UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 28, 2014
E-WASTE SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
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Nevada
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26-4018362
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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1350 E. Flamingo, #3101, Las Vegas, Nevada 89119
(Address of principal executive offices including zip code)
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Registrant’s telephone number, including area code: 650-283-2907
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______________________________________________________
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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SECTION 1 – REGISTRANT’S BUSINESS OBLIGATIONS
Item 1.01 Entry Into Material Definitive Agreement.
On November 28, 2014 , E-Waste Systems, Inc (“EWSI”) entered into a binding Agreement (“HTA”) with Aruls Environmental and Green Ozone Pvt Ltd (“AEGOPL”), an India based company, for a Joint Venture to develop and expand reverse logistic operations in North America, India and South East Asia.
The HTA provides for an initial investment of $750K by AEGOPL is to fund the acquisition of an existing Public Company to establish a functional presence for AEGOPL in the US to advance application for government support to open recycling and environmental operations in India and the other interested territories. This investment will also provide working capital for the development of e-waste projects in New York area providing a significant expansion of the EWSI New York operations. The HTA also commits $1.75M to expand the EWSI New York e-waste facility. The parties will enter into a Joint Venture to establish a regional and/or national eWaste recycling and environmental business in India. Closing of the investment is set to 90 days from the effective date of the HTA. A copy of the HTA is attached hereto as Exhibit 10.1 and incorporated herein by reference.
On November 28, 2014, EWSI entered into a Teaming Agreement with Ingram Micro (UK) Limited (“Ingram Micro UK”), a limited company registered in England and Whales and a subsidiary of Ingram Micro Inc., self-described as “the world’s largest technology distributor and a leading technology sales, marketing and logistics company for the IT industry worldwide.”
Pursuant to EWSI’s branded strategy of growth, the Teaming Agreement gives both companies the ability to extend its service to geographical locations in which they don’t presently operate. Under the terms of the Teaming Agreement, both parties have (i) agreed to collaborate to address customers with services to process certain end of life electronics assets from their respective customers (ii) agreed to use the highest standards for the e-Waste industry including but not limited to zero landfill and prohibition of illegal exportation of hazardous material have agreed to work together to and (iii) agreed that EWSI shall be the sole commercial brand under this agreement for its customers and Ingram Micro UK shall be the sole commercial brand for its customers. A copy of the Teaming Agreement is attached hereto as Exhibit 10.2 and is incorporated herein by reference.
On December 2, 2014 the Company's Board of Directors unanimously approved the execution of a contract for Executive Consulting with Simon Hundal, based in the United Kingdom, to provide executive operations management, business development, acquisition sourcing, and related services to the Company and to report directly to the Chief Executive Officer or such other senior executive as directed by the Board of Directors from time to time. Simon Hundal shall carry the title of Director and Chief Operations Officer and Business Development and shall be compensated on an incentive-based system. A copy of the Executive Consulting Agreement is attached as Exhibit 10.3 and is incorporated herein by reference.
Effective December 2, 2014, the Board of directors unanimously approved the execution of a Consulting Fee Agreement with Jayesh Tanna, a citizen of the Republic of India with international business experience and extensive contacts to provide executive operations management, business development, acquisition sourcing, investment sourcing in order to exploit commercial opportunities in the United States and in the Republic of India and to spearhead expansion in India. A copy of the Consulting Fee Agreement is attached as Exhibit 10.4 and is incorporated herein by reference.
The foregoing descriptions of the agreements do not purport to be complete and are qualified in their entirety by reference to the full test of the agreements attached hereto.
SECTION 5 – CORPORATE GOVERNANCE AND MANAGEMENT
Item 5.03 – Amendment to Articles of Incorporation or Bylaws
On December 2, 2014 the Company approved the filing of an amendment to its Articles of Incorporation with the Nevada Secretary of State to increase its’ authorized capital. This increase will be effective upon the filing and acceptance by the Secretary of State of Nevada. The previously authorized capital of the company was 24,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock. The amounts will be increased to Four Hundred Ninety Million (490,000,000) shares of common stock and Ten Million (10,000,000) shares of Preferred stock.
The increase in the Company’s authorized capital was consented to by the Board of Directors of the Company as well as consent of our Majority shareholder voting 64.7% of our issued and outstanding shares of Common stock. This action was deemed necessary to help support the Company’s growth initiatives and to discharge obligations previously made to convertible note holders.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit Number
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Description
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10.1
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10.2
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10.3
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10.4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
E-Waste Systems, Inc.
/s/ Martin Nielson
By: Martin Nielson
Its: Chief Executive Officer
Date: December 10, 2014
EXHIBIT 10.1
Binding Heads of Terms Agreement
This Heads of Terms Agreement ("HTA") is effective as of the date first signed below and is made by and between:
● Aruls Environment and Green Ozone Pvt. Ltd. c/o of Sundaram Arulrhaj Hospitals, 145/5-B, Jeyaraj Road, Tuticorin 628 002, Tel: 0461-2320061, 2322661, 4200061, 6538061; Fax: 0461 – 2338661, e.mail: drarulrhaj@gmail.com, www.arulsenvironment.com, www.drarulrhaj.com (together "AEGOPL’) based in the Republic of India, and
● A group of international investors to be independently sourced and arranged by AEGOPL (the ‘Investors’) and represented herein by Jayesh Tanna, Jose Capote, and Jivabhai Rambhai Khunti, and
● E-Waste Systems, Inc. and its subsidiaries (www.ewastesystems.com), a USA publicly traded and fully compliant reporting company regulated by the United States Securities and Exchange Commission (the ‘SEC’) and Taking Advice Ltd (‘TAL’) which is a UK Registered Auditor and Chartered Certified Accountant, governed by the UK’s Financial Services Authority, which provides EWSI with a range of services including cloud-based statutory accounting and auditing, tax preparation and advice for selected subsidiaries and affiliates, (together ‘ESWI’) (OTC: EWSI) and
● AEGOPL and EWSI are each herein a (‘Party’) and jointly (the ‘Parties’)
Introduction
● EWSI, through its subsidiaries, licensees, partners and affiliates, offers customized end-to-end branded (eWaste™) solutions including recycling plant engineering and related technologies (ePlant1000™ and others), carbon credit analysis and trading (eWasteCC™), IT Asset Recovery Services (eAsset™), E- Management Services (eVolve™), Electronics Reverse Logistics Services (eRLOG™) and Incubation Services (eIncubator™) (collectively the ‘Services’), and
● AEGOPL is a group of professionals some of which have extensive international executive experience in building companies and which together wish to establish a presence in the USA for the establishment of a Waste to Energy and Resources business which may also include recycling and reverse logistics market in the USA as a first step before doing the same in the Republic of India (‘India’) and South-East Asia, and Canada
● As part of this collaboration, AEGOPL plan to cement their presence in the USA through the acquisition of an existing Public Company through a Reverse Take-Over (RTO).
● A professional and ownership collaboration between AEGOPL and their related companies, the Investors and EWSI, is desired by the Parties in order to implement the project objectives.
IT IS HEREBY AGREED as follows:
1. Purpose
The Parties agree to enter into this HTA in order to plan for and then execute a joint venture between themselves with the following goals and objectives:
a. For AEGOPL:
i. Acquire a target Public Company (PubCo) vehicle for undertaking the RTO
ii. To establish a functional presence in the USA from which it can generate credibility in advance of application for government support to open recycling and environmental operations in India, Canada & other parts of the World
iii. To provide a base of operation in the New York region whereby their existing relations with Bhima Ranmal, and others which may be used to expand sales and profits
iv. To obtain executive positions for certain of the professionals in AEGOPL
v. To create an accelerated revenue and profit stream initially in the USA and ultimately in India, Canada & other parts of the World
b. For EWSI:
i. To expand its business and grow profits initially in the USA and later into India, South- East Asia and other parts of the world
ii. Expand its capital raising to support its growth
iii. To create superior value for its stakeholders
c. For the Investors:
i. Obtain a superior return on investment through investment into public securities,
ii. Utilize the investment into EWSI to fund the acquisition of the target PubCo for the RTO and thus to invest into at least two public companies
d. Generally extend the customer base, expand geographies and grow sales of and with EWSI
e. Create increased capital value for all Parties
2. Contribution of the Parties
a. AEGOPL shall contribute and do the following:
i. Investment into EWSI of initially US$750,000, to be used as stated in the Use of Proceeds, detailed below; with such funds coming from qualified investors under SEC regulations:
Proposed Use of Proceeds:
• USD $500,000 for the acquisition of the target PubCo for the RTO
• USD $250,000 as working capital for the development of e-waste projects in New York area
ii. EWSI will, in turn receive shares in the new PubCo, equal to 2.5% of the post-acquired PubCo common stock plus warrants in the PubCo to be negotiated under the formal Share Exchange Agreement associated with the RTO. .
iii. Enter into an exclusive contract with EWSI for the expansion of their New York e-waste recycling center. The Capital Investment required for this expansion will be made via the RTO Company and shall be a further $1.75M This investment will be subject to due diligence to be undertaken by the AEGOPL and it's investment partners and the new management of the PubCo
iv. Based on the successful collaboration on the New York project, the Parties would negotiate a Joint Venture agreement to establish regional and/or national eWaste recycling and environmental business(es) in India
b. EWSI shall contribute and do the following:
i. Shall offer AEGOPL investors securities in EWSI in one of the following forms, to be decided by the investor:
i. Restricted common stock at a 30% discount to the current 20 day volume weighted average price (‘VWAP’) per share with voting rights, or
ii. Series A Convertible Redeemable Preferred Shares priced at $1000/share with a 10% coupon to maturity, a 30% redemption premium, and option to convert, at a price of $1100, into common stock at a 25% discount to the 20 day VWAP with voting available upon conversion
iii. Series B Preferred Stock at $1000 per share with super voting rights and 25% redemption premium but no conversion rights
iv. Convertible Debenture with 10% interest and the right to convert to free trading shares after 180 days at a price of 30% discount to the 20 day VWA
ii. Shall allow its fully licensed and permitted eWaste recycling operation in the State of New York, USA to become the platform for the Project, including its customer base, its facility, its inventory, its know-how, and its employees and management in the NY facility
iii. Provide such managerial and professional support for the Project required to at least maintain its current credentials, including ISO 9001, ISO 14001, R2, New York State licenses, etc.
iv. Provide assistance in obtaining Sponsorship visa’s for members of AEGOPL who intend to come to the USA as part of the Project’s management team
v. Through Taking-Account, provide AEGOPL with accounting and audit services for the Project
vi. Support and promote AEGOPL’s intent to expand internationally through the EWSI network, with specific focus on India
vii. Provide support to AEGOPL, as requested and if requested by AEGOPL in the implementation of the RTO
c. The Parties will jointly:
i. Enter into definitive agreements containing (but not limited to) the scope and precise legal structure of the project; the use of funds from the Investors; the management team to be deployed to run the project; the financial plan; the governance of the project, etc.
ii. Agree to execute the Use of Funds as in the schedule.
d. The Parties will each:
i. Be individually responsible for their own costs,
ii. Agree to abide by the highest legal and ethical standards, including at minimum the execution of a Code of Business Conduct and Ethics policy and Insider Trading Policy
iii. Agree to abide by Fair Trade Employment principles
iv. Agree to adopt the highest principles of respect for the environment in selecting companies and individuals as targets, clients, customers, etc.
3. Timing
Within 15 business days of the effective date of this HTA, EWSI shall deliver definitive investment documents to enable the closing of the investments within 75 days.
4. Intellectual Property
All work or materials developed or provided by either Party shall be owned exclusively by that Party and shall not be represented in any form as belonging to anyone other than the originating Party. Such work or materials shall include, but are not limited to, standard corporate documents, branding and intellectual property, operational data, notes, plans, customer lists, deal based documentation, specifications, designs, files, engineering technology, software (in source and object code form), and any proprietary solutions.
5. No Agency
The Parties agree that this HTA does not create any formal or informal agency, partnership or similar permanent relationship other than as described in this HTA and executed in the subsequent documents in support of this agreement, and neither Party shall have any right or authority to bind the other Party in any manner including, without limitation, any legal or financial obligation.
6. No Warranty
The Parties shall use reasonable efforts to ensure the suitability of all proposed solutions and plans but neither Party shall be providing any warranty or guarantees.
7. Legal Effect
This HTA is binding upon the Parties, however each Party agrees that it will not make any frivolous claim for damages or seek any other legal or equitable remedy against or from the other Party or against the other Party's affiliates arising from or in connection with this HTA other than by a serious breach of this HTA.
8. Confidentiality
This HTA and all information disclosed by one Party to the other in connection with the proposed collaboration shall be deemed Confidential Information and treated accordingly by the Parties. The Parties hereby affirm a separate Non-Disclosure Agreement signed between them.
9. Term and Termination
This HTA is effective from the date first signed below and shall continue in force until terminated by either Party giving the other Party at least 60 business days prior written notice. If the Parties subsequently execute definitive agreements, any such agreements will supersede this HTA as of its/their effective date.
10. Exclusivity and Non-Circumvention
The rights and relationships arising under this HTA are exclusive to the Parties until Termination or until such time as the Parties may execute definitive agreements which may require extended exclusivity. Until the later of the Termination Date or the execution of any definitive agreement neither Party shall engage others to perform services the same as or similar to those contemplated by the Parties under this HTA, and shall not do or take any action which directly or indirectly circumvents the other Party in execution of the Project which is contemplated by this Agreement.
11. Public Company Obligations & Public Announcements
The Parties understand that EWSI is a publicly traded company under the jurisdiction of the United States Securities and Exchange Commission (the ‘SEC’) and that if in the opinion of EWSI’s counsel any agreements between the Parties, including this one, may be subject to requirements for filing with the SEC, in which case EWSI shall promptly do so and shall so notify AEGOPL with a copy of any such filing. Any other public statements, such as press releases, will specifically require joint approval by the Parties in advance of any release.
In addition, AEGOPL specifically agrees that they shall not execute any trading of EWSI’s common stock in any manner that would be in contravention of any trading laws of the SEC, or in violation of EWSI’s Insider Trading Policy or Code of Business Conduct and Ethics Policies, both of which are posted on EWSI’s website.
12. Governing Law
This HTA shall be construed and controlled by the Laws of Nevada, USA. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement.
| On behalf of EWSI |
On behalf of AEGOPL |
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| By: /s/ Martin Nielson |
By: /s/ Dr. Arulrhaj |
| Martin Nielson |
Dr. Arulrhaj |
| Chief Executive Officer |
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| Effective Date: November 28, 2014 |
Effective Date: November 28, 2014 |
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| Jayesh Tanna |
Jose Capote |
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| By: /s/ Joyesh Tanna |
By: /s/ Jose Capote |
| Joyesh Tanna |
Jose Capote |
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| Effective Date: November 28, 2014 |
Effective Date: November 28, 2014 |
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Jivabhai Rambhai Khunti
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| By: /s/ Jivabhai Rambhai Khunti |
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| Jivabhai Rambhai Khunti |
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| Effective Date: November 28, 2014 |
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Attachments:
1. Uses of Funds Schedule
2. CV’s of the Key Individuals of AEGOPL and EWSI
Uses of Funds Schedule
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Investment Category
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Use
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Amount
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$500,000 RTO
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Management FeeS
Legal Fees
Due Diligence Fees
Audit and Accounting Fees Stock Transfer Agent Fees FINRA Filing
Blue Sky Filing Fees State Filing Fees Market Maker Fees
Payment to Shell Owners
Post Closing Working Capital
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$250,000 New York Working Capital
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$1,750,000 New York Expansion
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Upgraded capital equipment
• Next generation shredding and separating line
• Precious Metals processing line
• Leaded glass separation line
Hire additional sales, biz dev personnel
New management personnel from India
• Base Comp
• Expenses
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EXHIBIT 10.2
TEAMING AGREEMENT
THIS TEAMING AGREEMENT (the “Agreement”) is made and entered into this November _, 2014, by and between E-WASTE SYSTEMS, INC.(EWSI) 1350 E. Flamingo, #3101 - Las Vegas, NV 89119 (“EWSI”), and Ingram Micro (UK) Limited whose address is 7 Clarendon Drive , Wymbush, Milton Keynes, MK8 8ED (“PARTNER”), which together hereinafter are jointly referred to as the "Parties".
RECITALS
WHEREAS, EWSI is executing a branded strategy of growth by brand licensing, by partnership, by acquisition; by organic business development; and by joint venture and as a result has a constantly growing network of high quality companies around the globe that it is working with, and
WHEREAS, both EWSI and PARTNER have or may develop customer relations which may need servicing in locations where they do not presently operate and,
WHEREAS, both Parties desire to provide the operational support for these customer initiatives to the other Party, and
WHEREAS the Parties wish to engage each other to promote and to perform the services described under this Teaming Agreement.
NOW, THEREFORE, the Parties hereby agree as follows:
1) Joint Cooperation
EWSI and PARTNER have resolved to enter into this Agreement to agree on the collaboration between the Parties to address customers with services to process certain end of life electronics assets from their respective customers with the objective of providing the highest standards of recycling, refurbishing, and /or reselling of these assets, and only in keeping with the customer's requirements, for either reuse or scrap. Neither party shall landfill or export hazardous materials in performing its respective services pursuant this Agreement. All data will also be destroyed to satisfy customer requirements and to satisfy EWSI's and PARTNER’s own high-end standards. This Agreement does not obligate either Party to perform any specific services unless and until separately mutually agreed in writing.
2) Sole Brand
EWSI shall be the sole commercial brand deployed in the operation of services under this Agreement for its customers and PARTNER shall be the sole commercial brand deployed for its customers unless otherwise agreed by the Parties in writing. All communication, correspondence and documentation shall be as directed by the Party which owns the customer relationship. Both Parties may choose to display the brand, geography and services of the other Party on its own website and promotional material so long as the form of their use is agreed with the other Party in writing prior to such use. Each Party shall indemnify, defend and hold the other Party and its affiliates harmless from and against any and all third party claims asserting that the first Party’s trademarks, brands or other intellectual property infringe on such third party’s right.
3) Principles
The Parties warrant to each other that they shall deploy the highest industry and ethical standards in execution of the contracted customer services, including but not limited to the following: zero landfilling of any electronics or other waste; complete destruction of customer data; provision of certificates of destruction; resale of still usable electronics only with the consent of the customer; and prohibition of any improper or illegal exportation. In addition, the Parties agree to be guided by, but may exceed and therefore not be limited to, the highest legal e-waste recycling standards in the world, generally accepted to be Europe's WEEE Directive, as well as the principles of the R2 standards as recommended by the United States EPA, and all local laws pertaining to the jurisdictions relevant to the Parties.
4) Customer Relationship; non-circumvention
The relationships with the customers that will be served by the Parties belong solely to the original owner of the customer relationship and neither Party shall do or take any action to circumvent the other or otherwise attempt to take away the business of the customer from the other Party. Similarly, the Parties shall not do or take any action to hire away any employees of the other Party or otherwise circumvent the other Party; provided, however, that responses to general solicitations shall not be a breach hereof.
5) Geography
The Parties are not limiting themselves by entering into this Agreement to any sector or geography. It is contemplated that the Parties may choose to pursue opportunities wherever they choose to in the world.
6) Management
Under this Agreement, each Party originating the customer relationship will be responsible for establishing, publishing and overseeing the operational standards in advance of signing any contract or order with such customer. The Parties agree that any contract and/or order shall carefully identify the specific customer requirements (or statements of work), including, but not limited to:
i. Removal
ii. Labor
iii. Trucking
iv. Grading
v. Parting
vi. Refurbishment
vii. Testing
viii. Data destruction
ix. Demanufacturing
x. Method of recycling
xi. Packaging
xii. Financing
xiii. Selling
xiv. Reporting to the customer
xv. Reporting to the other Party
xvi. Environmental compliance, and
xvii. Providing for customer on-site inspections, tours of the facility, or video capture of the processing, etc.
7) Locations
Unless otherwise agreed upon by the Parties the work will be performed at PARTNER’s facilities or EWSI's locations as evidenced by its website, but may include any other agreed location which is under direct or sub-contractual control of either Party, or which is part of the EWSI affiliate network. So long as this Agreement remains valid, the facilities of either Party and any other subsequently deployed locations, may be identified as part of the combined network of both Parties via their websites and other public documents as either Party chooses.
8) Cost of Assets
For purposes of clarity, and unless otherwise agreed on a case by case basis, the Parties enter into this Agreement with the understanding that it will be generally receiving end of life assets for disposition at little or no cost to be paid to the customer(s), but that if the equipment contains enough high value at the end of the processing, a portion of the net recovered value may be offered to the customer. Final details regarding a particular customer transaction will address the applicable pricing and materials at issue, and further will specify the compensation and other financial arrangements between the Parties for that specific transaction and a separate agreement will be entered into between the parties with respect thereto.
9) Term & Termination
The term of this Agreement will initially be for one year, with a routine reviews to ensure that the terms of this Agreement provide a fair reflection of the performance and rewards of each Party, and may be renewed annually thereafter, by mutual agreement. Within 60 days of the end of the initial term, the Parties will evaluate this Agreement and endeavor to extend the same on terms that are mutually acceptable. In the event the Parties do not agree on a new contract, this Agreement shall continue month to month thereafter until terminated. At the end of the initial one year term, either Party may elect to terminate the Agreement by giving not less than 30 days written notice to the other Party, without penalty. Either Party may terminate this Agreement at any time for "cause", to be defined as material breach of this Agreement, gross misconduct, malfeasance, moral or unethical dealings, or violation of any laws of any applicable jurisdiction. In the event of termination, the Parties shall complete all contracted services and settle the financial matters between them in accordance with the terms of this Agreement.
10) EWSI’s Repres entation a nd W arranti es
Each Party represents and warrants that it will conduct itself with the highest ethical standards and in compliance with any and all applicable laws and will not make any false or misleading representation or warranty regarding the services of the other Party and shall indemnify, defend and hold Partner harmless from and against any and all third party claims resulting from a breach of such representation and warranty contained in this clause.
11) Change of Control Provision
This Agreement is binding upon the Parties, their successors and assigns. The foregoing notwithstanding, in the event that either Party to this Agreement sells a controlling interest of its company to a third party, the other Party shall have the right to cease work on behalf of any
customer until the third party confirm this Agreement in writing as requested and further shall be entitled to terminate this Agreement immediately upon notice thereof.
12) Authority
The Parties warrant to each other that they have full authority to enter into this Agreement and agree to be bound by its terms.
13) No Strict Construction
The Parties confirm that there is no relevance to the order of listing of the terms of this Agreement and that if any single element of this Agreement is deemed invalid the other elements shall remain valid and in full force.
14) Governing Law
The laws governing this Agreement will be those of England and Wales. In case of any dispute regarding this Agreement, the parties shall refer any disputes to and to agree to be bound by exclusive jurisdiction of the course of competent jurisdiction in London, England.
The Parties hereby approve and accept these terms on the date shown below.
| On Behalf of E-Waste Systems, Inc. |
On Behalf of Ingram Micro UK Ltd |
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| /s/ Martin Nielson |
/s/ Brent McCarty |
| Name: Martin Nielson |
Name: Brent McCarty |
| Title: Chief Executive Officer |
Title: Director |
| Date: 11/25/2014 |
Date: 11/25/2014 |
EXHIBIT 10.3
EXECUTIVE CONSULTING AGREEMENT
This Agreement (the “Agreement”) is entered into as of 26 October 2014 by and between E-Waste Systems, Inc., a Nevada, USA company whose registered address is 1350 E. Flamingo, #3101 - Las Vegas, NV 89119 and its subsidiaries, including E-Waste Systems (UK) Ltd (together “EWSI”), and Simon Hundal 6 Sweet Chariot Way, Admaston, Telford, Shropshire, TF1 3JE Tel: 07983 174 745 Email: simon_hundal@hotmail.com (the “Consultant”).
Whereas, EWSI is a publicly traded (OTCBB: EWSI), environmentally focused and socially responsible company supplying highly skilled management services, branded solutions for environmental processes, and related technologies to companies globally in fields which include electronics and other waste recycling and related reverse logistics services, management services, and incubator services and it wishes to expand these services and the geographies in which it operates, and
Whereas, the Consultant, is based in the United Kingdom (where the Company desires to aggressively expand) and is an internationally experienced professional actively engaged with and who has personal knowledge of a number of organizations which could be considered as customers, partners with, acquisition targets for, operating contractors, technology suppliers, or investors into EWSI, and
Whereas, EWSI desires to expand its business, and desires to obtain the benefit of the knowledge, location, expertise and contacts which the Consultant possesses to help achieve its objectives, and
Whereas, EWSI desires to retain the Consultant to provide executive operations management, business development, acquisition sourcing and related services to take advantage of the Consultant’s experience and wishes to exploit such commercial opportunities, and the Consultant is willing to provide such consulting services acting on behalf of EWSI.
Now therefore, in consideration of the mutual covenants and promises contained herein, the Parties hereto agree as follows:
1. Engagement; Consultant Relationship; Duties; Title. EWSI hereby engages the Consultant, and the Consultant hereby agrees to render, consulting and management services to EWSI in connection with the expansion of the business. The Consultant shall report to the CEO or such other person as the CEO shall designate and provide a routine (not less than monthly) report outlining the developments, operational results achieved and engagements performed.
The Consultant shall devote such of his time and effort as is reasonably required to perform the services described herein. The Consultant shall perform the services with a level of care, skill, and diligence that a prudent professional acting in a like capacity and familiar with such matters would use, and shall agree to abide by the rules of governance established by EWSI’s board of directors, including but not limited to, the Code of Business Conduct and Ethics and the Insider Trading Policies (copies of which are available and maintained on the EWSI website).
It is understood that having the credibility of a title of distinction may enhance the Consultant’s success, and EWSI hereby allows the Consultant to use the title of and be appointed to the role of Director, and Chief Operations Officer and Business Development, E-Waste Systems (UK) Ltd for the term of this engagement. EWSI shall include reference to this role on its website, in the ‘Team’ section, and shall provide an EWSI email address for correspondence.
2. Term and Termination. The term of this Agreement shall begin on the date first signed and shall continue until the first anniversary of the date of this Agreement (the ‘Termination Date’) unless terminated by either Party as described herein (the “Term”). EWSI may terminate this agreement for cause (defined as immoral, unethical, or illegal behavior or failure or refusal to follow any directive of the Board of Directors or the CEO by the Consultant) without prior notice and without any further obligation to Consultant regardless of any pending business opportunities. Should EWSI terminate this agreement without cause, it shall provide the Consultant with thirty days notice. Upon such termination without cause, Consultant shall provide to EWSI a list of pending opportunities and the Parties shall agree on the legitimacy of such opportunities. Should EWSI subsequently conclude a transaction as described in such list of pending opportunities within 6 months of Termination Date, EWSI shall pay to Consultant any fees deriving from such transactions in accordance with this Agreement. EWSI reserves the right to apply unilateral modifications to this agreement, but only in writing.
Should the Consultant terminate this agreement other than due to a breach of this Agreement by EWSI, or in the event Consultant is terminated for Cause as described above, Consultant shall forfeit any claims to compensation for transactions completed by EWSI following the termination date, unless the fees earned were for work completed by the Consultant prior to the termination date.
If neither Party elects to terminate this agreement prior the first term as described above, the agreement shall be automatically be extended for a subsequent one year term under the same conditions.
3. Compensation. The compensation structure is incentive-based. The form, amount and timing of compensation will be agreed by the Parties upon the closing by EWSI of any opportunity with the terms reflective of the payments to EWSI by customers, clients, deal partners, investors or others sourced by the consultant. The base compensation, which is subject to periodic review, is shown in Schedule A attached.
EWSI reserves the right to issue the compensation in EWSI common stock or in cash, with the default being cash when cash is received by EWSI. The common stock issued shall be newly issued restricted common shares.
Unless otherwise required by law, all such compensation shall be payable without deduction for national or local income taxes, social security or any other amounts, which shall remain the responsibility of the Consultant.
4. Expenses. The Consultant shall pay for his own expenses unless otherwise agreed or required by EWSI and pre-approved. A budget for such expenses shall be created and approved with an initial expectation that local travel shall not exceed £1,500 or its equivalent (as soon as possible a Company credit or debit card will be made available for this purpose).
5. Independent Contractor. The Consultant is an independent contractor providing services to EWSI. The Consultant is not an agent of EWSI and shall have no right to bind EWSI, except as expressly and duly authorized by affirmative action of the CEO or board of directors. EWSI, as appropriate, will report all payments to be made hereunder on Forms 1099 (or their equivalent in a different country) as payments to the Consultant for independent contracting services. EWSI shall not carry worker’s compensation insurance to cover the Consultant. EWSI shall not pay any contributions to Social Security, unemployment insurance, federal or state withholding taxes, or their equivalent in another country, nor provide any other contributions or benefits that might be expected in an employer-employee relationship.
6. No Assignment. Unless otherwise agreed with EWSI, the Consultant shall not subcontract his duties or cause any other person or entity to perform his services. The Consultant shall therefore not voluntarily or by operation of law assign or otherwise transfer the obligations incurred on his part pursuant to the terms of this Agreement without the prior written consent of EWSI. Any attempted assignment or transfer by Consultant of his obligations without such consent shall be voided.
7. Payment of Fees. The Parties agree that no compensation shall be due to Consultant except as to the extent of ascertainable and quantifiable value to EWSI determined by EWSI in its reasonable discretion and EWSI has no obligation to accept opportunities brought or introduced by Consultant and shall evaluate and accept or decline such opportunities in its sole and absolute discretion.
8. Confidentiality, Non-Competition and Non-Circumvention. During the term of this Agreement and for a period of two (2) years after, EWSI and Consultant agree that neither of them, nor any affiliate of them, directly or indirectly, or in any other capacity, will (i) in any manner influence any person
who is an employee of the other Party to leave such service or hire any such person, (ii) contact or solicit any Person that is or at any time within the one year period immediately prior to the date of this Agreement was a customer of EWSI or Consultant for the purpose of providing products, services or business competitive with that provided by the other Party, or provide any such products, services or business to any such Person, (iii) request or advise any suppliers, customers or accounts of the other Party to withdraw, curtail or cancel any business that is placed with the other Party, (iv) use or disclose, or cause to be used or disclosed, any secret, confidential or proprietary information of either Party, which is stipulated by either Party as confidential, regardless of the fact that EWSI and/or Consultant or any EWSI Affiliate may have participated in the development of that information, or (v) make any disparaging remarks about the other Party, their employees or officers, or their services, practices or conduct.
9. Contracts or Other Agreements with Current or Former Employer or Business. The Consultant hereby represents and warrants that he is not subject to any agreement with respect to which the Consultant’s engagement by EWSI would be a breach.
10. Modification of Agreement. This Agreement may be modified at any time by EWSI or at any time by a written supplemental agreement executed by both Parties.
11. Notice. All notices and other communications required or permitted under this Agreement shall be in writing and, if mailed by prepaid first-class mail or certified mail, return receipt requested, shall be deemed to have been received on the earlier of the date shown on the receipt or three (3) business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand, facsimile transmission or overnight courier, in which event the notice shall be deemed effective when delivered or transmitted.
All notices and other communications under this Agreement shall be given to the Parties hereto at the following addresses:
If to EWSI:
Susan Johnson, Secretary-Treasurer
12075 Northwest Blvd, Building 300
Cincinnati, Ohio 45246
Email: sjohnson@ewastesystems.com
If to Consultant: Simon Hundal
6 Sweet Chariot Way, Admaston,
Telford, Shropshire, TF1 3JE
Email: simon_hundal@hotmail.com
or to such other address as the Parties hereto may specify, in writing, from time to time.
12. Waiver of Breach. The waiver by either Party of any breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.
13. Entire Agreement. This Agreement contains the entire agreement of the Parties relating to the subject matter of this Agreement and supersedes any prior written or oral arrangements with respect to the Consultant’s engagement by EWSI.
14. Successors, Binding Agreement. Subject to the restrictions on assignment contained herein, this Agreement shall inure to the benefit of and be enforceable by EWSI’s successors and assigns.
15. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
16. Survival of Obligations. The duties and obligations contained in Paragraphs 6, 12, 13, 15 and 17 shall survive the expiration or termination of this Agreement.
17. Multiple Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same Agreement.
18. Tax Withholding; Indemnification. By reason of Consultant’s relationship with EWSI as an independent contractor, all sums required to be paid by EWSI to Consultant shall be paid in full, without reduction for any withholding taxes, employers’ taxes, social security taxes, payments or contributions, and similar employer withholdings, deductions and payments. Consultant acknowledges and agrees that Consultant shall be solely responsible for making all such filings and payments and shall indemnify and hold harmless EWSI for any liability, claim, expense or other cost incurred by EWSI arising out of or related to the obligations of Consultant pursuant to this Paragraph 16.
19. Applicable Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Nevada, USA.
20. Headings. The headings of the Paragraphs of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed, or cause their duly assigned agent to execute, this Agreement as of the date first set forth above.
| For E-Waste Systems, Inc. |
Consultant |
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| By: /s/ Martin Nielson |
By: /s/ Simon Hundal |
| Martin Nielson, CEO |
Simon Hundal |
Attachments:
Exhibit A Compensation Schedule for Consultant
Exhibit A: Compensation Schedule for Consultant
1. On Target Earnings. $150,000 per annum
This amount is the on-target earnings expected under this agreement. This expectation will be reviewed quarterly. All earnings under this agreement are commissions or incentive payment based solely on the closing of and payment to EWSI for deals brought by the Consultant, and there is therefore no guarantee that the On Target Earning shall be paid. However it is in the best interests of the Consultant and the Company that transactions are closed which the Consultant sources. Therefore, if commissions are not earned which are at least reflecting the OTE, then the Company is not benefitting and this agreement may be reviewed for termination or adjustment.
2. Incentive Compensation from Sales. 20% of Net Revenue
Each month, the Company shall pay an incentive payment to the Consultant equivalent to the Net Revenue from the deals sourced by and closed by the Consultant and which are processed through operations owned by or which are part of the Company’s network, as it may be extended from time to time, and will only be paid when then Company has earned and been paid the revenue from the source. The Net Revenue shall be determined by subtracting total revenue sourced by the Consultant and recorded for each month for each location, less all direct cost of sales, including direct labor, transportation/freight, sales commissions, incentives, revenue sharing, payments to customers, etc. All such amounts are subject to verification by the Company’s auditors.
3. Business Development Incentives. Variable; paid based on value created
The Company shall incentivize the Consultant to bring and execute transactions which create value for the Company by building its infrastructure, growing its brand, increasing sales, completing new contracts, sourcing acquisitions or joint ventures, hiring key personnel, and other such growth initiatives as the Company and the Consultant may agree upon. Incentive payments include the following:
a. Investment. 10% of the value of any investment brought to the Company
b. New Commercial Contracts. 2% of the gross value of the contract for the greater of the first year or the fixed term, for any contract executed by the Company and paid to the Company and sourced in whole or in part by the Consultant
c. Acquisition or Joint Venture. 1.5% of the total sales for the most recent fiscal year of the acquired target brought to the Company by the Consultant
d. Brand License Sales. 2% of the value of any brand license agreement closed by the Company and sourced by the Consultant
e. Hiring of executive personnel. $5,000 or 5% of the first year base compensation for any executive hired by the Company and sourced by the Consultant
f. Others as agreed
4. Annual Bonus Pool. Up to 30% of Compensation Earned
The Company shall include the Consultant in any Executive Bonus plan adopted by the Board of Directors, which shall pay up to 30% of at least the base compensation of the Consultant.
5. USA Incentive Stock Option Plan. 5% of the Gross Issued and Outstanding Common Stock
The Company shall, upon adoption by the Board of Directors, include the Consultant in the stock option plan, which shall include vesting over a three-year period and other obligations as they are adopted.
6. UK Shares. 20% of the Initial Share Capital
The Company shall, grant the Consultant these common shares upon execution of this agreement, which shall have similar three year vesting as the Incentive Stock Option Plan. The Consultant shall have the right to convert the UK Shares to USA shares at a value and time as determined by the Board of Directors.
EXHIBIT 10.4
Consulting Fee Agreement
This Agreement (the “Agreement”) is entered into as of 2 Dec, 2014 by and between E-Waste Systems, Inc., a Nevada, USA company whose registered address is 1350 E. Flamingo, #3101 - Las Vegas, NV 89119and its subsidiaries, including E-Waste Systems (UK) Ltd (together “EWSI”), and JayeshTanna, a citizen of the Republic of India whose address is D-17, Dodsal Colony, BPC ROAD, Akota, Vadodara, Gujarat, Email: jayeshtanna2000@yahoo.com (the “Consultant”).
Whereas, EWSI is a publicly traded (OTCBB: EWSI), environmentally focused and socially responsible company supplying highly skilled management services, branded solutions for environmental processes, and related technologies to companies globally in fields which include electronics and other waste recycling and related reverse logistics services, management services, and incubator services and it wishes to expand these services and the geographies in which it operates, and
Whereas, the Consultant, is based in the Republic of India (where the Company desires to aggressively expand) and in the United States of America and is an internationally experienced professional actively engaged with and who has personal relationships and detailed knowledge and of a number of organizations which could be considered as customers, partners with, acquisition targets for, operating contractors, technology suppliers, or investors into EWSI, and
Whereas, EWSI desires to expand its business, and desires to obtain the benefit of the knowledge, location, expertise and contacts which the Consultant possesses to help achieve its objectives, and
Whereas, EWSI desires to retain the Consultant to provide executive operations management, business development, acquisition sourcing, investment sourcing and related services to take advantage of the Consultant’s experience and wishes to exploit such commercial opportunities, and the Consultant is willing to provide such consulting services acting on behalf of EWSI.
Now therefore, in consideration of the mutual covenants and promises contained herein, the Parties hereto agree as follows:
1. Engagement; Consultant Relationship; Duties; Title. EWSI hereby engages the Consultant, and the Consultant hereby agrees to render, consulting and investment management services to EWSI in connection with the expansion of the business. The Consultant shall report to the CEO or such other person, as the CEO shall designate.
The Consultant shall devote such of his time and effort as is reasonably required to perform the services described herein. The Consultant shall perform the services with a level of care, skill, and diligence that a prudent professional acting in a like capacity and familiar with such matters would use, and shall agree to abide by the rules of governance established by EWSI’s board of directors, including but not limited to, the Code of Business Conduct and Ethics and the Insider Trading Policies (copies of which are available and maintained on the EWSI website).
2. Term and Termination. The term of this Agreement shall begin on the date first signed and shall continue until the first anniversary of the date of this Agreement (the ‘Termination Date’) unless terminated by either Party as described herein (the “Term”). EWSI may terminate this agreement for cause (defined as immoral, unethical, or illegal behavior or failure or refusal to follow any directive of the Board of Directors or the CEO by the Consultant) with due process and prior notice.
Should EWSI terminate this agreement without cause, it shall provide the Consultant with thirty days notice. Upon such termination without cause, Consultant shall provide to EWSI a list of
pending opportunities and the Parties shall agree on the legitimacy of such opportunities. Should EWSI subsequently conclude a transaction as described in such list of pending opportunities at any time after Termination Date, EWSI shall pay to Consultant any fees deriving from such transactions in accordance with this Agreement.
Should the Consultant terminate this agreement other than due to a breach of this Agreement by EWSI, or in the event Consultant is terminated for Cause as described above, Consultant shall forfeit any claims to compensation for transactions completed by EWSI following the termination date, unless the fees earned were for work completed by the Consultant prior to the termination date and except that, for transactions that were identified in writing by the Consultant prior to Termination, consultant shall be entitled to compensation for such transactions if completed by EWSI, even after termination.
If neither Party elects to terminate this agreement prior the first term as described above, the agreement shall be automatically be extended for a subsequent one-year term under the same conditions.
3. Compensation. The compensation structure is incentive-based and shall be paid as follows: For investments received by EWSI and sourced by the Consultant, EWSI shall pay the Consultant a sum equivalent to 10% of those funds in cash and upon receipt plus 2.5% in Series A convertible redeemable preferred stock. Consultant may bill EWSI for reasonable and, pre-approved, out of pocket expenses, payable only upon closing of a transaction.
Compensation for Business Development activities shall be as follows:
a. New Commercial Contracts. 2% of the gross value of the contract for the greater of the first year or the fixed term, for any contract executed by the Company and paid to the Company and which was sourced by the Consultant
b. Acquisition or Joint Venture. 1.5% of the total sales for the most recent fiscal year of an acquired target brought to the Company by the Consultant
c. Brand License Sales. 2% of the value of any brand license agreement closed by the Company and sourced by the Consultant
Consultant, at his sole discretion, reserves the right to accept the compensation in cash or in EWSI common stock, or a combination of both, with the default being cash when cash is received by EWSI. The common stock issued shall be newly issued restricted common shares.
Unless otherwise required by law, all such compensation shall be payable without deduction for national or local income taxes, social security or any other amounts, which shall remain the responsibility of the Consultant.
5. Independent Contractor. The Consultant is an independent contractor providing services to EWSI. The Consultant is not an agent of EWSI and shall have no right to bind EWSI, except as expressly and duly authorized by affirmative action of the CEO or board of directors. EWSI, as appropriate, will report all payments to be made hereunder on Forms 1099 (or their equivalent in a different country) as payments to theConsultant for independent contracting services. EWSI shall not carry worker’s compensation insurance to cover the Consultant. EWSI shall not pay any contributions to Social Security, unemployment insurance, federal or state withholding taxes, or their equivalent in another country, nor provide any other contributions or benefits that might be expected in an employer- employee relationship.
6. No Assignment. Unless otherwise agreed with EWSI, the Consultant shall not subcontract his duties or cause any other person or entity to perform his services. The Consultant shall therefore not
voluntarily or by operation of law assign or otherwise transfer the obligations incurred on his part pursuant to the terms of this Agreement without the prior written consent of EWSI. Any attempted assignment or transfer by Consultant of his obligations without such consent shall be voided.
7. Payment of Fees. The Parties agree that no compensation shall be due to Consultant except for such transactions that are concluded by EWSI and consistent with the individual Compensation Agremeements executed by Consultant and EWSI, as outlined in Clause 3, above. EWSI has no obligation to accept opportunities brought or introduced by Consultant and shall evaluate and accept or decline such opportunities in its sole and absolute discretion and such opportunities accepted by EWSI (at it sole discretion) will be duly documented and included in the list of transactions wherein Consultant shall be due and owing compensation.
8. Confidentiality, Non-Competition and Non-Circumvention. During the term of this Agreement and for a period of two (2) years after, EWSI and Consultant agree that neither of them, nor any affiliate of them, directly or indirectly, or in any other capacity, will (i) in any manner influence any person who is an employee of the other Party to leave such service or hire any such person, (ii) contact or solicit any Person that is or at any time within the one year period immediately prior to the date of this Agreement was a customer of EWSI or Consultant for the purpose of providing products, services or business competitive with that provided by the other Party, or provide any such products, services or business to any such Person, (iii) request or advise any suppliers, customers or accounts of the other Party to withdraw, curtail or cancel any business that is placed with the other Party, (iv) use or disclose, or cause to be used or disclosed, any secret, confidential or proprietary information of either Party, which is stipulated by either Party as confidential, regardless of the fact that EWSI and/or Consultant or any EWSI Affiliate may have participated in the development of that information, or (v) make any disparaging remarks about the other Party, their employees or officers, or their services, practices or conduct.
9. Contracts or Other Agreements with Current or Former Employer or Business. The Consultant hereby represents and warrants that he is not subject to any agreement with respect to which the Consultant’s engagement by EWSI would be a breach.
10. Modification of Agreement. This Agreement may be modified at any time by EWSI or at any time by a written supplemental agreement executed by both Parties.
11. Notice. All notices and other communications required or permitted under this Agreement shall be in writing and, if mailed by prepaid first-class mail or certified mail, return receipt requested, shall be deemed to have been received on the earlier of the date shown on the receipt or three (3) business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand, facsimile transmission or overnight courier, in which event the notice shall be deemed effective when delivered or transmitted. All notices and other communications under this Agreement shall be given to the Parties hereto at the following addresses:
If to EWSI:
Susan Johnson, Secretary-Treasurer
12075 Northwest Blvd, Building 300
Cincinnati, Ohio 45246
Email: sjohnson@ewastesystems.com
If to Consultant: JayeshTanna
D-17, Dodsal Colony, BPC ROAD,
Akota, Vadodara, Gujarat,
Email: jayeshtanna2000@yahoo.com
or to such other address as the Parties hereto may specify, in writing, from time to time.
12. Waiver of Breach. The waiver by either Party of any breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach.
13. Entire Agreement. This Agreement contains the entire agreement of the Parties relating to the subject matter of this Agreement and supersedes any prior written or oral arrangements with respect to the Consultant’s engagement by EWSI.
14. Successors, Binding Agreement. Subject to the restrictions on assignment contained herein, this Agreement shall inure to the benefit of and be enforceable by EWSI’s successors and assigns.
15. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
16. Survival of Obligations. The duties and obligations contained in Paragraphs 6, 12, 13, 15 and 17 shall survive the expiration or termination of this Agreement.
17. Multiple Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same Agreement.
18. Tax Withholding; Indemnification. By reason of Consultant’s relationship with EWSI as an independent contractor, all sums required to be paid by EWSI to Consultant shall be paid in full, without reduction for any withholding taxes, employers’ taxes, social security taxes, payments or contributions, and similar employer withholdings, deductions and payments. Consultant acknowledges and agrees that Consultant shall be solely responsible for making all such filings and payments and shall indemnify and hold harmless EWSI for any liability, claim, expense or other cost incurred by EWSI arising out of or related to the obligations of Consultant pursuant to this Paragraph 16.
19. Applicable Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Nevada, USA.
20. Headings. The headings of the Paragraphs of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed, or cause their duly assigned agent to execute, this Agreement as of the date first sets forth above.
| For E-Waste Systems, Inc. |
Consultant |
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| By: /s/ Martin Nielson |
By: /s/ Jayesh Tanna |
| Martin Nielson, CEO |
Jayesh Tanna |