-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EeVPFeBvgW/5/190SqNO8slQB6A0XwnN9nWvKHZs6hO1xeceOhAwmLSPE9bnsQPF sywDsnJNXMEOpQpRDh/1mQ== 0000891836-02-000561.txt : 20021115 0000891836-02-000561.hdr.sgml : 20021115 20021115171635 ACCESSION NUMBER: 0000891836-02-000561 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20021115 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: QUINTON CARDIOLOGY SYSTEMS INC CENTRAL INDEX KEY: 0001166409 STANDARD INDUSTRIAL CLASSIFICATION: SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841] IRS NUMBER: 943300396 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-78261 FILM NUMBER: 02830475 BUSINESS ADDRESS: STREET 1: 3303 MONTE VILLA PKWY CITY: BOTHELL STATE: WA ZIP: 98021 BUSINESS PHONE: 4254022000 FORMER COMPANY: FORMER CONFORMED NAME: QUINTON HOLDING CORP DATE OF NAME CHANGE: 20020201 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KONINKLIJKE PHILIPS ELECTRONICS NV CENTRAL INDEX KEY: 0000313216 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC & OTHER ELECTRICAL EQUIPMENT (NO COMPUTER EQUIP) [3600] IRS NUMBER: 000000000 STATE OF INCORPORATION: P7 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: REMBRANDT TOWER AMSTELPLEIN 1 STREET 2: 1096 HA AMSTERDAM CITY: THE NETHERLANDS BUSINESS PHONE: 0113140791 MAIL ADDRESS: STREET 1: REMBRANDT TOWER AMSTELPLEIN 1 STREET 2: 1096 HA AMSTERDAM CITY: THE NETHERLANDS FORMER COMPANY: FORMER CONFORMED NAME: PHILIPS NV DATE OF NAME CHANGE: 19910903 FORMER COMPANY: FORMER CONFORMED NAME: PHILIPS ELECTRONICS N V DATE OF NAME CHANGE: 19930727 SC 13D/A 1 sc0320.txt AMENDMENT NO. 1 OMB APPROVAL ------------------------------- OMB Number: 3235-0145 Expires: November 30, 2002 Estimated average burden hours per response...........11 ------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D/A UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)* Quinton Cardiology Systems, Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, without par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 748773 10 8 - -------------------------------------------------------------------------------- (CUSIP Number) Belinda W. Chew Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) November 5, 2002 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box |_|. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). PERSONS WHO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. SEC 1746 (03-00) SCHEDULE 13D - ---------------------- ----------------------- CUSIP NO. 748773 10 8 PAGE 2 of 22 PAGES - ---------------------- ----------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Koninklijke Philips Electronics N.V. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION The Netherlands - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 1,189,997 SHARES --------------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 0 EACH --------------------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON 1,189,997 WITH --------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,189,997 - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.93% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO/HC - -------------------------------------------------------------------------------- SCHEDULE 13D - ---------------------- ----------------------- CUSIP NO. 748773 10 8 PAGE 3 of 22 PAGES - ---------------------- ----------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Philips Holding USA Inc. - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) AF - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 1,189,997 SHARES --------------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 0 EACH --------------------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON 1,189,997 WITH --------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,189,997 - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.93% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO - -------------------------------------------------------------------------------- SCHEDULE 13D - ---------------------- ----------------------- CUSIP NO. 748773 10 8 PAGE 4 of 22 PAGES - ---------------------- ----------------------- - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Philips Electronics North America Corporation - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) AF - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7. SOLE VOTING POWER NUMBER OF 1,189,997 SHARES --------------------------------------------------------------- BENEFICIALLY 8. SHARED VOTING POWER OWNED BY 0 EACH --------------------------------------------------------------- REPORTING 9. SOLE DISPOSITIVE POWER PERSON 1,189,997 WITH --------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER 0 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,189,997 - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.93% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO - -------------------------------------------------------------------------------- CUSIP Number: 748773 10 8 Page 5 of 22 This Amendment No. 1 amends and restates in its entirety the Schedule 13D filed by the Reporting Persons (as defined herein) on May 13, 2002. ITEM 1. SECURITY AND ISSUER The class of equity securities to which this statement relates is the shares of Common Stock, without par value (the "Shares"), of Quinton Cardiology Systems, Inc. (formerly QIC Holding Corp.), a California corporation ("Quinton"). The principal executive office of Quinton is located at 3303 Monte Villa Parkway, Bothell, Washington 98021. ITEM 2. IDENTITY AND BACKGROUND (a) This statement is being filed by Koninklijke Philips Electronics N.V.("KPENV"), Philips Holding USA Inc. ("PHUSA") and Philips Electronics North America Corporation ("PENAC" and, collectively with KPENV and PHUSA, the "Reporting Persons"). PENAC is a wholly owned subsidiary of PHUSA, which, in turn, is a wholly owned subsidiary of KPENV. Pursuant to the Letter Agreement, dated November 5, 2002 (the "WRH Letter Agreement"), among W.R. Hambrecht/QIC, LLC, a California limited liability company ("WRH"), W.R. Hambrecht/QIC Management, LLC, a California limited liability company ("WRH Management"), and PENAC, attached hereto as Exhibit 1 and incorporated herein by reference, WRH, WRH Management and PENAC terminated the Shareholders Agreement, dated as of August 1, 2001 (the "Shareholders Agreement"), among WRH, WRH Management and PENAC. Prior to the termination of the Shareholders Agreement, the Reporting Persons believed that they, WRH and certain individuals and entities related to WRH (the "WRH Group") could have been deemed to constitute a "group" for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934 and Rule 13d-5(b)(1) promulgated thereunder. As a result of termination of the Shareholders Agreement, the Reporting Persons believe that they and the WRH Group can no longer be deemed to constitute a "group" for such purposes. Zymed, Inc., a California corporation ("Zymed"), a wholly owned subsidiary of PENAC which PENAC acquired in connection with the acquisition by KPENV of the Healthcare Solutions Group of Agilent Technologies, Inc., a Delaware CUSIP Number: 748773 10 8 Page 6 of 22 corporation ("Agilent"), which was consummated on August 1, 2001, is a non-control member of WRH. Based on Quinton's Registration Statement on Form S-1 filed on February 22, 2002 (as amended from time to time, the "Registration Statement"), and the Form 3/A filed by WRH on May 7, 2002, the Reporting Persons believe that WRH is or was the beneficial owner of approximately 5,056,215 Shares. Zymed disclaims beneficial ownership of any and all Shares held by or otherwise beneficially owned by WRH, and this statement shall not be construed as an admission that Zymed is, for the purposes of Section 13(d) or 13(g) of the Securities Exchange Act of 1934 or for any other purpose, the beneficial owner of the Shares held by WRH. Certain information concerning each director and executive officer of (i) PENAC is set forth in Schedule I hereto and incorporated herein by reference and (ii) KPENV is set forth in Schedule II hereto and incorporated herein by reference. (b) The principal business address of KPENV is Breitner Centre, Amstelplein 2, 1096 BC Amsterdam, The Netherlands. The principal business address of PHUSA and PENAC is 1251 Avenue of the Americas, New York, New York 10020. (c) The primary business of each of the Reporting Persons is the manufacture and distribution of electronic and electrical products, systems and equipment, as well as information technology services. (d) None of the Reporting Persons or, to the best knowledge and belief of the Reporting Persons, any of the individuals listed on Schedule I or II has, during the past five years, been convicted in any criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Persons or, to the best knowledge and belief of the Reporting Persons, any of the individuals listed on Schedule I or II has, during the past five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. CUSIP Number: 748773 10 8 Page 7 of 22 (f) KPENV is a company incorporated under the laws of the Netherlands. PHUSA and PENAC are Delaware corporations. This Item 2 is qualified in its entirety by reference to Schedules I and II which are incorporated herein by reference. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Pursuant to the Asset Purchase Agreement, dated as of November 17, 2000, between Agilent and KPENV, and the Amendment and Supplemental Agreement, dated as of August 1, 2001, between Agilent and KPENV, on August 1, 2001, PENAC acquired 19 shares of Class A Common Stock and 2,330,000 shares of Series A Preferred Stock of Quinton for $4,000,000, the source of which funds was working capital. Each share of Series A Preferred Stock was convertible into one share of Class A Common Stock at the option of the holder, subject to certain adjustments. Pursuant to Article III(d)(3)(ff) of the Certificate of Amendment of Articles of Incorporation of Quinton, dated June 2, 1998 (the "Certificate of Amendment"), the holders of Series A Preferred Stock were entitled to receive certificates of adjustment regarding certain anti-dilution adjustments upon the grant of certain shares of Class A Common Stock or certain options to purchase shares of Class A Common Stock under Quinton's 1998 Equity Incentive Plan. In place of these certificates of adjustment PENAC was granted 287,977 additional, uncertificated shares of Series A Preferred Stock, recorded on the books of Quinton as of August 1, 2001. On April 5, 2002, pursuant to a 2.2-for-1 stock split and a redesignation of the Class A Common Stock into Shares, the 19 shares of Class A Common Stock held by PENAC were redesignated into 8 Shares. As a result of a 2.2-for-1 stock split and conversion of the Series A Preferred Stock into Shares at the closing of the initial public offering referred to in the Registration Statement, the 2,617,977 shares of Series A Preferred Stock held by PENAC were converted into 1,189,989 Shares. The Reporting Persons have not purchased or sold any securities of Quinton in the last 60 days. CUSIP Number: 748773 10 8 Page 8 of 22 None of the persons listed on Schedule I or II hereto has contributed any funds or other consideration towards the purchase of the shares of Quinton reported in this statement. Information about the WRH Group is disclosed in the Registration Statement and the WRH Group Reports. ITEM 4. PURPOSE OF TRANSACTION Pursuant to a Letter Agreement, dated February 19, 2002 (the "Agilent Letter Agreement"), by and among PENAC, KPENV and Agilent, attached hereto as Exhibit 2 and incorporated herein by reference, PENAC is a successor in interest to Hewlett-Packard Company, a Delaware corporation ("HP"), in an Investors' Rights Agreement, dated as of May 27, 1998 (the "Investors' Rights Agreement"), between Quinton, WRH and HP, attached hereto as Exhibit 3 and incorporated herein by reference. Pursuant to the Investors' Rights Agreement, subject to certain conditions and limitations set forth therein, WRH and PENAC may require Quinton to use its best efforts to include their Shares in any registration by Quinton of its Shares at Quinton's expense. These registration rights are subject to conditions and limitations including that, if the registration is in connection with an underwritten public offering, the holder is obligated to participate in the underwriting and the underwriters have the right to exclude all or limit the number of the holder's shares included in the registration statement. The Investors' Rights Agreement also imposes certain restrictions on the transfer of shares held by WRH and PENAC, and by any successors in interest to them, including requiring any transferee to agree to be bound by the transfer restrictions in the Investors' Rights Agreement and requiring either that an effective registration statement cover the disposition or that Quinton be notified of the disposition by the transferor and that the transfer not require registration. In March, 1999, Quinton, Inc. ("QIC"), a Washington corporation and a wholly owned subsidiary of Quinton, formerly known as Quinton Instrument Company, signed an Original Equipment Manufacturer and Distributor Agreement (the "OEM Agreement") with Zymed, effective as of July, 1998, providing for the purchase of certain Holter monitoring items, and appointed QIC the exclusive distributor of such products in the United States and Canada for a period of five years. If the parties mutually agreed, the OEM CUSIP Number: 748773 10 8 Page 9 of 22 Agreement could be extended for an additional five years. The OEM Agreement is attached hereto as Exhibit 4 and incorporated herein by reference. According to the Registration Statement, the products supplied under this agreement represented a significant portion of Quinton's revenues, approximately 8% in 1999, 12% in 2000 and 3% in 2001. In the third quarter of 2000, Zymed terminated the OEM Agreement because the parties failed to agree on pricing and volume requirements as was required to be done annually under the OEM Agreement. The OEM Agreement provided for a 180 day notice period that expired in February 2001. QIC disputed this notice of termination and in November 2000 initiated a lawsuit in the United States District Court for the Western District of Washington against Zymed, Agilent and HP, seeking damages against the defendants for harm to its business resulting both from Zymed's termination of the OEM Agreement and a variety of other alleged wrongful and tortuous conduct. QIC is seeking monetary damages. On April 8, 2002, the court entered an order dismissing all of QIC's claims other than the claims related to breach of contract. The trial date, originally scheduled for late April 2002, was first reset for September 18, 2002, and has now been reset for January 6, 2003. The Reporting Persons believe that the claims QIC has made in connection with the lawsuit are without merit and can likely be successfully defended, and they are cooperating in a vigorous defense of such claims. Regardless of the underlying merit of such claims, however, and notwithstanding the lack of success of prior efforts, the Reporting Persons and/or their respective subsidiaries may from time to time engage in mediation and/or negotiations with Quinton and QIC with a view to resolving such claims. Any such mediation and/or negotiations may or may not include discussions concerning -- and any resolution of such claims may or may not include -- the acquisition or disposition by the Reporting Persons of Shares or other securities of Quinton, the sale or transfer of cash or other assets of Quinton and/or its subsidiaries, the amendment, modification and/or termination of the Investors' Rights Agreement, and/or extraordinary corporate transactions. None of the Reporting Persons, Quinton or QIC is under any obligation to agree to any resolution or settlement of the litigation. The foregoing discussion is qualified in its entirety by reference to the WRH Letter Agreement, the Agilent Letter Agreement, the Investors' Rights Agreement and the OEM Agreement. CUSIP Number: 748773 10 8 Page 10 of 22 Other than as set forth herein, none of the Reporting Persons or, to the best knowledge and belief of the Reporting Persons, any of the individuals listed on Schedule I or II has plans or proposals which relate to or would result in any of the events described by Items 4(a) through 4(j) of Schedule 13D. Each Reporting Person expects to evaluate on an ongoing basis Quinton's financial condition, business operations and prospects, market price of the Shares of Quinton, conditions in securities markets generally, general economic and industry conditions and other factors. Accordingly, each Reporting Person reserves the right to change its plans and intentions at any time, as it deems appropriate. In particular, each Reporting Person may at any time and from time to time acquire additional Shares of Quinton or securities convertible or exchangeable for Shares of Quinton; may dispose of Shares of Quinton; and/or may enter into privately negotiated derivative transactions with institutional counterparties to hedge the market risk of some or all of its positions in such Shares. Any such transactions may be effected at any time and from time to time subject to any applicable limitations of the Securities Act and the contractual restrictions described herein. To the knowledge of each Reporting Person, each of the persons listed on Schedules I and II hereto may make the same evaluation and reserves the same rights. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) The percentage interest held by each Reporting Person presented below is based on the number of Shares of Quinton reported in Quinton's quarterly report on Form 10-Q for the quarterly period ended September 30, 2002, filed on November 14, 2002, to be outstanding as of November 8, 2002 (the "Outstanding Shares"). PENAC is the direct beneficial owner of 1,189,997 Shares of Quinton, representing approximately 9.93% of the Outstanding Shares. PHUSA may be deemed to beneficially own 1,189,997 Shares of Quinton, representing approximately 9.93% of the Outstanding Shares. KPENV may be deemed to beneficially own 1,189,997 Shares of Quinton, representing approximately 9.93% of the Outstanding Shares. CUSIP Number: 748773 10 8 Page 11 of 22 None of the Reporting Persons or, to the best knowledge and belief of the Reporting Persons, any of the persons listed on Schedules I and II hereto beneficially owns any Shares of Quinton other than as set forth herein. (b) Each Reporting Person has the power to vote or direct the vote and dispose or direct the disposition of the Shares beneficially owned by such Reporting Persons as indicated in pages 2 through 4. (c) Not Applicable. (d) No other person has the right to receive or the power to direct the receipt of dividends from or proceeds from the sale of Shares. (e) Not Applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER There are no contracts, arrangements, understandings or relationships between the Reporting Persons (or their wholly owned subsidiaries), and to the best knowledge and belief of the Reporting Persons, none of the persons listed on Schedules I and II hereto, and other persons with respect to the Shares of Quinton aside from the Investors' Rights Agreement. Pursuant to the Investors' Rights Agreement, and subject to conditions and limitations, WRH and PENAC may require Quinton to use its best efforts to include their Shares in any registration by Quinton of its Shares at Quinton's expense. These registration rights are subject to conditions and limitations including, if the registration is in connection with an underwritten public offering, the holder's obligation to participate in the underwriting and the right of the underwriters to exclude all or limit the number of shares included in the registration statement. The Investors' Rights Agreement also imposes restrictions on the transfer of shares held by WRH and PENAC, and by any successors in interest to them, including requiring any transferee to agree to be bound by Section 2 of the Investors' Rights Agreement (which section contains the restrictions on transfer) and requiring either that an effective registration statement cover the disposition or that Quinton be notified of the disposition by the transferor and that the transfer not require registration. CUSIP Number: 748773 10 8 Page 12 of 22 The foregoing discussion is qualified in its entirety by reference to the WRH Letter Agreement, the Agilent Letter Agreement, the Investors' Rights Agreement and the OEM Agreement, each of which is incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit No. Exhibit Description - ----------- ------------------- 1. Letter Agreement, dated as of November 5, 2002, by and among WRH, WRH Management and PENAC 2. Letter Agreement, dated February 19, 2002, by and among PENAC, KPENV and Agilent 3. Investors' Rights Agreement, dated as of May 27, 1998, between Quinton, WRH and HP 4. Original Equipment Manufacturer and Distributor Agreement, dated as of July 1, 1998, between Quinton and Zymed 5. Joint Filing Agreement CUSIP Number: 748773 10 8 Page 13 of 22 SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. Dated: November 15, 2002 KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ Jan H.M. Hommen -------------------------------- Name: Jan H.M. Hommen Title: Vice-Chairman of the Board of Management and Chief Financial Officer PHILIPS HOLDING USA INC. By: /s/ Robert M. Westerhof -------------------------------- Name: Robert M. Westerhof Title: President PHILIPS ELECTRONICS NORTH AMERICA CORPORATION By: /s/ Robert M. Westerhof -------------------------------- Name: Robert M. Westerhof Title: President and Chief Executive Officer CUSIP Number: 748773 10 8 Page 14 of 22 SCHEDULE I Name, Business Address, Principal Occupation or Employment and Citizenship of all Directors and Executive Officers of Philips Electronics North America Corporation. Each person listed below is not employed, other than by Philips Electronics North America Corporation, and thus no employer, employer's address or principal place of business of employer is listed. Name: Robert M. Westerhof Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Director, President and Chief Executive Officer. Citizenship: The Netherlands Name: Wilhelmus C.M. Groenhuysen Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Senior Vice President, Chief Financial Officer and Treasurer. Citizenship: The Netherlands Name: Kevin W. Doran Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Senior Vice President. Citizenship: United States CUSIP Number: 748773 10 8 Page 15 of 22 Name: Belinda W. Chew Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Director, Senior Vice President, General Counsel and Secretary. Citizenship: United States Name: Thomas B. Patton Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Vice President. Citizenship: United States Name: Robert N. Smith Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Vice President. Citizenship: United States Name: Raymond C. Fleming Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Controller. Citizenship: United States Name: Warren T. Oates, Jr. Business Address: Philips Electronics North America Corporation 1251 Avenue of the Americas New York, New York 10020 Principal Occupation: Assistant Secretary. Citizenship: United States CUSIP Number: 748773 10 8 Page 16 of 22 Name: Thomas M. Hafner Business Address: Philips Electronics North America Corporation 64 Perimeter Center East Atlanta, Georgia 30346 Principal Occupation: Attesting Secretary (Appointed). Citizenship: United States Name: Jack E. Haken Business Address: Philips Electronics North America Corporation 580 White Plains Road Tarrytown, New York 10591 Principal Occupation: Attesting Secretary (Appointed). Citizenship: United States Name: Michael E. Marion Business Address: Philips Electronics North America Corporation 580 White Plains Road Tarrytown, New York 10591 Principal Occupation: Attesting Secretary (Appointed). Citizenship: United States CUSIP Number: 748773 10 8 Page 17 of 22 SCHEDULE II Name, Business Address, Principal Occupation or Employment and Citizenship of: A. All Members of the Supervisory Board of Koninklijke Philips Electronics N.V. Unless otherwise indicated each person listed below is not employed, other than as a member of the Supervisory Board, and thus no employer, employer's address or principal place of business of employer is listed. Name: Prof. K.A.L.M. van Miert Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: President of Nyenrode University. Employer: Nyenrode University Employer's Address: Straatweg 25 3621 BG Breukelen The Netherlands Citizenship: Belgium Name: L.C. van Wachem Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Retired. Former Chairman of the Committee of Managing Directors of the Royal Dutch/Shell Group. Citizenship: The Netherlands CUSIP Number: 748773 10 8 Page 18 of 22 Name: L. Schweitzer Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Chairman and Chief Executive Officer of Renault. Employer: La regie nationale des usines Renault Employer's Address: 34 Quai du Point du Jour BP 103 92109 Boulogne Bilancourt Cedex, France Principal Business of Employer: Design, manufacture and sale of automobiles and related businesses Citizenship: France Name: Sir Richard Greenbury Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Retired. Former Chairman and Chief Executive Officer of Marks & Spencer. Citizenship: United Kingdom Name: W. de Kleuver Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Retired. Former Executive Vice-President of Royal Philips Electronics. Citizenship: The Netherlands Name: J-M. Hessels Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Retired. Former Chief Executive Officer of Royal Vendex KBB. Citizenship: The Netherlands CUSIP Number: 748773 10 8 Page 19 of 22 B. Board of Management and Group Management Committee of Royal Philips Electronics Unless otherwise indicated, all of the members of the Board of Management and Group Management Committee are employed by Royal Philips Electronics at Breitner Centre, Amstelplein 2, 1096 BC Amsterdam, The Netherlands, whose principal business is the manufacture and distribution of electronic and electrical products, systems and equipment. Name: Gerard J. Kleisterlee Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: President and Chief Executive Officer of Royal Philips Electronics. Citizenship: The Netherlands Name: Jan H.M. Hommen Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Vice-Chairman of the Board of Management and Chief Financial Officer of Royal Philips Electronics. Citizenship: The Netherlands Name: Arthur van der Poel Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Executive Vice-President of Royal Philips Electronics. Citizenship: The Netherlands CUSIP Number: 748773 10 8 Page 20 of 22 Name: Ad Huijser Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Executive Vice-President and Chief Technology Officer of Royal Philips Electronics. Citizenship: The Netherlands Name: Gottfried H. Dutine Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Executive Vice-President of Royal Philips Electronics. Citizenship: Germany Name: Ad H.A. Veenhof Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President, and President/CEO of the Domestic Appliances and Personal Care division, of Royal Philips Electronics. Citizenship: The Netherlands Name: Jouko A. Karvinen Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President, and President/CEO of the Medical Systems division, of Royal Philips Electronics. Citizenship: Finland CUSIP Number: 748773 10 8 Page 21 of 22 Name: Jan Oosterveld Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President of Royal Philips Electronics. Citizenship: The Netherlands Name: Arie Westerlaken Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President, General Secretary, Chief Legal Officer and Secretary to the Board of Management, of Royal Philips Electronics. Citizenship: The Netherlands Name: David Hamill Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President, and President/CEO of the Lighting division, of Royal Philips Electronics. Citizenship: United Kingdom Name: Guy J.M. Demuynck Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President, and CEO of the Consumer Electronics Mainstream division, of Royal Philips Electronics. Citizenship: Belgium CUSIP Number: 748773 10 8 Page 22 of 22 Name: Tjerk Hooghiemstra Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President of Royal Philips Electronics. Citizenship: The Netherlands Name: Scott McGregor Business Address: Royal Philips Electronics Breitner Centre Amstelplein 2 1096 BC Amsterdam, The Netherlands Principal Occupation: Senior Vice-President, and President/CEO of the Semiconductors division, of Royal Philips Electronics. Citizenship: United States LIST OF EXHIBITS ---------------- Exhibit No. Exhibit Description - ----------- ------------------- 10.1 Letter Agreement, dated as of November 5, 2002, by and among W.R. Hambrecht/QIC, LLC, W.R. Hambrecht/QIC Management, LLC, and Philips Electronics North America Corporation 10.2 Letter Agreement, dated February 19, 2002, by and among PENAC, KPNV and Agilent 10.3 Investors' Rights Agreement, dated as of May 27, 1998, by and between Quinton, WRH and HP 10.4 Original Equipment Manufacturer and Distributor Agreement, effective as of July 1, 1998, by and between Zymed and QIC 99.1 Joint Filing Agreement EX-10.1 3 ex-10_1.txt WRH LETTER AGREEMENT November 5, 2002 TO W.R. HAMBRECHT/QIC, LLC AND W.R. HAMBRECHT/QIC MANAGEMENT, LLC: With reference to the Shareholders Agreement, made as of August 1, 2001 (the "New Agreement"), by and among W.R. Hambrecht/QIC, LLC ("WRH/QIC"), Philips Electronics North America Corporation ("PENAC") and W.R. Hambrecht/QIC Management, LLC (the "Manager" and, collectively with WRH/QIC and PENAC, the "Parties") and the Shareholders Agreement, made as of May 27, 1998 (the "Old Agreement"), by and among WRH/QIC, Hewlett-Packard Company ("HP") and the Manager, this letter sets forth our agreement as follows: 1. Pursuant to Section 5 of the New Agreement, the New Agreement is hereby terminated, and all of the provisions of the New Agreement are hereby repealed, effective as of the date hereof. 2. Each Party, for itself and its shareholders, officers, directors, employees, agents, assigns, successors, representatives, direct and indirect parent companies, direct and indirect subsidiaries and other affiliates (such other individuals and entities, such Party's "Affiliates"), (i) does hereby release, discharge, and covenant not to sue or bring or maintain any suit, claim, action or bring any proceeding against any other Party, HP, Agilent Technologies, Inc. ("Agilent") and/or their respective shareholders, officers, directors, employees, agents, assigns, successors, representatives, direct and indirect parent companies, direct and indirect subsidiaries and other affiliates (the Parties, HP, Agilent and all such individuals and entities collectively, the "Released Entities") from, against or regarding any and all claims, demands, awards, damages, suits, causes of action, losses, liabilities or expenses of any kind or character, whether known or unknown, which such Party and its Affiliates now have, may have or ever have had, which arise out of or in connection with the New Agreement or the Old Agreement. Each Party fully understands that if any fact regarding the subject matter underlying this letter is found hereafter to be other than, or different from, any fact now believed to be true, such Party expressly accepts and assumes the risk of such possible difference(s) in fact and agrees that this letter shall be effective notwithstanding such difference(s) in fact(s). Each Party acknowledges its familiarity with the provisions of Section 1542 of the California Civil Code and expressly agrees that the release set forth herein constitutes a waiver and release of any rights or benefits that may arise thereunder, to the full extent that such rights or benefits may be waived. Section 1542 of the California Civil Code states as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." Each Party expressly acknowledges that the effect and import of this letter has been fully explained by such Party's own counsel and that this letter is entered into knowingly and voluntarily, without duress or undue influence, in consideration for the promises, obligations and rights set forth herein. 3. The Released Entities are intended third party beneficiaries of the agreement set forth in this letter. This letter agreement shall be governed by, and construed in accordance with, the internal laws of the State of California. If you are in agreement with the foregoing, please fax a single executed counterpart of this letter to Daniel Petroff of Sullivan & Cromwell at +1-212-558-3588, whereupon this letter shall become a binding agreement among us. Very truly yours, PHILIPS ELECTRONICS NORTH AMERICA CORPORATION By: /s/ Belinda W. Chew ---------------------------- Name: Belinda W. Chew Title: Senior Vice President Accepted and agreed as of the date hereof: W.R. HAMBRECHT/QIC, LLC By: W.R. Hambrecht/QIC Management, LLC, As Manager By: /s/ J.D. Delafield ---------------------------------- Name: J.D. Delafield Title: Manager W.R. HAMBRECHT/QIC MANAGEMENT, LLC By: /s/ J.D. Delafield ---------------------------------- Name: J.D. Delafield Title: Manager EX-10.2 4 ex-10_2.txt AGILENT LETTER AGREEMENT EXHIBIT 10.2 PHILIPS ELECTRONICS NORTH AMERICA CORPORATION February 19, 2002 TO AGILENT TECHNOLOGIES, INC.: With reference to the Investors' Rights Agreement, dated as of May 27, 1998, between QIC Holding Corp. (the "Company"), W.R. Hambrecht/QIC, LLC, and a predecessor in interest to Agilent Technologies, Inc. ("Agilent"), as amended (the "Agreement"), Agilent, Koninklijke Philips Electronics N.V ("Philips") and Philips Electronics North America Corporation ("PENAC") hereby agree as follows: 1. Agilent hereby transfers and assigns to PENAC all of its rights under the Agreement, including without limitation the registration rights set forth in Section 3 of the Agreement, effective as of and from August 1, 2001. 2. Agilent, Philips and PENAC acknowledge and agree that the Agreement is an Assumed Contract, as defined in the Asset Purchase Agreement, dated as of November 17, 2000, between Agilent and Philips (the "Purchase Agreement"). 3. PENAC hereby assumes all of the obligations of Agilent under the Agreement and hereby agrees (for the benefit of the Company and without limiting the generality of the foregoing assumption) to be bound by Section 2 of the Agreement, to the extent such Section may from time to time be applicable, in each case effective as of and from August 1, 2001. Philips hereby guarantees PENAC's obligations pursuant to this paragraph. The Company is an intended third party beneficiary of the covenants set forth in this paragraph. 4. This letter agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Paragraph 4, provided that receipt of copies of such counterparts is confirmed. 5. This letter agreement shall be governed in all respects by the internal laws of the State of New York without regard to conflict of laws provisions. 6. Except as expressly set forth in Paragraph 3, this letter agreement does not contain any rights, claims or benefits inuring to any person that is not a party hereto nor create or establish any third party beneficiary hereto. 7. The provisions of Sections 11.1, 11.2, 11.4, 11.5, 11.8 - 11.10, 11.13 and 11.16 of the Purchase Agreement shall apply mutates mutandis to this letter agreement. [Remainder of this page intentionally left blank.] If you are in agreement with the foregoing, please execute a counterpart of this letter agreement and deliver it by facsimile transmission to Daniel Petroff of Sullivan & Cromwell at +1-212-558-3588. KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ Roland M. Notermans --------------------------------- Name: Roland M. Notermans Title: Authorized Representative PHILIPS ELECTRONICS NORTH AMERICA CORPORATION By: /s/ Belinda Chew -------------------------------- Name: Belinda Chew Title: Senior Vice President Accepted and agreed: AGILENT TECHNOLOGIES, INC. By: /s/ Marie Oh Huber -------------------------------------- Name: Marie Oh Huber Title: Vice President POWER OF ATTORNEY The undersigned, Mr. A. Westerlaken, General Secretary and Senior Vice-President of Koninklijke Philips Electronics N.V. ("Philips"), in such capacity authorized to represent Philips, hereby authorizes MR. R.M. NOTERMANS to sign and execute in the name and on behalf of Philips the letter agreement to be entered into between Agilent Technologies, Inc. ("Agilent") on the one side and Philips and Philips Electronics North America Corporation ("PENAC") on the other side regarding the transfer and assignment by Agilent to PENAC of all of Agilent's rights under the Investors' Rights Agreement, dated as of May 27, 1998, between QIC Holding Corp., W.R. Hambrecht/QIC, LLC and a predecessor in interest to Agilent, as amended, and further to do or cause to be done all such acts and things as are deemed necessary in connection with the said transaction. This power of attorney will expire on March 31, 2002 Eindhoven, February 14, 2002 KONINKLIJKE PHILIPS ELECTRONICS N.V. /s/ A. Westerlaken - -------------------------------------------- A. Westerlaken EX-10.3 5 ex-10_3.txt INVESTORS' RIGHTS AGREEMENT EXHIBIT 10.3 QIC HOLDING CORP. INVESTORS' RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of the 27th day of May, 1998, by and between QIC Holding Corp., a California corporation (the "Company"), on the one part, and W.R. Hambrecht/QIC, LLC ("WRH/QIC"), a California limited liability corporation and Hewlett-Packard Company ("HP"), a Delaware corporation (collectively the "Purchasers"), on the other part. RECITALS A. The Company has entered into a Subscription Agreement dated May 27, 1998 with WRH/QIC and HP (the "Subscription Agreement"), whereby the Company agreed to sell 81 shares of its Class A Common Stock and 9,900,000 shares of its Series A Preferred Stock to WRH/QIC, and 19 shares of its Class A Common Stock and 2,330,000 shares of its Series A Preferred Stock to HP. B. The obligations of the Company and the Purchasers under the Subscription Agreements are conditioned, among other things, upon the execution and delivery of this Agreement by the Company and the Purchasers. NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: a. "Agreement" shall mean this Registration Rights Agreement, as it may be amended or supplemented from time to time. b. "Commission" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. c. "Preferred Stock" shall mean shares of Series A Preferred Stock, in the Company. d. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time. e. "Holder" shall mean the Purchasers, to the extent the Purchasers hold Registrable Securities, and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Sections 2 and 9 hereof. f. "Indemnified Party" shall mean each party entitled to indemnification under Section 6 herein. g. "Indemnifying Party" shall mean the party required to provide indemnification pursuant to Section 6 herein. h. "Registrable Securities" shall mean: (1) shares of common stock issued or issuable pursuant to conversion of the Preferred Stock; (2) shares of Class A Common Stock; and (3) any common stock issued or issuable as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (1) above; provided, however, that Registrable Securities shall not include any shares of common stock which have previously been registered or which have been sold in a private transaction in which the transferors' rights under this Agreement are not assigned. i. The terms "register," "registered" and "registration" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement. j. "Registration Expenses" shall mean all expenses incurred in effecting any registration pursuant to this Agreement, 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 expenses of any regular or special audits incident to or required by any such registration, but shall not include Selling Expenses, fees and disbursements of counsel for the Holders; provided further that Registration Expenses shall not include the compensation of regular employees of the Company, which shall be paid in any event by the Company. k. "Restricted Securities" shall mean any Registrable Securities required to bear the legend set forth in Section 2 hereof. l. "Rule 144" shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. m. "Rule 145" shall mean Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. n. "Rule 415" shall mean Rule 415 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. 2 o. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time. p. "Selling Expenses" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holders (other than the fees and disbursements of counsel included in Registration Expenses). 2. Restrictions on Transfer. a. Each Holder agrees not to make any disposition of all or any portion of the Registrable Securities unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 2, provided and to the extent such Section is then applicable, and: b. There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or c. The Holder has (i) notified the Company of the proposed disposition and has furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (ii) if reasonably requested by the Company, has furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration of such shares under the Securities Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances d. Notwithstanding the provisions of paragraphs (b) and (c) above, no such registration statement or opinion of counsel shall be necessary for a transfer by a Holder which is (i) a partnership to its partners or retired partners in accordance with partnership interests, (ii) a corporation to its shareholders in accordance with their interest in the corporation, (iii) a limited liability company to its members or former members in accordance with their interest in the limited liability company, (iv) to the Holder's family member or trust for the benefit of an individual Holder, provided the transferee will be subject to the terms of this Section 2 to the same extent as if such transferee were an original Holder hereunder, or (v) to a wholly-owned subsidiary of HP. e. Each certificate representing Registrable Securities shall (unless otherwise permitted by the provisions of this Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws): THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED, ASSIGNED, PLEDGED OR 3 HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED. f. The Company shall be obligated to reissue promptly unlegended certificates at the request of any holder thereof if the holder shall have obtained an opinion of counsel at such Holder's expense (which counsel may be counsel to the Company) reasonably acceptable to the Company to the effect that the securities proposed to be disposed of may lawfully be so disposed of without registration, qualification or legend. g. Any legend endorsed on an instrument pursuant to applicable state securities laws and the stop-transfer instructions with respect to such securities shall be removed upon receipt by the Company of an order of the appropriate blue sky authority authorizing such removal. 3. Company Registration. a. If the Company shall determine to register any of its securities, other than its initial public offering, or a registration relating solely to employee benefit plans, or a registration relating to a corporate reorganization or other transactions under Rule 145, or a registration on any registration form that does not permit secondary sales, the Company will: (1) promptly give to each Holder written notice thereof; and (2) use its best efforts to include in such registration (and any related qualification under blue sky laws or other compliance), except as set forth in Section 3(b) below, and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by any Holder and received by the Company within ten (10) days after the written notice from the Company described in clause (1) above is mailed or delivered by the Company. Such written request may specify all or a part of a Holder's Registrable Securities. b. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 3(a)(1). In such event, the right of any Holder to registration pursuant to this Section 3 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders of securities of the Company with registration rights to participate therein distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Company. (1) Notwithstanding any other provision of this Section 3, if the representative of the underwriters advises the Company in writing that marketing factors 4 require a limitation on the number of shares to be underwritten, the representative may (subject to the limitations set forth below) exclude all Registrable Securities from, or limit the number of Registrable Securities to be included in, the registration and underwriting. The Company shall so advise all holders of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated first to the Company for securities being sold for its own account and thereafter as set forth in Section 11. If any person does not agree to the terms of any such underwriting, he shall be excluded therefrom by written notice from the Company or the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration. (2) If shares are so withdrawn from the registration or if the number of shares of Registrable Securities to be included in such registration was previously reduced as a result of marketing factors, the Company shall then offer to all persons who have retained the right to include securities in the registration the right to include additional securities in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among the persons requesting additional inclusion in accordance with Section 11 hereof. 4. Expenses of Registration. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to Section 3 hereof shall be borne by the Company. All Selling Expenses relating to securities so registered shall be borne by the holders of such securities pro rata on the basis of the number of shares of securities so registered on their behalf, as shall any other expenses in connection with the registration required to be borne by the Holders of such securities. 5. Registration Procedures. In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will use its best efforts to: a. Keep such registration effective for a period of one hundred twenty (120) days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of common stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered in a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statements effective until all such Registrable Securities are sold, provided that if Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis and provided further that applicable rules under the Securities Act governing the obligation to file a post- effective amendment permit, in lieu of filing a post-effective amendment that (I) includes any prospectus required by Section 10(a)(3) of the Securities Act; or (II) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference to information required to be included in (I) and (II) 5 ABOVE TO BE CONTAINED IN PERIODIC REPORTS FILED PURSUANT TO SECTION 13 OR 15(D) of the Exchange Act in the registration statement; b. Prepare and file with the Commission 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 such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Holder from time to time may reasonably request; d. Notify each seller of 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 or incomplete in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not 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 not misleading or incomplete in the light of the circumstances then existing; e. In connection with any underwritten offering pursuant to a registration statement filed pursuant to this Agreement, the Company will enter into an underwriting agreement in form reasonably necessary to effect the offer and sale of stock, provided such underwriting agreement contains customary underwriting provisions, and provided further that if the underwriter so requests the underwriting agreement will contain customary contribution provisions; f. Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed; g. Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; and h. Furnish, at the request of any Holder requesting registration pursuant to Section 3 hereof, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to Section 3 hereof, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the 6 purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substances as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. 6. Indemnification. a. The Company will indemnify each Holder, each of its officers, directors and partners, legal counsel, and accountants and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification, or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls within the meaning of Section 15 of the Securities Act any underwriter, against all expenses, claims, losses, damages, and liabilities (or actions, proceedings, or settlements in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular, or other document (including any related registration statement, notification, or the like) incident to any such registration, qualification, or compliance, or based on any 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 any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, qualification, or compliance, and will reimburse each such Holder, each of its officers, directors, partners, legal counsel, and accountants and each person controlling such Holder, each such underwriter, and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any claim, loss, damage, liability, or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability, or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder or underwriter and stated to be specifically for use therein. It is agreed that the indemnity agreement contained in this Section 6(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 has not been unreasonably withheld). b. Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification, or compliance is being effected, indemnify the Company, each of its directors, officers, partners, legal counsel, and accountants and each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder, and each of its officers, directors, and partners, and each person controlling such Holder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular, or other document, or any omission (or alleged 7 omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and such Holders, directors, officers, partners, legal counsel, and accountants, persons, underwriters, or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability, or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular, or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein; provided, however, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages, or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and provided that in no event shall any indemnity under this Section 6 exceed the gross proceeds from the offering received by such Holder. c. The "Indemnified Party" shall give notice to the Indemnifying Party promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 6, to the extent such failure is not prejudicial. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom. d. If the indemnification provided for in this Section 6 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. 8 e. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 7. Information by Holder. Each Holder shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification, or compliance referred to in this Agreement. 8. Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Restricted Securities to the public without registration, the Company agrees to use its best efforts to: a. Make and keep public information regarding the Company available as those terms are understood and defined in Rule 144 under the Securities Act, at all times commencing ninety (90) days after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public; b. File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; c. So long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request: (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (within ninety (90) days after the Company's initial public offering) and of the Securities Act and the Exchange Act (after it becomes subject to reporting requirements), (ii) a copy of the most recent annual or quarterly report of the Company, and (iii) such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration. 9. Transfer or Assignment of Registration Rights. The rights granted to Holder under Section 3 to cause the Company to register securities under this Agreement may be transferred or assigned by a Holder only to a transferee or assignee of not less than 1,200,000 shares of Registrable Securities (as presently constituted and calculated based upon the then effective conversion price for the Preferred Stock, and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits, and the like), provided that the Company is given written notice at the time of or within a reasonable time after said transfer or assignment, stating the name and address of the transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned, and, provided further, that the transferee or assignee of such rights assumes in writing the obligations of such Holder under this Agreement. 10. "Market Stand-Off" Agreement. If requested by an underwriter of common stock (or other securities) of the Company, a Holder shall not sell or otherwise transfer 9 or dispose of any common stock (or other securities) of the Company held by such Holder (other than those included in the registration) during the one hundred eighty (180) day period following the effective date of a registration statement of the Company filed under the Securities Act. The obligations described in this Section 10 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future. 11. Allocation of Registration Opportunities. In any circumstance in which all of the Registrable Securities requested to be included in a registration on behalf of the Holders cannot be so included as a result of limitations of the aggregate number of shares of Registrable Securities that may be so included, the number of shares of Registrable Securities that may be so included shall be allocated among the Holders requesting inclusion of shares pro rata on the basis of the number of shares of Registrable Securities that would be held by such Holders, assuming conversion; provided, however, that such allocation shall not operate to reduce the aggregate number of Registrable Securities to be included in such registration. If any Holder does not request inclusion of the maximum number of shares of Registrable Securities allocated to him pursuant to the above-described procedure, the remaining portion of his allocation shall be reallocated among those requesting Holders whose allocations did not satisfy their requests pro rata on the basis of the number of shares of Registrable Securities which would be held by such Holders, assuming conversion, and this procedure shall be repeated until all of the shares of Registrable Securities which may be included in the registration on behalf of the Holders have been so allocated. 12. Delay of Registration. No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement. 13. Termination of Registration Rights. The right of the Holder to request inclusion in any registration pursuant to Section 3 shall terminate on the earlier of (i) five years from the date hereof and (ii) as of such date that all of the shares of Registrable Securities held by such Holder may immediately be sold under Rule 144 during any 90-day period. 14. Basic Financial Information. The Company will furnish the following reports to each Holder: a. As soon as practicable after the end of each fiscal year of the Company, in any event within ninety (90) days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of such fiscal year, and consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures from the previous fiscal year, all in reasonable detail and certified by independent certified public accountants selected by the Company. b. As soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within forty- 10 five (45) days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period, and consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles consistently applied and setting forth in each case in comparative form the figures for the corresponding periods of the previous fiscal year, subject to changes resulting from normal year-end audit adjustments, all in reasonable detail and certified by the principal financial or accounting officer of the Company, except that such financial statements need not contain the notes required by generally accepted accounting principles. c. At the request of a Holder, copies of annual operating budgets for the upcoming fiscal year that have been provided to Silicon Valley Bank under the terms of its loan and security agreement. d. From the date the Company becomes subject to the reporting requirements of the Exchange Act (which shall include any successor federal statute), and in lieu of the financial information required pursuant to Sections 14(a) and 14(b), the Company shall file copies of its annual reports on Form 10-K and its quarterly reports on Form 10-Q, respectively. 15. Inspection Rights. a. The Company will permit any holder, so long as they own at least 1,200,000 shares of the Series A Preferred Stock, or such number of shares of Class A Common Stock issued upon conversion of 1,200,000 shares of the Series A Preferred Stock, or any combination thereof (as presently constituted and subject to subsequent adjustment for stock splits, stock dividends, reverse stock splits and the like) (a "Significant Holder") (or a representative of any Significant Holder) to visit and inspect any of the properties of the Company, including its books of account and other records (and make copies thereof and take extracts therefrom), and to discuss its affairs, finances and accounts with the Company's officers and its independent public accountants, all at such reasonable times and as often as any such person may reasonably request. b. Notwithstanding any of the provisions in Section 15, no Holder or Significant Holder shall have access to any trade secrets or classified information of the Company by reason of this agreement. Each Significant Holder hereby agrees to hold in confidence and trust and not to misuse or disclose confidential information provided pursuant to this Section 15. The Company shall not be required to comply with this Section 15 in respect of any Holder of Significant Holder whom the Company reasonably determines to be a competitor or any officer, employee, director or greater than ten percent (10%) stockholder of a competitor. 16. Right of First Refusal. The Company hereby grants to each Holder who owns any shares of Series A Preferred Stock or any shares of Common Stock issued upon conversion of Series A Preferred Stock the right of first refusal to purchase a pro rata share of New Securities (as defined in this Section 16) which the Company may, from time to time, propose to sell and issue. A Holder's pro rata share, for purposes of this right of first refusal, is 11 the ratio of the number of shares of Common Stock owned by such Holder immediately prior to the issuance of New Securities, assuming full conversion of the Class A Preferred Stock and exercise of all outstanding rights, options and warrants to acquire Common Stock of the Company. Each Holder shall have a right of over-allotment such that if any Holder fails to exercise its right hereunder to purchase its pro rata share of New Securities, the other Holders may purchase the non-purchasing Holder's portion on a pro rata basis within ten (10) days from the date such non-purchasing Holder fails to exercise its right hereunder to purchase its pro rata share of New Securities. This right of first refusal shall be subject to the following provisions: a. "New Securities" shall mean any capital stock (including Common Stock and/or Preferred Stock) of the Company whether now authorized or not, and rights, options and warrants to purchase such capital stock, and securities of any type whatsoever that are, or may become, convertible into capital stock; provided that the term "New Securities" does not include (i) securities issued upon conversion of the Series A Preferred Stock; (ii) securities issued pursuant to the bona fide acquisition of another business entity or business segment of any such entity by the Company by merger, purchase of substantially all the assets or other reorganization whereby the Company will own more than fifty percent (50%) of the voting power of such business entity or business segment of any such entity; (iii) any borrowings, direct or indirect, from entities other than institutional lenders by the Company, whether or not presently authorized, including any type of loan or payment evidenced by any type of debt instrument, provided such borrowings do not have any equity features including warrants, options or other rights to purchase capital stock and are not convertible into capital stock of the Company; (iv) securities issued or issuable upon exercise of options issued to institutional lenders in connection with financing commitments to the Company; (v) securities issued to employees, consultants, officers or directors of the Company pursuant to any stock option, stock purchase or stock bonus plan, agreement, or arrangement approved by a majority of the Board of Directors; (vi) securities issued to vendors or customers or to other persons in similar situations with the Company if such issuance is approved by the Board of Directors; (vii) securities issued in connection with obtaining lease financing, whether issued to a lessor, guarantor or other person; (viii) securities issued in a public offering pursuant to a registration under the Securities Act with an aggregate offering price to the public of at least $10,000,000; (ix) securities issued in connection with any stock split, stock dividend or recapitalization of the Company; (x) securities issued in connection with corporate partnering transactions on terms approved by a majority of the Board of Directors, provided such issuances are for other than primarily equity financing purposes; and (xi) any right, option or warrant to acquire any security convertible into the securities excluded from the definition of New Securities pursuant to subsections (i) through (x) above. b. In the event the company proposes to undertake an issuance of New Securities, it shall give each Holder written notice of its intention, describing the type of New Securities, and their price and the general terms upon which the Company proposes to issue the same. Each Holder shall have twenty (20) days after such notice is mailed or delivered to agree to purchase such Holder's pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. 12 c. In the event the Holders fail to exercise fully the right of first refusal within said twenty (20) day period and after the expiration of the 10-day period for the exercise of the over-allotment provision of this Section 16, the Company shall have one hundred twenty (120) days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within one hundred twenty (120) days from the date of said agreement) to sell the New Securities respecting which the Holders' right of first refusal option set forth in this Section 16 was not exercised, at a price and upon terms no more favorable to the purchasers thereof than specified in the Company's notice to Holders pursuant to Section 16(b). In the event the Company has not sold within said 120-day period, or entered into an agreement to sell the New Securities in accordance with the foregoing within one hundred twenty (120) days from the date of said agreement, the Company shall not thereafter issue or sell any New Securities, without first again offering such securities to the Holders in the manner specified in Section 16(b) above. d. The right of first refusal granted under this Agreement shall expire upon, and shall not be applicable to, the first sale of Common Stock of the Company to the public effected pursuant to a registration statement filed with, and declared effective by, the Securities and Exchange Commission (the "Commission") under the Securities Act, with proceeds of more than $10,000,000 and shall in any event expire on June 1, 2005. e. The right of first refusal set forth in this Section 16 may not be assigned or transferred, except that (i) such right is assignable by each Holder to any wholly-owned subsidiary or parent of, or to any corporation or entity that is, within the meaning of the Securities Act, controlling, controlled by or under common control with, any such Holder, and (ii) such right is assignable between and among any of the Holders. 17. Termination. The covenants set forth in Sections 14 and 15 shall terminate and be of no further force and effect after the closings of the Company's first firm commitment underwritten public offering registered under the Securities Act in which all shares of Series A Preferred Stock are converted to Common Stock is consummated or where the Company becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, whichever event shall first occur. 18. Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of California without regard to conflict of laws provisions. 19. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 20. Entire Agreement; Amendment; Waiver. This Agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject hereof No party shall be liable or bound to any other party by any warranties, representations or covenants except as specifically herein set forth. This Agreement supersedes any prior written or oral agreement or understanding with respect to the subject matter hereof. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, 13 discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. 21. Notices. All notices, requests and other communications to any party hereunder shall be in writing and addressed to the respective parties at the following addresses (or at such address for a party as shall be specified in a notice given in accordance with this Section 17): a. If to WRH/QIC, to: W.R. Hambrecht/QIC, LLC 550 15th Street San Francisco, CA 94103 ATTN: J.D. Delafield b. If to HP, to: Hewlett-Packard Company 3000 Hanover Street Palo Alto, CA 94304 Mailstop 20 BT ATTN: Director, Corporate Development With a copy to: Hewlett-Packard Company 3000 Hanover Street Palo Alto, CA 94304 Mailstop 20 BQ ATTN: General Counsel c. If to the Company, to: QIC Holding Corp. 550 15th Street San Francisco, CA 94103 ATTN: J. D. Delafield All notices under this Section 21 shall be deemed to have been given upon receipt if delivered in person and shall be deemed to have been given (a) two (2) business days after transmission of a facsimile, telegram, telex, or (b) four (4) business days after deposit in United States registered or certified mail (postage prepaid, return receipt requested) or (c) two (2) business days after delivery to a reputable overnight courier. 22. Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach or 14 default of another party under this Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach of default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded, to any party, shall be cumulative and not alternative. 23. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, and all of which together shall constitute one instrument. 24. Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provisions, which shall be replaced with an enforceable provision closest in intent and economic effect as the severed provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party. 25. Titles and Subtitles. The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement effective as of the day and year first above written. QIC HOLDING CORP. By: /s/ J.D. Delafield ----------------------------------- Name: J.D. Delafield ----------------------------------- Title: President ----------------------------------- W.R. HAMBRECHT/QIC, LLC By: W.R. Hambrecht/QIC Management, LLC Manager By: /s/ J.D. Delafield ----------------------------------- Name: J.D. Delafield ----------------------------------- Title: Manager ----------------------------------- HEWLETT-PACKARD COMPANY By: /s/ Stephen H. Rusckowski ----------------------------------- Name: General Manager ----------------------------------- Title: Cardiology Products Division ----------------------------------- Stephen H. Rusckowski 15 EX-10.4 6 ex-10_4.txt MANUFACTURER AND DISTRIBUTOR AGREEMENT EXHIBIT 10.4 ORIGINAL EQUIPMENT MANUFACTURER AND DISTRIBUTOR AGREEMENT This document and attached exhibits establish an Agreement between Zymed, Inc. (referred to herein as "Zymed") and Quinton Instrument Company (referred to herein as Quinton). Zymed desires to appoint Quinton as an authorized, exclusive Distributor of certain medical Products, accessories and related goods ("Products") to be supplied by Zymed, and Quinton desires to accept such appointment. Quinton agrees to purchase and Zymed agrees to sell such Products upon the following terms and conditions: 1. DEFINITIONS a) "Commencement Date" is July 1, 1998. b) "Anniversary Date" is 12 months following the Commencement Date. c) "Ordering Period" is the initial 1 month period following the Commencement Date and any 12 month ordering period thereafter. d) "Forecasted Purchases" are the mutually agreed quantity of Products which Quinton plans to order during each ordering period (12 months). e) "Exhibits" are documents attached to, incorporated by reference in, or added to this Agreement at a later date, by mutual agreement, which describes Products or Quinton Locations. f) "Territories" are defined as follows: 1) "Quinton Territory" shall mean the United States, its possessions and Canada 2) "Zymed Territory" shall mean the countries of the Asia Pacific as set forth on Appendix A attached hereto 3) "Rest of World" or "ROW" shall mean all countries of the world other than those countries in the Quinton Territory or the Zymed Territory. 2. APPOINTMENT a. Zymed hereby appoints Quinton as its exclusive distributor for the promotion, sale and support in the Quinton Territory of the products listed on the attached Exhibits (the "Products"), such Exhibits hereinafter referred to as Product Exhibits, upon the terms and conditions set forth in this Agreement and the Product Exhibits. Quinton accepts such appointment upon such terms and under such conditions. Zymed retains the exclusive right to promote, sell and support the Products in the Zymed Territory. The parties agree and acknowledge that both parties can promote, sell or support the Products in the ROW until such time as, by mutual agreement of the parties and on a country-by-country basis, the countries of the ROW are added to the Quinton Territory or the Zymed Territory, as applicable. -1- b. Zymed agrees to provide existing sales literature for the Products listed in exhibit A. Quinton will be responsible for the creation of new sales literature for the Products it is promoting in the Quinton Territory. Zymed will contribute 30% of the cost of printing sales literature, mutually agreed upon, for Products listed in Exhibit A. c. Quinton agrees to maintain trained sales staff capable of demonstrating the Products. Zymed will offer, at Zymed's sole expense, and as part of Zymed's Distributor program, Product training and arrhythmia recognition classes. Quinton agrees to participate in Product training classes that are mutually defined and agreed upon by both parties. d. Zymed and Quinton agree to exert commercially reasonable efforts to promote, stock, merchandise, sell and support the Products to ultimate users of the Products. Quinton understands and agrees that Quinton's commitment to pre-sale and post-sale support for the Products is essential to Quinton's responsibility under this Agreement. Quinton agrees that the Purchasing Schedule set forth in the attached Product Exhibits is a reasonable approximate forecast of the performance to be expected from Quinton and that Zymed considers such standards in determining whether to renew this Agreement or exercise its rights under section 18 herein. e. Both Zymed and Quinton will exchange information on the status of inventory held for Quinton at Zymed's facilities. Quarterly reconciliation of the inventory status will be conducted by both parties. Zymed will provide weekly finished goods reports of all Products held for Quinton. f. Zymed shall provide Quinton with the same written materials (for example, service bulletins) that Zymed provides its own field service personnel and which is applicable to any of the Products. Additionally, Zymed shall provide to Quinton technical service updates regarding preventive maintenance, circumvention of bugs and notification of common failure modes with respect to all Products. 3. RELATIONSHIP a. The relationship of Quinton to Zymed shall apply to only the Products in Exhibit A. This contract supersedes the OEM Agreement dated May 20, 1994 and the Medical Products Distributor Agreement dated January 1, 1998. b. Any commitments Quinton makes with respect to unusual quantities, delivery times, a special modification, suitability of software, or suitability of Products to a particular hardware interface, in specific applications or otherwise, shall be Quinton's sole responsibility unless prior written authorization is obtained from Zymed. c. Quinton shall have no power or authority to enlarge or modify the user warranty defined in Section 10 or to make any warranty or commitment on behalf of Zymed. Quinton shall indemnify Zymed from any liability for any such warranty or commitment made by Quinton, unless prior written authorization is obtained from Zymed. -2- d. Neither the making nor the performance of this Agreement shall be construed in any manner to have established a joint venture or partnership. 4. TERM AND RENEWAL a. This agreement will commence on the Commencement Date and will remain in effect for 5 years ("Initial Term"), unless terminated as provided herein. b. Forecasted Purchases will be reviewed and revised, as appropriate, prior to each Anniversary Date. Prices will be reviewed and revised, as appropriate, prior to each Anniversary Date, or more frequently as provided in paragraph 6. Any other changes for a renewal term must be mutually agreed in writing. c. This Agreement is renewable for an additional 5 years after the end of the 5th year of the initial term, if mutually agreed by Quinton and Zymed. d. Forecasted Purchases will be based on sales commencing 07/01/98 and shall be calculated based on the Exhibit(s). 5. DELIVERY a. Deliveries under this Agreement shall be initiated by written orders. b. Quinton shall comply with all Food and Drug Administration requirements pertaining to the Distributor of Products including reporting, tracking and listing as set forth in 21 CFR 800 and following. c. Zymed will commit to exerting its best effort towards product availability at the time Quinton's order is received. If Zymed fails to deliver Products for 30 days beyond the agreed delivery date, Quinton may cancel such orders at no charge and/or reduce the fixed purchasing schedule by the order amount. d. Products shipped under Quinton's shipping instructions, title and risk of loss and damage will pass to Quinton at Zymed's shipping dock. e. Zymed will ship according to Zymed standard commercial practice, second day delivery, at Quinton's expense, to locations as specified by Quinton. Quinton requested special packaging or shipping instructions must be mutually agreed, and charges will be billed separately to Quinton. f. Together with or immediately upon shipment of any Products, Zymed shall maintain and, if requested, provide Quinton with a copy of all test certifications and device history records with respect to such Products. -3- 6. PRICE AND PAYMENT a. The prices which Quinton shall pay Zymed for the Products purchased (net Quinton prices) shall be the price appearing on the Product Exhibits. b. Prices to Quinton will be reviewed every 3 months to maintain a distributor Over All Product Gross Margins of 50% (not including Home Trak). Price changes will apply to future orders only. If agreement on price or forecasted purchases can not be obtained during these review sessions, either party may terminate this agreement with a 180 days written notice. Previously existing pricing will remain in effect for the remainder of the agreement if the termination option is selected. c. Taxes are not included in prices and will be invoiced, if applicable, as separate items. d. Payment for all orders will be due 30 days from the date of Zymed's invoice. 7. MODIFICATION OF PRODUCTS a. All Zymed Products marketed by Quinton shall be sold only in the form as packaged by Zymed. Quinton shall not alter, modify, or change any Product or its package without Zymed's prior written consent except when necessary for service reasons. Zymed will not alter specifications of Products without prior notification. b. During the term of this Agreement, the parties may revise the Specifications by mutual written agreement. After the Effective Date, Zymed shall not make any material change to the Specifications without notifying Quinton no less than thirty (30) days prior to the effective date of such change. No such change shall alter Zymed's obligation to manufacture the Products for Quinton under this Agreement. In the event that such change would result in the loss of any sale by Quinton of any Product pursuant to an agreement between Quinton and its customer entered into prior to Quinton's receipt of such notice, Zymed shall honor all of Quinton's orders made relating to such sale. Zymed shall immediately notify (both verbally and in writing) if Zymed determines that any software anomalies in any of the Products can be traced to software provided to Quinton and/or used in any Quinton product. c. If, during the term of this Agreement Zymed makes any changes to the hardware and/or software configurations of its own products, including but not limited to any (a) algorithm enhancements for beat detection or arrhythmia analysis and classification, or (b) upgrades to the software also contained in any Product, Zymed shall notify Quinton of such changes no less than thirty (30) days in advance of Zymed's institution of such changes. In the event that (1) Quinton determines such changes would enhance the current features of any Product and (2) such changes do not constitute a new feature for which Zymed is separately charging its own customers Zymed shall proceed to update all Products with such changes at no charge to Quinton provided that Quinton shall have the right to qualify for acceptance any hardware substitutions that Zymed deems necessary -4- due to obsolescence or cost reduction, such acceptance not to be unreasonably withheld by Quinton. 8. ADVERTISING, TRADEMARKS AND COPYRIGHTED MATERIALS a. Zymed will provide, at Zymed's expense, sales literature, advertising materials, promotional plans, and other information. programs and sales support to assist Quinton in developing its own sales literature, advertising materials, promotional plans, and sales support to support the selling of the Products in the Quinton Territory. b. Zymed hereby grants Quinton a revocable license to use any Zymed trademark or trade name associated with the Produces solely in the advertisement and promotion of the Products during the term of this Agreement. Except as provided in this paragraph, Quinton shall have no right, title or interest in or to any patent, trademark or trade name belonging to Zymed. c. Quinton shall advertise, promote, market, and sell the Products either separately or as part of other products under any of its trademarks (including, without limitation, Quinton(R), HolterWorks(TM), and HolterWorks Plus(TM)), copyright, tradename, or logo, whether registered or unregistered. Zymed shall have no right, title, or interest in or to any such trademark, copyright, tradename or logo. So long as Quinton or any Affiliate of Quinton shall have any interest in any such trademark, copyright, tradename, or logo, whether registered or unregistered, whether as proprietor, owner, or licensee in any country of the world, Zymed shall not adopt, use, apply for registration, register or own such trademark, copyright, tradename, or logo, or any such item confusing similar thereto in any country of the world, or take any action which, in Quinton sole opinion, weakens or undermines Quinton's proprietary rights. d. With Zymed's written consent, one copy of Zymed copyrighted materials (software and printed documentation) may be retained for archive purposes, to replace a defective copy or for program error verification by Quinton. 9. TELEMARKETING a. Quinton has the option to subcontract Zymed's Telemarketing Department for the lead generation of Quinton products. The cost of this service is $7,500.00 per telemarketer, per quarter. 10. WARRANTY a. The Products will be covered by a written Warranty in favor of the ultimate purchaser and user of such Products (the "User Warrantee") set forth in Exhibit B hereto. Such Products shall be referred to as the "Warranty Products". The User Warranty covering the Warranty Products is the only consumer warranty covering any Product sold herein. -5- b. Zymed will supply a copy of the User Warranty with each Warranty Product sold herein. In addition, Zymed will supply Quinton with point-of-sale copies of the User Warranty for pre-sale disclosure to prospective users. c. Zymed warrants to Quinton that the Products will conform to and comply with all applicable Federal, State and local laws, regulations and codes. 11. INDEMNIFICATION AND INSURANCE a. Zymed shall, at its expense, defend any action or claim instituted against Quinton and indemnify and hold harmless Quinton and its Affiliates together with their respective officers, directors, employees, agents, and insurers for any "Loss" or "Losses": All liability claims, demands, damages, actions, suits, and judgments instituted by third parties against each of the parties hereunder attributable to bodily injury, sickness, disease, death, injury to property, infringement of intellectual property rights or otherwise, including, without limitation, attorney's fees and investigation and other costs ("Loss") arising out of Zymed's obligations under this Agreement, including but not limited to any allegation that a Product is defectively or negligently designed, manufactured or tested. Notwithstanding the foregoing, Zymed's obligations under this Subsection 11a shall not apply to any Loss caused by the independent negligence of Quinton or its employee for which Quinton shall, at its expense, defend any action or claim instituted against Zymed and indemnify and hold harmless Zymed and its Affiliates together with their respective officers, directors, employees, agents, and Insurers for any "loss" or "losses" as previously defined. b. In addition to Quinton's remedies for breach of the warranties set forth in subsection 10a and 10c hereof, Zymed shall also indemnify, defend, and hold harmless Quinton and its Affiliates, together with their respective officers, directors, employees, agents, and insurers against all Losses arising out of any breach of said warranties, notwithstanding the foregoing, Zymed's obligations under subsection 10a and 10c shall not apply to any Loss caused by the independent negligence of Quinton or its employee for which Quinton shall, at its expense, defend any action or claim instituted against Zymed and indemnify and hold harmless Zymed and its Affiliates together with their respective officers, directors, employees, agents, and Insurers for any "loss" or "losses" as previously defined. c. Zymed shall maintain, during the term of this Agreement and such additional periods as Quinton may reasonably request (and, in no event, for a period not less than five (5) years after any termination of this Agreement), Comprehensive General Liability Insurance, including full Products Liability coverage, with an insurance carrier reasonably acceptable to Quinton, and coverage limits of not less than $5,000,000.00 per occurrence and at least $5,000,000.00 aggregate coverage for claims of bodily injury and property damage arising out of any Loss. Such policy or policies shall extend coverage with respect to occurrences during a policy period, regardless of the dates on which claims arising from such an occurrence are made, and shall include Quinton as named insured in -6- such policy or policies. Such policy or policies shall also expressly cover any liability Zymed may incur as an indemnitor under this Agreement. d. Both parties shall provide notice to the other of any Loss, whether actual or threatened, promptly upon receipt of notice thereof. 12. RECALLS a. If either party determines that it is necessary to recall or perform a major field correction on any Product, it shall immediately notify the other party. b. Prior to commencing any recall or major field correction, the parties shall review with one another the manner in which the recall or major field correction is to be carried out and any instructions or suggestions of the applicable regulatory authorities. Zymed and Quinton shall effect the recall or mayor field correction in the manner agreed upon between the parties in as expeditious a manner as possible and in such a way as to cause the least disruption to the sales of any Products and to preserve the goodwill and reputation associated with the Products and with all other Products manufactured and/or distributed by and the names of Zymed, Quinton and their respective Affiliates. c. Except for recalls or major field corrections caused by the independent negligence of Quinton or its employees, Zymed shall: (i) Reimburse Quinton for all of Quinton's costs, losses and expenses incurred as a result of any recall or major field correction, but in no event shall Zymed be obligated to pay to Quinton more than Zymed received from Quinton as its price for the Product plus all other costs and expenses incurred by Quinton in connection with the recall or major field correction and the sale for the recalled Product and (ii) Defend, indemnify, and hold harmless Quinton and its Affiliates, together with their respective officers, directors, employees, agents, and insurers from and against all Losses arising out of any recall or major field correction. 13. REPAIR OF QUINTON OWNED DEFECTIVE GOODS a. Zymed and Quinton agree that the procedure provided herein for return and repair or replacement of defective units shall be Quinton's sole and exclusive remedy for any claim by Quinton relating to any alleged defect or nonconformity in the Products sold herein. This provision shall not otherwise limit the rights and remedies available to Quinton and Zymed set forth in sections 11 or 12 hereof. b. After Zymed approves the return of the defective unit, Zymed will inform Quinton as to the return location. c. Zymed shall be entitled to verify the reason for the return set forth in the Service Information Card arid to determine at its discretion whether to replace (rather than repair) the unit. Zymed shall not repair or replace units returned for the following reason: i. Damage from abuse or misuse; -7- ii. Attempted repair by unauthorized service center; iii. Repossession; iv. Use by Quinton as demonstration units. 14. WARRANTY AND PRODUCT SAFETY ISSUES a. In order to comply with regulatory bodies and to verify the warranty start date, Zymed will utilize the shipping information provided by Quinton to Zymed for all Products sold hereunder as well as for warranty Products to be used by Quinton as a display or demonstration system. b. In the event Quinton learns by any means of an incident involving malfunction of a Warranty Product sold by Quinton, Quinton agrees to notify Zymed of such incident within three (3) working days in case of serious injury or death, and within ten (10) working days otherwise. c. Quinton shall comply with all Food and Drug Administration requirements for distributors. See 21 CFR 807. 15. IN-WARRANTY REPAIR a. Zymed will provide a thirteen (13) month warranty on Products sold to Quinton, with the exception of Digital Recorders which Zymed will provide a 24 month warranty. The warranty period starts when the Products are shipped to Quinton's customer using the shipping date as the starting date. b. Field repair service and installation shall be performed by Quinton at Quinton's expense for all Products sold by Quinton, provided, however, that the Product meets the specifications set forth in Exhibit E. c. Products under Warranty are covered by Zymed. Quinton or its customer must pay for transportation, insurance, and handling charges in all cases of shipment of Product to Zymed for Warranty. Repaired Warranty Products will be returned to sender at Zymed's expense. d. Quinton shall be responsible for the satisfactory handling and resolution of complaints from its customers with Zymed's support. 16. OUT-OF-WARRANTY REPAIR a. Except as provided in section 11 Quinton or its customer shall bear all shipping charges for out-of-warranty repairs. b. Repairs made by Zymed outside of the warranty period shall be billed at 70% of the current Zymed repair charge at the time of repair. Repairs due to design flaws will be done at no charge. -8- c. All repairs will be made by an authorized factory service representative or authorized Zymed representative and shall be performed at Quinton's customer's site or, at Zymed's option, at a Zymed facility depending on specific Product warranty. d. An optional service contract will be available to Quinton or Quinton's customers. e. Yearly service repair charges will not exceed 3% of the total revenue generated by Quinton from the cumulative sales of the Products during prior years. This figure will be calculated every 12 months and a credit to Quinton will be issued for any excess over the 3% during the prior 12 month period. Not included in the repair charges calculations are: accessories, product configurations changes and billable field support. 17. SAFE HARBOR REGULATIONS a. Quinton shall comply with all requirements of the Safe Harbor regulations 42 CFR 1001 and following with respect to any discounts, rebates or credits offered to its customers. 18. TERMINATION a. Either party may terminate this Agreement without cause at 5 years upon 120 days prior written notice to the other party. b. If either party becomes insolvent, is unable to pay its debts when due, files for bankruptcy, is the subject of involuntary bankruptcy, has a receiver appointed, the other party may terminate this Agreement upon providing written notice and may cancel any unfulfilled obligations. c. If a party materially breaches this Agreement, and within sixty (60) days of notice of breach from the non-breaching party, the breaching party has not initiated good faith efforts to cure such breach to the reasonable satisfaction of the non-breaching party, then the non-breaching party may terminate this Agreement in writing promptly after expiration of such sixty (60) day period. In the event of termination under this Section 18(c), either party may set off any amounts owing to such party against any amounts owing to the other party under this or any other agreement between the parties. d. Quinton shall immediately cease to be an authorized Zymed Distributor upon the effective date of the termination of this Agreement. Quinton shall thereafter refrain from representing itself as an authorized Zymed Distributor and from using any Zymed trademark or trade name except as required to sell any unsold inventory or to honor and service commitments with Quinton customers. e. All claims of every kind thereto shall cease and there shall be nothing payable by either party except as may be due as a result of prior sales and these shall be paid as they fall due. -9- 19. NOTICE a. Any notices given hereunder shall be given in writing by mail to the addresses of the parties hereinafter set forth in below or to such other address for wither party as it may designate by written notice to the other. 20. PATENT INDEMNITY a. Zymed shall, except as otherwise provided below, defend or settle any claim made or any suit or proceeding brought against Quinton so far as it is based on an allegation that any Product furnished herein infringes a patent or other proprietary right of a third party, if notified promptly in writing and given information, reasonable assistance and the sole authority to defend or settle same (at Zymed's expense), and Zymed shall pay all damages and costs, including Attorney's fees, finally awarded or reasonably incurred, in any such suit or proceeding against Quinton. In case said Product is in such suit held to infringe and the use or said Product is enjoined, or in the case of a settlement as referred to above, Zymed shall have to option at its own expense, to procure for Quinton the right to continue using or selling said Product, or replace same with a non-infringing Product; or modify same so it becomes non-infringing; or grant Quinton a credit for the depreciated value of said Product and accept return of same. The foregoing states the entire liability of Zymed for patent infringement by Products furnished herein. 21. EXPORTING a. If Quinton exports Products Quinton assumes responsibility for complying with applicable laws and regulations and for obtaining required export and import authorizations. 22. GENERAL CONDITIONS a. Neither party may assign rights or obligations without prior written consent of the other party. Quinton shall advise Zymed of any changes in control of Quinton or its operating arrangement and such change shall not give rise to a right of termination by Zymed. Zymed shall advise Quinton of any changes in control of Zymed or its operating arrangement and such change shall not give rise to a right of termination by Quinton. b. Neither party's failure to exercise any of its rights under this Agreement will constitute or be deemed a waiver or forfeiture of those rights. c. Any disputes arising in connection with this Agreement will be governed by the laws of Washington without regards to any conflicts of law provisions thereof. d. This Agreement supersedes any previous communication, representations, or agreements between the parties, whether oral or written, regarding transactions hereunder. Zymed and Quinton's additional or different terms and conditions on any order or acceptance -10- forms will not apply. This Agreement may not be changed except by an amendment signed by an authorized representative of each party. e. The obligations contained in Sections 10, 11, 12, 13, 14, 15, 16 and 19, will survive termination or expiration of this agreement. 15e will terminate 12 months following termination or expiration of this agreement 23. APPENDIX AND EXHIBITS The attached Appendix and Exhibits are hereby made a part of this Agreement: Appendix A: Specific locations referred to as "Asia Pacific" Exhibit A: Pricing Exhibit B: Warranty Exhibit C: Quinton Locations Exhibit D: Supplies Exhibit E: Product Specifications Distributor: Seller: Quinton Instrument Company ZYMED, INC. 3303 Monte Villa Parkway 20 North Aviador Street Bothell, WA 98021 Camarillo, CA 93010 /s Mark Tauscher /s/ Hosmel Galan - --------------------------------- --------------------------------- Authorized Representative Signature Authorized Representative Signature Name: Mark Tauscher Name: Hosmel Galan Title: Executive V.P. Sales/Marketing Title: Executive V.P. Date: March 31, 1999 Date: 3/9/99 -11- APPENDIX A: ASIA PACIFIC COUNTRIES - EXCLUDED AFGHANISTAN BANGALADESH BHUTAN BRUNEI CHINA, PEOPLES REPUBLIC OF HONG KONG INDIA INDONESIA JAPAN KOREA, SOUTH KOREA, NORTH MACAU MALAYSIA MALDIVES ISLANDS MYANMAR NEPAL PAKISTAN PHILIPPINES SINGAPORE SRI LANKA TAIWAN - REPUBLIC OF CHINA THAILAND UZBEKISTAN TURKMENISTAN VIETNAM AUSTRALIA COOK ISLANDS FIJI ISLANDS NEW ZEALAND PAPUA NEW GUINEA -12- EXHIBIT A: PRICING The Holter Monitoring System Products listed below are priced in accordance with the schedules stated on this Exhibit. ITEM PRODUCT PRICE *2010 Holter Holter Workstation $14,000ea HomeTrak Event Recorder $ 750ea HomeTrak (HW & SW) Receiving Station $ 3,500ea Zybit (Software License) Server Software $ 3,000ea Zybit (Software License) Remote Software $ 1,000ea Zybit (Hardware - Server) Server Hardware & Software $ 4,750ea Zybit (Hardware - Remote) Remote Hardware & Software $ 3,400ea *HolterWorks Holter Workstation $ 9,000ea *HolterWorks Plus Holter Workstation $12,000ea Zip Drive Option $ 185ea Jaz Drive Option $ 550ea Home Trak Plus EASI Event Recorder $ 750ea HomeTrak Plus Receiving Station Receiving Station $ 3,500ea *20/20 Cassette Recorder $ 690ea *20/20D Digital Recorder $ 1,025ea *Fax/Modem Option $ 200ea HP TraceMaster Interface TBD (TBD upon final product release) *NT Holter TBD (TBD upon final product release) * Within the exclusive territories, Quinton is the only authorized dealer for these products. All other products are non-exclusive. HOLTER MONITORING SYSTEM PURCHASING SCHEDULE On July 1, 1998, and subsequently, every "Anniversary Date", the Fixed Purchasing Schedule will be reviewed and adjusted, if appropriate. The Fixed Purchasing Schedule can be increased and/or accelerated by mutual agreement. FIXED PURCHASING SCHEDULE*: July 1 1998 -September 30, 1998: 20 Units October 1, 1998 - December 31, 1998: 18 Units January 1, 1999 - March 31, 1999: 24 Units April 1, 1999 - June 30, 1999: 24 Units ESTIMATED PURCHASING SCHEDULE**: July 1, 1999 - September 30, 1999: 30 Units October 1, 1999 - December 31, 1999: 35 Units -13- January 1, 2000 - March 31, 2000: 30 Units April 1, 2000 - June 30, 2000: 30 Units PAYMENT TERMS: Due upon reported on Manufacture Log * The fixed purchasing schedule can be made of any mix of HolterWorks, HolterWorks Plus, 2010 and NY Holter product. At the end of every quarter (i.e. March 31, June 30) title to products held at Zymed's location and risk of loss or damage to such products will pass to Quinton for any of the fixed purchasing schedule units ordered but not shipped during that quarter. ** July 1, 1999 - June 30, 2000 is based upon the release of the NT Holter product to QIC by June 1, 1999. Fixed Purchasing Schedule will be revised to mutually agreed quantity in the event that NT Holter is not released per specification by June 1, 1999. -14- WARRANTY The Zymed Product is warranted against defects in materials and workmanship for a period of 13 months from the date of shipment (except 20/20D Recorders which are warranted for a period of 24 months). The product is warranted to meet its specifications per Exhibit E. During the warranty period, Zymed will, at its option, either repair or replace Products which prove to be defective. Zymed does not warrant that the operation of the Product's software, firmware, or hardware shall be uninterrupted or error free. No other warranty is expressed or implied. Zymed specifically disclaims the implied warranties of merchantability and fitness for a particular purpose other than described herein. LIMITATION OF WARRANTY The foregoing warranty shall not apply to defects resulting from: 1. Improper or Inadequate maintenance by buyer. 2. Buyer-supplied software or interfacing. 3. Unauthorized modification or misuse. 4. Operation outside of the environment specification for the product. 5. Improper site preparation and maintenance. -15- EXHIBIT C: QUINTON LOCATIONS [Locations where Quinton business is conducted] Address: Quinton Instrument Company - -------------------------------------------------------------------------------- 3330 Monte Villa parkway - -------------------------------------------------------------------------------- Bothell, WA 98021 - -------------------------------------------------------------------------------- Phone: 425/402-2000 -------------------------------------------------------------------------- Fax: 425/402-2005 ---------------------------------------------------------------------------- -16- EXHIBIT D: SUPPLIES
DESCRIPTION PART # PRICE EXCHANGE SUPPLIER - ----------- ------ ----- -------- -------- Laser Paper 100000-001 $4.00 N/A N/A Hookup Kit 101147-001 $7.00 N/A Zymed Pouch w/Strap 102066-005 $20.00 N/A Terra Craft Test Box 102980-001 $95.00 N/A Zymed 14" Monitor 108010-001 $400.00 N/A CTX Tape Deck Assembly 108040-001 $2,416.00 $1,208.00 Zymed Acquisition Board 108050-001 $1,800.00 $900.00 Zymed Printer Cable 131018-001 $25.00 N/A N/A Power Strip 131021-001 $13.00 N/A N/A 1 Meg Module 151006-217 $90.00 N/A Intel 8 Meg Module 151006-200 $100.00 N/A Intel Patient Cable 163003-005 $28.00 N/A Tronomed Waist Belt 164008-005 $5.60 N/A Terra Craft 17" Monitor 164021-018 $850.00 N/A Arcus 17" Monitor 164002-045 $850.00 N/A CTX Disk Controller 164022-056 $40.00 N/A Worldnet Graphite Video Card 164022-078 $450.00 N/A Hercules PG420 Dynamite 164022-079 $450.00 N/A Dynamite Fax Board 164022-087 $170.00 N/A Karby TMB-240 CTP Pentium Zappa 120 164022-200 $900.00 N/A Zappa Board Motherboard (486-33)* 164022-600 $900.00 N/A Micronics, DTK Motherboard (486-66)* 164022-800 $900.00 N/A Micronics, DTK DOS 6.2 164023-006 $66.00 N/A Microsoft Keyboard 164024-004 $50.00 N/A Fujitsu Mouse Pad 164024-005 $0.00 N/A Distributor Mouse 164024-001 $50.00 N/A Microsoft Laser Toner Cartridge 164025-014 $150.00 N/A Hewlett Packard Laser IV Plus 164025-050 $1,400.00 N/A Hewlett Packard Hard Disk 164027-063 $300.00 N/A Maxtor 3.5" Floppy Disk 164035-012 $80.00 N/A Teac Intel Falsh Card (20 Meg) 164039-020 $275.00 N/A Intel Chassis (tower, bezel, cover, p.s.) 164051-001 $150.00 N/A Am Enhance Power Supply 164051-050 $85.00 N/A Am Enhance Recorder Operators Manual 172003-010 $17.50 N/A Zymed 20/20D Recorder Only 031371-002 $925 N/A Zymed 20/20D Recorder w/Accessories 00365-002 $1,025.00 N/A Zymed 20/20 Recorder w/Accessories 000365-001 $690.00 N/A Zymed Recorder Chassis 164060-001 $325.00 N/A Holterworks Plus Tower 031285-005 $9,750.00 N/A Zymed Holterworks Plus Tower 031285-006 $9,750.00 N/A Zymed Holterworks Plus System 000364-004 $12,000.00 N/A Zymed (Tower, 17" Monitor, Printer) 2010 Holter Tower (110 volts) 35694-001 $11,750.00 N/A Zymed 2010 Holter Tower (220 volts) 35694-002 $11,750.00 N/A Zymed HW Tower 031282-005 $7,300.00 N/A Zymed Laser Jet 4000 35695-001 $1,400.00 N/A Hewlett Packard Laser Jet 5 18842019 $1,400.00 N/A Hewlett Packard Laser Jet 5L 18842017 $850.00 N/A Hewlett Packard Card Reader 164022-087 $170.00 N/A Karby TMB-240 CTP
-17- * Does not include memory. ORDERING SUPPLIES Supply orders can be placed by calling Zymed at: (800) 235-5941 - or - by contacting Zymed's e-mail address at: zysales@zmi.com Monday - Friday, 6:30am - 4:30pm Pacific Standard Time -18- EXHIBIT E: PRODUCT SPECIFICATIONS REFER TO: 2010 DOCUMENT NUMBER SRS 172235-000 REVISION: A HOLTER NT DOCUMENT NUMBER SRS 172285-000 REVISION: -- HOLTER WORKS PLUS: SRS 172239-000 REVISION: A -19- EX-99.1 7 ex-99_1.txt JOINT FILING AGREEMENT EXHIBIT 99.1 JOINT FILING AGREEMENT In accordance with Rule 13-d(k)(1) promulgated under the Securities Exchange Act of 1934, the undersigned agree to the joint filing of a Statement on Schedule 13D (including any and all amendments thereto) with respect to the Common Stock of Quinton Cardiology Systems, Inc., and further agree to the filing of this agreement as an Exhibit thereto. In addition, each party to this Agreement expressly authorizes each other party to this Agreement to file on its behalf any and all amendments to such Statement on Schedule 13D. Dated: May 13, 2002 KONINKLIJKE PHILIPS ELECTRONICS N.V. By: /s/ A. Westerlaken --------------------------------- Title: Senior Vice President and General Secretary PHILIPS HOLDING USA INC. By: /s/ Belinda W. Chew --------------------------------- Title: Senior Vice President PHILIPS ELECTRONICS NORTH AMERICA CORPORATION By: /s/ Belinda W. Chew --------------------------------- Title: Senior Vice President -----END PRIVACY-ENHANCED MESSAGE-----