OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT
Exhibit 4.4
Nano-Proprietary,
Inc.
0000
Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxx,
Xxxxx 00000
Ladies
and Gentlemen:
This will
confirm our agreement in connection with the purchase by the undersigned today
(the “Holder”) of _________ shares (the “Shares”) of common stock of
NANO-PROPRIETARY, INC. (“Nano-Proprietary”) from Nano-Proprietary pursuant to
the Regulation D Subscription Agreement entered into between Nano-Proprietary
and the Holder (the “Regulation D Subscription Agreement”).
Section
1. Representations
and Warranties
1.1 The
Holder hereby makes to Nano-Proprietary the representations and warranties made
by the Holder in the Regulation D Subscription Agreement, as though fully set
forth herein.
1.2 Nano-Proprietary
hereby represents and warrants to the Holder that the execution, delivery and
performance of this Agreement by Nano-Proprietary has been duly authorized by
all requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the articles of organization
or by-laws of Nano-Proprietary or any provision of any other agreement or
instrument to which it is a party and that this Agreement constitutes the legal,
valid and binding obligation of Nano-Proprietary, enforceable in accordance with
its terms.
Section
2. Shares
Owned
2.1 The
purchase of the Shares by the Holder did not result in the Holder and its
“affiliates,” as defined in Rule 144 of the Securities Exchange Act of 1934, as
amended (the “Securities Exchange Act”), being deemed the owner of more than
9.99% of outstanding shares of common stock of Nano-Proprietary, assuming that
there are at least 97,246,422 shares of Common Stock outstanding immediately
after such purchase.
Section
3. Registration
Rights
3.1 Registration.
Nano-Proprietary shall include the resale of the Shares in a registration
statement on Form S-2 or any comparable or successor form or forms (the
“Registration Statement”) (provided that if the Company is not entitled to use
Form S-2 or any successor thereto it shall file a registration statement on
Form S-1 or comparable or successor form) filed by it with the Securities and
Exchange Commission (“SEC”) by not later than the 30th business
day following the date of this Agreement, subject to the Holder’s compliance
with Section 3.1(j).
(a) Nano-Proprietary
shall use its best efforts to cause the Registration Statement to be declared
effective within 60 days after its initial filing with the SEC and to remain
effective until the earlier of the date (i) as of which the Holder may sell all
of the Shares without restriction pursuant to Rule 144(k) and (ii) when the
Holder shall have sold all of the Shares.
(b) Nano-Proprietary
shall prepare and file with the SEC such amendments and supplements to the
Registration Statement and the Prospectus included in the Registration Statement
(the “Prospectus”) as may be necessary to keep the Registration Statement
continuously effective, pursuant to Rule 415, for the period specified in
Section 3(a) above and comply with the provisions of the Securities Act of 1933,
as amended (the “Securities Act”) with respect to the disposition of all the
Shares covered by the Registration Statement in accordance with the Holder’s
intended method of disposition set forth in the Registration Statement for such
period; provided,
however,
notwithstanding the foregoing provisions of this Section 3(b), Nano-Proprietary
may suspend the use of the Registration Statement for a period not to exceed 60
days (whether or not consecutive) in any 12-month period if Nano-Proprietary’s
Board of Directors determines in good faith (after consulting with
Nano-Proprietary’s counsel and, if appropriate, its independent auditors) that
because of valid and material business developments (which, under applicable
securities laws, would be required to be disclosed in an amendment to the
Prospectus), including pending mergers or other business combination
transactions, the planned acquisition or divestiture of assets, pending material
corporate developments and similar events, it is advisable to suspend such use
and, prior to or contemporaneously with suspending such use, Nano-Proprietary
provides the Holder with written notice of such suspension, which notice need
not specify the nature of the event giving rise to such suspension. At the end
of any such suspension period, Nano-Proprietary shall provide Holder with
written notice of the termination of such suspension.
(c) Nano-Proprietary
shall permit Holder to review and comment upon the Registration Statement and,
upon all future amendments and supplements thereto, at least three days prior to
their filing with the SEC.
(d) Nano-Proprietary
shall furnish to the Holder such number of copies of the Registration Statement
and the Prospectus as the Holder reasonably may request in order to facilitate
the public sale or other disposition of the Shares pursuant to the
Prospectus.
(e) Nano-Proprietary
shall cause all Shares covered by the Registration Statement to be eligible for
quotation on the
over the counter bulletin board (or listed on a national securities exchange or
quoted on the Nasdaq Small Cap or National Market) on the same terms and
conditions as Nano-Proprietary Common Shares are then traded, quoted, or listed
(provided that Nano-Proprietary Common Shares are then so traded, listed or
quoted).
(f) While a
Prospectus relating to the Shares is required to be delivered under the
Securities Act, Nano-Proprietary shall promptly notify the Holder of the
happening of any event of which Nano-Proprietary has knowledge and as a result
of which the Prospectus, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing.
(g) The
Holder agrees that, upon receipt of any notice from Nano-Proprietary of the
happening of any event of the kind specified in Sections 3.1(b) or (f), the
Holder will immediately discontinue disposition of the Shares pursuant to the
Prospectus until the Holder’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3.1(b), and, if so directed by
Nano-Proprietary, the Holder will deliver to Nano-Proprietary, or alternatively
certify that it has destroyed, all copies, other than permanent file copies then
in Holder’s possession, of the most recent Prospectus at the time of receipt of
such notice.
(h) Nano-Proprietary
shall make available for inspection by the Holder, and any attorney, accountant
or other agent retained by the Holder, all financial and other records,
pertinent corporate documents and properties of Nano-Proprietary, and cause
Nano-Proprietary’s officers, directors and employees to supply all information
reasonably requested by the Holder or such attorney, accountant or agent in
connection with the Registration Statement, provided appropriate confidentiality
agreements are first received by Nano-Proprietary.
(i) The
Holder shall furnish to Nano-Proprietary in writing such information with
respect to it and the proposed distribution by it, as reasonably shall be
necessary and reasonably requested by Nano-Proprietary’s counsel in writing, in
order to assure compliance with applicable federal and state securities laws.
The Holder shall provide notice to Nano-Proprietary at the address set forth
above within three business days of the sale of all of the Shares registered
pursuant to this Ownership and Registration Rights Agreement.
3.2 Expenses.
Nano-Proprietary shall pay all Registration Expenses (as defined below) and the
Holder will pay all Selling Expenses (as defined below). All expenses incurred
by Nano-Proprietary in complying with Section 3.1 including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for Nano-Proprietary, fees and
expenses (including counsel fees) incurred in connection with complying with
state securities or “blue sky” laws, Nasdaq fees, fees of transfer agents and
registrars, and costs of issuing the Shares, but excluding any Selling Expenses
and fees and disbursements of any counsel, or any accountant or agent of the
Holder, are called “Registration Expenses.” All underwriting discounts and
selling commissions applicable to the sale of the Shares are called “Selling
Expenses.”
Section
4. Indemnification.
4.1 Indemnification. (a) In
connection with the registration and sale of the Shares pursuant to the
Registration Statement, to the fullest extent permitted by law, Nano-Proprietary
will indemnify and hold harmless the Holder together with the Holder’s officers,
directors, members, partners, employees and agents, and each other person, if
any, who controls Holder within the meaning of the Securities Act (each a
“Controlling Person”), against any losses, claims, damages or liabilities, joint
or several, to which the Holder and the Holder’s officers, directors, members,
partners, employees and agents, or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims,
damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement or the Prospectus or any amendment or
supplement thereof, or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by
Nano-Proprietary of the Securities Act, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Shares pursuant to
the Registration Statement (but not the Holder’s failure to comply with the
prospectus delivery requirements or other rules and regulations under the
Securities Exchange Act of 1934 relating to the Holder’s conduct in offering and
selling the Shares). Nano-Proprietary will promptly reimburse the Holder and
each Controlling Person for any legal or other expenses reasonably incurred by
them in connection with investigation or defending any such loss, claim, damage,
liability or action; provided,
however, that
Nano-Proprietary will not be liable in any such case if and to the extent that
any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by the Holder or a Controlling
Person in writing specifically for use in the Registration Statement or the
Prospectus. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of the indemnified party.
(b) In
connection with the registration and sale of the Shares pursuant to the
Registration Statement, the Holder will indemnify and hold harmless
Nano-Proprietary, each person, if any, who controls Nano-Proprietary within the
meaning of the Securities Act, each officer of Nano-Proprietary who signs the
Registration Statement, and each director of Nano-Proprietary, against all
losses, claims, damages or liabilities, joint or several, to which
Nano-Proprietary or such officer, director, or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, the Prospectus contained therein, or
any amendment or supplement thereof, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will promptly reimburse
Nano-Proprietary and each such officer, director, and controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided,
however, that
the Holder will have no liability hereunder unless such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to the Holder and furnished in writing to
Nano-Proprietary by the Holder specifically for use in the Registration
Statement or the Prospectus; and provided,
further,
however, that
the liability of the Holder hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the public offering price of the Shares sold by the Holder under the
Registration Statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed an amount equal to
the net proceeds received by the Holder from the sale of the Shares covered by
the Registration Statement.
(c) Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party under
this Section 3.3 except and to the extent the indemnifying party is prejudiced
by such omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 3.3 for any legal expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; provided,
however, that if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) In order
to provide for just and equitable contribution to joint liability under the
Securities Act in any case in which either (i) Holder or any controlling person
of the Holder makes a claim for indemnification pursuant to this Section 3.3 but
it is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction as to which time to appeal or the denial of the
last right of appeal has expired) that such indemnification may not be enforced
in such case notwithstanding the fact that this Section 3.3 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of the Holder or any such controlling person in
circumstances for which indemnification is provided under this Section 3.3,
then, and in each such case, Nano-Proprietary and the Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in proportion to their relative fault
provided,
however, that,
in any such case, (A) the Holder shall not be required to contribute any amount
in excess of an amount equal to one half of the public offering price of all the
Shares offered by it pursuant to the Registration Statement; and (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
4.2 Enforcement. Each
Party acknowledges that there is no adequate remedy at law for failure by it to
comply with the provisions of this Section 3 and that such failure would not be
adequately compensable in damages, and therefore agrees that its agreements
contained in this Section 3 may be specifically enforced. In the event that
Nano-Proprietary fails to comply with its obligations and agreements in this
Section 3, then, in addition to any other rights or remedies the Holder may have
at law or in equity, Nano-Proprietary shall indemnify and hold harmless the
Holder from and against any and all manner of loss which it may incur as a
result of such a failure. In addition, Nano-Proprietary shall also reimburse the
Holder for any and all reasonable legal fees and expenses incurred by it in
enforcing its rights pursuant to this Section 3, regardless of whether any
litigation was commenced.
Section
5. Choice
of Law This
Agreement shall be governed by and interpreted in accordance with the laws of
the State of New York without regard to the principles of conflict of
laws.
Section
6. Counterparts This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same instrument and shall become effective when
counterparts have been signed by each party and delivered to the other
party.
[Signature
Page Follows.]
Signature
Page to
Ownership
and Registration Rights
Agreement
|
Dated:
_________, 200_ |
AGREED:
________________
By:
_________________
By:______________________________ |
Agreed:
Nano-Proprietary,
Inc.
By:
_________________________
Xxxxxxx
X. Xxxxx
Vice
President and Secretary
