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EXHIBIT 10.2
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EQUITY LINE FINANCING AGREEMENT
BETWEEN
COMPUTER MOTION, INC.
AND
SOCIETE GENERALE
DATED AS OF
MARCH 30, 2001
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EQUITY LINE FINANCING AGREEMENT
EQUITY LINE FINANCING AGREEMENT (this "Agreement"), dated as of March
30, 2001, between COMPUTER MOTION, INC., a Delaware corporation (the "Company"),
and SOCIETE GENERALE, a bank organized under the laws of France (the
"Investor").
W I T N E S S E T H:
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company may issue and sell to the Investor from
time to time as provided herein, and the Investor shall purchase from the
Company, shares of Common Stock for an aggregate purchase price up to
$12,000,000 on a private placement basis pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933; and
WHEREAS, the Investor shall be entitled to resell shares of Common Stock
acquired hereunder pursuant to a resale registration statement established by
the Company pursuant to the terms of the Registration Rights Agreement between
the Company and the Investor which shall be declared effective by the Commission
prior to the delivery of a Draw Down Notice hereunder.
NOW THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINITIONS. For purposes of this Agreement,
capitalized terms used herein and not otherwise defined shall have the following
respective meanings:
"Affiliate" of a Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first- mentioned Person. The term "control"
(including the terms "controlling," "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Average Daily Trading Volume" with respect to any Draw Down effected by
the Company shall mean the average daily volume of shares of Common Stock traded
on the Principal Market as reported by Bloomberg Financial during the twenty
(20) consecutive Trading Day period ending on the Trading Day immediately
preceding the date on which a Draw Down Notice is delivered pursuant to Section
2.03(b) hereof.
"Bloomberg Financial" shall mean Bloomberg Financial Markets or an
equivalent reliable reporting service acceptable to and hereafter designated by
the Investor.
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"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock, including each class of common stock and preferred stock, of such Person.
"Closing" shall have the meaning set forth in Section 2.02(a).
"Closing Date" shall mean the date on which the Closing occurs.
"Comfort Letter" shall mean a letter from Xxxxxx Xxxxxxxx LLP or another
"Big Five" independent public accounting firm, in form and substance
satisfactory to the Investor, addressed to the Investor and dated as of the
Effective Date or the filing date of any Current Report on Form 8-K, if such
report contains substantial financial information, (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission and (ii)
stating, as of the Effective Date or filing date, as applicable, the conclusions
and findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to underwriters in
connection with registered public offerings.
"Commission" means the United States Securities and Exchange Commission.
"Commitment Period" shall mean the period commencing on the Effective
Date and expiring on the earliest to occur of (x) the date on which the Investor
shall have purchased Draw Down Shares pursuant to this Agreement for an
aggregate Purchase Price of $12,000,000, (y) the date this Agreement is
terminated pursuant to Article X and (z) the date occurring twenty-four (24)
months from the date hereof.
"Common Stock" shall mean the Company's common stock, $.001 par value
per share.
"Common Shares" shall mean shares of the Company's Common Stock issued
pursuant to this Agreement.
"Draw Down" shall mean each occasion the Company elects to exercise its
right to deliver a Draw Down Notice requiring the Investor to purchase the
Common Shares as specified in such Draw Down Notice, subject to the terms and
conditions of this Agreement.
"Draw Down Cancellation" shall have the meaning set forth in Section
6.04(a).
"Draw Down Cancellation Date" shall have the meaning set forth in
Section 6.04(a).
"Draw Down Cancellation Notice" shall have the meaning set forth in
Section 6.04(a).
"Draw Down Date" shall mean any Trading Day during the Commitment Period
that a Draw Down Notice to sell Common Stock to the Investor is deemed delivered
pursuant to Section 2.03(b) hereof.
"Draw Down Notice" shall mean a written notice to the Investor delivered
in accordance with this Agreement in the form attached hereto as Exhibit A
setting forth the Investment
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Amount that the Company intends to sell to the Investor pursuant to such Draw
Down and the Floor Price applicable to such Draw Down.
"Draw Down Shares" shall mean all shares of Common Stock issued or
issuable pursuant to a Draw Down that has occurred or may occur in accordance
with the terms and conditions of this Agreement.
"DWAC Transfer" shall have the meaning set forth in Section 2.04.
"Effective Date" shall mean the date on which the Commission first
declares effective a Registration Statement registering the resale of the
Registrable Securities as set forth in Section 6.02(a).
"Exchange Act" means the Securities Exchange Act of 1934.
"Floor Price" shall mean the lowest VWAP (before taking into account any
discount used to calculate the Purchase Price hereunder) at which the Company
will sell its Common Stock as specified in the Draw Down Notice delivered in
connection with any Draw Down effected pursuant to this Agreement, but in no
event shall the Floor Price be less than $2.72.
"Governmental Authority" means any federal or state government or
political subdivision thereof and any agency or other entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Investment Amount" shall mean the aggregate dollar amount (within the
range specified in Section 2.03) of any Draw Down Shares to be purchased by the
Investor with respect to any Draw Down effected by the Company in accordance
with Section 2.03 hereof.
"Irrevocable Transfer Agent Instructions" shall have the meaning set
forth in Article IX.
"Material Adverse Effect" has the meaning set forth in Section 3.01.
"Maximum Draw Down Amount" with respect to any Draw Down effected by the
Company in accordance with Section 2.03 hereof shall mean the lesser of (i)
$250,000 (subject to increase to (I) $500,000 in the event the average VWAP for
the Common Stock for each of the five Trading Days immediately preceding the
applicable Draw Down Date, multiplied by the Average Daily Trading Volume of the
Common Stock applicable with respect to such Draw Down Date shall exceed
$750,000 or (II) $800,000 in the event the average VWAP for the Common Stock for
each of the five Trading Days immediately preceding the applicable Draw Down
Date, multiplied by the Average Daily Trading Volume of the Common Stock
applicable with respect to such Draw Down Date shall exceed $1,250,000 and (ii)
10% of the product of (x) the average VWAP for the Common Stock for each of the
five Trading Days immediately preceding the applicable Draw Down Date,
multiplied by (y) the Average Daily Trading Volume of the Common Stock
applicable with respect to such Draw Down Date.
"Maximum Share Amount" shall have the meaning set forth in Section
2.01(c).
"Minimum Draw Down Amount" shall mean $75,000.
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"Periodic Accountant's Report" shall mean a review report from Xxxxxx
Xxxxxxxx LLP or another "Big Five" independent public accounting firm, delivered
to the Investor within 45 days of the end of each of the Company's fiscal
quarters (other than the fourth fiscal quarter) in conjunction with such
accounting firm's issuance to the Company of a SAS No. 71 review report with
respect to each of the Company's quarterly financial statements.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
Governmental Authority or other entity of any kind.
"Principal Market" shall mean the Nasdaq National Market, the American
Stock Exchange or the New York Stock Exchange, whichever is at the time the
principal trading exchange or market for the Common Stock.
"Prospectus Supplement" shall have the meaning set forth in Section
6.02(o).
"Purchase Price" with respect to each Trading Day during a Valuation
Period shall mean 91% of the VWAP for such Trading Day (subject to increase to
(I) 92% in the event the average VWAP for the Common Stock for each of the five
Trading Days immediately preceding the applicable Draw Down Date, multiplied by
the Average Daily Trading Volume of the Common Stock applicable with respect to
such Draw Down Date shall exceed $750,000 or (II) 93% in the event average VWAP
for the Common Stock for each of the five Trading Days immediately preceding the
applicable Draw Down Date, multiplied by the Average Daily Trading Volume of the
Common Stock applicable with respect to such Draw Down Date shall exceed
$1,250,000).
"Registrable Securities" shall mean the Draw Down Shares, and any other
shares of capital stock issued or issuable as a dividend on or in exchange for
or otherwise with respect to the Draw Down Shares and until (i) the Registration
Statement has been declared effective by the Commission and all such shares have
been disposed of pursuant to the Registration Statement, (ii) all such shares
have been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) are met, (iii) all such
shares have been otherwise transferred to holders who may trade such shares
without restriction under the Securities Act, and the Company shall have
delivered a new certificate or other evidence of ownership for such securities
not bearing a restrictive legend, (iv) such time as, in the opinion of counsel
to the Investor, all such shares may be sold without any time, volume or manner
limitations pursuant to Rule 144(k) (or any similar provision then in effect)
under the Securities Act or (v) any combination of the foregoing relating to all
such shares.
"Registration Rights Agreement" shall mean the agreement regarding the
filing of the Registration Statement for the resale of the Registrable
Securities entered into between the Company and the Investor as of the Closing
Date.
"Registration Statement" shall mean a registration statement on such
form promulgated by the Commission for which the Company then qualifies and
which counsel for the Company shall deem appropriate and which form shall be
available for the resale of the Registrable Securities to be registered
thereunder in accordance with the provisions of this Agreement and the
Registration Rights Agreement, and in accordance with the intended method of
distribution
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of such securities, for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.
"SEC Reports" means, the Company's Annual Report on Form 10-K for the
year ended December 31, 2000.
"Securities Act" means the Securities Act of 1933.
"Settlement Date" shall mean the sixth Trading Day following the Draw
Down Date.
"Trading Day" shall mean any day during which the Principal Market shall
be open for trading.
"Transaction Documents" means, collectively, this Agreement and the
Registration Rights Agreement.
"Valuation Period" shall mean the period of five (5) consecutive Trading
Days following the Trading Day on which a Draw Down Notice is delivered or
deemed to be delivered pursuant to Section 2.03(b) hereof.
"VWAP" for any given Trading Day shall mean the daily volume weighted
average price of the Common Stock on such date on the Principal Market as
reported by Bloomberg Financial using the AQR function.
ARTICLE II
SALE AND PURCHASE OF COMMON STOCK
SECTION 2.01. INVESTMENTS. (a) Purchase and Sale of Common Stock.
Subject to the terms and conditions of this Agreement, the Company, at its sole
and exclusive option, may issue and sell to the Investor, and the Investor shall
purchase from the Company shares of the Company's Common Stock, based on such
number of Draw Downs (subject to the Maximum Draw Down Amount and the Minimum
Draw Down Amount) as the Company, in its sole discretion, shall choose to
deliver during the Commitment Period until the aggregate Investment Amount with
respect to Common Shares purchased under this Agreement equals $12,000,000 or
this Agreement is otherwise terminated.
(b) Draw Downs. Upon the terms and subject to the conditions set forth
herein, on any Trading Day as provided in Section 2.03(b) hereof during the
Commitment Period on which the conditions set forth in Section 6.02 and 6.03
hereof have been satisfied, the Company may exercise a Draw Down by the delivery
of a Draw Down Notice to the Investor. The aggregate number of Draw Down Shares
that the Investor shall be obligated to purchase pursuant to such Draw Down
shall be determined by dividing the relevant portions of the Investment Amount
specified in the Draw Down Notice by the corresponding Purchase Prices for each
Trading Day during the Valuation Period as specified in Section 2.03(c). Each
Draw Down will be settled on the applicable Settlement Date following the Draw
Down Date.
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(c) Maximum Amount of Draw Down Shares. Unless the Company obtains the
approval of its stockholders in accordance with the applicable rules of the
Principal Market, no more than 200,000 shares of Common Stock (the "Maximum
Share Amount") may be issued and sold pursuant to all Draw Downs hereunder (any
such issuances hereunder prior to such stockholder approval to be counted
against the Investor's pro rated allocation of the "Maximum Shares Issuance"
applicable to its investment in Series B Convertible Preferred Stock of the
Company if such issuance should be deemed integrated with the offering by the
Principal Market).
SECTION 2.02. EFFECTIVENESS. The effectiveness of this Agreement (the
"Closing") shall be deemed to take place concurrently with the execution and
delivery of this Agreement by the parties hereto and the completion of the
closing transactions set forth in the immediately following sentence. At the
Closing, the following closing transactions shall take place, each of which
shall be deemed to occur simultaneously with the Closing: (i) the Company and
the Investor shall execute and deliver the Registration Rights Agreement; (ii)
Company shall deliver to the Investor a certificate executed by the Secretary of
the Company, signing in such capacity, dated the date of the Closing (A)
certifying that attached thereto are true and complete copies of the resolutions
duly adopted by the Board of Directors of the Company authorizing the execution
and delivery of the Transaction Documents and the consummation of the
transactions contemplated thereby (including, without limitation, the
reservation and issuance of the Common Stock pursuant to this Agreement), which
authorization shall be in full force and effect on and as of the date of such
certificate, (B) certifying and attesting to the office, incumbency, due
authority and specimen signatures of each Person who executed any Transaction
Document for or on behalf of the Company and (C) confirming the accuracy of the
representations and warranties of the Company contained in this Agreement; (iii)
Stradling, Yocca, Xxxxxxx & Xxxxx, counsel to the Company, shall deliver to the
Investor an opinion, dated the date of the Closing and addressed to the
Investor, covering customary matters; and (iv) the Company shall pay the
expenses set forth in Section 9.02 hereof by wire transfer to the account
designated by the Investor in writing prior to the Closing.
SECTION 2.03. MECHANICS OF DRAW DOWNS. (a) Draw Down Notice. On any
Trading Day during the Commitment Period, the Company may deliver a Draw Down
Notice to the Investor, subject to the satisfaction of the conditions set forth
in Sections 6.02 and 6.03; provided, however, the Investment Amount for each
Draw Down as designated by the Company in the applicable Draw Down Notice shall
be neither less than the Minimum Draw Down Amount nor more than the Maximum Draw
Down Amount (as determined as of the applicable Draw Down Date); provided
further, however, that if the Maximum Draw Down Amount as of the applicable Draw
Down Date is less than the Minimum Draw Down Amount, the Company shall not be
entitled to deliver any such Draw Down Notice.
(b) Delivery of Draw Down Notice. A Draw Down Notice shall be deemed
delivered only if it is on (i) the Trading Day that it is received by facsimile
or otherwise by the Investor if received prior to 3:00 p.m., New York City time
such Trading Day, or (ii) in the event it is received by facsimile or otherwise
subsequent to 3:00 p.m., New York City time, on a Trading Day, the immediately
succeeding Trading Day. No Draw Down Notice may be delivered other than on a
Trading Day during the Commitment Period.
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(c) Determination of Draw Down Shares Issuable. Subject to Section
2.03(d) and (e) hereof, the number of Draw Down Shares to be purchased by the
Investor with respect to any Draw Down shall be determined on a daily basis
during the applicable Valuation Period and shall equal with respect to any such
Trading Day the quotient of (x) one-fifth (1/5) of the Investment Amount,
divided by (y) the Purchase Price for such Trading Day. The portion of the
Investment Amount for which Draw Down Shares may be issued for each Trading Day
during the Valuation Period may not exceed one-fifth (1/5) of the Investment
Amount.
(d) Floor Price Limitation. If the VWAP on any Trading Day during a
Valuation Period is less than the Floor Price specified in the applicable Draw
Down Notice, the Company shall not sell and the Investor shall not purchase the
Draw Down Shares otherwise to be purchased for such Trading Day. In such case,
the Investment Amount shall be reduced by one-fifth (1/5) of the Investment
Amount for each such Trading Day.
(e) Minimum Trading Hours Limitation. In the event that the Common Stock
is not listed and approved for trading on a Principal Market and free from any
halts or suspensions of trading (whether imposed generally on such Principal
Market or specifically with respect to the Common Stock) for a period of at
least six (6) hours on any Trading Day during a Valuation Period, then the
Company shall not sell and the Investor shall not purchase the Draw Down Shares
otherwise to be purchased in respect of such Trading Day. In such case, the
Investment Amount shall be reduced by one-fifth (1/5) of the Investment Amount
for each such Trading Day.
SECTION 2.04. SETTLEMENTS. Subject to the provisions of Section 6.04, on
each Settlement Date the Company shall, unless otherwise instructed by the
Investor, cause the Transfer Agent to electronically transmit shares of Common
Stock to the Investor (by crediting the account of the Investor's Prime Broker,
as designated by the Investor, with the Depository Trust Corporation through its
Deposit Withdrawal Agent Commission system ("DWAC Transfer")) representing the
Draw Down Shares to be purchased by the Investor on such Settlement Date with
respect to the Draw Down Period immediately preceding such Settlement Date
pursuant to Section 2.03(c) hereof and, upon receipt of such Draw Down Shares,
the Investor shall deliver the portion of the Investment Amount representing the
Draw Down Shares to be purchased on such Settlement Date by wire transfer
immediately available funds to an account designated by the Company on or before
the Settlement Date. In addition, on or prior to each such Settlement Date, each
of the Company and the Investor shall deliver all documents, instruments and
writings required to be delivered by either of them pursuant to this Agreement
in order to implement and effect the transactions contemplated herein.
SECTION 2.05. LIQUIDATED DAMAGES. In the event the Draw Down Shares are
not timely delivered by the Company on any Settlement Date, the Company will pay
the Investor, as liquidated damages for such failure to deliver and not as a
penalty, two percent (2%) of the aggregate Investment Amount payable in respect
of such Draw Down Shares for each seven (7) calendar day period, or part
thereof, following such failure, in cash, until such Draw Down Shares have been
delivered. Such amount may be subtracted by the Investor from the portion of the
Investment Amount otherwise payable by the Investor with respect to such Draw
Down Shares.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Investor to enter into this Agreement,
the Company hereby represents and warrants to the Investor that, except as set
forth in the Disclosure Schedules delivered by the Company to the Investor and
attached hereto, on and as of the date hereof:
SECTION 3.01. ORGANIZATION AND STANDING. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority, and all authorizations, licenses,
permits and certifications necessary for it to own its properties and assets and
to carry on its business as it is now being conducted (and, to the extent
described therein, as described in the SEC Reports) and proposed to be
conducted. The Company and each of its subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction in which the
character of the properties owned or leased by it or the nature of its
businesses makes such qualification necessary, except where the failure to so
qualify or be in good standing would not have a material adverse effect on the
business, assets, operations, properties, condition (financial or otherwise) or
prospects of the Company and its subsidiaries, taken as a whole, or any adverse
effect on the Company's ability to consummate the transactions contemplated by,
or to execute, deliver and perform its obligations under, each of the
Transaction Documents (a "Material Adverse Effect").
SECTION 3.02. SECURITIES OF THE COMPANY. The authorized Capital Stock of
the Company consists of 50,000,000 shares of Common Stock and 5,000,000 shares
of preferred stock; as of March 31, 2001, 10,179,563 shares of common stock and
11,024 shares of Series B Convertible Preferred Stock were outstanding and
7,561,793 shares of Common Stock were reserved for issuance upon exercise of
outstanding convertible securities, warrants or pursuant to the Company's Tandem
Stock Option Plan or 1997 Stock Incentive Plan. Except as set forth in the SEC
Reports or disclosed in Schedule 3.02, the Company has no other authorized,
issued or outstanding equity securities or securities containing any equity
features, or any other securities convertible into, exchangeable for or
entitling any person to otherwise acquire any other securities of the Company
containing any equity features. The Company has no stock option, incentive or
similar plan other than the Tandem Stock Option Plan and the 1997 Stock
Incentive Plan under which the issuance of 4,440,000 shares of Common Stock may
be issued. All of the outstanding shares of Capital Stock of the Company have
been duly and validly authorized and issued, and are fully paid and
nonassessable. The Common Shares have been duly and validly authorized. When
issued against payment therefor as provided in this Agreement, the Common Shares
will be validly issued, fully paid and nonassessable, free and clear of all
preemptive rights, claims, liens, charges, encumbrances and security interests
of any nature whatsoever. A sufficient number of shares of Common Stock has been
duly reserved and will remain available for issuance upon conversion of the
Common Shares. Except as set forth in this Section 3.02, the SEC Reports or
Schedule 3.02 hereto, there are no outstanding options, warrants, conversion
rights, subscription rights, preemptive rights, rights of first refusal or other
rights or agreements of any nature outstanding to subscribe for or to purchase
any shares of Capital Stock of the Company or any other securities of the
Company of any kind binding on the Company. The
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issuance of the Common Shares pursuant to this Agreement is not subject to any
preemptive rights, rights of first refusal or other similar limitation. Except
as otherwise required by law, there are no restrictions upon the voting or
transfer of any shares of the Company's Capital Stock pursuant to the Company's
Certificate of Incorporation, bylaws or other documents. Except as provided
herein or in the other Transaction Documents, there are no agreements or other
obligations (contingent or otherwise) that may require the Company to repurchase
or otherwise acquire any shares of its Capital Stock.
SECTION 3.03. AUTHORIZATION; ENFORCEABILITY. The Company has the
corporate power and authority to execute, deliver and perform the terms and
provisions of each of the Transaction Documents to be executed, delivered or
performed by it and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of, and the consummation of the
transactions contemplated by, the Transaction Documents. No other corporate
proceeding on the part of the Company is necessary, and no consent of any
shareholder of the Company is required, for the valid execution and delivery by
the Company of the Transaction Documents, and except as described in Section
5.06 hereof, the performance and consummation by the Company of the transactions
contemplated by the Transaction Documents to be performed by the Company. The
Company has duly executed and delivered, or concurrently herewith is executing
and delivering, each of the Transaction Documents. Assuming the due execution of
this Agreement and the Registration Rights Agreement by the Investor, this
Agreement and the Registration Rights Agreement constitute the valid and binding
obligations of the Company, enforceable against the Company in accordance with
each of their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 3.04. NO VIOLATION; CONSENTS.
(a) The execution, delivery and performance by the Company of the
Transaction Documents and the consummation of the transactions contemplated
thereby to be performed by the Company do not and will not (i) contravene the
applicable provisions of any law, statute, rule, regulation, order, writ,
injunction, judgment or decree of any court or Governmental Authority to or by
which the Company or any of its subsidiaries or any of its respective property
or assets is bound, (ii) violate, result in a breach of or constitute (with due
notice or lapse of time or both) a default or give rise to an event of
acceleration under any contract, lease, loan or credit agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company is a party or by which it or any of its subsidiaries is bound or to
which any of its respective properties or assets is subject, nor result in the
creation or imposition of any lien, security interest, charge or encumbrance of
any kind upon any of the properties, assets or Capital Stock of the Company or
any of its subsidiaries, or (iii) violate any provision of the organizational
and other governing documents of the Company or any of its subsidiaries.
(b) No consent, approval, authorization or order of, or filing or
registration with, any court or Governmental Authority or other Person is
required to be obtained or made by the Company for the execution, delivery and
performance of the Transaction Documents or the consummation of any of the
transactions contemplated thereby (other than (i) the registration of
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the resale of the Common Stock with the Commission and pursuant to any state
"blue sky" laws as contemplated by the Registration Rights Agreement and (ii)
the stockholder approval required by the rules applicable to companies whose
common stock is quoted on NASDAQ described in Section 5.06 hereof), except for
those consents or authorizations previously obtained and those filings
previously made.
SECTION 3.05. SECURITIES ACT REPRESENTATIONS. The Company has not
offered or sold and will not offer or sell any shares of its Capital Stock in
this offering other than to the Investor. Assuming the accuracy of each
Purchaser's representations pursuant to Section 4.02 hereof, the sale of the
Common Shares hereunder will be, exempt from the registration requirements of
the Securities Act. Neither the Company, nor any of its Affiliates, or, to its
knowledge, any Person acting on its or their behalf has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D
under the Securities Act) in connection with the offer or sale of the Common
Shares hereunder. Neither the Company, nor any of its Affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security other than
pursuant to this Agreement under circumstances that would require registration
under the Securities Act of the Common Shares to be issued under this Agreement.
The Company is eligible to use Form S-2 under the Securities Act to file the
Registration Statement (as defined in the Registration Rights Agreement). The
Company has not provided the Investor with any material non-public information
that, according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to engaging in the transactions
contemplated by the Transaction Documents but that has not been so disclosed.
SECTION 3.06. SOLVENCY; NO DEFAULT. (a) The Company is, and upon giving
effect to the transactions contemplated hereby to be performed by it as of the
Closing will be, Solvent. "Solvent" means that, as of the date of determination,
(i) the then fair saleable value of the assets of the Company (on a consolidated
basis) exceeds the then total amount (on a consolidated basis) of its debts and
other liabilities, (including any guarantees and other contingent, subordinated,
unmatured or unliquidated liabilities whether or not reduced to judgment,
disputed or undisputed, secured or unsecured), (ii) the Company has sufficient
funds and cash flow to pay its liability on its existing debts as they become
absolute and matured, (iii) final judgments against the Company in pending or,
to the Company's knowledge, threatened actions for money damages will not be
rendered at a time when, or in an amount such that, the Company will be unable
to satisfy any such judgments promptly in accordance with their terms (taking
into account (a) the maximum reasonable amount of such judgments in any such
actions (other than amounts that would be remote), (b) the earliest reasonable
time at which such judgments would be rendered and (c) any reasonably expected
insurance recovery with respect thereto), and (iv) the Company does not have
unreasonably small capital with which to engage in its present business.
(b) The Company is not, and immediately after the consummation of the
transactions contemplated hereby to be performed by the Company will not be, in
default of (whether upon the passage of time, the giving of notice or both) its
organizational and other governing documents, or any provision of any security
issued by the Company, or of any agreement, instrument or other undertaking to
which the Company is a party or by which it or any of its property or assets is
bound, or the applicable provisions of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or Governmental
Authority to or by
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which the Company or any of its property or assets is bound, which default or
violation, either individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
SECTION 3.07. NO BROKERS. No broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, placement or similar fee or
other commission in connection with the transactions contemplated hereby based
on any agreement, arrangement or understanding with the Company.
SECTION 3.08. SEC REPORTS; FINANCIAL CONDITION; NO ADVERSE CHANGES. (a)
The audited consolidated financial statements of the Company and the related
notes thereto as of December 31, 2000 reported on by Xxxxxx Xxxxxxxx LLP,
independent accountants, copies of which have heretofore been furnished to the
Investor and are publicly available, present fairly the financial condition,
results of operations and cash flows of the Company (on a consolidated basis) at
such date and for the periods set forth therein (such audited consolidated
financial statements, the "Financial Statements"). The Financial Statements,
including the related schedules and notes thereto (if any), have been prepared
in accordance with generally accepted accounting principles as set forth in the
opinions and pronouncements of the Accounting Principles Board of American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board as in effect on the date of filing of
such documents with the Commission, applied on a consistent basis (except for
changes concurred in by the Company's independent public accountants) unless
otherwise expressly stated therein. Except as disclosed in the SEC Reports,
during the period from January 1, 2001 to and including the date hereof, there
has been no sale, transfer or other disposition by the Company of any material
part of the business, property or securities of the Company and no purchase or
other acquisition of any business, property or securities by the Company
material in relation to the financial condition of the Company.
(b) Except as are fully reflected or reserved against in the Financial
Statements and the notes thereto, there are no liabilities or obligations with
respect to the Company or any of its subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due)
that, either individually or in the aggregate, after taking into account (a) the
maximum reasonable amount of any liability that may arise on account of any
litigation or any other contingent liability or obligation (other than amounts
that would be remote), (b) the earliest reasonable time at which any such
liability or obligation may become due and (c) any reasonably expected insurance
recovery with respect thereto, could reasonably be expected to have a Material
Adverse Effect.
(c) Since December 31, 2000, except as set forth in the SEC Reports,
there has been no development or event, nor any prospective development or event
known to the Company or any of its subsidiaries, or any litigation, proceeding
or other action seeking an injunction or other restraining order, damages or
other relief from a court or administrative agency of competent jurisdiction
pending, threatened or, to the knowledge of the Company, contemplated, or any
action of any Governmental Authority, that has had or could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.09. USE OF PROCEEDS; FEDERAL REGULATIONS. No part of the net
proceeds from the sale of the Common Stock issued hereunder will be used in a
manner that would violate
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the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System. The Company will not use such proceeds other than for or in
connection with general working capital purposes.
SECTION 3.10. SUBSIDIARIES. As of the date hereof, the Company has no
subsidiaries other than Computer Motion, S.A., a French corporation.
SECTION 3.11. NO INTEGRATED OFFERING. Neither the Company, nor any of
its Affiliates, nor to its knowledge any Person acting on its or their behalf,
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would require
registration under the Securities Act of the offer and sale of the Common Stock
hereunder.
SECTION 3.12. NO LITIGATION. Except as set forth in Schedule 3.12,
hereto, no litigation or claim (including those for unpaid taxes), or
environmental proceeding against the Company or any of its subsidiaries is
pending, threatened or, to the Company's best knowledge, contemplated that, if
determined adversely, would (after taking into consideration any reasonably
expected insurance recovery with respect thereto) have a Material Adverse Effect
on the Company.
SECTION 3.13. ENVIRONMENTAL MATTERS. The Company and each of its
subsidiaries is in compliance in all material respects with all applicable state
and federal environmental laws, and no event or condition has occurred that may
interfere in any material respect with the compliance by the Company or any of
its subsidiaries with any environmental law or that may give rise to any
liability under any environmental law that, individually or in the aggregate,
would have a Material Adverse Effect.
SECTION 3.14. INTELLECTUAL PROPERTY. The Company (and/or its
subsidiaries) owns or has licenses to use certain patents, copyrights and
trademarks ("intellectual property") associated with its business. The Company
and its subsidiaries have all intellectual property rights that are needed to
conduct the business of the Company and its subsidiaries as it is now being
conducted as disclosed in the SEC Reports. The intellectual property rights that
the Company (and/or its subsidiaries) owns are valid and enforceable. The use of
such intellectual property by the Company (and/or its subsidiaries') does not
infringe upon or conflict with any right of any third party, and neither the
Company nor any of its subsidiaries has received notice, written or otherwise,
of any such infringement or conflict. Except as set forth in the SEC Reports,
the Company has no knowledge of any infringement of its (and/or its
subsidiaries) intellectual property by any third party.
SECTION 3.15. INSURANCE. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its
subsidiaries are engaged. The Company has no reason to believe that it and its
subsidiaries will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost.
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SECTION 3.16. RELATED PARTY TRANSACTIONS. Except as disclosed in
Schedule 3.16 none of the officers, directors, employees or 5% or greater
shareholders of the Company is presently a party to any transaction with the
Company or any of its subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or the advances of money or otherwise requiring
payments to or from any such officer, director, employee or shareholder or, to
the knowledge of the Company, any corporation, partnership, trust or other
entity in which any such officer, director, employee or shareholder has a
substantial interest or is an officer, director, trustee or partner.
SECTION 3.17. PERMITS. The Company and each of its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the "Company Permits"), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits except for such Company
Permits the failure of which to possess, or the cancellation or suspension of
which, would not, individually or in the aggregate, have a Material Adverse
Effect. To the best of its knowledge neither the Company nor any of its
subsidiaries is in material conflict with, or in material default or material
violation of, any of the Company Permits.
SECTION 3.18. INTERNAL ACCOUNTING CONTROLS. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company's board of directors, to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
SECTION 3.19. TAX RETURNS. The Company has filed or caused to be filed
all Federal tax returns and all material state and local tax returns required to
have been filed by it and has paid or caused to be paid all taxes shown to be
due and payable by it on such returns or on any assessments received by it,
except any such tax, the validity or amount of which is being contested in good
faith by appropriate proceedings and as to which the Company has set aside on
its books adequate reserves with respect thereto in accordance with generally
accepted accounting principles. Neither the Company nor its subsidiaries has
received any tax assessment, notice of audit, notice of proposed adjustment or
deficiency notice from any taxing authority.
SECTION 3.20. DISCLOSURE. The representations and warranties of the
Company in this Agreement and the statements contained in the SEC Reports and
the schedules, certificates and exhibits furnished to the Purchasers by or on
behalf of the Company in connection herewith do not contain any untrue statement
of a material fact and do not omit to state any material fact necessary to make
the statements herein or therein not misleading. The SEC Reports contain all
material information concerning the Company required to be set forth therein,
and no event or
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circumstance has occurred or exists since December 31, 2000, that would require
the Company to disclose such event or circumstance in order to make the
statements in the SEC Reports not misleading as of the date of the Closing but
that has not been so disclosed. The Company hereby acknowledges that the
Investor is and will be relying on the SEC Reports and the Company's
representations, warranties and covenants contained herein in making an
investment decision with respect to the Common Shares and will be relying
thereon (together with future reports filed with the Commission) in connection
with any transfer of Common Shares.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR
The Investor hereby acknowledges, represents, warrants and covenants, to
the Company as follows:
SECTION 4.01. AUTHORIZATION; ENFORCEABILITY; NO VIOLATIONS.
(a) The Investor is duly organized, validly existing and in good
standing under the laws of its jurisdiction, has all requisite power and
authority to execute, deliver and perform the terms and provisions of this
Agreement and the Registration Rights Agreement and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement and the Registration Rights Agreement and to consummate the
transactions contemplated hereby and thereby to be performed by it.
(b) The execution, delivery and performance by the Investor of this
Agreement and the Registration Rights Agreement and the consummation by the
Investor of the transactions contemplated hereby and thereby to be performed by
it do not and will not violate any provision of (i) the Investor's
organizational documents or (ii) any law, statute, rule, regulation, order,
writ, injunction, judgment or decree to which the Investor is subject. The
Investor has duly executed and delivered this Agreement and has executed and
delivered, or concurrently herewith is executing and delivering, the
Registration Rights Agreement. Assuming the due execution hereof and thereof by
the Company, each of this Agreement and the Registration Rights Agreement
constitutes the legal, valid and binding obligation of the Investor, enforceable
against the Investor in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
SECTION 4.02. SECURITIES ACT REPRESENTATIONS; LEGENDS.
(a) The Investor understands that: (i) the offering and sale of the
Common Shares to be issued and sold hereunder is intended to be exempt from the
registration requirements of the Securities Act; (ii) the initial offer and sale
of the Common Shares issuable hereunder has not been registered under the
Securities Act or any other applicable securities laws and such securities may
be resold only if registered under the Securities Act and any other applicable
securities laws or if an exemption from such registration requirements is
available; and (iii) the Company is required to register any resale of the
Common Shares under the Securities Act and
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any other applicable securities laws only to the extent provided in the
Registration Rights Agreement.
(b) The Common Shares to be acquired by the Investor pursuant to this
Agreement are being acquired for its own account and not with a view to, or for
sale in connection with, any distribution thereof or (other than the resale of
such Common Shares pursuant to an effective registration statement as
contemplated by the Registration Rights Agreement) in violation of the
Securities Act or any other securities laws that may be applicable.
(c) The Investor is not an affiliate (as such term is defined in the
Securities Act) of the Company.
(d) The Investor (i) has sufficient knowledge and experience in
financial and business matters so as to be capable of evaluating the merits and
risks of its investment in the Common Stock and is capable of bearing the
economic risks of such investment, including a complete loss of its investment
in the Common Shares; (ii) believes that its investment in the Common Shares is
suitable for it based upon its objectives and financial needs, and the Investor
has adequate means for providing for its current financial needs and business
contingencies and has no present need for liquidity of investment with respect
to the Common Shares; (iii) has no present plan, intention or understanding and
has made no arrangement to sell the Common Shares at any predetermined time or
for any predetermined price; (iv) has not purchased, sold or entered into any
put option, short position or similar arrangement with respect to the Common
Shares, and will not, for the term of this Agreement purchase, sell or enter
into any such put option, short position or similar arrangement in any manner
that violates the provisions of the Securities Act or the Exchange Act.
(e) No oral or written statements or representations have been made to
the Investor by or on behalf of the Company in connection with the offering and
sale of the Common Shares hereunder other than those set forth in the SEC
Reports, or as set forth herein or in the other Transaction Documents, and the
Investor is not subscribing for the Common Shares as a result of, or in response
to, any advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
presented at any seminar or meeting.
(f) The Investor acknowledges that the Securities Act restricts the
transferability of securities, such as the Common Shares, issued in reliance
upon the exemption from the registration requirements of the Securities Act
provided by Section 4(2) thereunder, and that, unless sold pursuant to the
Registration Statement, the transfer of such Common Shares is restricted.
SECTION 4.03. NO BROKERS. No broker, finder, agent or similar
intermediary is entitled to any broker's, finder's, placement or similar fee or
other commission in connection with the transactions contemplated hereby based
on any agreement, arrangement or understanding with the Investor.
SECTION 4.04. NO INFLUENCE ON BUSINESS. The Investor (whether in its
capacity as holder of the Common Stock or otherwise) covenants and agrees with
the Company that it will
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not: (a) in any manner exercise or attempt to exercise a controlling influence
over the management or policies of the Company or attempt to influence the
business activities or decisions or the Company; (b) propose a director or slate
of directors to serve on the board of directors of the Company; (c) have or seek
to have a representative of the Investor be appointed to serve as a director of
the Company or participate as an observer at meetings of the board of directors
(or committees thereof) or have or seek to have any employee or representative
of the Investor serve as an officer, agent or employee of the Company; (d)
attempt to influence the dividend policies or practices of the Company; (e)
solicit or participate in soliciting proxies with respect to any matter
presented to the shareholders of the Company; (f) dispose or threaten to dispose
of the Common Shares to any third party in any manner as a condition to specific
action or non-action by the Company; or (g) enter into any joint venture,
enterprise or undertaking of any kind with the Company.
SECTION 4.05. LIMITATIONS ON RESALES. The Investor further covenants and
agrees that it will not knowingly transfer to any Person (together with such
Person's Affiliates), other than the Company or Affiliates of the Investor, in a
transaction or series of transactions, Common Stock in an aggregate amount in
excess of 2% of the issued and outstanding shares of Common Stock of the Company
(based upon the number of shares of Common Stock of the Company issued and
outstanding on the applicable date of transfer); in furtherance thereof, the
Investor covenants and agrees that it shall not during any five (5) consecutive
trading days transfer Common Stock in secondary market transactions in which the
identity of the acquiror is not known to the Investor in an amount in excess of
2% of the issued and outstanding shares of Common Stock of the Company (based
upon the number of shares of Common Stock of the Company issued and outstanding
on the applicable date of transfer). The Investor covenants and agrees that the
foregoing transfers to third parties shall be made in bona fide, arms-length
transactions and that upon any such transfer, it will not retain the power to
control the disposition of the securities transferred or to direct the voting
with respect thereto.
ARTICLE V
COVENANTS
SECTION 5.01. EXEMPTION FROM REGISTRATION; LIMITATION ON ISSUANCE OF
SECURITIES.
The Company will not make any offer to sell, solicit any offer to buy,
agree to sell or sell any security or right to acquire any security, except at
such time and in such manner so as not to cause the loss of any of the
exemptions for the offer and sale of the Common Shares from the registration
requirements under the Securities Act or under the securities or "blue sky" laws
of any jurisdiction in which such offer, sale or issuance is made.
SECTION 5.02. TRANSFER RESTRICTIONS.
The Investor acknowledges that any proposed offer, sale, pledge or other
transfer of Common Shares prior to the date that is two (2) years from the date
of issuance (or such other date as may be required pursuant to Rule 144 under
the Securities Act (or similar successor provision) as in effect from time to
time), in the absence of registration under the Securities Act, is limited.
Accordingly, prior to such passage of time or such registration, the Common
Shares
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may be offered, sold, pledged or otherwise transferred only (i) to the Company,
(ii) in an offshore transaction in accordance with Rule 904 under the Securities
Act, (iii) pursuant to any other exemption from registration provided by the
Securities Act, (iv) pursuant to Rule 144 under the Securities Act or (v)
pursuant to an effective registration statement under the Securities Act; in the
case of any transfer pursuant to clause (ii), (iii) or (iv), the Company shall
be entitled to receive an opinion of the selling Investor's counsel, in form and
substance reasonably satisfactory to the Company, to the effect that
registration is not required in connection with such disposition.
SECTION 5.03. RULES 144; CURRENT INFORMATION. For so long as any Common
Shares are outstanding, the Company will (i) cause its Common Stock to continue
to be registered under Section 12 of the Exchange Act, file all reports required
to be filed by it under the Securities Act and the Exchange Act and will take
such further actions as the Investor may reasonably request, all to the extent
required from time to time to enable any Purchaser to sell Common Shares without
registration under the Securities Act pursuant to the safe harbors and
exemptions provided by Rule 144 under the Securities Act (to the extent
applicable), as such Rule may be amended from time to time, or any similar rule
or regulation hereafter adopted by the Commission, and (ii) furnish the Investor
with all reports, proxy statements and registration statements that the Company
files with the Commission or distributes to its securityholders pursuant to the
Securities Act and the Exchange Act at the times of such filings and
distributions (unless such documents are available electronically from the
Commission or elsewhere without charge and within a period reasonably
contemporaneous with the filing thereof with the Commission, in which case such
documents need not be provided to the Investor). Upon the request of the
Investor, the Company will deliver to the Investor a written statement as to
whether it has complied with the foregoing requirements.
SECTION 5.04. RESERVATION OF COMMON SHARES. The Company shall at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock or its issued shares of Common
Stock held in its treasury, or both, sufficient shares of Common Stock to
provide for the issuance of the Conversion Shares in an amount equal to the
balance of the maximum number of Common Shares issuable under this Agreement
(assuming issuance at the Floor Price) not then yet issued.
SECTION 5.05. STOCK LISTING. The Company shall have the Common Shares in
an amount equal to the maximum number of Common Shares issuable under this
Agreement (assuming issuance at the Floor Price) approved for quotation or
listing, prior to issuance, upon the Principal Market upon which the Common
Stock is listed or traded at the time of issuance of such Common Shares and
shall use its best efforts to maintain such listing.
SECTION 5.06. STOCKHOLDER APPROVAL. In order to satisfy Nasdaq's
stockholder approval requirements, the Company will use its best efforts to hold
a stockholders meeting as soon as reasonably practicable to obtain stockholder
approval to allow for the issuance to the Investor of the maximum number of
shares of Common Stock which the Investor could acquire in accordance with the
terms hereof (based on the Floor Price), which maximum amount could be deemed,
if integrated with certain prior issuances of securities, to be in excess of 20%
of the currently outstanding shares of Common Stock of the Company.
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SECTION 5.07. REPORTING STATUS; CONVERSION TO FORM S-3. The Company's
Common Stock is registered under Section 12(g) of the Exchange Act. So long as
the Investor beneficially owns any of the Securities, the Company shall timely
file all reports required to be filed with the SEC pursuant to the Exchange Act,
and the Company shall not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination. At such time as the
Company meets the "registrant eligibility" requirements set forth in the general
instructions to Form S-3 applicable to both "primary" and "resale" registrations
on Form S-3, it shall promptly convert the Registration Statement to a Form S-3.
SECTION 5.08. NO INTEGRATION. The Company shall not make any offers or
sales of any security (other than the Common Shares) under circumstances that
would require registration of the Common Shares being offered or sold hereunder
under the Securities Act or cause the offer and sale of Common Shares to be
integrated with any other offering of securities by the Company for the purpose
of any stockholder approval provision applicable to the Company or its
securities.
SECTION 5.09. REGISTRATION RIGHTS. The Company shall cause the
Registration Rights Agreement to remain in full force and effect and the Company
shall comply in all respects with the terms thereof.
SECTION 5.10. NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION;
SUSPENSION OF RIGHT TO DELIVER A DRAW DOWN NOTICE. The Company will immediately
notify the Investor upon the occurrence of any of the following events in
respect of the Registration Statement or related prospectus in respect of the
resale of the Registrable Securities: (i) receipt of any request for additional
information from the Commission or any other federal or state governmental
authority during the period of effectiveness of the Registration Statement, the
response to which would require any amendments or supplements to the
Registration Statement or related prospectus; (ii) the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose; (iv) the happening
of any event that makes any statement made in the Registration Statement or
related prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires the making
of any changes in the Registration Statement, related prospectus or documents so
that, in the case of the Registration Statement, 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 not misleading, and
that in the case of the related prospectus, 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 the light of the
circumstances under which they were made, not misleading; (v) a post-effective
amendment or supplement to the Registration to reflect events covered by the
Company's annual report on Form 10-K, quarterly report or Form 10-Q or current
report on Form 8-K is necessary or will be necessary during the subsequent ten
Trading Days, (vi) the withdrawal of any relevant Comfort Letter or Periodic
Accountant's Report; and (vii) the Company's reasonable determination that a
post-effective amendment or supplement to the
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Registration Statement would otherwise be appropriate; and the Company will
promptly make available to the Investor any such supplement or amendment to the
related prospectus. The Company shall not deliver to the Investor any Draw Down
Notice during the continuation of any of the foregoing events and shall cancel
an existing Draw Down by delivering a Draw Down Cancellation Notice in the
manner required by Section 6.04 of this Agreement.
SECTION 5.11. DISCLOSURE OF MATERIAL INFORMATION. In the event that the
Company comes into possession of any material non-public information, the
Company shall make full and complete public disclosure in accordance with all
applicable securities laws (including all common law formulations thereof).
SECTION 5.12. ISSUANCE OF DRAW DOWN SHARES. The sale and issuance of the
Draw Down Shares shall be made in accordance with the provisions and
requirements of Section 4(2) of the Securities Act and any applicable state law.
ARTICLE VI
CONDITIONS TO DELIVERY OF DRAW DOWN
NOTICES AND CONDITIONS TO SETTLEMENT
SECTION 6.01. CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
ISSUE AND SELL COMMON STOCK. The obligation hereunder of the Company to issue
and sell the Draw Down Shares to the Investor incident to each Settlement is
subject to the satisfaction, at or before each such Settlement, of each of the
conditions set forth below.
(a) Accuracy of the Investor's Representation and Warranties. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the date when made and as of the date of each such
Settlement as though made at each such time (except for representations and
warranties specifically made as of a particular date which shall be true and
correct in all material respects as of the date when made).
(b) Performance by the Investor. The Investor shall have performed,
satisfied and complied in all respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such Settlement.
SECTION 6.02. CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO
DELIVER A DRAW DOWN NOTICE. The right of the Company to deliver a Draw Down
Notice hereunder is subject to the satisfaction, on the date of delivery of such
Draw Down Notice, of each of the following conditions:
(a) Effective Registration Statement. As set forth in the Registration
Rights Agreement, the Registration Statement shall have previously been declared
effective and shall remain effective and sales of all of the Registrable
Securities (including all of the Draw Down Shares issued with respect to all
prior Draw Downs and all of the Draw Down Shares expected to be issued in
connection with the Draw Down specified by the current Draw Down Notice
(assuming for such purpose that the Purchase Price applicable to such Draw Down
is the Floor
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Price)) may be made by the Investor thereunder and (i) neither the Company nor
the Investor shall have received notice that the Commission has issued or
intends to issue a stop order with respect to the Registration Statement or that
the Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement either, temporarily or permanently, or intends or has
threatened to do so, (ii) no other suspension of the use or withdrawal of the
effectiveness of the Registration Statement or related prospectus shall exist
and (iii) no event specified in Section 5.13 shall have occurred and be
continuing.
(b) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the applicable Draw Down
Date as though made at such time (except for representations and warranties
specifically made as of a particular date which shall be true and correct in all
material respects as of the date when made).
(c) Performance by the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Registration Rights Agreement
to be performed, satisfied or complied with by the Company at or prior to such
date, nor shall there have occurred an Event of Default under this Agreement.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby that prohibits or directly and adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced that
may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
(e) Material Adverse Changes. For the thirty (30) days preceding the
date of delivery of such Draw Down Notice, no event that had or is reasonably
likely to have a Material Adverse Effect shall have occurred (provided that any
changes resulting from general economic conditions or the medical device
industry in general shall not be deemed to constitute a "Material Adverse
Effect" for purposes hereof).
(f) No Suspension of Trading In or Delisting of Common Stock. The
trading of the Common Stock (including without limitation the Draw Down Shares)
shall not have been suspended by the Commission, the Principal Market or the
NASD and the Common Stock (including without limitation the Draw Down Shares)
shall have been approved for listing or quotation on and shall not have been
delisted from the Principal Market.
(g) Comfort Letter; Periodic Accountant's Report. The Comfort Letter
shall have been delivered and a Periodic Accountant's Report, satisfactory to
the Investor, covering required matters shall have been delivered.
(h) No Knowledge. The Company shall have no knowledge of any event that
would reasonably be expected to have the effect of causing such Registration
Statement to be suspended
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or otherwise ineffective (which event is more likely than not to occur within
the five (5) Trading Days following the Trading Day on which such Draw Down
Notice is deemed delivered).
(i) Trading Cushion. A period of five Trading Days shall have elapsed
since the delivery of the preceding Draw Down Notice.
(j) Maximum Share Amount. Unless the Company has obtained the requisite
approval of its stockholders in accordance with the applicable rules of the
Principal Market, in no event may the Company issue a Draw Down Notice to sell
an Investment Amount to the extent that the sum of (x) the number of shares of
Common Stock represented by the quotient of (i) the requested Investment Amount,
divided by (ii) the Floor Price, plus (y) the cumulative total of all shares of
Common Stock issued under all previous Draw Downs effected pursuant to this
Agreement, would exceed the Maximum Share Amount.
(k) Investment Amount Limitation. On each Draw Down Date, the Investment
Amount specified in the applicable Draw Down Notice may not exceed the dollar
amount which would result in a number of Draw Down Shares then to be purchased
by the Investor (for purposes of this Section 6.02(k), assuming that such number
of Draw Down Shares to be issued pursuant to such Draw Down Notice equals the
Investment Amount specified in such Draw Down Notice, divided by the Floor
Price) which would cause the Investor not to satisfy the conditions set forth in
the following two sentences. Notwithstanding any other provision of this
Agreement, the aggregate number of Common Shares issuable to the Investor in
respect of a Draw Down, together with the shares of Common Stock then
beneficially owned (as defined in the Exchange Act) by the Investor and its
affiliates (excluding shares of Common Stock otherwise deemed beneficially owned
as a result of the convertibility of the shares of the Series B Convertible
Preferred Stock held by the Investor or its affiliates), shall not exceed 4.9%
of the total outstanding shares of Common Stock as of such date (the "4.9%
Limitation"). In addition, notwithstanding any other provision of this Agreement
during any consecutive 61-day period the Investor (together with its affiliates)
may not be issued Common Shares to the extent such purchase, when combined with
prior conversions of the Investor's shares of the Company's Series B Convertible
Preferred Stock or exercises of its warrants to purchase the Company's Common
Stock would in the aggregate exceed a number of shares of Common Stock exceeding
9.9% of the Company's issued and outstanding shares of Common Stock as of the
first of such 61-day period nor may the Investor sell shares of Common Stock
(whether acquired upon conversion of the Series B Convertible Preferred Stock,
exercise of warrants, pursuant to this Agreement or otherwise in excess of 9.9%
of the Company's issued and outstanding shares of Common Stock as of the first
day of such 61-day period (the "9.9% Limitation"). The foregoing limitations may
not be waived, amended or modified. The Company shall have no obligation to
monitor compliance with the foregoing limitations. In the event the issuance of
the full number of Common Shares pursuant to a Draw Down Notice (assuming the
Common Shares were to issued based on the Floor Price specified in such Draw
Down Notice) would cause the Investor to be in violation of the foregoing
limitations, the Investor shall within one Business Day of receiving such Draw
Down Notice notify the Company and on the Settlement Date, the Investor shall
only be required to purchase such number of Common Shares (pro rated over the
Valuation Period) which would not cause the Investor to be in violation of such
limitations. In the event that as a result of the foregoing, the Investor shall
not purchase Common Shares for the entire Investment Amount specified in such
Draw Down Notice, the Investor shall be required to pay
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the Company as liquidated damages an amount equal to 2% of the portion of the
Investment Amount not paid; such liquidated damages amount shall be paid by
increasing the Purchase Price on future purchases of Common Shares under this
Agreement accordingly, provided that if the Company has not effectively have
been paid such liquidated damages amount in full within 90 days after such
obligation shall have arisen, the Investor shall, if requested by the Company,
pay such amount in cash to the Company.
(l) Prospectus Supplement. A supplement to the prospectus included in
the Registration Statement (the "Prospectus Supplement"), in form and substance
to be agreed upon by the parties, setting forth information regarding the Draw
Down including, without limitation, the Draw Down Date, the Investment Amount,
the number of shares sold to the Investor in connection with all previous Draw
Downs, if not previously disclosed in an SEC Document, and any additional
information required by SEC rules and regulations, including Item 507 of
Regulation S-K, shall have been filed with the Commission and sufficient copies
thereof delivered to the Investor on the Trading Day immediately following the
delivery of the Draw Down Notice.
SECTION 6.03. DOCUMENTS REQUIRED TO BE DELIVERED ON EACH DRAW DOWN DATE.
The Investor's obligation to purchase Common Shares pursuant to a Draw Down
hereunder shall additionally be conditioned upon the delivery to the Investor of
each of the following documents on or before the Draw Down Date:
(a) a certificate in form and substance satisfactory to the Investor,
executed by an executive officer of the Company and to the effect that all the
conditions to such Draw Down Notice shall have been satisfied as at the date of
such certificate;
(b) the opinion of counsel in form and substance satisfactory to the
Investor dated as of the Draw Down Date.
SECTION 6.04. DRAW DOWN CANCELLATION.
(a) Mechanics of Draw Down Cancellation. If at any time during a
Valuation Period, (i) any of the events specified in Section 5.13 of this
Agreement shall occur, (ii) any of the conditions precedent to a Draw Down set
forth in Section 6.02 shall no longer be satisfied as of any date during the
Valuation Period or (iii) the Company discovers that a document set forth in
Section 6.03(a) or (b) or the most recent applicable Comfort Letter(s) or
Periodic Accountant's Report(s) would not be deliverable in the precise form so
delivered if delivered as of such date during the Valuation Period, then the
Company shall cancel the Draw Down (a "Draw Down Cancellation") immediately by
delivering written notice to the Investor specifying the reasons therefor (the
"Draw Down Cancellation Notice"), by facsimile and overnight courier. The Draw
Down Cancellation Notice shall be deemed delivered on (i) the Trading Day it is
received by facsimile or otherwise by the Investor if such notice is received
prior to 5:00 p.m., New York City time, or (ii) the immediately succeeding
Trading Day if it is received by facsimile or otherwise after 5:00 p.m., New
York City time, on a Trading Day, or at any time on a day which is not a Trading
Day. No Draw Down Cancellation Notice may be deemed delivered on a day that is
not a Trading Day. "Draw Down Cancellation Date" shall be the date the Draw Down
Cancellation Notice is deemed delivered pursuant to the preceding sentence.
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(b) Effect of Draw Down Cancellation. If a Draw Down Cancellation Notice
has been delivered to the Investor after a Draw Down Date, the Valuation Period
for such Draw Down shall (except as provided in the proviso to the succeeding
sentence) end on the Trading Day immediately preceding the Draw Down
Cancellation Date. In such event, the Investment Amount relating to such Draw
Down shall be reduced by one-fifth (1/5) with respect to each Trading Day during
the period beginning on and including the Draw Down Cancellation Date and ending
on the last Trading Day of such Valuation Period. Anytime a Draw Down
Cancellation Notice is delivered to the Investor, such Draw Down shall remain
effective as to the portion of the Investment Amount not canceled pursuant to
the preceding sentence and the Investor shall be entitled to use the
Registration Statement and related prospectus for sales of the Draw Down Shares
issuable with respect to such non-canceled portion of the Investment Amount.
ARTICLE VII
TERMINATION
SECTION 7.01. TERM; TERMINATION BY MUTUAL CONSENT. Subject to the
provisions of Section 7.02, the term of this Agreement shall run until the end
of the Commitment Period; provided that the right of the Company to effect any
Draw Downs under this Agreement may be terminated at any time by mutual consent
of the parties.
SECTION 7.02. TERMINATION BY THE INVESTOR. The Investor may terminate
the right of the Company to effect any Draw Downs under this Agreement upon one
(i) Trading Day's notice if any of the following events (each, an "Event of
Default") shall occur:
(a) The Company (i) fails to issue shares of Common Stock to the
Investor on any Settlement Date as provided herein, (ii) fails to remove any
restrictive legend (or to withdraw any stop transfer instructions in respect
thereof) on any certificate or any shares of Common Stock issued to the Investor
as and when required by this Agreement or the Registration Rights Agreement, or
(iii) fails to fulfill its obligations pursuant to this Agreement (or makes any
announcement, statement or threat that it does not intend to honor the
obligations described in this paragraph), and any such failure shall continue
uncured (or any announcement, statement or threat not to honor its obligations
shall not be rescinded in writing) for five (5) days after the Company shall
have been notified thereof in writing by the Investor;
(b) The Company fails to obtain effectiveness of the Registration
Statement within 180 days from the Closing Date, or fails to obtain the
effectiveness of any additional Registration Statement required to be filed
pursuant to the Registration Rights Agreement within ninety (90) days after the
occurrence of the event that requires such filing, or any such Registration
Statement, after its initial effectiveness, lapses in effect or sales of all of
the Registrable Securities otherwise cannot be made thereunder (whether by
reason of the Company's failure to amend or supplement the prospectus included
therein in accordance with the Registration Rights Agreement, the Company's
failure to file and obtain effectiveness with the Commission of an additional
Registration Statement required pursuant to the Registration Rights Agreement or
otherwise) for more than twenty (20) consecutive Trading Days or more than
eighty (80) Trading Days in any twelve (12) month period after such Registration
Statement becomes effective;
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(c) The Company or any Subsidiary shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for all or substantially all of its property or business;
or such a receiver or trustee shall otherwise be appointed;
(d) Bankruptcy, insolvency, reorganization or liquidation proceedings or
other proceedings for relief under any bankruptcy law or any law for the relief
of debtors shall be instituted by or against the Company or any subsidiary of
the Company;
(e) The Company shall fail to maintain the listing of the Common Stock
on a Principal Market or trading in such Common Stock shall otherwise be halted
or suspended for a period of ten (10) consecutive Trading Days;
(f) The sale, conveyance or disposition of all or substantially all of
the assets of the Company, the effectuation by the Company of a transaction or
series of related transactions in which more than 50% of the voting power of the
Company is disposed of, or the consolidation, merger or other business
combination of the Company with or into any other Person or Persons when the
Company is not the survivor;
(g) The Company breaches any material representation, warranty or
covenant contained in this Agreement or the other Transaction Documents; or
(h) Since the date hereof, the Company's Common Stock shall have traded
below the minimum Floor Price for a period of 30 consecutive Trading Days.
ARTICLE VIII
NON-DISCLOSURE OF MATERIAL NON-PUBLIC INFORMATION
SECTION 8.01. NON-DISCLOSURE OF MATERIAL NON-PUBLIC INFORMATION.
(a) The Company covenants and agrees that it shall refrain from
disclosing, and shall cause its officers, directors, employees and agents to
refrain from disclosing, any material non-public information to the Investor,
unless prior to disclosure of such information the Company identifies such
information as being material non-public information and provides the Investor
and its advisors and representatives with the opportunity to accept or refuse to
accept such material non-public information for review.
(b) The Company acknowledges and understands that the Investor is
entering into this Agreement and the Registration Rights Agreement at the
request of the Company and in good faith reliance on (i) the Company's
representation set forth in this Agreement that neither it nor its agents have
disclosed to the Investor any material non-public information; and (ii) the
Company's covenant set forth in this Agreement that if the Company comes into
possession of any material non-public information, the Company shall timely make
full and complete public disclosure of all or such portion of such information
in accordance with all applicable securities laws.
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(c) Nothing herein shall require the Company to disclose material
non-public information to the Investor or its advisors or representatives, and
the Company represents that it does not disseminate material non-public
information to any investors who purchase stock in the Company in a public
offering, to money managers or to securities analysts; provided, however, that
notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the Investor and its advisors and
representatives and, if any, underwriters, of the existence of any event or
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements therein, in light
of the circumstances in which they were made, not misleading.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. PRESS RELEASES AND DISCLOSURE. The Company shall issue a
press release describing the material terms of the transactions contemplated
hereby as soon as practicable following the Closing Date but in no event more
than five (5) days following the Closing Date, and shall file with the
Commission a Current Report on Form 8-K describing the material terms of the
transactions contemplated hereby. No party hereto shall issue any press release
or make any other public disclosure related to this Agreement or any of the
transactions contemplated hereby without the prior written approval of the other
party hereto, except as may be necessary or appropriate in the opinion of the
party seeking to make disclosure to comply with the requirements of applicable
law or stock exchange rules. If any such press release or public disclosure is
so required, the party making such disclosure shall consult with the other party
prior to making such disclosure, and the parties shall use all reasonable
efforts, acting in good faith, to agree upon a text for such disclosure that is
satisfactory to all parties.
SECTION 9.02. EXPENSES. The Company will pay all of the Investor's
expenses (including reasonable attorneys' fees and expenses) in connection with
the negotiation of the Transaction Documents subject to a maximum of $25,000,
which shall be payable at the Closing.
SECTION 9.03. NOTICES. All notices, demands, requests, consents,
approvals or other communications required or permitted to be given hereunder or
that are given with respect to this Agreement shall be in writing and shall be
personally served or deposited in the mail, registered or certified, return
receipt requested, postage prepaid or delivered by reputable air courier service
with charges prepaid, or transmitted by hand delivery, telegram, telex or
facsimile, addressed as set forth below, or to such other address as such party
shall have specified most recently by written notice: (i) if to the Company, to:
Computer Motion, Inc., 000 Xxxxxxx Xxxxx, Xxxxxx, XX 00000 Attention: Xxxxxx
Xxxxxx, Facsimile No.: 000-000-0000, with copies (which shall not constitute
notice) to: Stradling, Yocca, Xxxxxxx & Xxxxx, 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx Xxxxx, XX 00000, Attention: Xxxxxxxx Xxxx, Facsimile No.: (949)
725-4100; and (ii) if to the Investor, Societe Generale c/o XX Xxxxx Securities
Corporation, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, XX 00000 Attention:
Xxxxxxxxx Xxxxxx, Facsimile No.: (212) 278-
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5467, with copies (which shall not constitute notice) to: Xxxxx, Day, Xxxxxx &
Xxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: J. Xxxx Xxxx,
Facsimile No.: (000) 000-0000. Notice shall be deemed given on the date of
service or transmission if personally served or transmitted by telegram, telex
or facsimile. Notice otherwise sent as provided herein shall be deemed given on
the third business day following the date mailed or on the next business day
following delivery of such notice to a reputable air courier service.
SECTION 9.04. ENTIRE AGREEMENT. This Agreement (together with the other
Transaction Documents and all other documents delivered pursuant hereto and
thereto) constitutes the entire agreement of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
SECTION 9.05. AMENDMENT AND WAIVER. This Agreement may not be amended,
modified, supplemented, restated or waived except by a writing executed by the
party against which such amendment, modification or waiver is sought to been
enforced. Waivers may be made in advance or after the right waived has arisen or
the breach or default waived has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts.
SECTION 9.06. ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
and the rights, duties and obligations hereunder may not be assigned or
delegated by the Company or the Investor without the prior written consent of
the other parties hereto; provided that the Investor may assign or delegate its
rights, duties and obligations hereunder, to any Affiliate of the Investor.
Except as provided in the preceding sentence, any purported assignment or
delegation of rights, duties or obligations hereunder made without the prior
written consent of the other party hereto shall be void and of no effect. This
Agreement and the provisions hereof shall be binding upon and shall inure to the
benefit of each of the parties and their respective successors and permitted
assigns. This Agreement is not intended to confer any rights or benefits on any
Persons other than as set forth above.
SECTION 9.07. SEVERABILITY. This Agreement shall be deemed severable,
and the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof. Furthermore, in lieu of any such invalid or unenforceable term
or provision, the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 9.08. FURTHER ASSURANCES. Each party hereto, upon the request of
any other party hereto, shall do all such further acts and execute, acknowledge
and deliver all such further instruments and documents as may be necessary or
desirable to carry out the transactions contemplated by this Agreement.
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SECTION 9.09. TITLES AND HEADINGS. Titles, captions and headings of the
sections of this Agreement are for convenience of reference only and shall not
affect the construction of any provision of this Agreement.
SECTION 9.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE
STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.
SECTION 9.11. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, all of which taken
together shall constitute one and the same instrument.
SECTION 9.12. REPORTING ENTITY FOR THE COMMON STOCK. The reporting
entity relied upon for the determination of the VWAP, trading price or trading
volume of the Common Stock on any given Trading Day for the purposes of this
Agreement shall be Bloomberg Financial.
SECTION 9.13. COMMITMENT FEE PAYMENT. In the event Company shall not
issue Draw Down Shares for an aggregate Investment Amount of at least $3,000,000
prior to the termination of this Agreement, the Company shall pay the Investor
the amount of $270,000 (pro rated for issuances prior to the termination of this
Agreement), payable two business days following termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
COMPUTER MOTION, INC.
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title:
SOCIETE GENERALE
By: /s/ GUILLANME POULET
------------------------------
Name: Guillanme Poulet
Title:
