EXHIBIT 10.00
SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT
AMONG
CAREVIEW COMMUNICATIONS, L.L.C.
AND
T2
DATED FEBRUARY 28, 2005
TABLE OF CONTENTS
ARTICLE I GLOSSARY AND INTERESTS | 1 | |
1.1 Glossary | 1 | |
1.2 Purchase and Sale of Interests | 1 | |
ARTICLE II REPRESENTATION AND WARRANTIES | 2 | |
2.1 Representations and Warranties of the Company | 2 | |
2.2 Representations and Warranties of T2 | 6 | |
ARTICLE III RIGHTS OF T2 | 6 | |
3.1 Come-Along Right | 6 | |
3.2 Information Rights | 7 | |
3.3 Registration Rights | 8 | |
3.4 Rights of Transferees | 8 | |
ARTICLE IV THOMPSON SERVICES | 8 | |
4.1 Chairman of the Board | 8 | |
4.2 Article IV Payments | 9 | |
4.3 Termination of Service Period | 9 | |
4.4 Article IV Conditions Subsequent | 10 | |
4.5 Termination of Engagement Letter | 11 | |
ARTICLE V DISPUTE RESOLUTION | 11 | |
5.1 Disputes | 11 | |
5.2 Resolution of Purported Breaches by the Parties | 11 | |
5.3 Payment Cures | 12 | |
5.4 Governing Law | 12 | |
ARTICLE VI MISCELLANEOUS | 12 | |
6.1 Notices | 12 | |
6.2 Further Assurances | 13 | |
6.3 Severability | 13 | |
6.4 Specific Performance | 13 | |
6.5 Governing Law | 13 | |
6.6 Amendments | 13 | |
6.7 Counterparts | 13 | |
6.8 Noncompetition | 14 | |
6.9. Noncircumvention | 14 | |
EXHIBIT 1 : DEFINITIONS | 1 | |
EXHIBIT 1.2 : OPERATING AGREEMENT OF CAREVIEW | 1 |
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EXHIBIT 2.1B : CAREVIEW CAPITALIZATION | 1 | |
EXHIBIT 2.1C : CAREVIEW OWNERS AND DEBTHOLDERS | 1 | |
EXHIBIT 2.1H : CAREVIEW FINANCIAL STATEMENTS | 1 | |
EXHIBIT 2.1J : CAREVIEW PATENTS, TRADEMARKS, ETC. | 1 | |
EXHIBIT 2.1K : CAREVIEW CONTRACTS | 1 | |
EXHIBIT 3.3 : REGISTRATION RIGHTS | 1 | |
EXHIBIT 5.1 : ARBITRATION | 1 |
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SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT
THIS SUBSCRIPTION AND INVESTOR RIGHTS AGREEMENT (Agreement), dated as of February 28, 2005, is entered into by and among CareView Communications, LLC, a Texas limited liability company (the “Company”);T2; and all of the current owners of theCompany (thePrincipals). Each of theCompany,T2 and thePrincipals are referred to herein as aParty and collectively as theParties.
In consideration of the mutual covenants contained herein, and for other valuable consideration, receipt of which is hereby acknowledged, theParties hereto agree as follows:
ARTICLE I
GLOSSARY AND INTERESTS
1.1Glossary. Exhibit 1.1, “Glossary”, hereto, the terms of which are incorporated herein by reference, shall constitute the glossary of thisAgreement, (Glossary), and any and all such terms when used in thisAgreement and/or any of its exhibits (which are incorporated herein by reference thereto) shall be used in accordance with the definitions ascribed to such terms in theGlossary. In addition to definitions, the terms defined in theGlossary may contain material and substantive language, provisions and/or terms of and/or to thisAgreement, and are to be read as any other term, paragraph, sentence, section, subsection, provision, etc. of thisAgreement. The headings of the Articles and Sections of thisAgreement are for convenience only and shall not be considered in construing or interpreting any of the terms or provisions hereof. Whenever required by the context, any pronoun used in thisAgreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs shall include the plural and vice versa. The use of the word “including” in this Agreement shall be by way of example rather than by limitation. Wherever required by the context, references to a fiscal year shall refer to a portion thereof. The use of the words “or,” “either,” and “any” shall not be exclusive. TheParties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by theParties hereto, and no presumption or burden of proof shall arise favoring or disfavoring anyParty by virtue of the authorship of any of the provisions of thisAgreement. Wherever a conflict exists between thisAgreement and any other agreement, thisAgreement shall control but solely to the extent of such conflict.
1.2Purchase and Sale of Interests.T2hereby agrees to purchase from theCompany and theCompany hereby agrees to sell toT2, as founders stock/equity in theCompany, a 17% ownership interest in theCompany (theT2 Interest). The purchase price (Purchase Price) for theT2 Interest shall be One Thousand Dollars ($1,000), which thePartiesstipulate and agree to be (i) the fair market value of theT2 Interest on the date of thisAgreement and (ii) founders’ stock/equity of theCompany. TheCompany also agrees to issue toT2 for no additional consideration theAdjusted Gross Income Interest. A copy of theCompany’s Operating Agreement (herein theCareView Agreement) in effect on the date hereof showing the issuance of theT2 Interest and theAdjusted Gross Income Interest is attached hereto as Exhibit 1.2, “Operating Agreement of CareView”, andT2 will execute theOperating Agreement as a member. TheCompany and thePrincipals acknowledge and agree that theT2 Interest and the
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Adjusted Gross Income Interest are freely transferable byT2 subject to theCompany’s approval which may not be unreasonably withheld. Given such transfer theCompanyshall require any such transferee ofT2 to become aSubstitute Member pursuant to theOperating Agreement.Prior to the consummation of anInitial Public Offeringand/or aT2 Approved Recapitalization, theT2 Interest will not be diluted (i.e., it will represent and continue to represent a 17% ownership interest in theCompany) and after anInitial Public Offering any dilution must be pro rata with the other owners of theCompany. At no time will theAdjusted Gross Income Interest be diluted. After theInitial Public Offering (subject to relevantSecurities Laws) all restrictions on transfer of T2 Interests and/orAdjusted Gross Income Interestshall be removed. No security, whether now existing or hereafter issued will have any priority or preference of any kind or nature over theT2 Interest or theAdjusted Gross Income Interest.
In the eventThompson fails to complete theService Period up to May 31, 2006, by virtue of death orDisability, thenT2 hereby agrees to sell itsT2 Interests to theCompany for Fifty Thousand Dollars ($50,000).T2’s consideration for the receipt of theT2 Interest is thePurchase Price as well as other good and valuable consideration, the receipt of which is hereby acknowledged by theCompany. T2’sconsideration for the receipt of theAdjusted Gross Income Interest(via its owners) current input into marketing opportunities of theCompany, as well as other good and valuable consideration, the receipt of which is hereby acknowledged by theCompany. Although,Thompson is an owner ofT2 and shall be the Chairman of the Board of theCompany, such potential conflict, is fully disclosed and acknowledged and accepted by theCompany, the Principals andT2. The performance or breach of the Article IV, “Thompson Services”, byThompson shall have no impact whatsoever on theNon-Article IV Terms hereof but a material breach of thisAgreementby the Companywhich is not cured as provided for herein shall constitute independent grounds forThompson’s and/orT2’s (but shall not constitute independent grounds for theCompany’s) termination of theService Period as set forth in Section 4.1, “Chairman of the Board”.
It is understood by theParties thatT2has entered into thisAgreement, simultaneously with the July 05, 2005 Engagement Letter (“Engagement Letter”) betweenCompany and Akin Gump Strauss Hauer & Feld, L.L.P. (“AG”) as referenced in Exhibit 2.1K, “CareView Contracts”;and neither thisAgreementnor theEngagement Lettershall supercede the other, butThompson’s failure to complete theService Periodby virtue of death orDisability orThompson’s and/orT2’stermination of theService Period as referenced above is grounds for theCompany’stermination of theEngagement Letter.But forTommy Thompson having entered into this Agreement,Companywould not have executed theEngagement Letter.
ARTICLE II
REPRESENTATION AND WARRANTIES
2.1Representations and Warranties of the Company. TheCompany hereby represents and warrants toT2 as follows (each of which shall survive without contractual limitations the execution and delivery of thisAgreementand the consummation of the transactions contemplated hereby):
A.Organization and Standing. TheCompany is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas and has full power
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and authority to conduct its business as presently conducted and as proposed to be conducted by it and to enter into and perform thisAgreement and to carry out the transactions contemplated by thisAgreement. TheCompany has furnished toT2 true and complete copies of all of its charter and/or formation documents and/or agreements, each as amended to date and presently in effect.
B.Capitalization. The capitalization of theCompany is as set forth on Exhibit 2.1B, “CareView Capitalization”. All of the issued and outstanding securities of theCompany have been duly authorized and validly issued and are fully paid and nonassessable. Except as otherwise provided in thisAgreement or as set forth on the Exhibits hereto, (i) no subscription, warrant, option, convertible security or other right (contingent or otherwise) to purchase or acquire any ownership of theCompany is authorized or outstanding, (ii) except as specifically and expressly provided in theOperating Agreement, there is not any commitment of theCompany to issue any subscription, warrant, option, convertible security or other such right or to issue or distribute to holders of any ownership interests any evidences of indebtedness or assets of theCompany and (iii) theCompany has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any ownership interests or any other interest therein or to pay any dividend or distribution (except as specifically and expressly provided in theOperating Agreement). All of the issued and outstandingOwnership Interests have been offered, issued and sold by theCompany in compliance with applicable Federal and state securities laws.
C.Debtholders and Owners List. Listed on Exhibit 2.1C, “CareView Owners and Debtholders”, is a true and complete list of the debtholders and owners of theCompany, showing the amount of debt and the ownership interest in theCompany held by each debtholder and owner as of the date of thisAgreement and the consideration paid to theCompany, if any, for such instruments and interests.
D.Issuance of Ownership Interests. The issuance, sale, and delivery of theT2 Interest and theAdjusted Gross Income Interest in accordance with thisAgreement has been duly authorized by all necessary action on the part of theCompany, and theT2 Interest and theAdjusted Gross Income Interest when so issued, sold and delivered against payment therefor in accordance with the provisions of thisAgreement, will be duly and validly issued, fully paid and non-assessable.
E.Authority for Agreement. The execution, delivery and performance by theCompany and thePrincipalsof thisAgreement and all other agreements required to be entered into pursuant to thisAgreement have been duly authorized by all necessary action, and duly executed and delivered by theCompanyand thePrincipals. ThisAgreement and such other agreements constitute valid and binding obligations of theCompany enforceable in accordance with their respective terms. The execution of and performance of the transactions contemplated by thisAgreement and such other agreements to be executed and delivered by theCompany hereunder and compliance with their provisions by theCompany will not violate any provision of law and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, its charter documents and agreements or any indenture, lease, agreement or other instrument to which the
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Company are aParty or by which they or any of their properties are bound, or any decree, judgment, order, statute, rule or regulation applicable to theCompany.
F.Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any governmental authority is required on the part of theCompany in connection with the execution and delivery of thisAgreement, the offer, issue, sale and delivery of theT2 Interest and/or theAdjusted Gross Income Interest, or the other transactions contemplated by thisAgreement.
G.Litigation. There is no action, suit, proceeding or investigation pending, or, to the best of theCompany’sknowledge, any basis therefor or threat thereof, against theCompanywhich questions the validity of thisAgreementor the right of theCompanyto enter into it, or which might result, either individually or in the aggregate, in any material adverse change in the assets, condition (financial or otherwise), business or prospects of theCompany, nor is there any litigation pending, or, to the best of theCompany’sknowledge, any basis therefor or threat thereof, against theCompanyby reason of the past employment relationships, the proposed activities of theCompanyor negotiations by theCompanywith possible investors in theCompany.
H.Financial Statements; Absence of Liabilities. Financial Statements of the Company as of December 31, 2004, are being prepared. When they are completed they shall become attached hereto as Exhibit 2.1H, “CareView 2004 Financial Statements”, and shall be warranted by theCompany as a complete and correct copy of the balance sheet (the “Balance Sheet”) of theCompany as of December 31, 2004 and (the “Balance Sheet Date”), and the related statements of operations and of changes in financial position for the 12 months ended on December 31, 2004 (collectively, the “Financial Statements”). Moreover, theCompany warrants toT2 that as of February 28, 2005: i) there is no positive income or cash flow, and ii) that theCompanyis still in its start-up or founding stage. TheFinancial Statements shall be complete and correct, shall be in accordance with the books and records of theCompanyand shall present fairly the financial condition and results of operations of theCompany, as of the dates and for the periods indicated, and shall be prepared in accordance with generally accepted accounting principles in all material respects. TheCompanyshall not have, at theBalance Sheet Date, any liabilities of any type, whether absolute or contingent, which were not fully reflected on theBalance Sheet, and, since theBalance Sheet Date, theCompany has not incurred or otherwise become subject to any such liabilities or obligations except in the ordinary course of business and as set forth elsewhere herein.
I.Property and Assets. TheCompanyhas good and marketable title to all of its properties and assets, including all properties and assets reflected in theBalance Sheet, except those disposed of in the ordinary course of business, and none of such properties or assets is subject to any mortgage, pledge, lien, security interest, lease, charge or encumbrance.
J.Patents and Trademarks. Set forth on Exhibit 2.1J, “CareView Patents, Trademarks, etc.”, is a true and complete list of all patents, patent applications, trademarks, service marks, trademark and service mark applications, trade names, copyrights and
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licenses presently owned or held by theCompany or any or all of thePrincipalsand related to the business of theCompany (as currently conducted or anticipated). TheCompany owns or possesses all of the patents, trademarks, service marks, trade names, copyrights, proprietary rights, trade secrets, and licenses or rights to the foregoing, necessary for the conduct of theCompany’s business as conducted and as proposed to be conducted. To the best of theCompany’s knowledge, the business proposed by theCompany will not cause theCompany to infringe or violate any of the patents, trademarks, service marks, trade names, copyrights, licenses, trade secrets or other proprietary rights of any other person or entity.
K.Material Contracts and Obligations. Exhibit 2.1K, “CareView Contracts”, hereto lists all material agreements of any nature to which theCompany is aParty or by which it is bound.
L.Compliance. TheCompany has, in all material respects, complied with all laws, regulations and orders applicable to its present and proposed business and has all materials permits and licenses required hereby.
M.Absence of Changes. Since theBalance Sheet Date, there has been no material adverse change in the condition, financial or otherwise, net worth, prospects or results of operations of theCompany.
N.Disclosures. Neither thisAgreement nor any Exhibit hereto, nor any report, certificate or instrument furnished toT2 in connection with the transactions contemplated by thisAgreement, when read together, contains or will contain any material misstatement of fact or omits or will omit to state a material fact necessary to make the statements contained herein or therein not misleading. TheCompany knows of no information or fact which has or would have a material adverse effect on the financial condition, business or prospects of theCompany which has not been disclosed toT2. Each projection furnished toT2 was prepared with due care based on reasonable assumptions and represents theCompany’s best estimate of future results based on information available as of the date hereof, and no events have occurred that would require a material change in such assumptions.
O.Thompson Provisions. TheCompany acknowledges and agrees that but for theCompany’s entering into the terms of theNon-Article IV Terms,Thompson andT2 would not have entered into the terms of Article IV, “Thompson Services”. However, theCompany warrants and agrees: i) that the performance of the Article IV, “Thompson Services”, and/or any breach thereof byThompson and/orT2 shall have no legal and/or equitable impact whatsoever on theNon-Article IV Terms of thisAgreement; and ii) that a breach of theNon-Article IV Terms of thisAgreementby theCompanygrantsThompson andT2 the right to terminate theService Period without affecting its/their other rights, claims and/or causes of action against theCompany.
However, it is understood by the Parties thatT2 has entered into thisAgreement, simultaneously with the July 05, 2005 Engagement Letter (“Engagement Letter”) betweenCompany and Akin Gump Strauss Hauer & Feld, L.L.P. (“AG”) as referenced in Exhibit 2.1K, “CareView Contracts”; and neither thisAgreement nor theEngagement Letter shall supercede the other, butThompson’s and/orT2’s termination of theService
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Period as referenced above is grounds for theCompany’stermination of theEngagement Letter.But forTommy Thompson having entered into this Agreement,Companywould not have executed theEngagement Letter.
2.2Representations and Warranties of T2.T2 represents and warrants to theCompany as follows:
A.Investment.T2 is acquiring theT2 Interestand theAdjusted Gross Income Interest for its own account for investment and not with a current view to, or currently for sale in connection with, any distribution thereof, nor with any present intention of distributing or selling the same.
B.Authority. As of the fulfillment or waiver of theArticle IV Conditions Subsequent,T2 shall have been ratified with retroactive authority to enter into and perform thisAgreement in accordance with its terms as of the date first written above.
C.Authority for Agreement. The execution, delivery and performance of thisAgreement shall be duly authorized and ratified byT2as of the fulfillment or waiver of theArticle IV Conditions Subsequent. ThisAgreement and all other agreements or transactions contemplated within thisAgreement shall constitute valid and binding obligations ofT2, enforceable againstT2 in accordance with their respective terms.
D.Accredited Investor. All ofT2’s owners shall be “accredited investors” within the meaning of Rule 501 under the Securities Act and shall be experienced in evaluating and investing in companies such as theCompany, and are able to fend for themselves in the transactions contemplated by thisAgreement. The initialT2owners shall beThompson, Gerald L. Murphy and Dennis M. Langley and/or their family trusts.
ARTICLE III
RIGHTS OF T2
3.1Come-Along Rights. If at any time prior to anInitial Public Offering, any of thePrincipals wish to sell anyOwnership Interests owned by him/them (the “Selling Party”) to any person or entity (the “Purchaser”),T2 shall have the right, but not the obligation, to offer for sale to thePurchaser, the same proportion ofT2 Interest as the proposed sale represents with respect to the total number ofOwnership Interests that theSelling Party owns or has the right to acquire pursuant to outstanding options, warrants or convertible securities at the same price per percentage interest and on the same terms and conditions as involved in such sale by theSelling Party. Promptly after receiving an offer to sellOwnership Interests(an “Offer”), theSelling Party shall provide written notice of theOffer toT2.T2 shall notify theSelling Party of its intention as soon as practicable after receipt of theOffer made, but in no event later than 15 days after receipt thereof. TheSelling Party andT2, if it exercises its rights under this Section (a “Participating Shareholder”) shall sell to thePurchaser all of the interests proposed to be sold by them at not less than the price per percentage interest and upon other terms and conditions, if any, not more favorable to thePurchaser than those in theOffer provided by theSelling Party as
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provided above.T2’s rights under this Section shall be assignable to any subsequent purchaser of all or any portion of theT2 Interest.
3.2Information Rights. TheCompanywill deliver toT2:
A. Within 90 days after the end of each fiscal year, an audited balance sheet of theCompany as of the end of such year and audited statements of operations and statements of cash flows and statements of changes in owners’ equity of theCompany for such year, (a) prepared in accordance with generally accepted accounting principles consistently applied, and (b) accompanied by (i) an unqualified opinion of an independent accounting firm of recognized national standing and acceptable to the Investors, and (ii) a copy of such firm’s annual management letter to the Board;
B. Within 45 days after the end of each fiscal quarter (other than an end of a fiscal year) of theCompany, an unaudited balance sheet of theCompany as at the end of such quarter, unaudited statements of operations, statements of cash flows and statements of changes in owners’ equity of theCompanyfor such fiscal quarter and for the current fiscal year to the end of such fiscal quarter and setting forth comparisons to the annual budget and to the corresponding period in the preceding year and providing a narrative of management’s discussion and analysis of the results and prospects;
C. Within 20 days after the end of each calendar month (other than an end of a fiscal year), an unaudited balance sheet of theCompany as at the end of the prior month and unaudited statements of operations, statements of cash flows and statements of changes in owners’ equity of theCompany for such month and for the current fiscal year to the end of such month;
D. As soon as available, but in any event not later than 30 days after the commencement of each new fiscal year, a business plan that shall contain projected quarterly and annual financial statements and quarterly and annual operating and capital budgets for such upcoming fiscal year, and within 30 days after any monthly period in which there is a material adverse deviation from an annual or quarterly budget, an officer’s certificate explaining the deviation and what actions theCompany has taken and proposes to take with respect thereto; and
E. Promptly upon receipt thereof, any additional reports, management letters or other detailed information concerning significant aspects of theCompany’s operations and financial affairs given to theCompany by its independent accountants (and not otherwise contained in other materials provided hereunder).
T2 (or its representatives) shall have the right upon reasonable notice to inspect and audit any books and records of theCompany or any subsidiaries. The inspection and audit will be at the cost ofT2. However, if any payment ofAdjusted Gross Income Interest is more than 3% less than it should have been, then theCompany will pay the additional amount owed, interest at thePrime Rate plus 6 percentage points, and reimburseT2 for the fees and expenses of the audit or inspection.
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3.3Registration Rights. TheCompany hereby grantsT2 certainRegistration Rights as more particularly set forth in Exhibit 3.3, “Registration Rights”, the terms of which are incorporated herein.
3.4Rights of Transferees. Except as otherwise expressly provided herein, the rights and obligations of anyParty under thisAgreement shall be binding upon theCompany, thePrincipals andT2 and their respective heirs, executors, administrators, legal representatives, successor and assigns.
ARTICLE IV
THOMPSON SERVICES
4.1Chairman of the Board. Subject to the Article IV Conditions Subsequent, Thompson shall be the Chairman of the Board of theCompany, andThompson’s signature hereof shall constitute his conditional acceptance of such position with theCompany, upon the terms and conditions hereinafter set forth in this Article.Thompson shall serve asCompany’s Chairman of the Board during the Service Period.Thompson’s responsibilities will be: i) to provide executive services regarding senior level sales and marketing services forCompany, including making presentations, speeches and appearances promoting the products of theCompany and regarding health care topics to gatherings of senior personnel of the health care industry throughout the United States and in foreign countries; ii) to make follow-up targeted telephone calls and/or meetings regarding major transactions which theCompany reasonably believes are necessary to complete material transactions; and iii) to provide other services as mutually agreed upon by theParties (i, ii and/or iii above being referred to herein asThompson Article IV Services).
Notwithstanding the foregoing, theParties acknowledge that in performing services forCompany,Thompson shall not be required to provide services which conflict with the following: i) Thompson’s duties relating to other business enterprises, including meetings and/or activities on dates associated with being member of other companies’ Boards of Directors; ii) family and/or personal vacations and holidays; iii) periods of personal or family illness; iv) and other speeches and/or political activities previously scheduled. Moreover, absentThompson’s voluntary election to do so,Thompson shall not be required to spend more than 25% of his business related time, in his capacity as Chairman of the Board of Directors of theCompany and/or otherwise providing services hereunder.
TheService Period shall commence on the date first set forth above and shall end on May 31, 2008 (theInitial Service Period), and thereafter continuing in an evergreen fashion for successive three (3) year periods from June 1 to May 31 (each aSecondary Service Period); unless sooner terminated as provided in Section 4.3, “Termination of Service Period”,hereof, theService Periodmay be terminated by either i) theCompany or ii)Thompson andT2 at the end of theService Period or anySecondary Service Periodby delivery of a written notice of nonrenewal to the otherPartyat least ninety (90) days prior to the end of suchService PeriodorSecondary Service Period, as the case may be. ShouldCompany elect not to renew theService Period,Companyshall payT2in a lump sum on the date the Service Period ends two years’ worth of theAnnual Base Payment in effect on the date of the end of theService Period in question.
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4.2Article IV Payments. During theService Period:
A.Companyshall payT2 as compensation forThompson Article IV Services pursuant to this Section, anAnnual Base Payment of not less than Three Hundred Thousand Dollars ($300,000) of which One Hundred Thousand Dollars will be paid directly toT2 and Two Hundred Thousand Dollars will be paid toAGpursuant to the terms of theEngagement Letter.T2’s Annual Base Paymentshall be reviewed at least annually by the governing Board ofCompany and may be subject to increases at such reviews (but not decreases). As partial consideration for theAnnual Base Payment,T2 shall provide and employ at least one person attached to its Kansas City Office (Shawnee, Kansas) for Fifty Thousand, ($50,000) per year, who shall help coordinateThompson withCompany, and with the aide whom shall accompanyThompson,and assist in the services set forth in Subsection D, below.
B.Company shall provideThompson all rights and benefits which are provided for theCompany’s employees and any senior executive.In addition thereto,Company shall provideThompson directly (notT2) the following benefits at mutually agreeable levels: i) family health insurance coverage; ii) disability insurance; iii) travel by first class, charter and/or private aircraft; iv) a full-time personal aide (as further explained in Subsection 4.2 D below; v) a full-time personal driver to be employed byCompany; and vi) an automobile and insurance for such automobile. In addition,Company shall pay all ofT2’s andThompson’sfees and expenses in negotiating, preparing and entering into thisAgreement including without limitation, legal fees and expenses, travel, lodging, and meals.
C.Companyshall reimburseThompsonand T2for reasonable expenses incurred byThompsonand T2while working onCompanybusiness, in accordance with the greater of theCompany’s normal business expense reimbursement policies or as provided in Section 4.2 B above.
D. The personal aide: i) shall be an employee ofCompany; ii) shall accompany and assistThompson as a professional aide in allThompson’s business endeavors, including those not associated with theCompany; ii) shall become professionally versed inCompany’s business; iii) shall function as a constant liaison betweenThompson and theCompany andT2; iv) shall coordinate withThompson’s schedule vis-à-vis theCompany andThompson Article IV Services hereunder; v) shall briefCompany as to relevant data whichThompson has discovered vis-à-vis theCompany and/or potential clients; vi) shall coordinate materials, tasks and all other items desirable betweenCompany, T2 andThompson; and vii) shall be trained and briefed by theCompany on an as needed basis; and viii) shall perform any and all other liaison functions betweenThompson, theCompany andT2, and theCompany’s clients on an as needed basis. The aide shall communicate with theCompany andT2’s Kansas offices daily (Monday through Friday) regarding the above.
4.3Termination of Service Period.Thompson may be removed as the Chairman of the Board of Directors as provided for by theCompany’s governance documents, but theService
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Periodand theThompson Article IV Services may be terminated only as provided in this section and its subsections, to-wit:
A. Immediately upon the death ofThompson, and upon thirty (30) days prior written notice toThompson, in the eventThompson, by reason of physical or mentalDisability, shall be unable to perform a material portion of the services required ofThompson, hereunder for a continuous ninety (90) day period as determined byThompson’s primary physician.
B. ForCause, which for the purposes of this Article IV, “Thompson Services”, shall mean:
1. a material breach byThompsonof Article IV, “Thompson Services”, of thisAgreement which is not cured as provided for in Article V, “Dispute Resolution” and Exhibit 5.1, “Arbitration”.
2.Thompson’s commission of fraud or criminal activity againstCompany in any material respect or conviction of a felony which significantly impairs the reputation of, or otherwise harms,Company or its subsidiaries.
Cause, as a prerequisite, must be determined to exist by the vote of at least two-thirds (2/3rds) vote of all the Directors of the Board (includingThompson) of theCompany, and thereafter is subject to Article V, “Dispute Resolution”, and Exhibit 5.1, “Arbitration”, hereof.Thompson andT2 may terminate theService Period and theThompson Article IV Services hereunder if theCompanyis determined to be in material breach of any term of thisAgreement, regardless of whether such breach(s) relate(s) to the provisions of Article IV, “Thompson Services”, orNon-Article IV TermsifCompany is found to be in a material breach of any provision(s). Such termination of theService Period, shall not affect, offset and/or diminish the other damages, causes of actions, claims, etc. whichThompson and/orT2 may have against theCompany for any breach of theNon-Article IV Termsby theCompany.
C. Notwithstanding anything herein to the contrary, theNon-Article IV Terms of thisAgreement shall not be altered or affected in any manner whatsoever by the following: i) the breach of anyThompson Article IVservices byThompsonand/orT2, ii) the termination of theService Period,with or withoutCause,by theCompanyor byThompson, and/or iii) a determination by theArbitrator that thePartiesare obligated to one another for a breach of any of the terms of Article IV, “Thompson Services”.
4.4Article IV Conditions Subsequent. Although,Thompsonshall serve as the Chairman of the Board of theCompany, he shall not be required to provide any of the otherArticle IV Thompson Servicesand neither he norT2 shall commence to receive theAnnual Base Paymentsand/or other payments set forth in Section 4.2, “Article IV Payments”, until theArticle IV Conditions Subsequent have either transpired or been waived by theCompany,T2 andThompson. Once theArticle IV Conditions Subsequent have been fulfilled, the amount of theAnnual Base Paymentshall be retroactively applied from March 1, 2005, until the date of the
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fulfillment of such conditions subsequent, even thoughThompson andT2 may not have providedThompson Article IV Services or any other services during such period.
4.5Termination of Engagement Letter.It is understood by theParties thatT2has entered into thisAgreement, simultaneously with the July 05, 2005 Engagement Letter (“Engagement Letter”) betweenCompany and Akin Gump Strauss Hauer & Feld, L.L.P. (“AG”) as referenced in Exhibit 2.1K, “CareView Contracts”;and neither thisAgreementnor theEngagement Lettershall supercede the other. However,Thompson’s resignation or dismissal as Chairman of the Board of theCompany; orCompany’s non-renewal of theService Period as referenced in Section 4.1 “Chairman of the Board”; orThompson’s removal as the Chairman of the Board of Directors as provided for by theCompany’s governance documents or as provided for in Section 4.3 are grounds for theCompany’stermination of theEngagement Letter.ShouldThompson resign or be terminated from Akin Gump Strauss Hauer & Feld, L.L.P. (“AG”) during the course of thisAgreement, and theCompany elects to terminate theEngagement Letter, then payments toAG as depicted in theEngagement Letter, will subsequently be transferred as payments toT2for the remainder of thisAgreement. But forTommy Thompson having entered into this Agreement,Companywould not have executed theEngagement Letter.
ARTICLE V
DISPUTE RESOLUTION
5.1Disputes. Any and allDisputes between or among theParties shall be resolved by suchPartiespursuant to this Article V, “Dispute Resolution”, and Exhibit 5.1, “Arbitration”, the terms of which are incorporated herein.
5.2Resolution of Purported Breaches by the Parties. In the event aParty believes the otherPartyis in breach of the terms hereof for any reason(s), it shall provide written notice of such purported breach(es) describing such breach(es) with particularity (in fact and in legal impact) and the purported breachingParty shall be granted thirty (30) days from its actual receipt of such notice to cure said breach(es) if it concurs that the complaint(s) constitutes a breach(s) hereof, and if so cured by the purported breachingParty, the breach(es) shall be deemed to have never occurred. In the event theParties cannot agree as to whether the complaint(s) constitutes a breach(es) of the terms hereof, or the purported breachingParty does not elect to undertake the expense of resolving the complaint(s), then theParties agree to submit the facts to an appropriate court pursuant to the subsequent Sections of this Article V, “Dispute Resolution”, and Exhibit 5.1, “Arbitration”. If the court determines any action or inaction of the purported breachingPartyin fact constitutes a breach(es) of the terms hereof, then the breachingPartyshall have thirty (30) days from the date the court’s decision becomes final to cure said breach(es), and if so cured by the breachingParty, shall be deemed to have never occurred. Unless expressly specified otherwise herein to the contrary, a breachingParty shall only be obligated to the non-breachingParty for said non-breachingParty(s) actual damages (plusInterestthereon from the date of the occurrence or loss) proximately caused by the breach of theAgreement. In no event shall the remedy of termination or cancellation of theAgreementbe employed, permitted or decreed; and, unless specified otherwise herein to the contrary, aParty shall not be responsible for punitive or consequential damages for a breach of theAgreement.
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Specific performance and other equitable remedies, unless otherwise barred herein are expressly stipulated by thePartiesto be with the discretion, authority and purview of the court.
5.3Payment Cures. The cure of any monetary payment breach shall require the breachingParty to pay the full amount due, plusInterest thereon during the period that the amount due remains unpaid. In the alternative, theParty alleged to be in default may place the disputed amount in an interest-bearing,Third Party escrow account, and the Party(s) ultimately determined to be entitled to such amount shall receive theInterest accrued thereon in such escrow account.
5.4Governing Law. ThisAgreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware applicable to agreements made and to be performed entirely within such state, including all matters of enforcement, validity and performance.
ARTICLE VI
MISCELLANEOUS
6.1Notices. Any Notice required or permitted to be given hereunder shall be in writing shall be: (i) personally delivered; and/or (ii) transmitted by postage pre-paid first class certified United States mail return receipt requested; and/or (iii) transmitted by pre-paid, overnight courier (e.g. FedEx, DHL, UPS, etc . . .). Duplicative notices may be given in writing by: United States mail (not certified and no return receipt), facsimile (fax) and/or e-mail. AllNotices and other communications shall be deemed to have been duly given, received and effective on the earlier of: (i) the date of receipt if delivered personally; (ii) the second business day after the date of transmission if by overnight courier; (iii) the date the return receipt is signed by the receivingParty in the case of pre-paid postage; or (iv) the date of actual receipt if the same can be demonstrated by other evidence (including parole evidence). AnyParty may unilaterally change its address for purposes hereof byNoticegiven to the otherParty.Notices hereunder shall be directed to the following agents of theParties at the following addresses:
Company | CareView Communications, L.L.C. | |
Attn: David E. Webb, President | ||
5000 Legacy Drive, Suite 470 | ||
Plano, TX 75024 | ||
T2 | T2 Consulting, LLC | |
Attn: Dennis M. Langley | ||
5225 Renner Road | ||
Shawnee, Kansas 66217 | ||
Thompson | Tommy G. Thompson | |
3101 North Hampton Drive, #1611 | ||
Alexandria, VA 22302 |
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The following additional contact information is also being provided:
CareView Communications, L.L.C. | ||||
Telephone: 972-943-6000 | ||||
Fax: 972-403-7659 | ||||
E-mail: | davidw@horizonmc.net | |||
norma.wolfson@horizonmc.net | ||||
T2 Consulting, LLC | ||||
Telephone: (913) 962-9999 | ||||
Fax: (913) 962-6517 | ||||
E-mail:dlangley@e3-llc.com | ||||
Tommy G. Thompson | ||||
Telephone: 202-494-3486 | ||||
Fax: 202-756-0274 | ||||
E-mail: tthompson@logisticshealth.com |
6.2Further Assurances. TheParties hereby agree to execute, acknowledge and deliver to each other any further writings, documents, transfers, acknowledgements, instruments, powers of attorney, authorizations, filings, applications, reports, etc. that may be reasonably required to give full force and effect to the provisions of thisAgreement, and to take such further actions reasonably required in fulfillment of obligations set forth herein or in furtherance of the intent hereof.
6.3Severability. The provisions of thisAgreement are severable, so that the invalidity or unenforceability of any provision of thisAgreement shall not affect the validity or enforceability of any other term or provision of thisAgreement, which shall remain in full force and effect.
6.4Specific Performance. In addition to any and all other remedies that may be available at law in the event of any breach of thisAgreement,T2 shall be entitled to specific performance of the agreements and obligations of theCompany hereunder and to such other injunctive or other equitable relief as may be granted by a court of competent jurisdiction.
6.5Governing Law. ThisAgreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware.
6.6Amendments. ThisAgreement constitutes the full and complete agreement of theParties hereto with respect to the subject matter hereof. ThisAgreement may be amended, modified, terminated or waived (in any one instance or generally and whether retroactively or prospectively): i) by a writing signed by theCompany andT2 regardingNon-Article IV Terms; and ii) if it relates to Article IV, “Thompson Services”, byThompson, T2,and theCompany.
6.7Counterparts. ThisAgreement may be executed in any number of counterparts, each of which shall constitute oneAgreement binding on all theParties hereto and may be executed by facsimile.
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6.8Noncompetition. EachParty and theirAffiliated Entities undertakes that it shall not, for so long as it owns any interest in theCompany and for a period of twenty-four (24) months after it ceases to own any interest in theCompany, solicit or entice away or attempt to solicit or entice away from theCompany, the otherParty and/or any of theirAffiliated Entities any employees, customers or any Person who is or has at any time within thirty six (36) months prior to the date in question been or employee, customer, client, agent or correspondent of, or in the habit of dealing with, theCompany.
6.9.Noncircumvention. No Party nor any of theirAffiliated Entities shall directly or indirectly circumvent, avoid, bypass, or in any way obviate theCompany’s or any otherParty’s rights under thisAgreement. The terms of thisAgreement are binding uponAffiliated Entities of theParty’sto the extent anyAffiliated Entity(s) violate(s) or proximately causes a violation of any of the terms of thisAgreement. In the event of a violation proximately caused by anAffiliated Entity(s) of anyParty,theParty which is affiliated therewith agrees to be pecuniarily liable to the otherParty(s) of theCompanyas if they had directly violated the terms hereof. In the event anAffiliated Entity(s) violates or proximately causes a violation of the terms hereof, the Party, which is affiliated with suchEntity shall indemnify and keep the otherParty(s) and theCompany whole as if it/he had directly violated the terms hereof, and the aggrievedParty(s) shall be entitled to attach and/or to offset the share of any proceeds of suchParty under thisAgreement. Notwithstanding the above, theAffiliated Entity(s) of anyParty shall NOT be liable to any otherParty orCompany for violations of thisAgreement, proximately caused by aParty hereto without the willful, material, in such violation by theAffiliated Entity(s).
Remainder of Page Intentionally Left Blank
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IN WITNESS WHEREOF, thisAgreement has been executed by theParties hereto as of the day and year first above written or consent to and ratify as if executed on such date.
THE COMPANY: | ||
CAREVIEW COMMUNICATIONS, L.L.C. | ||
By: | /s/ Henry Burklhalter | |
Henry Burkhalter | ||
Chairman |
Attested by: | /s/ Ronald F. Beck | |
Ronald F. Beck | ||
President and CEO |
Principals of CareView for purposes of assenting to all of the terms hereof and of being bound personally by the terms of the last paragraph of Section 1.2, “Purchase and Sale of Interests”, hereof. | ||
Cazatur Group, LLC | ||
By: | /s/ Henry Burkhalter | |
Henry Burkhalter | ||
Manager | ||
Recap Group, LLC | ||
By: | /s/ David E. Webb | |
David E. Webb | ||
Manager |
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Investsearch Management, LLC | ||
By: | /s/ David E. Webb | |
David E. Webb | ||
Manager | ||
Investsearch, LLC | ||
By: | /s/ David E. Webb | |
David E. Webb | ||
Manager | ||
Dozer Man, LLC | ||
By: | /s/ Allen Wheeler | |
Allen Wheeler | ||
Manager | ||
Beck Financial, Corp. | ||
By: | /s/ Ronald F. Beck | |
Ronald F. Beck | ||
President | ||
/s/ Tommy G. Thompson | ||
Tommy G. Thompson, Personally, but only for the provisions set forth in Article IV, “Thompson Services”, regardingThompson Article IV Services |
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T2 as an Unincorporated Association pending ratification by T2 Consulting, LLC | ||
By: | /s/ Dennis M. Langley | |
Dennis M. Langley, Member | ||
By: | /s/ Tommy G. Thompson | |
Tommy G. Thompson, Member | ||
By: | /s/ Gerald L. Murphy | |
Gerald L. Murphy, Member |
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RATIFICATION
T2 Consulting, LLC hereby ratifies and accepts theAgreement effective this 24th day of May, 2005, and accepts the liability ofT2 pursuant to theAgreement from February 28, 2005, until this ratification date.
T2 Consulting, LLC | ||
By: | /s/ Dennis M. Langley | |
Dennis M. Langley, Manager | ||
By: | /s/ Tommy G. Thompson | |
Tommy G. Thompson, Manager | ||
By: | /s/ Gerald L. Murphy | |
Gerald L. Murphy, Manager |
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EXHIBIT 1.1
GLOSSARY
Aside from definitions, various Sections and Subsections of thisGlossary,Exhibit 1.1 may and shall contain material and substantive contractual terms and expressions of intent. Terms in the singular shall have the same meanings when used in the plural and vice versa, and any gender designation shall refer to all genders. The following terms shall be used throughout theAgreement in accordance with the definitions ascribed to them in thisGlossary, to-wit:
AAA means the American Arbitration Association.
Adjusted Gross Income Interest means an income interest in theCompany reflecting rights to 5% of (a) all revenue of any type or nature and from whatever source received by theCompany and its subsidiaries; less (b) pre-tax , nondebt service, payments toPersons which are notAffiliates or employees of theCompany, if any, made in the ordinary course of theCompany’s business in the nature of third party, nondebt, cost of goods sold (and not general and administrative expenses) (e.gs., payments to hospitals and programming costs for movies). TheAdjusted Gross Income Interest will be paid no later than the 15th day of each calendar month. Payments will be accompanied by a report reasonably acceptable toT2. In the eventThompson should fail to complete theService Period through to May 31, 2008, by virtue of his death orDisability, then theAdjusted Gross Income Interestshall be reduced to an amount equal to the product of the following formula, to-wit: five percent (5%) multiplied by a fraction, the denominator of which shall be 1095, and the numerator of which shall be the number of days from and including June 1, 2005, through and including the day ofThompson’s death orDisability.
Affiliated Entity orAffiliate shall be deemed affiliated as to each other to the extent: (a) one of theEntities directly or indirectly controls, or is controlled by, the operations of the other, or the direct or indirect control of one of theEntities is exercised by the officers, directors, stockholders, or partners of the otherEntity (whether or not such persons exercise such control in their capacities as officers, directors, stockholders, or partners); or (b) one of theEntities directly or indirectly owns, and/or its officers, directors, stockholders or partners (limited or general) directly or indirectly own, a fifteen percent (15%) or greater interest in the capital and/or profits of the otherEntity.
Agreementshall mean the “Subscription and Investor Rights Agreement” to which thisGlossary is attached as Exhibit 1.1.
Akin Gump Strauss Hauer & Feld, L.L.P.(AG)shall mean the entity referenced in Exhibit 2.1K, “CareView Contracts”.
Annual Base Payment shall be ascribed the meaning given thereto in Subsection A of Section 4.2, “Article IV Payments”.
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Arbitrationshall have the meaning operationally ascribed thereto in Article V, “Dispute Resolution” of theAgreement and Exhibit 5.1, “Arbitration”.
Arbitration Actshall mean the Federal Arbitration Act of the United States and anyLaws governingArbitration in effect in the State of Delaware.
Arbitratormeans an arbitrator selected in accordance withExhibit 5.1, “Arbitration”,of theAgreement.
Article IV Conditions Subsequentmeans that the following two (2) conditions subsequent have occurred: i) theCompany shall have received financing and capitalization from Easton Hunt Capital Partners, L.P., Easton Hunt New York, L.P. and/or otherEntity reasonably acceptable toT2 which is sufficient (inT2’s judgment) to adequately capitalize theCompany, and ii) shall have contracts with two (2) federal hospitals and one (1) private sector hospital.
Cause shall be ascribed the meaning given thereto in Section 4.3, “Termination of Service Period”.
Commission means the Securities and ExchangeCommission or any other Federal agency at the time administering theSecurities Act.
Company shall meanCareView Communications, L.L.C., a Texas Limited Liability Company.
Disabilityshall have the meaning ascribed thereto in Subsection A of Section 4.3, “Termination of Service Period”.
Disputemeans any claims, disputes and/or other matters in questions arising out of, or relating to thisAgreement or the breach hereof.
Engagement Letter means the July 05, 2005 Engagement Letter (“Engagement Letter”) betweenCompany and Akin Gump Strauss Hauer & Feld, L.L.P. (“AG”) as referenced in Exhibit 2.1K, “CareView Contracts”.
Exchange Actmeans the SecuritiesExchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of theCommission issued under such Act, as they each may, from time to time, be in effect.
Governmental AuthorityorGovernmental Entityshall mean any (and all) juridical and/or governmental body(s), agent(s), agency(s), board(s), commission(s), organization(s), task force(s), staff(s), representative(s), council(s), court(s), tribunal(s), committee(s), panel(s), group(s), body(s), department(s), division(s), person(s),Entity(s), etc. whether at the federal, national, provincial, local, reserve, regional, city, municipal, county, parish level, and/or any other level(s) of government including inter-governmentalEntities of any government including, but not limited to any and all legislative, executive, judicial, quasi-judicial, quasi-legislative, and administrativeEntity(s) whether they function in an authoritative role, police enforcement function, management capacity, legal capacity, judicial capacity, oversight role, and/or any role, capacity or function whose power and authority is ultimately derived from a government.
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Initial Service Periodshall have the meaning ascribed thereto in Section 4.1, “Chairman of the Board”.
Initial Public Offeringmeans the effective date of aRegistration Statement covering theCompany’s (or its successor’s or subsidiaries) first underwritten public offering of equity securities, resulting in gross proceeds to theCompany of at least $10,000,000.
Law shall mean any and all rule(s), by-law(s), law(s), constitution(s), common law(s), statute(s), code(s), regulation(s), ordinance(s), precept(s), practice(s), canon(s), procedure(s), directive(s), order(s), judgment(s), estoppel(s), injunction(s), authoritative statement(s), etc. of anyGovernmental Authority.
Non-Article IV Termsshall mean any and all terms of theAgreement which are not set forth in Article IV, “Thompson Services”.
Offershall be ascribed the meaning given thereto in Section 3.1, “Come-Along Rights”.
Ownership Interestmeans any ownership interest of anyPerson in theCompany.
Participating Shareholder shall be ascribed the meaning given thereto in Section 5 of theAgreement.
Party(s) shall be ascribed the meaning given thereto in the first paragraph of theAgreement as further explained in this definition. TheCompany andT2 areParties hereto for all purposes. The principals areParties hereto i) for the limited purposes of assenting to the terms hereof vis-à-vis theCompany, ii) for accepting the pre-incorporation status ofT2 and post incorporation ratification hereof byT2, and iii) in contractual privity toT2 for the provisions set forth in the last paragraph of Section 1.2, “Purchase and Sale of Interests”.Thompson is aParty hereto for the limited purpose of the provisions set forth in Article IV, “Thompson Services”.
Person orEntitymeans any corporation, proprietorship, partnership (general or limited), natural person, trust, estate, foundation, association or any other entity or group.
Prime Rate means the rate of interest set forth from time to time as thePrime Rate in theWall Street Journal.
Principal(s)shall be ascribed the meaning given thereto in the first paragraph of thisAgreement.
Purchasershall be ascribed the meaning given thereto in Section 3.1, “Come-Along Rights”.
Registration Statementmeans a registration statement filed by theCompany with theCommission for a public offering and sale of securities of theCompany (other than a registration statement on Form S-8 or Form S-4, or their successors, or any other similar form, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another corporation).
Registration Expensesmeans all expenses incurred by theCompany in complying with Section 8 of theAgreement, including, without limitation, all registration and filing fees, exchange listing
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fees, printing expenses, fees of accountants for theCompany, fees and disbursements of counsel for theCompany and the fees and expenses (not in excess of $20,000) of one counsel selected byT2 to representT2, state blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration, but excluding underwriting discounts, selling commissions or any other brokerage or underwriting fees and expenses.
Registrable Shares means (i) the shares of Common Stock issued or issuable upon conversion of theT2 Interest and (ii) any other securities of theCompany or any converted company then owned byT2 or its successors or assigns.
Secondary Service Periodshall have the meaning ascribed thereto in Section 4.1, “Chairman of the Board”.
Service Period shall have the mean ascribed to it in Section 4.1, “Chairman of the Board”.
Securities Act means theSecurities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of theCommission issued under such Act, as they each may, from time to time, be in effect.
Selling Partyshall be ascribed the meaning given thereto in Section 3.1, “Come-Along Rights”.
T2 is aPartyto theAgreement. As of the date of theAgreement,T2 will be an unincorporated association amongThompson, Gerald L. Murphy, Dennis M. Langley and/or their family trusts. As of the date of the fulfillment or waiver of theArticle IV Conditions Subsequent,T2 shall be a Delaware limited liability company. TheCompanyand thePrincipals accept such status of T2 and agree to be bound by the terms of theAgreement toT2 in its incorporated state (i.e. to be bound toThompson, Gerald L. Murphy, Dennis M. Langley and/or their family trusts), until the formation ofT2 as a Delaware limited liability company and thereafter to be bound toT2, as a limited liability company. The official name ofT2 as of its formation as a Delaware limited liability company shall be T2 Consulting, LLC. OnceT2 has been formed and has ratified thisAgreement, Dennis M. Langley, Gerald L. Murphy and/or their family trusts shall be personally released from any and all obligations hereunder, andThompson shall be personally released from any and all obligations hereunder, except, and only except, those set forth inArticle IV, “Thompson Services”.
T2 Approved Recapitalizationshall mean any additional capitalization by theCompany, approved in writing byT2, which has the effect of dilutingT2 Interest. In no event whatsoever, shall theT2 Interest be diluted if the other then existing equity interests of thePrincipalsand theCompanyare not being diluted proportionately with theT2 Interest.T2 may reject any proposedT2 Approved Recapitalizationfor any or no reason in its sole and absolute discretion.
T2 Interestshall have the meaning ascribed thereto in Section 1.2, “Purchase and Sale of Interests”.
Third Party means aPerson not affiliated with anyParty.
Thompson shall mean Tommy G. Thompson.
Thompson Article IV Services shall be ascribed the meaning given thereto in Section 4.1, “Chairman of the Board”.
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EXHIBIT 1.2
OPERATING AGREEMENT OF CAREVIEW
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EXHIBIT 2.1B
CAREVIEW CAPITALIZATION
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EXHIBIT 2.1C
CAREVIEW OWNERS AND DEBTHOLDERS
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EXHIBIT 2.1H
CAREVIEW 2004 FINANCIAL STATEMENTS
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EXHIBIT 2.1J
CAREVIEW PATENTS, TRADEMARKS, ETC.
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EXHIBIT 2.1K
CAREVIEW CONTRACTS
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EXHIBIT 3.3
REGISTRATION RIGHTS
(a).Certain Definitions. As used in this Exhibit 3.3, “T2” meansT2 and anyPersons orEntities to whom the rights granted under this Section are transferred byT2 and their successors or assigns.
(b).Required Registrations.
(i) At any time after the earlier of (A) December 31, 2007 or the end of the nine-month period commencing on theInitial Public Offering pursuant to aRegistration Statement,T2 may request, in writing, that theCompany effect a tax-free conversion of theCompany into a corporation and the subsequent registration on Form S-1, or if available, Form S-2 (or any successor form) of all or any part ofRegistrable Shares owned byT2 having an aggregate offering price of at least $500,000 (based on the then current market price or fair value). IfT2 intends to distribute theRegistrable Shares by means of an underwriting, it shall so advise theCompany in their request of such intention and of their selection of an underwriter (which selection shall be subject to the consent of theCompany, which consent shall not be unreasonably withheld).
(ii) At any time after theCompany becomes eligible to file aRegistration Statement on Form S-3 (or any successor form relating to secondary offerings),T2 may request theCompany, in writing, to effect the registration on Form S-3 (or such successor form), ofRegistrable Shares having an aggregate offering price of at least $500,000 (based on the current public market price). Thereupon, theCompany shall, as expeditiously as possible, use its best efforts to effect to the registration of allRegistrable Shares which theCompany has been requested to register.
(iii) TheCompanyshall not be required to effect more than two registrations pursuant to subsection (b)(i) above, but there shall be no numerical limitation on the number of registrations that theCompanyshall be required to affect pursuant to subsection (b)(ii) above; provided however, only the first three registrations pursuant to subsection (b)(ii) above will be atCompany’s expense with additional such registrations to be at the expense of the holders of the shares to be registered.
(iv) If at the time of any request to registerRegistrable Shares pursuant to this Section, theCompany is engaged or has bona fide plans to engage, within 30 days of the time of the request, in a registered public offering as to whichT2 may includeRegistrable Shares pursuant to subsection (b) or is engaged in any other activity which, in the good faith determination of theBoard, would be adversely affected by the requested registration to the material detriment of theCompany, then theCompany may at its option direct that such request be delayed for a period not in excess of three months from the effective date of such offering or the date of commencement of such other material activity, as the case may be.
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(c).Incidental Registration.
(i) Whenever theCompany proposes it any time after theInitial Public Offering and from time to time to file aRegistration Statement that contemplates the sale of Common Stock and is on a form which would allow registration of theRegistrable Shares, it will, prior to such filing, give written notice toT2 of its intention to do so and, upon the written request ofT2 given within 10 days after theCompany provides such notice, theCompany shall use its best efforts to cause allRegistrable Shares which theCompany has been requested byT2 to be registered under theSecurities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request ofT2; provided, however, that theCompany shall have the right to postpone or withdraw any registration proposed pursuant to this subsection (d) without obligation toT2.
(ii) In connection with any offering under subsection (c)(i) involving an underwriting, theCompany shall not be required to include anyRegistrable Shares in such underwriting unless the holders thereof accept the terms of the underwriting as agreed upon between theCompany and the underwriters selected by it, and then only in such quantity as will not, in the opinion of the underwriters, jeopardize the success of the offering by theCompany. If in the written opinion of the managing underwriter the registration of all, or part of, theRegistrable Shares which the holders have requested to be included would materially and adversely affect such public offering, then theCompany shall be required to include in the underwriting only that number ofRegistrable Shares, if any, which the managing underwriter believes may be sold without causing such material adverse effect, but in no event shall the amount ofRegistrable Shares included in the offering be reduced below 10% of the total amount of securities included in the offering. If the number ofRegistrable Shares to be included in the underwriting in accordance with the foregoing is less than the total number of shares which the holders ofRegistrable Shares have requested to be included, then the holders ofRegistrable Shares who have requested registration shall participate in the underwriting pro rata based upon the number ofRegistrable Shares of that the holders have requested to be so included.
(d).Registration Procedures. If and whenever theCompany is required by the provisions of this Agreement to use its best efforts to effect the registration of any of theRegistrable Shares under theSecurities Act, theCompany shall:
(i) File with theCommission aRegistration Statement with respect to suchRegistrable Shares and use its best efforts to cause thatRegistration Statement to become and remain effective;
(ii) As expeditiously as possible prepare and file with theCommission any amendments and supplements to theRegistration Statement and the prospectus included in theRegistration Statement as may be necessary to keep theRegistration Statement effective for a period of not less than 60 days from the effective date;
(iii) As expeditiously as possible furnish toT2 such reasonable numbers of copies of the prospectus, including a preliminary prospectus, in the conformity with the
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requirements of theSecurities Act, and such other documents asT2 may reasonably request in order to facilitate the public sale or other disposition of theRegistrable Shares owned byT2;
(iv) As expeditiously as possible use its best efforts to register or qualify theRegistrable Shares covered by theRegistration Statement under the securities or blue sky laws of such states asT2 shall reasonably request, and do any and all other acts and things that may be necessary or desirable to enableT2 to consummate the public sale or other disposition within such states of theRegistrable Shares owned byT2; provided, however, that theCompany shall not be required in connection with this clause (iv) to qualify as a foreign corporation in any jurisdiction, execute a general consent to service of process in any jurisdiction, or subject itself to taxation in any jurisdiction; and
(v) Use its best efforts to cause theRegistrable Shares to be listed on the principal securities exchange on which similar securities of theCompany are there listed, if any, if the listing of such shares is then permitted under the rules of such exchange.
If theCompany has delivered preliminary or final prospectuses toT2 and after having done so the prospectus is amended to comply with the requirements of theSecurities Act, theCompany shall promptly notifyT2 and, if requested,T2 shall immediately cease making offers ofRegistrable Shares and return all prospectuses to theCompany. TheCompany shall promptly provideT2 with revised prospectuses and, following receipt of the revised prospectuses and compliance with any related requirements of theSecurities Act and any applicable state securities or blue sky laws,T2 shall be free to resume making offers of theRegistrable Shares.
(e).Allocation of Expenses. TheCompany will pay allRegistration Expenses of all registrations under this Agreement; provided, however, that if a registration is withdrawn at the request ofT2 (other than as a result of information concerning the business or financial condition of theCompany which is made known toT2 after the date on which such registration was requested) and ifT2 elects not to have such registration counted as a registration requested under subsection (b), T2 shall pay theRegistration Expenses of such registration pro rata in accordance with the number of theirRegistrable Shares included in such registration.
(f).Indemnification.
(i) In the event of any registration of any of theRegistrable Shares under theSecurities Act pursuant to this Agreement, theCompany will indemnify and hold harmless the seller of suchRegistrable Shares, each underwriter of suchRegistrable Shares, and each other person, if any, who controls such seller or underwriter within the meaning of theSecurities Act or theExchange Act against any losses, claims, damages or liabilities, joint or several, to which such seller, underwriter or controlling person may become subject under theSecurities Act, theExchange Act, state securities or blue sky laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue
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statement of any material fact contained in anyRegistration Statement under which suchRegistrable Shares were registered under theSecurities Act, any preliminary prospectus or final prospectus contained in theRegistration Statement, or any amendment or supplement to suchRegistration Statement, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and theCompany will reimburse such seller, underwriter and each such controlling person for any legal or any other expenses reasonably incurred by such seller, underwriter or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that theCompany will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon (i) any untrue statement or omission made in suchRegistration Statement, preliminary prospectus or prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to theCompany, in writing, by or on behalf of such seller, underwriter or controlling person specifically for use in the preparation thereof or (ii) the failure of such seller to delivery copies of the prospectus in the manner required by theSecurities Act.
(ii) In the event of any registration of any of theRegistrable Shares under theSecurities Act pursuant to this Agreement, each seller ofRegistrable Shares, severally (and not jointly or jointly and severally), will indemnify and hold harmless theCompany, each of its directors and officers and each underwriter, if any, and each person, if any, who controls theCompany or any such underwriter within the meaning of theSecurities Act or theExchange Act, against any losses, claims, damages or liabilities, joint or several, to which theCompany, such directors and officers, underwriter or controlling person may become subject under theSecurities Act,Exchange Act, state securities or blue sky laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in anyRegistration Statement under which suchRegistrable Shares were registered under theSecurities Act, any preliminary prospectus or final prospectus contained in theRegistration Statement, or any amendment or supplement to theRegistration Statement or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to theCompany by or on behalf of such seller, specifically for use in connection with the preparation of suchRegistration Statement, prospectus, amendment or supplement; provided, however, that, the obligations of a seller hereunder shall be limited to an amount equal to the proceeds to the seller arising from the sale ofRegistrable Shares as contemplated herein where any such losses, claims, damages or liabilities are not determined to be caused at least primarily by any untrue statement of material fact made by, or any omission to state a material fact by, such Seller.
(iii) EachParty entitled to indemnification under this Section (the “Indemnified Party”) shall give notice to theParty required to provide indemnification (the “Indemnifying Party”) within a reasonable period of time after suchIndemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit
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theIndemnifying Party to assume the defense of any such claim or any litigation resulting there from; provided, however, that counsel for theIndemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by theIndemnified Party (whole approval shall not be withheld unreasonably). TheIndemnified Party may participate in such defense at suchParty’s expense; provided, however, that theIndemnifying Party shall pay such expense if representation of suchIndemnified Party by the counsel retained by time Party would be inappropriate due to actual or potential differing interests between theIndemnified Party and any otherParty represented by such counsel in such proceeding. NoIndemnifying Party in the defense of any such claim or litigation shall, except with the prior written consent of eachIndemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to suchIndemnified Party of a release from all liability in respect of such claim or litigation, and noIndemnified Party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of theIndemnifying Party.
(g).Indemnification with Respect to Underwritten Offering. In the event thatRegistrable Shares are sold pursuant to aRegistration Statement in an underwritten offering pursuant to subsection (b)(i), theCompany agrees to enter into an underwriting agreement containing customary representations and warranties with respect to the business and operations of an issuer of the securities being registered and customary covenants and agreements to be performed by such issuer, including without limitation customary provisions with respect to indemnification by theCompany of the underwriters of such offering.
(h).Information by Holder. Each holder ofRegistrable Shares included in any registration shall furnish to theCompany such information regarding such holder and the distribution proposed by such holder as theCompany may request in writing if it is required in connection with any registration, qualification or compliance referred to in this Section.
(i).Limitation on Subsequent Registration Rights. TheCompany shall not, without the prior written consent ofT2, enter into any agreement (other than thisAgreement) with any holder or prospective holder of any securities of theCompany or any assignee or successors which would allow such holder or prospective holder to demand that his securities in theCompany or any assignee or successors be registered or that his securities be included in any registration filed under subsection (b) or (c).
(j).Rule 144 Requirements. After the earliest of (i) the closing of the sale of securities of theCompany pursuant to aRegistration Statement, (ii) the registration by theCompany of a class of securities under Section 12 of theExchange Act or (iii) the issuance by theCompany of an offering circular pursuant to Regulation A under theSecurities Act, theCompany or any assignee or successors agrees to:
(i) Make and keep public information available, as those terms are understood and defined in Rule 144 under theSecurities Act;
(ii) Use its best efforts to file with theCommission in a timely manner all reports and other documents required of theCompany or any assignee or successors under the
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Securities Act and theExchange Act (at any time after it has become subject to such reporting requirements); and
(iii) Furnish to any holder of Registrable Shares upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days following the closing of the first sale of securities by the Company pursuant to a Registration Statement), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly reports of the Company, and such other reports and documents of the Company as such holder may reasonably request to avail itself of any similar rule or regulation of the Commission allowing it to sell any such securities without registration.
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EXHIBIT 5.1 ARBITRATION
This Exhibit is to that particularAgreementbetweenCareView and T2 Consulting.The terms of this Exhibit and theAgreementare hereby incorporated into one another. It is the expressed intent of theParties that any and allDisputes between and among theParties and theirAffiliated Entities (including their officers, directors, shareholders, employees, elected officials, etc.), regardless of the nature thereof, which have not been resolved or cured by theParties as described in Article V, “Dispute Resolution,” of theAgreement, shall be submitted toArbitration (pursuant to the terms of theAgreement and this Exhibit thereto) under the applicable Rules and Procedures ofArbitration of the American Arbitration Association (AAA). TheParties further stipulate that the decision or award rendered from saidArbitration will be enforceable under the Federal Arbitration Act of the United States and/or comparable arbitration enforcement laws in theUSA.
1.Arbitration Notice.Notice of the demand forArbitration shall be filed in writing with the otherParties to theAgreement as provided for in Article V, “Dispute Resolution” and with theAAA. The demand forArbitration shall be made within a reasonable time (not less than ten (10) days and not more than sixty (60) days) after the notice is received. In no event shall notice be given after the date when the institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations or statute of repose. Notice to eachParty shall be given as provided in Section 6.1, “Notices”, of theAgreement.
2.Choosing an Arbitrator. TheParties agree to have one (1) disinterested and independentArbitratorappointed by the Federal District Court in Kansas City, Kansas to sit during theArbitration proceedings and render an award thereon. The court appointedArbitrator shall be an attorney or judge with a background in corporate law and business transactions.
3.Location of Hearing; Language. ActualArbitrationhearings shall take place in the Kansas City Metropolitan Area unless otherwise mutually agreed to, in writing.
4.Discovery. Unless otherwise agreed by theParties, theParties will be entitled to conduct discovery prior to the hearing, on a schedule to be agreed to by theParties or established by theArbitrator,consisting of production of documents relevant to theDispute, depositions of witnesses having knowledge relevant to theDispute,and depositions (and production of reports if prepared) of any expert witness the otherParty intends to call at theArbitration hearing.
5.Presentation of Arguments.Absent the mutual agreement of theParties to the contrary, all arguments must be presented in no more than thirty (30) days after the start of theArbitrationhearings. Failure to present arguments within the time allotted shall be considered a default only in respect to the matter presented forArbitration.If anyPartyso defaults, it hereby agrees to forfeit all other remedies available to it inLaw, equity or otherwise for the matter being arbitrated only.
6.Rendering of Award. After each side rests in theArbitrationhearing, the award of theArbitratormust be rendered in writing within ten (10) days; however, an award rendered extrinsic of such time frame shall be valid and binding on theParties. If either Party believes the
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award to be ambiguous or unclear in any manner, it shall submit its questions in writing to theArbitratorand to the otherParty which may elect to submit comments on the questions in writing to theArbitratorand to the questioningParty within ten (10) days, and theArbitratorshall respond thereto in writing within ten (10) days of their receipt of the later of the questions or the comments on the questions.
7.Remedies and Rules of Construction. In theArbitrationof anyDisputebetween theParties hereto theArbitratorand/or reviewing courts are expressly restricted as follows by the contractual agreement of theParties:
A. Absent an expressed written statement(s) in theAgreement the terms of theAgreementmay not be revised, rewritten or modified by theArbitratoror reviewing court (such terms can only be interpreted in accordance with the guidelines and directives herein and therein contained).Cy-pres may be invoked only if theAgreementor any of its provisions are determined by a court of proper jurisdiction to be invalid, illegal, but its invocation shall be only for the purpose of carrying out as nearly as possible the intentions of theParties and of preserving theParties pecuniary interests via reformation, modification, revision and/or reinstitution.
B. The common law principle of legal construction that the document is to be strictly construed against the draftingParty is expressly waived by theParties hereto and theArbitratoris expressly instructed not to apply such principle in his/her deliberations.
C. TheArbitratormust resolve the conflict; i.e., theArbitrator may not allow the conflict to remain unresolved.
D. TheArbitratormay not deliver an award which is arbitrary, capricious, or which is not supported by substantial evidence, or which revises, rewrites or ignores the terms of thisAgreement,and if he/she does so, the award may be submitted for review to a court of proper jurisdiction and venue, which is hereby requested to vacate, overturn, reverse and/or remand the same.
E. The award/decision rendered by theArbitratorshall be final and conclusive, and theParties stipulate that legal and/or equitable judgment may be entered upon it in the court having jurisdiction. It is also stipulated and agreed and the specific intent of theParties hereto that termination of theAgreementshall not be remedy ordered and/or awarded by theArbitrator,or the court.
F. It is stipulated that this agreement to arbitrate shall be enforceable via specific performance and/or injunctive relief. It is also stipulated and agreed that theArbitrator in rendering his/her award/decision shall be authorized to order both specific performance, and in the same decision award aParty(s) monetary damages as to the failure of the otherParty(s) to perform its previous obligations to the otherParty(s).
G. AnyParty(s) shall be entitled to the pre and post judgment remedy of attaching or offsetting income or monies in order to pay any amount due or owing to it by the otherParty(s) pursuant to theAgreement.If the pre and/or post judgment, self-help remedy of
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attaching or offsetting income is disputed it shall be decided as otherDisputesbetween or among theParties, with no penalty(s) being awarded for the use of pre and/or post judgment, self-help remedies, even if the use thereof is held to have been in error.
8.Costs of Arbitration.All costs of arbitration shall be borne by the losingParty(s). The losingParty(s) shall be theParty(s) designated as such by theArbitrator. In the event aParty prevails on certain issues and loses on others, the cost ofArbitrationshall be apportioned between theParties in any manner theArbitrator orders. Costs ofArbitrationinclude, but are not limited to the following withInterest thereon from the date such expenses are accrued, to wit: i) expenses and fees of theArbitrator;ii) legal expenses of theParties during the course of and in preparation forArbitrationandDispute Resolutionand/or involving or enforcing the processArbitrationandDispute Resolutionand/or involving or enforcing the processArbitrationandDispute Resolutionand/or enforcing the decision or judgment of theArbitrator via legal proceedings; iii) travel and out-of-pocket expenditures of anyParty in relation toArbitrationandDispute Resolution.In the event there is any dispute regarding what constitutes anArbitrationexpense or the reasonableness of a particular item of expense submitted, theArbitratorshall resolve the same.
9.Application of AAA and Federal Arbitration Act. Except as herein provided, the provisions of theAAA and the Federal Arbitration Act shall apply; and wherever and whenever there is a conflict between the provisions of theAAA and the Federal Arbitration Act and theAgreement, the provisions of the relevantAgreement shall prevail.
10.Enforceable at Law and In Equity. It is stipulated that theParties’ agreement to arbitrate shall be enforceable via specific performance and/or injunctive relief via any proper court with jurisdiction. The award and judgment rendered by theArbitrator shall be final and conclusive, and theParties stipulate that legal and/or equitable judgment may be entered upon jurisdiction in accordance with the Federal Arbitration Act in the Federal Courts for the District of Kansas in Kansas City, Kansas.
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