AQUA METALS, INC. (NASDAQ:AQMS) Files An 8-K Entry into a Material Definitive Agreement

AQUA METALS, INC. (NASDAQ:AQMS) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01

Entry into a Material Definitive Agreement.

On February 7, 2017, we entered into the following definitive
agreements with two wholly-owned indirect subsidiaries of Johnson
Controls International plc, or Johnson Controls.

Equipment Supply Agreement

We entered into an Equipment Supply Agreement dated February 7,
2017 with Johnson Controls to which we agreed to collaborate on
the development of a program for the installation of new
greenfield builds and conversion of existing Johnson Controls and
certain strategic partners of Johnson Controls existing lead
smelters to a lead recycling process utilizing our proprietary
and patent-pending AquaRefining technology and equipment, know
how and services. We have agreed with Johnson Controls to develop
an appropriate program blueprint, and enter into a definitive
development program agreement reflecting that blueprint, to which
we will provide to Johnson Controls and certain strategic
partners of Johnson Controls, by way of licensing or sale, the
following products and services in the regions of North America,
Europe and China:

AquaRefining technology and the related equipment,
engineering and systems integration support sufficient to
convert or retrofit existing smelter-based operations and/or
the construction of new Johnson Controls and Johnson Controls
strategic partners battery recycling facilities based on our
AquaRefining technology;
Training, evaluation and certification of Johnson Controls
operations personnel sufficient for such personnel to
competently operate our AquaRefining technology and
equipment; and
Ongoing technical support, maintenance services and
warranties.

We will provide the above services and equipment to Johnson
Controls on a serviced license basis, including Johnson Controls
ongoing licensing fees payable to us based on the operational
capacity of the AquaRefining equipment supplied by us. We have
agreed not to license our AquaRefining technology and equipment
to third parties in the aforementioned regions until such as we
and Johnson Controls have agreed on certain matters relating to
the initial conversion of a Johnson Controls facility. The
Equipment Supply Agreement may be terminated by either party upon
60 days prior written notice if the parties have not entered into
the blueprint agreement by a mutually agreed date. The Equipment
Supply Agreement allows each party the right to seek early
termination based on a material breach by the other party that
goes uncorrected for 30 days following notice of breach. The
Equipment Supply Agreement contains representations, warranties
and indemnities that are customary to commercial agreements of
this nature.

Tolling/Lead Purchase Agreement

We have entered into a Tolling/Lead Purchase Agreement dated
February 7, 2017 with Johnson Controls to which we have agreed to
sell to Johnson Controls, and Johnson Controls has agreed to
purchase from us, recycled lead on both a tolling (fee to convert
feedstock to recycled materials) and merchanting (sale of
recycled materials) basis.

to the agreement, Johnson Controls has agreed to purchase from
us, and we have agreed to sell to Johnson Controls, up to 100% of
the recycled lead we produce for automotive applications, other
than by way of tolling arrangements, on a monthly basis, unless
we receive notice from Johnson Controls six months advance of its
intention to purchase less than 100% of our output in any given
month. Our agreement with Johnson Controls excludes, and we are
free to manufacture and sell to third parties, recycled lead for
non-automotive uses, such as stationery batteries for back-up
power systems for Internet/Cloud applications or grid scale
storage applications.

We have also agreed to provide tolling services to Johnson
Controls whereby Johnson Controls will deliver to us used lead
acid batteries, or LABs, and we will recycle the used LABs and
return the recycled lead to Johnson Controls for a fee. Johnson
Controls has agreed to send to us for tolling, and we have agreed
to toll for Johnson Controls, used LABs representing a
significant allocation of the production capacity of our initial
recycling facility in McCarran, Nevada.

The Tolling/Lead Purchase Agreement has a minimum term of five
years and upon the expiration of the initial term the agreement
extends each day for another three years. Either party may elect
to terminate the agreement for any reason after the second
anniversary of the agreement, which termination shall be
effective on the third anniversary of the notice of termination.
Either party may terminate the agreement on ten days prior
written notice of breach that goes uncorrected during the notice
period. The Tolling/Lead Purchase Agreement contains
representations, warranties and indemnities that are customary to
commercial agreements of this nature.

Investment Agreement

We entered into a Stock Purchase Agreement dated February 7, 2017
with Johnson Controls to which we issued and sold to Johnson
Controls 939,005 shares of our common stock at $11.33 per share
for the gross proceeds of approximately $10,638,926. The Stock
Purchase Agreement includes customary representations,
warranties, and covenants by Johnson Controls and us, and an
indemnity from us in favor of Johnson Controls.

In connection with the investment transactions, we also entered
into an Investors Rights Agreement dated February 7, 2017 with
Johnson Controls to which we granted Johnson Controls customary
demand and piggyback registration rights, limited board
observation rights and limited preemptive rights allowing Johnson
Controls the right to purchase its proportional share of certain
future equity issuances by us. The Investor Rights Agreement also
provides that we must make certain payments as liquidated damages
to Johnson Controls if we fail to file the registration statement
within 20 days of the close of the investment or if Rule 144
under the Securities Act of 1933 (Securities Act) should become
unavailable for the resale of the common shares. The board
observation and preemptive rights shall expire on the earlier of
(i) such time as Johnson Controls no longer owns 50% of the
acquired shares or (ii) the termination of both the Tolling/Lead
Purchase Agreement and Equipment Supply Agreement.

to the Investor Rights Agreement, we have agreed to procure
directors and officers insurance coverage of Johnson Controls
board observer within 20 business days following the date of the
agreement. We have also agreed to compensate Johnson Controls
should either Stephen Clarke, our current chief executive
officer, or Selwyn Mould, our current chief operating officer, no
longer hold such positions or no longer devote substantially all
of their business time and attention to our company, whether as a
result of resignation, death, disability or otherwise (such an
event referred to as a key-man event). We have agreed to pay
Johnson Controls $1,000,000, per occurrence, if either officer is
subject to a key-man event during the 18 months following
February 7, 2017, and we have agreed to pay Johnson Controls a
total of $1,000,000 if either or both key-man events occur after
18 months and prior to 30 months following February 7, 2017.

The investment transaction with Johnson Controls closed on
February 7, 2017. There were no sales commissions paid by us in
connection with the sale of our common shares to Johnson
Controls.

Item 3.02 Unregistered Sales of Equity Securities

On February 7, 2017, we issued to Johnson Controls 939,005 shares
of our common stock. The terms of the share issuance are
described in Item 1.01 above. The securities were issued to the
exemption from registration provided by Section 4(a)(2) of the
Securities Act and Rule 506(b) thereunder.


About AQUA METALS, INC. (NASDAQ:AQMS)

Aqua Metals, Inc. is engaged in the business of recycling lead through a process that the Company developed and named AquaRefining. AquaRefining process will provide for the recycling of lead acid batteries (LABs) and the production of lead. AquaRefining is a water-based ambient temperature process. The modular nature of AquaRefining makes it possible to start LAB recycling at a smaller scale than is possible with smelters. Its AquaRefining process begins with the crushing of used LABs and the separation of the metallic lead, active material (lead compounds), sulfuric acid and plastic for recycling. The active material is dissolved in its solvent. The primary lead is then stripped from the solvent using its automated process allowing the solvent to be reused continuously and indefinitely. Its AquaRefining process generates over three outputs, such as lead; cleaned plastic chips, recovered from battery casings, and sulfuric acid. The Company has not generated revenues.

AQUA METALS, INC. (NASDAQ:AQMS) Recent Trading Information

AQUA METALS, INC. (NASDAQ:AQMS) closed its last trading session up +1.21 at 17.45 with 878,234 shares trading hands.

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