UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the

Securities Act of 1934

January 22, 2016

(Date of Report)

January 15, 2015

(Date of Earliest Reported Event)

  AMERICATOWNE Inc.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

4700 Homewood Court, Suite 100, Raleigh, North Carolina 27609
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(888) 406 2713

 (ISSUER TELEPHONE NUMBER)

(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)

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):

◻   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

◻   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

◻   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

◻   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On January 15, 2016, AmericaTowne, Inc. (the “Company”) entered into a United States Trade Center Agreement (the “Trade Center Agreement”) with Quintus A. MacDonald, an individual (“MacDonald”) located at 5504 Tanglewood Pine Lane in Raleigh, North Carolina 27610 (the “MacDonald Trade Center Agreement”). The terms and conditions associated with the agreement are set forth below. MacDonald is not a shareholder of the Company, and the agreement set forth below does not present a known, perceived or anticipated conflict of interest.

The general purpose behind the Trade Center Agreement is to support AmericaTowne export operations and take advantage of the Immigrant Investor Program administered by the United States Citizenship and Immigration Services commonly referred to as the “EB-5” visa (hereinafter referred to as the “EB-5 Program.”). MacDonald is identified in his agreement as a “Service Provider.” As a Service Provider, each individual represents that he or his related entity(ies) has distinct experience working with potential individuals and businesses who may be candidates for the Company’s operations and business, including but not limited to, experience assisting businesses and entrepreneurs who may be candidates for occupancy, or facilitating the acquisition of goods and performing services to the Company, securing funding (credit lines, loans and loan guarantees), insurance, supplier and export contracts and other related services that could assist candidates in conducting business with AmericaTowne. These services are collectively referred to in each agreement as “Support Services.”

Under the Trade Center Agreement, the parties agree to organize a limited liability company in order to facilitate the EB-5 Program for a particular geographical location whereby the Company, or a wholly-owned subsidiary of the Company, in the case of the MacDonald Trade Service Agreement, owns 57% of the authorized units and the “Service Provider” owns 8% of the authorized units, and the EB5 investor, if any, up to 35%. If there is no EB5 investor, the Company or its wholly-owned subsidiary will own the 35% allocated for the EB5 investor, until if and when an EB5 investor participates. In the case of MacDonald, the geographical location is Souderton, Pennsylvania. The parties under the MacDonald Trade Center Agreement agree that the company’s ownership may change as directed by the Company to accommodate other investors including those investors that may participate under the EB-5 Program.

Under the anticipated terms of the Operating Agreement for the limited liability company, the parties agree that the limited liability company will operate from a designated location approved by the Company that is commensurate with the Company’s office in Raleigh, North Carolina. The Service Provider will manage the office for the limited liability company. The Service Provider agrees to manage, operate, employ and maintain a specific number of employees consistent with the requirements of the EB-5 Program, as may be amended and revised during the term of the Trade Center Agreement. The Service Provider also agrees, that if an investment under the EB-5 Program is assigned to the limited liability company, an office will be maintained within the closest “Targeted Employment Area,” to meet the EB5 Program criteria.

The Trade Center Agreements are governed by North Carolina law, and thus to the extent a special purpose limited liability company is organized as contemplated under the Trade Center Agreements, the Company anticipates that the entity would be organized in North Carolina applying North Carolina law. The North Carolina Limited Liability Company Act, N.C. Gen. Stat. § 57C-1-01 et seq., does not create fiduciary duties among members. Members of a limited liability company are like shareholders in a corporation in that members do not owe a fiduciary duty to each other or to the company. However, an exception to this rule is that a controlling member of a limited liability company in North Carolina, i.e. in this case, the Company, would owe a fiduciary duty to not act in a way that harms minority members. 

The MacDonald Trade Center Agreement

The effective date of the MacDonald Trade Center Agreement is January 15, 2016. It expires on December 31, 2021, unless otherwise terminated early or extended by the parties. Upon termination, the Company shall reimburse MacDonald for any approved compensation and expenses incurred related to fulfilling its duties under this Agreement. In the event the parties do not organize the limited liability company within 45 days of the effective date of the MacDonald Trade Center Agreement, the agreement shall be null and void.

The Company retains the option to extend the term of the MacDonald Trade Center Agreement under its sole discretion until December 7, 2025 subject to the “Option Term.” The Option Term shall become effective provided the Company provides written notice to MacDonald by October 31, 2021 of its intent to exercise the option right. The Company may terminate the MacDonald Trade Center Agreement at any time during the Option Term subject to the Company providing written notice to MacDonald fifteen (15) days prior to the termination. The Parties agree that in the event of termination, any and all corresponding rights, duties and obligations intended to survive post-termination shall remain in full force and effect. MacDonald has agreed to a confidentiality agreement, and an agreement not to circumvent the interests of the Company and to not compete against the Company. The parties have also agreed to a mutual indemnification and hold harmless.

The consideration paid to the Company under the MacDonald Trade Center Agreement is a nonrefundable Service Fee of $35,000 paid as follows: (a) $5,000 upon execution, and (b) $1,000 per month for thirty months, after execution commencing on February 28, 2016. The consideration paid to MacDonald includes a percentage fee for those businesses referred by him or his related entity(ies) that contract with the Company for export support services. There is no related party relationship between MacDonald, and the Company and its principal officers.

In addition to the monetary compensation, above, during the Term and, if applicable, the Option Term, as these terms are defined in the Agreement, the Company has agreed to pay MacDonald, at its sole discretion, a fee equal to 1.0% to 13% of the gross value of all funds, insurance, loans and or guarantees charged and collected from those businesses and individuals participating or contracting with the Company’s export program.

In addition, MacDonald is entitled to a stock award of 25,000 shares of the Company’s restricted common stock one year after the effective date of the MacDonald Trade Center Agreement, orivided it has not been terminated. Starting at the end of the second month of the MacDonald Trade Center Agreement, provided MacDonald has met the production schedule, the Company shall pay, at its sole discretion, MacDonald a monthly stipend of $1,800.00. The Company has also granted MacDonald a stock option of 25,000 shares of restricted common stock of the Company for each year the agreement is in force for up to five years. Upon the effective date under the MacDonald Trade Center Agreement through December 31, 2016, and each year thereafter for up to five years, the option can be exercised at the option price of $1.50 per common share.

The shares must be purchased pursuant to a Subscription Agreement setting forth the price per share along with a representation that the shares are being purchased for MacDonald’s own account without the intent to distribute through public resale. If the location becomes an EB-5 investment location, as defined in the MacDonald Trade Center Agreement, the Company has agreed to pay MacDonald $10,000.00 within one year of the EB-5 company qualifying in all respects under the EB-5 Program, as defined in the Agreement.

 SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.