exempt from Section 16(b) of the Exchange Act pursuant to one or
more rules promulgated thereunder, applicable law and the Commission’s releases
and interpretations, and will, from time to time as and when requested by the
Investors, and will cause its successors and assigns to, execute and deliver or
cause to be executed and delivered, to the extent it may lawfully do so, all
such documents and instruments and take, or cause to be taken, to the extent it
may lawfully do so, all such further actions as the Investors may reasonably
deem necessary and desirable to facilitate and effect any such exemption.
 
ARTICLE 6
 
NEGATIVE COVENANTS
 
For so long as any Note or Warrant remains outstanding or any Investor holds any
Note Shares or Warrant Shares, the Company shall comply with each of the
following negative covenants, unless, in any given instance, any such negative
covenant is waived in writing by the Investors:
 
6.1           Amendments.  The Company shall not amend, restate, modify, repeal
or waive any provision of the Company’s Charter or Bylaws.
 
6.2           Change in Operations.  The Company shall not change the nature or
strategy of its principal business as it exists on the Closing Date.
 
6.3           Defaults and Breaches.  The Company shall not permit to exist any
default or breach of any contract provision beyond any grace period provided for
in any contract if the breach or default may result in any liability on the part
of the Company in excess of $50,000 or an amount in excess of $50,000 becoming
due and payable by the Company prior to its contractually stated maturity.
 
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.
 

 
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6.5           Certain Debt.  Except for Permitted Indebtedness and Indebtedness
evidenced in favor of the Investors, the Company shall not incur or suffer to
exist any Indebtedness without the prior approval of the Investors.
 
6.6           Liens and Encumbrances.  The Company shall not create, incur,
assume or suffer to exist any Lien on its assets or properties now owned or
hereafter acquired other than Permitted Encumbrances and other than pursuant to
the transactions contemplated by the Transaction Documents.
 
6.7           Sale-Leaseback Transactions.  The Company shall not enter into
directly or indirectly any sale-leaseback transactions with any other Person
without the prior approval of the Investors.
 
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.
 
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 to 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.
 
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 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) except 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 each such repurchase is
in compliance with the Company's covenants under the Revolving Debt Facility and
any other Indebtedness.
 
6.11           Gross Income Interest Rights.  The Company shall not elect to
purchase the gross income interest rights held by Tommy G. Thompson, Gerald L.
Murphy, or Dennis Langley (collectively, the “GIIR Holders”) with Common Stock
without the prior approval of the Investors, unless the Company is required by
the GIIR Holders pursuant to their contractual rights to purchase such gross
income interest rights and the Company does not have sufficient cash available
at the time such purchase is required to purchase such gross income interest
rights with cash.
 
6.12           Equity Issuance.  The Company shall not issue any capital stock
or debt or equity securities convertible into capital stock without the
Investors’ prior written consent, which consent shall not be unreasonably
withheld; provided, that the Company shall be permitted to issue shares of
Common Stock without requiring such consent to (a) employees, consultants and
advisors of the Company pursuant to incentive equity arrangements that are
approved by the compensation committee of the Board of Directors, if any, or the
Board of Directors and (b) holders of Options or Convertible Securities that are
outstanding on the Closing Date, upon the
 

 
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exercise or conversion of such Options or Convertible Securities, upon the terms
of such securities existing on the date of this Agreement.
 
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.
 
6.14           Capital Expenditures.  The Company shall not incur or contract to
incur any capital expenditures outside of the ordinary course of the Company’s
business in excess of $250,000 individually or in the aggregate over any twelve
(12) month period (provided that, for the avoidance of doubt, purchases of cable
boxes and related equipment for installation of the Company's products in
hospitals shall be considered capital expenditures within the ordinary course of
the Company’s business).
 
6.15           Certain Business Practices.  The Company shall not (a) use any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to political activity; (b) make any unlawful payment to foreign
or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violate any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (c) make any other unlawful payment in
connection with the Company’s business.
 
6.16           Loss of Collateral.  The Company shall not incur the loss, theft,
damage or destruction of an aggregate of more than One Hundred Thousand Dollars
($100,000) in fair market value of its assets, which loss, theft, damage or
destruction is not covered by insurance.
 
6.17           Subsidiaries.  The Company shall not create, establish or acquire
any direct or indirect Subsidiary.
 
6.18           Liquidation.  The Company shall not liquidate, dissolve or effect
a sale or reorganization in any form of transaction or otherwise alter its legal
status.
 
6.19           Equipment.  The Company shall not (a) permit any of its assets to
become fixtures to real property unless such real property is owned by the
Company and is subject to a first mortgage in favor of the Investors, or if such
real property is leased, is subject to a landlord’s agreement in favor of the
Investors on terms acceptable to the Investors, or (b) permit any of its assets
to become an accession to any other personal property unless such personal
property is subject to a first priority lien in favor of the Investors.
 
6.20           Subsidiary Actions.  The Company shall not cause or permit any of
its Subsidiaries to take any actions or permit to exist any circumstances that
the Company would be prohibited from taking or permitting to exist directly
pursuant to this Article 6, provided that such Subsidiaries shall be entitled to
declare and pay dividends to the Company notwithstanding the restrictions set
forth in Section 6.10.
 
ARTICLE 7
 
MISCELLANEOUS
 

 
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7.1           Definitions.  As used herein, the following terms shall have the
respective meanings set forth below or provided for in the section of this
Agreement referred to below (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
 
(a)           “Affiliate” shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
another Person or a Subsidiary of such other Person.  A Person shall be deemed
to control another Person if the controlling Person owns (on a fully diluted
basis) ten percent (10%) or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the power to direct or
cause the direction of the management or policies of the controlled Person,
whether through ownership of Indebtedness or equity securities, by contract or
otherwise.
 
(b)           “Capital Lease” means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
 
(c)           “Capital Lease Obligation” means, with respect to any Person, the
amount of the obligation of such Person as the lessee under a Capital Lease
which would, in accordance with GAAP, appear as a liability on the balance sheet
of such Person
 
(d)           “Charges” means all federal, state, county, city, municipal,
local, foreign or other governmental taxes, levies, assessments, charges or
claims, in each case then due and payable, upon or relating to (a) any property
of the Company or any of its Subsidiaries, (b) the Notes, (c) the Company’s or
any of its Subsidiaries' employees, payroll, income or gross receipts, (d) the
Company’s or any of its Subsidiaries' ownership or use of any of its property,
or (e) any other aspect of the Company’s or any of its Subsidiaries' business.
 
(e)           “knowledge” shall mean, and shall for all purposes be construed
as, the collective knowledge of the directors, officers, and management
personnel of the Company after reasonable investigation.
 
(f)           “Lien” shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, priority, security interest, lien (statutory or
otherwise), claim or encumbrance, or preference, priority or other security
arrangement held or asserted in respect of any asset, contractual deposit
arrangement, whether imposed by statute or otherwise, or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof, and filing of
or agreement to give any financing statement under the Uniform Commercial Code
of any jurisdiction) and any contingent or other agreement to provide any of the
foregoing or any other type of preferential arrangement for the purpose, or
having the effect of, protecting a creditor against loss or securing the payment
or performance of any obligation.
 
(g)           “MAC” shall mean a material adverse effect or change (a) on the
business, operations, properties, assets or condition (financial or otherwise)
of the Company or its Subsidiaries, (b) on the ability of the Company or its
Subsidiaries to pay or perform their respective obligations under this Agreement
or any of the other Transaction Documents, or
 

 
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(c) on the rights, privileges, attributes and remedies of any holder of the
Notes or any of the other Transaction Documents.
 
(h)           “Market MAC” shall mean (i) any material disruption or material
adverse change in U.S. or international financial, political or economic
conditions or currency exchange rates or exchange controls; (ii) any suspension
or material limitation of trading in securities generally on the New York Stock
Exchange or the NASDAQ Stock Market, or any setting of minimum or maximum prices
for trading on such exchange; (iii)  any suspension of trading of any securities
of the Company on any exchange or in the over-the-counter market; (iv) any
banking moratorium declared by any U.S. federal or New York authorities; or
(v) any material disruption of settlements of securities, payment or clearance
services in the United States.
 
(i)           “Material Contracts” shall mean all contracts of the Company and
its Subsidiaries that are disclosed or are required to be disclosed in Section
2.14 of the Disclosure Letter.
 
(j)           “Permitted Encumbrances” means (a) Liens in favor and for the
benefit of the Investors; (b) Liens in favor and for the benefit of the lenders
under the Revolving Debt Facility, (c) 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; (d) 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; (e)
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; (f)
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;
(g) deposits or pledges to secure obligations under workers’ compensation,
social security or similar laws, or with respect to unemployment insurance;
(h) 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; (i) 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 (j) 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.
 
(k)           “Permitted Indebtedness” shall mean (i) the Revolving Debt
Facility, and (ii) 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.
 

 
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(l)           "Person" shall mean an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof
 
(m)           “Revolving Debt Facility” shall mean a single senior secured loan
or commercial bank or similar financing, or a series thereof, of up to an
aggregate of $50,000,000 for use solely for the purpose of purchasing cable
boxes and related equipment for installation of the Company's products in
hospitals.
 
(n)           “Subsidiary” means with respect to any Person, any corporation,
association or other business entity of which 50% or more of the total voting
power of equity entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees or other governing
body thereof is at the time owned or controlled by such Person (regardless of
whether such equity is owned directly or through one or more other Subsidiaries
of such Person or a combination thereof).
 
7.2           Expenses.
 
(a)           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 and in the other Transaction Documents, including without
limitation all costs and expenses attributable to legal due diligence,
intellectual property due diligence and healthcare regulatory due diligence, up
to an aggregate amount of $150,000.  All legal fees and other out-of-pocket
costs and expenses in excess of $150,000 shall only be the responsibility of the
Company to the extent the Company provides its written consent to the same,
which consent shall not be unreasonably withheld, delayed or conditioned.
 
(b)           The Company further agrees that it will pay, and will save the
Investors harmless from, any and all liabilities, costs and expenses incurred by
the Investors in connection with the ownership of the Closing Securities
including, without limitation, any amendment or waiver of, or enforcement of,
any Transaction Document relating to the transactions contemplated hereby.
 
(c)           The Company further agrees that it will pay, and will save the
Investors harmless from, any and all Liabilities with respect to any stamp or
similar taxes which may be determined to be payable in connection with the
execution and delivery and performance of the Transaction Documents or any
modification, amendment or alteration of the terms or provisions of the
Transaction Documents (excluding any taxes on the income or gain of the
Investors).
 
7.3           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 Agreement and the other Transaction
Documents.
 
7.4           Remedies.  In case any one or more of the representations,
warranties, covenants and/or agreements set forth in this Agreement or any other
Transaction Documents shall have
 

 
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been breached by a party, the other parties may proceed to protect and enforce
its rights either by suit in equity and/or by action at law, including an action
for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Agreement or any
of the other Transaction Documents, and may exercise all remedies under the
Closing Securities.
 
7.5           Survival.  The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any party hereto,
the execution and delivery of this Agreement and the closing of the transactions
contemplated hereby.
 
7.6           Successors and Assigns.  This Agreement shall bind and inure to
the benefit of the Company and the Investors and their respective successors and
permitted assigns.  Subject to applicable federal, state and provincial
securities laws and regulations, the Investors may freely assign either this
Agreement or any of their rights, interests, or obligations hereunder without
the prior written approval of the Company.
 
7.7           Entire Agreement.  This Agreement and the other writings referred
to herein or delivered pursuant hereto (including the other Transaction
Documents) which form a part hereof contain the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous arrangements or understandings with respect thereto.
 
7.8           Notices.  All notices, requests, demands, claims, consents and
other communications delivered hereunder (whether or not required to be
delivered hereunder) shall be deemed to be sufficient and duly given if
contained in a written instrument (a) personally delivered, (b) sent by fax, (c)
sent by nationally-recognized overnight courier guaranteeing next business day
delivery or (d) sent by first class registered or certified mail, postage
prepaid, return receipt requested, in each case addressed as follows:
 
(i)           if to the Company, to:
 
CareView Communications, Inc.
405 State Highway 121
Suite B-240
Lewisville, TX 75067
 
Attention:  Chief Executive Officer
 
Fax:  (972) 403-7659
 
with a copy to:
 
Law Offices of Carl A. Generes
4358 Shady Bend Drive
Dallas, Texas 75244-7447
Attn: Carl A. Generes
Fax: (972) 715-5700

 
and
 

 
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(ii)           if to the Investors, to the addresses set forth on the signature
page hereto
 
with a copy to:

Edwards Angell Palmer & Dodge LLP
2800 Financial Plaza
Providence RI 02903
Attn:  Eugene W. McDermott, Jr.
Fax: (888) 325-9069 

or to such other address as the party to whom such notice or other communication
is to be given may have furnished to each other party in writing in accordance
herewith.  Any such notice or communication shall be deemed to have been
received (A) when delivered, if personally delivered, (B) when sent, if sent by
telecopy on a business day (or, if not sent on a business day, on the next
business day after the date sent by telecopy), (C) on the next business day
after dispatch, if sent by nationally recognized, overnight courier guaranteeing
next business day delivery, and (D) on the fifth (5th) business day following
the date on which the piece of mail containing such communication is posted, if
sent by mail.
 
7.9           Amendments, Modifications, Terminations and Waivers.  The terms
and provisions of this Agreement and the Closing Securities may not be modified,
amended or terminated, nor may any of the provisions hereof be waived,
temporarily or permanently, except pursuant to a written instrument executed by
both the Company and the Investors.  The parties expressly acknowledge and agree
that the representations and warranties and the covenants contained herein
constitute an integral component of the transactions contemplated by the this
Agreement and the Transaction Documents and the parties hereto shall be entitled
to withhold their consent in their sole and absolute discretion with respect to
any future requests for waivers of and/or modifications to such representations,
warranties and covenants (it being understood and affirmed that it is the intent
of the parties that the affirmative and negative covenants of the Company in
Articles 5 and 6 shall continue to apply following the conversion of the Notes
and exercise of the Warrants, for so long as any Investor continues to hold Note
Shares or Warrant Shares, as the case may be).
 
7.10           Governing Law; Waiver of Jury Trial.
 
(a)           All questions concerning the construction, interpretation and
validity of this Agreement 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 Agreement, 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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(b)           BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
 
7.11           No Third Party Reliance.  Anything contained herein to the
contrary notwithstanding, the representations and warranties of the Company
contained in this Agreement (a) are being given by the Company as an inducement
to the Investors to enter into this Agreement and the other Transaction
Documents (and the Company acknowledges that the Investors have expressly relied
thereon) and (b) are solely for the benefit of the Investors.  Accordingly, no
third party (including, without limitation, any holder of capital stock of the
Company) or anyone acting on behalf of any holder thereof other than the
Investors shall be a third-party or other beneficiary of such representations
and warranties and no such third party shall have any rights of contribution
against the Investors or the Company with respect to such representations or
warranties or any matter subject to or resulting in indemnification under this
Agreement or otherwise.
 
7.12           Publicity.  Neither the Investors nor the Company shall issue any
press release or make any public disclosure regarding the transactions
contemplated hereby unless such press release or public disclosure is approved
by the Investors and those parties mentioned in such press release or public
disclosure in advance.  Notwithstanding the foregoing, the parties hereto may,
in documents required to be filed by it with the Commission or other regulatory
bodies, make such statements with respect to the transactions contemplated
hereby as each may be advised by counsel is legally necessary or advisable.
 
7.13           Severability.  It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest extent permissible
under the law and public policies applied in each jurisdiction in which
enforcement is sought.  Accordingly, in the event that any provision of this
Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any
jurisdiction.  Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as to not be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
 
7.14           Independence of Agreements, Covenants, Representations and
Warranties.  All agreements and covenants hereunder shall be given independent
effect so that if a certain action or condition constitutes a default under a
certain agreement or covenant, the fact that such action or condition is
permitted by another agreement or covenant shall not affect the occurrence of
 

 
28

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such default, unless expressly permitted under an exception to such
covenant.  In addition, all representations and warranties hereunder shall be
given independent effect so that if a particular representation or warranty
proves to be incorrect or is breached, the fact that another representation or
warranty concerning the same or similar subject matter is correct or is not
breached will not affect the incorrectness of or a breach of a representation
and warranty hereunder.  The annexes, exhibits and schedules attached hereto are
hereby made part of this Agreement in all respects.
 
7.15           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.
 
7.16           Counterparts; Facsimile and Electronic Signatures.  This
Agreement 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 Agreement delivered by facsimile or other electronic
transmission shall be acceptable and binding.
 
7.17           Headings.  The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
 
*    *    *    *    *
 

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

 
COMPANY:
     
CareView Communications, Inc.
     
By:
/s/ Steven Johnson
   
Name:
Steven Johnson
   
Title:
President/COO
     
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/ Steven J. Musumeci
   
Name:
Steven J. Musumeci
   
Title:
Chief Operating Officer
     
Address:
HealthCor Partners
   
Carnegie Hall Towers
   
152 West 57th Street
   
New York, NY 10019

 
 

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Annex I

Investors

Investor
Initial Principal Amount of Note
Warrants
Purchase Price
HealthCor Partners Fund, L.P.
$9,316,000
5,488,456
$9,316,000
HealthCor Hybrid Offshore Master Fund, L.P.
$10,684,000
6,294,403
$10,684,000