Document:

EXHIBIT
10.3

    

    REGISTRATION RIGHTS
AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”) is made and
entered into effective as of _____________, 2010, between Li3 Energy, Inc., a Nevada
corporation (the “Company”) and the persons who
have executed omnibus or counterpart signature page(s) hereto (each, a “Purchaser” and collectively,
the “Purchasers”).

     

    RECITALS:

     

    WHEREAS,
the Company is offering in compliance with Rule 506 of Regulation D and/or Rule
903 of Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), to
accredited investors and non-U.S. persons in a private placement offering (the
“PPO”), a minimum (the
“Minimum Amount”) of
4,000,000 units (the “Units”) and a maximum of
20,000,000 Units of the Company’s securities, at the purchase price of $0.25 per
Unit (the “Purchase
Price”), each Unit consisting of one (1) share  (the “Purchaser Shares”) of the
Company’s common stock, par value $0.001 per share (the “Common Stock”) and a warrant
(the “Purchaser
Warrants”), entitling the holder to purchase one share of Common Stock
until two (2) years after the final closing date of the PPO at an exercise price
of $0.70 per whole share of Common Stock; and in the event the PPO is
oversubscribed, the Company may, in its discretion, sell up to 8,000,000
additional Units at the same purchase price per Unit (the “Over-Allotment”);

     

    WHEREAS,
the initial closing of the PPO will occur upon the receipt of subscriptions and
payment for at least the Minimum Amount, and other conditions to closing of the
PPO are satisfied; and

     

    WHEREAS,
in connection with the sale and purchase of Units in the PPO, the Company shall
enter into a Subscription Agreement with each Purchaser (collectively, the
“Subscription
Agreements”) that provides for the Purchaser and the Company to enter
into a registration rights agreement on the terms set forth herein;
and

     

    NOW,
THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants, and conditions set forth herein, the parties mutually agree as
follows:

     

    1.           Certain
Definitions.  As used in this Agreement, the following terms
shall have the following respective meanings:

     

    “Approved Market”
means the Over-the-Counter Bulletin Board, the Nasdaq Stock Market, the New York
Stock Exchange or the American Stock Exchange.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Blackout Period”
means, with respect to a registration, a period, in each case commencing on the
day immediately after the Company notifies the Purchasers that they are
required, because of the occurrence of an event of the kind described in Section
4(f) hereof, to suspend offers and sales of Registrable Securities during which
the Company, in the good faith judgment of its board of directors, determines
(because of the existence of, or in anticipation of, any acquisition, financing
activity, or other transaction involving the Company, or the unavailability for
reasons beyond the Company’s control of any required financial statements,
disclosure of information which is in its best interest not to publicly
disclose, or any other event or condition of similar significance to the
Company) that the registration and distribution of the Registrable Securities to
be covered by such Registration Statement, if any, would be seriously
detrimental to the Company and its stockholders and ending on the earlier of (1)
the date upon which the material non-public information commencing the Blackout
Period is disclosed to the public or ceases to be material and (2) such time as
the Company notifies the selling Holders that sales pursuant to such
Registration Statement or a new or amended Registration Statement may
resume.

     

     “Business Day” means
any day of the year, other than a Saturday, Sunday, or other day on which the
Commission is required or authorized to close.

     

    “Commission” means the
U. S. Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

     

    “Common Stock” means
the common stock, par value $0.001 per share, of the Company and any and all
shares of capital stock or other equity securities of: (i) the Company which are
added to or exchanged or substituted for the Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of any
distribution or the reclassification, readjustment, recapitalization or other
such modification of the capital structure of the Company; and (ii) any other
corporation, now or hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, which results from any
consolidation or reorganization to which the Company is a party, or to which is
sold all or substantially all of the shares or assets of the Company, if
immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other
corporation.

     

    “Effective Date” means
the date of the final closing of the PPO.

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder.

     

    “Family Member” means
(a) with respect to any individual, such individual’s spouse, any descendants
(whether natural or adopted), any trust all of the beneficial interests of which
are owned by any of such individuals or by any of such individuals together with
any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.

     

     “Holder” means (i)
each Purchaser or any of such Purchaser’s respective successors and Permitted
Assignees who acquire rights in accordance with this Agreement with respect to
any Registrable Securities directly or indirectly from a Purchaser or from any
Permitted Assignee.

     

     “Majority Holders”
means at any time Holders representing a majority of the Registrable
Securities.

    
      
         

      

      
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    “Permitted Assignee”
means (a) with respect to a partnership, its partners or former partners in
accordance with their partnership interests, (b) with respect to a corporation,
its stockholders in accordance with their interest in the corporation, (c) with
respect to a limited liability company, its members or former members in
accordance with their interest in the limited liability company, (d) with
respect to an individual party, any Family Member of such party, (e) an entity
that is controlled by, controls, or is under common control with a transferor,
or (f) a party to this Agreement.

     

     “Piggyback
Registration” means, in any registration of Common Stock referenced in
Section 3(c), the right of each Holder to include the Registrable Securities of
such Holder in such registration.

     

    “Purchaser Shares” has
the meaning given it in the recitals of this Agreement.

     

    “Purchaser Warrants”
has the meaning given it in the recitals of this Agreement.

     

    “Purchaser Warrant
Shares” means the shares of Common Stock issuable upon exercise of the
Purchaser Warrants.

     

    The terms
“register,”
“registered,”
and “registration” refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

     

    “Registrable
Securities” means the Purchaser Shares and the Purchaser Warrant Shares,
but excluding (i) any otherwise Registrable Securities that have been publicly
sold or may be immediately sold under the Securities Act either pursuant to Rule
144 of the Securities Act or otherwise during any ninety (90) day period; (ii)
any otherwise Registrable Securities sold by a person in a transaction pursuant
to a registration statement filed under the Securities Act, and (iii) any
otherwise Registrable Securities that are at the time subject to an effective
registration statement under the Securities Act.

     

    “Registration Effectiveness
Date” means the date that is 180 days after the after the Effective
Date.

     

    “Registration Default
Period” means the period during which any Registration Event occurs and
is continuing.

     

    “Registration Event”
means the occurrence of any of the following events:

     

    (a)           the
Company fails to file with the Commission the Registration Statement on or
before the Registration Filing Date;

     

    (b)           the
Registration Statement is not declared effective by the Commission on or before
the Registration Default Date;

    
      
         

      

      
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    (c)           after
the SEC Effective Date, the Registration Statement ceases for any reason to
remain continuously effective or the Holders are otherwise not permitted to
utilize the prospectus therein to resell the Registrable Securities (including a
Blackout Period), for more than fifteen (15) consecutive calendar days, except
as excused pursuant to Section 3(a); or

     

    (d)           the
Registrable Securities, if issued, are not listed or included for quotation on
an Approved Market, or trading of the Common Stock is suspended or halted on the
Approved Market, which at the time constitutes the principal market for the
Common Stock, for more than two (2) full, consecutive Trading Days; provided, however, a
Registration Event shall not be deemed to occur if all or substantially all
trading in equity securities (including the Common Stock) is suspended or halted
on the Approved Market for any length of time.

     

    “Registration Filing
Date” means the date that is 60 days after the Effective
Date.

     

    “Registration
Statement” means the registration statement that the Company is required
to file pursuant to Section 3(a) of this Agreement to register the Registrable
Securities.

     

    “Rule 144” means Rule
144 promulgated by the Commission under the Securities Act, as such rule may be
amended or supplemented from time to time, or any similar successor rule that
may be promulgated by the Commission.

     

    “Rule 145” means Rule
145 promulgated by the Commission under the Securities Act, as such rule may be
amended or supplemented from time to time, or any similar successor rule that
may be promulgated by the Commission.

     

    “Rule 415” means Rule
415 promulgated by the Commission under the Securities Act, as such rule may be
amended or supplemented from time to time, or any similar successor rule that
may be promulgated by the Commission.

     

     “Securities Act” means
the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.

     

    “SEC Effective Date”
means the date the Registration Statement is declared effective by the
Commission.

     

    “Trading Day” means
any day on which such national securities exchange, the OTC Bulletin Board or
such other securities market or quotation system, which at the time constitutes
the principal securities market for the Common Stock, is open for general
trading of securities.

     

    2.           Term.  This
Agreement shall terminate on the earlier of: (i) two years from the Effective
Date; (ii) such date on which all Registrable Securities held or entitled to be
held upon exercise by such Holder may immediately be sold under Rule 144
during any ninety (90) day period; or (iii) the date otherwise terminated as
provided herein.

    
      
         

      

      
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    3.           Registration.

     

    (a)           Registration on Form
S-1.  The Company shall file with the Commission a Registration
Statement on Form S-1, or other applicable form, relating to the resale by the
Holders of all of the Registrable Securities, and the Company shall use its
commercially reasonable efforts to (i) make the initial filing of the
Registration Statement within 60 days after the earlier of the final closing of
the PPO or the Termination Date (as defined in the Term Sheet attached to the
Subscription Agreement) of the PPO, and (ii) cause such Registration Statement
to be declared effective as soon as practicable after it is first filed; provided, that the
Company shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section, or keep such registration effective
pursuant to the terms hereunder in any particular jurisdiction in which the
Company would be required to qualify to do business as a foreign corporation or
as a dealer in securities under the securities laws of such jurisdiction or to
execute a general consent to service of process in effecting such registration,
qualification or compliance, in each case where it has not already done
so.  Notwithstanding the foregoing, in the event that the Commission
should limit the number of Registrable Securities that may be sold pursuant to
the Registration Statement, the Company may remove from the Registration
Statement such number of Registrable Securities as specified by the Commission
on behalf of all of the holders of Registrable Securities on a pro-rata
basis.  In such event, the Company shall give the Purchasers prompt
notice of the number of Registrable Securities excluded therefrom.

     

    (b)           Piggyback
Registration.    Piggyback Registration rights shall
apply to any Registrable Securities that are removed from the Registration
Statement as a result of a requirement by the Commission.  If, after
the SEC Effective Date, the Company shall determine to register for sale for
cash any of its Common Stock, for its own account or for the account of others
(other than the Holders), other than (x) a registration relating solely to
employee benefit plans or securities issued or issuable to employees,
consultants (to the extent the securities owned or to be owned by such
consultants could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8) or (y) a registration relating solely to
a Securities Act Rule 145 transaction or a registration on Form S-4 in
connection with a merger, acquisition, divestiture, reorganization or similar
event, then the Company shall promptly give to the Holders written notice
thereof (and in no event shall such notice be given less than 20 calendar days
prior to the filing of such registration statement), and shall, subject to
Section 3(c), include as a Piggyback Registration all of the Registrable
Securities specified in a written request delivered by the Holder thereof within
10 calendar days after delivery to the Holder of such written notice from the
Company. However, the Company may, without the consent of the Holders, withdraw
such registration statement prior to its becoming effective if the Company or
such other selling stockholders have elected to abandon the proposal to register
the securities proposed to be registered thereby.

     

    (c)           Underwriting.  If
a Piggyback Registration is for a registered public offering that is to be made
by an underwriting, the Company shall so advise the Holders of the Registrable
Securities eligible for inclusion in such Registration Statement pursuant to
Section 3(b).  In that event, the right of any Holder to Piggyback
Registration 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 sell any of
their Registrable Securities through such underwriting shall (together with the
Company and any other stockholders of the Company selling their securities
through such underwriting) enter into an underwriting agreement in customary
form with the underwriter selected for such underwriting by the Company or such
other selling stockholders, as applicable.  Notwithstanding any other
provision of this Section, if the underwriter or the Company determines that
marketing factors require a limitation on the number of shares of Common Stock
or the amount of other securities to be underwritten, the underwriter may
exclude some or all Registrable Securities from such registration and
underwriting.  The Company shall so advise all Holders (except those
Holders who failed to timely elect to include their Registrable Securities
through such underwriting or have indicated to the Company their decision not to
do so), and indicate to each such Holder the number of shares of Registrable
Securities that may be included in the registration and underwriting, if any.
The number of shares of Registrable Securities to be included in such
registration and underwriting shall be allocated among such Holders as
follows:

    
      
         

      

      
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    (i)           If
the Piggyback Registration was initiated by the Company, the number of shares
that may be included in the registration and underwriting shall be allocated
first to the Company and then, subject to obligations and commitments existing
as of the date hereof, to all persons exercising piggyback registration rights
(including the Holders) who have requested to sell in the registration on a pro
rata basis according to the number of shares requested to be included therein;
and

     

    (ii)           If
the Piggyback Registration was initiated by the exercise of demand registration
rights by a stockholder or stockholders of the Company, then the number of
shares that may be included in the registration and underwriting shall be
allocated first to such selling stockholders who exercised such demand to the
extent of their demand registration rights, and then, subject to obligations and
commitments existing as of the date hereof, to the Company and then, subject to
obligations and commitments existing as of the date hereof, to all persons
exercising piggyback registration rights (including the Holders) who have
requested to sell in the registration on a pro rata basis according to the
number of shares requested to be included therein.

     

    No
Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw such Holder’s Registrable Securities therefrom by delivering a
written notice to the Company and the underwriter.  The Registrable
Securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by
the withdrawal of such Registrable Securities, a greater number of Registrable
Securities held by other Holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriters), then the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities pursuant to
the terms and limitations set forth herein in the same proportion used above in
determining the underwriter limitation.

     

    (d)           Other
Registrations.  Before such date that is six months following
the SEC Effective Date, the Company will not, without the prior written consent
of the Majority Holders, file any other registration statement with the
Commission or request the acceleration of any other registration statement filed
with the Commission, and during any time subsequent to the SEC Effective Date
when the Registration Statement for any reason is not available for use by any
Holder for the resale of any Registrable Securities, the Company shall not,
without the prior written consent of the Majority Holders, file any other
registration statement or any amendment thereto with the Commission under the
Securities Act or request the acceleration of the effectiveness of any other
registration statement previously filed with the Commission, other than (i) any
registration statement on Form S-8 or Form S-4 and (ii) any registration
statement or amendment which the Company is required to file or as to which the
Company is required to request acceleration pursuant to any obligation in effect
on the date of execution and delivery of this Agreement.

    
      
         

      

      
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    (e)           Occurrence of Registration
Event.  If a Registration Event occurs, then the Company will
make payments to each Holder of Registrable Securities, as partial liquidated
damages to such Holder by reason of the Registration Event, a cash sum equal to
1% of the purchase price in the PPO of the PPO Units that include Registrable
Securities, or Purchaser Warrants exercisable for Registrable Securities, which
are affected by such Registration Event, for each full thirty (30) days during
which such Registration Event continues to affect such Registrable Securities
(which shall be pro-rated for any period less than 30
days).  Notwithstanding the foregoing, the maximum amount of
liquidated damages that may be paid by the Company pursuant to this Section 3(e)
shall be an amount equal to 10% of the purchase price paid in the PPO for the
PPO Units that include Registrable Securities, or Purchaser Warrants exercisable
for Registrable Securities, which are affected by all Registration Events in the
aggregate.  Each payment of liquidated damages pursuant to this
Section 3(e) shall be due and payable in arrears within five (5) days after the
end of each full 30-day period of the Registration Default Period until the
termination of the Registration Default Period and within five (5) days after
such termination.  Such payments shall constitute the Holder’s
exclusive remedy for any Registration Event.  If the Company fails to
pay any partial liquidated damages pursuant to this Section in full within seven
(7) days after the date payable, then the Company shall pay interest thereon at
a rate of 8% per annum (or such lesser maximum amount that is permitted to be
paid by applicable law) to the effected Holders, accruing daily from the date
such partial liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full.  The Registration Default Period
shall terminate upon (i) the filing of the Registration Statement in the case of
clause (a) of the definition of Registration Event, (ii) the SEC Effective Date
in the case of clause (b) of the definition of Registration Event, (iii) the
ability of the Holders to effect sales pursuant to the Registration Statement in
the case of clause (c) of the definition of Registration Event, and (iv) the
listing or inclusion and/or trading of the Common Stock on an Approved Market,
as the case may be, in the case of clause (d) of the definition of Registration
Event.  The amounts payable as liquidated damages pursuant to this
Section 3(e) shall be payable in lawful money of the United
States.  Notwithstanding the foregoing, the Company will not be liable
for the payment of liquidated damages described in this Section 3(e) for any
delay in registration of the Registrable Securities that may be included and
sold by the Holders in the Registration Statement pursuant to Rule 415 solely as
a result of a comment received by the Commission requiring a limit on the number
of Registrable Securities included in such Registration Statement in order for
such Registration Statement to be able to avail itself of Rule
415.  In the event of any such delay, the Company will use its
commercially reasonable efforts at the first opportunity that is permitted by
the Commission to register for resale the Registrable Securities that have been
cut back from being registered pursuant to Rule 415 only with respect to that
portion of the Holders’ Registrable Securities that are then Registrable
Securities.

     

    
      
         

      

      
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    (f)           Notwithstanding
the provisions of Section 3(e) above, (a) if the Commission does not declare the
Registration Statement effective on or before the Registration Effectiveness
Date, or (b) if the Commission allows the Registration Statement to be declared
effective at any time before or after the Registration Effectiveness Date,
subject to the withdrawal of certain Registrable Securities from the
Registration Statement, and the reason for (a) or (b) is the Commission’s
determination that (x) the offering of any of the Registrable Securities
constitutes a primary offering of securities by the Company, (y) Rule 415 may
not be relied upon for the registration of the resale of any or all of the
Registrable Securities, and/or (z) a Holder of any Registrable Securities must
be named as an underwriter, the Holders understand and agree that in the case of
(b) the Company may reduce, on a pro rata basis, the total number of Registrable
Securities to be registered on behalf of each such Holder, and in the case of
(a) or (b) the Holder shall not be entitled to partial liquidated damages with
respect to the Registrable Securities not registered for the reason set forth in
(a) or so reduced on a pro rata basis as set forth in (b).

     

    4.           Registration Procedures for
Registrable Securities.  The Company will keep each Holder
reasonably advised as to the filing and effectiveness of the Registration
Statement.  At its expense with respect to the Registration Statement,
the Company will:

     

    (a)           prepare
and file with the Commission with respect to the Registrable Securities, a
Registration Statement on Form S-1, or any other form for which the Company then
qualifies or which counsel for the Company shall deem appropriate and which form
shall be available for the sale of the Registrable Securities in accordance with
the intended methods of distribution thereof, and use its commercially
reasonable efforts to cause such Registration Statement to become effective and
to remain effective for a period of one year or for such shorter period ending
on the earlier to occur of (i) the sale of all Registrable Securities and (ii)
the availability under Rule 144 for the Holder to sell all of the Registrable
Securities within a 90 day period (the “Effectiveness
Period”).  Each Holder agrees to furnish to the Company a
completed questionnaire in the form attached to this Agreement as Annex A (a “Selling Shareholder
Questionnaire”) not later than three (3) Business Days following the date
on which such Holder receives draft materials of such Registration
Statement;

     

    (b)           if
the Registration Statement is subject to review by the Commission, promptly
respond to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission;

     

    (c)           prepare
and file with the Commission such amendments and supplements to such
Registration Statement as may be necessary to keep such Registration Statement
effective during the Effectiveness Period;

     

    (d)           furnish,
without charge, to each Holder of Registrable Securities covered by such
Registration Statement (i) a reasonable number of copies of such Registration
Statement (including any exhibits thereto other than exhibits incorporated by
reference), each amendment and supplement thereto as such Holder may reasonably
request, (ii) such number of copies of the prospectus included in such
Registration Statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 of the Securities Act) as such Holders may
reasonably request, in conformity with the requirements of the Securities Act,
and (iii) such other documents as such Holder may require to consummate the
disposition of the Registrable Securities owned by such Holder, but only during
the Effectiveness Period;

     

    
      
         

      

      
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    (e)           use
its commercially reasonable efforts to register or qualify such registration
under such other applicable securities laws of such jurisdictions as any Holder
of Registrable Securities covered by such Registration Statement reasonably
requests and as may be necessary for the marketability of the Registrable
Securities (such request to be made by the time the applicable Registration
Statement is deemed effective by the Commission) and do any and all other acts
and things necessary to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided, that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph, (ii) subject itself to taxation in any such jurisdiction, or (iii)
consent to general service of process in any such jurisdiction.

     

    (f)           as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities, the disposition of which requires delivery of a
prospectus relating thereto under the Securities Act, of the happening of any
event, which comes to the Company’s attention, that will after the occurrence of
such event cause the prospectus included in such Registration Statement, if not
amended or supplemented, to contain an untrue statement of a material fact or an
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and the Company shall promptly
thereafter prepare and furnish to such Holder a supplement or amendment to such
prospectus (or prepare and file appropriate reports under the Exchange Act) so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, unless suspension of the use of such
prospectus otherwise is authorized herein or in the event of a Blackout Period,
in which case no supplement or amendment need be furnished (or Exchange Act
filing made) until the termination of such suspension or Blackout
Period;

     

    (g)          comply,
and continue to comply during the Effectiveness Period, in all material respects
with the Securities Act and the Exchange Act and with all applicable rules and
regulations of the Commission with respect to the disposition of all securities
covered by such Registration Statement;

     

    (h)          as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement;

     

    (i)           use
its commercially reasonable efforts to cause all the Registrable Securities
covered by the Registration Statement to be quoted on the OTC Bulletin Board or
such other principal securities market on which securities of the same class or
series issued by the Company are then listed or traded;

     

    (j)           provide
a transfer agent and registrar, which may be a single entity, for the shares of
Common Stock at all times;

     

    (k)          cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to issue and deliver, or cause its transfer agent to
issue and deliver, certificates representing Registrable Securities to be
offered pursuant to the Registration Statement within a reasonable time after
the delivery of certificates representing the Registrable Securities to the
transfer agent or the Company, as applicable, and enable such certificates to be
in such denominations or amounts as the Holders may reasonably request and
registered in such names as the Holders may request;

     

    
      
         

      

      
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    (l)           during
the Effectiveness Period, refrain from bidding for or purchasing any Common
Stock or any right to purchase Common Stock or attempting to induce any person
to purchase any such security or right if such bid, purchase or attempt would in
any way limit the right of the Holders to sell Registrable Securities by reason
of the limitations set forth in Regulation M of the Exchange Act;
and

     

    (m)         take
all other reasonable actions necessary to expedite and facilitate the
disposition by the Holders of the Registrable Securities pursuant to the
Registration Statement during the term of this Agreement.

     

    5.           Suspension of Offers and
Sales.  Each Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
4(f) hereof or of the commencement of a Blackout Period, such Holder shall
discontinue the disposition of Registrable Securities included in the
Registration Statement until such Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 4(f) hereof or notice
of the end of the Blackout Period, and, if so directed by the Company, such
Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file
copies, then in such Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice.

     

    6.           Registration
Expenses.  The Company shall pay all expenses in connection
with any registration obligation provided herein, including, without limitation,
all registration, filing, stock exchange fees, printing expenses, all fees and
expenses of complying with applicable securities laws, and the fees and
disbursements of counsel for the Company and of its independent accountants;
provided, that,
in any underwritten registration, each party shall pay for its own underwriting
discounts and commissions and transfer taxes. Except as provided in this Section
and Section 9, the Company shall not be responsible for the expenses of any
attorney or other advisor employed by a Holder.

     

    7.           Assignment of
Rights.  No Holder may assign its rights under this Agreement
to any party without the prior written consent of the Company; provided, however, that any
Holder may assign its rights under this Agreement without such consent to a
Permitted Assignee as long as (a) such transfer or assignment is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c) such
Holder notifies the Company in writing of such transfer or assignment, stating
the name and address of the transferee or assignee and identifying the
Registrable Securities with respect to which such rights are being transferred
or assigned.

     

    8.           Information by
Holder.  Holders included in any registration shall furnish to
the Company such information as the Company may reasonably request in writing
regarding such Holders and the distribution proposed by such Holders including
an updated Selling Shareholder Questionnaire if requested by the
Company.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    9.           Indemnification.

     

    (a)           In
the event of the offer and sale of Registrable Securities under the Securities
Act, the Company shall, and hereby does, indemnify and hold harmless, to the
fullest extent permitted by law, each Holder, its directors, officers, partners,
each other person who participates as an underwriter in the offering or sale of
such securities, and each other person, if any, who controls or is under common
control with such Holder or any such underwriter within the meaning of Section
15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, and expenses to which the Holder or any such director,
officer, partner or underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities or expenses (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any untrue
statement of any material fact contained in any registration statement prepared
and filed by the Company under which Registrable Securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement thereto, or
any omission to state therein a material fact required to be stated or necessary
to make the statements therein in light of the circumstances in which they were
made not misleading, and the Company shall reimburse the Holder, and each such
director, officer, partner, underwriter and controlling person for any legal or
any other expenses reasonably incurred by them in connection with investigating,
defending or settling any such loss, claim, damage, liability, action or
proceeding; provided, that such
indemnity agreement found in this Section 9(a) shall in no event exceed the net
proceeds from the PPO received by the Company; and provided further,
that the Company shall not be liable in any such case (i) to the extent that any
such loss, claim, damage, liability (or action or proceeding in respect thereof)
or expense arises out of or is based upon an untrue statement in or omission
from such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company for use in the
preparation thereof or (ii) if the person asserting any such loss, claim,
damage, liability (or action or proceeding in respect thereof) who purchased the
Registrable Securities that are the subject thereof did not receive a copy of an
amended preliminary prospectus or the final prospectus (or the final prospectus
as amended or supplemented) at or prior to the written confirmation of the sale
of such Registrable Securities to such person because of the failure of such
Holder or underwriter to so provide such amended preliminary or final prospectus
and the untrue statement or omission of a material fact made in such preliminary
prospectus was corrected in the amended preliminary or final prospectus (or the
final prospectus as amended or supplemented). Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holders, or any such director, officer, partner, underwriter or controlling
person and shall survive the transfer of such shares by the Holder.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (b)           As
a condition to including Registrable Securities in any registration statement
filed pursuant to this Agreement, each Holder agrees to be bound by the terms of
this Section 9 and to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, each of its directors, officers, partners, legal
counsel and accountants and each underwriter, if any, and each other person, if
any, who controls the Company within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which the Company or any such director or officer or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon an untrue
statement in or omission from such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished by the Holder
for use in the preparation thereof, and such Holder shall reimburse the Company,
and such Holders, directors, officers, partners, legal counsel and accountants,
persons, underwriters, or control persons, each such director, officer, and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating, defending, or settling any such loss, claim,
damage, liability, action, or proceeding; provided, however, that
indemnity obligation contained in this Section 9(b) shall in no event exceed the
amount of the net proceeds received by such Holder as a result of the sale of
such Holder’s Registrable Securities pursuant to such registration statement,
except in the case of fraud or willful misconduct.  Such indemnity
shall remain in full force and effect, regardless of any investigation made by
or on behalf of the Company or any such director, officer or controlling person
and shall survive the transfer by any Holder of such shares.

     

    (c)           Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in this Section (including
any governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
indemnifying party of the commencement of such action; provided, 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, except to
the extent that the indemnifying party is actually prejudiced by such failure to
give notice.  In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume 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 the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of
investigation.  Neither an indemnified nor an indemnifying party shall
be liable for any settlement of any action or proceeding effected without its
consent.  No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any
settlement, which 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 of such claim or litigation.  Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party shall have the right to retain,
at its own expense, counsel with respect to the defense of a claim. 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.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    (d)           If
an indemnifying party does or is not permitted to assume the defense of an
action pursuant to Sections 9(c) or in the case of the expense reimbursement
obligation set forth in Sections 9(a) and (b), the indemnification required by
Sections 9(a) and 9(b) shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills received or
expenses, losses, damages, or liabilities are incurred.

     

    (e)           If
the indemnification provided for in Section 9(a) or 9(b) 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 herein, 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 (i) in such proportion
as is appropriate to reflect the proportionate relative fault of the
indemnifying party on the one hand and the indemnified party on the other
(determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission relates to information supplied
by the indemnifying party or the indemnified party and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission), or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, then in such
proportion as is appropriate to reflect not only the proportionate relative
fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other, as well as any other relevant equitable considerations. No
indemnified party guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
indemnifying party who was not guilty of such fraudulent
misrepresentation.

     

    (f)           Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with an underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall
control.

     

    (g)           Other
Indemnification.  Indemnification similar to that specified in
this Section (with appropriate modifications) shall be given by the Company and
each Holder of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act.

     

    10.          Rule
144.  For a period of at least 12 months following the
Effective Date, the Company will use its commercially reasonable efforts to
timely file all reports required to be filed by the Company after the date
hereof under the Exchange Act and the rules and regulations adopted by the
Commission thereunder, and if the Company is not required to file reports
pursuant to such sections, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell shares of Common Stock under Rule
144.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    11.          Independent Nature of Each
Purchaser’s Obligations and Rights.  The obligations of each
Purchaser under this Agreement are several and not joint with the obligations of
any other Purchaser, and each Purchaser shall not be responsible in any way for
the performance of the obligations of any other Purchaser under this Agreement.
Nothing contained herein and no action taken by any Purchaser pursuant hereto,
shall be deemed to constitute such Purchasers as a partnership, an association,
a joint venture, or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement. Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

     

    12.          Miscellaneous.

     

    (a)           Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the
United States of America and the State of New York, both substantive and
remedial, without regard to New York conflicts of law principles. Any judicial
proceeding brought against either of the parties to this Agreement or any
dispute arising out of this Agreement or any matter related hereto shall be
brought in the courts of the State of New York, New York County, or in the
United States District Court for the Southern District of New York and, by its
execution and delivery of this Agreement, each party to this Agreement accepts
the jurisdiction of such courts. The foregoing consent to jurisdiction shall not
be deemed to confer rights on any person other than the parties to this
Agreement.

     

    (b)          Remedies.  In
the event of a breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, shall be entitled to
specific performance of its rights under this Agreement.  The Company
and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.

     

    (c)           Successors and
Assigns.  Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
Permitted Assignees, executors and administrators of the parties
hereto.

     

    (d)           No Inconsistent
Agreements.  The Company has not entered, as of the date
hereof, and shall not enter, on or after the date of this Agreement, into any
agreement with respect to its securities that would have the effect of impairing
the rights granted to the Holders in this Agreement or otherwise conflicts with
the provisions hereof.

     

    (e)           Entire
Agreement.  This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (f)           Notices, etc. All
notices or other communications which are required or permitted under this
Agreement shall be in writing and sufficient if transmitted by hand delivery, by
facsimile transmission, by registered or certified mail, postage pre-paid, by
electronic mail, or by nationally recognized overnight carrier, to the persons
at the addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered (i) if transmitted by
hand delivery, as of the date delivered, (ii) if transmitted by facsimile or
electronic mail, as of the date so transmitted with an automated confirmation of
delivery, (iii) if transmitted by nationally recognized overnight carrier, as of
the Business Day following the date of delivery to the carrier, and (iv) if
transmitted by registered or certified mail, postage pre-paid, on the third
Business Day following posting with the U.S. Postal Service:

     

    If to the
Company to:

    

    Li3
Energy, Inc.

    Av. Pardo
y Aliaga 699 Of. 802

    San
Isidro, Lima, Peru

    Attention:  Luis
Saenz, CEO

    

    with copy
to:

    

    Gottbetter
& Partners, LLP

    488
Madison Avenue, 12th
Floor

    New York,
NY  10022

    Attention:  Adam
S. Gottbetter, Esq.

    Facsimile:  (212)
400-6901

    

    if to a
Purchaser:

    

    to such
Purchaser at the address set forth on the signature page hereto;

    

    or at
such other address as any party shall have furnished to the other parties in
writing.

     

    (g)           Delays or
Omissions.  No delay or omission to exercise any right, power
or remedy accruing to any Holder, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy of such
Holder nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of any similar breach or default thereunder
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
Holder of any breach or default under this Agreement, or any waiver on the part
of any Holder 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 holder, shall be cumulative and not alternative.

     

    (h)           Counterparts.  This
Agreement may be executed in any number of counterparts, and with respect to any
purchaser, by execution of an omnibus signature page to this Agreement and the
Subscription Agreement, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall constitute
one instrument.  In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (i)           Severability. In the
case any provision of this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

     

    (j)           Amendments. The
provisions of this Agreement may be amended at any time and from time to time,
and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and the Majority Holders.
The Purchasers acknowledge that by the operation of this Section, the Majority
Holders may have the right and power to diminish or eliminate all rights of the
Purchasers under this Agreement.

     

    (k)          Limitation on Subsequent
Registration Rights.  After the date of this Agreement, the
Company shall not, without the prior written consent of the Majority Holders,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights senior or equal
to those granted to the Holders hereunder.

     

    [SIGNATURE
PAGES FOLLOW]

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    This
Registration Rights Agreement is hereby executed as of the date first above
written.

     

    
      
        	 
      	
                COMPANY:

              
	 
      	 
      
	 
      	
                Li3
      ENERGY, INC.

              
	 
      	 
      
	 
      	
                By:

              	
                    

              
	 
      	 
      	
                Name:  Luis
      Saenz

              
	 
      	 
      	
                Title:  Chief
      Executive Officer

              

      

    

     

    [SIGNATURE
PAGE OF PURCHASER FOLLOWS]

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    This
Registration Rights Agreement is hereby executed by the undersigned, as a
Purchaser thereunder, as of the ____ day of ___________, 20__.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	 
      	
                                  PURCHASER
      (Individual)

                                
	 
      	 
      
	 
      	
                                      

                                
	 	 
	 
      	
                                       

                                
	 
      	
                                  (Print
      Name)

                                
	 
      	 
      
	 
      	
                                  PURCHASER
      (Entity)

                                
	 	 
	 
      	
                                  By:

                                	
                                      

                                
	 	 
	 
      	
                                      

                                
	 
      	
                                  (Print
      Name)

                                
	 
      	 
      
	 
      	
                                       

                                
	 
      	
                                  (Print
      Title)

                                
	 
      	 
      
	 
      	
                                  Address
      for notices:

                                
	 
      	 
      
	 
      	
                                       

                                
	 	 
	 
      	
                                       

                                
	 	 
	 
      	
                                       

                                
	 
      	
                                  City

                                	
                                  State

                                	
                                  Zip
      Code

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    Annex
A

     

    Li3
ENERGY, INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of Registrable Securities of Li3 Energy, Inc., a
Nevada corporation (the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission a registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended, of the Registrable Securities, in accordance
with the terms of the Registration Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed.  A copy of the
Registration Rights Agreement is available from the Company upon request at the
address set forth below.  All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Registration Rights
Agreement.

     

    Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus.  Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Registration Statement and
the related prospectus.

     

    NOTICE

     

    The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement.

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      1.  Name:

    

     

    
      
        	
                 
      

              	
                (a)

              	
                Full
      Legal Name of Selling Securityholder

              
	 	 	 
	 	 	 
	 	 	 

      

    

     

    
      
        	
                 
      

              	
                (b)

              	
                Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities are held:

              
	 	 	 
	 	 	 
	 	 	 

      

    

     

    
      
        	
                 
      

              	
                (c)

              	
                Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by the questionnaire):

              
	 	 	 
	 	 	 
	 	 	 

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      2.  Address
for Notices to Selling Securityholder:

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	 
      
	 
      
	 
      
	Telephone:	 	

                                          Fax:

                                        	 
	

                                          Email:

                                        	 	
                                           

                                        
	

                                          Contact
      Person:

                                        	 	
                                           

                                        

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    
      3.  Broker-Dealer
Status:

    

     

    
      	
               
      

            	
              (a)

            	
              Are
      you a broker-dealer?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
               
      

            	
              (b)

            	
              If
      “yes” to Section 3(a), did you receive your Registrable Securities as
      compensation for investment banking services to the
    Company?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
            	
              Note:

            	
              If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Are
      you an affiliate of a
broker-dealer?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
               
      

            	
              (d)

            	
              If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

            

    

     

    Yes    ̈                      No    ̈

     

    
      	
            	
              Note:

            	
              If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
Statement.

            

    

     

    4.  Beneficial
Ownership of Securities of the Company Owned by the Selling
Securityholder:

     

    Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the PPO.

     

    
      
        	
                 
      

              	
                (a)

              	
                Type
      and Amount of other securities (other than the Registrable Securities)
      beneficially owned by the Selling Securityholder:

              
	 	 	 
	 	 	 
	 	 	 

      

    

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      5.  Relationships
with the Company:

    

     

    Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% or more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

     

    
      
        	
                 
      

              	
                State
      any exceptions here:

              
	 	 
	 	 
	 	 

      

    

     

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto.  The undersigned understands that
such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

     

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Selling Securityholder Notice and Questionnaire to be executed and delivered
either in person or by its duly authorized agent.

    

    
      
        
          
            	
                    Dated: 

                  	 
      	 
      	
                    Beneficial
      Owner: 

                  	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	
                    By:

                  	 
      
	 
      	 
      	
                    Name:

                  
	 
      	 
      	
                    Title:

                  

          

        

      

    

    

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

    

    Gottbetter
& Partners, LLP

    488
Madison Avenue, 12th Floor

    New York,
NY  10022

    Attention:  Rachel
L. DeGenaro

    Facsimile:  (212)
400-6901

    
      
         

      

      
        3a6328466ex10_1.htm

Exhibit 10.1

 

EXECUTION VERSION

 

 

OUTSOURCING SERVICES AGREEMENT

Benihana, Inc.

THIS OUTSOURCING SERVICES AGREEMENT (“Services Agreement” or “Agreement”) is entered into as of June 10, 2010 (“Effective Date”) by and between InfoSync Services, LLC (“InfoSync”) a Nevada limited liability company and Benihana, Inc. (“Client”) a Delaware corporation (collectively referred to as the “Parties”).

WHEREAS, Client desires to obtain certain accounting and information services from InfoSync and InfoSync is willing to furnish or make such services available to Client;

NOW, THEREFORE, in consideration of the above and the mutual promises contained herein, the Parties agree as follows:

	
1.

	
DEFINITIONS

Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings set forth below:

	 	
(a)

	
“Accounting Services” means general accounting, payroll and financial reporting services as defined in Attachment C.

	 	  	  
	 	
(b)

	
“Business Day” means any day except a Saturday, Sunday or other InfoSync scheduled holiday (see Attachment B).  Normal work hours are 8:00 a.m. to 5:00 p.m., Central, U.S. time.

	 	  	  
	 	
(c)

	
“Information Services” means general services relating to data processing, including computers, servers, third party software, hardware, programming, systems support, software maintenance, computer supplies and systems operations staff.

	 	  	  
	 	
(d)

	
“Software” means software and programs used by InfoSync in providing the Services under this Agreement.

	 	  	  
	 	
(e)

	
“Units” means the number of unique business locations such as restaurants utilizing the Services.

	
2.

	
SERVICES. InfoSync will provide to Client those Accounting Services and Information Services (collectively, the “Services”), described in Attachment C and such Additional Services (as defined below) as may be from time to time mutually agreed upon in writing among the Parties in consideration of the respective charges set forth in Section 6 entitled “Charges” and the recurring InfoSync service fees set forth in Attachment B (collectively, the “Charges”), as such Charges may be changed from time to time by mutual agreement of both Parties in the manner set forth in Section 7.  Services will be performed on Business Days unless specifically set forth in Attachment C.

 

  

  

  

 

	
3.

	
PROVISION OF TECHNOLOGY.  In connection with the provision of the Services hereunder:

 

	 	
(a)

	
InfoSync shall use the most current (or within one release of the current) release of the Software;

	 	  	  
	 	
(b)

	
InfoSync shall obtain the necessary approvals, in form and substance reasonably acceptable to Client, to (i) allow Client to access all current source code for the program modules and custom code licensed to InfoSync from SolutionWare, Ltd., and (ii) allow Client to access all interfaces from the Software provided by SolutionWare, Ltd. to the Client’s systems.  Such approvals will become effective when InfoSync (A) files for bankruptcy, (B) becomes or is declared insolvent, (C) becomes the subject of any proceedings related to its liquidation, insolvency or for the appointment of a receiver or similar officer for it, (D) makes an assignment for the benefit of all of its creditors, (E) enters into an agreement for the composition, extension, or readjustment of substantially all of its obligations or (F) ceases to do business.  The code will be delivered in System i or PC readable magnetic media format and InfoSync will maintain a current copy, updated monthly, of the source code for safekeeping at a bank or depository other than InfoSync’s office or computer facilities.

	
4.

	
NO EXCLUSIVITY.

	 	
(a)

	
Except for the services set forth in Attachments A and C and the recurring service fees set forth on Attachment B, Client makes no commitment to purchase any additional Services under this Agreement or to pay any additional fees to InfoSync under this Agreement.

	 	  	  
	 	
(b)

	
Following the provision by either Party of written notice of termination to the other Party under Section 8, Client shall have the right to contract with other providers for any products and services, including products and services that are competitive with, or currently included in, the Services

	
5.

	
TERM. This Services Agreement will commence on the date hereof and will expire on the thirty six (36) month anniversary of the Start of Processing Date, defined as the first (1st) date in which any service in Attachment C is provided to Client, other than for setup, testing or evaluation purposes (“Original Term” and collectively with any renewals under Section 10, the “Term”), unless earlier terminated in accordance with Section 8.

	
6.

	
CHARGES.

	 	
(a)

	
Costs of the Services.  In exchange for the provision of the Services in accordance with this Agreement, Client will pay InfoSync according to the cost schedule set forth in Attachment B.

 

  

2

  

 

	 	
(b)

	
Additional Fees. In consideration for any agreement between Client and InfoSync, from time to time, to provide additional services beyond the scope of this Agreement (collectively, the “Additional Services”) fees will be (i) as reflected in Attachment B or (ii) other amounts mutually agreed upon by the Parties in the manner set forth in Section 7 and reflected by an amendment or supplement to Attachment B.

	 	  	  
	 	
(c)

	
Direct Costs. Client shall be responsible for payment of all direct costs of its restaurant operations and the Services related thereto (“Direct Costs”). Direct Costs shall include, but not be limited to, costs associated with the following: weekly folders, W-2 and other special forms, postage, overnight express services and long-term third party paper storage.  Such Direct Costs are pass-through costs which will be billed directly by the vendor to Client and paid by Client directly to the vendor.  Any other Direct Costs not listed here will be discussed and mutually agreed by Client.

	 	  	  
	 	
(d)

	
Reimbursement of Expenses. Client will pay, or reimburse InfoSync for all actual out-of-pocket costs and expenses, including travel and travel-related expenses reasonably incurred and appropriately documented by InfoSync in the provision of the Services hereunder with the prior written approval of the Client and in connection with InfoSync’s performance of its obligations under this Agreement.

	 	  	  
	 	
(e)

	
Taxes. Client shall pay all documented sales or use taxes should they be imposed by local, state or federal governmental authorities for the outsourced services defined in this Agreement.

	 	  	  
	 	
(f)

	
Employee Deduction. Deductions from employee payroll will include court approved processing fees for garnishments.  The court approved fee is disclosed in the court documents and InfoSync will include that fee in the employee deduction.  On a quarterly basis, InfoSync will generate an invoice for the court approved fees deducted during that period and following Client’s review and approval of such invoice will process a check to be paid to InfoSync funded by the employee deductions.

	
7.

	
CHANGES TO THE CHARGES.

 

	 	
(a)

	
If either Client or InfoSync proposes a change in or addition to the Services and both Parties agree to such change or addition, then the price for such change or addition shall be determined by mutual agreement between both Parties.

	 	  	  
	 	
(b)

	
For each proposed change or Additional Service, InfoSync shall quote to Client a charge for such change or Additional Service no greater than the amount charged to other InfoSync clients under contracts for Services similar in scope and nature to the proposed change or Additional Services.

 

  

3

  

 

	
8.

	
TERMINATION.

	 	
(a)

	
Termination without Cause.  Client shall have the right to terminate this Agreement for any reason or no reason at any time upon one hundred twenty (120) days written notice to InfoSync.

	 	
 

	  
	 	
(b)

	
Termination for Cause.

	 	 	
(i)

	
By Client: If InfoSync fails to perform any of its obligations under this Agreement (an “InfoSync Event of Default”), and, upon written notice of such InfoSync Event of Default (the “Default Notice”) from Client, does not cure such Event of Default within thirty (30) days after its receipt of Default Notice, then Client may, by giving written termination notice to InfoSync, ter­minate this Agreement as of the date specified in the termination notice.

	 	 	  	  
	 	 	
(ii)

	
By InfoSync: In the event that Client should default on the payment of InfoSync invoices for more than fifteen (15) days (a “Client Event of Default”) in the aggregate amount exceeding $10,000 (provided that such failure to pay may continue beyond such fifteen (15) day period for a good faith dispute with respect to an aggregate amount not exceeding $10,000 and such dispute is subject to the dispute resolution process specified in Section 14), and, upon Default Notice from InfoSync, does not cure such Event of Default within twenty (20) days of such Default Notice, then InfoSync may, by giving written termination notice to Client, terminate this Agreement as of the date specified in the termination notice.

	 	
(c)

	
Termination for Insolvency. If either Party files for bankruptcy, becomes or is declared insolvent, or is the subject of any proceedings related to its liquidation, insolvency or for the appointment of a receiver or similar officer for it, makes an assignment for the benefit of all of its creditors, or enters into an agreement for the composition, extension, or readjustment of substantially all of its obligation (in any event, the “Dissolving Party”), then the other Party may, by giving written notice to the Dissolving Party, terminate this Agreement as of a date specified in such notice of termination, but not sooner than thirty (30) days after the date of such notice.

	 	  	  
	 	
(d)

	
Termination upon Change of Control

	 	 	
(i)

	
In the event of an InfoSync Change of Control (as defined below), Client shall have the right to give a written termination notice to InfoSync to terminate this Agreement as of the date specified in such notice of termination, but no sooner than one hundred and twenty (120) days after the date of such notice.

	 	 	  	  
	 	 	
(ii)

	
For purposes of this Agreement, an “InfoSync Change of Control” shall mean with respect to InfoSync (i) any sale of equity interests, merger, consolidation, reorganization or similar transaction whereby there is a change in (x) the legal, beneficial or equitable ownership, directly or indirectly, of more than fifty percent (50%) of the voting equity interests of InfoSync or (y) the ability, directly or indirectly, to direct the voting of a majority of the directors of InfoSync’s board of directors (or an equivalent governing body), whether through appointment, voting agreement or otherwise; or (ii) a sale of substantially all of the assets of InfoSync.

  

4

  

 

	 	 	
(iii)

	
The terms “control”, “controlling” and “controlled”, as used in this Section, shall mean the legal, beneficial or equitable ownership, direct or indirect, of more than fifty percent (50%) of the aggregate of the voting equity interests of an entity.

	 	
(e)

	
Effects of Terminations.

	 	 	
(i)

	
If this Agreement is terminated for any reason whatsoever, InfoSync shall continue to make Services available and Client shall continue to compensate InfoSync for such Services for the duration of the transition period not to exceed one hundred and eighty (180) days following the agreed-upon termination date.

	 	 	  	  
	 	 	
(ii)

	
Upon expiration or termination of this Agreement for any reason, Client will pay InfoSync for all Services provided and actual and documented expenses pursuant to Section 6 incurred through the date of such expiration or termination in accordance with this Agreement.

	 	 	  	  
	 	 	
(iii)

	
In the event that Client terminates this Services Agreement pursuant to Section 8(a) during the first (1st) year of the Original Term, Client shall pay to InfoSync a one-time early termination fee equivalent to three (3) times the amount of the largest recurring InfoSync services invoice to Client in the three (3) periods prior to the date of notice of termination.  The early termination fee will be reduced during the second (2nd) year of the Original Term to two (2) times such largest recurring InfoSync invoice, and then to one (1) times such largest recurring InfoSync invoice during the third (3rd) year of the Original Term.  Client’s notice of early termination shall not be effective unless the early termination fee provided in this Section 8(e)(iii) has been paid to InfoSync within fifteen (15) days of the date of the early termination notice.  All services provided by InfoSync after Client’s written notice of early termination pursuant to Section 8(a) shall be prepaid each period by Client.  No early termination fee is payable for a termination effective at the end of the term or during any subsequent renewal period.

	 	 	  	  
	 	 	
(iv)

	
In the event that InfoSync terminates this Services Agreement pursuant to Section 8(b)(ii) during the first (1st) year of the Original Term, Client shall pay to InfoSync at the effective date of such termination a one-time payment equivalent to three (3) times the amount of the largest InfoSync services invoice to Client in the three (3) periods prior to the date of notice of termination.  This early termination fee for non-payment will be reduced during the second (2nd) year of the Original Term to two (2) times such largest InfoSync invoice, and then to one (1) times such largest InfoSync invoice during the third (3rd) year of the Original Term.

 

  

5

  

 

	 	 	
(v)

	
Notwithstanding anything to the contrary contained herein and for the avoidance of doubt, InfoSync hereby acknowledges and agrees that in the event that Client terminates this Services Agreement pursuant to Sections 8(b)(i), 8(c)or 8(d) InfoSync shall not be entitled to any early termination fees.

	 	 	  	  
	 	 	
(vi)

	
Notwithstanding anything to the contrary contained herein and for the avoidance of doubt, InfoSync hereby acknowledges and agrees that the termination fees set forth in Sections 8(e)(iii)and 8(e)(iv) above shall be considered liquidated damages (and not a penalty) and upon payment of such termination fees InfoSync shall have no more rights or claims under this Agreement against Client, any of its affiliates or representatives, whether at law or equity, in contract, in tort or otherwise, and neither Client nor any of its affiliates or representatives shall have any further liability or obligation relating to or arising out of this Agreement or the transactions contemplated by this Agreement other than the ongoing fees for the services being delivered through the transition period up to the termination date as set forth in Sections 8(e)(i) and 8(e)(ii).

	 	 	  	  
	 	 	
(vii)

	
If this Agreement is terminated for any reason whatsoever, upon Client’s written request, at no additional cost to Client except for (A) the termination fees described in Sections 8(e)(iii) and 8(e)(iv), and (B) the ongoing fees for the services being delivered as set forth in Sections 8(e)(i) and 8(e)(ii), InfoSync shall:

	 	 	 	
i.

	
within thirty (30) days of the notice of termination deliver or otherwise make available to Client (x) in electronic format, all data and information submitted to InfoSync or InfoSync’s representatives in tangible form (including electronic form) by Client or obtained, developed or produced by InfoSync or InfoSync’s representatives on behalf of Client (collectively, “Client Data”) in InfoSync’s possession, (y) all records, correspondence, written files and other Client-related materials in InfoSync’s possession, and (z) in the event of termination by Client pursuant to Section 8(c), access to the Software (including its source code) used by InfoSync to provide the Services under this Agreement in accordance with Section 3(b).

	
9.

	
REIMBURSEMENT AND PAYMENT FOR SERVICES.

	 	
(a)

	
In full compensation for the Services, Client shall pay and reimburse InfoSync for providing such Services as detailed in Section 6.  Recurring service fees are payable to InfoSync by Client on the first (1st) Business Day of each Client fiscal period.  Invoices for other services are due and payable within thirty (30) days after receipt of InfoSync’s invoice therefore.  Any amount owing to InfoSync pursuant to this Agreement that is not paid when due and payable will thereafter bear interest until paid at a rate of interest equal to ten percent (10%) per annum; provided, however, that in no event will such interest rate exceed the maximum rate of interest allowed by applicable law (the “Default Rate”), and provided further that no such Default Rate shall accrue for so long as any amounts are being disputed by either Party in good faith.  Each invoice shall provide sufficient details to justify the fees, including, but not limited to, the calculation upon which the amount to be reimbursed or paid is based, broken down by the Services rendered during the period to which such invoice relates.

  

6

  

 

	 	
(b)

	
InfoSync shall maintain separate, true and complete books of account containing an accurate record of all data necessary for the proper computation of all costs to be paid to InfoSync by the Company under the terms of this Agreement.

	 	  	  
	 	
(c)

	
The amounts to be reimbursed or paid in respect of the Services provided under this Agreement shall be consistent with Attachments A, B and C to this Agreement.

	
10.

	
RENEWAL. Client shall have the option to renew the term of this Agreement at the end of the Original Term and each successive term (if any) for successive one (1) year periods (as mutually agreed upon between the Parties).  Client shall exercise such options by providing written notice to InfoSync at least one hundred and twenty (120) days prior to the then effective expiration date of the Term (the “Expiration Date”).  If this Agreement is extended beyond the Original Term, the Charges for the Services provided by InfoSync will be such charges as will be mutually agreed upon by the Parties in writing for such period in the manner set forth in Section 7 by an amendment or supplement to Attachments A, B and C, as applicable; provided, however, that in the absence of such an express agreement in writing, the charges will be based on the rates then in effect under this Agreement.  In the event that Client chooses not to exercise its option to extend the Term of this Agreement, InfoSync will cooperate with the transition of the Services as reasonably requested by Client, with the understanding that such transition may require resources and services beyond those otherwise then being provided by InfoSync hereunder; all such transition services will be performed as Additional Services pursuant to Section 6(b) and charged appropriately on a project or hourly basis.

	  	  
	
11.

	
PERFORMANCE OF SERVICES.

	 	
(a)

	
InfoSync shall perform the Services with substantially the same degree of care, skill and prudence customarily exercised by (i) similarly situated companies in the outsourcing industry and (ii) InfoSync with respect to its own business and employees and consistent with Attachments A and C.

	 	  	  
	 	
(b)

	
Attachment A reflects the initial responsibilities of the Parties and may be modified from time-to-time upon mutual written agreement of the Parties.

	 	  	  
	 	
(c)

	
If either Party has concerns regarding adherence to the terms of this Agreement or the responsibilities outlined in Attachments A and C by the other Party, InfoSync and Client agree to communicate such concerns in writing to the other Party as detailed in Section 27 and resolve such concerns in accordance with Section 14.

  

7

  

 

	
12.

	
PROJECT TEAM.

	 	
(a)

	
Client will designate an officer or employee (the “Client Representative”) who will be authorized to act as the primary point of contact for InfoSync in dealing with Client with respect to the Services. If Client fails to expressly designate a Client Representative, the principal executive officer of Client will be the Client Representative.  The Client Representative will be responsible for directing, insofar as InfoSync is concerned, all activities of Client affecting the provision by InfoSync of the Services under this Agreement and will also work with InfoSync to establish Client's priorities for the Services.

	 	  	  
	 	
(b)

	
InfoSync will designate an officer or employee (the “InfoSync Representative”) who will be authorized to act as the primary point of contact for Client in dealing with InfoSync with respect to the Services. If InfoSync fails to expressly designate an InfoSync Representative, the principal executive officer of InfoSync will be the InfoSync Representative.  The InfoSync Representative will be responsible for directing, insofar as the Client is concerned, all activities of InfoSync affecting the provision of the Services under this Agreement and will also work with Client to understand Client's priorities for the Services. Client may rely upon the representations and agreements of the InfoSync Representative; provided, however, that the InfoSync Representative shall not have the authority to enter into written agreements to modify or supersede this Agreement.

	 	  	  
	 	
(c)

	
InfoSync shall have the right, subject to Client’s reasonable approval, to use subcontractors to assist InfoSync in performing work related to the Services, subject, however, to such subcontractor(s) entering into appropriate agreements requiring such subcontractor(s) to adhere to the confidentiality and non-disclosure provisions of this Agreement.

	 	  	  
	 	
(d)

	
InfoSync shall be responsible for the work and activities of each of its subcontractors, including compliance with the terms of this Agreement.  InfoSync shall be responsible for all payments to its subcontractors.

	
13.

	
MANAGEMENT AND CONTROL.  Upon execution of this Agreement, Client and InfoSync shall each appoint two (2) representatives to serve on a management committee (the “Management Committee”).  The Management Committee shall be authorized and responsible for (i) overseeing the provision of the Services and each Party’s performance under this Agreement and (ii) monitoring and resolving disagreements regarding the provision of the Services and each Party’s performance under this Agreement.  A Party may change any of its representatives on the Management Committee upon notice to the other Party.

	  	  
	
14.

	
DISPUTE RESOLUTION.

	 	
(a)

	
All disputes relating to this Agreement shall initially be referred by the Party raising the dispute to the Client Representative and the InfoSync Representative.  If the Client Representative and the InfoSync Representative are unable to resolve the dispute within ten (10) Business Days after referral of the matter to them, the Parties shall submit the dispute to the Management Committee.

 

  

8

  

 

	 	
(b)

	
The Management Committee shall meet at least once every calendar quarter during the Term (or at such other time as either Party may designate in a notice to the other Party) for the purpose of reviewing the overall performance of the Parties’ respective obligations under this Agreement and resolving disputes, if any, that may arise under this Agreement.  The Management Committee shall consider disputes in the order such disputes are brought before it.  In the event the Management Committee is unable to resolve a dispute within ten (10) Business Days of the date of the meeting during which such dispute was considered, the Management Committee shall notify the senior management of each Party.

	 	  	  
	 	
(c)

	
Either Party may, upon notice and within five (5) Business Days of receipt of a notice from the Management Committee pursuant to Section 14(b), elect to utilize a non-binding resolution procedure whereby each presents its case before a panel consisting of two (2) senior executives of each of the Parties who are not members of the Management Committee and, if such executives can agree upon such an individual, a mutually acceptable neutral advisor.  If a Party elects to use the procedure set forth in this Section 14(c) the other Party shall participate.  The hearing shall occur no more than ten (10) Business Days after a Party serves notice to use the procedure set forth in this Section 14(c).  If the matter cannot be resolved by such senior executives, the neutral advisor, if one has been agreed upon, may be asked to assist such senior executives in evaluating the strengths and weaknesses of each Party’s position on the merits of the dispute.  The Parties shall each bear their respective costs incurred in connection with the procedure set forth in this Section 14(c), except that they shall share equally the fees and expenses of the neutral advisor, if any, and the cost of the facility for the hearing.

	 	  	  
	 	
(d)

	
Arbitration.

	 	 	
(i)

	
If a dispute is not resolved pursuant to Section 14(c), then either Party may, upon notice to the other Party submit the dispute to binding arbitration in accordance with this Section 14(d).

	 	 	  	  
	 	 	
(ii)

	
The arbitration shall be held before a panel of three (3) arbitrators in the city of Miami, State of Florida.  Either Party may, upon notice to the other Party, demand arbitration by serving on the other Party a statement of the dispute, the facts relating or giving rise to such dispute and the name of the arbitrator selected by it.

	 	 	  	  
	 	 	
(iii)

	
Within five (5) days after receipt of such notice, the other Party shall name its arbitrator, and the two (2) arbitrators named by the Parties shall, within five (5) days after the date of such notice, select the third (3rd) arbitrator.

 

  

9

  

 

	 	 	
(iv)

	
The arbitration shall be administered by the American Arbitration Association and be governed by the Commercial Arbitration Rules of the American Arbitration Association, as may be amended from time to time, except as expressly provided in this Section 14(d).  The arbitrators may not amend or disregard any provision of this Section 14(d).

	 	 	  	  
	 	 	
(v)

	
The arbitrators shall allow such discovery as is appropriate to the purposes of arbitration in accomplishing a fair, speedy and cost-effective resolution of disputes.  The arbitrators shall reference the rules of evidence of the Federal Rules of Civil Procedure then in effect in setting the scope and direction of such discovery.

	 	 	  	  
	 	 	
(vi)

	
The decision of and award rendered by the arbitrators shall be final and binding on the Parties.  Judgment on the award of the arbitrators may be entered in and enforced by any court of competent jurisdiction. 

	 	 	  	  
	 	 	
(vii)

	
The costs of the arbitration proceedings conducted pursuant to this Section 14(d) shall be paid by the Party designated by the arbitrators.

	 	
(e)

	
InfoSync acknowledges that the performance of its obligations pursuant to this Agreement is critical to the business and operations of Client.  Accordingly, in the event of any dispute between Client and InfoSync, each Party shall continue to perform its obligations (including payment pursuant to Sections 6 and 9 of this Agreement except for any such amounts as are actually in dispute) under this Agreement in good faith during the pendency of such dispute resolution proceedings unless and until this Agreement is terminated in accordance with the provisions hereof.

	 	  	  
	 	
(f)

	
Notwithstanding anything to the contrary contained in this Agreement, in the event of a dispute relating to or arising out of an event of default by either Party, the dispute resolution procedures described in Sections 14(a), 14(b) and 14(c) must be commenced and completed within the cure period (if any) allowed for such an event of default under this Agreement.

	 	  	  
	 	
(g)

	
Notwithstanding the above dispute resolution provisions, in the event that a third party initiates a judicial action against either Party hereto in connection with or arising out of this Agreement, that Party shall have the right to seek to implead the other Party into that action, and the above dispute resolution provisions shall not be a bar to such impleader.

	
15.

	
COOPERATION.  During the Term each Party shall provide to the other Party reasonable cooperation and assistance in connection with its performance of its obligations under this Agreement.

	  	  
	
16.

	
LIMITATION OF LIABILITY. Except for indemnification pursuant to Section 17 and in the case of any gross negligence, willful misconduct or personal injury or death, neither Party will be liable for indirect, incidental, consequential or punitive damages that the other Party may incur on account of the performance or breach of this Services Agreement in excess of the aggregate amount of all sums paid by Client to InfoSync under this Agreement for the immediately preceding twelve (12) months.

 

  

10

  

 

	
17.

	
MUTUAL INDEMNITY.

	
  

	
(a)

	
InfoSync agrees to defend and indemnify Client for and against any and all liabilities, obligations, claims, damages, costs and ex­penses (including court costs, reasonable costs of investigation and reasonable at­tor­neys’ fees and expenses as they are incurred) (collectively, “Claims”) by third parties against Client resulting from any act, omission or breach by InfoSync related to its performance under this Services Agreement.  Client agrees to defend and indemnify InfoSync for and against any and all Claims by third parties against InfoSync resulting from any act, omission or breach by Client related to its performance under this Services Agreement.

	
  

	
(b)

	
InfoSync agrees to defend and indemnify Client for and against any Claim that any InfoSync Intellectual Property or the Software used by Client in connection with this Agreement infringes any patent, copyright, or other intellectual property right of a third party unless such infringement results from Client’s use of such InfoSync Intellectual Property or the Software in a manner which was not authorized by InfoSync.

	
  

	
(c)

	
The Party claiming indemnification under this Section (the “Indemnified Party”) shall deliver written notice (an “Indemnity Notice”) to the Party against whom indemnity is claimed (the “Indemnitor”) within the earlier of ten (10) days of re­ceipt of notice or thirty (30) days from discovery of any matters which may give rise to a Claim.  An Indemnity Notice shall set forth in reasonable detail to the extent then avail­able the facts concerning the Claim and the basis on which the Indemnified Party believes this indemnity applies.  The failure to give such Indemnity Notice shall not affect the right of the Indemnified Party to indemnity hereunder unless and to the extent that such failure has materially and adversely affected the defense of such Claims by the Indemnitor.  At any time after thirty (30) days from the giving of such Indem­nity Notice, the Indemnified Party may, at its option, contest, settle or otherwise com­­promise, or pay such Claim, unless it shall have received notice from the Indem­nitor that Indemnitor intends, at Indemnitor’s sole cost and expense, to assume and control the defense of any such matter, in which case the Indemnified Party shall have the right, at no cost or expense to Indemnitor, to participate in such defense.  If the Indemnitor does not assume the defense of such matter, and in any event until Indemnitor states in writing that it shall assume the defense, Indemnitor shall pay the costs of the Indemnified Party arising out of the defense until the defense is as­sumed; provided, however, that the Indemnitor shall have the right, at its own cost and expense, to participate in such defense and Indemnified Party shall consult with Indemnitor and obtain Indem­nitor’s consent, which shall not be unreasonably with­held or delayed, to any payment or settlement of any such Claim.  The Indem­nified Party may not settle a Claim after the Indemnitor assumes the defense with­out the consent of the Indemnitor or unless the Indemnified Party first agrees to release the Indemnitor from any obligation to indemnify the Indemnified Party with respect to such Claim.  If Indemnitor proposes to settle, com­promise or pay a Claim it may do so (i) with the consent of the Indemnified Party (which consent shall not be unrea­sonably withheld or delayed) or (ii) without the consent of the Indemnified Party pro­vided such settlement or compromise involves solely the payment of money and includes a release by any third party making such Claim against the Indemnified Party of all claims against the Indemnified Party which were the subject of the in­dem­nification.  The Indemnified Party shall take all appro­priate action to permit and authorize Indemnitor to assume and control the defense of any such Claim.  Indem­nitor shall keep the Indemnified Party fully apprised at all times as to the status of the defense.  If Indemnitor does not assume the defense, the Indemnified Party shall keep Indemnitor apprised at all times as to the status of the defense.

 

  

11

  

 

	
  

	
(d)

	
Following indemnification as provided herein, an Indemnitor shall be sub­rogated to all rights of the Indemnified Party with respect to all third parties re­lating to the matter for which indemnification has been made.

	
  

	
(e)

	
The indemnification rights of each Indemnified Party pur­suant to this Article shall be the exclusive remedy of such Indemnified Party against the Indemnifying Party with respect to the third party Claim to which such indem­nification relates; provided, however, that such Indemnified Party shall retain the right to seek wholly non-monetary injunctive or other equitable remedies with re­spect to such Claim.

	
18.

	
ASSIGNMENT. This Agreement will be binding upon and inure to the benefit of the Parties to this Agreement and their respective successors and assigns (it being understood and agreed that, except as expressly provided in this Agreement, nothing contained in this Agreement is intended to confer upon any other Person any rights, benefits or remedies of any kind or character whatsoever under or by reason of this Agreement). No Party may assign this Agreement without obtaining the prior written consent of the other Party. Notwithstanding the foregoing, either Party may assign this Agreement, and its rights and obligations under this Agreement, to any of its respective affiliates without the consent of the other Party; provided, however, that any such assignment will not relieve the assigning Party of any of its obligations under this Agreement.

	
19.

	
CONTINUED PROVISION OF SERVICES.

	
  

	
(a)

	
Business Continuity Plan.  InfoSync will make its business continuity plan available to Client prior to implementation of the Services.  In the event that InfoSync is planning to amend, update or otherwise alter its business continuity plan it shall provide Client with reasonable notice of such amendment including sufficient detail thereof and shall not amend, update or otherwise alter such business continuity plan without Client’s prior written consent.

	
  

	
(b)

	
Force Majeure.

	
  

	
(i)

	
If and to the extent that either Party’s performance of any of its obligations pursuant to this Agreement is prevented, hindered or delayed by fire, flood, earthquake, elements of nature or acts of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, third party strikes, third party lockouts or labor difficulties or any other cause beyond the reasonable control of such Party (each, a “Force Majeure Event”) and such non-performance could not have been prevented by reasonable precautions, then the non-performing Party shall be excused from any further performance of those obligations affected by the Force Majeure Event for as long as such Force Majeure Event continues and such Party continues to use its commercially reasonable efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, work around plans or other means.

 

  

12

  

 

	
  

	
(ii)

	
The occurrence of a Force Majeure Event does not limit or otherwise affect InfoSync’s obligation to provide either normal disaster recovery procedures or any other disaster recovery services described in Section 19(a).

	
  

	
(iii)

	
No Party to this Agreement shall be considered in default in the performance of its obligations under this Agreement or be liable in damages or otherwise for any failure or delay of less than thirty (30) days in performance which is due to a Force Majeure Event.  No Party to this Agreement shall be required to make any concession or grant any demand or request to bring to an end any strike or other concerted act of workers.

	
  

	
(iv)

	
A Party can only claim a Force Majeure Event as an excuse from its performance hereunder until normal performance can be recommenced if such claiming Party has given prompt written notice and described in reasonable detail the nature of the Force Majeure Event to the other Party of such claim and if the claiming Party makes a continuing and good faith effort to lessen or avoid the effects of such Force Majeure Event on the other Party.

	
20.

	
AUDITS.

	
  

	
(a)

	
Services.  Upon reasonable notice from Client, InfoSync and InfoSync agents shall provide Client’s agents, and any of Client’s regulators, with access to and any assistance that they may reasonably require with respect to the relevant Service locations and the systems for the purpose of performing audits or inspections of the Services and the business of Client relating to the Services.  InfoSync shall, subject to its standard security requirements, provide, and shall cause its agents to provide, Client’s agents or regulators any assistance that they may reasonably require, provided such assistance does not unreasonably interfere with InfoSync’s performance of its obligations hereunder.  InfoSync shall not provide Client’s agents or regulators with access to InfoSync customers’ information or data.  Subject to Sections 22, 23 and 24, InfoSync shall provide Client’s agents and regulators with access to InfoSync’s proprietary data relating to the Services, to the extent required to perform audits described in this Section.  If any audit by an auditor designated by Client or a regulatory authority, results in InfoSync being notified that it or InfoSync’s agents are not in compliance with any law, regulation or audit requirement, InfoSync shall, and shall cause its agents to, take actions to comply with such audit.  Client shall bear the expense of any such compliance that is (i) required by any law, regulation or other audit requirement relating to Client’s business or (ii) necessary due to Client’s noncompliance with any law, regulation or audit requirement imposed on InfoSync.  InfoSync shall bear the expense of any such compliance that is (x) required by any law, regulation or other audit requirement relating to InfoSync’s business or (y) necessary due to InfoSync’s or its agents’ noncompliance with any law, regulation or audit requirement imposed on InfoSync or its agents.

 

  

13

  

 

	
  

	
(b)

	
Fees. Upon reasonable notice, InfoSync shall provide Client and its agents access to such financial records and supporting documentation as may be reasonably requested by the Client to audit the records and documentation relating to all of the fees, taxes and expenses charged to Client pursuant to this Agreement.  If, as a result of such audit, it is determined that InfoSync has overcharged Client, Client shall promptly notify InfoSync and InfoSync shall promptly pay to Client the amount of the overcharge as the case may be, plus interest at the Prime Rate per year, calculated from the date of receipt by InfoSync of such incorrect amount until the date of payment to Client.  For the purposes of this Agreement “Prime Rate” shall mean the United States of America prime rate as recorded in the New York edition of the Wall Street Journal the day of such receipt or payment, as the case may be.

 

	
  

	
(c)

	
Record Retention.  Except as otherwise required by applicable law or as stated in other sections of the Agreement, InfoSync shall not be required to retain any records or documentation relating to Client or the Services provided under this Agreement so long as originals of such documentation have been provided to Client for imaging and/or storage.

	
  

	
(d)

	
Facilities. In the event of an audit described in this Section, InfoSync agrees to give Client and its agents reasonable access to the premises where such audit is being performed and such space (reasonably available), office furnishings (including lockable cabinets), telephone and facsimile service, utilities and office-related equipment and duplicating services as Client may reasonably require to perform the audits described in this Section.

	
21.

	
OTHER ACTIVITIES OF INFOSYNC. Client recognizes that InfoSync now renders and may continue to render management and other services to other clients that may or may not have policies and conduct activities similar to those of Client.  InfoSync shall be free to render such advice and other services, and Client hereby consents thereto. InfoSync shall not be required to devote its full time and attention to the performance of its duties under this Services Agreement, but shall devote sufficient time and attention as necessary to fulfill all of InfoSync’s obligations under this Agreement.

	
22.

	
CLIENT DATA.

	
  

	
(a)

	
As between InfoSync and Client, the Client Data will remain solely Client's property. Client hereby authorizes InfoSync to have access to and to make use of the Client Data as is appropriate for the performance by InfoSync of its obligations under this Agreement. Upon the expiration or termination of this Agreement for any reason, InfoSync, at the direction of Client, will either delete such Client Data from the data files maintained by InfoSync or return the Client Data to Client. InfoSync will not sell, assign, lease or otherwise dispose of, or commercially exploit, the Client Data.

 

  

14

  

 

	
  

	
(b)

	
During the Term, within ten (10) Business Days following the end of each fiscal period of Client, InfoSync shall provide to Client, in a form and manner to be reasonably agreed to by the Parties, a copy of Client’s database containing all of the Client Data provided to, or generated by, InfoSync and located on InfoSync servers as of the end of such fiscal period.

	
23.

	
INTELLECTUAL PROPERTY.

	
  

	
(a)

	
For purposes of this Agreement, “InfoSync Intellectual Property” shall mean all software or other intellectual property (including any writings, discoveries, inventions or other materials covered by any rights of copyright, trademark or patent or any rights similar thereto, whether registered or unregistered, or otherwise protectible as trade secret, proprietary or confidential information) owned or developed by, or otherwise proprietary to, InfoSync.  InfoSync Intellectual Property shall also include all programs and documentation therefor and the tangible media on which such programs are recorded, as well as all reports, technology, training materials, forms, specifications, and other intellectual property owned or developed by or proprietary to InfoSync, for use in providing the Services hereunder or otherwise in its business.

	
  

	
(b)

	
All InfoSync Intellectual Property is and will remain the property and confidential information of InfoSync or its third party licensors, and Client shall have no right, title or interest therein except to the extent of such limited right to use such particular portions thereof as are necessary to enable the Parties to perform their respective obligations hereunder or except as may otherwise be provided in any separate license agreements.  No use of InfoSync Intellectual Property at or in connection with any Service or equipment containing InfoSync Intellectual Property shall confer any rights in such InfoSync Intellectual Property on Client.

	
  

	
(c)

	
For purposes of this Agreement, “Client Intellectual Property” shall mean all software or other intellectual property (including any writings, discoveries, inventions or other materials covered by any rights of copyright, trademark or patent or any rights similar thereto, whether registered or unregistered, or otherwise protectable as trade secret, proprietary or confidential information) owned or developed by, or otherwise proprietary to, Client.  Client Intellectual Property shall also include all programs and documentation therefore and the tangible media on which such programs are recorded, as well as all reports, technology, training materials, forms, specifications, and other intellectual property owned or developed by or proprietary to Client.

	
  

	
(d)

	
All Client Intellectual Property is and will remain the property and confidential information of Client or its third party licensors, and InfoSync shall have no right, title or interest therein except to the extent of such limited right to use such particular portions thereof as are necessary to enable the Parties to perform their respective obligations hereunder or except as may otherwise be provided in any separate license agreements.  No use of Client Intellectual Property at or in connection with any Service or equipment containing Client Intellectual Property shall confer any rights in such Client Intellectual Property on InfoSync.

 

  

15

  

 

	
24.

	
CONFIDENTIALITY.

	
  

	
(a)

	
Except as otherwise provided in this Agreement, all confidential information or trade secrets (including, without limitation, any software or Client Data) (collectively, the “Confidential Information”) communicated to one Party by the other Party, whether before or after the commencement of the Services hereunder, will be, and will be deemed to have been, received in strict confidence and will be used only for the purposes of carrying out the obligations of, or as otherwise contemplated by, this Agreement.  Without obtaining the prior written consent of the other Party, neither Party will disclose any such Confidential Information received from the other Party.  Each Party shall treat the other’s Confidential Information with the same level of care as it treats its own confidential information of like import, but not less than a reasonable level of care, shall disclose it within its own organization only on a need-to-know basis, and shall inform those to whom it rightfully discloses such Confidential Information of their obligations of confidentiality and non-disclosure hereunder.

	
  

	
(b)

	
Confidential Information will not include any information that:

	
  

	
(i)

	
is already in the possession of such Party without being subject to another confidentiality agreement;

	
  

	
(ii)

	
is or becomes generally available to the public other than as a result, directly or indirectly, of a disclosure of information by such Party or by other persons to whom such Party disclosed information;

	
  

	
(iii)

	
Client is required to disclose by any applicable law, regulation or rules of any stock exchange; or

	
  

	
(iv)

	
constitutes general information relating to the scope of the Services and the duration of this Agreement which Client may disclose to potential buyers of Client or any one (1) or more affiliates of Client.

	
  

	
(c)

	
Each Party acknowledges that the other Party may suffer irreparable damage in the event of a breach or threatened breach of any provision of this Section.  Accordingly, in such event, notwithstanding Section 14, such Party shall be entitled to preliminary and final injunctive relief, as well as any and all other applicable remedies at law or equity, including the recovery of damages, subject to the limitation in Section 16.

 

  

16

  

 

	
25.

	
REPRESENTATIONS AND WARRANTIES.

	
  

	
(a)

	
Client represents and warrants that:

	
  

	
(i)

	
Client is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware.

	
  

	
(ii)

	
Client has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement.

	
  

	
(iii)

	
The execution, delivery and performance of this Agreement have been duly authorized by Client.

	
  

	
(iv)

	
Client has not disclosed any Confidential Information of InfoSync as of the date hereof.

	
  

	
(v)

	
There is no outstanding litigation, arbitrated matter or other dispute to which Client is a Party which would reasonably be expected to have a potential or actual material adverse effect on InfoSync’s or Client’s ability to fulfill its respective obligations under this Agreement.

	
  

	
(b)

	
InfoSync represents and warrants that:

	
  

	
(i)

	
InfoSync is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Nevada.

	
  

	
(ii)

	
InfoSync has all requisite limited liability company power and authority to execute, deliver and perform its obligations under this Agreement.

	
  

	
(iii)

	
InfoSync is duly licensed, authorized or qualified to do business and is in good standing in every jurisdiction in which a license, authorization or qualification is required for the ownership or leasing of its assets or the transaction of business of the character transacted by it, except where the failure to be so licensed, authorized or qualified would not have a material adverse effect on InfoSync’s ability to fulfill its obligations under this Agreement.

	
  

	
(iv)

	
The execution, delivery and performance of this Agreement have been duly authorized by InfoSync.

	
  

	
(v)

	
InfoSync shall comply with all applicable Federal, state and local laws and regulations applicable to InfoSync and shall obtain all applicable permits and licenses required of InfoSync in connection with its obligations under this Agreement.

	
  

	
(vi)

	
InfoSync has not disclosed any Confidential Information of Client as of the date hereof.

 

  

17

  

 

	
  

	
(vii)

	
There is no outstanding litigation, arbitrated matter or other dispute to which InfoSync is a Party which would reasonably be expected to have a potential or actual material adverse effect on Client’s or InfoSync’s ability to fulfill its respective obligations under this Agreement.

	
  

	
(viii)

	
To its knowledge the InfoSync Intellectual Property does not and will not infringe upon the proprietary rights of any third party.

	
26.

	
SAS 70 TYPE II AUDIT. In connection with InfoSync's obligations under this Agreement, InfoSync will have an annual "SAS 70 Type II" audit by an independent, nationally recognized accounting or consulting firm of InfoSync's operations and related internal controls. Such audit shall be conducted at InfoSync's expense. InfoSync shall provide Client with a copy of the related "Service Audit Report" promptly after receipt by InfoSync of such audit report.  The SAS 70 "Service Audit Report" shall contain InfoSync's management's response to the exception comments, together with appropriate target dates for completion of required changes.

	
27.

	
NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by courier service, by facsimile or by registered or certified mail (postage prepaid, return receipt requested) to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this section):

 

	 	
(a)

	
If to InfoSync:

	 	  	  
	 	  	
InfoSync Services, LLC

	 	  	
1938 N. Woodlawn, Suite 110

	 	  	
Wichita, KS 67208

	 	  	
Facsimile No.: 316-681-4359

	 	  	
Attention: Dale Hoyer, CEO

	 	  	  
	 	
(b)

	
If to Client:

	 	  	  
	 	  	
Benihana, Inc.

	 	  	
8685 NW 53rd Terrace

	 	  	
Miami, FL 33166

	 	  	
Facsimile No.: 305-702-2806

	 	  	
Attention: Richard C. Stockinger, CEO

 

	
28.

	
RELATIONSHIP OF THE PARTIES. The Parties hereto are independent contractors and no Party is an employee, partner or joint venturer of the other Party.  Under no circumstances shall any of the employees of either Party hereto be deemed to be employees of the other Party for any purpose. No Party shall have the right to bind the other Party to any agreement with a third party or to represent itself as a partner or joint venturer of the other Party.

 

  

18

  

 

	
29.

	
CLIENT RESALE OR PASS-THROUGH OF SERVICES.  Client may not resell, pass-through or otherwise provide any of the services that have been provided hereunder by InfoSync to any person.

	
30.

	
GOVERNING LAW.  This Services Agreement shall be governed by the laws of the State of Oklahoma.

	
31.

	
ARBITRATION. Any actions brought to enforce any of the provisions of this Services Agreement shall be fully and finally resolved by binding arbitration as set forth in Section 14(d).

	
32.

	
SURVIVAL. The terms of Sections 13, 17, 22, 23, 24, 25(a)(i), 25(a)(ii), 25(b)(i), 25(b)(ii), 30 and 31 shall survive the expiration or termination of this Agreement.

	
33.

	
COVENANT OF FURTHER ASSURANCE.  Client and InfoSync covenant and agree that, subsequent to the execution and delivery of this Agreement and without any additional consideration each of Client and InfoSync shall execute and deliver any further legal instruments which are or may become necessary to effectuate the purposes of this Agreement.

	
34.

	
DISCLAIMER OF WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, INFOSYNC MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, TO CLIENT OR TO ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING THE MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE OF ANY SERVICES, SOFTWARE OR MATERIALS PROVIDED UNDER THIS AGREEMENT.

	
35.

	
INSURANCE.

	
  

	
(a)

	
InfoSync shall keep in full force and effect and maintain at its sole cost and expense the following policies of insurance with the specified minimum limits of liability during the period that the Services are being provided:  (a) commercial general liability with coverage of not less than $2,000,000 per occurrence and $5,000,000 in the aggregate for bodily injury and property damage; (b) motor vehicle liability for owned, non-owned and hired vehicles with not less than $1,000,000 combined single limit for bodily injury and property damage; (c) workers’ compensation insurance in the amount required by statute for all states in which the Services are to be performed; and (d) professional liability insurance with limits of not less than $3,000,000 per claim.

	
  

	
(b)

	
Insurance required to be maintained by InfoSync under this Agreement shall be with companies duly licensed to transact business in the state where the premises and/or work is being performed and shall have a  minimum rating of A-VIII as set forth in the most current issue of “AM Best” or similar publication.

	
  

	
(c)

	
InfoSync has provided evidence of insurance in the form of a certificate of insurance, acceptable to Client in its sole discretion, providing that all of the policies required under this Section, with the exception of workers’ compensation, (i) shall apply as primary insurance and name Client and its respective officers, directors, shareholders, members, partners, parents, subsidiaries, related and affiliated entities, agents, servants, employees and lenders as additional insureds, and (ii) attach a copy of the additional insured endorsement.  Such certificate of insurance provides, among other things, for a thirty (30) days notice to Client of cancellation, any material change or non-renewal.

 

  

19

  

 

	
36.

	
GENERAL. This Services Agreement and the Attachments hereto constitutes the entire understanding between the Parties with respect to the subject matter hereof and supersedes all proposals, commitments, writings, negotiations and understandings, oral and written, and all other communications between the Parties relating to the subject matter of this Services Agreement. This Services Agreement may not be amended or otherwise modified except in writing duly executed by both Parties.  A waiver by any Party of any breach or violation of this Services Agreement shall not be deemed or construed as a waiver of any subsequent breach or violation thereof. This Services Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. Should any part, term or condition hereof be declared illegal or unenforceable or in conflict with any other law, the validity of the remaining portions or provisions of this Services Agreement shall not be affected thereby, and the illegal or unenforceable portions of this Services Agreement shall be and hereby are redrafted to conform with applicable laws while leaving the remaining portions of this Services Agreement intact. Subject to the provisions of Section 17 of this Services Agreement, this Services Agreement is solely for the benefit of the Parties and their respective successors and assigns. Nothing herein shall be deemed to provide any rights to any other entity or individual. Section headings are for convenience only and do not control or affect the meaning or interpretation of any terms or provisions of this Services Agreement.

IN WITNESS WHEREOF, the Parties hereto have executed this Services Agreement as of the date first above written.

 

	
BENIHANA, INC

	
INFOSYNC SERVICES, LLC

	 	 
	 	 
	____________________________________	____________________________________
	
Authorized Signature

	
Authorized Signature

	 	 
	 	 
	 ____________________________________	____________________________________
	
Printed Name

	
Printed Name

 

  

20

  

 

Attachment A

ACCOUNTING, PAYROLL, AND REPORTING SERVICES

 

 

Specific standards and procedures will be developed and modified from time to time upon mutual agreement by Client and InfoSync management.  A responsibility matrix detailing the initial list of services to be provided by InfoSync under this Agreement is included at Attachment C.

 

 

THE IMPLEMENTATION PROCESS:

 

 

The InfoSync implementation process will provide a comprehensive and timely start-up for the Services.  The key to this process is the joint work of the InfoSync and Client teams during the planning phase.  A detailed start-up plan, including dates and assignments, shall be prepared by InfoSync during this phase.  Anticipated start of service date is the beginning of Client’s fiscal Period 7, 2010 (September 13, 2010).

 

 

CLIENT’S GENERAL RESPONSIBILITIES:

	
  

	
·

	
Forward all financial transaction information to InfoSync in a timely manner

	
  

	
·

	
Maintain banking relationships

	
  

	
·

	
Maintain adequate funding in bank accounts and maintain all treasury functions

	
  

	
·

	
Agree to general ledger chart of accounts setup, financial statement definitions, budget structure, etc.

	
  

	
·

	
Ensure all restaurants prepare weekly packets and send to InfoSync on a timely basis

	
  

	
·

	
Provide period budgets in a format that can be uploaded to InfoSync

	
  

	
·

	
Provide documentation on Client company policies and procedures

	
  

	
·

	
Pay all InfoSync service related expenses and invoices in a timely manner as described in Section 8 of this Agreement

	
  

	
·

	
Provide executive oversight and problem resolution in support of the InfoSync relationship

	
  

	
·

	
Set accounting policy and evaluate significant accounting estimates

	
  

	
·

	
Review of financial statements (Client management is responsible for the accuracy of Client’s financial statements)

	
  

	
·

	
Distribution of financial statements and other financial information to third parties (Client management is responsible for determining what financial information is to be provided to third parties and the accuracy of that information)

 

  

21

  

 

Attachment B

 

ACCOUNTING, PAYROLL, AND REPORTING SERVICES FEES:

 

 

The following details the Services and their respective rates for a 13 period fiscal year.  InfoSync service rates are based on the total number of Units served and the pricing below is contingent upon Client operating and maintaining a minimum of 75 restaurants and maintaining Client’s current corporate structure.  Reduction in Unit counts below 75 restaurants or formation of additional separate legal entities may require a price increase to be mutually agreed upon at that time by the Parties.  The following pricing reflects the responsibility matrix in Attachment C.  All recurring fees are due on the first Business Day of each fiscal period beginning with the Start of Processing Date; such recurring period invoices will be delivered to Client by email the last week of the previous period and Client will authorize a check or wire to be initiated on the first Business Day of each period.

	  	
Recurring Fees

Per Restaurant

Per Period

	
Setup Fees

	 	 	 
	
Accounting, Payroll and Financial Reporting Services For all Client Owned Restaurants

	  	  
	 	 	 
	
Corporate Accounting (Payroll, AP, Franchise Receivable, G&A, Financial Reporting)

	  	  
	 	 	 
	
Business Intelligence Services (Operational Reporting on RightView Web)

	  	  
	 	 	 
	
Annual CPI Increase (Including renewal periods)

	
Maximum increase of 3% per year

	  

 

 

	 	
Notes:

	 	  
	 	  	 a)	
Initial setup fees are due at contract signing.

	 	  	 b)	
The client is responsible for all CFO, Human Resource administration, auditing, corporate income tax return preparation, franchise tax return preparation, lease administration and property tax rendition preparation services.  These functions are not provided by InfoSync.

	 	  	 c)	
CPI means the Consumer Price Index as published by the U.S. Department of Labor, Bureau of Labor Statistics, All Urban Consumers-(CPI-U), U.S. city average, All items 1982-84=100 (ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt).

 

  

22

  

 

ADDITIONAL SERVICE FEES (Requires Client approval of Statement of Work):

	
1) Initial Training and Conversion

	
Included in Setup Fee above

	 
	
2) Custom Programming

	
$100/hour (see note c)

	 

 

 

	
Notes:

	 	  
	
 

	a)	
Additional Services fee rates are subject to a potential maximum increase of 3% per year.

	
 

	
b)

	
Travel & Expenses (T&E) are billed at cost.

	
 

	
c)

	
Custom programming charges apply to programming beyond the scope of services anticipated at the time of contract execution – application, reporting, restaurant system changes, bank changes, benefit provider changes, etc.

INFOSYNC SCHEDULED HOLIDAYS:

Following are the holidays normally recognized by InfoSync Services. The actual days to be taken will be announced each year, additionally there may be allowance made for holidays that fall on weekend days.

	
Holiday

	
Normal Date

	
New Year's Day

	
(January 1)

	
Memorial Day

	
(last Monday in May)

	
Independence Day

	
(July 4)

	
Labor Day

	
(first Monday in September)

	
Thanksgiving

	
(fourth Thursday in November)

	
Day after Thanksgiving

	
(fourth Friday in November)

	
Christmas Eve

	
(December 24)

	
Christmas

	
(December 25)

 

23

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