Document:

f8k042914ex10ii_lipidviro.htm

Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of April 29, 2014, between LipidViro Tech, Inc. (to be renamed NAC Global Technologies, Inc.), a Nevada corporation (the “Company”), and the purchaser signatory hereto (the “Purchaser”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and the Purchaser (the “Purchase Agreement”).

The Company and the Purchaser hereby agrees as follows:

1.             Definitions.

 

Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

“Advice” shall have the meaning set forth in Section 6(d).

“Effectiveness Date” means, with respect to the Initial Registration Statement required to be filed hereunder, the 90th calendar day following the filing of the Initial Registration Statement with the Commission; provided, however, that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth (5th) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Event” shall have the meaning set forth in Section 2(g).

“Event Date” shall have the meaning set forth in Section 2(g).

“Holder” means the holder, as the case may be, from time to time of Registrable Securities.

“Indemnified Party” shall have the meaning set forth in Section 5(c).

 

  

  

  

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Initial Registration Statement” means the initial Registration Statement filed pursuant to this Agreement.

“Losses” shall have the meaning set forth in Section 5(a).

“Plan of Distribution” shall have the meaning set forth in Section 2(a).

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means, as of any date of determination, (a) all of the shares of Common Stock then issued and issuable upon conversion in full of the Note (assuming on such date the Note is converted in full without regard to any conversion limitations therein), (b) all shares of Common Stock issued and issuable as interest or principal on the Note assuming all permissible interest and principal payments are made in shares of Common Stock and the Note is held until maturity, (e) any additional shares of Common Stock issued and issuable in connection with any anti-dilution provisions in the Note (in each case, without giving effect to any limitations on conversion set forth in the Note) and (e) any securities issued or then issuable upon any stock split, dividend or other distribution,  recapitalization or similar event with respect to the foregoing; provided, however, that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holder (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company), as reasonably determined by the Company, upon the advice of counsel to the Company.

 

  

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“Registration Statement” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2 or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

 “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“Selling Stockholder Questionnaire” shall have the meaning set forth in Section 3(a).

“SEC Guidance” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.

2.           Registration

 

  (a)           Demand Registration Rights as to Closing.  The Purchaser, at any time within thirty (30) after the Closing, may, by written notice to the Company, request that the Company effect the registration of Registrable Securities (for the avoidance of doubt, the Purchaser may deliver a demand for registration under this Section 2(a) whether or not the Purchaser owns Registrable Securities at the time of such request).  In such event, the Company shall have thirty (30) days to file the Initial Registration Statement with the Commission.  The Registration Statement filed hereunder shall be on Form S-3 and shall contain (unless otherwise directed by at least 85% in interest of the Holder) substantially the “Plan of Distribution” attached hereto as Annex A.  If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.  Subject to the limitations set forth in Sections 2(c), the Company shall use its best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act within ninety (90) days after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) six (6) months after the Registrable Securities may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holder (the “Effectiveness Period”).  The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day.   The Company shall immediately notify the Holder via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement.  The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424.  Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(g).

 

  

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  (b)           Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform the Holder thereof and use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(g); with respect to filing on Form S-3 or other appropriate form, and subject to the provisions of Section 2(g) with respect to the payment of liquidated damages; provided, however, that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.

  (c)            Limitations. The Company will not be required to effect more than one (1) registration at the request of the Purchaser.

 

  

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  (d)           Piggyback Registration.  If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 2(d) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement.

  (e)           Allocation of Shares. In connection with any offering under Section 2(d) involving an underwriting, the Company shall not be required to include any Registrable Securities in such underwriting unless the Holder thereof accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by it. Further, if the managing underwriter advises the Company that, in its view, the number of Registrable Securities requested to be included in such registration exceeds the “Maximum Offering Size” (which shall mean the largest aggregate number of shares which can be sold without having a material adverse effect on such offering, as determined by the managing underwriter), the Company will include in such registration, in the following priority, up to the Maximum Offering Size: first, so many shares of Common Stock proposed to be registered by the Company as would not cause the offering to exceed the Maximum Offering Size; and second, any Registrable Securities requested to be included in such registration by the Purchaser, allocated, if necessary, pro rata on the basis of their relative number of Registrable Securities so held.

  (f)           Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(g), if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:

	 	
a.

	
First, the Company shall reduce or eliminate any securities to be included by any Person other than a Holder; and

 

  

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b.

	
Second, the Company shall reduce Registrable Securities represented by Conversion Shares (applied, in the case that some Conversion Shares may be registered, to the Holder on a pro rata basis based on the total number of unregistered Conversion Shares held by the Holder).

 

In the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s allotment.  In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.

 

  (g)           If: (i) the Initial Registration Statement is not filed on or prior to the time periods described in Section 2(a) (if the Company files the Initial Registration Statement without affording the Holder the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five (5) Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within ten (10) calendar days after the receipt of comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared effective, or (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement, or (v) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Holder is otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such ten (10) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights the Holder may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 2.0% multiplied by the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement.  If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.

 

  

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3.           Registration Procedures.

In connection with the Company’s registration obligations hereunder, the Company shall:

  (a)         Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of the Holder, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holder advances copies of any universal shelf registration statement registering securities in addition to those required hereunder, or any Prospectus prepared thereto.  The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holder of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holder has been so furnished copies of a Registration Statement or one (1) Trading Day after the Holder has been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex B (a “Selling Stockholder Questionnaire”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4th) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.

 

  

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  (b)         (i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holder true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holder thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

  (c)         If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case within thirty (30) days, an additional Registration Statement covering the resale by the Holder of not less than the number of such Registrable Securities.

 

  

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  (d)         Notify the Holder of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any 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, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided, however, in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.

  (e)         Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

  (f)          Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.

  (g)         Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holder in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).

 

  

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  (h)        The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company shall pay the filing fee required by such filing within two (2) Business Days of request therefor.

  (i)          Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holder in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

  (j)          If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

  (k)         Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holder in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus until the requisite changes to such Prospectus have been made, then the Holder shall suspend use of such Prospectus.  The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.  The Company shall be entitled to exercise its right under this Section 3(k) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(g), for a period not to exceed sixty (60) calendar days (which need not be consecutive days) in any 12-month period.

 

  

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  (l)          Comply with all applicable rules and regulations of the Commission.

  (m)        The Company shall use its best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.

  (n)        The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.

 

 4.           Registration Expenses. All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing, with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement.  In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.  In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holder.

 

  

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 5.            Indemnification.

 

(a)           Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected.  The Company shall notify the Holder promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holder in accordance with Section 6(g).

 

  

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(b)           Indemnification by Holder. The Holder shall indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) the Holder’s failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), to the extent, but only to the extent, related to the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected.  In no event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

  

13

  

(c)           Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless:  (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.

 

  

14

  

(d)           Contribution. If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.  Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

 6.            Miscellaneous.

(a)          Remedies.  In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, the 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.  Each of the Company and each Holder agrees 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.

 

  

15

  

(b)          No Piggyback on Registrations; Prohibition on Filing Other Registration Statements.  Neither the Company nor any of its security holders (other than the Holder in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities.  The Company shall not file any other registration statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) (i) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement and (ii) shall not prohibit the Company from filing a shelf registration statement on Form S-3 for a primary offering by the Company, provided that the Company makes no offering of securities pursuant to such shelf registration statement prior to the effective date of the Registration Statement required hereunder that includes all of the Registrable Securities.

(c)          Compliance. The Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration Statement.

(d)          Discontinued Disposition.  By its acquisition of Registrable Securities, the Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed.  The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable.

(e)          Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holder of 67% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any Security).  If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for the Holder shall be reduced pro rata the Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of the Holder may be given only by the Holder of all of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first  sentence of this Section 6(e). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

 

  

16

  

(f)           Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.

(g)          Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of the Holder of the then outstanding Registrable Securities.  The Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.

(h)          No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holder in this Agreement or otherwise conflicts with the provisions hereof.  Except as set forth on Schedule 6(h), neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

(i)           Execution and Counterparts. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, 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 or “.pdf” signature page were an original thereof.

(j)           Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.

(k)          Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

 

  

17

  

(l)           Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(m)         Headings. The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(n)          Independent Nature of Holder’s Obligations and Rights. The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holder as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holder is in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holder is not acting in concert or as a group, and the Company shall not asset any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder.  It is expressly understood and agreed that each provision contained in this Agreement is between the Company and the Holder, solely.

********************

 

(Signature Pages Follow)

 

  

18

  

 

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

 

	 	LIPIDVIRO TECH, INC.
	 	 	  
	 	
By:

	 	
 

	 	 	Name:	  
	 	 	Title:	  

[SIGNATURE PAGE OF HOLDER FOLLOWS]

 

  

19

  

[SIGNATURE PAGE OF HOLDER TO RRA]

Name of Holder: _________________________

 

Signature of Authorized Signatory of Holder: __________________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________

 

  

20

  

Annex A

Plan of Distribution

Each Selling Stockholder (the “Selling Stockholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the OTC Bulletin Board or any other stock exchange, market or trading facility on which the securities are traded or in private transactions.  These sales may be at fixed or negotiated prices.  A Selling Stockholder may use any one or more of the following methods when selling securities:

 

	
  

	
·

	
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

	
  

	
·

	
block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

	
  

	
·

	
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

	
  

	
·

	
an exchange distribution in accordance with the rules of the applicable exchange;

 

	
  

	
·

	
privately negotiated transactions;

 

	
  

	
·

	
settlement of short sales;

 

	
  

	
·

	
in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

 

	
  

	
·

	
through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

 

	
  

	
·

	
a combination of any such methods of sale; or

 

	
  

	
·

	
any other method permitted pursuant to applicable law.

 

The Selling Stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.

 

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales.  Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

  

1

  

 

In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume.  The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales.  In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.  Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

 

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities.  The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

 

Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder.  In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders.

 

  

2

  

 

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.  The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution.  In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Stockholders or any other person.  We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

  

3

  

 

Annex B

 

LIPIDVIRO TECH, INC.

(to be renamed NAC Global Technologies, Inc.)

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”) of LIPIDVIRO TECH, INC. (to be renamed NAC Global Technologies, Inc.) (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), 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 stockholder 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 stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

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

 

  

1

  

 

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 Stockholder

 

	
  

	 	 

 

	
  

	
(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 this Questionnaire):

 

	
  

	 	 

 

	
2.

	
Address for Notices to Selling Stockholder:

 

	  
	  
	  

	
Telephone:

	 
	
Fax:

	 
	
Contact Person:

	 

 

	3.	
Broker-Dealer Status:

 

	
  

	
(a)

	
Are you a broker-dealer?

 

Yes   o                      No   o

 

	
  

	
(b)

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

 

Yes   o                      No   o

 

	
  

	
Note:

	
If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

  

2

  

 

	
  

	
(c)

	
Are you an affiliate of a broker-dealer?

 

Yes   o                      No   o

 

	
  

	
(d)

	
If you are an affiliate of a broker-dealer, do you certify that you purchased 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   o                      No   o

 

	
  

	
Note:

	
If “no” to Section 3(d), 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 Stockholder.

 

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 Purchase Agreement.

 

	
  

	
(a)

	

Type and Amount of other securities beneficially owned by the Selling Stockholder:

 

	
  

	 	

 

	
  

	 	

 

 

  

3

  

 

	
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% of 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 and any amendments or supplements thereto.

 

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

 

	
Date:

	 	 	Beneficial Owner:	 	 

 

	  	
By:

	 	 
	  	  	
Name:

	 
	  	  	
Title:

	 

 

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

 

 

 4f8k042914ex10iii_lipidviro.htm

Exhibit 10.3

 

EXCLUSIVE MANUFACTURING AND SALES REPRESENTATIVE AND DISTRIBUTOR AGREEMENT

 

THIS AGREEMENT made this 19th day of October, 2012 between Beijing CTKM Harmonic Drive Co. Ltd., with its principal place of business located at A21, Yuhua Road, B of Beijing Airport Industrial Zone, Shunyi Beijing China, hereinafter referred to as the "Company" or the “Manufacturer”; and NAC Harmonic Drive Corporation, with its principal office at 4720 Salisbury Road, Jacksonville, Florida 32256, hereinafter referred to as “NAC” or "Distributor".

R E C I T A L S

 

The Company designs, develops and manufactures harmonic drive gearing, mechanical devices for transmission, and other motion control products.  Heretofore, the Company’s principal area of sales has been the People’s Republic of China.

 

NAC has heretofore been involved worldwide in the design, manufacture and sale of harmonic drive components and gearheads and has established worldwide contacts and a customer base for the harmonic drive market.  As the result of the Company’s manufacturing capabilities and NAC’s worldwide sales capabilities, the parties have determined that it is to their mutual benefit to enter this agreement wherein and whereby the Company shall appoint NAC as its exclusive sales representative and distributor throughout the world except for the People’s Republic of China, for the sale and distribution of the Company’s harmonic drive gearing products and any other products that the Company may offer for sale.  Additionally, NAC shall have sole right to subcontract to the Company manufacturing of harmonic drive gearing and its associated components, and the Company agrees it will not engage in manufacturing of harmonic drive gearing products for any third party companies.

 

The explicit intent of the Company and NAC is to enter into a long term, perpetual cooperative agreement that extends beyond the initial term.  The Company and NAC mutually desire to cooperate in areas other than sales, marketing, and distribution, with such areas including, but not limited to, engineering, product development, and production improvements.

 

NOW THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, and for other good and valuable consideration, the parties agree as follows:

 

  

1

  

 

1.             Appointment of NAC as Exclusive Worldwide Sales Representative and Distributor

Subject to the terms and conditions hereinafter set forth, the Company hereby appoints NAC and, NAC hereby accepts the Company’s appointment as the Company’s sole and exclusive sales representative and products distributor throughout the world excluding only the Territory comprising the People’s Republic of China.  NAC shall have the exclusive right to sell the equipment and products manufactured by the Company within NAC’S exclusive territory.  This exclusive right to sell the Company’s products shall extend to and cover any products, regardless of the brand name that may be used for the product. The Company shall not appoint any other sales representative or distributor in the exclusive designated territory granted to NAC. NAC shall have the exclusive right to create a network within its Territory of sub-sales representatives and sub-distributors.  These sub-sales representatives and sub-distributors shall report solely to NAC and the Company shall not, without the permission and consent of NAC, deal directly with any of the sub-sales representatives or sub-distributors of NAC.  Any and all purchase orders for the Company’s products received from purchasers outside the People’s Republic of China by the Company shall be immediately referred to NAC for processing.  The Company shall not quote any prices or delivery terms to any prospective purchasers within NAC’S exclusive distribution territory.  All sales inquiries and requests for price quotes received by the Company from NAC’S Territory shall immediately be transmitted and referred to NAC.

 

2.             Duties and Responsibilities of NAC

 

(a)           NAC as the sole and exclusive sales representative and distributor of the Company’s products and equipment outside the People’s Republic of China shall maintain a sales and operations office during regular business hours during normal United States work days.  NAC shall devote such time and effort as may be reasonably necessary to sell, promote and support the sale of the Company’s products to worldwide prospects.

 

(b)           It is understood and agreed that the relationship between the Company and NAC shall be one of an independent contractor.    NAC shall have no authority to bind the Company to any agreement with any third party.  NAC shall maintain at all times its status as an independent contractor.    NAC is authorized to contract its services to other parties as a sales representative or distributor and maintains the right to manufacture, sell, broker, distribute for itself, and as a representative agent or distributor of any third party, any equipment or goods that NAC deems appropriate for its business purposes.  The Company understands that while NAC is hereby designated as the sole distributor and sales representative of the Company’s products outside the People’s Republic of China, NAC shall not be restrained from acting as a sales representative or distributor of other equipment, services and goods for third parties.  Notwithstanding the foregoing, NAC agrees that it shall not offer for sale any competitive products to the Company’s products that NAC is authorized to sell for the Company pursuant to this agreement.

 

(c)           NAC will conduct all of its business in its own name except when necessary to promote the Company’s interests.  NAC will pay all of its own operating expenses and shall not look to the Company for reimbursement of expenses unless otherwise specifically agreed to between the parties.

 

  

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(d)           In furtherance of its sales efforts, NAC shall have the right to use the Company’s name, trademarks, copyrighted materials and intellectual property and information for the promotion and sale of the Company’s products.  However, NAC shall be prohibited from disseminating any information or material that constitutes confidential information or trade secrets.  The Company shall be solely responsible for the development, production, supply and performance of its manufactured products and hereby agrees to indemnify and hold NAC harmless against any losses, costs, damages, court imposed fines, penalties, sanctions, and  expenses whatsoever, including reasonable attorney’s fees and costs which NAC may sustain or incur on account of any infringement or alleged infringement of any patent, trademark, service mark, trade name, copyright, trade secret or any other intellectual property materials supplied by the Company or which the Company claims ownership of.

 

3.             Prices

 

(a)           The Company shall maintain a pricelist for all its products that are available for distribution and sale to NAC.  Pricing shall be most favorable pricing offered by the Company to its most favored customers.  It is the intention of this provision to afford NAC the lowest rice that the Company sells the product  to any of its customers. The Company pricelist shall be expressed in United States Dollars (USD).  All prices shall be quoted FOB Company plant.  All the prices shall be maintained by the Company for not less than a six (6) month period from the date of its first publication, unless a special circumstance shall arise which would create a condition which would equitably require a price adjustment.  Such special circumstances shall be, by example, a currency revaluation between the U.S. Dollar and the Chinese Yuan of more than ten (10%) percent that would have the effect of increasing the costs to the Company; or a significant shortage of raw materials that increased the price of raw materials by more than ten (10%) percent for which the Company does not maintain in stock which requires the Company to purchase said material in order to manufacture the equipment on the pricelist.  In absence of exigent circumstances, the Company shall give NAC a six (6) month notice of any change in the prices of its products.

 

(b)           Terms of Payment.  Unless otherwise specifically agreed to in writing, payment for purchased product shall be due and payable by NAC to the Company net 30-45 days from the date of shipment of the goods from the Company’s plant.

 

(c)           Prices Charged by NAC as Distributor.  NAC shall be free to price the products purchased from the Company for resale at  its sole discretion.

 

(d)           Sales of Company’s Product within the People’s Republic of China.  In the event NAC receives an initial inquiry from a potential customer from within the People’s Republic of China for the Company’s products within the People’s Republic of China, NAC shall forward the inquiry to the Company and it shall be the Company’s responsibility to follow up on the inquiry and fulfill  any orders that develop to the customer within China.  If however, as a result of NAC’S sales efforts from sources outside the People’s Republic of China an order shall be generated that requires delivery of products within the People’s Republic of China, the sale and NAC’S right to compensation shall be governed by the next subparagraph.

 

  

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(e)           There may be situations where NAC’s customers have operations both outside the Peoples Republic of China and within the Peoples Republic of China.  Should orders develop within the People’s Republic of China resulting from sales activities initiated with NAC customers outside the Peoples Republic of China, NAC and the company shall work together to process the order(s) as the situation necessitates. As consideration for NAC’s sales activities in acquiring purchase orders within the People’s Republic of China, the Company agrees to pay NAC a sales commission of ten (10%) percent of the purchase price for the Company’s equipment, FOB the Company’s factory.  The commission on the gross sales price shall be payable within thirty (30) days from the day payment is received by the Company.

 

4.             Sales, Marketing and Technical Support

 

(a)           Sales.  NAC shall use its best efforts to promote the sale and distribution of the Company’s equipment and to provide adequate support to the end user customer.  The Company shall provide adequate training to NAC’s sales staff and sales and promotional material to support NAC’S sales activities.  In the event the Company receives any inquiries as to its products from any prospective customers within NAC’s territory, it shall immediately forward these sales leads including all relevant information and contact persons to NAC so that NAC can follow up the sales lead.  The Company shall transmit the sales leads it receives by email to NAC’s designated email address.  The Company agrees that it shall not respond to any inquiries from customers that lie within NAC’s territory but shall immediately forward those inquiries to NAC as set forth above.  NAC agrees that it shall not offer any price quotes to any inquiries from customers within the People’s Republic of China but shall forward such contact information by email to the Company.  Notwithstanding the foregoing, if NAC shall receive an inquiry or shall make a sales contact within its territory and the end user of the equipment shall be within the People’s Republic of China, that sale shall be treated as a sale within NAC’s distribution territory.

 

(b)           Marketing.  The parties acknowledge the importance of the availability of catalogs, pricelists, brochures, competitive data, electronic and computer aided design drawings and other equipment data if the sales efforts of the distributor are to be effective.  The Company agrees that at its sole cost, it shall maintain with NAC as its sales representative and distributor, a adequate supply of English language marketing material for all the equipment and products that the Company manufacturers for sale and distribution through NAC.  This marketing material shall be delivered by the Company to NAC in electronic form.  The marketing material shall be in form and content mutually agreed upon by the parties.  NAC shall have the right to produce its own supplemental marketing material.  The cost of printing the electronic marketing material provided by the Company shall be borne by the distributor.

 

(c)           Technical Support.  The Company shall provide NAC with adequate and sufficient trained technical support through the Company’s staff to support NAC’s sales, maintenance and engineering activities.  Such technical support shall be supplied by the Company through email, internet as well as by oral communication with the use of English speaking technical support help.

 

  

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5.             Procedures for Processing Orders

 

(a)           Purchase Orders.  All orders to be placed by NAC for the Company’s equipment shall be in writing.  No oral Purchase Orders shall be valid.  The parties may hereafter agree upon a specific form and content.  Purchase Orders may be transmitted by mail, telefax, email or via internet website Purchase Order form.  The Purchase Order shall specify the Company model number, the quantities to be purchased and shall be identified by the Company designated model number or SKU number or any other identification number routinely used by the Company to identify their products; the unit price, any design modifications to be incorporated into the equipment (if any) and optional features.  The Purchase Order shall clearly identify the number of units and the per unit price extrapolated to reflect each line item’s total and the full amount of the Purchase Order shall be stated at the bottom of the Purchase Order.  The Purchase Order shall also state the desired delivery dates and the desired method of shipment.  All prices on the Purchase Order shall be FOB, Company factory. The Company shall acknowledge acceptance and approval of the Purchase Order within _____ days of its receipt.  If the Company fails to acknowledge the receipt and acceptance of the Purchase Order within the time allotted above, the Purchase Order shall be deemed accepted by the Company.  The Company agrees to use its best efforts to adhere to the delivery dates set forth in the accepted Purchase Order.

(b)           Shipment

 

All shipments of equipment by the Company shall be FOB Company’s plant.  The cost of shipment from the Company’s plant to the indicated destination shall be borne by NAC.  Upon delivery to the carrier at the Company’s plant, the risk of loss during shipment and delivery shall shift to and be borne by NAC.  The Company shall be responsible for packaging the equipment in such a manner so as to provide a reasonable level of safety from ordinary handling incurred in the usual course of shipment of similar type goods.  The packaging shall indicate that the equipment is the product of NAC which shall supply at its cost, the proper labeling and packaging material in order to reflect that the equipment is distributed by NAC.  The cost of protective packaging, other than the labeling, shall be borne by the Company.  In the event the Company fails to meet a reasonable manufacturing and delivery schedule and has extended delays in accordance with the Company’s promised delivery date, then the parties agree that in order to meet timely delivery schedules, the parties will arrange for expedited transportation with the additional incremental cost over and above the planned shipping method to be borne by the Company.

 

  

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(c)           Blanket Orders and Cancellation

 

A blanket order shall be defined as an annual order placed by NAC for equipment with specified delivery dates through the course of the ensuing year.  Notwithstanding the placement and existence of any such blanket orders, NAC at its sole discretion shall have the right at any time prior to the scheduled date of shipment or if the order has not been shipped on the scheduled date of shipment, prior to the actual shipment date, have the right to cancel any and/or all equipment not shipped pursuant to the blanket order provided that said cancellation notice served be sixty (60) days prior to the scheduled delivery date in the Purchase Order or, sixty (60) days prior to the ability of the Company to ship any portion of the blanket order.  This ability to cancel on sixty (60) days prior notice shall extend to other Purchase Orders, provided that these Purchase Orders do not encompass product and equipment that is specially manufactured to specifications other than the Company’s stock specifications.  If a Purchase Order contemplates specialty products requiring additional engineering that is not made in the Company’s ordinary course of manufacturing and requires special engineering or tooling, then so long as production of the product has not commenced, then NAC shall have the right to cancel and terminate the order.

 

6.             Proprietary Rights, Confidentiality and Non-Disclosure

 

(a)           Confidentiality.  Each party asserts certain proprietary rights to their wholly-owned intellectual properties including but not limited to company names, trademarks, copyrighted material, trade secrets, formulas, sales processes and sales methods; manufacturing methods, engineering as an example.  The parties agree that each shall use their best lawful efforts to hold in strict confidence all data and information obtained from the other party to this Agreement except to the extent that such data or information is required to be included in sales or manufacturing efforts, is ascertainable from other sources or required to be revealed by court order or other governmental processes.  If either party shall receive a court order or subpoena demanding the production of confidential information, it shall immediately inform  the other party.  Any such information, data or processes which either party deems confidential shall be so designated by that party and the receiving party shall treat such information as confidential and use its best efforts to comply with the proprietary interests of the provider of said data and information.  While the Company has granted NAC the right to use the Company’s name and trademark and service marks in its marketing efforts, NAC acknowledges that it has no proprietary right or interest in such proprietary information owned by the Company and upon termination of this Agreement, NAC’s right to the continued use of the Company’s protected proprietary materials shall cease.  Similarly, the Company is granted the right by NAC to use NAC’s name to further the efforts of NAC in promoting the Company’s products and the Company acknowledges that the name of NAC and its other intellectual proprietary properties are the sole ownership of NAC and upon termination of this Agreement, the right of the Company to use NAC’s name or other proprietary information and intellectual property shall cease.

 

  

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(i)           The Company acknowledges that NAC has developed a roster of potential customers in its territory and the identification of these customers will from time to time become known to the Company.  The Company agrees that as the result of the receipt of the knowledge of the names of these customers, it shall not either directly or indirectly for itself or for any of its employees, directors, officers and shareholders in any way will interfere with or compete with NAC with respect to its sales efforts with these customers whether now known to the Company to be known in the future and the Company shall not seek to solicit any business within the exclusive territory of NAC during the life of this Agreement and for a period of three (3) years after the termination of this Agreement.  The Company acknowledges that the customer lists of NAC is a valuable asset of NAC and the identification of these customers and the development of the relationships with them constitute a valuable trade secret to NAC.  The Company hereby acknowledges that the information gathered by NAC in identifying, locating and developing customers is a valuable asset to NAC and the Company agrees not to reveal the names of any of NAC’s customers to any third party.

 

(ii)           The Company has developed certain patents, manufacturing methods and other specialized information regarding the design and manufacture of harmonic drives which it deems to be confidential, proprietary information and a trade secret.  NAC acknowledges the Company’s rights to its proprietary information with regard to the engineering, design and manufacture of harmonic drives and agrees to hold any information it may obtain from the Company with respect to the engineering, manufacture and design of harmonic drives as proprietary and trade secret information and shall not reveal any such information to any third party.

 

(b)           The parties acknowledge that it may difficult or impossible to ascertain monetary damages if any of these covenants of confidentiality are breached.  Therefore, each party consents to the issuance of an injunction from a court of competent jurisdiction in the event of any threatened or actual breach of confidentiality pursuant to this clause.

 

(c)            Non-Disclosure of Sales Data.  The parties mutually agree that all sales information whether sales by the Company or by the distributor upon becoming known to the other it shall remain proprietary information and neither party shall disseminate any sales information regarding sales of the other company except as may be necessary to comply with laws in jurisdictions where the parties operate.  It is the intent of this provision to keep this information confidential from potential or real competitors and is deemed to be proprietary information not to be disseminated to the public but nothing contained herein is to be construed from prohibiting the use of this information in order to comply with tax reporting laws.

 

(d)           (d)           Company’s Warranty of its Rights to Its Intellectual Properties.  The Company has given NAC the right, pursuant to this Agreement, to use the Company’s intellectual property rights, its name, trademarks, patents and patent information, copyrights, service marks and any and all other intellectual protected property for NAC’s use in its sales efforts.  The Company believes that it has an unimpaired right to these intellectual properties and to permit the use of those intellectual properties and license that use to NAC.  In the event any third party challenges NAC’s right to use any of the Company’s protected intellectual properties and brings an action for infringement of those rights or for monetary damages for improper use of said intellectual properties, the Company hereby agrees that it shall full indemnify and hold harmless NAC from all claims whether by suit, settlement, arbitration or any form of dispute resolution, from any expenses, judgments, damages, legal fees, costs that NAC may incur as the result of defending any claim by a suit or otherwise by any third party.  In the event NAC receives any notice of any claim violation of a third parties’ rights as the result of the use of the Company’s intellectual properties, NAC shall expeditiously inform the Company of such claim or suit.  Immediately thereupon, if in the sole judgment of NAC, it shall require the services of an attorney to defend its interests and rights, NAC shall have the right to retain the services of any law firm or attorney of its choosing in order to defend its interests.  The costs incurred by NAC in retaining legal services shall be reimbursed to NAC by the Company within thirty (30) days of presentation of invoices and statements incurred by NAC in its defense of any lawsuit or claim.  In the event any judgment or arbitration award is granted against NAC for monetary damages, the Company agrees to immediately indemnify and hold harmless NAC from the effects of said judgment.  If any such judgment is the subject to appeal, NAC may post a bond or undertaking in order to remove the effects of any possible execution on a judgment until the appeal is determined.  When a final judgment has been rendered that is un-appealable that requires the payment of a sum of money to the plaintiff or claimant, the Company shall immediately within five (5) business days of any such notification, provide payment for full satisfaction of any such judgment.

 

  

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7.             Product Warranties

 

(a)           The Company shall provide written warranties supporting its products sold by NAC.  The Company shall not be held liable to warranty claims arising from improper use or application based performance issues outside of the Company’s control. Each product of the Company shall carry a minimum one year warranty from the date of shipment to NAC’s customer not to exceed (2) years from the date of shipment from the Company, covering workmanship, materials, merchantability and fitness for the purpose intended.  Should a warranty repair or replacement be necessary, round trip equipment transportation, and import/export fees will be borne by the company.  The Company shall be solely responsible for supporting its warranties and for repairing or replacing any product that is deemed defective and unfit for the purposes intended due to defects in workmanship or materials.

 

(b)           The Company’s limit of liability shall not exceed replacement costs plus shipping as noted above.

 

(c)           The Company shall maintain its manufacture of the products and equipment currently maintained by the Company and enough of those products for sale to the distributor for a continuous period of ten (10) years.  The Company shall not cease production of any of the products it now manufactures or maintains for sale without first providing NAC with a ten (10) year prior written notice of intent to terminate the availability of the specific product.  Any new products that are added after the execution of this Agreement shall be subject to this provision requiring the maintenance of the product for a period of ten (10) years without notification in writing of Company’s intent to terminate the manufacture and availability of such products.  During the runoff period after notice and for ten (10) years after receipt of the notice, the Company shall continue to offer for sale to NAC, those products that it intends to cease manufacture and availability until the ten-year period has expired.  The Company shall continue to make available during any runoff period provided for herein, the same quality and quantity of the products that it intends to phase out as it was available prior to any notice of termination.

 

8.             Non-Circumvention Covenant

 

The Company recognizes that NAC has considerable sales experience and has developed contacts throughout the world that will assist NAC in its efforts to sell the Company’s product line of harmonic drives.  The parties have agreed that NAC shall be granted the exclusive right as sales representative and distributor of the Company’s products throughout the world with the exception of the People’s Republic of China.  Accordingly, any sales that are made outside the People’s Republic of China shall be deemed sales made by NAC entitling it to receive compensation for those sales.  The Company agrees that it shall take no steps and make no efforts to circumvent this Agreement providing NAC with exclusive distribution and sales representative rights throughout the world with the exclusion of the People’s Republic of China.

 

The Company shall refrain from selling to trading companies and other distributors within the Peoples Republic of China  that would result in the sale of products outside of the People’s Republic of China and the Company shall not engage in any rebranding of its products in order to circumvent  this provision granting NAC exclusive rights to distribute and sell the Company’s products outside the People’s Republic of China.

 

9.             Product Availability Repair and Obsolescence

 

(a)           In addition to NAC’s worldwide exclusive distributorship and sales representation, NAC shall have the sole and exclusive right to repair the Company’s products outside the People’s Republic of China subject to the Company’s warranty repair obligations as set forth in Paragraph 7, supra.

 

  

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If for any reason, the Company is unwilling or unable to meet its Warranty repair obligations pursuant to Paragraph 7, then NAC shall have the sole and exclusive right to perform warranty repairs for product outside the People’s Republic of China.  The parties agree to establish a service and repair rate schedule to be paid by the Company to NAC that will cover the costs of labor and parts and time to travel to the repair site plus a reasonable margin for profit for NAC.  NAC shall be entitled to subcontract  with third parties for the performance of repairs. 

 

(ii)           Non-Warranty Repairs.  NAC shall have the sole and exclusive worldwide right to service non-warranty repairs for the Company’s products (with the exception of the People’s Republic of China).  The Company shall maintain an adequate supply of spare and replacement parts to be made available to NAC in order for NAC to properly service its customer base for repairs, both warranty and not warranty.  NAC shall have the right to subcontract to third parties to perform non-warranty service and repairs.

 

(iii)           With respect to all repairs, warranty or non-warranty, the Company shall maintain an adequate technical support staff available to NAC and its subcontractors in order to allow NAC and its subcontractors to properly service warranty and non-warranty repairs.

10.           Term of Agreement

 

This Agreement shall be effective for a period of ten (10) years from the date of its execution.  Thereafter, unless either party serves a notice of termination not less than 5 years prior to the expiration date of the term, then this Agreement shall automatically renew, in continuum, for an additional ten (10) years.  Any notice of termination shall be served pursuant to the notice provisions contained in this Agreement.

 

11.           Resolution of Disputes

 

The Company and NAC agree to use their best effort to resolve disputes and reach agreements on conflict arising out of this agreement. 

 

12.           Notices

 

(a)           There shall be classifications of notices, (1) routine business communications and (2) notice pursuant to this Agreement.

 

(i)           Routine Business Notice.  Routine business notice shall include but not be limited to daily routine administrative communications regarding the day to day relationship between the parties; placement of purchase orders and acceptance of purchase orders; data transmissions; reports; general correspondence; and any and all other communications conducted in the ordinary course of business.  Such notices may be transmitted by email, website postings and forms, telefaxes, and overnight delivery services such as DHL, Federal Express and United Parcel Service, or any other recognized worldwide package and overnight mail carrier.

 

  

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(ii)           Notice Pursuant to this Agreement and affecting this Agreement.  All notices with respect to the terms and conditions of this Agreement shall be served exclusively by a worldwide-recognized package carrier such as DHL, Federal Express and UPS.  Such carrier must have the capability of proof of delivery and any notice served pursuant to this section shall require proof of delivery capability.  Such notices shall be deemed received upon actual delivery by the carrier to the recipient.

 

(iii)          Notices pursuant to (ii) above shall be served upon the Company by service at the following address:

 

Beijing CTKM Harmonic Drive Co. Ltd.

A21, Yuhua Road

B of Beijing Airport Industrial Zone

Shunyi Beijing China

(iv)          Notice and Communications to NAC shall be sent to:

 

NAC Harmonic Drive Corporation

4720 Salisbury Road

Jacksonville, Florida 32256

 

The parties may change their address for service pursuant to this paragraph at any time by serving not ice of change of address in the manner provided for herein.

13.           Additional Provisions

 

(a)           Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors in interest, provided however that this Agreement may not be assigned by either party with the express written consent of the other party.

 

(b)           Captions.  The captions of the respective paragraphs are inserted for convenience of reference only and are not to be deemed to modify or affect the provisions of this Agreement.

 

  

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(c)           Waiver; Invalidity.  The waiver or breach of any of the terms or conditions of this Agreement shall not be deemed to construe a waiver of any other breach or of the same or any other term or condition contained in this Agreement.  The invalidation of any of the provisions of this Agreement shall not affect the validity of any other provision hereof.  The parties by the inclusion of this clause shall not be deemed to have included any invalid provision in this Agreement.  In the event any provision is declared to be invalid then this Agreement shall be deemed not to have contained such provision and the balance of the Agreement shall continue unaffected thereby.  Under no circumstance shall the parties be deemed or construed by operation of law or otherwise, to have abandoned this Agreement or any of the terms hereof unless such abandonment shall be by a written instrument signed by all the parties hereto.

 

(d)           Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original.

 

(e)           Prior Agreement.  This Agreement supersedes any prior agreements made between the parties hereto and all such prior agreements are hereby terminated.

 

(f)           Relationship of the Parties.  The relationship of the parties is one of independent contractor, one to the other.  This Agreement is not intended to create any relationship other than one of independent contractors and nothing contained herein shall be construed to presume or assume a relationship of co-venturers, partners and neither party herein shall be deemed the agent of the other party and neither party shall have any right to represent to the third parties that it has the authority to bind the other party to any agreements.

 

(g)           Implementation.  The parties agree to implement and carry into effect each and every provision of this Agreement in such form and matter as may be required or permitted by law, without any reservation whatsoever and agree to sign whatever documents may, from time to time, become necessary to effectuate the provisions of this Agreement.

 

(h)           Modifications of this Agreement.  This Agreement shall not be modified, changed or altered, unless such modification shall be in writing and signed by both parties.  Any such agreement purporting to modify this Agreement shall make specific reference to this Agreement.

 

(i)            Binding agreement.  This agreement shall be deemed binding on the parties as well as their successors and assigns.  In the event the Company shall sell, convey or otherwise transfer all or any portion of its business that is covered by this agreement, such sale or transfer shall not defeat the intent of this agreement to grant NAC sole distributorship rights as provided for in this agreement and the Company, its successors transferees and/or assigns shall remain fully obligated to NAC for the full and faithful performance of this agreement and for any and all damages and losses that NAC may incur as a result of the breach of this agreement and the right of NAC to act as sole distributor of the Company’s products as contemplated herein

 

(j)            Cessation of Business.   In the event that NAC or the Company permanently cease business operations due to unforeseen events, this agreement by necessity shall be deemed null and void.

 

(k)           Signature of the Parties Required.  This Agreement shall in no way be binding or effective until signed by all of the parties hereto, notwithstanding that one or more acts, in furtherance of the activities contemplated by this Agreement have occurred prior to its execution.

 

(l)            Gender.  The words and phrases used in the singular shall be deemed to include the plural and vice versa, and nouns and pronouns used in any particular gender shall be deemed to include the other gender.

 

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and date first above written.

COMPANY:

Beijing CTKM Harmonic Drive Co. LTD.

By: _______________________________                                                                Date:____________

       (Authorized Officer)

Printed or Typed Name: ___________________________

Title:_________________

 

DISTRIBUTOR:

NAC Harmonic Drive Corporation

By: __________________________                                                                           Date:______________

      (Authorized Officer)

Printed or Typed Name: ___________________________

Title: __________________________

 

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