EXHIBIT 4.9
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 30th day of
September, 2002, by and among QUICKTEST 5, INC., a Delaware corporation (the
"Company"), and NMDS INVESTMENTS, L.P. ("LENDER").
BACKGROUND
----------
The Company wishes to set forth the registration rights and certain
other rights of the Lender in this Agreement as the sole agreement of the
Company and the Lender with respect to the 75,000 shares of Common Stock issued
pursuant to that certain Purchase Agreement and the shares of Common Stock
issuable upon conversion of that certain $150,000 Convertible Promissory Note
(the "Shares") dated of an even date herewith (the "Subscription Agreement").
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Amendment. This Agreement and the rights and obligations included
herein may hereafter be amended by the written consent of the Company and
Lender.
2. Registration Rights. The Company covenants and agrees as follows:
2.1 Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar federal statute and the rules and regulations of the
Securities and Exchange Commission ("SEC") thereunder, all as the same may be in
effect at that time;
(b) The terms "Register", "Registered" and "Registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act and the
declaration or ordering of effectiveness of such registration statement or
document;
(c) "Registrable Securities" shall mean, the Shares,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which Lender's rights under this Section 2 are not assigned;
(d) "Holder" shall mean any person who holds outstanding
Registrable Securities which have not been sold to the public, but only if such
person is a Lender or an assignee or transferee thereof in accordance with
Section 2.10 hereof;
(e) "Registration Expenses" shall mean all expenses
incurred by the Company in complying with Sections 2.2 and 2.3 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
(f) "Selling Expenses" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applicable to the
securities registered by the Holders.
1
(g) "Form S-3" means such form under the Securities Act as
in effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC; and
(h) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any similar federal statute and the rules and
regulations of the SEC thereunder, all as the same may be in effect at that
time.
2.2 Company Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan, or a registration relating to a Rule 145
transaction or a registration on any form which does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities) the Company shall,
each such time, promptly give Holder written notice of such registration. Upon
the written request of Holder given within twenty (20) days after mailing of
such notice by the Company, the Company shall, subject to the provisions of
Section 2.6, cause to be registered under the Securities Act all of the
Registrable Securities that each such Holder has requested to be registered.
2.3 Obligations of the Company. Whenever required under this
Section 2 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously and as reasonably as possible,:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective and, upon the request of the
Holder, keep such registration statement effective for up to one hundred twenty
(120) days.
(b) 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) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, 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 Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders, 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 jurisdiction.
2.4 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 that
the selling Holders shall
2
furnish to the Company such information regarding themselves, the Registrable
Securities held by them, and the intended method of disposition of such
securities as shall be required to effect the registration of their Registrable
Securities.
2.5 Expenses of Registration. All Registration Expenses incurred
in connection with any registration, filing, qualification or compliance
pursuant to this Section 2 shall be borne by the Company.
2.6 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
2.7 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2,:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless Holder, the officers and directors of Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any person who controls such Holder or underwriter within the meaning of the
Securities Act or 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 law, 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"): (i) 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; (ii) 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 (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and the Company will reimburse
each such Holder, officer or director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action
provided, however, that the indemnity agreement contained in this Section 2.8(a)
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), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling 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, any underwriter
(within the meaning of the Securities Act) for the Company or such other
Holders, any person who controls such underwriter, and any other Holder selling
securities in such registration statement or any of its directors or officers or
any person who controls such Holder, against any losses, claims, damages, or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, or underwriter or controlling person, or other such
Holder or director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state 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)
3
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or controlling person, other Holder, officer, director, or
controlling person in connection with investigating or defending any such loss,
claim damage, liability, or action provided, however, that the indemnity
agreement contained in this Section 2.8(b) 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; and, provided further that in no event shall any
selling Holder's liability hereunder exceed the gross proceeds actually received
by such Holder in respect of the sale of such Holder's shares in such offering.
(c) Promptly after receipt by an indemnified party under
this Section 2.8 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 2.8, notify the
indemnifying party in writing 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, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to notify an
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.8, but the omission so to notify the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 2.8.
2.8 Reports Under Exchange Act. With a view to making available
to the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration or pursuant to
a registration on Form S-3, the Company agrees to:
(a) make and keep public information available as those
terms are understood and defined in SEC Rule 144, at all times after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public;
(b) take such action, including the voluntary registration
of its Common Stock under Section 12 of the Exchange Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective;
(c) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request: (i) a written statement by the
Company that it has
4
complied with the reporting requirements of SEC Rule 144 (at any time after
ninety (90) days after the effective date of the first registration statement
filed by the Company), the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies); (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company; and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
2.9 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of at least one thousand
(1,000) shares of such Registrable Securities provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; and, provided further, that
such assignment shall be effective only if immediately following such transfer,
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act.
3. Miscellaneous.
3.1 This Agreement constitutes the entire agreement between the
Company and the Lender with respect to the subject matter hereof. Any previous
agreement between the Company and the Lender is superseded by this Agreement.
Subject to the exceptions specifically set forth in this Agreement, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective heirs, successors, administrators, executors and assigns of
the parties hereto.
3.2 Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or five (5) days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified as follows: if to the
Company, to the Company's President at the Company's principal executive office,
and, if the Lender, at the address indicated for the Lender in the Subscription
Agreement or at such other address as such party may designate by ten (10) days
advance written notice to the other parties.
3.3 This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
3.4 This Agreement shall be governed in all respects by the laws
of the State of California applicable to contracts entered into and wholly to be
performed within the State of California by California residents.
IN WITNESS WHEREOF, the undersigned or each of their respective duly
authorized officers or representatives have set their hands as of the date set
forth above.
QUICKTEST 5, INC. "LENDER"
By: /s/ XXXXXXX X. XXXXX By: /s/ XXXXXX X. XXXXX
------------------------------------ ---------------------------------
Xxxxxxx X. Xxxxx, President and CEO Xxxxxx X. Xxxxx, General Partner
5
