NAC Global Technologies, Inc. (OTCMKTS:NACG) Files An 8-K Entry into a Material Definitive Agreement

NAC Global Technologies, Inc. (OTCMKTS:NACG) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01.

Entry into a Material Definitive Agreement.

As previously disclosed on a Current Report on Form 8-K filed
with the filings with the Securities and Exchange Commission (the
SEC) on November 10, 2016, on November 4, 2016,
NAC Global Technologies, Inc. (the Company) and
NAC Drive Systems, Inc., a wholly owned subsidiary of the Company
(NACD), entered into a securities purchase
agreement (the Purchase Agreement) with a single
institutional investor (the Investor), who is an
accredited investor as defined in Rule 501(a) of the Securities
Act of 1933, as amended (the Securities Act). to
the Purchase Agreement, the Company and NACD sold to the Investor
1,578,948 shares of common stock of NACD (the NACD
Shares
), par value $0.01 per share, for aggregate gross
proceeds of up to $1,500,000, which shall be paid by the Investor
in ten tranches (each, a Tranche), subject to
the terms and conditions contained in the Purchase Agreement.

On November 16, 2016, the Company conducted the closing of the
second Tranche in the amount of $125,000 (the Second
Closing
). Simultaneously with the Second Closing, the
Company, certain subsidiaries and affiliates of the Company and
the Investor entered into certain other agreements, including (i)
a Registration Rights Agreement, (ii) a Security and Pledge
Agreement (the Security Agreement), (iii) a
Subsidiary Guarantee, (iv) Collateral Assignment of Receivables
Agreements and (v) Validity and Performance Guarantees (together
with the Purchase Agreement and the Certificate of Designations
(as defined below), the Transaction Documents).
The Company and the Investor also agreed to the final form of the
Certificate of Designations, Preferences and Rights of the Series
A Convertible Preferred Stock of the Company (the
Certificate of Designations) for the designation
of the Series A Convertible Preferred Stock of the Company, par
value $0.001 per share (the Series A Preferred
Stock
). Upon the effectiveness of the Certificate of
Designations (which is anticipated to be on or about December 9,
2016), the NACD Shares will be automatically exchanged for shares
of Series A Preferred Stock.

Certificate of Designations of Series A Preferred Stock

The form of Certificate of Designations sets forth the following
rights, preferences, privileges, and restrictions of the Series A
Preferred Stock:

Authorized Shares; Ranking; Voting. to the Certificate
of Designations, the authorized shares of Series A Preferred
Stock is 1,578,948 shares, each with a par value of $0.001.
Series A Preferred Stock is senior in rank to shares of common
stock of the Company, par value $0.001 per share (Common
Stock
) in respect of the preferences as to dividends,
distributions and payments upon liquidations. Except for certain
voting or approval rights required by the Certificate of
Designations, the holders of shares of the Series A Preferred
Stock (initially consisting solely of the Investor) shall have no
voting rights.

Dividends. The holders of shares of the Series A
Preferred Stock will be entitled to receive cumulative dividends
at a rate of 5% per annum, payable quarterly, with the first
(1st) year of dividends guaranteed. Subject to certain
conditions set forth in the Certificate of Designations, such
dividends can be paid in cash or shares of Common Stock at a
holders option. In addition, holders of Series A Preferred Stock
may request payment of accrued dividends on any date of
conversion or Redemption Installment (as defined below).

Conversion. Shares of Series A Preferred Stock and
accrued but unpaid dividends may be converted into shares Common
Stock at any time at a conversion price of $0.06 (the
Conversion Price), subject to adjustments
provided in the Certificate of Designations. For each conversion,
the conversion amount is the aggregate of the stated value of
Series A Preferred Stock on the date of conversion, accrued but
unpaid dividends and certain make-whole payments and late charges
set forth under the Certificate of Designations. The Conversion
Price is subject to certain stock-based and price-based
anti-dilution adjustments under the Certificate of Designations,
including full ratchet price protection such that in the event
that the Company or any subsidiary of the Company sells or grants
rights or options that entitle any person to acquire shares of
Common Stock at an effective price per share of less than $0.06,
the conversion price of Series A Preferred Stock shall be reduced
to such lower price.

Mandatory Redemption. Commencing on the earlier of the
effectiveness of the Registration Statement (as defined below)
and May 16, 2017 and as long as any shares of the Series A
Preferred Stock are outstanding, the Company has the obligation
to redeem $150,000 of the outstanding amount of Series A
Preferred Stock and any accrued but unpaid dividends (the
Redemption Installment) for 10 consecutive
weeks. Each redemption can be paid in cash or shares of Common
Stock at the Companys option (subject to the Equity Conditions
(as defined in the Certificate of Designations)). If paid in
cash, a 130% redemption premium will apply. If paid in shares of
Common Stock, the number of shares to be issued is the product of
(A) the applicable Redemption Installment multiplied by (B) 130%
divided by the lesser of (x) 0.06 and (y) the lowest volume
weighted average price for 15 consecutive trading days
immediately prior to the redemption.

Optional Redemption. Subject to certain conditions set
forth under the Certificate of Designations, the Company has the
right to redeem all, but not less than all, of the outstanding
shares of Series A Preferred Stock at any time prior to February
16, 2017. Such redemption shall be made in (i) cash in the amount
that equals to the aggregate of (A) 120% of the stated value of
Series A Preferred Stock, (B) accrued and unpaid dividends and
(C) certain make-whole payments and late charges set forth under
the Certificate of Designations, or (ii) in shares of Common
Stock.

Triggering Events Redemption. In addition to the above
redemptions, a holder of Series A Preferred Stock may require the
Company to redeem any shares of Series A Preferred Stock held by
such holder upon occurrence of certain triggering events set
forth under the Certificate of Designations, including but not
limited to (i) material uncured breaches of the Transaction
Documents, (ii) breaches or defaults of Company indebtedness,
(iii) a trading suspension of Common Stock, (iv) trading
restrictions on shares of Common Stock issuable upon conversion
of shares of Series A Preferred Stock, (v) failure to meeting
certain public trading volume thresholds after April 15, 2017,
(vi) failure to pay dividends when due, (vii) failure to maintain
certain collateral under the Security and Pledge Agreement,
(viii) failure to have the Registration Statement (as defined
below) be declared effective when required, (ix) failure to make
certain filings with the SEC by certain dates, and (x) bankruptcy
or liquidation instituted against the Company or certain
subsidiaries of the Company.

Depending on whether there is a difference in the price of Common
Stock on a redemption date and the date that the redemption
payment is made by the Company, the Company may have the
obligation to make certain make-whole payments in shares of
Common Stock.

Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Company, holders of the Series A Preferred Stock will be entitled
to be paid out of the assets available for distribution, before
any payment is made to holders of Common Stock or any other
series or class of the Companys shares ranking junior to the
Series A Preferred Stock. Such payment amount will equal to the
greater of (A) 110% of the conversion amount referenced above
multiplied by130% and (B) the amount such holders would receive
if shares of Series A Preferred Stock held by such holders had
been converted into shares of Common Stock immediately prior to
such liquidation event.

The foregoing summary does not purport to be complete and is
qualified in its entirety by reference to the Certificate of
Designation, a form of which is attached hereto as Exhibit 3.1
and is incorporated herein by reference.

Registration Rights Agreement

to the Purchase Agreement, the Company and the Investor entered
into a Registration Rights Agreement (the Registration
Rights Agreement
) under which the Investor will have
certain rights to cause the Company to register certain
securities of the Company issuable to the Investor in connection
with the transactions contemplated by the Purchase Agreement (the
Registrable Securities).

to the Registration Rights Agreement, the Company has the
obligation to file an initial draft registration statement (the
Registration Statement) with the SEC by January
24, 2017 to register the Registrable Securities and use
commercially reasonable best efforts to cause such registration
statement to become effective within 90 days from the initial
filing date (or 120 days if the Company receives more than 25
comments from the SEC on initial draft Registration Statement).
In the event that the Registration Statement cannot register all
Registrable Securities, the Company has agreed to inform the
Investor of such restriction and also use commercially reasonable
efforts to file amendments to cover the maximum numbers of
Registrable Securities permitted to be registered. To the extent
permitted by the SEC and applicable securities laws and
regulations, the Company has agreed to use its commercially
reasonable best efforts to file one or more registration
statements to register Registrable Securities that has been cut
back from the Registration Statement.

In the event that the Company fails to file the Registration
Statement or related acceleration request and pre-effectiveness
amendments within certain timeframe set forth under the
Registration Rights Agreement, the Investor will be entitled
liquidated damages in the amount of 1% of the amount actually
funded by the Investor for up to 9% of such amount. The
Registration Rights Agreement also contains mutual
indemnification provisions.

The foregoing description of the Registration Rights Agreement
does not purport to be complete and is qualified in its entirety
by reference to the full text of the agreement, a form of which
is attached hereto as Exhibit 10.2 and is incorporated herein by
reference.

Security and Pledge Agreement

In connection with the transactions contemplated by the Purchase
Agreement, on November 16, 2016, the Company and certain
subsidiaries of the Company (collectively, the
Debtors, and each, a Debtor),
including Swiss Heights Engineering S.A. (SHE),
NACD, Bellelli Engineering S.P.A. (BE), BE North
America, Corp. (BENA) and Bellelli USA LLC
(BEUSA), entered into a Security and Pledge
Agreement (the Security Agreement) with the
Investor. Subject to certain conditions set forth therein, the
Security Agreement grants a security interest in certain assets
of the Debtors as collateral (the Collateral) to
secure the performance of obligations under the Transaction
Documents. The Collateral includes (i) existing and after
acquired assets of the Company, NACD and BEUSA, (ii) certain
accounts receivable of SHE and BE and (iii) a pledge of the
equity interests in the Companys direct and indirect subsidiaries
held by the Company, SHE and BENA.

The Security Agreement sets forth certain customary events of
defaults, including but not limited to a failure to perform
obligations thereunder by a Debtor after a 5-day cure period, as
well as the occurrence of a triggering redemption event under the
Certificate of Designations as described above. Upon the
occurrence of any such event, the Investor will have certain
rights and remedies, including but not limited to the right to
take possession of the Collateral. The Security Agreement also
contains customary representations, warranties and covenants for
transactions of similar nature.

The foregoing description of the Security Agreement does not
purport to be complete and is qualified in its entirety by
reference to the full text of the agreement, a form of which is
attached hereto as Exhibit 10.3 and is incorporated herein by
reference.

Subsidiary Guarantee

In connection with the transactions contemplated by the Purchase
Agreement, on November 16, 2016, certain subsidiaries of the
Company, including SHE, NACD, BE, BENA and BEUSA (together with
the Company, the Guarantors) entered into a
Subsidiary Guarantee (the Subsidiary Guarantee)
in favor of the Investor. to the Subsidiary Guarantee, the
Guarantors shall jointly and severally guarantee the performance
by the Company and applicable subsidiaries of obligations under
the Purchase Agreement, the Certificate of Designations and the
Security Agreement (the Obligations). Such
guarantee shall remain in full force and effect until the
Obligations are fully satisfied. A payment by any other person
shall not affect the liability of a Guarantor under the
Subsidiary Guarantee. Upon default of non-monetary Obligations
that cannot be performed by a Guarantor, such Guarantor will be
liable for making the Investor whole on a monetary basis. To the
extent that a Guarantor has paid more than its proportionate
share of the Obligations, such Guarantor will be entitled to seek
and receive contribution from any other Guarantor.

The foregoing description of the Subsidiary Guarantee does not
purport to be complete and is qualified in its entirety by
reference to the full text of the agreement, a form of which is
attached hereto as Exhibit 10.4 and is incorporated herein by
reference.

Collateral Assignment of Receivables

On November 16, 2016, the Company and certain U.S. and
international subsidiaries of the Company (the
Assignors) entered into Collateral Assignment of
Receivables agreements (the Collateral Assignment
Agreements
) with the Investor, to which the Assignors
assign to the Investor their rights in receivables under certain
contracts (the Contracts) to secure their
obligations under the Security Agreement. Upon the occurrence and
during the continuance of an event of default under the Security
Agreement, the Investor may enforce the rights of the Assignors
to such receivables. The Collateral Assignment Agreements will
terminate immediately after the termination of the Security
Agreement and fully performance of the Assignors obligations
thereunder.

The foregoing summaries of the Collateral Assignment Agreements
do not purport to be complete are qualified in their entirety by
reference to the full text of the agreements. Forms of the
Collateral Assignment Agreements are attached hereto as Exhibits
10.5 and 10.6 and are incorporated herein by reference.

Validity and Performance Guarantee

In connection with the transactions contemplated by the Purchase
Agreement, on November 16, 2016, each of Antonio Monesi and
Filippo Puglisi, the President and the Chief Financial Officer of
the Company, respectively (collectively, the
Principals, each, a Principal)
entered into a Validity and Performance Guarantee (the
Performance Guarantee) in favor of the Investor.
to the Performance Guarantee, each Principal has agreed not to
(i) intentionally or through conduct that constitutes gross
negligence or willful misconduct, provide material misleading or
inaccurate information related to the Collateral, (ii) conceal or
cause to be concealed from the Investor such information or make
any material false representation or warranty in connection with
the Purchase Agreement or the Collateral. In addition, each
Principal has guaranteed that certain post-closing covenants set
forth under the Purchase Agreement will be complied in a timely
manner to the Investors reasonable satisfaction.

Upon a breach of any of the foregoing obligations, the Principals
will be liability for the Investors losses resulting therefrom
for a total amount of up to $1.5 million and related attorneys
fees and expenses of the Investor. The Performance Guarantee
shall terminate upon the repayment of 50% of the Companys
obligations secured by the Security Agreement.

The foregoing description of the Performance Guarantee does not
purport to be complete and is qualified in its entirety by
reference to the full text of the agreement, a form of which is
attached hereto as Exhibit 10.7 and is incorporated herein by
reference.

Item2.03. Creation of a Direct Financial Obligation or an
Obligation Under an Off Balance-Sheet Arrangement of a
Registrant
.

The disclosure set forth in Item1.01 above is hereby incorporated
by reference into this Item2.03.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits (1)
3.1 Form of Certificate of Designations, Preferences and Rights
of the Series A Convertible Preferred Stock.
10.2 Form of Registration Rights Agreement by and between NAC
Global Technologies, Inc. and the Investor, dated November
16, 2016.
10.3 Form of Security and Pledge Agreement by and among NAC Global
Technologies, Inc., its subsidiaries and the Investor, dated
November 16, 2016. (1)
10.4 Form of Subsidiary Guarantee by and among NAC Global
Technologies, Inc., its subsidiaries and the Investor, dated
November 16, 2016. (1)
10.5 Form of Collateral Assignment of Receivables by and among NAC
Global Technologies, Inc., its US subsidiaries and the
Investor, dated November 16, 2016.
10.6 Form of Collateral Assignment of Receivables by and among NAC
Global Technologies, Inc., its foreign subsidiaries and the
Investor, dated November 16, 2016.
10.7 Form of Validity and Performance Guarantee by and among NAC
Global Technologies, Inc., the Principals and the Investor,
dated November 16, 2016.
(1) Certain exhibits and schedules to this exhibit have been
omitted in accordance with Regulation S-K Item 601(b)(2). The
Company agrees to furnish and supplemental a copy of all
omitted exhibits and schedules to the Commission upon its
request.


About NAC Global Technologies, Inc. (OTCMKTS:NACG)

NAC Global Technologies, Inc. is an engineering services, research and development (R&D), and manufacturing company. The Company’s subsidiary, NAC Drive Systems, Inc. (NAC) is a manufacturer and supplier of harmonic gearing technology (HGT) that operates in the robotics, automation and medical industries, among others. The Company manufactures its HGT components in Beijing, China, and performs final assembly and quality control in Port Jervis, New York. Beyond its HGT platform, it intends to bring additional, synergistic subsidiary business into NAC via strategic acquisition with a focus on the energy markets. It manufactures harmonics of approximately 3,500 newton-meters (Nm)/30,997 pound inch (in-lb) capacity or over 13 inch diameter.

NAC Global Technologies, Inc. (OTCMKTS:NACG) Recent Trading Information

NAC Global Technologies, Inc. (OTCMKTS:NACG) closed its last trading session 00.0000 at 0.0375 with shares trading hands.

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