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EXHIBIT 10.1
BRIDGE FINANCING AGREEMENT
This Bridge Financing Agreement (the "Agreement") is entered into as of
March 31, 2000, among COMPUTER MOTION, INC., a Delaware corporation (the
"Company"), and Xxxxxx X. Xxxxxx (the "Purchaser").
R E C I T A L S :
A. Purchaser desires to loan the sum of $3,000,000 to the Company and the
Company desires to borrow such amount pursuant to the terms and conditions set
forth herein.
B. The purpose of this Agreement is to set forth the terms and provisions
of this bridge financing.
NOW, THEREFORE, for good and valuable consideration, the parties agree as
follows:
1. Issuance of Note. Purchaser shall be issued a convertible promissory
note substantially in the form attached hereto as Exhibit A (the "Note"),
evidencing the amount loaned to the Company by Purchaser.
2. Automatic Conversion of the Note.
(a) All of the principal and accrued interest then outstanding under the
Note shall automatically be converted into Common Stock of the Company upon the
approval of the conversion by the Company's stockholders at the Company's next
annual meeting (the "2000 Annual Meeting"). The conversion price per share shall
be the same price as used in the close of the private round of financing
approved by the Company's Board of Directors on March 9, 2000 (the "Conversion
Price").
(b) The Company hereby agrees to take such actions as required to submit
the Note for approval by the Company's stockholders at the Company's 2000 Annual
Meeting.
(c) Should the stockholders of the Company decline to approve the
conversion of the note, the note would become due and payable on the first
anniversary of the 2000 Annual Meeting.
(d) Notwithstanding anything contained in the Note to the contrary, in
the event that prior to the payment of the Note or conversion of the Note
pursuant to this Section 2 hereof, whichever first occurs, if the Company
approves a Change in Control Transaction (as defined below), the Company shall
cause to be given to the Purchaser a written notice of such Change of Control
Transaction (a "Transaction Notice") as soon as practicable, but in no event
later than the tenth day immediately preceding the date on which the
stockholders of the Company are scheduled to vote on approval of the proposed
Change in Control Transaction. Such Transaction Notice shall describe the
principal economic terms of the proposed Change in Control Transaction and the
anticipated allocation of the consideration to be received in such Change of
Control Transaction (the "Transaction Consideration") among the holders of the
Company's capital stock. Purchaser, at Purchaser's option, may elect, by written
notice delivered to the Company not later than ten days after the mailing to the
Purchaser of the Transaction Notice by the Company, to convert all, but not less
than all, of the principal amount of the Note outstanding at the time of such
conversion, together with any accrued and unpaid interest thereon (the "Change
of Control Conversion Right") into a
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number of shares of Common Stock of the Company equal to the result obtained by
dividing the principal amount of the Note then outstanding and the accrued and
unpaid interest by the Conversion Price, in which event the Purchaser would be
entitled to receive the Transaction Consideration following consummation of such
Change of Control Transaction as if the Purchaser converted the then outstanding
principal amount of the Note immediately prior to the consummation of the Change
of Control Transaction in accordance with the formula described above. If the
Purchaser fails to make such election to convert the then outstanding principal
amount of the Note within such ten-day time period, the Change of Control
Conversion Right granted hereunder shall terminate automatically and be of not
further force or effect with respect to the Note.
As used herein, a "Change of Control Transaction" shall mean a sale of all
or substantially all of the assets of the Company, or a merger, consolidation or
reorganization of the Company with another corporation or other business entity
and, immediately following the consummation of any such transaction will not own
at least a majority of the outstanding voting stock of the acquiring corporation
(in the case of a sale of assets), or the surviving corporation (in a merger,
consolidation or reorganization), or a corporation that possesses a majority of
the voting power of such acquiring corporation or surviving corporation.
3. Representations and Warranties of the Company.
(a) Organization and Standing. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware, and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as presently conducted.
(b) Capitalization. The authorized capital stock of the Company,
immediately prior to this offering, consists of 25,000,000 shares of Common
Stock, $.001 par value, 8,801,135 shares of which are issued and outstanding,
5,000,000 shares of Preferred Stock. No shares of Preferred Stock are issued and
outstanding. All issued and outstanding shares of the Company's capital stock
have been duly authorized and validly issued and are fully paid and
nonassessable. All of the outstanding shares of Common Stock, options and
warrants have been duly and validly issued in compliance with all applicable
federal and state securities laws.
(c) Validity of the Note and Common Stock. The Note and Common Stock,
when issued, sold and delivered in compliance with the provisions of this
Agreement will be validly issued, fully paid and nonassessable, and will be free
of any liens or encumbrances; provided, however, that the Note and Common Stock
may be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein or as otherwise required by such laws at the time a
transfer is proposed.
4. Payments. The Note shall be due and payable upon demand, with interest,
if Conversion does not occur by the maturity date of the Note.
5. Purchaser's Representations; Acknowledgments Regarding Risk.
(a) Purchaser hereby represents and warrants to the Company as follows:
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(i) The Purchaser is acquiring the Note and the Common Stock
(collectively, the "Securities") for the Purchaser's own account and not as a
nominee or agent for any other person, and not with the view to, or for sale in
connection with, any distribution thereof.
(ii) The Purchaser is an "accredited investor" within the meaning of
SEC Rule 501(a) of Regulation D, as presently in effect.
(iii) The Purchaser has a preexisting personal or business
relationship with an officer, director or controlling person of the Company and,
by reason of the Purchaser's business or financial experience, has the capacity
to protect the Purchaser's own interests in connection with the purchase of the
Securities.
(iv) The Purchaser has adequate means of providing for current means
and possible personal contingencies, is able to bear the economic risk of this
investment, and is able to hold the Securities indefinitely.
(v) The Purchaser has the knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of this
investment in the Company.
(vi) The Purchaser has been provided with, and access to, all
information which the Purchaser has deemed material or relevant to the
Purchaser's decision to purchase the Securities, and all questions which the
Purchaser had with respect to the purchase of the Securities have been answered
by an officer or director of the Company.
(b) The Purchaser acknowledges and understands that:
(i) The Securities have not been registered under the Securities Act
of 1993, as amended (the "Act"), and that, accordingly, they will not be fully
transferable except as permitted under various exemptions containing such Act,
or upon satisfaction of the registration and prospectus delivery requirements of
the Act, and that there will be a legend printed upon the Securities so
indicating.
(ii) The Securities may not be sold, transferred, assigned, pledged,
hypothecated or otherwise disposed of unless the Purchaser first provides to the
Company and opinion of counsel to the effect that such sale, transfer,
assignment, pledge, hypothecation or other disposition will be exempt from the
registration and prospectus delivery requirements of the Act and the
registration or qualification requirements of any applicable state securities'
law.
6. Unsecured Obligations. Purchaser hereby agrees that the obligations of
the Company created by this Agreement and the Note shall remain unsecured.
7. Miscellaneous.
(a) Binding on Successors. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, administrators and transferees of the parties.
(b) Entire Agreement. This Agreement and the exhibits hereto, constitute
the entire agreement between the parties with respect to the subject matter
hereof and supersedes all prior
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and contemporaneous agreements, whether written or oral, and shall not be
modified except by a writing signed by the parties hereto.
(c) Governing Law. This Agreement and all actions arising out of or in
connection with this Agreement shall be governed by and construed in accordance
with the laws of the State of California, without regard to the conflicts of law
provisions of the State of California or of any other state.
(d) Headings. The headings in this Agreement are for convenience only
and shall not alter or otherwise affect the meaning hereof.
(e) No Waiver. No waiver of any of the provisions contained in this
Agreement shall be valid unless made in writing and executed by the waiving
party. It is expressly understood that in the event any party shall on any
occasion fail to perform any term of this Agreement and the other parties shall
not enforce that term, the failure to enforce on that occasion shall not prevent
enforcement of that or any other term hereof on any other occasion.
(f) Severability. If any section of this Agreement is held invalid by
any law, rule, order, regulation, or promulgation of any jurisdiction, such
invalidity shall not affect the enforceability of any other sections not held to
be invalid.
(g) Counterparts. This Agreement and any amendment thereof may be
executed in two or more counterparts, each of which shall be deemed an original
for all purposes.
(h) Notices. Any notice, approval, request, authorization, direction or
other communication under this Agreement or the Note shall be given in writing
and shall be deemed to have been delivered and given for all purposes (i) on the
delivery date if delivered personally to the party to whom the same is directed
or transmitted by facsimile with confirmation of receipt, (ii) one (1) business
day after deposit with a commercial overnight carrier, with written verification
of receipt, or (iii) five (5) business days after the mailing date, whether or
not actually received, if sent by U.S. mail, return receipt requested, postage
and charges prepaid, at the address of the party set forth on the signature page
of this Agreement (or at such other address as may be communicated to the
notifying party in writing).
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The Company and Purchaser have executed this Agreement as of this 29 day of
March, 2000.
"PURCHASER"
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Xxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
COMPUTER MOTION, INC.
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Xxxxxx X. Xxxxxx, Chief Financial Officer
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