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EXHIBIT 10.9
STOCKHOLDERS AGREEMENT
THIS AGREEMENT is made as of August 24, 1994 among Chase Manhattan
Capital Corporation, a New York corporation (the "Investor"), Computer Motion,
Inc., a California corporation (the "Company") and each of the executives listed
on the Schedule of Executives attached hereto (the "Executives"). The Investor
and the Executives are collectively referred to as the "Stockholders" and
individually as a "Stockholder." Except as otherwise indicated, capitalized
terms used herein are defined in paragraph 8 hereof.
The Investor will purchase shares of the Company's Series D Convertible
Preferred Stock, no par value per share (the "Series D Preferred") and a
"Warrant" entitling the Investor to purchase shares of the Company's Common
Stock, no par value per share (the "Common Stock") pursuant to a Purchase
Agreement between the Investor and the Company dated as of the date hereof (the
"Purchase Agreement").
The Company and the Stockholders desire to enter into this Agreement
for the purposes, among others, of (i) establishing the composition of the
Company's Board of Directors (the "Board"), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Stockholders' Common Stock may be transferred. The execution and
delivery of this Agreement is a condition to the Investors' purchase of the
Series D Preferred and Warrant pursuant to the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Board of Directors.
(a) From and after the Closing (as defined in the Purchase
Agreement) and until the provisions of this paragraph 1 cease to be effective,
each Stockholder shall vote all of his Stockholder Shares and any other voting
securities of the Company over which such Stockholder has voting control and
shall take all other necessary or desirable actions within his control (whether
in his capacity as a stockholder, director, member of a Board committee or
officer of the Company or otherwise (to the extent not inconsistent with
fiduciary duties to stockholders under applicable law), and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary and desirable actions within its control
(including, without limitation, calling special Board and stockholder meetings),
so that:
(i) the authorized number of directors on the Board shall be
established and maintained at five directors; provided, that upon the completion
of a Qualified Public Offering the authorized number of directors on the Board
may be increased to seven directors;
(ii) one representative designated by the holders of a majority
of the shares of Underlying Common Stock (the "Investor Director") shall be
elected to the Board;
(iii) the board of directors of each of the Company's
subsidiaries (a "Sub Board") shall include the Investor Director as a member
thereof;
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(iv) any committees of the Board or a Sub Board shall include
the Investor Director as a member thereof;
(v) the removal from the Board or a Sub Board (with or without
cause) of any representative designated hereunder by the holders of a majority
of the shares of Underlying Common Stock pursuant to (ii) above shall be at such
holders' written request, but only upon such written request and under no other
circumstances;
(vi) in the event that the representative designated hereunder
by the holders of a majority of the shares of Underlying Common Stock for any
reason ceases to serve as a member of the Board or a Sub Board during his term
of office, the resulting vacancy on the Board or the Sub Board shall be filled
by a representative designated by such holders, as provided hereunder.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by the Investor Director in connection with attending the meetings of
the Board, any Sub Board and any committee thereof. Commencing within 30 days of
the date hereof, and so long as any Investor Director serves on the Board and
for three years thereafter, the Company shall maintain directors and officers
indemnity insurance coverage satisfactory to holders of a majority of the shares
of Underlying Common Stock.
(c) The provisions of this paragraph 1 (other than subparagraph
l(b))shall terminate automatically and be of no further force and effect upon
the first to occur of (i) the tenth anniversary of the date hereof, (ii) at such
time as no Underlying Common Stock remains outstanding, or (iii) at such time as
the ordinary voting power of the Underlying Common Stock represents less than
2.5% of the aggregate ordinary voting power of all classes of the Company's
voting securities.
(d) If the holders of Underlying Common Stock fail to designate a
representative to fill a directorship pursuant to the terms of this paragraph 1,
the election of a person to such directorship shall be accomplished in
accordance with the Company's bylaws and applicable law.
2. Irrevocable Proxy; Conflicting Agreements.
(a) In order to secure each Executive's obligation to vote his
Stockholder Shares and other voting securities of the Company in accordance with
the provisions of paragraph 1 hereof, each Executive hereby appoints the
Investor as his true and lawful proxy and attorney-in-fact, with full power of
substitution, to vote all of his Stockholder Shares, and other voting securities
of the Company over which such Executive has voting control, for the election
and/or removal of directors and all such other matters as expressly provided for
in paragraph 1. The Investor may exercise the irrevocable proxy granted to it
hereunder at any time any Executive fails to comply with the provisions of this
Agreement. The proxies and powers granted by each Executive pursuant to this
paragraph 2 are coupled with an interest and are given to secure the performance
of the Executive's obligations to the Investors under this Agreement. Such
proxies and powers will be irrevocable for the term set forth in paragraph l(c)
of this Agreement and will survive the death, incompetency and disability of
such Executive and be binding upon the holders of his Stockholder Shares.
(b) Each Executive represents that he has not granted and is not a
party to any proxy, voting trust or other agreement which is inconsistent with
or conflicts with the provisions of this Agreement, and no holder of Stockholder
Shares shall grant any proxy or become party to any
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voting trust or other agreement which is inconsistent with or conflicts with the
provisions of this Agreement.
3. Retention of Stockholder Shares. Until the third anniversary of the
date of this Agreement, neither Xxxxx Xxxx nor Xxxxxx X. Xxxxxx (each a
"Founder") shall sell, transfer, assign, pledge or otherwise dispose of (a
"Transfer") an aggregate amount of Stockholder Shares which is greater than 20%
of the number of Stockholder Shares held by such Founder on the date hereof;
provided, however, that on and after the completion of a Qualified Public
Offering, such 20% amount shall be increased to an aggregate amount from the
date hereof equal to 50% of the number of Stockholder Shares held by such
Founder on the date hereof. Until the earlier to occur of the third anniversary
of this Agreement or a Qualified Public Offering, neither Founder shall transfer
any Stockholder Shares at a price per share (calculated on an as-if-converted,
exercised or exchanged basis in the case of Stockholder Shares which are
convertible, exercisable or exchangeable for Common Stock, including without
limitation, the Series A Preferred, Series B Preferred or the Series C
Preferred) which is less than 150% of the Series D Preferred Conversion Price
then in effect (or, if all Series D Preferred has been redeemed pursuant to
paragraph 4I of the Certificate of Determination, then at a price which is less
than 150% of the Warrant Exercise Price then in effect); provided however, that
Xxxxxx X. Xxxxxx and Xxxxx Xxxx may each Transfer an aggregate of 100,000
Stockholder Shares that may otherwise be transferred pursuant to this paragraph
3 at a price per share which is less than 150% of the Conversion Price or
Exercise Price then in effect, and which Transfer shall not be subject to the
restrictions contained in subparagraphs 4(b) and 4(c) hereof (but which Transfer
shall count towards the 20% / 50% limitations contained in the first sentence of
this paragraph 3). Nothing contained in this paragraph 3 shall prohibit either
Founder from transferring Stockholder Shares as permitted under subparagraph
4(d) hereof (but which Transfer shall count towards the 20% / 50% limitations
contained in the first sentence of this paragraph 3).
4. Restrictions on Transfer of Stockholder Shares.
(a) Transfer of Stockholder Shares. Neither Founder shall Transfer
any interest in any Stockholder Shares except pursuant to the provisions of this
paragraph 4. Each Founder agrees not to consummate any Transfer until 30 days
after the later of the delivery to the Company and the holders of Underlying
Common Stock of such Founder's Offer Notice or Sale Notice, unless the parties
to the Transfer have been finally determined pursuant to this paragraph 4 prior
to the expiration of such 30-day period (the "Election Period").
(b) First Offer Right. At least 30 days prior to making any Transfer
of any Stockholder Shares, the transferring Founder (the "Transferring Founder")
shall deliver a written notice (the "Offer Notice") to the Company and the
holders of Underlying Common Stock. The Offer Notice shall disclose in
reasonable detail the proposed number of Stockholder Shares to be transferred
and the proposed terms and conditions of the Transfer. First, the Company may
elect to purchase all or any portion of the Stockholder Shares specified in the
Offer Notice at the price and on the terms specified therein by delivering
written notice of such election to the Transferring Founder and the holders of
Underlying Common Stock as soon as practical but in any event within fifteen
days after the delivery of the Offer Notice.
To the extent that the Company has not elected to purchase all of the
Stockholder Shares within the Election Period, the holders of Underlying Common
Stock may elect to purchase all or any portion of such Stockholder Shares which
the Company has not elected to purchase at the
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price and on the terms specified in the Offer Notice by delivering written
notice of such election to the Transferring Founder as soon as practical, but in
any event within thirty days after delivery of the Offer Notice. If the holders
of Underlying Common Stock have in the aggregate elected to purchase more than
the number of Stockholder Shares available after giving effect to any
Stockholder Shares which the Company has elected to purchase, the shares shall
be allocated among the holders of Underlying Common Stock electing to purchase
shares according to each such holder's Pro Rata Share.
If the Company or any holders of Underlying Common Stock have elected
to purchase Stockholder Shares from the Transferring Founder, the transfer of
such shares shall be consummated as soon as practical after the delivery of the
election notices, but in any event within fifteen days after the expiration of
the Election Period. To the extent that the Company and the holders of
Underlying Common Stock have not elected to purchase all of the Stockholder
Shares being offered, the Transferring Founder may, within 60 days after the
expiration of the Election Period and subject to the provisions of subparagraph
(c) below, transfer such Stockholder Shares to one or more third parties at a
price not less than 95% of the price per share specified in the Offer Notice and
on other terms no more favorable to the transferees than offered to the Company
and the holders of Underlying Common Stock in the Offer Notice. The purchase
price specified in any Offer Notice shall be payable solely in cash at the
closing of the transaction or in installments over time, and no Stockholder
Shares may be pledged. The "Pro Rata Share" of each holder of Underlying Common
Stock shall be based upon such holder's proportionate ownership of Underlying
Common Stock. The rights and restrictions contained in this subparagraph 4(b)
shall terminate upon the completion of a Qualified Public Offering.
(c) Participation Rights. At least 30 days prior to any Transfer of
Stockholder Shares, the Transferring Founder shall deliver a written notice (the
"Sale Notice") to the Company and the holders of Underlying Common Stock,
specifying in reasonable detail the identity of the prospective transferee(s)
and the terms and conditions of the Transfer. The holders of Underlying Common
Stock may elect to participate in the contemplated Transfer by delivering
written notice to the Transferring Founder within 30 days after delivery of the
Sale Notice. If any holders of Underlying Common Stock have elected to
participate in such Transfer, the Transferring Founder and such holders of
Underlying Common Stock shall be entitled to sell in the contemplated Transfer,
at the same price and on the same terms, a number of Stockholder Shares equal to
the product of (i) the quotient determined by dividing the number of Stockholder
Shares owned by such person by the aggregate number of Stockholder Shares owned
by the Transferring Founder and the holders of Underlying Common Stock
participating in such sale and (ii) the number of Stockholder Shares to be sold
in the contemplated Transfer. For purposes of the foregoing, the rights
contained herein shall apply to any Transfer of Stockholder Shares which are not
Common Stock on an as-if-converted, exercised or exchanged (as appropriate)
basis.
For example, if the Sale Notice contemplated a sale of 100
Stockholder Shares by the Transferring Founder, and if the
Transferring Founder at such time owns 1,200 Stockholder
Shares and if one holder of Underlying Common Stock elects to
participate and owns 800 Stockholder Shares, the Transferring
Founder would be entitled to sell 60 shares (1,200 /
2,000 x 100 shares) and the holders of Underlying Common Stock
would be entitled to sell 40 shares (800 / 2,000 x 100
shares).
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Each Founder shall use best efforts to obtain the agreement of the
prospective transferee(s) to the participation of the holders of Underlying
Common Stock in any contemplated Transfer and to the inclusion of a transfer of
Series D Preferred and a portion of the Warrant (if still outstanding) in the
contemplated Transfer as contemplated below, and each Founder shall not transfer
any of its Stockholder Shares to the prospective transferee(s) if the
prospective transferee(s) declines to allow the participation of the holders of
Underlying Common Stock or the inclusion of the Series D Preferred or a portion
of the Warrant.
If any Series D Preferred is included in any Transfer of Stockholder
Shares under this subparagraph 4(c), then that portion of the Warrant which
becomes exercisable upon redemption of such Series D Preferred pursuant to
paragraph 4I of the Certificate of Determination shall also be included in such
Transfer, and the aggregate purchase price therefor shall be equal to the full
purchase price determined hereunder for the Stockholder Shares covered by the
Series D Preferred to be transferred. If, however, the Series D Preferred has
been redeemed pursuant to paragraph 4I of the Certificate of Determination, and
if any portion of the Warrant is included in any Transfer of Stockholder Shares
under this subparagraph 4(c), the purchase price for the Warrant shall be equal
to the full purchase price determined hereunder for the Stockholder Shares
covered by the portion of the Warrant to be transferred, reduced by the
aggregate Exercise Price for such shares. The rights and restrictions contained
in this subparagraph 4(c) shall terminate upon the later to occur of (i) 3 years
from the date hereof, or (ii) the completion of a Qualified Public Offering.
(d) Permitted Transfers. The restrictions contained in this
paragraph 4 shall not apply with respect to any Transfer of Stockholder Shares
by any Founder pursuant to applicable laws of descent and distribution or among
such Founder's Family Group, or by Xxxxxx X. Xxxxxx to Xxxx Xxxxxx in an amount
not to exceed 20% of the Stockholder Shares owned by Xxxxxx X. Xxxxxx as of the
date hereof (collectively referred to herein as "Permitted Transferees");
provided that the restrictions contained in this paragraph 4 shall continue to
be applicable to the Stockholder Shares after any such Transfer and provided
further that the transferees of such Stockholder Shares shall have agreed in
writing to be bound by the provisions of this Agreement affecting the
Stockholder Shares so transferred. "Family Group" means a Founder's spouse,
parents and descendants (whether natural or adopted) and any trust solely for
the benefit of such Founder and/or such Founder's spouse and/or parents and/or
descendants. Notwithstanding the foregoing, nothing contained in this Section 4
shall limit the right of Chase to freely transfer Stockholder Shares to any
affiliate.
5. Holdback Agreement. Each Executive agrees not to effect any public
sale or distribution of the Company's equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven days prior to and the 30-day period (or up to 90 days if requested by the
managing underwriter) beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (as such terms are
defined in the Registration Agreement dated as of the date hereof between the
Investor and the Company) unless the underwriters managing the registration
otherwise agree. The restrictions on the transfer of Stockholder Shares set
forth in this paragraph 5 shall continue with respect to each Stockholder Share
until the date on which such Stockholder Share has been transferred in a Public
Sale.
6. Legend. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stockholder Shares as defined herein after such
transfer) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
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"The securities represented by this certificate are subject to
a Stockholders Agreement dated as of August 24, 1994, among
the issuer of such securities (the "Company") and certain of
the Company's stockholders. A copy of such Stockholders
Agreement will be furnished without charge by the Company to
the holder hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof. The legend set forth above shall be
removed from the certificates evidencing any shares which cease to be
Stockholder Shares in accordance with paragraph 8 hereof.
7. Transfer. Prior to transferring any Stockholder Shares to any person
or entity, the transferring Stockholder shall cause the prospective transferee
to execute and deliver to the Company and the other Stockholders a counterpart
of this Agreement.
8. Definitions.
"Certificate of Determination" means the Certificate of
Determination setting forth the terms of the Series D Preferred filed by the
Corporation with the Secretary of State of California.
"Conversion Price" means the Conversion Price for the Series D
Preferred as in effect from the time to time pursuant to the Certificate of
Determination.
"Exercise Price" means the Exercise Price for the Warrant as in
effect from time to time pursuant to the terms thereof.
"Permitted Transferee" shall have the meaning set forth in paragraph
4(d) hereof.
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Series A Preferred" means the Company's Series A Preferred Stock,
no par value per share.
"Series B Preferred" means the Company's Series B Preferred Stock,
no par value per share.
"Series C Preferred" means the Company's Series C Preferred Stock,
no par value per share.
"Stockholder Shares" means (i) any Common Stock purchased or
otherwise acquired by any Stockholder, (ii) any Common Stock issuable to
Stockholders upon conversion, exercise or exchange of any securities or
instruments convertible into or exercisable or exchangeable for Common Stock,
(iii) any equity securities issued or issuable to Stockholders directly or
indirectly with respect to the Common Stock referred to in clauses (i) or (ii)
above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iv) any other shares of any class or series of capital
stock of the Company
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held by a Stockholder. As to any particular shares constituting Stockholder
Shares, such shares will cease to be Stockholder Shares when they have been (x)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (y) sold to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act. Notwithstanding the foregoing, for
purposes of determining the number of Stockholder Shares owned by each holder
thereof, Common Stock issuable upon exercise of the Warrant shall be disregarded
until the Warrant becomes exercisable under the terms thereof.
"Qualified Public Offering" shall have the meaning set forth in the
Certificate of Determination.
"Underlying Common Stock" means (i) the Common Stock issued or
issuable upon the conversion of Series D Preferred or upon the exercise of the
Warrant, and (ii) any Common Stock issued or issuable with respect to the
securities referred to in clause (i) by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Stockholders
Agreement, any person that holds Series D Preferred or Warrants shall be deemed
to be the holder of Underlying Common Stock obtainable upon conversion of such
Series D Preferred or exercise of such portion of the Warrant, provided that the
Common Stock issuable upon the exercise of the Warrants shall be deemed to
constitute Underlying Common Stock for the purpose of any calculations under
this Agreement only to the extent that the Series D Preferred has been redeemed
by the Company pursuant to paragraph 4I of the Certificate of Determination. Any
particular share of Underlying Common Stock shall cease to be Underlying Common
Stock when it has been (a) effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering it, or (b)
distributed to the public through a broker, dealer or market-maker pursuant to
Rule 144 under the Securities Act (or any similar provision then in force).
"Warrant" means the Stock Purchase Warrant issued pursuant to the
Purchase Agreement and any warrant or warrants issued in exchange, substitution
or replacement thereof.
9. Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Stockholder Shares in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Stockholder Shares as the owner
of such shares for any purpose.
10. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company, holders of a majority
of the Underlying Common Stock and holders of a majority of the Stockholders
Shares owned by Executives and their Permitted Transferees. The failure of any
party to enforce any of the provisions of this Agreement shall in no way be
construed as a waiver of such provisions and shall not affect the right of such
party thereafter to enforce each and every provision of this Agreement in
accordance with its terms.
11. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in
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such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
12. Entire Agreement. Except as otherwise expressly set forth herein,
this document embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
13. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares. Without limiting the
generality of the foregoing, the holders of Underlying Common Stock shall be
entitled to assign their rights under paragraph 4(b) hereof to any other person.
14. Counterparts. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
15. Remedies. The Company, the Investor, holders of Underlying Common
Stock and the Executives shall be entitled to enforce their rights under this
Agreement specifically to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in their
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that the
Company, the Investor, any holder of Underlying Common Stock and any Executive
may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
16. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Stockholder Shares subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices will be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service. The Company's address
is:
Computer Motion, Inc.
000-X Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xx. Xxxxxx X. Xxxxxx
Chairman
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of
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law provision or rule (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California. Any dispute relating hereto shall be heard
in the state or federal courts of Santa Xxxxxxx County, California, and the
parties agree to jurisdiction and venue therein.
18. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
19. Construction. Where specific language is used to clarify by example
a general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
COMPUTER MOTION, INC.
By: _______________________________
Its:_______________________________
CHASE MANHATTAN CAPITAL CORPORATION
By: _______________________________
Its:_______________________________
EXECUTIVES
___________________________________
Xxxxxx X. Xxxxxx
___________________________________
Xxxxx Xxxx
___________________________________
Xxxx Xxxxxx
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SCHEDULE OF EXECUTIVES
Xxxxxx X. Xxxxxx
Xxxxx Xxxx
Xxxx Xxxxxx
