Exhibit 10.20
REGISTRATION RIGHTS AGREEMENT
-----------------------------
Registration Rights Agreement dated November 26, 2003 (this
"Agreement") by and between QUINTEK TECHNOLOGIES, INC., a California corporation
(the "Company"), and KAZI MANAGEMENT V.I., LLC, a U.S. Virgin Islands
corporation (the "Investor").
WHEREAS, upon the terms and subject to the conditions of the Note
Purchase Agreement dated of even date herewith by and between the Investor and
the Company (the "Note Purchase Agreement"), the Company has agreed to issue and
sell to the Investor a total of five (5) Convertible Notes (the "Notes"), each
in $100,000 denominations with a 10% annual interest rate and one year term, and
convertible in accordance with the terms thereof into shares of the Company's
Common Stock (the "Shares") at a conversion price of $0.06. (The Shares included
in the Registrable Securities (as hereinafter defined) are sometimes referred to
herein as the "Shares" or "Common Stock"). Further, bonus Warrants ("Warrants")
to purchase one share of Common Stock, exercisable for five years, at $0.06 are
issuable on a one-to one basis with each Share issued upon conversion of all or
part of a Note. Pursuant to the Note Purchase Agreement, upon conversion of all
of the Notes and accrued interest (calculated at one year of 10% simple
interest), a total of 8,333,333 shares of the Company's Common Stock would be
eligible for registration under the Securities Act; and the Investor would
receive an additional 8,333,333 Warrants to purchase an additional 8,333,333
shares of Common Stock (the "Warrants"), which shares of Common Stock underlying
said Warrants would also be eligible for registration under the Securities Act";
and
WHEREAS, to induce the Investor to execute and deliver the Note
Purchase Agreement, the Company has agreed to provide with respect to the Common
Stock issuable upon conversion of the Notes as well as the Common Stock issuable
upon exercise of the Warrants certain registration rights under the Securities
Act;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Definitions
(A) As used in this Agreement, the following terms shall have the
meanings:
(1) "Affiliate" of any specified Person means any other
Person who directly, or indirectly through one or more intermediaries, is in
control of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, control of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract, securities, ownership or otherwise;
and the terms "controlling" and "controlled" have the respective meanings
correlative to the foregoing.
(2) "Closing Date" means November 26, 2003.
(3) "Commission" means the Securities and Exchange
Commission.
(4) "Exchange Act" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
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(5) "Investor" means each of the Investor and any transferee
or assignee of Registrable Securities which agrees to become bound by all of the
terms and provisions of this Agreement in accordance with Section 8 hereof.
(6) "Person" means any individual, partnership, corporation,
limited liability company, joint stock company, association, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
(7) "Prospectus" means the prospectus (including, without
limitation, any preliminary prospectus and any final prospectus filed pursuant
to Rule 424(b) under the Securities Act, including any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance on Rule 430A under the Securities Act)
included in the Registration Statement, 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 by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
(8) "Public Offering" means an offer registered with the
Commission and the appropriate state securities commissions by the Company of
its Common Stock and made pursuant to the Securities Act.
(9) "Registrable Securities" means: (i) the Shares; (ii) the
Common Stock issued or issuable upon exercise of the Warrants; or (iii) any
additional Shares or the Common Stock underlying any additional Warrants issued
pursuant to Section 6 of the Note Purchase Agreement; provided, however, a share
of Common Stock shall cease to be a Registrable Security for purposes of this
Agreement when it no longer is a Restricted Security.
(10) "Registration Statement" means a registration statement
of the Company filed on an appropriate form under the Securities Act providing
for the registration of, and the sale on a continuous or delayed basis by the
holders of, all of the Registrable Securities pursuant to Rule 415 under the
Securities Act, including the Prospectus contained therein and forming a part
thereof, any amendments to such registration statement and supplements to such
Prospectus, and all exhibits to and other material incorporated by reference in
such registration statement and Prospectus.
(11) "Restricted Security" means the Shares and any share of
Common Stock issued upon exercise of the Warrants or the Additional Warrants
except any such share that (i) has been registered pursuant to an effective
registration statement under the Securities Act and sold in a manner
contemplated by the prospectus included in such registration statement, (ii) has
been transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable pursuant
to paragraph (k) of Rule 144 under the Securities Act (or any successor
provision thereto) or (iii) otherwise has been transferred and a new share of
Common Stock not subject to transfer restrictions under the Securities Act has
been delivered by or on behalf of the Company.
(12) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, or any
similar successor statute.
(B) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Securities Purchase Agreement or the
Debenture.
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2. Registration
(A) Filing and Effectiveness of Registration Statement. The
Company shall prepare and file with the Commission a Registration Statement
relating to the offer and sale of the Registrable Securities and shall use its
best efforts to cause the Commission to declare such Registration Statement
effective under the Securities Act as promptly as practicable but in no event
later than ninety (90) days after the Closing Date. The Company shall promptly
(and, in any event, no more than 24 hours after it receives comments from the
Commission), notify the Investor when and if it receives any comments from the
Commission on the Registration Statement and promptly forward a copy of such
comments, if they are in writing, to the Investor. At such time after the filing
of the Registration Statement pursuant to this Section 2(A) as the Commission
indicates, either orally or in writing, that it has no further comments with
respect to such Registration Statement or that it is willing to entertain
appropriate requests for acceleration of effectiveness of such Registration
Statement, the Company shall promptly, and in no event later than two (2)
business days after receipt of such indication from the Commission, request that
the effectiveness of such Registration Statement be accelerated within
forty-eight (48) hours of the Commission's receipt of such request. The Company
shall notify the Investor by written notice that such Registration Statement has
been declared effective by the Commission within 24 hours of such declaration by
the Commission.
(B) Eligibility for Use of Form S-3 or an SB-2. The Company
agrees that at such time as it meets all the requirements for the use of
Securities Act Registration Statement on Form S-3 or SB-2, it shall file all
reports and information required to be filed by it with the Commission in a
timely manner and take all such other action so as to maintain such eligibility
for the use of such form.
(C) (i) If the Company proposes to register any of its
warrants, Common Stock or any other shares of common stock of the Company under
the Securities Act (other than a registration (A) on Form S-8 or S-4 or any
successor or similar forms, (B) relating to Common Stock or any other shares of
common stock of the Company issuable upon exercise of employee share options or
in connection with any employee benefit or similar plan of the Company or (C) in
connection with a direct or indirect acquisition by the Company of another
Person or any transaction with respect to which Rule 145 (or any successor
provision) under the Securities Act applies), whether or not for sale for its
own account, it will each such time, give prompt written notice at least 20 days
prior to the anticipated filing date of the registration statement relating to
such registration to the Investor, which notice shall set forth such Investor's
rights under this Section 2(C) and shall offer such Investor the opportunity to
include in such registration statement such number of Registrable Securities as
such Investor may request. Upon the written request of Investor made within 10
days after the receipt of notice from the Company (which request shall specify
the number of Registrable Securities intended to be disposed of by such
Investor), the Company will use its best efforts to effect the registration
under the Securities Act of all Registrable Securities that the Company has been
so requested to register by each Investor, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered; provided,
however, that if, at any time after giving written notice of its intention to
register any Registrable Securities pursuant to this Section 2 and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
Registrable Securities, the Company shall give written notice to each Investor
and, thereupon, shall be relieved of its obligation to register any Registrable
Securities in connection with such registration. The Company's obligations under
this Section 2(C) shall terminate on the date that the registration statement to
be filed in accordance with Section 2(A) is declared effective by the
Commission.
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(ii) If a registration pursuant to this Section 2(C) involves
a Public Offering and the managing underwriter thereof advises the Company that,
in its view, the number of shares of Common Stock that the Company and the
Investor intend to include in such registration exceeds the largest number of
shares of Common Stock that can be sold without having an adverse effect on such
Public Offering (the "Maximum Offering Size"), the Company will include in such
registration only such number of shares of Common Stock as does not exceed the
Maximum Offering Size, and the number of shares in the Maximum Offering Size
shall be allocated among the Company, the Investor and any other sellers of
Common Stock in such Public Offering ("Third-Party Sellers"), first, pro rata
among the Investor until all the shares of Common Stock originally proposed to
be offered for sale by the Investor have been allocated, and second, pro rata
among the Company and any Third-Party Sellers, in each case on the basis of the
relative number of shares of Common Stock originally proposed to be offered for
sale under such registration by the Investor, the Company and the Third-Party
Sellers, as the case may be. If as a result of the proration provisions of this
Section 2(C)(ii), the Investor is not entitled to include all such Registrable
Securities in such registration, such Investor may elect to withdraw its request
to include any Registrable Securities in such registration. With respect to
registrations pursuant to this Section 2(C), the number of securities required
to satisfy any underwriters' over-allotment option shall be allocated among the
Company, the Investor and any Third Party Seller pro rata on the basis of the
relative number of securities offered for sale under such registration by the
Investor, the Company and any such Third Party Sellers before the exercise of
such over-allotment option.
3. Obligations of the Company
In connection with the registration of the Registrable Securities, the
Company shall:
(A) Promptly (i) prepare and file with the Commission such
amendments (including post-effective amendments) to the Registration Statement
and supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of the
Securities Act applicable thereto so as to permit the Prospectus forming part
thereof to be current and useable by Investor for resales of the Registrable
Securities for a period of five (5) years from the date on which the
Registration Statement is first declared effective by the Commission (the
"Effective Time") or such shorter period that will terminate when all the
Registrable Securities covered by the Registration Statement have been sold
pursuant thereto in accordance with the plan of distribution provided in the
Prospectus, transferred pursuant to Rule 144 under the Securities Act or
otherwise transferred in a manner that results in the delivery of new securities
not subject to transfer restrictions under the Securities Act (the "Registration
Period") and (ii) take all lawful action such that each of (A) the Registration
Statement and any amendment thereto does not, when it becomes effective, 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, not misleading
and (B) the Prospectus forming part of the Registration Statement, and any
amendment or supplement thereto, does not at any time during the Registration
Period include 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 light of the circumstances under which they were made, not
misleading;
(B) During the Registration Period, comply with the
provisions of the Securities Act with respect to the Registrable Securities of
the Company covered by the Registration Statement until such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the Investor as set forth in the Prospectus forming
part of the Registration Statement;
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(C) (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any Prospectus (including any supplements thereto), provide (A)
draft copies thereof to the Investor and reflect in such documents all such
comments as the Investor (and its counsel) reasonably may propose and (B) to the
Investor a copy of the accountant's consent letter to be included in the filing
and (ii) furnish to the Investor whose Registrable Securities are included in
the Registration Statement and its legal counsel identified to the Company, (A)
promptly after the same is prepared and publicly distributed, filed with the
Commission, or received by the Company, one copy of the Registration Statement,
each Prospectus, and each amendment or supplement thereto and (B) such number of
copies of the Prospectus and all amendments and supplements thereto and such
other documents, as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;
(D) (i) Register or qualify the Registrable Securities
covered by the Registration Statement under such securities or "blue sky" laws
of such jurisdictions as the Investor who holds a majority-in-interest of the
Registrable Securities being offered reasonably requests, (ii) prepare and file
in such jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period,
(iii) take all such other lawful actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period and (iv) take all such other lawful actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(D), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;
(E) As promptly as practicable after becoming aware of such
event, notify the Investor of the occurrence of any event, as a result of which
the Prospectus included in the 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,
in light of the circumstances under which they were made, not misleading, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to the Investor as such
Investor may reasonably request;
(F) As promptly as practicable after becoming aware of such
event, notify the Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;
(G) Cause all the Registrable Securities covered by the
Registration Statement to be listed on the principal national securities
exchange, and included in an inter-dealer quotation system of a registered
national securities association, on or in which securities of the same class or
series issued by the Company are then listed or included;
(H) Maintain a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;
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(I) Cooperate with the Investor who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
registration statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Investor reasonably may request and registered in such names as the Investor may
request; and, within three (3) business days after a registration statement
which includes Registrable Securities is declared effective by the Commission,
deliver and cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to the Investor whose
Registrable Securities are included in such registration statement) an
appropriate instruction and, to the extent necessary, an opinion of such
counsel;
(J) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investor of its Registrable
Securities in accordance with the intended methods therefor provided in the
Prospectus which are customary under the circumstances;
(K) Make generally available to its security holders as soon
as practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11 (a) of
the Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(L) In the event of an underwritten offering, promptly
include or incorporate in a Prospectus supplement or post-effective amendment to
the Registration Statement such information as the managers reasonably agree
should be included therein and to which the Company does not reasonably object
and make all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after it is notified of the matters to be
included or incorporated in such Prospectus supplement or post-effective
amendment;
(M) (i) Make reasonably available for inspection by Investor,
any underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such Investor
or any such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and (ii)
cause the Company's officers, directors and employees to supply all information
reasonably requested by such Investor or any such underwriter, attorney,
accountant or agent in connection with the Registration Statement, in each case,
as is customary for similar due diligence examinations; provided, however, that
all records, information and documents that are designated in writing by the
Company, in good faith, as confidential, proprietary or containing any material
nonpublic information shall be kept confidential by such Investor and any such
underwriter, attorney, accountant or agent (pursuant to an appropriate
confidentiality agreement in the case of any such holder or agent), unless such
disclosure is made pursuant to judicial process in a court proceeding (after
first giving the Company an opportunity promptly to seek a protective order or
otherwise limit the scope of the information sought to be disclosed) or is
required by law, or such records, information or documents become available to
the public generally or through a third party not in violation of an
accompanying obligation of confidentiality; and provided, further, that, if the
foregoing inspection and information gathering would otherwise disrupt the
Company's conduct of its business, such inspection and information gathering
shall, to the maximum extent possible, be coordinated on behalf of the Investor
and the other parties entitled thereto by one firm of counsel designed by and on
behalf of the majority in interest of Investor and other parties;
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(N) In connection with any underwritten offering, make such
representations and warranties to the Investor participating in such
underwritten offering and to the managers, in form, substance and scope as are
customarily made by the Company to underwriters in secondary underwritten
offerings;
(O) In connection with any underwritten offering, obtain
opinions of counsel to the Company (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the managers) addressed to
the underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the Effective Time of the Registration Statement or
most recent post-effective amendment thereto, as the case may be, the absence
from the Registration Statement and the Prospectus, including any documents
incorporated by reference therein, of an untrue statement of a material fact or
the omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, subject to customary
limitations);
(P) In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public accountants of
the Company (and, if necessary, from the independent public accountants of any
business acquired by the Company for which financial statements and financial
data are, or are required to be, included in the Registration Statement),
addressed to each underwriter participating in such underwritten offering (if
such underwriter has provided such letter, representations or documentation, if
any, required for such cold comfort letter to be so addressed), in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with secondary underwritten offerings;
(Q) In connection with any underwritten offering, deliver
such documents and certificates as may be reasonably required by the managers,
if any, and
(R) In the event that any broker-dealer registered under the
Exchange Act shall be an "Affiliate" (as defined in Rule 2729(b)(1) of the rules
and regulations of the National Association of Securities Dealers, Inc. (the
"NASD Rules") (or any successor provision thereto)) of the Company or has a
"conflict of interest" (as defined in Rule 2720(b)(7) of the NASD Rules (or any
successor provision thereto)) and such broker-dealer shall underwrite,
participate as a member of an underwriting syndicate or selling group or assist
in the distribution of any Registrable Securities covered by the Registration
Statement, whether as a holder of such Registrable Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, the Company shall assist such broker-dealer in complying
with the requirements of the NASD Rules, including, without limitation, by (A)
engaging a "qualified independent underwriter" (as defined in Rule 2720(b)(15)
of the NASD Rules (or any successor provision thereto)) to participate in the
preparation of the Registration Statement relating to such Registrable
Securities, to exercise usual standards of due diligence in respect thereof and
to recommend the public offering price of such Registrable Securities, (B)
indemnifying such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 6 hereof and (C) providing
such information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the NASD Rules.
4. Obligations of the Investor
In connection with the registration of the Registrable Securities, the
Investor shall have the following obligations:
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(A) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request;
(B) The Investor by its acceptance of the Registrable
Securities agrees to cooperate with the Company in connection with the
preparation and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities from the Registration Statement; and
(C) The Investor agrees that, upon receipt of any notice from
the Company of the occurrence of any event of the kind described in Section 3(E)
or 3(F), it shall immediately discontinue its disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(E) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice.
5. Expenses of Registration
All expenses, other than underwriting discounts and
commissions, incurred in connection with registrations, filings or
qualifications pursuant to Section 3, but including, without limitation, all
registration, listing, and qualifications fees, printing and engraving fees,
accounting fees, and the fees and disbursements of counsel for the Company shall
be borne by the Company.
6. Indemnification and Contribution
(A) Indemnification by the Company. The Company shall
indemnify and hold harmless each Investor and each underwriter, if any, which
facilitates the disposition of Registrable Securities, and each of their
respective officers and directors and each person who controls such Investor or
underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act (each such person being sometimes hereinafter referred to as
an "Indemnified Person") from and against any losses, claims, damages or
liabilities, joint or several, to which such Indemnified Person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement of a material fact contained in any Registration
Statement or an 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 arise out of or are based upon an untrue statement of a material
fact contained in any Prospectus or an omission or alleged omission to state
therein 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; and the Company hereby agrees to reimburse such
Indemnified Person for all reasonable legal and other expenses incurred by them
in connection with investigating or defending any such action or claim as and
when such expenses are incurred; provided, however, that the Company shall not
be liable to any such Indemnified Person in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon (i) an
untrue statement or alleged untrue statement made in, or an omission or alleged
omission from, such Registration Statement or Prospectus in reliance upon and in
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conformity with written information furnished to the Company by such Indemnified
Person expressly for use therein or (ii) in the case of the occurrence of an
event of the type specified in Section 3(E), the use by the Indemnified Person
of an outdated or defective Prospectus after the Company has provided to such
Indemnified Person an updated Prospectus correcting the untrue statement or
alleged untrue statement or omission or alleged omission giving rise to such
loss, claim, damage or liability.
(B) Notice of Claims, etc. Promptly after receipt by a party
seeking indemnification pursuant to this Section 6 (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 6 is being sought (the "Indemnifying Party") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees, costs
and expenses, (y) the Indemnified Party and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party or (z) the Indemnifying Party shall have failed to employ
legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in connection with any Claim
in the same jurisdiction, be liable for the fees and expenses of more than one
firm of counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnified Party shall not, without the prior written consent of
the Indemnifying Party (which consent shall not unreasonably be withheld),
settle or compromise any Claim or consent to the entry of any judgment that does
not include an unconditional release of the Indemnifying Party from all
liabilities with respect to such Claim or judgment.
(C) Contribution. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an Indemnified
Person under subsection (A) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault [how is this determined??] of the Indemnifying Party and the
Indemnified Party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
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 the untrue or alleged untrue statement of a
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material fact or omission or alleged omission to state a material fact relates
to information supplied by such Indemnifying Party or by such Indemnified Party,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. 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 (even if the Investor or any
underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in this Section 6(D). The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. 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 obligations of the Investor and
any underwriters in this Section 6(D) to contribute shall be several in
proportion to the percentage of Registrable Securities registered or
underwritten, as the case may be, by them and not joint.
(D) Notwithstanding any other provision of this Section 6, in
no event shall any (i) Investor be required to undertake liability to any person
under this Section 6 for any amounts and (ii) underwriter be required to
undertake liability to any Person hereunder for any amounts in excess of the
aggregate discount, commission or other compensation payable to such underwriter
with respect to the Registrable Securities underwritten by it and distributed
pursuant to the Registration Statement.
(E) The obligations of the Company under this Section 6 shall
be in addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 6 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
7. Rule 144
With a view to making available to the Investor the benefits of Rule
144 under the Securities Act or any other similar rule or regulation of the
Commission that may at any time permit the Investor to sell securities of the
Company to the public without registration ("Rule 144"), the Company agrees to
use its best efforts to:
(1) comply with the provisions of paragraph (c) (1) of Rule
144 and
(2) file with the Commission in a timely manner all reports
and other documents required to be filed by the Company pursuant to Section 13
or 15(d) under the Exchange Act; and, if at any time it is not required to file
such reports but in the past had been required to or did file such reports, it
will, upon the request of any Investor, make available other information as
required by, and so long as necessary to permit sales of, its Registrable
Securities pursuant to Rule 144.
8. Assignment
The rights to have the Company register Registrable Securities
pursuant to this Agreement shall be automatically assigned by the Investor to
any permitted transferee of all or any portion of such Registrable Securities
(or all or any portion of the Warrants of the Company which are convertible into
such securities) only if (a) the Investor agrees in writing with the transferee
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or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) immediately following such transfer or assignment,
the securities so transferred or assigned to the transferee or assignee
constitute Restricted Securities and (d) at or before the time the Company
received the written notice contemplated by clause (b) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein.
9. Amendment and Waiver
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and Investor who hold a majority-in-interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 9 shall be binding
upon each Investor and the Company.
10. Changes in Common Stock
If, and as often as, there are any changes in the Common Stock by way
of stock split, stock dividend, reverse split, combination or reclassification,
or through merger, consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the provisions hereof, as
may be required, so that the rights and privileges granted hereby shall continue
with respect to the Common Stock as so changed.
11. Miscellaneous
(A) A person or entity shall be deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(B) Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally, or sent by telecopier machine or by a
nationally recognized overnight courier service, and shall be deemed given when
so delivered personally, or by telecopier machine or overnight courier service
as follows:
(1) if to the Company, to:
QUINTEK TECHNOLOGIES, INC.
000 Xxxxxxxxxxxx Xxx, Xxxxx X
Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx, CEO
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
(2) if to the Investor, to:
Kazi Management VI, LLC
00 Xxxxxxxxxx Xxxx, Xxxxx X
Xx. Xxxxxx, Xxxxxx Xxxxxxx 00000
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
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(3) if to any other Investor, at such address as
such Investor shall have provided in
writing to the Company.
The Company, the Investor or any Investor may change the
foregoing address by notice given pursuant to this Section 11(B).
(C) Failure of any party to exercise any right or remedy
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, shall not operate as a waiver thereof.
(D) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Californiania. Each of the parties
consents to the jurisdiction of the federal courts whose districts encompass any
part of the City of Camarillo or the state courts of the State of California
sitting in Ventura County in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any
objection including any objection based on forum non conveniens, to the bringing
of any such proceeding in such jurisdictions.
(E) Should any party hereto employ an attorney for the purpose
of enforcing or construing this Agreement, or any judgment based on this
Agreement, in any legal proceeding whatsoever, including insolvency, bankruptcy,
arbitration, declaratory relief or other litigation, the prevailing party shall
be entitled to receive from the other party or parties thereto reimbursement for
all reasonable attorneys' fees and all reasonable costs, including but not
limited to service of process, filing fees, court and court reporter costs,
investigative costs, expert witness fees, and the cost of any bonds, whether
taxable or not, and that such reimbursement shall be included in any judgment or
final order issued in that proceeding. The "prevailing party" means the party
determined by the court to most nearly prevail and not necessarily the one in
whose favor a judgment is rendered.
(F) The remedies provided in this Agreement are cumulative
and not exclusive of any remedies provided by law. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the remainder of 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 best 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.
(G) This Agreement, the Note Purchase Agreement, the Note,
the Security Agreement and the Warrants of even date herewith among the Company
and the Investor constitute the entire agreement among the parties hereto with
respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
These Agreements supersede all prior agreements and undertakings among the
parties hereto with respect to the subject matter hereof.
(H) Subject to the requirements of Section 8 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(I) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(J) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
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(K) This Agreement may be executed in two (2) counterparts,
each of which shall be deemed an original but both of which shall constitute one
and the same agreement. A facsimile transmission of this signed Agreement shall
be legal and binding on the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement
to be executed and delivered on the date first above written.
QUINTEK TECHNOLOGIES, INC.,
a California corporation
By: /s/ Xxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxx
Title: Chairman & CEO
Investor:
KAZI MANAGEMENT V.I., LLC
/s/ Xxxxxx Xxxx
By: ---------------------------------------------
Name: Xxxxxx Xxxx
Title: President
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