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EXHIBIT 10.20
COMPUTER MOTION, INC.
000-X XXXXXXX XXXXX
XXXXXX, XXXXXXXXXX 00000
June 17, 1997
Medtronic, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxxx, XX 00000
Re: Conversion of Debenture
Gentlemen:
This Letter Agreement is to document our agreement regarding conversion
of the Secured Convertible Debenture dated March 19, 1997 (the "Debenture").
Pursuant to Section 6(c), the Debenture converts into shares of Computer Motion,
Inc. ("CMI") Common Stock upon the execution of definitive agreements relating
to Medtronic, Inc. ("Medtronic") acting as distributor and sales agent for
certain of CMI's products. Such agreement was executed on May 28, 1997. As a
result, we agree that all interest on the Debenture ceased accruing on such date
and that the aggregate accrued interest is $73,918. Notwithstanding Section 6(c)
of the Debenture regarding the conversion price, we hereby agree that the
conversion price shall be $11.20 per share, and as a result, Medtronic Asset
Management, Inc., a wholly-owned subsidiary and assignee of Medtronic, owns
363,743 shares of CMI Common Stock. The per share conversion price and number of
shares owned by Medtronic are calculated assuming a 1.928-for-one reverse split
of the CMI Common Stock; if such reverse stock split does not occur, such
amounts shall be appropriately adjusted.
In addition, we agree that, notwithstanding Section 8(a) of the
Debenture, if on or before November 28, 1998 CMI completes an initial public
offering of CMI Common Stock (an "IPO") at a per common share price less than
$11.20, then Medtronic shall be entitled to receive additional shares of CMI
Common Stock, without further consideration, so that the additional shares
cause the quotient of (i) $4,073,918 divided by (ii) the sum of 363,743 plus
such additional shares, to equal the IPO price.
In addition, we agree that, notwithstanding Section 8(a) of the
Debenture, if on or before November 28, 1998 CMI completes one or more private
placements aggregating at least $3 million or more of equity securities of CMI
(including debt, preferred stock or other instruments convertible into CMI
Common Stock) at a weighted average per common share price less than $11.20,
then Medtronic shall be entitled to receive additional shares of CMI Common
Stock, without further consideration, so that the aggregate number of shares
held by Medtronic with respect to the conversion of the Debenture equals the
number of shares of Common Stock Medtronic would have received had it
converted the Debenture at a conversion price equal to the weighted average
private placement price.
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Medtronic, Inc.
June 17, 1997
Page 2
If CMI does not complete an IPO or private placement described in the
two preceding paragraphs by November 28, 1998, then CMI and Medtronic shall
select a mutually agreeable investment banker to value CMI as of November 28,
1998 and determine the fair market value per share of the shares of Common
Stock of CMI. If such fair market value is less than $11.20 per share, then
Medtronic shall be entitled to receive additional shares of CMI Common Stock,
without further consideration, so that the additional shares cause the quotient
of (i) $4,073,918 divided by (ii) the sum of 363,743 plus such additional
shares, to equal the fair market value as determined by such investment banker.
In order to evidence your agreement, please execute the enclosed copy
of this letter when indicated and return it to me.
Very truly yours,
/s/ XXXX XXXX
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Xxxx Xxxx
Chief Executive Officer
and President
Agreed to and accepted this
17th day of June, 1997
MEDTRONIC, INC.
By: /s/ XXXXXXX X. XXXXXXX
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Its: Vice President
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