EXHIBIT 4.2
WARRANT
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR WITH THE
SECURITIES COMMISSION OF ANY APPLICABLE STATE UNDER SUCH STATE'S SECURITIES OR
BLUE SKY LAWS. THESE SECURITIES MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER SUCH SECURITIES ACT AND THE APPLICABLE STATE SECURITIES OR BLUE
SKY LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE SECURITIES OR BLUE SKY LAWS.
WARRANT TO PURCHASE STOCK
OF
COMPUTER MOTION, INC.
WARRANT NO.: AC-1 FEBRUARY 13, 2003
This Warrant certifies that, as a material inducement for Agility
Capital, LLC, the original Holder (as defined below) to enter into that certain
Loan and Security Agreement (the "Loan Agreement"), dated February 13, 2003, by
and between Holder and Computer Motion, Inc., a Delaware corporation (the
"Company"), the Holder is entitled, subject to the terms and conditions of this
Warrant, to purchase from the Company at any time prior to 5:00 p.m. Pacific
time on or before February 13, 2010 (the "Expiration Date") shares of Warrant
Stock (as defined below) equal to the Exercise Quantity (as defined below) at a
price per share equal to the Exercise Price (as defined below), upon surrender
of this Warrant at the principal offices of the Company, together with a duly
executed subscription form substantially in the form attached hereto as Exhibit
1 and, if applicable, payment of the full Warrant Price for the shares of
Warrant Stock so purchased in lawful money of the United States. The Exercise
Price and the number and character of shares of Warrant Stock purchasable under
this Warrant are subject to adjustment as provided herein.
1. Definitions. The following definitions shall apply for
purposes of this Warrant:
1.1 "Common Stock Equivalents" means collectively any
rights, options or warrants to subscribe for or to purchase or otherwise acquire
common stock or other securities or rights convertible into or exercisable or
exchangeable for shares of the Company's common stock.
1.2 "Company" means the "Company" as defined above and
includes any Person (other than an individual) which shall succeed to or assume
the obligations of the Company under and in accordance this Warrant.
1.3 "Exercise Price" means: $0.97 per Warrant Share.
1.4 "Exercise Quantity" means 500,000 of Warrant Stock
which amount shall be increased as follows: (i) upon the occurrence an Event of
Default under the Loan Agreement
by 50,000 shares of Warrant Stock, and (ii) on the first day of each thirty (30)
day period after such Event of Default until (x) the Secured Obligations (as
defined in the Loan Agreement) are paid in full indefeasibly or (y) the written
waiver by the Lender, if any, of such Event of Default, by an additional 25,000
shares of Warrant Stock.
1.5 "Fair Market Value" means, on any given date, if the
items to be valued are securities traded on a United States public market, the
closing price of such securities (or the securities into which such securities
are convertible) last reported sales price regular way or, in the case no
reported sales take place on such date, the average of the reported closing bid
and asked prices regular way on the principal U.S. securities exchange on which
such security is listed or, if not so listed, on the Nasdaq Stock Market or, if
not so quoted, the average of the closing bid and asked prices on the
over-the-counter market. If the items to be valued are securities not so traded
or are other property, assets or evidences of indebtedness, the "Fair Market
Value" means, on any given day, the fair market value of the securities or other
property, assets or evidences of indebtedness as reasonably determined in good
faith by the Board of Directors of the Company; provided, that if the Holder
advises the Company's Board of Directors in writing that the Holder disagrees
with such determination, then the Company and the Holder shall promptly agree
upon a nationally recognized investment banking firm to undertake such
valuation. If the valuation of such investment banking firm is greater than that
so determined by the Company's Board of Directors, then all fees and expenses of
such investment banking firm shall be paid by the Company. In all other
circumstances, such fees and expenses shall be paid by Holder.
1.6 "Holder" means any Person who shall at the time be
the registered holder of this Warrant.
1.7 "Person" means a natural person, a partnership, a
corporation, a limited liability company, an association, a joint stock company,
a trust, a joint venture, an unincorporated organization or other entity, or a
governmental entity or any department, agency or political subdivision thereof.
1.8 "SEC" means the Securities and Exchange Commission
and any successor thereto.
1.9 "Securities Act" means the Securities Exchange Act of
1933, as amended, and the rules and regulations promulgated thereunder.
1.10 "Termination Date" has the meaning set forth in
Section 4.5.
1.11 "Warrant" means this Warrant and any warrant(s)
delivered in substitution or exchange therefor, as provided herein.
1.12 "Warrant Stock" means the Company's common stock, par
value $0.001 per share. The number and character of shares of Warrant Stock are
subject to adjustment as provided herein and the term "Warrant Stock" shall
include stock and other securities, property and/or assets at any time
receivable or issuable upon exercise of this Warrant in accordance with its
terms.
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2. EXERCISE.
2.1 Exercise Quantity. Subject to the terms and
conditions set forth below (including, without limitation, the adjustment
provided for herein), this Warrant entitles the Holder to purchase from the
Company up to that number of shares of Warrant Stock equal to the Exercise
Quantity.
2.2 Vesting. The shares underlying this Warrant shall
vest and become exercisable immediately on the date hereof.
2.3 Method of Exercise. Subject to the terms and
conditions of this Warrant, the Holder may exercise this Warrant in whole or in
part, at any time or from time to time, on any business day beginning on the
date of this Warrant through and including the Expiration Date by surrendering
this Warrant at the principal offices of the Company, with the subscription form
attached hereto duly executed by the Holder, and payment, as applicable, of an
amount equal to the product obtained by multiplying (i) the number of shares of
Warrant Stock to be purchased by the Holder by (ii) the Exercise Price as
determined in accordance with the terms hereof.
2.4 Form of Payment. Payment of the aggregate Exercise
Price, as required, may be made, as determined in the sole discretion of Holder,
by (i) a check payable to the Company's order, (ii) wire transfer of funds to
the Company, (iii) transfer of the Company's capital stock held by the Holder to
the Company (valued at the then Fair Market Value of such stock), (iv)
cancellation of undisputed indebtedness of the Company to Holder (if any) or (v)
any combination of the foregoing.
2.5 Partial Exercise. Upon a partial exercise of this
Warrant, this Warrant shall be surrendered by the Holder and replaced with a new
Warrant of like tenor in which the maximum number of shares of Warrant Stock
purchasable by the Holder shall be the maximum number of shares of Warrant Stock
purchasable under the original Warrant minus the amount of shares of Warrant
Stock purchased in such partial exercise.
2.6 No Fractional Shares. No fractional shares may be
issued upon any exercise of this Warrant, and any fractions shall be rounded
down to the nearest whole number of shares to determine the number of shares to
be issued upon such exercise. If upon any exercise of this Warrant a fraction of
a share would otherwise result but for the prior sentence, the Company will pay
the cash value of any such fractional share, calculated on the basis of the Fair
Market Value of a share.
2.7 Net Exercise Election. The Holder may elect to
convert all or a portion of this Warrant, without the payment by the Holder of
the Exercise Price or of any other consideration, by the surrender of this
Warrant or such portion to the Company, with the net exercise election selected
in the subscription form attached hereto duly executed by the Holder, into up to
the number of shares of Warrant Stock that is obtained under the following
formula:
Y (A-B)
X = -------
A
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where X = the number of shares of Warrant Stock to be issued to
the Holder pursuant to this Section 2.7.
Y = the number of shares of Warrant Stock that could be
acquired upon a cash exercise of the portion of this
Warrant being surrendered at the time the net
exercise election is made pursuant to this Section
2.7.
A = the Fair Market Value of one share of Warrant Stock
at the time the net exercise election is made
pursuant to this Section 2.7.
B = the Exercise Price at the time the net exercise
election is made pursuant to this Section 2.7.
The Company will promptly respond in writing to an inquiry by the
Holder as to the then current Fair Market Value of one share of Warrant Stock.
3. ISSUANCE OF STOCK. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the Person entitled to receive the
shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As soon as practicable on or after such date, but in no event less
than three business days thereafter, the Company shall issue and deliver to the
Person or Persons entitled to receive the same a certificate or certificates for
the number of whole shares of Warrant Stock issuable upon such exercise.
4. ADJUSTMENT PROVISIONS. The Exercise Quantity, character of the
Warrant Stock issuable upon exercise of this Warrant (or any other securities,
property or assets at the time receivable or issuable upon exercise of this
Warrant or the exercise, exchange or conversion of any security receivable or
issuable upon exercise of this Warrant) and the Exercise Price therefor, are
subject to adjustment upon the occurrence of the following events during the
period beginning on the date this Warrant is issued and ending on the date this
Warrant is exercised:
4.1 ADJUSTMENT FOR STOCK SPLITS. The Exercise Price, and
the Exercise Quantity shall each be proportionally adjusted to reflect any stock
split, or other subdivision, reverse stock split, combination of shares, or
other similar event affecting the number of outstanding shares of Warrant Stock
(or such other securities) immediately prior to such event.
4.2 Adjustment for Dividends and Distributions.
(a) If the Company shall make, issue, declare, pay,
distribute or set aside, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution payable
with respect to the common stock or any Common Stock Equivalents that is payable
in (i) common stock or Common Stock Equivalents (other than issuances with
respect to which adjustment is made under Section 4.1), (ii) property or assets
or (iii) evidences of its indebtedness, then, and in each such case; (A) the
Exercise Price shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise Price in effect immediately prior to the
record date mentioned above by (if there is no such date, then the date
immediately prior to the date the Company makes, issues, pays, distributes or
sets aside such dividend or
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distribution) a fraction, the numerator of which shall be equal to the sum of
(x) the total number of shares of common stock then outstanding multiplied by
the Fair Market Value per share of the common stock on the record date mentioned
below, minus (y) the Fair Market Value as of such record date of said shares of
common stock or Common Stock Equivalents, properties, assets or evidences of
indebtedness so made, issued, paid, distributed, declared or set aside, plus (z)
in the case of the issuance or distribution of Common Stock Equivalents, the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the conversion, exercise or exchange of such Common Stock
Equivalents, and the denominator of which shall be the total number of shares of
common stock then outstanding multiplied by the Fair Market Value per share of
common stock on the record date mentioned above (but in no event shall such
fraction be greater than 1.0) and (B) the Exercise Quantity shall be adjusted to
equal the number obtained by dividing (x) the Exercise Price in effect
immediately prior to such dividend or distribution multiplied by the Exercise
Quantity immediately prior to such dividend or distribution by (y) the Exercise
Price resulting from the adjustment made pursuant to clause (A) above. Such
adjustments shall be made whenever any such dividend or distribution is (or if
there is no such record date, immediately prior to the date the Company makes,
issues, pays, distributes or sets aside such dividend or distribution) and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution (or if there is
no such record date, immediately prior to the date the Company makes, issues,
pays, distributes or sets aside such dividend or distribution).
(b) In the event of a distribution by the Company of
stock or other securities of a subsidiary or securities convertible or
exchangeable into or exercisable for such stock, then in lieu of an adjustment
in the Exercise Price, the Holder of this Warrant, upon the exercise thereof at
any time after such distribution, shall be entitled to receive from the Company,
such subsidiary or both, the stock or other securities to which such Holder
would have been entitled if such Holder had exercised such Warrant immediately
prior to the record date set for such dividend or distribution, all subject to
further adjustment as provided in this Warrant (or if there is no such record
date, immediately prior to the date the Company makes, issues, pays, distributes
or sets aside such dividend or distribution).
4.3 Adjustment for Reorganization, Consolidation or
Merger. In case of any reorganization, reclassification, recapitalization or
similar transaction involving the stock of the Company (or of any other entity,
the stock or other securities of which are at the time receivable upon the
exercise of this Warrant), after the date of this Warrant, or in case, after
such date, the Company (or any such corporation) shall consolidate with or merge
into another corporation, convey all or substantially all of its assets or stock
to another entity or undertake a similar transaction (a "Corporate
Transaction"), then, and in each such case, the Holder, upon the exercise of
this Warrant at any time after the record date for the holders of stock entitled
to participate in such Corporate Transaction (or if there is no such record
date, immediately after the consummation of the Corporate Transaction) shall be
entitled to receive, in lieu of the stock or other securities, property, assets,
evidences of indebtedness, or other rights, warrants or options receivable upon
the exercise of this Warrant prior to the consummation of such Corporate
Transaction, the stock or other securities, property, assets, evidence of
indebtedness, or other rights, warrants or options to which the Holder would
have been entitled upon the consummation of such Corporate Transaction if the
Holder had exercised this Warrant immediately prior thereto and assuming that
any adjustment under this Section 4 that would
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otherwise be made in connection with the consummation of such Corporate
Transaction had been made, all subject to further adjustment as provided in this
Warrant, as applicable, and the successor or purchasing entity in such Corporate
Transaction, (if other than the Company) shall duly execute and deliver to the
Holder a supplement hereto acknowledging such entity's obligations under this
Warrant; and in each such case, the terms of this Warrant shall be applicable to
the shares of stock or other securities, property, assets, evidences of
indebtedness, or other rights, warrants or options receivable upon the exercise
of this Warrant after the consummation of such Corporate Transaction.
4.4 Price Adjustment.
(a) In each case where the Company, after the date of
this Warrant, sells, issues or grants or becomes obligated to sell, issue or
grant (x) shares of its common stock at a price per share less than the then
applicable Exercise Price or (y) any Common Stock Equivalents that are
convertible into or exercisable or exchangeable for common stock at a price per
share less than the then applicable Exercise Price, then (A) the Exercise Price
in effect immediately prior to such sale, issuance, grant or obligation shall be
adjusted by multiplying such Exercise Price by a fraction, the numerator of
which is equal to the lowest such price per share and the denominator of which
is equal to the Exercise Price per share of common stock immediately prior to
such sale, issuance, grant or obligation and (B) the Exercise Quantity shall be
adjusted to equal the number obtained by dividing (x) the Exercise Price in
effect immediately prior to such sale, issuance, grant or obligation multiplied
by the Exercise Quantity in effect immediately prior to such sale, issuance,
grant or obligation by (y) the Exercise Price resulting from the adjustment made
pursuant to clause (A).
(b) The provisions of Section 4.4(a) shall not apply to
(i) the issuance of shares of the Company's common stock upon exercise of this
Warrant, (ii) the issuance of shares of the Company's common stock upon the
conversion or exercise of convertible or exercisable securities issued and
outstanding on the date hereof as set forth on Schedule 4.5(a) of the Loan
Agreement and (iii) the issuance by the Company of options to acquire common
stock issued to employees, officers, directors, consultants and advisors
pursuant to any stock option plan or other restricted stock plan designated and
approved by the Company's board of directors; provided that such options do not
represent the right to acquire more than shares of common stock representing ten
percent (10%) of the Company's capital stock on a fully diluted basis, subject
to adjustment as provided in Section 4.1.
4.5 Exchange of Stock. In case all the authorized Warrant
Stock of the Company is exchanged into other securities or property, assets,
evidence of indebtedness or other rights, warrants, or options, or the Warrant
Stock otherwise ceases to exist as a result of conversion, exchange, redemption
or otherwise, then, in such case, the Holder, upon exercise of this Warrant at
any time after the date on which the Warrant Stock is so exchanged or ceases to
exist (the "Termination Date"), shall receive, in lieu of the Exercise Quantity
immediately prior to the Termination Date (the "Former Number of Shares of
Warrant Stock"), the stock and other securities and property to which the Holder
would have been entitled to receive upon the Termination Date if the Holder had
exercised this Warrant with respect to the Former Number of Shares of Warrant
Stock immediately prior to the Termination Date and assuming that any
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adjustment under this Section 4 that would otherwise be made in connection with
such exchange has been made, all subject to further adjustment as provided in
this Warrant.
4.6 Notice of Adjustments. The Company shall promptly
give written notice of each adjustment or readjustment of the Exercise Price,
the Exercise Quantity or the Warrant Stock or other securities issuable upon
exercise of this Warrant. The notice shall describe the adjustment or
readjustment and show in reasonable detail the facts on which the adjustment or
readjustment is based.
4.7 No Change Necessary. The form of this Warrant need
not be changed because of any adjustment in or change to the Exercise Price, the
Exercise Quantity or in the Warrant Stock issuable upon its exercise whether
pursuant to this Section 4, Section 1.4 or otherwise.
4.8 Reservation of Stock. The Company shall at all times
reserve for issuance that number of shares of Warrant Stock then issuable
hereunder. If at any time the number of shares of Warrant Stock or other
securities issuable upon exercise of this Warrant shall not be sufficient to
effect the exercise of this Warrant, the Company will take such corporate action
as may be necessary to reserve such Warrant Stock, including, without
limitation, if necessary increasing its authorized but unissued shares of
Warrant Stock or other securities issuable upon exercise of this Warrant as
shall be sufficient for such purpose.
4.9 Statement of Shares. Upon the receipt by the Company
of Holder's request, the Company shall as promptly as reasonably practicable
prepare and deliver to the Holder a statement setting forth the Company's
calculation of the number of shares of Warrant Stock issuable upon exercise of
this Warrant.
4.10 Reissue of Warrants. Holder may, at its sole option,
surrender this Warrant to the Company and require that the Company execute and
deliver new Warrants containing identical terms and provisions to Holder and to
its participants in amounts that reflect their respective interests hereunder,
as provided to the Company by the Holder.
4.11 Most Favored Rights. The provisions of this Section 4
shall be modified as necessary so that the Holder shall have the additional
benefits, if any, of the most favored provision of any other equity security, on
a security by security basis, as determined by the Holder from time to time.
5. REQUIRED NOTICES. The Company will give the Holder notice at
least twenty(20)days prior to the earlier of the effective date of or any
applicable record date with respect to any Corporate Transaction, or other
record date for any other transaction or action by the Company which could
trigger any adjustment under Section 4 herein or that could result in the
conversion or exchange of all outstanding shares of Warrant Stock into or for
cash, any other security or other property or assets.
6. REGISTRATION RIGHTS. The Holder shall have, with respect to
the Warrant Stock, registration rights set forth below and such rights shall be
as favorable as those granted to holders of any class of the Company's equity
securities from time to time. The rights granted to the Holder hereunder (and
for the issuance of security into which the Warrant Stock of other securities
into which the Warrant Stock or other
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security may be exercisable, exchangeable or convertible) shall be transferable
with this Warrant and/or the Warrant Stock.
6.1 Definitions. For purposes of this Section 6:
(a) Registration. The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term "Registrable
Securities" means: (x) the Warrant Stock and any securities of the Company
issued as a dividend or other distribution with respect to, or in exchange for
or in replacement of the Warrant Stock. The term "Registrable Securities" shall
include the securities, if any, that the Holder would be entitled to receive in
exchange for Registrable Securities in any merger, consolidation, reorganization
or similar transaction.
(c) Registrable Securities Then Outstanding. The number
of shares of "Registrable Securities then outstanding" shall mean the number of
Warrant Stock and other securities that are Registrable Securities and are then
issued and outstanding.
(d) Form S-3. The term "Form S-3" means such form under
the Securities Act as is in effect on the date hereof or any successor
registration form under the Securities Act subsequently adopted by the SEC that
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC after the effective date of
such registration;
6.2 Automatic Registration. The Company agrees to cause
the Registrable Securities issuable to the Holder to be registered under the
Securities Act on an effective and current shelf registration on Form S-3, or
any successor (the "Automatic Registration Statement"), by filing a registration
statement with the SEC within thirty (30) days of the date of this Warrant and
as soon as reasonably practicable after the date of this Warrant but in no event
later than ninety (90) days after the date of this Warrant, shall cause the
Automatic Registration Statement to be declared effective. The Company shall
keep such shelf registration statement effective and current until such time as
all of the Registrable Securities have been sold or otherwise disposed of.
(a) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 6.2 (excluding underwriters' discounts and
commissions relating to shares sold by the Holder, which shall be borne by the
Holder), including, without limitation, all federal, state and "blue sky"
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of one counsel for the Holder, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
(b) Not Demand Registration. Registration pursuant to
this Section 6.2 shall not be deemed to be a demand registration as described in
Section 6.3.
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6.3 Demand Registration.
(a) Request by Holder. If at any time after the Automatic
Registration Statement has been suspended or is otherwise no longer effective,
the Company shall receive a written request from the Holder that the Company
file a registration statement under the Securities Act on Form S-3, or any
successor or other available form if Form S-3 shall not be available, covering
the registration of the Registrable Securities held by Holder, then the Company
shall, as soon as practicable, but in no event more than thirty (30) days after
such request, file such a registration statement for the registration under the
Securities Act of all Registrable Securities that the Holder requests to be
registered and included in such registration, as soon as reasonably practicable
thereafter, but in no event later than sixty (60) days after such filing shall
cause such registration statement to be declared effective and to obtain and
maintain in full force and effect all related qualifications, registrations or
other compliances that may be necessary under the laws of any applicable
jurisdiction, including, without limitation, state securities or "blue sky"
laws.
(b) Expenses. All expenses incurred in connection with
any registration pursuant to this Section 6.3 (excluding underwriters' discounts
and commissions relating to shares sold by the Holder which shall be borne by
the Holder) including, without limitation, all federal, state and "blue sky"
registration, filing and qualification fees, printer's and accounting fees, fees
and disbursements of one counsel for the Holder, and fees and disbursements of
counsel for the Company.
(c) Maintenance. The Company shall maintain the
effectiveness of any registration statement filed under this Section 6.3 until
such time as all of the Registrable Securities held by the Holder have been sold
in accordance therewith.
6.4 Piggyback Registrations. At any time that a
registration statement is not in effect under Section 6.2 or 6.3 hereof, and the
Holder owns Registrable Securities, the Company shall notify the Holder in
writing at least twenty (20) days prior to filing any registration statement
under the Securities Act for purposes of effecting a public offering of
securities of the Company (including registration statements relating to
secondary offerings of securities of the Company, but excluding registration
statements on Form S-8 relating to any employee benefit plan or on Form S-4
relating to any merger or other corporate reorganization) and will afford the
Holder an opportunity to include in such registration statement all or any part
of the Registrable Securities then held by the Holder. If the Holder desires to
include in any such registration statement all or any part of the Registrable
Securities the Holder shall, within ten (10) business days after receipt of the
above-described notice from the Company, so notify the Company in writing, and
in such notice shall inform the Company of the number of Registrable Securities
the Holder wishes to include in such registration statement. If the Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, the Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein and, in any event, the Holder shall have all of its
rights under Section 6.1 and 6.2 hereof.
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(a) Underwriting. If a registration statement under which
the Company gives notice under this Section 6.4 is for an underwritten offering,
then the Company shall so advise the Holder. In such event, the right of the
Registrable Securities to be included in such a registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of the Holder's Registrable Securities in the underwriting to the
extent provided herein. The Holder proposes to distribute the Registrable
Securities through such underwriting the Holder shall enter into an underwriting
agreement in customary form with the managing underwriter or underwriters
selected for such underwriting; provided, however, that it shall not be
considered customary to require any of the Holder to provide representations and
warranties regarding the Company or indemnification of the underwriters for
material misstatements or omissions regarding the Company in the registration
statement, prospectus or prospectus supplement for such offering.
(b) Expenses. All expenses incurred in connection with a
registration pursuant to this Section 6.4 (excluding underwriters' discounts and
commissions relating to shares sold by the Holder, which shall be borne by the
Holder), including, without limitation, all federal, state and "blue sky"
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of one counsel for the Holder, and fees and disbursements of
counsel for the Company, shall be borne by the Company.
(c) Not Demand Registration. Registration pursuant to
this Section 6.4 shall not be deemed to be a demand registration as described in
Section 6.3.
6.5 Obligations of the Company. Whenever required to
effect the registration of any Registrable Securities under this Agreement, the
Company shall, as expeditiously as reasonably possible:
(a) Registration Statement. Prepare and file with the SEC
a registration statement with respect to such Registrable Securities and shall
cause such registration statement to become effective.
(b) Amendments and Supplements. Prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement.
(c) Prospectuses. Furnish to the Holder such number of
copies of a prospectus, including, without limitation, a preliminary prospectus
and any applicable prospectus supplement, in conformity with the requirements of
the Securities Act, and such other documents as they may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by the
Holder that are included in such registration in accordance with the plan of
distribution described in the related prospectus or prospectus supplement.
(d) Effectiveness; Qualification. The Company shall avoid
the issuance of, or if issued, obtain the prompt withdrawal of, (i) any order
suspending the effectiveness or use of any registration statement covering
Registrable Securities or (ii) any suspension of the
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qualification or registration for sale (or exemption from qualification or
registration for sale) of any of the Registrable Securities as soon as
practicable.
(e) Blue Sky. Register and qualify the securities covered
by such registration statement as required under such other securities or blue
sky laws of such jurisdictions as shall be reasonably requested by the Holder,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(f) Underwriting. In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, which agreement shall be in usual and customary form (including,
without limitation, customary indemnification of the underwriters by the
Company), with the managing underwriter(s) of such offering. The Holder shall
also enter into and perform its obligations under such an agreement.
(g) Notification. Notify the Holder with respect to the
Registrable Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, in which event the Holder shall not use such
prospectus in connection with any offer or sale of the Registrable Securities
until such prospectus has been appropriately amended (which the Company shall do
promptly under the circumstances and deliver new prospectuses to the Holder
promptly thereafter).
(h) Opinion and Comfort Letter. If such securities are
being sold through underwriters, furnish, at the request of the Holder, on the
date that the Registrable Securities are delivered to the underwriters for sale,
(1) an opinion, dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering and in the same form
and substance as that provided to the underwriters of such offering, addressed
to the underwriters and to the Holder requesting registration of Registrable
Securities and (2) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and in the same form and
substance as that provided to the underwriters of such offering, addressed to
the underwriters and to the Holder requesting registration of Registrable
Securities.
(i) Company's Right to Delay If the Company provides to
the Holder a certified resolution duly adopted by the Company's Board of
Directors stating that, in it reasonable business judgment, it would be
materially disadvantageous to the Company to disclose certain information
because such disclosure would materially interfere with or otherwise adversely
affect in any material respect any existing or reasonably likely acquisition,
financing, corporate reorganization or other material transaction or development
(a "Disadvantageous Condition"), then the Company may refrain from maintaining
the current prospectus contained in the applicable registration statement (and
suspend sales of Registrable Securities) until such
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Disadvantageous Condition no longer exists. Any notice of a Disadvantageous
Condition shall set forth in general terms the reason for such determination.
The Company shall promptly notify the Holder when such Disadvantageous Condition
no longer exists. The Company may use its delay right under this Section 6.5(i)
only once in any twelve month period for a period of time not to exceed sixty
(60) days. Notwithstanding the foregoing, the Company can only delay maintaining
current of such prospectus (and such suspension of sales of Registrable
Securities) only if the Company shall concurrently prohibit sales by other
security holders under all other registration statements then outstanding and by
all of the members of the Company's Board of Directors, all of the officers of
the Company and all of the stockholders of the Company that own five percent
(5%) or more (including options, warrants and other exchangeable, exercisable or
convertible securities ultimately exchangeable or exercisable for or convertible
into common stock of the Company) of the Company's common stock.
6.6 Indemnification. In the event any Registrable
Securities are included in a registration statement under Section 6.2, 6.3 or
6.4:
(a) By the Company. To the extent permitted by law, the
Company will indemnify and hold harmless the Holder, the partners, officers,
shareholders, employees, representatives and directors of the Holder, any
underwriter (as determined under the Securities Act) for the Holder and each
person, if any, who controls the Holder or such underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state securities or blue sky laws, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(x) any untrue statement or alleged untrue statement
of a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein, or any amendments
or supplements thereto;
(y) the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading; or
(z) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any federal or state securities or blue
sky law or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any federal or state securities or blue sky law in connection
with the offering covered by such registration statement;
and the Company will reimburse the Holder, and each partner, officer,
shareholder, employee, representative, director, underwriter and controlling
person of the Holder for any legal or other expenses reasonably incurred by
them, as incurred, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this paragraph shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld or delayed), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it
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arises out of or is based upon a Violation that occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Holder, or any partner, officer, shareholder,
employee, representative, director, underwriter or controlling person of the
Holder.
(b) By the Holder. To the extent permitted by law, the
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the registration statement, each person, if any,
who controls the Company within the meaning of the Securities Act, and any
underwriter and any other person or entity, selling securities under such
registration statement or such person's or entity's partners, officers,
shareholders, employees, representatives and directors and any person or entity
who controls such person or entity within the meaning of the Securities Act or
the Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such officer or director, controlling
person, underwriter or other such person or entity, partner, officer,
shareholder, employee, representative, director or controlling person of such
person or entity may become subject under the Securities Act, the Exchange Act
or other federal or state securities or blue sky law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by the Holder expressly for use in connection with
such registration; and the Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such officer or director, controlling
person, underwriter or other person or entity, partner, officer, shareholder,
employee, representative, director or controlling person of such person or
entity in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this paragraph shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld or delayed; and provided further, that the total amounts payable in
indemnity by the Holder under this subsection, subsection (d) of this Section
6.7 or otherwise in respect of any and all Violations shall not exceed in the
aggregate the net proceeds received by the Holder in the registered offering out
of which such Violations arise.
(c) Notice. Promptly after receipt by an indemnified
party of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this section, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, to the extent that representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflict of interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
liability except to the extent the indemnifying party is prejudiced as a result
thereof.
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(d) Contribution. In order to provide for just and
equitable contribution to joint liability under the Securities Act in any case
in which either (1) the Holder exercising rights under this Agreement, or any
controlling person of the Holder, makes a claim for indemnification pursuant to
this section, but it is judicially determined (by the entry of a final judgment
or decree by a court of competent jurisdiction and the expiration of time to
appeal or the denial of the last right of appeal) that such indemnification may
not be enforced in full in such case notwithstanding the fact that this section
provides for indemnification in such case, or (2) contribution under the
Securities Act may be required on the part of the Holder or any such controlling
person in circumstances for which indemnification is provided under this
section; then, and in each such case, the Company and the Holder will contribute
to the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that the Holder
is responsible for the portion represented by the percentage that the public
offering price of the Registrable Securities offered by and sold by the Holder
under the registration statement bears to the public offering price of all
securities offered by and sold under such registration statement, and the
Company is responsible for the remaining portion. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, if the registration statement in question does not register thereon at
least a majority of securities other than the Registrable Securities or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
the relative benefits received (as described in the previous sentence of this
subsection (d)) but also the relative fault of the Company on the one hand and
the Holder on the other in connection with the applicable Violation or action
taken or not taken, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Holder on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company on the one
hand and the Holder on the other hand. The relative fault shall be determined by
reference to, among other things, whether the applicable Violation relates to
information supplied by or action taken or not taken by the Company on the one
hand or the Holder on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such Violation or to
take or not to take such action. The Company and the Holder agree that it would
not be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
subsection (d). In any such case: (x) the Holder will not be required to
contribute any amount in excess of the net proceeds received by the Holder from
the public offering price of all the Registrable Securities offered and sold by
the Holder pursuant to such registration statement; and (y) no person or entity
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.
6.7 Survival. The obligations of the Company and the
Holder under this Section 6.7 shall survive until the expiration of any statutes
of limitation including extensions thereof.
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7. CERTAIN COMPANY REPRESENTATIONS, WARRANTIES AND COVENANTS.
7.1 The Company represents, warrants and covenants that:
(a) it will at all times reserve and set apart and have,
free from preemptive or stock purchase rights, a sufficient number of shares of
authorized but unissued common stock and the Warrant Stock, if applicable, to
provide for the issuance of the Warrant Stock upon the exercise of this Warrant
(and for the issuance of any security into which the Warrant Stock or other
securities into which the Warrant Stock or other security may be exercisable,
exchangeable or convertible) and will take any and all actions, including
without limitation, amending its Certificate of Incorporation, necessary to
comply herewith;
(b) before taking any action that would cause an
adjustment reducing the Exercise Price below the then par value of the shares
issuable upon exercise of this Warrant, the Company will take any corporate
action that may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Warrant Stock or common stock
at such adjusted Exercise Price;
(c) the issuance of this Warrant shall constitute full
authority to the Company's officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for the
shares of Warrant Stock issuable upon exercise of this Warrant;
(d) the Company has all requisite legal and corporate
power to execute and deliver this Warrant, to sell and issue the Warrant Stock
issuable upon exercise of this Warrant and to carry out and perform its
obligations under the terms of this Warrant;
(e) all corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, delivery
and performance of this Warrant by the Company, the authorization, sale,
issuance and delivery of the Warrant Stock issuable upon exercise of this
Warrant, and the performance of the Company's obligations hereunder has been
taken; and
(f) the Warrant Stock issuable upon exercise of this
Warrant, when issued in compliance with the provisions of this Warrant, will be
legally and validly issued, fully paid and nonassessable, and free of any
preemptive or stock purchase rights, liens, claims or any other encumbrances
whatsoever, and will be issued in compliance with all applicable federal and
state securities and blue sky laws;
7.2 So long as the Holder holds this Warrant and/or any
of the Warrant Stock, the Company shall deliver to the Holder: (a) promptly
after mailing, copies of all notices or other written communications to the
stockholders of the Company, (b) at such time, if any, as the Company is no
longer timely making filings with the SEC that are available on the World Wide
Web, within ninety (90) days after the end of each fiscal year of the Company,
full year end financial statement audited by a certified independent accounting
firm reasonably acceptable to Holder, (c) at such time, if any, as the Company
is no longer timely making filings with the SEC that are available on the World
Wide Web, within forty-five (45) days after the end of each fiscal
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quarter, quarterly, full quarterly financial statements and (d) within thirty
(30) days after the end of each month, Company-prepared full monthly financial
statements.
7.3 No Stockholder Rights. This Warrant, by itself, as
distinguished from any Warrant Stock acquired hereunder, shall not entitle the
Holder to any rights of a stockholder of the Company, including, without
limitation, the right to vote or consent as a stockholder of the Company;
provided that nothing herein shall impair any rights granted to the Holder under
the Loan Agreement or in this Agreement (including, without limitation, in
Section 7.2 hereof).
8. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or Bylaws, or through reorganization,
recapitalization, reclassification, consolidation, merger, dissolution, issue or
sale of securities, conveyance of assets or similar transaction or any other
voluntary action, willfully avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all of the terms hereof and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder against impairment. Without limiting the generality of the foregoing, the
Company will take all such action as may be necessary or appropriate in order
that the Company may duly and validly issue fully paid and nonassessable shares
of Warrant Stock upon the exercise of this Warrant. Further, the Company will
take all actions to apply the protections provided to Lender under Section 4 to
the Warrant Stock which is not common stock of the Company or Common Stock
Equivalents to prevent the dilution of Lender's ownership interest or impairment
of the Lender's rights or interest hereunder. The Company shall not effect any
reorganization, recapitalization, reclassification, consolidation, merger,
dissolution, issue or sale of securities, conveyance of assets or similar
transactions unless prior to or simultaneously with the consummation thereof the
survivor or successor entity (if other than the Company) resulting from such
transaction or the entity purchasing such assets or receiving such conveyance or
otherwise succeeding to the rights and/or assets of the Company shall assume by
written instrument satisfactory to the Holder executed and sent to such Holder,
the obligation to deliver to such Holder such shares of stock, securities,
assets (including cash), property, evidences of indebtedness or other rights,
warrants or options as such Holder may be entitled to receive hereunder, and
containing the express assumption by such successor entity of the due and
punctual performance and observance of every provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder.
9. ATTORNEYS' FEES. In the event any party engages the services
of any attorneys for the purpose of enforcing this Warrant, or any provision
thereof, the prevailing party shall be entitled to recover its reasonable
expenses and costs in enforcing this Warrant, including reasonable attorneys'
fees and expenses.
10. GOVERNING LAW. This Warrant shall be governed by and construed
under the internal laws of the State of California, without reference to
principles of conflict of laws thereof.
11. HEADINGS. The headings and captions used in this Warrant are
used for convenience only and are not to be considered in construing or
interpreting this Warrant. All references in this Warrant to sections and
exhibits shall, unless otherwise provided, refer to
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sections hereof and exhibits attached hereto, all of which exhibits are
incorporated herein by this reference.
12. NOTICES. Any notice required or permitted under this Warrant
shall be given in accordance with the terms of Section 9.5 of the Loan Agreement
and such terms are herein incorporated by reference.
13. AMENDMENT; WAIVER. Any term of this Warrant may be amended,
and the observance of any term of this Warrant may be waived (either generally
or in a particular instance and either retroactively or prospectively) only with
the written consent of the Company and the Holder. Any amendment or waiver
effected in accordance with this Section 13 shall be binding upon the Holder,
each future holder of such securities, the Company and the Company's successor
and permitted assigns.
14. SEVERABILITY. In case any provision of this Warrant shall be
held to be invalid, illegal or unenforceable, it shall, to the extent possible,
be modified in such manner as to be valid, legal and enforceable but so as to
most nearly retain the intent of the parties, and if such modification is not
possible, such provision shall be severed from this Warrant, and in either case
the validity, legality and enforceability of the remaining provisions of this
Warrant and the future application of such provision shall not in any way be
affected or impaired thereby.
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15. SUCCESSORS AND ASSIGNS. This Warrant may not be assigned or
otherwise transferred by the Company without the written consent of the Holder.
The terms and provisions of this Warrant shall inure to the benefit of, and be
binding upon, the Company and the Holder hereof and their respective successors
and permitted assigns.
COMPUTER MOTION, INC.
By:
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
AGILITY CAPITAL, LLC
By:_______________________________
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
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Exhibit 1
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Computer Motion, Inc.
(1) The undersigned Holder hereby elects to purchase ____________
shares of Warrant Stock, pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price for such shares in full.
- OR -
Net Exercise Election. The undersigned Holder elects to
convert the Warrant into ___________ shares of Warrant Stock by net exercise
election pursuant to Section 2.7 of the Warrant.
[CHECK PARAGRAPH ABOVE THAT APPLIES]
(2) Please issue a certificate representing _______________ shares
of Warrant Stock in the name of specified below:
_____________________________________
(Name)
_____________________________________
(Address)
_____________________________________
(City, State, Zip Code)
_____________________________________
(Federal Tax Identification Number)
_____________________________________
(Date)
_____________________________________
(Signature of Holder)
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