Document:

ex-10_77.htm

Careview Communications, Inc. 8-K

 

 

Exhibit 10.77

 

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of April 21, 2011 by and among CareView Communications, Inc., a Nevada corporation (the “Company”) and the “Investors” parties hereto.

 

The parties hereto agree as follows:

 

1.           Certain Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings given such terms in that certain Note and Warrant Purchase Agreement dated as of April 21, 2011 by and among the Company and the Investors, as the same may be amended and/or restated from time to time (the “Note and Warrant Purchase Agreement”).  As used in this Agreement, the following terms shall have the following meanings:

 

(a)           “Common Stock” mean the Company’s common stock, par value $0.001 per share, and any securities into which such shares may hereinafter be reclassified.

 

(b)           “Effective Date” shall mean, with respect to the Registration Statement, the date on which the Registration Statement shall have been declared effective by the SEC.

 

(c)           “Effectiveness Period” shall mean the period from the Closing Date until the earlier of (i) the date on which all Registrable Securities covered by such Registration Statement, as amended from time to time, have been sold, and (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold without restriction pursuant to Rule 144.  The Company shall advise the Investors in writing when the Effectiveness Period has expired pursuant to clause (ii) of this Section 1(c).

 

(d)           “Exchange Act” means the Securities Exchange Act of 1934, as amended, together with all rules and regulations promulgated thereunder.

 

(e)           “Holders” means the Investors or any of their respective affiliates or permitted transferees.

 

(f)           “Notes” means the senior secured convertible notes issued to the Investors pursuant to the Note and Warrant Purchase Agreement, the form of which is attached to the Note and Warrant Purchase Agreement as Exhibit A.

 

(g)           “Note Shares” means the shares of Common Stock issuable upon the conversion of the Notes.

 

(h)           “Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 424(b) promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

  

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(i)           “Registrable Securities” shall mean the Note Shares, the Warrant Shares, and any other securities issued or issuable with respect to in exchange for Registrable Securities, but excluding (i) any such shares sold under an effective registration statement or (ii) any such shares sold pursuant to Rule 144 under the Securities Act.

 

(j)           “Registration Statement” means any registration statement required to be filed under this Agreement, including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

(k)           “Rule 144”, “Rule 415” and “Rule 424” mean the rules so designated as promulgated by the SEC under the Securities Act.

 

(l)           “SEC” means the U.S. Securities and Exchange Commission.

 

(m)           “Securities Act” means the Securities Act of 1933, as amended, together with all rules and regulations promulgated thereunder

 

(n)           “Warrants” means the warrants to purchase shares of Common Stock issued to the Investors pursuant to the Note and Warrant Purchase Agreement, the form of which is attached to the Note and Warrant Purchase Agreement as Exhibit B.

 

(o)           “Warrant Shares” means the shares of Common Stock issuable upon the exercise of the Warrants.

 

2.           Registration.

 

(a)           Demand Registration.  At any time following the Closing Date but prior to the expiration of the Effectiveness Period, if the Company shall be requested (a “Registration Request”) by Holders holding at least a majority of the then outstanding Registrable Securities to effect the registration under the Securities Act of Registrable Securities, then the Company shall (i) within five (5) days of the receipt of such Registration Request, give written notice of such request to all Holders describing the terms of such registration and, in the case of an Underwriting Request under Section 4 of this Agreement, describing the underwriting in which such securities are proposed to be sold and (ii) as soon as practicable (and in the case of an offering to be made on a continuous basis under Rule 415 or any other Registration Request not involving an Underwriting Request, in no event later than thirty (30) days following the Registration Request) cause to be prepared and filed with the SEC a Registration Statement providing for the resale of all Registrable Securities which Holders request to be registered.  The Registration Statement shall be on Form S-3 if the Company is then eligible to register for resale the Registrable Securities on such form (a “Short Form Registration”).  If the Company is not then eligible to register for resale the Registrable Securities on Form S-3, such registration shall be on Form S-1 or another appropriate form in accordance herewith (a “Long Form Registration”).  The Company shall cause the Registration Statement to be declared effective under the Securities 

 

  

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Act as promptly as possible after the filing thereof (and in the case of an offering to be made on a continuous basis under Rule 415 or any other Registration Request not involving an Underwriting Request, in no event later than either of (A) one hundred and eighty (180) calendar days following the date of the Registration Request or (B) five (5) Business Days following notification by the staff of the SEC to the Company that there will be no review of the Registration Statement or, if comments have been given, that the staff will have no further comments with respect thereto). The Company shall keep the Registration Statement continuously effective under the Securities Act until the date when all Registrable Securities covered by such Registration Statement have been sold.  Reference is made to the Registration Default Payments (as such term is defined in the Notes) set forth in Section 10(e) of the Notes and Section 5.7 of the Note and Warrant Purchase Agreement. The Company shall not be obligated to file and cause to become effective more than three (3) Registration Statements under a Long Form Registration pursuant to this Section 2(a). A Registration Statement shall not be counted for purposes of the foregoing until such time as such Registration Statement has been declared effective by the SEC and all of the Registrable Securities offered pursuant to such Registration Statement are sold thereunder upon the price and terms offered. There shall be no limitation on the number of Short Form Registrations pursuant to this Section 2(a). Notwithstanding anything to the contrary contained herein, (X) if the SEC specifically prohibits the Registration Statement from including all Registrable Securities (“SEC Guidance”) (provided that the Company shall advocate with the SEC for the registration of all or the maximum number of the Registrable Securities permitted by SEC Guidance to be included in such Registration Statement, such maximum number, the “Rule 415 Amount”), then the Company will not be in breach of this provision by following such SEC Guidance, and the Company will file such additional Registration Statements at the earliest practicable date on which the Company is permitted by SEC Guidance to file such additional Registration Statements related to the Registrable Securities, each registering the Rule 415 Amount, seriatim, until all of the Registrable Securities have been registered (and no such additional Registration Statements counting toward any limitation on the number of demands hereunder), and (Y) the Company shall not be required to make any demand registration under this Section 2(a) unless the maximum aggregate offering price of the Registrable Securities requested to be so registered is expected to equal or exceed $5 million.

(b)           Each Holder will furnish to the Company in writing the information specified in Item 507 and/or 508 of Regulation S-K, as applicable, of the Securities Act for use in connection with any Registration Statement or prospectus or preliminary prospectus included therein.  Each Holder agrees to promptly furnish additional information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

 

(c)           The Company shall notify each Holder in writing promptly (and in any event within one business day) after receiving notification from the SEC that a Registration Statement has been declared effective.

 

(d)           Any Registration Statement required hereunder shall contain (except if otherwise directed by the Holders of at least a majority of the Registrable Securities included in such Registration Statement) the “Plan of Distribution” attached hereto as Annex A.

  

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3.           Registration Procedures.  In connection with the Company’s registration obligations hereunder, the Company shall:

 

(a)           (i) prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep the Registration Statement continuously effective as to the Registrable Securities until the earlier of the date when all Registrable Securities covered by such Registration Statement have been sold or the end of the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; and (iii) respond as promptly as reasonably possible to any comments received from the SEC with respect to the Registration Statement or any amendment thereto (and in any event within ten (10) Business Days following receipt by the Company of such comments) and as promptly as reasonably possible provide each Holder copies of all correspondence from and to the SEC relating to the Registration Statement.

 

(b)           Notify each Holder as promptly as reasonably possible, and confirm such notice in writing no later than one (1) trading day thereafter, of any of the following events:  (i) the SEC notifies the Company whether there will be a “review” of the Registration Statement; (ii) the SEC comments in writing on the Registration Statement (in which case the Company shall deliver to each Holder a copy of such comments and of all written responses thereto); (iii) the SEC or any other Federal or state governmental authority in writing requests any amendment or supplement to the Registration Statement or Prospectus or requests additional information related thereto; (iv) if the SEC issues any stop order suspending the effectiveness of the Registration Statement or initiates any Proceeding (as defined in Section 6(c)) for that purpose; (v) the Company receives notice in writing of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vi) the financial statements included in the Registration Statement become ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference is untrue in any material respect or any revision to the Registration Statement, Prospectus or other document is required so that it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(c)           Use its reasonable best efforts to avoid the issuance of or, if issued, obtain the withdrawal of: (i) any order suspending the effectiveness of the Registration Statement or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

 

(d)           Promptly deliver to each Holder, without charge, such reasonable number of copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Holder may reasonably request.  The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by the Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.

  

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(e)           (i)  In the time and manner required by the OTCQB Market and any other market on which the Registrable Securities are traded (each, a “Principal Market”), prepare and file with each Principal Market an additional shares listing application covering all of the Registrable Securities and a notification form regarding the change in the number of the Company’s outstanding Shares, in each case to the extent required by such market; (ii) take all steps necessary to cause such Registrable Securities to be approved for listing or quotation on each Principal Market as soon as possible thereafter; (iii) provide to each Holder notice of such listing or quotation; and (iv) maintain the listing or quotation of such Registrable Securities on each Principal Market.

 

(f)           Prior to any public offering of Registrable Securities, register or qualify or cooperate with the Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or “blue sky” laws of such jurisdictions within the United States as any Holder requests in writing, to keep each such registration or qualification (or exemption therefrom) effective until the date when all Registrable Securities covered by such Registration Statement have been sold and to do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by a Registration Statement; provided, however, that the Company shall not be required for any such purpose to: (i) qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not be otherwise required to qualify but for the requirements of this Section (3)(f), or (ii) subject itself to taxation.

 

(g)           Upon the occurrence of any event described in Section (3)(b)(vi) above, as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Company may suspend sales pursuant to the Registration Statement for a period (such period being a “Blackout Period”) of up to sixty (60) days (unless the Holders of at least a majority of the Registrable Securities consent in writing to a longer delay of up to an additional thirty (30) days) no more than once in any twelve-month period if the Company furnishes to the Holders a certificate signed by the Company’s Chief Executive Officer stating that in the good faith judgment of the Company’s Board of Directors: (i) the offering could reasonably be expected to materially interfere with an acquisition, corporate reorganization or other material transaction then under consideration by the Company or (ii) there is some other material development relating to the operations or condition (financial or other) of the Company that has not been disclosed to the general public and as to which it is in the Company’s best interests not to disclose; provided further, however, that the Company may not so suspend sales more than once in any calendar year without the written consent of the Holders of at least a majority of the Registrable Securities.

 

(h)           Comply with all applicable rules and regulations of the SEC and each Principal Market with respect to the Company’s obligations hereunder.

  

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4.           Underwritten Offerings.

 

(a)           At the request (an “Underwriting Request”) of the Holders of at least a majority of the then outstanding Registrable Securities (the “Requesting Stockholders”), the distribution of the Registrable Securities covered by a Registration Statement filed or to be filed pursuant to Section 2 hereof shall be effected by means of an underwriting.

 

(b)           In the event of an Underwriting Request, the Company, together with all Holders proposing to distribute their securities through such underwriting (the “Participating Stockholders”), shall enter into an underwriting agreement in customary form with the managing underwriter(s) selected for such underwriting by the Requesting Stockholders, which underwriter(s) shall be reasonably acceptable to the Company; provided, however, that no Holder shall be required to make any representations or warranties concerning the Company or its business, properties, prospects, financial condition or related matters.  Notwithstanding any other provision of this Section 4, if the managing underwriter(s) advises the Company and the Participating Stockholders in writing that because the number of shares requested by the Participating Stockholders to be included in the registration exceeds the number which can be sold in an orderly manner in such offering within a price range acceptable to the Requesting Stockholders or that marketing factors require a limitation of the number of shares to be underwritten on behalf of the Participating Stockholders (the “Underwritten Registration Cutback”), and such Underwritten Registration Cutback results in less than all of the Registrable Securities of the Participating Stockholders that are requested to be included in such registration to actually be included in such registration, then the Company will include in such registration, to the extent of the number which the Company is so advised can be sold in (or during the time of) such offering without such interference or affect on the price or sale, such number of Registrable Securities shared pro rata among all of the Participating Stockholders based on the total number of Registrable Securities held by each such Participating Stockholder.  For the avoidance of doubt, the Company shall not sell shares in any underwritten offering in connection with a Registration Statement filed pursuant to Section 2 in the event of an Underwritten Registration Cutback.

 

(c)           In the event of an Underwriting Request, the Company shall

 

(i)           cooperate with the Participating Stockholders, the underwriters participating in the offering and their counsel in any due diligence investigation reasonably requested by the Participating Stockholders or the underwriters in connection therewith, and participate, to the extent reasonably requested by the Participating Stockholders and the underwriter for the offering, in efforts to sell the Registrable Securities under the offering (including, without limitation, participating in “roadshow” meetings with prospective investors) that would be customary for underwritten primary offerings of a comparable amount of equity securities by the Company;

 

(ii)          cooperate, to the extent reasonably requested, with each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with each Principal Market;

  

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(iii)         afford the Requesting Stockholders with the opportunity to participate in the drafting of the registration statement and the documentation relating thereto;

 

(iv)         furnish, on the date on which such Registrable Securities are sold to the underwriter, (A) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (B) a “comfort” letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters; and

 

(v)          take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby.

 

5.           Registration Expenses.  The Company shall pay all fees and expenses incident to the performance of or compliance with this Agreement by the Company, including without limitation: (a) all registration and filing fees and expenses, including without limitation those related to filings with the SEC, each Principal Market and in connection with applicable state securities or “Blue Sky” laws, (b) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing copies of Prospectuses reasonably requested by a Holder), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, and (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement.  The Company shall also pay the reasonable fees and expenses of one counsel to the Holders (selected by the Holders of at least a majority of the Registrable Shares to be registered on such applicable Registration Statement), except that the Company be required to pay the fees and expenses of counsel to the Holders in connection with a Short Form Registration only with respect to the first two (2) such Short Form Registrations.  Each Holder shall pay any and all costs, fees, discounts or commissions attributable to the sale of its respective Registrable Securities.

 

6.           Indemnification.

 

(a)           Indemnification by the Company.  In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless each of the Holders, and their respective officers, directors, members, partners, employees, representatives, agents and each other Person, if any, who controls or is an affiliate of such Holder within the meaning of the Securities Act, against any losses, claims, damages or liabilities (collectively, “Losses”), to which such Holder, or such Persons may become subject under the Securities Act or otherwise, insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Holder, and each such Person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such Losses; provided, however, that the Company will not be liable in any such case if and to the extent that any such Losses arise out of or are based upon: (i) an untrue statement or alleged untrue statement or omission or alleged omission so made in 

 

  

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conformity with information furnished by or on behalf of such Holder or any such Person in writing specifically for use in any such document and specifically relating to such Holder, (ii) the failure of a Holder to deliver a Prospectus, to the extent that such Holder was required to do so under applicable securities laws, or (iii) in the case of an occurrence of an event of the type specified in Section (3)(b)(iii)-(vi) above, the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 7 below.

(b)           Indemnification by Holders.  In the event of a registration of the Registrable Securities under the Securities Act pursuant to this Agreement, each Holder will severally, but not jointly, indemnify and hold harmless the Company, its directors, each of its officers who signs the Registration Statement, and each other Person, if any, who controls the Company within the meaning of the Securities Act, against all Losses to which the Company or such Persons may become subject under the Securities Act or otherwise, insofar as such Losses arise out of or are based upon any untrue statement or alleged untrue statement of any material fact in the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such Person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such Losses; provided, however, that a Holder will be liable in any such case if and only to the extent that any such Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing to the Company by or on behalf of such Holder specifically for use in any such document and specifically relating to such Holder.

 

(c)           Conduct of Indemnification Proceedings.  If any action, claim, suit, investigation or proceeding (a “Proceeding”) shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof, provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have prejudiced the Indemnifying Party.  An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it 

  

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elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party); provided, however, that in the event that the Indemnifying Party shall be required to pay the fees and expenses of separate counsel, the Indemnifying Party shall only be required to pay the fees and expenses of one separate counsel for such Indemnified Party or Parties.  The Indemnifying Party shall not be liable for any settlement of any such Proceeding affected without its written consent, which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.  All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten trading days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d)           Contribution.  If a claim for indemnification under Section 6(a) or (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or related to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 6 was available to such party in accordance with its terms.

 

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.  No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

  

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(e)           Notwithstanding the provisions of this Section 6, no Holder shall be required to pay indemnification or to contribute, in the aggregate, any amount in excess of the amount of proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding.

 

(f)           The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

 

7.           Dispositions.  Each Holder agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.  Each Holder further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(b)(iii)-(vi), such Holder will discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement contemplated by Section 3(g), or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement.

 

8.           Piggy-Back Registrations.  If at any time during the Effectiveness Period, the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to the each Holder written notice of such determination and if, within fifteen (15) days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered.  Notwithstanding the foregoing, if the Company’s proposed registration of equity securities hereunder is, in whole or in part, an underwritten public offering, and the managing underwriter of such proposed registration determines and advises in writing that the inclusion of all Registrable Securities proposed to be included in the underwritten public offering, together with any other issued and outstanding shares of the Company’s common stock proposed to be included therein (such other shares hereinafter collectively referred to as the “Other Shares”), would interfere with the successful marketing of the Company’s securities, then the total number of such securities proposed to be included in such underwritten public offering shall be reduced, (i) first by the shares requested to be included in such registration by the holders of Other Shares, and (ii) second, if necessary, (A) one-half (1⁄2) by the securities proposed to be issued by the Company, and (B) one-half (1⁄2) by the Registrable Securities proposed to be included in such registration by the Holders, on a pro rata basis, based upon the number of Registrable Securities then held by each such Holder. The shares of the Company’s common stock that are excluded from the underwritten public offering pursuant to the preceding sentence shall be withheld from the market by the holders thereof for a period, not to exceed 90 days from the closing of such underwritten public offering, that the managing underwriter reasonably determines as necessary in order to effect such underwritten public offering.  Notwithstanding anything to the contrary contained herein, the amount of Registrable Securities required to be included in the initial Registration Statement as described in this Section 8 shall be equal to the lesser of (a) the amount of Registrable Securities that Holders request to have so registered pursuant to this Section 8 and (b) the maximum amount of Registrable Securities which may be included in a Registration Statement without exceeding the Rule 415 Amount.

  

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9.           Reports Under Exchange Act.  With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company  to the public without registration, the Company shall:

 

(a)           make and keep public information available, as those terms are understood and defined in Rule 144, at all times after the date hereof and so long as the Company is subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act;

 

(b)           file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(c)           furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the Securities Act and the Exchange Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

 

10.           Mergers.  The Company shall not, directly or indirectly, enter into any merger, consolidation or reorganization in which the Company shall not be the surviving corporation unless the proposed surviving corporation shall, prior to such merger, consolidation or reorganization, agree in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to “Registrable Securities” shall be deemed to be references to the securities which the Holders would be entitled to receive in exchange for Registrable Securities under any such merger, consolidation or reorganization, provided, however, that the provisions of this Agreement shall not apply in the event of any merger, consolidation or reorganization in which the Company is not the surviving corporation if the Holders are entitled to receive in exchange therefor (i) cash or (ii) securities of the acquiring corporation which may be immediately sold to the public pursuant to an effective registration statement under the Securities Act or pursuant to an exemption therefrom which permits sales without limitation as to volume or the manner of sale on an Eligible Market (as defined in the Notes).

 

11.           Miscellaneous.

  

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(a)           Governing Law. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of Delaware, without giving effect to principles of conflicts of law or choice of law that would cause the laws of any other jurisdiction to apply.

 

(b)           Transfer of Registration Rights.  Any Holder that is a partnership, corporation or limited liability company may transfer or assign its registration rights provided pursuant to this Agreement with respect to any Registrable Securities to any partner, shareholder, member or affiliate of such Holder; provided, however, that (i) such Holder shall give the Company written notice prior to the time of such transfer or assignment stating the name and address of the transferee and identifying the Registrable Securities with respect to which the rights under this Agreement are being transferred and (ii) such transferee or assignee agrees in writing, the form and substance of which shall be reasonably satisfactory to the Company, to be bound as a Holder by the provisions of this Agreement, following which any such transferee or assignee shall be deemed a “Holder” pursuant to this Agreement.

 

(c)           Amendment, Waiver and Termination. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively) and this Agreement may be terminated, only upon the written consent of both the Company and the Holders of not less than a majority of the then outstanding Registrable Securities.

 

(d)           Entire Agreement. This Agreement, the Notes, the Warrants, the Note and Warrant Purchase Agreement, the Security Agreement and the IP Security Agreement constitute the entire agreement between the parties relative to the specific subject matter hereof. Any previous agreement among the parties relative to the specific subject matter hereof is superseded by this Agreement.

 

(e)           Third Party Beneficiaries.  There shall be no third party beneficiaries or intended beneficiaries of this Agreement.

 

(f)           Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given in accordance with the Note and Warrant Purchase Agreement.

 

(g)           Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

(h)           Counterparts.  This Agreement may be executed in counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile or other electronic transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

 

  

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(i)           Successors and Assigns.  The provisions hereof shall inure to the benefit of, and be binding upon, the successors and assigns of the parties hereto.

 

(j)           Independent Nature of Holders’ Obligations and Rights.  The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder.  Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement.  Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose.

 

(k)           Remedies.  In the event of a breach by the Company or by a Holder, of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement.

 

(l)           Titles and Subtitles.                                The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

 

 

[Signature Pages Follow]

  

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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date and year first set forth above.

	  	  	
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

	  	  	
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

 

  

  

  

ANNEX A

 

Plan of Distribution

 

The shares covered by this prospectus may be offered and sold from time to time by the selling stockholders. The term “selling stockholder” includes pledgees, donees, transferees or other successors in interest selling shares received after the date of this prospectus from each selling stockholder as a pledge, gift, partnership distribution or other non-sale related transfer. The number of shares beneficially owned by a selling stockholder will decrease as and when it effects any such transfers. The plan of distribution for the selling stockholders’ shares sold hereunder will otherwise remain unchanged, except that the transferees, pledgees, donees or other successors will be selling stockholders hereunder. To the extent required, we may amend and supplement this prospectus from time to time to describe a specific plan of distribution.

 

The selling stockholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. The selling stockholders may make these sales at prices and under terms then prevailing or at prices related to the then current market price. The selling stockholders may also make sales in negotiated transactions. The selling stockholders may offer their shares from time to time pursuant to one or more of the following methods:

 

	
  

 

	
•

 

	  	
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

	  	
•

 

	  	
one or more block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

	  	
•

 

	  	
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

	
  

 

	
•

 

	  	
an exchange distribution in accordance with the rules of the applicable exchange;

 

	
  

 

	
•

 

	  	
publicly or privately negotiated transactions;

 

	
  

 

	
•

 

	  	
on the OTCQB (or on or through the facilities of any national securities exchange or U.S. inter-dealer quotation system of a registered national securities association, on which the shares are then listed, admitted to unlisted trading privileges or included for quotation);

 

	
  

 

	
•

 

	  	
through underwriters, brokers or dealers (who may act as agents or principals) or directly to one or more purchasers;

 

	
  

 

	
•

 

	  	
a combination of any such methods of sale; and

 

	
  

 

	
•

 

	  	
any other method permitted pursuant to applicable law.

 

  

  

  

In connection with distributions of the shares or otherwise, the selling stockholders may, to the extent permitted by applicable law:

 

	
  

 

	
•

 

	  	
enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares in the course of hedging the positions they assume;

 

	
  

 

	
•

 

	  	
sell the shares short and redeliver the shares to close out such short positions;

 

	
  

 

	
•

 

	  	
enter into option or other transactions with broker-dealers or other financial institutions which require the delivery to them of shares offered by this prospectus, which they may in turn resell; and

 

	
  

 

	
•

 

	  	
pledge shares to a broker-dealer or other financial institution, which, upon a default, they may in turn resell.

 

 

In addition to the foregoing methods, the selling stockholders may offer their shares from time to time in transactions involving principals or brokers not otherwise contemplated above, in a combination of such methods or described above or any other lawful methods. The selling stockholders may also transfer, donate or assign their shares to lenders, family members and others and each of such persons will be deemed to be a selling stockholder for purposes of this prospectus. The selling stockholders or their successors in interest may from time to time pledge or grant a security interest in some or all of the shares of common stock, and if the selling stockholders default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from to time under this prospectus; provided however in the event of a pledge or then default on a secured obligation by the selling stockholder, in order for the shares to be sold under this registration statement, unless permitted by law, we must distribute a prospectus supplement and/or amendment to this registration statement amending the list of selling stockholders to include the pledgee, secured party or other successors in interest of the selling stockholder under this prospectus.

 

The selling stockholders may also sell their shares pursuant to Rule 144 under the Securities Act, which permits limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions.

 

Sales through brokers may be made by any method of trading authorized by any stock exchange or market on which the shares may be listed or quoted, including block trading in negotiated transactions. Without limiting the foregoing, such brokers may act as dealers by purchasing any or all of the shares covered by this prospectus, either as agents for others or as principals for their own accounts, and reselling such shares pursuant to this prospectus. The selling stockholders may effect such transactions directly, or indirectly through underwriters, broker-dealers or agents acting on their behalf. In effecting sales, broker-dealers or agents engaged by the selling stockholders may arrange for other broker-dealers to participate. Broker-dealers or agents may receive commissions, discounts or concessions from the selling stockholders, in amounts to be negotiated immediately prior to the sale (which compensation as to a particular broker-dealer might be in excess of customary commissions for routine market transactions).

 

  

  

  

 

In offering the shares covered by this prospectus, the selling stockholders, and any broker-dealers and any other participating broker-dealers who execute sales for the selling stockholders, may be deemed to be “underwriters” within the meaning of the Securities Act in connection with these sales. Any profits realized by the selling stockholders and the compensation of such broker-dealers may be deemed to be underwriting discounts and commissions.

 

The Company is required to pay all fees and expenses incident to the registration of the shares other than underwriting commissions and discounts of the underwriters in an underwritten offering by the selling stockholders.

 

The Company and the selling stockholders have agreed to indemnify each other against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.ex-10_78.htm

Careview Communications, Inc. 8-K

 

 

Exhibit 10.78

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from time to time, the “Security Agreement”) is entered into as of April 21, 2011 by and among CareView Communications, Inc., a Nevada corporation (“CareView NV”), CareView Communications, Inc., a Texas corporation (“CareView TX”), CareView Operations, LLC, a Texas limited liability company (“CareView LLC” and together with CareView NV and CareView TX, collectively referred to herein as the “Grantor”), and HealthCor Partners Fund, L.P., a Delaware limited partnership (“HealthCor Partners”) and HealthCor Hybrid Offshore Master Fund L.P., a Caymen Islands limited partnership (“HealthCor Offshore” and together with HealthCor Partners, the “Secured Parties”).

 

PRELIMINARY STATEMENT

 

Reference is hereby made to that certain Note and Warrant Purchase Agreement dated as of April 21, 2011 (as it may be amended or modified from time to time, the “Purchase Agreement”) by and among CareView NV and the Secured Parties.  CareView NV is entering into this Security Agreement in order to induce the Secured Parties to enter into, and to advance the Purchase Price to CareView NV under, the Purchase Agreement and to secure all of the obligations of CareView NV to the Secured Parties under the Purchase Agreement and the other Transaction Documents (the “Obligations”). CareView TX and CareView LLC are entering into this Security Agreement as a result of the substantial direct and indirect financial benefit they will derive from the Secured Parties’ purchase of the Notes from CareView NV and because the Secured Parties have required them to be parties hereto as a condition precedent to the consummation of the transactions contemplated in the Purchase Agreement.

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants set forth herein, the Grantor and the Secured Parties hereby agree as follows:

 

ARTICLE I

DEFINITIONS

1.1.           Terms Defined in Purchase Agreement.  All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Purchase Agreement.

 

1.2.           Terms Defined in UCC.  Terms defined in the UCC which are not otherwise defined in this Security Agreement are used herein as defined in the UCC.

 

1.3.           Definitions of Certain Terms Used Herein.  As used in this Security Agreement, in addition to the terms defined in the Preliminary Statement, the following terms shall have the following meanings:

 

“Accounts” shall have the meaning set forth in Article 9 of the UCC.

 

“Article” means a numbered article of this Security Agreement, unless another document is specifically referenced.

 

“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 Grantor, (b) the Notes, (c) the Grantor’s employees, payroll, income or gross receipts, (d) the Grantor’s ownership or use of any of its property, or (e) any other aspect of the Grantor’s business.

  

  

  

“Chattel Paper” shall have the meaning set forth in Article 9 of the UCC.

 

“Collateral” shall have the meaning set forth in Article II.

 

“Commercial Tort Claims” means “commercial tort claims” as set forth in Article 9 of the UCC and shall include, without limitation, any existing commercial tort claims of the Grantor set forth in Exhibit C-2 attached hereto.

 

“Contracts” means, collectively, all of the Grantor’s rights and remedies under, and all moneys and claims for money due or to become due to the Grantor under all contracts and other agreements between the Grantor and any party (other than the Secured Parties) and all amendments, supplements, extensions, and renewals thereof, including all rights and claims of the Grantor now or hereafter existing: (a) under any insurance, indemnities, warranties, and guarantees provided for or arising out of or in connection with any of the foregoing agreements; (b) for any damages arising out of or for breach or default under or in connection with any of the foregoing agreements; (c) to all other amounts from time to time paid or payable under or in connection with any of the foregoing agreements; or (d) to exercise or enforce any and all covenants, remedies, powers and privileges under or in connection with any of the foregoing agreements.

 

“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.

 

“Control Agreement” means an agreement, in form and substance satisfactory to the Secured Parties, among (i) the Grantor, (ii) a banking institution, securities broker or securities intermediary at which the Grantor maintains a Deposit Account or a securities account, and (iii) the Secured Parties, providing for the Secured Parties to have Control over the funds or securities and other financial assets held in such Deposit Account or securities account.

 

“Copyrights” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:  (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to sue for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.

 

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Deposit Accounts” shall have the meaning set forth in Article 9 of the UCC.

 

“Documents” shall have the meaning set forth in Article 9 of the UCC.

 

“Equipment” shall have the meaning set forth in Article 9 of the UCC.

 

“Event of Default” shall have the meaning set forth in Section 5.1.

 

“Exhibit” refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced.

 

“Fixtures” shall have the meaning set forth in Article 9 of the UCC.

  

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“General Intangibles” shall have the meaning set forth in Article 9 of the UCC.

 

“Goods” shall have the meaning set forth in Article 9 of the UCC.

 

“Instruments” shall have the meaning set forth in Article 9 of the UCC.

 

“Inventory” shall have the meaning set forth in Article 9 of the UCC.

 

“Investment Property” shall have the meaning set forth in Article 9 of the UCC.

 

“Letter-of-Credit Rights” shall have the meaning set forth in Article 9 of the UCC.

 

“Licenses” means, with respect to any Person, all of such Person’s right, title, and interest in and to (a) any and all licensing agreements or similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to sue for past, present, and future breaches thereof.

 

“Patents” means, with respect to any Person, all of such Person’s right, title, and interest in and to:  (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.

 

“Permitted Encumbrances” means (a) Liens in favor and for the benefit of the Secured Parties; (b) Liens in favor and for the benefit of the lenders under the Revolving Debt Facility (as defined in the Purchase Agreement), (c) non-exclusive licenses of the Grantor’s intellectual property granted to hospitals in the ordinary course of the Grantor’s business pursuant to the Grantor’s hospital contracts; (d) non-exclusive licenses of the Grantor’s intellectual property granted to subsidiaries of the Grantor in connection with existing joint venture transactions and future joint venture transactions entered into by the Grantor 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 Grantor 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 Grantor 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 Grantor; 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 Grantor’s owned, leased or licensed real property for its intended purpose in connection with the business.

 

“Pledged Collateral” means all Instruments, Securities and other Investment Property of the Grantor, whether or not physically delivered to the Secured Parties pursuant to this Security Agreement.

 

“Receivables” means, with respect to the Grantor, all rights to payment, whether or not earned by performance, for goods or other property sold, leased, licensed, assigned or otherwise disposed of, or services rendered, including, without limitation, all such rights constituting or evidenced by an Account, Chattel Paper, Document, Investment Property, Instrument, or any other right or claim to receive money which is a General Intangible or which is otherwise included as Collateral.

  

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“Section” means a numbered section of this Security Agreement, unless another document is specifically referenced.

 

“Security” has the meaning set forth in Article 8 of the UCC.

 

“Stock Rights” means all dividends, instruments or other distributions and any other right or property which the Grantor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in substitution for, or in exchange for any Equity Interest constituting Collateral, any right to receive an Equity Interest and any right to receive earnings, in which the Grantor now has or hereafter acquires any right, issued by an issuer of such Equity Interest.

 

“Supporting Obligations” shall have the meaning set forth in Article 9 of the UCC.

 

“Trademarks” means, with respect to any Person, all of such Person’s right, title, and interest in and to the following:  (a) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (f) all rights corresponding to any of the foregoing throughout the world.

 

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of Delaware or of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, the Secured Parties’ Lien on any Collateral.

 

The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

 

ARTICLE II

GRANT OF SECURITY INTEREST

2.1.           Grant of Security Interest.  The Grantor hereby pledges, assigns and grants to the Secured Parties a security interest in all of its right, title and interest in, to and under all personal property and other tangible and intangible assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of the Grantor (including under any trade name or derivations thereof), and whether owned or consigned by or to, or leased from or to, the Grantor, and wherever located (all of which will be collectively referred to as the “Collateral”), including, without limitation:

 

(i)           all Accounts;

 

(ii)          all Chattel Paper;

 

(iii)         all Copyrights, Patents and Trademarks;

  

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(iv)         all Documents;

 

(v)          all Equipment;

 

(vi)         all Fixtures;

 

(vii)        all General Intangibles;

 

(viii)       all Goods;

 

(ix)          all Instruments;

 

(x)           all Inventory;

 

(xi)          all Investment Property;

 

(xii)         all cash or cash equivalents;

 

(xiii)        all letters of credit, Letter-of-Credit Rights and Supporting Obligations;

 

(xiv)        all Deposit Accounts with any bank or other financial institution;

 

(xv)         all Commercial Tort Claims;

 

(xvi)        all Contracts; and

 

(xvii)       all accessions to, substitutions for and replacements, proceeds (including Stock Rights), insurance proceeds and products of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto and any General Intangibles at any time evidencing or relating to any of the foregoing.

 

Any of the foregoing to the contrary notwithstanding (a) the “Collateral” shall not include, and the security interest granted herein shall not attach to, any asset subject to a rule of law, statute or regulation (including a permit, license or franchise), where the grant of such security interest would invalidate or constitute a breach or violation of any such rule of law, statute or regulation, provided that the limitation set forth in this sentence shall (i) exist only for so long as such rule of law, statute or regulation, continues to be effective (and, upon the cessation, termination, expiration of such rule of law, statute or regulation, or if any such rule of law, statue or regulation is no longer applicable, the security interest granted herein shall be deemed to have automatically attached to such asset), and (ii) not apply with respect to any asset if and to the extent that the security interest in and to such asset granted in this Security Agreement is permitted under Section 9-406, 9-407, 9-408, or 9-409 of the UCC, and (b) in the case of a Subsidiary that is a foreign entity, in no event shall the "Collateral" include more than sixty-five percent (65%) of the equity interests in such Subsidiary.

 

2.2.           Security for Obligations.  This Security Agreement, including the Guarantors’ guaranty hereunder, secures, and the Collateral is collateral security for, the prompt and complete payment or performance in full when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations.

  

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ARTICLE III

REPRESENTATIONS AND WARRANTIES

The Grantor represents and warrants to the Secured Parties that:

 

3.1.           Title, Perfection and Priority.  The Grantor has good and valid rights in, or the power to transfer rights in, the Collateral and, to the extent applicable, title to the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all Liens, except for Permitted Encumbrances, and has full power and authority to grant to the Secured Parties the security interest in such Collateral pursuant hereto.  When financing statements have been filed in the appropriate offices against the Grantor in the locations listed on Exhibit G, the Secured Parties will have a fully perfected security interest in that Collateral of the Grantor in which a security interest may be perfected by filing, and having priority over all other Liens on such Collateral except in the case of (a) Permitted Encumbrances, to the extent any such Permitted Encumbrances would have priority over the Liens in favor of the Secured Parties pursuant to any applicable law or agreement, and (b) Liens perfected only by possession (including possession of any certificate of title) to the extent the Secured Parties have not obtained or do not maintain possession of such Collateral, in which case such Lien in favor of the Secured Parties shall not be perfected until such possession is obtained.

 

3.2.           Type and Jurisdiction of Organization, Organizational and Identification Number.  The type of entity of the Grantor, its state of organization, the organizational number issued to it by its state of organization and its federal employer identification number are set forth on Exhibit A.

 

3.3.           Principal Location.  The Grantor’s mailing address and the location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business), is disclosed in Exhibit A; the Grantor has no other places of business except those set forth in Exhibit A.

 

3.4.           Collateral Locations.  All of the Grantor’s locations where Collateral is located are listed on Exhibit A.  All of said locations are owned by the Grantor except for locations (i) which are leased by the Grantor as lessee and designated in Part VII(b) of Exhibit A and (ii) at which Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment as designated in Part VII(c) of Exhibit A.

 

3.5.           Deposit Accounts.  All of the Grantor’s Deposit Accounts are listed in Part VIII of Exhibit A.

 

3.6.           Exact Names.  The Grantor’s name in which it has executed this Security Agreement is the exact name as it appears in the Grantor’s organizational documents, as amended, as filed with the Grantor’s jurisdiction of organization.  Other than as set forth on Exhibit B, the Grantor has not, during the past five years, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or been a party to any acquisition.

 

3.7.           Letter-of-Credit Rights and Chattel Paper.  Exhibit C-1 lists all Letter-of-Credit Rights and Chattel Paper of the Grantor having a value in excess of $25,000, individually.  All action by the Grantor necessary or desirable to protect and perfect the Secured Parties’ Lien on each item listed on Exhibit C-1 (including the delivery of all originals and the placement of a legend on all Chattel Paper as required hereunder) has been duly taken. The Secured Parties will have a fully perfected first priority security interest in the Collateral listed on Exhibit C-1.

 

3.8.           Intellectual Property. The Grantor does not have any interest in, or title to, any Patent, Trademark or Copyright except as set forth in Exhibit D.

  

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3.9.           Filing Requirements.  None of the Grantor’s Equipment is covered by any certificate of title.  None of the Collateral owned by the Grantor is of a type for which security interests or Liens may be perfected by filing under any federal statute except for Patents, Trademarks and Copyrights held by the Grantor and described in Exhibit D.  The legal description, county and street address of each property on which any Fixtures are located is set forth in Exhibit E together with the name and address of the record owner of each such property.

 

3.10.         No Financing Statements, Security Agreements.  No financing statement or security agreement describing all or any portion of the Collateral which has not lapsed or been terminated naming the Grantor as debtor has been filed or is of record in any jurisdiction except (a) for financing statements or security agreements naming the Secured Parties as the secured party and (b) to perfect Permitted Encumbrances.

 

3.11.         Pledged Collateral.

 

(a)           Exhibit F sets forth a complete and accurate list of the Pledged Collateral.  The Grantor is the record and beneficial owner of the Pledged Collateral listed on Exhibit F as being owned by the Grantor, free and clear of any Liens, except for the security interest granted to the Secured Parties hereunder and Permitted Encumbrances.  The Grantor further represents and warrants that (i) with respect to any certificates delivered to the Secured Parties representing Equity Interests, either such certificates are Securities as defined in Article 8 of the UCC as a result of actions by the issuer or otherwise or, if such certificates are not Securities, the Grantor has so informed the Secured Parties so that the Secured Parties may take steps to perfect their security interest therein as a General Intangible, (ii) all Pledged Collateral held by a securities intermediary is covered by a Control Agreement among the Grantor, the securities intermediary and the Secured Parties, or otherwise held under terms, pursuant to which the Secured Parties have Control, (iii) none of the Pledged Collateral owned by the Grantor has been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject, (iv) there are existing no options, warrants, calls or commitments of any character whatsoever relating to such Pledged Collateral, and (v) no consent, approval, authorization, or other action by, and no giving of notice or filing with, any governmental authority or any other Person is required for the pledge by the Grantor of such Pledged Collateral pursuant to this Security Agreement or for the execution, delivery and performance of this Security Agreement by the Grantor, or for the exercise by the Secured Parties of the voting or other rights provided for in this Security Agreement or for the remedies in respect of the Pledged Collateral pursuant to this Security Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally.

 

(b)           Except as set forth in Exhibit F, the Grantor owns 100% of the issued and outstanding Equity Interests which constitute Pledged Collateral owned by it and none of the Pledged Collateral which represents indebtedness owed to the Grantor is subordinated in right of payment to other indebtedness or subject to the terms of an indenture.

 

ARTICLE IV

COVENANTS

From the date of this Security Agreement, and thereafter until this Security Agreement is terminated, the Grantor agrees that:

 

4.1.           General.

  

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(a)           Collateral Records.  The Grantor will maintain complete and accurate books and records with respect to the Collateral owned by it, and will furnish the Secured Parties with updates with respect to Exhibits A, B, C-1, C-2, D, E, F and G hereto in accordance with Section 4.1(c) and such other such reports relating to such Collateral as the Secured Parties shall from time to time request.

 

(b)           Authorization to File Financing Statements; Ratification.  The Grantor hereby authorizes the Secured Parties to file, and if requested will deliver to the Secured Parties, all financing statements and other documents and to take such other actions as may from time to time be requested by the Secured Parties in order to maintain a perfected security interest in and, if applicable, Control of, the Collateral owned by the Grantor subject only to Permitted Encumbrances.  Any financing statement filed by the Secured Parties may be filed in any filing office in any UCC jurisdiction and may (i) indicate the Grantor’s Collateral (1) as all assets of the Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC or such jurisdiction, or (2) by any other description which reasonably approximates the description contained in this Security Agreement, and (ii) contain any other information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance of any financing statement or amendment, including (A) whether the Grantor is an organization, the type of organization and any organization identification number issued to the Grantor and (B) in the case of a financing statement filed as a fixture filing, a sufficient description of real property to which the Collateral relates.  The Grantor also agrees to furnish any such information to the Secured Parties promptly upon request.  The Grantor also ratifies its authorization for the Secured Parties to have filed in any UCC jurisdiction any initial financing statements or amendments thereto if filed prior to the date hereof.

 

(c)           Further Assurances.  The Grantor will, if reasonably requested by the Secured Parties, furnish to the Secured Parties statements and schedules further identifying and describing the Collateral owned by it and such other reports and information in connection with its Collateral as the Secured Parties may reasonably request, all in such detail as the Secured Parties may reasonably specify.  The Grantor also agrees to take any and all actions necessary to defend title to the Collateral against all persons and to defend the security interest of the Secured Parties in its Collateral and the priority thereof against any Lien not expressly permitted hereunder, in each case as reasonably requested by the Secured Parties.  The Grantor shall also supplement the information set forth in Exhibits A, B, C-1, C-2, D, E, F and G attached hereto within thirty (30) days after obtaining knowledge of information which would require a material correction or addition of any such Exhibit.

 

(d)           Disposition of Collateral.  The Grantor will not sell, lease or otherwise dispose of the Collateral owned by it except for dispositions in the ordinary course of business consistent with past practice or as permitted under the Purchase Agreement.

 

(e)           Liens.  The Grantor will not create, incur, or suffer to exist any Lien on the Collateral owned by it except (i) the security interest created by this Security Agreement and (ii) Permitted Encumbrances.

 

(f)           Other Financing Statements.  The Grantor will not authorize the filing of any financing statement naming it as debtor covering all or any portion of the Collateral owned by it, except in connection with Permitted Encumbrances and the Revolving Debt Facility.  The Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement without the prior written consent of the Secured Parties, subject to the Grantor’s rights under Section 9-509(d)(2) of the UCC.

 

(g)           Locations. Other than to the extent permitted by the Purchase Agreement, the Grantor will not (i) maintain any Collateral owned by it at any location other than those locations listed on Exhibit A, (ii) otherwise change or add to such locations without the Secured Parties’ prior written consent, which shall not be unreasonably withheld (provided that if the Secured Parties give such consent, the Grantor will concurrently therewith obtain a landlord waiver for each such location), or (iii) change its principal place of business or chief executive office from the location identified on Exhibit A.

  

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(h)           Compliance with Terms.  The Grantor will perform and comply in all material respects with all obligations in respect of the Collateral owned by it and all agreements to which it is a party or by which it is bound relating to such Collateral.

 

4.2.           Equipment.  The Grantor shall not permit any Equipment to become a fixture with respect to real property or to become an accession with respect to other personal property with respect to which real or personal property the Secured Parties do not have a Lien.  The Grantor will not, without the Secured Parties’ prior written consent, alter or remove any identifying symbol or number on any of the Grantor’s Equipment constituting Collateral.

 

4.3.           Delivery of Instruments, Securities, Chattel Paper and Documents.  The Grantor will (a) deliver to the Secured Parties immediately upon execution of this Security Agreement the originals of all Chattel Paper, Securities (to the extent certificated) and Instruments constituting Collateral owned by it (if any then exist), (b) hold in trust for the Secured Parties upon receipt and immediately thereafter deliver to the Secured Parties any such Chattel Paper, Securities and Instruments constituting Collateral, and (c) upon the Secured Parties’ request, deliver to the Secured Parties (and thereafter hold in trust for the Secured Parties upon receipt and immediately deliver to the Secured Parties) any Document evidencing or constituting Collateral.

 

4.4.           Uncertificated Pledged Collateral. The Grantor will permit the Secured Parties from time to time to cause the appropriate issuers (and, if held with a securities intermediary, such securities intermediary) of uncertificated securities or other types of Pledged Collateral owned by it not represented by certificates to mark their books and records with the numbers and face amounts of all such uncertificated securities or other types of Pledged Collateral not represented by certificates and all rollovers and replacements therefor to reflect the Lien of the Secured Parties granted pursuant to this Security Agreement.  With respect to any Pledged Collateral owned by it, the Grantor will take any actions necessary to cause (a) the issuers of uncertificated securities which are Pledged Collateral and (b) any securities intermediary which is the holder of any such Pledged Collateral, to cause the Secured Parties to have and retain Control over such Pledged Collateral.  Without limiting the foregoing, the Grantor will, with respect to any such Pledged Collateral held with a securities intermediary, cause such securities intermediary to enter into a Control Agreement with the Secured Parties, in form and substance satisfactory to the Secured Parties, giving the Secured Parties Control over such Pledged Collateral.

 

4.5.           Pledged Collateral.

 

(a)           Changes in Capital Structure of Issuers.  Except as permitted under the Purchase Agreement, the Grantor will not (i) permit or suffer any issuer of Equity Interests constituting Pledged Collateral owned by it to dissolve, merge, liquidate, retire any of its Equity Interests or other Instruments or Securities evidencing ownership, reduce its capital, sell or encumber all or substantially all of its assets (except for Permitted Encumbrances and sales of assets permitted pursuant to Section 4.1(d)) or merge or consolidate with any other entity, or (ii) vote any such Pledged Collateral in favor of any of the foregoing.

 

(b)           Issuance of Additional Securities.  If any issuer of Equity Interests constituting Pledged Collateral issues additional Equity Interests to the Grantor, the Grantor shall promptly notify the Secured Parties of such issuance of Equity Interests and such Equity Interests shall promptly be deposited with and pledged to the Secured Parties in accordance with Section 4.4 and 4.5 hereof, subject, in each case, to the limitation set forth in Section 2.1.

  

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(c)           Registration of Pledged Collateral.  After the occurrence and during the continuance of an Event of Default, the Grantor will permit any registrable Pledged Collateral owned by it to be registered in the name of the Secured Parties or their nominee at any time at the Secured Parties’ option.

(d)           Exercise of Rights in Pledged Collateral.

 

(i)           Without in any way limiting the foregoing and subject to clause (ii) below, the Grantor shall have the right to exercise all voting rights or other rights relating to the Pledged Collateral owned by it for all purposes not inconsistent with this Security Agreement, the Purchase Agreement or any other Transaction Document; provided however, that no vote or other right shall be exercised or action taken which would have the effect of impairing the rights of the Secured Parties in respect of such Pledged Collateral.

 

(ii)          The Grantor will permit the Secured Parties or their nominee at any time after the occurrence and during the continuance of an Event of Default, without notice, to exercise all voting rights or other rights relating to the Pledged Collateral owned by it, including, without limitation, exchange, subscription or any other rights, privileges, or options pertaining to any Equity Interests or Investment Property constituting such Pledged Collateral as if they were the absolute owner thereof.

 

(iii)         So long as no Event of Default shall have occurred and be continuing, the Grantor shall be entitled to collect and receive for its own use all cash dividends and interest paid in respect of the Pledged Collateral owned by it to the extent not in violation of the Purchase Agreement; provided however, that until actually paid, all rights to such distributions shall remain subject to the Lien created by this Security Agreement.

 

4.6.           Intellectual Property.

 

(a)           The Grantor will use commercially reasonable efforts to secure all consents and approvals necessary or appropriate for the assignment to or benefit of the Secured Parties of any material License held by the Grantor and to enforce the security interests granted hereunder.

(b)           In no event shall the Grantor, either directly or through any agent, employee, licensee or designee, file an application for the registration of any material Patent, Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving the Secured Parties prior written notice thereof, and, upon the Secured Parties’ request, the Grantor shall execute and deliver any and all security agreements as the Secured Parties may request to evidence the Secured Parties’ first priority security interest on such Patent, Trademark or Copyright, and the General Intangibles of the Grantor relating thereto or represented thereby.

 

(c)           The Grantor shall take all actions necessary or reasonably requested by the Secured Parties to maintain and pursue each application, to obtain the relevant registration and to maintain the registration of each of its material Patents, Trademarks and Copyrights registered with, or applied to be registered with, the United Stated Patent and Trademark Office or the United States Copyright Office, as applicable (now or hereafter existing), including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings, unless the Grantor shall determine in good faith that such Patent, Trademark or Copyright is not material to the conduct of the Grantor’s business.

  

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(d)           The Grantor shall, unless it shall reasonably determine that such Patent, Trademark or Copyright is not material to the conduct of its business or operations, promptly sue for any material infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as the Secured Parties shall deem reasonably appropriate under the circumstances to protect such Patent, Trademark or Copyright.  In the event that the Grantor institutes suit because any of its Patents, Trademarks or Copyrights constituting Collateral is infringed upon, or misappropriated or diluted by a third party, the Grantor shall comply with Section 4.7.

 

4.7.           Commercial Tort Claims.  The Grantor shall promptly, and in any event within two Business Days after the same is acquired by it, notify the Secured Parties of any commercial tort claim (as defined in the UCC) acquired by it having a value in excess of $25,000 and, unless the Secured Parties otherwise consent, the Grantor shall enter into an amendment to this Security Agreement, in form and substance reasonably satisfactory to the Secured Parties, granting the Secured Parties a first priority security interest in such commercial tort claim.

 

4.8.           Letter-of-Credit Rights.  If the Grantor is or becomes the beneficiary of a letter of credit having a value in excess of $25,000, it shall promptly, and in any event within five (5) Business Days after becoming a beneficiary, notify the Secured Parties thereof and use its commercially reasonable efforts to cause the issuer and/or confirmation bank to (i) consent to the assignment of any Letter-of-Credit Rights to the Secured Parties and (ii) agree to direct all payments thereunder to a Deposit Account subject to a Control Agreement for application to the Obligations, all in form and substance reasonably satisfactory to the Secured Parties.

 

4.9.           Federal, State or Municipal Claims.  The Grantor will, within five (5) Business Days, notify the Secured Parties of any Collateral which constitutes a claim against the United States government or any state or local government or any instrumentality or agency thereof (other than Accounts owing from the United States government which have been or will be identified by the Grantor) having a value in excess of $25,000, the assignment of which claim is restricted by federal, state or municipal law.

 

4.10.           No Interference.  The Grantor agrees that it will not interfere with any right, power and remedy of the Secured Parties provided for in this Security Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Secured Parties of any one or more of such rights, powers or remedies.

 

4.11.           Insurance.

 

(a)           All insurance policies required hereunder and under Section 5.10 of the Purchase Agreement shall name each of the Secured Parties as additional insureds or as loss payees, as applicable, and shall contain loss payable clauses through endorsements in form and substance satisfactory to the Secured Parties, which provide that: (i) all proceeds thereunder with respect to any Collateral shall be payable to the Secured Parties; (ii) no such insurance shall be affected by any act or neglect of the insured or owner of the property described in such policy; and (iii) such policy and loss payable clauses may be canceled, amended, or terminated only upon at least thirty (30) days prior written notice given to the Secured Parties.

  

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(b)           All premiums on any such insurance shall be paid when due by the Grantor, and copies of the policies delivered to the Secured Parties, upon the request of the Secured Parties.  If the Grantor fails to obtain any insurance as required by this Section, the Secured Parties may obtain such insurance at the expense of the Grantor.

 

4.12.           Landlord Waivers.  The Grantor shall obtain landlord waivers from the lessor of each location of real property leased by the Grantor, mortgagee of owned property or bailee or consignee with respect to any warehouse, processor or converter facility or other location where Collateral is stored or located, which landlord waivers shall be reasonably satisfactory in form and substance to the Secured Parties. The Grantor shall timely and fully pay and perform in all material respects its obligations under all leases and other agreements with respect to each leased location or third party warehouse where any Collateral is or may be located.

 

4.13.           Control Agreements.  The Grantor will provide to the Secured Parties upon the Secured Parties’ request in accordance with the Purchase Agreement, a Control Agreement duly executed on behalf of each financial institution, securities broker or securities intermediary where the Grantor maintains a deposit account or securities account.

 

4.14.           Change of Name or Location; Change of Fiscal Year.  The Grantor shall not (a) change its name as it appears in official filings in the state of its incorporation or organization, (b) change its chief executive office, principal place of business, mailing address or corporate offices, or the location of its records concerning the Collateral as set forth in the Security Agreement, (c) change the type of entity that it is, (d) change its organization identification number, if any, issued by its state of incorporation or other organization, or (e) change its state of incorporation or organization, in each case, unless the Secured Parties shall have received at least thirty (30) days prior written notice of such change and the Secured Parties shall have acknowledged in writing that either (1) such change will not adversely affect the validity, perfection or priority of the Secured Parties’ security interest in the Collateral, or (2) any reasonable action requested by the Secured Parties in connection therewith has been completed or taken (including any action to continue the perfection of any Liens in favor of the Secured Parties, in any Collateral), provided that, any new location shall be located in the continental U.S. to the extent the prior location was located in the continental U.S.  The Grantor shall not store any Collateral at any new warehouse or new leased location unless the Grantor shall have provided the Secured Parties with at least five (5) Business Days prior written notice.  The Grantor shall not change its fiscal year which currently ends on December 31.

 

ARTICLE V

EVENTS OF DEFAULT AND REMEDIES

5.1.           Events of Default.

 

The occurrence of any “Event of Default” under, and as defined in, the Notes shall constitute an Event of Default hereunder.

 

5.2.           Remedies.

 

(a)           If an Event of Default has occurred and for so long as such Event of Default is continuing, the Secured Parties may exercise any or all of the following rights and remedies:

 

(i)           those rights and remedies provided in this Security Agreement, the Notes, or any other Transaction Document; provided that, this Section 5.2(a) shall not be understood to limit any rights or remedies available to the Secured Parties prior to an Event of Default;

  

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(ii)          those rights and remedies available to a secured party under the UCC (whether or not the UCC applies to the affected Collateral) or under any other applicable law when a debtor is in default under a security agreement;

 

(iii)         give notice of sole control or any other instruction under any Control Agreement and take any action therein with respect to such Collateral;

 

(iv)         without notice (except as specifically provided in Section 8.2 or elsewhere herein), demand or advertisement of any kind to the Grantor or any other Person, enter the premises of the Grantor where any Collateral is located (through self-help and without judicial process) to collect, receive, assemble, process, appropriate, sell, lease, assign, grant an option or options to purchase or otherwise dispose of, deliver, or realize upon, the Collateral or any part thereof in one or more parcels at public or private sale or sales (which sales may be adjourned or continued from time to time with or without notice and may take place at the Grantor’s premises or elsewhere), for cash, on credit or for future delivery without assumption of any credit risk, and upon such other terms as the Secured Parties may deem commercially reasonable; and

 

(v)          concurrently with written notice to the Grantor, transfer and register in their name or in the name of their nominee(s) the whole or any part of the Pledged Collateral, to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations, to exercise the voting and all other rights as a holder with respect thereto, to collect and receive all cash dividends, interest, principal and other distributions made thereon and to otherwise act with respect to the Pledged Collateral as though the Secured Parties were the outright owners thereof.

 

(b)           The Secured Parties may comply with any applicable state or federal law in connection with a disposition of the Collateral and such compliance will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

 

(c)           The Secured Parties shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of the Secured Parties the whole or any part of the Collateral so sold, free of any right of equity redemption, which equity redemption the Grantor hereby expressly releases.

 

(d)           Until the Secured Parties are able to effect a sale, lease, or other disposition of Collateral, the Secured Parties shall have the right to hold or use Collateral, or any part thereof, to the extent that they deem appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by the Secured Parties.  The Secured Parties may, if they so elect, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of the Secured Parties’ remedies with respect to such appointment without prior notice or hearing as to such appointment.

 

(e)           Notwithstanding the foregoing, the Secured Parties shall not be required to (i) make any demand upon, or pursue or exhaust any of their rights or remedies against, the Grantor, any other obligor, guarantor, pledgor or any other Person with respect to the payment of the Obligations or to pursue or exhaust any of their rights or remedies with respect to any Collateral therefor or any direct or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee of the Obligations or to resort to the Collateral or any such guarantee in any particular order, or (iii) effect a public sale of any Collateral.

  

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(f)           The Grantor recognizes that the Secured Parties may be unable to effect a public sale of any or all the Pledged Collateral and may be compelled to resort to one or more private sales thereof in accordance with clause (a) above.  The Grantor also acknowledges that any private sale may result in prices and other terms less favorable to the seller than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall not be deemed to have been made in a commercially unreasonable manner solely by virtue of such sale being private.  The Secured Parties shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the Grantor or the issuer of the Pledged Collateral to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if the Grantor and the issuer would agree to do so.

 

5.3.           Grantor’s Obligations Upon an Event of Default.  Upon the request of the Secured Parties after the occurrence and during the continuance of an Event of Default, the Grantor will:

 

(a)           assemble and make available to the Secured Parties the Collateral and all books and records relating thereto at any place or places specified by the Secured Parties, whether at the Grantor’s premises or elsewhere;

 

(b)           permit the Secured Parties, by their respective representatives and agents, to enter, occupy and use  any premises where all or any part of the Collateral, or the books and records relating thereto, or both, are located, to take possession of all or any part of the Collateral or the books and records relating thereto, or both, to remove all or any part of the Collateral or the books and records relating thereto, or both, and to conduct sales of the Collateral, without any obligation to pay the Grantor for such use and occupancy; and

 

(c)           at its own expense, cause the Grantor’s accountants to prepare and deliver to the Secured Parties, at any time, and from time to time, promptly upon the Secured Parties’ request, the following reports with respect to the Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test verification of such Accounts.

 

5.4.           Grant of Intellectual Property License.  For the purpose of enabling the Secured Parties to exercise the rights and remedies under this Article V at such time as the Secured Parties shall be lawfully entitled to exercise such rights and remedies, the Grantor hereby (a) grants to the Secured Parties an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to the Grantor) to use, license or sublicense any Intellectual Property Rights now owned or hereafter acquired by the Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof and (b) irrevocably agrees that the Secured Parties may sell any of the Grantor’s Inventory directly to any person, including without limitation persons who have previously purchased the Grantor’s Inventory from the Grantor and in connection with any such sale or other enforcement of the Secured Parties’ rights under this Security Agreement, may sell Inventory which bears any Trademark owned by or licensed to the Grantor and any Inventory that is covered by any Copyright owned by or licensed to the Grantor and the Secured Parties may finish any work in process and affix any Trademark owned by or licensed to the Grantor and sell such Inventory as provided herein.

 

ARTICLE VI

ACCOUNT VERIFICATION; ATTORNEY IN FACT; PROXY

6.1.           Account Verification.  The Secured Parties may at any time, in their own name, in the name of their nominee(s), or in the name of the Grantor, communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of the Grantor, parties to contracts with the Grantor and obligors in respect of Instruments of the Grantor to verify with such Persons, to the Secured Parties’ satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts, Instruments, Chattel Paper, payment intangibles and/or other Receivables.

  

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6.2.           Authorization for Secured Parties to Take Certain Action.

 

(a)           The Grantor irrevocably authorizes the Secured Parties at any time and from time to time in their sole discretion, and appoints the Secured Parties as its attorney in fact, (i) to execute on behalf of the Grantor as debtor and to file financing statements necessary or desirable in the Secured Parties’ sole discretion to perfect and to maintain the perfection and priority of the Secured Parties’ security interest in the Collateral, (ii) to endorse and collect any cash proceeds of the Collateral, (iii) to file a carbon, photographic or other reproduction of this Security Agreement or any financing statement with respect to the Collateral as a financing statement and to file any other financing statement or amendment of a financing statement (which does not add new collateral or add a debtor) in such offices as the Secured Parties in their sole discretion deem necessary or desirable to perfect and to maintain the perfection and priority of the Secured Parties’ security interest in the Collateral, (iv) to contact and enter into one or more agreements with the issuers of uncertificated securities which are Pledged Collateral or with securities intermediaries holding Pledged Collateral as may be necessary or advisable to give the Secured Parties Control over such Pledged Collateral, (v) to discharge past due taxes, assessments, charges, fees or Liens on the Collateral (except for (i) such Liens as are specifically permitted hereunder if the Grantor shall have failed to do so after request by the Secured Parties, (vi) to contact Account Debtors for any reason, (vii) to demand payment or enforce payment of the Receivables in the name of the Secured Parties or the Grantor and to endorse any and all checks, drafts, and other instruments for the payment of money relating to the Receivables, (viii) to sign the Grantor’s name on any invoice or bill of lading relating to the Receivables, drafts against any Account Debtor of the Grantor, assignments and verifications of Receivables, (ix) to exercise all of the Grantor’s rights and remedies with respect to the collection of the Receivables and any other Collateral, (x) to settle, adjust, compromise, extend or renew the Receivables, (xi) to settle, adjust or compromise any legal proceedings brought to collect Receivables, (xii) to prepare, file and sign the Grantor’s name on a proof of claim in bankruptcy or similar document against any Account Debtor of the Grantor, (xiii) to prepare, file and sign the Grantor’s name on any notice of Lien, assignment or satisfaction of Lien or similar document in connection with the Receivables, (xiv) to change the address for delivery of mail addressed to the Grantor to such address as the Secured Parties may designate and to receive, open and dispose of all mail addressed to the Grantor, and (xv) to do all other acts and things necessary to carry out this Security Agreement (other than the acts and things described in clauses (vi) through (xiv) above) to the extent not performed by the Grantor hereunder when due; and the Grantor agrees to reimburse the Secured Parties on demand for any payment made or any expense incurred by the Secured Parties in connection with any of the foregoing; provided that, this authorization shall not relieve the Grantor of any of its obligations under this Security Agreement or under the Purchase Agreement.

 

(b)           All acts of said attorney or designee are hereby ratified and approved. The powers conferred on the Secured Parties under this Section 6.2 are solely to protect the Secured Parties’ interests in the Collateral and shall not impose any duty upon the Secured Parties to exercise any such powers.  The Secured Parties agree that, except for the powers granted in Section 6.2(a)(i)-(v) and Section 6.2(a)(xv), they shall not exercise any power or authority granted to them unless an Event of Default has occurred and is continuing.

 

6.3.           Proxy. THE GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE SECURED PARTIES AS ITS PROXIES AND ATTORNEYS-IN-FACT (AS SET FORTH IN SECTION 6.2 ABOVE) WITH RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE SECURED PARTIES AS ITS PROXIES AND ATTORNEYS-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED 

COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR AGENT THEREOF), UPON THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.

  

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6.4.           Nature of Appointment; Limitation of Duty.  THE APPOINTMENT OF THE SECURED PARTIES AS PROXIES AND ATTORNEYS-IN-FACT IN THIS ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.15. NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE SECURED PARTIES NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT  IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.

 

ARTICLE VII

DEPOSIT ACCOUNTS

7.1.           Control Agreements.  Before opening or replacing any Deposit Account, the Grantor shall (a) obtain the Secured Parties’ consent (not to be unreasonably withheld or delayed) in writing to the opening of such Deposit Account, and (b) to the extent then applicable, cause each bank or financial institution in which it seeks to open a Deposit Account, to enter into a Control Agreement with the Secured Parties in order to give the Secured Parties Control of such Deposit Account.

 

7.2.           Application of Proceeds.

 

(a)           Notwithstanding anything to the contrary set forth herein, if an Event of Default shall have occurred and be continuing, the Secured Parties shall have, in addition to all other rights and remedies provided herein and in the other Transaction Documents, the right to direct each banking institution, securities broker or securities intermediary at which the Grantor maintains a Deposit Account or securities account, to follow all instructions given to such banking institution, securities broker or securities intermediary by the Secured Parties, including, without limitation, instructions regarding the liquidation of securities and the transfer of funds held in such accounts, and the Grantor shall remain liable for any deficiency if such funds and proceeds are insufficient to pay all Obligations, including any attorneys’ fees and other expenses incurred by the Secured Parties to collect such deficiency.

  

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ARTICLE VIII

GENERAL PROVISIONS

8.1.           Guaranty, Etc.  CareView TX and CareView LLC (the “Guarantors”), in consideration of the Secured Parties entering into the Purchase Agreement and the other Transaction Documents to which they are a party and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and for the purpose of inducing the Secured Parties to enter into the Transaction Documents, hereby jointly and severally, irrevocably and unconditionally guarantee to the Secured Parties (a) the full, punctual and prompt payment of all Obligations, whether at maturity or by acceleration or otherwise, in immediately available funds; (b) the performance of all of CareView NV’s Obligations; and (c) all other obligations of every kind and description now existing or hereafter arising, direct or indirect, absolute or contingent, secured or unsecured, matured or unmatured, primary or secondary, of CareView NV to the Secured Parties.  The Guarantors hereby acknowledge that this guaranty is a guarantee of (i) performance by CareView NV of the Obligations; and (ii) payment and not of collection, and that the liability of Guarantors hereunder is present, absolute, unconditional, continuing, primary, direct and independent of the obligations of CareView NV.  The Secured Parties shall not be required to pursue any other remedies before invoking the benefits of this guaranty, including, without limitation, its remedies under the Transaction Documents.  The Guarantors hereby waive notice of the acceptance of this guaranty, presentment, demand, protest and notice of protest, nonpayment, default or dishonor of the Obligations or any renewal or extension thereof and any and all other rights and remedies now or hereafter accorded to guarantors by applicable law.  In addition, the Guarantors hereby unconditionally and irrevocably agree that they will not at any time exert or exercise against CareView NV, and do hereby subordinate any right of or claim to subrogation, reimbursement, indemnity, contribution or payment for or with respect to any amounts which the Guarantors may pay or be obligated to pay to the Secured Parties.

 

8.2.           Waivers.  The Grantor hereby waives notice of the time and place of any public sale or the time after which any private sale or other disposition of all or any part of the Collateral may be made.  To the extent such notice may not be waived under applicable law, any notice made shall be deemed reasonable if sent to the Grantor, addressed as set forth in Article IX, at least ten days prior to (i) the date of any such public sale or (ii) the time after which any such private sale or other disposition may be made.  To the maximum extent permitted by applicable law, the Grantor waives all claims, damages, and demands against the Secured Parties arising out of the repossession, retention or sale of the Collateral, except such as arise solely out of the gross negligence or willful misconduct of the Secured Parties as finally determined by a court of competent jurisdiction. To the extent it may lawfully do so, the Grantor absolutely and irrevocably waives and relinquishes the benefit and advantage of, and covenants not to assert against the Secured Parties, any valuation, stay, appraisal, extension, moratorium, redemption or similar laws and any and all rights or defenses it may have as a surety now or hereafter existing which, but for this provision, might be applicable to the sale of any Collateral made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Security Agreement, or otherwise.  Except as otherwise specifically provided herein, the Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Security Agreement or any Collateral.

 

8.3.           Limitation on the Secured Parties’ Duty with Respect to the Collateral.  The Secured Parties shall have no obligation to clean-up or otherwise prepare the Collateral for sale. The Secured Parties shall use reasonable care with respect to the Collateral in their possession or under their control.  The Secured Parties shall have no other duty as to any Collateral in their possession or control or in the possession or control of any agent or nominee of the Secured Parties, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto. To the extent that applicable law imposes duties on the Secured Parties to exercise remedies in a commercially reasonable manner, the Grantor acknowledges and agrees that it is commercially reasonable for the Secured Parties (i) to fail to incur expenses deemed significant by the Secured Parties to prepare Collateral for disposition or otherwise to transform raw material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, 

  

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whether or not in the same business as the Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the Secured Parties against risks of loss, collection or disposition of Collateral or to provide to the Secured Parties a guaranteed return from the collection or disposition of Collateral, or (xii) to the extent deemed appropriate by the Secured Parties, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Secured Parties in the collection or disposition of any of the Collateral.  The Grantor acknowledges that the purpose of this Section 8.3 is to provide non-exhaustive indications of what actions or omissions by the Secured Parties would be commercially reasonable in the Secured Parties’ exercise of remedies against the Collateral and that other actions or omissions by the Secured Parties shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 8.3.  Without limitation upon the foregoing, nothing contained in this Section 8.3 shall be construed to grant any rights to the Grantor or to impose any duties on the Secured Parties that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section 8.3.

8.4.           Compromises and Collection of Collateral.  The Grantor and the Secured Parties recognize that setoffs, counterclaims, defenses and other claims may be asserted by obligors with respect to certain of the Receivables, that certain of the Receivables may be or become uncollectible in whole or in part and that the expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may be expected to be recovered with respect to a Receivable.  In view of the foregoing, the Grantor agrees that the Secured Parties may at any time and from time to time, if an Event of Default has occurred and is continuing, compromise with the obligor on any Receivable, accept in full payment of any Receivable such amount as the Secured Parties in their sole discretion shall determine or abandon any Receivable, and any such action by the Secured Parties shall be commercially reasonable so long as the Secured Parties acts in good faith based on information known to them at the time they take any such action.

 

8.5.           The Secured Parties’ Performance of Grantor Obligations.  Without having any obligation to do so, the Secured Parties may perform or pay any obligation which the Grantor has agreed to perform or pay in this Security Agreement, but has failed to perform or pay when due, and the Grantor shall reimburse the Secured Parties for any amounts paid by the Secured Parties pursuant to this Section 8.5.  The Grantor’s obligation to reimburse the Secured Parties pursuant to the preceding sentence shall be an Obligation payable on demand.

 

8.6.           Specific Performance of Certain Covenants.  The Grantor acknowledges and agrees that a breach of any of the covenants contained in Sections 4.1(d), Sections 4.1(e), 4.3, 4.4, 4.5, 4.11, 4.12, 4.13, 4.14, 5.3, or 8.8 or in Article VII will cause irreparable injury to the Secured Parties and that the Secured Parties have no adequate remedy at law in respect of such breaches and therefore agrees, without limiting the right of the Secured Parties to seek and obtain specific performance of other obligations of the Grantor contained in this Security Agreement, that the covenants of the Grantor contained in the Sections referred to in this Section 8.6 shall be specifically enforceable against the Grantor.

  

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8.7.           Dispositions Not Authorized.  The Grantor is authorized to sell or otherwise dispose of the Collateral except as set forth in Section 4.1(d) and notwithstanding any course of dealing between the Grantor and the Secured Parties or other conduct of the Secured Parties, no authorization to sell or otherwise dispose of the Collateral (except as set forth in Section 4.1(d)) shall be binding upon the Secured Parties unless such authorization is in writing signed by the Secured Parties.

 

8.8.           No Waiver; Amendments; Cumulative Remedies. No delay or omission of the Secured Parties to exercise any right or remedy granted under this Security Agreement shall impair such right or remedy or be construed to be a waiver of any Default or an acquiescence therein, and any single or partial exercise of any such right or remedy shall not preclude any other or further exercise thereof or the exercise of any other right or remedy. No waiver, amendment or other variation of the terms, conditions or provisions of this Security Agreement whatsoever shall be valid unless in writing signed by the Secured Parties and then only to the extent in such writing specifically set forth.  All rights and remedies contained in this Security Agreement or by law afforded shall be cumulative and all shall be available to the Secured Parties until the Obligations have been paid in full.

 

8.9.           Limitation by Law; Severability of Provisions.  All rights, remedies and powers provided in this Security Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Security Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Security Agreement invalid, unenforceable or not entitled to be recorded or registered, in whole or in part.  Any provision in this Security Agreement that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of this Security Agreement are declared to be severable.

 

8.10.         Reinstatement.  This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against the Grantor for liquidation or reorganization, should the Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of the Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

 

8.11.         Benefit of Agreement.  The terms and provisions of this Security Agreement shall be binding upon and inure to the benefit of the Grantor, the Secured Parties and their respective successors and assigns (including all persons who become bound as a debtor to this Security Agreement), except that the Grantor shall not have the right to assign its rights or delegate its obligations under this Security Agreement or any interest herein, without the prior written consent of the Secured Parties.  No sales of participations, assignments, transfers, or other dispositions of any agreement governing the Obligations or any portion thereof or interest therein shall in any manner impair the Lien granted to the Secured Parties, hereunder.

  

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8.12.         Survival of Representations.  All representations and warranties of the Grantor contained in this Security Agreement shall survive the execution and delivery of this Security Agreement.

 

8.13.         Taxes and Expenses.  Any taxes (including income taxes) payable or ruled payable by Federal or State authority in respect of this Security Agreement shall be paid by the Grantor, together with interest and penalties, if any.  The Grantor shall reimburse the Secured Parties for any and all reasonable out-of-pocket expenses paid or incurred by the Secured Parties in connection with the preparation, execution, delivery, administration, collection and enforcement of this Security Agreement and in the audit, analysis, administration, collection, preservation or sale of the Collateral (including the reasonable fees, charges and disbursements of counsel for the Secured Parties), all as more fully described in, and subject to the limitations and conditions set forth in, Section 7.2 of the Purchase Agreement.  Any and all costs and expenses incurred by the Grantor in the performance of actions required pursuant to the terms hereof shall be borne solely by the Grantor.

 

8.14.         Headings.  The title of and section headings in this Security Agreement are for convenience of reference only, and shall not govern the interpretation of any of the terms and provisions of this Security Agreement.

 

8.15.         Termination.  This Security Agreement shall continue in effect (notwithstanding the fact that from time to time there may be no Obligations outstanding) until (i) the Purchase Agreement has terminated pursuant to its express terms and (ii) all of the Obligations have been indefeasibly paid and performed in full and no commitments of the Secured Parties which would give rise to any Obligations are outstanding.

 

8.16.         Entire Agreement.  This Security Agreement embodies the entire agreement and understanding between the Grantor and the Secured Parties relating to the Collateral and supersedes all prior agreements and understandings between the Grantor and the Secured Parties relating to the Collateral.

 

8.17.        CHOICE OF LAW.  THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE (REGARDLESS OF THE CHOICE OR CONFLICTS OF LAWS PRINCIPLES OF THAT JURISDICTION).

 

8.18.        CONSENT TO JURISDICTION.  THE GRANTOR HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR STATE COURT SITTING IN THE STATE OF DELAWARE IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT AND THE GRANTOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.  NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE SECURED PARTIES TO BRING PROCEEDINGS AGAINST THE GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION.  ANY JUDICIAL PROCEEDING BY THE GRANTOR AGAINST THE SECURED PARTIES OR ANY AFFILIATE OF THE SECURED PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN THE STATE OF DELAWARE.

  

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8.19.        WAIVER OF JURY TRIAL. THE GRANTOR AND THE SECURED PARTIES HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

 

8.20.         Indemnity.  The Grantor hereby agrees to indemnify the Secured Parties, and their successors, assigns, agents and employees (each such Person being called an “Indemnitee”), from and against any and all liabilities, damages, penalties, suits, costs, and expenses of any kind and nature (including, without limitation, all expenses of litigation or preparation therefor whether or not either of the Secured Parties is a party thereto) imposed on, incurred by or asserted against the Secured Parties, or theirs successors, assigns, agents and employees, in any way relating to or arising out of this Security Agreement, or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of any Collateral (including, without limitation, latent and other defects, whether or not discoverable by the Secured Parties or the Grantor, and any claim for Patent, Trademark or Copyright infringement); provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, damages, penalties, suits, costs and expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

 

8.21.         Counterparts.  This Security Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Security Agreement by signing any such counterpart.

 

ARTICLE IX

NOTICES

 

9.1.           Sending Notices.  Any notice required or permitted to be given under this Security Agreement shall be sent by United States mail, telecopier, personal delivery or nationally established overnight courier service, and shall be deemed received (a) when received, if sent by hand or overnight courier service, or mailed by certified or registered mail notices or (b) when sent, if sent by telecopier (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient), in each case addressed to the Grantor at the notice address set forth on Exhibit A, and to the Secured Parties at the respective addresses set forth on the signature page hereto.

 

9.2.           Change in Address for Notices.  Each of the Grantor and the Secured Parties may change the address for service of notice upon it by a notice in writing to the other parties.

  

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IN WITNESS WHEREOF, the Grantor and the Secured Parties have executed this Security Agreement as of the date first above written.

 

	  	
GRANTOR:

	  	  
	
Address of Grantor:

	
CAREVIEW COMMUNICATIONS, INC.,

	  	
a Nevada corporation

	  	  
	
405 State Highway 121

Suite B-240

Lewisville, TX 75067

Attn: __________________________

	
By: /s/ Steven Johnson

Name: Steven Johnson

Title: President/COO

 

	  	
CAREVIEW COMMUNICATIONS, INC.,

	  	
a Texas corporation

	  	  
	
405 State Highway 121

Suite B-240

Lewisville, TX 75067

Attn: __________________________

	
By: /s/ Steven Johnson

Name: Steven Johnson

Title: President/COO

 

	  	
CAREVIEW OPERATIONS, LLC

	  	  
	
405 State Highway 121

Suite B-240

Lewisville, TX 75067

Attn: __________________________

	
By: /s/ Steven Johnson

Name: Steven Johnson

Title: President/COO

 

	  	
SECURED PARTIES:

	  	  
	
Address of Secured Party:

	
HEALTHCOR PARTNERS FUND, L.P.

	  	  
	
HealthCor Partners

Carnegie Hall Towers

152 West 57th Street

New York, NY 10019

	
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

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