Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is made and entered into as of
October 31, 2002 (this "Agreement"), by and between Computer Motion, Inc., a
Delaware corporation (the "Company"), and the entities listed on Exhibit A
hereto (each, a "Purchaser" and, collectively, the "Purchasers").
WHEREAS, upon the terms and subject to the conditions of the
Series C Convertible Preferred Stock Purchase Agreement, dated as of the date
hereof (the "Purchase Agreement"), the Company has agreed to issue and sell
shares of its Series C Convertible Preferred Stock (the "Series C Preferred
Stock") and Warrants to purchase shares of its Common Stock (the "Warrants") to
the Purchasers; and
WHEREAS, to induce the Purchasers to execute and deliver the
Purchase Agreement and to purchase the Series C Preferred Stock and the
Warrants, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the Conversion Shares (as defined below) issuable upon conversion of the Series
C Preferred Stock and the Warrant Shares (as defined below).
NOW, THEREFORE, in consideration of the representations,
warranties and agreements contained herein and other good and valuable
consideration, the receipt and legal adequacy of which is hereby acknowledged by
the parties, the Company and the Purchaser hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly controls or is controlled by or under common control
with such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section
3(m).
"Board" shall have the meaning set forth in Section 3(m).
"Business Day" means any day except Saturday, Sunday and any day
which is a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"Commission" means the Securities and Exchange Commission.
"Common Shares" shall have the meaning set forth in the
definition of "Registrable Securities."
"Common Stock" means the Company's Common Stock, $.001 par value.
"Conversion Shares" means shares of Common Stock issuable upon
conversion of the Series C Preferred Shares.
"Effectiveness Date" means with respect to the registration
statement the earlier of (x) the 90th day following the Closing Date, before
which the Company will use its best efforts to cause the registration statement
to become effective and (y) the date which is within five (5) Business Days of
the date on which the Commission informs the Company that the Commission (i)
will not review the Registration Statement or (ii) that the Company may request
the acceleration of the effectiveness of the Registration Statement.
"Effectiveness Period" shall have the meaning set forth in
Section 2.
"Event" shall have the meaning set forth in Section 8(d).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Filing Date" means the date that a Registration Statement is
required to be filed which date shall be December 15, 2002.
"Holder" means collectively, each holder from time to time of
Registrable Securities including, without limitation, each Purchaser and its
assignees. To the extent this Agreement refers to an election, consent, waiver,
request or approval of or by a Holder, such reference shall mean an election,
consent, waiver, request or approval by the holders of a majority in interest of
the then-outstanding Registrable Securities.
"Indemnified Party" shall have the meaning set forth in Section
6(c).
"Indemnifying Party" shall have the meaning set forth in Section
6(c).
"Dividend Payment Shares" shall mean shares of Common Stock the
Company elects to pay as dividends on the Series C Preferred Stock.
"Liquidated Damages" shall have the meaning set forth in Section
8(d).
"Losses" shall have the meaning set forth in Section 5(a).
"NMS" shall mean the Nasdaq National Market.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
2
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities" means the shares of Common Stock
issuable as Dividend Payment Shares, Conversion Shares and Warrant Shares
pursuant to the Certificate of Designations Setting Forth the Preferences,
Rights and Limitations of the Series C Convertible Preferred Stock of Computer
Motion, Inc. or the Warrants, as the case may be, and upon any stock split,
stock dividend, recapitalization or similar event with respect to such shares of
Common Stock and any other securities issued in exchange of or replacement of
such shares of Common Stock (collectively, the "Common Shares"); until in the
case of any of the Common Shares (i) a Registration Statement covering such
Common Share has been declared effective by the SEC and continues to be
effective during the Effectiveness Period; or (ii) such Common Share is sold in
compliance with Rule 144 or may be sold pursuant to Rule 144(k) after which time
such Common Share shall not be a Registrable Security.
"Registration Statement" means any registration statement
registering Registrable Securities, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission pursuant
to the Securities Act, as such Rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to the Holder, for
which the Holder will be reimbursed by the Company pursuant to Section 5 of this
Agreement and Section 8 of the Purchase Agreement.
3
"Warrant Shares" shall mean the shares of common stock issuable
upon exercise of the Warrants.
2. Registration. On or prior to the Filing Date the Company shall
prepare and use its best efforts to file with the Commission a Registration
Statement covering the resale of the Registrable Securities for an offering to
be made on a continuous basis pursuant to Rule 415. The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for
resale the Warrant Shares on Form S-3, in which case such registration shall be
on another appropriate form in accordance with the Securities Act and the rules
promulgated thereunder) and shall contain (except if otherwise directed by the
Purchaser) the "Plan of Distribution" attached hereto as Exhibit B. The Company
shall (i) not permit any securities other than the Registrable Securities to be
included in the Registration Statement, other than (x) the securities described
in Schedule 1 hereto or (y) any other Registrable Securities issued and
outstanding on the Filing Date, (ii) use its best efforts to cause the
Registration Statement to be declared effective under the Securities Act
(including filing with the Commission a request for acceleration of
effectiveness in accordance with Rule 12dl-2 promulgated under the Exchange Act
within five (5) Business Days of the date that the Company is notified (orally
or in writing, whichever is earlier) by the Commission that a Registration
Statement will not be "reviewed," or not be subject to further review) as soon
as possible after the filing thereof, but in any event prior to the
Effectiveness Date, and to keep such Registration Statement continuously
effective under the Securities Act until such date as is the earlier of (x) the
date when all Warrant Shares (and other Registrable Securities, if any) covered
by such Registration Statement have been sold or (y) the date on which the
Warrant Shares, and the other Registrable Securities, if any, covered by such
Registration Statement may be sold without any restriction pursuant to Rule
144(k) as determined by the counsel to the Company pursuant to a written letter,
addressed to the Company's transfer agent to such effect (the "Effectiveness
Period").
3. Registration Procedures; Company's Obligations.
In connection with the registration of the Registrable
Securities, the Company shall:
(a) Prepare and use its best efforts to file with the Commission
on or prior to the Filing Date, a Registration Statement on Form S-3 (or if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3 such registration shall be on another appropriate form in accordance
with the Securities Act and the Rules promulgated thereunder) in accordance with
the method or methods of distribution thereof as specified by the Holder (except
if otherwise directed by the Holder), and use its best efforts to cause the
Registration Statement to become effective and remain effective as provided
herein; provided, however, that not less than three (3) Business Days prior to
the filing of the Registration Statement or any related Prospectus or any
amendment or supplement thereto (including any document that would be
incorporated therein by reference), the Company shall (i) furnish to the Holder
and any Special Counsel, copies of all such documents proposed to be filed,
which documents (other than those incorporated by reference) will be subject to
the timely review of such Special Counsel, and (ii) at the request of the Holder
cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of counsel to such Holder, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file the Registration Statement or any such Prospectus or
4
any amendments or supplements thereto to which the Holder or any Special Counsel
shall reasonably object in writing within three (3) Business Days of their
receipt thereof.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond promptly to any comments received from the
Commission with respect to the Registration Statement or any amendment thereto
and promptly provide the Holder true and complete copies of all correspondence
from and to the Commission relating to the Registration Statement; and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in accordance
with the intended methods of disposition by the Holders thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the Holder of Registrable Securities to be sold and
any Special Counsel promptly (and, in the case of (i)(A) below, not less than
three (3) Business Days prior to such filing and, in the case of (i)(B) or
(i)(C) below, no later than the first (1st) business day following the date on
which the Registration Statement becomes effective) and (if requested by any
such Person) confirm such notice in writing no later than three (3) Business
Days following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a "review" of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement and (C) with respect to the Registration Statement
or any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, 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.
The Company shall promptly furnish to Special Counsel, without
charge, (i) any correspondence from the Commission or the Commission's staff to
the Company or its representatives relating to any Registration Statement and
(ii) promptly after the same is
5
prepared and filed with the Commission, a copy of any written response to the
correspondence received from the Commission.
(d) Use its best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of, (i) any order suspending the effectiveness of the
Registration Statement or (ii) any suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any U.S.
jurisdiction, at the earliest practicable moment.
(e) If requested by the Holder, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
such information as the Company reasonably agrees should be included therein and
(ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(f) Furnish to the Holder and any Special Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with the
Commission.
(g) Promptly deliver to the Holder and any Special Counsel,
without charge, as many copies of the Registration Statement, Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by the selling Holder in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling Holders
and any Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as the Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any tax
in any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement and to enable such Registrable
Securities to be in such denominations and registered in such names as the
Holder may request at least two (2) Business Days prior to any sale of
Registrable Securities.
6
(j) Upon the occurrence of any event contemplated by Section
3(c)(v), promptly prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a 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.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the NMS and any other
securities exchange, quotation system, market or over-the-counter bulletin
board, if any, on which the same securities issued by the Company are then
listed as and when required pursuant to the Purchase Agreement.
(l) Comply in all material respects with all applicable rules and
regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than forty-five (45) days after the end of
any twelve (12) month period (or ninety (90) days after the end of any twelve
(12) month period if such period is a fiscal year) commencing on the first day
of the first fiscal quarter of the Company after the effective date of the
Registration Statement, which statement shall conform to the requirements of
Rule 158.
(m) If (i) there is material non-public information regarding the
Company which the Company's Board of Directors (the "Board") reasonably
determines not to be in the Company's best interest to disclose and which the
Company is not otherwise required to disclose, or (ii) there is a significant
business opportunity (including, but not limited to, the acquisition or
disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may suspend effectiveness of
a registration statement and suspend the sale of Registrable Securities under a
Registration Statement one (1) time every three (3) months or three (3) times in
any twelve month period, provided that the Company may not suspend its
obligation for more than sixty (60) days in the aggregate in any twelve month
period (each, a "Blackout Period"); provided, however, that no such suspension
shall be permitted for more than twenty (20) consecutive days, arising out of
the same set of facts, circumstances or transactions.
(n) Within two (2) Business Days after the Registration Statement
which includes the Registrable Securities is ordered effective by the
Commission, the Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Holder whose Registrable Securities are included in such
Registration Statement) confirmation that the Registration Statement has been
declared effective by the Commission in the form attached hereto as Exhibit C.
4. Registration Procedures; Holder's Obligations
In connection with the registration of the Registrable
Securities, the Holder shall:
7
(a) If the Registration Statement refers to the Holder by name or
otherwise as the holder of any securities of the Company, have the right to
require (if such reference to the Holder by name or otherwise is not required by
the Securities Act or any similar federal statute then in force) the deletion of
the reference to the Holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference ceases to
be required.
(b) (i) not sell any Registrable Securities under the
Registration Statement until it has received copies of the Prospectus as then
amended or supplemented as contemplated in Section 3(g) and notice from the
Company that such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 3(c), (ii) comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the Registration
Statement and (iii) furnish to the Company information regarding such Holder and
the distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, and the Company may exclude from such
registration the Registrable Securities of the Holder of it fails to furnish
such information within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.
(c) upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(m), forthwith discontinue disposition of such Registrable
Securities under the Registration Statement until the Holder's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 3(j), or until it is advised in writing by the Company
that the use of the applicable Prospectus may be resumed, and, in either case,
has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.
5. Registration Expenses
All reasonable fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation the following: (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the NMS and each other securities exchange or market on
which Registrable Securities are required hereunder to be listed, (B) with
respect to filings required to be made with the Commission, and (C) in
compliance with state securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses if the printing of
prospectuses is requested by the holders of a majority of the Registrable
Securities included in the Registration Statement), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company
and (v) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, the Company's independent public
accountants (including the expenses of any comfort letters or costs associated
with the delivery by independent public accountants of a comfort letter or
comfort letters). In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions
8
contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as
required hereunder.
6. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
the Purchaser, its permitted assignees, officers, directors, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees, each Person who controls any such
Purchaser or permitted assignee (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling Person, and the respective
successors, assigns, estate and personal representatives of each of the
foregoing, to the fullest extent permitted by applicable law, from and against
any and all claims, losses, damages, liabilities, penalties, judgments, costs
(including, without limitation, costs of investigation) and expenses (including,
without limitation, reasonable attorneys' fees and expenses) (collectively,
"Losses"), arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in the Registration Statement, any Prospectus, as
supplemented or amended, if applicable, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, except (i) to the extent, but only to the
extent, that such untrue statements or omissions are based solely upon
information regarding the Holder furnished in writing to the Company by the
Holder expressly for use therein, which information was reviewed and expressly
approved by the Holder or Special Counsel expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (ii) as a result of the failure of the Holder to deliver a
Prospectus, as amended or supplemented, to a purchaser in connection with an
offer or sale. The Company shall notify the Holder promptly of the institution,
threat or assertion of any Proceeding of which the Company is aware in
connection with the transactions contemplated by this Agreement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of an Indemnified Party (as defined in Section 7(c) hereof) and shall
survive the transfer of the Registrable Securities by the Holder.
(b) Indemnification by Purchaser. Purchaser and its permitted
assignees shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, and the respective successors, assigns, estate and
personal representatives of each of the foregoing, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus, as supplemented or
amended, if applicable, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, to the extent, but only to the
9
extent, that such untrue statement or omission is contained in or omitted from
any information so furnished in writing by the Holder or the Special Counsel to
the Company specifically for inclusion in the Registration Statement or such
Prospectus and that such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus or such form of
prospectus or to the extent that such information relates to the Holder or the
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by the Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus
Supplement. Notwithstanding anything to the contrary contained herein, the
Holder shall be liable under this Section 6(b) for only that amount as does not
exceed the net proceeds to the Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity pursuant
to Section 6(a) or 6(b) hereunder (an "Indemnified Party"), such Indemnified
Party promptly shall notify the Person from whom indemnity is sought (the
"Indemnifying Party) in writing, and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have materially and adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel reasonably acceptable to
the Indemnifying Party that a conflict of interest is likely to exist if the
same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Indemnifying
Party). The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, which consent shall not unreasonably be
withheld, effect any settlement of any pending Proceeding in respect of which
any Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding.
All reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified
10
Party, as incurred, within twenty (20) Business Days of written notice thereof
to the Indemnifying Party (regardless of whether it is ultimately determined
that an Indemnified Party is not entitled to indemnification hereunder;
provided, that the Indemnifying Party may require such Indemnified Party to
undertake to reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to
indemnification hereunder or pursuant to applicable law).
(d) Contribution. If a claim for indemnification under Section
6(a) or 6(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying, Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 6(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in under Section 6(a) or 6(b) was available to such
party in accordance with its terms. Notwithstanding anything to the contrary
contained herein, the Holder shall be liable or required to contribute under
this Section 6(d) for only that amount as does not exceed the net proceeds to
the Holder as a result of the sale of Registrable Securities pursuant to such
Registration Statement.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
7. Rule 144.
As long as the Holder owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange
Act and to promptly furnish the Holders with true and complete copies of all
such filings. As long as the Holder owns Registrable Securities, if the Company
is not required to file reports pursuant to Section 13(a) or 15(d) of the
Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c)
11
promulgated under the Securities Act annual and quarterly financial statements,
together with a discussion and analysis of such financial statements in form and
substance substantially similar to those that would otherwise be required to be
included in reports required by Section 13(a) or 15(d) of the Exchange Act, as
well as any other information required thereby, in the time period that such
filings would have been required to have been made under the Exchange Act. The
Company further covenants that it will take such further action as the Holder
may reasonably request, all to the extent required from time to time to enable
the Holder to sell Common Shares without registration under the Securities Act
within the limitation of the exemptions provided by Rule 144 promulgated under
the Securities Act, including providing any legal opinions of counsel to the
Company referred to in the Purchase Agreement. Upon the request of any Holder,
the Company shall deliver to such Holder a written certification of a duly
authorized officer as to whether it has complied with such requirements.
8. Miscellaneous.
(a) Remedies. The remedies provided in this Agreement and the
Purchase Agreement are cumulative and not exclusive of any remedies provided by
law. In the event of a breach by the Company or by the Holder, of any of their
obligations under this Agreement, the Holder or the Company, as the case may be,
in addition to being entitled to exercise all rights granted by law and under
this Agreement, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. The Company and the Holder agree
that monetary damages would not provide adequate compensation for any losses
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has, as of the date hereof entered into and currently in
effect, nor shall the Company or any of its Affiliates, on or after the date of
this Agreement, enter into any agreement with respect to its securities that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. Without limiting the generality
of the foregoing, without the written consent of the Holder, the Company shall
not grant to any Person the right to request the Company to register any
securities of the Company under the Securities Act if the rights so granted are
inconsistent with the rights granted to Holders set forth herein, or otherwise
prevent the Company with complying with all of its obligations hereunder.
(c) No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant hereto)
may include securities of the Company in the Registration Statement.
(d) Failure to File Registration Statement and Other Events. The
Company and the Holders agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not declared effective by the
Commission on or prior to the Effectiveness Date (or in the event an additional
Registration Statement is filed because the actual number of Common Shares
exceeds the number of shares of Common Stock
12
initially registered is not filed and declared effective within the time periods
set forth in Section 2), or (ii) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 12dl-2 promulgated under the
Exchange Act within five (5) Business Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that a
Registration Statement will not be "reviewed," or not subject to further review,
or (iii) the Registration Statement is filed with and declared effective by the
Commission but thereafter ceases to be effective as to the Registrable
Securities registered therein at any time during the Period, without being
succeeded within a reasonable period by a subsequent Registration Statement
filed with and declared effective by the Commission, or (iv) during the Period,
trading in the Common Stock shall be suspended for any reason for more than
three (3) Business Days in the aggregate, or (v) the Company has breached
Section 3(n) of this Agreement (any such failure or breach being referred to as
an "Event"), the Company shall pay as liquidated damages for such failure and
not as a penalty (the "Liquidated Damages") to the Holder an amount equal to
three and one-half percent (3_%) of the face value of Series C Preferred Stock
owned by such Holder for the first thirty (30) day period and one and one-half
percent (1_%) of the face value of Series C Preferred Stock owned by such Holder
for each subsequent thirty (30) day period, pro rated for any period less than
thirty (30) days, following the Event until the applicable Event has been cured.
Payments to be made pursuant to this Section 9(d) shall be due and payable
immediately upon demand at the option of the Holders in cash. The parties agree
that the Liquidated Damages represent a reasonable estimate on the part of the
parties, as of the date of this Agreement, of the amount of damages that may be
incurred by the Holders if the Registration Statement is not filed on or prior
to the Filing Date or has not been declared effective by the Commission on or
prior to the Effectiveness Date and maintained in the manner contemplated herein
during the Effectiveness Period or if any other Event as described herein has
occurred.
(e) Consent to Jurisdiction. Both the Company and the Purchaser
(i) hereby irrevocably submit to the jurisdiction of the United States District
Court for the Southern District of New York and the courts of the State of New
York located in New York county for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement or the Purchase
Agreement and (ii) hereby waive, and agree not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Both the Company and the Purchaser consent to process being served in
any such suit, action or proceeding by mailing a copy thereof to such party at
the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 8(e) shall affect or limit any right to serve
process in any other manner permitted by law.
(f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Holders
of at least ninety percent (90%) of the outstanding shares of Series C Preferred
Stock (excluding the shares of Series C Preferred Stock beneficially owned by
Xxxxxx X. Xxxxxx).
(g) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is
13
delivered via facsimile at the facsimile telephone number specified for notice
prior to 5:00 p.m., eastern standard time, on a Business Day, (ii) the first
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified for notice
later than 5:00 p.m., eastern time, on any date and earlier than 11:59 p.m.,
eastern time, on such date, (iii) the Business Day following the date of
mailing, if sent by nationally recognized overnight courier service or (iv)
actual receipt by the party to whom such notice is required to be given.
(x) if to the Company:
Computer Motion, Inc.
000-X Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Tel. No.: (000) 000-0000[ x.113]
Fax No.: (000) 000-0000
Attn: Xxxxxx Xxxxxx
with a copy to:
Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx, Esq.
(y) if to any Purchaser:
At the address of such Purchaser set forth on
Exhibit A to this Agreement.
with a copy to:
Jenkens & Xxxxxxxxx Xxxxxx Xxxxxx LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Tel. No.: (000) 000-0000
Fax No.: (000) 000-0000
Attn: Xxxxxxxxxxx X. Xxxxxxx
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.
(h) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted
assigns and shall inure to the benefit of the Holder and its successors and
assigns. The Company may not assign this Agreement or any of its respective
rights or obligations hereunder without the prior written
14
consent of the Purchaser. Each Purchaser may assign its rights hereunder in the
manner and to the Persons as permitted under the Purchase Agreement.
(i) Assignment of Registration Rights. The rights of the Holder
hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any Affiliate of such Holder or to
any other Holder or Affiliate of any other Holder of all or a portion of the
shares of Registrable Securities if: (i) the Holder agrees in writing with the
transferee or assignee to assign such rights, and a copy of such agreement is
furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment
the further disposition of such securities by the transferee or assignees is
restricted under the Securities Act and applicable state securities laws, (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement, and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement and shall be for no less than 100,000 shares of
Registrable Securities (appropriately adjusted for any stock dividend, split or
combination of the Common Stock). In addition, the Holder shall have the right
to assign its rights hereunder to any other Person with the prior written
consent of the Company, which consent shall not be unreasonably withheld. The
rights to assignment shall apply to the Holder (and to subsequent) successors
and assigns. In the event of an assignment pursuant to this Section 8(i), the
Purchaser shall pay all incremental costs and expenses incurred by the Company
in connection with filing a Registration Statement (or an amendment to the
Registration Statement) to register the shares of Registrable Securities
assigned to any assignee or transferee of the Purchaser.
(j) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to principles of conflicts of law thereof. This Agreement shall not be
interpreted or construed with any presumption against the party causing this
Agreement to be drafted.
(l) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(m) Termination. This Agreement shall terminate on the date on
which all remaining Registrable Securities may be sold without restriction
pursuant to Rule 144(k) of the Securities Act.
(n) Severability. If any term, provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable in any
respect, the remainder of
15
the terms, provisions, covenants and restrictions set forth herein shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their reasonable efforts to find
and employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
(o) Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
COMPUTER MOTION, INC.
By:
---------------------------------
Name:
Title:
PURCHASER
By:
---------------------------------
Name:
Title:
EXHIBIT A
SCHEDULE OF PURCHASERS
EXHIBIT B
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholder. The shares of common stock may be sold in one or more transactions
at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market prices, at varying prices determined at the
time of sale, or at negotiated prices. These sales may be effected at various
times in one or more of the following transactions, or in other kinds of
transactions:
- transactions on the New York Stock Exchange or on any national securities
exchange or U.S. inter-dealer system of a registered national securities
association on which our common stock may be listed or quoted at the time of
sale;
- in the over-the-counter market;
- in private transactions and transactions otherwise than on these exchanges
or systems or in the over-the-counter market;
- in connection with short sales of the shares;
- by pledge to secure or in payment of debt and other obligations;
- through the writing of options, whether the options are listed on an options
exchange or otherwise;
- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options; or
- through a combination of any of the above transactions.
The selling stockholder and its successors, including its transferees,
pledgees or donees or their successors, may sell the common stock directly to
purchasers or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholder or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 of the Securities Act may be sold under Rule 144
rather than pursuant to this prospectus.
We entered into a registration rights agreement for the benefit of the
selling stockholder to register our common stock under applicable federal and
state securities laws. The registration rights agreement provides for cross-
indemnification of the selling stockholder and us and our
respective directors, officers and controlling persons against specific
liabilities in connection with the offer and sale of the common stock, including
liabilities under the Securities Act. We will pay substantially all of the
expenses incurred by the selling stockholder incident to the offering and sale
of the common stock.
EXHIBIT C
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[Name and address of Transfer Agent]
------------------
------------------
------------------
Attn:
-------------
Re: [Company]
Ladies and Gentlemen:
We are counsel to _______________, a ___________ corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Purchase Agreement (the "PURCHASE AGREEMENT"), dated as of _________ __, 2002 by
and between the Company and the purchaser (the "Purchaser" and the "Holder")
named therein pursuant to which the Company issued to the Purchaser shares (the
"COMMON SHARES") of its Common Stock, $___ par value (the "COMMON STOCK").
Pursuant to the Purchase Agreement, the Company has also entered into a
Registration Rights Agreement with the Purchaser (the "REGISTRATION RIGHTS
AGREEMENT"), dated as of _________ __, 2002, pursuant to which the Company
agreed, among other things, to register the Registrable Securities (as defined
in the Registration Rights Agreement), including the Common Shares, under the
Securities Act of 1933, as amended (the "1933 ACT"). In connection with the
Company's obligations under the Registration Rights Agreement, on _________ __,
2002, the Company filed a Registration Statement on Form S-3 (File No.
333-________) (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "SEC") relating to the resale of the Registrable Securities
which names the Holder as a selling stockholder thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and, accordingly, the
Registrable Securities are available for resale under the 1933 Act in the manner
specified in, and pursuant to the terms of the Registration Statement.
Very truly yours,
By:
cc: [PURCHASER]
