Item 1.01 Entry into a Material Definitive
Agreement
American ATI Modular Technology Company
Project Investment Agreement
In its Form 10-12g registration
statement, ATI Modular Technology Corp., a Nevada corporation (the “Company”) had disclosed its Investment and Cooperation
Agreement with the Jiangnan Industry Zone in Anhui Province dated September 8, 2016 (the “Jiangnan Cooperation Agreement”).
The Company had disclosed that the Jiangnan Cooperation Agreement was not a definitive agreement. On December 28, 2016, the parties
entered into the American ATI Modular Technology Company Project Investment Agreement (the “Investment Agreement”),
which the Company has determined to constitute a materially definitive agreement and supersedes the Jiangnan Cooperation Agreement.
The following contains a summary of the terms of the Investment Agreement. The reader is directed to the entire agreement enclosed
as an exhibit hereto.
Under the Investment Agreement,
the Administrative Committee of Jiangnan Industrial Concentration Zone of Anhui Province (hereinafter, “Jiangnan”)
and the Company have agreed to the construction of the Company’s green, modular building and related technology under the
project name “Modular Plant Production Base.” By or before February 27, 2017, the Company will rent buildings, factories
and rental houses from Jiangnan, or its related-party - Jiangnan Construction & Development Co., Ltd. (“Jiangnan Construction”),
with a total acreage of approximately 244,776 square meters (approximately 2,634,747 square feet) for purposes of advancing the
Company’s modular construction, technology and research, and with a chosen location within this area for the Company’s
global company offices; however, the Company will retain its offices in the United States, as identified above. In the event the
Company does not occupy the rented facilities in one-year, Jiangnan may place other tenants in the buildings for unrelated projects.
The rental rate is as follows per square meter, per month: (a) 9 Chinese Yuan (approximately $1.29 USD) for single-storied factory
buildings, (b) 7 Chinese Yuan (approximately $1.01 USD) for multi-storied factory buildings, (c) 6 Chinese Yuan (approximately
$.86 USD) for two-storied buildings, (d) 5 Chinese Yuan (approximately $.75 USD) for three-storied buildings and public rental,
and (e) 10 Chinese Yuan (approximately $1.38 USD) for commercial housing. The first twenty-seven months is rent free.
The initial deposit of
330,000 Chinese Yuan (approximately $48,000 USD) is due to Jiangnan Construction by January 11, 2016. This amount may be applied
to the Company’s rental obligations. The Company has agreed to further capitalize the operation with 396,000,000 Chinese
Yuan (approximately $57,000,000 USD) with 79,200,000 Chinese Yuan (approximately $11,000,000 USD) by December 31, 2017.
The capitalization under
the Investment Agreement is, in part, the Company’s responsibility. However, the Company and Jiangnan have agreed to certain
provisions to mitigate against financing risks, including, but not limited to: (a) access upon request by the Company to local
bank loans in the Anhui Province and United States Exim Bank, (b) equity fund insertion up to $3,000,000 USD, and (c) contribution
by Jiangnan up to $2,900,000 upon meeting conditions in the Investment Agreement.
The Company’s majority
and controlling shareholder, AmericaTowne, Inc., a Delaware corporation (“AT”), has no financial obligations under
the Investment Agreement. However, AT’s director, officer and control person by virtue of his beneficial ownership of more
than 51% of the issued and outstanding shares of common stock is Alton Perkins. Mr. Perkins is also the beneficial owner of the
controlling interest in the Company by virtue of his ownership in ATI, and he is the Company’s sole director and officer.
As a result, Mr. Perkins might elect to vote AT’s shares, or exercise his rights as the sole member of the Board of Directors
of AT, to loan funds from AT to the Company to satisfy the capital requirements under the Investment Agreement. If this occurred,
the loaned funds would become a related-party debt to the Company. There are no current plans or intentions by Mr. Perkins to facilitate
such a loan.
The Investment Agreement
sets forth certain benefits, subsidies and incentives offered by the Chinese government, subject to the Company reaching certain
benchmarks and employing a specific numbers of employees from the region. In addition, Jiangnan has agreed to certain financial
contributions to the Company if it meets certain listing standards in China, and has agreed to exercise best efforts in pursuing
private equity contributions for the benefit of the Company in China. The Investment Agreement contains events of default, and
the respective rights and duties of the parties in the event of default. There is risk that investment by the Company may be made
under the Investment Agreement, and as a result of an uncured default, the Company could lose its investment and opportunities
in the region. Chinese law governs any disputes under the Investment Agreement, and the parties have agreed to jurisdiction of
any dispute in Jiangnan’s region. As a result, the Company might have logistical problems in litigating any such dispute.