Document:

exv10w5

 

Exhibit 10.5

NEIL PROCTOR EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made on this 29th day of November 2005, by and
between Tricell, Inc., a Nevada corporation (“Company”), and Neil Proctor, a resident of the United
Kingdom (“Executive”).

PREMISES

     WHEREAS, the Company and Executive desire to memorialize employment terms that have been
negotiated over the past several months;

     WHEREAS, Company desires to employ Executive as its Senior Vice President, pursuant to the
terms and conditions hereof;

     WHEREAS, Executive possesses experience as a member of executive management of companies in
the mobile phone and electronic commodities industry, and desires to serve as Company’s Senior Vice
President; and

     WHEREAS, in consideration for Executive’s past and future services as Senior Vice President of
the Company, Company desires to compensate Executive on terms set forth herein.

AGREEMENT

     NOW THEREFORE, with the above provisions incorporated herein by this reference, in
consideration of the mutual promises contained herein, the benefits to be derived by each party
hereunder and other good and valuable consideration, the sufficiency of which is hereby expressly
acknowledged, the parties hereto mutually agree as follows:

     1. Employment. Company hereby agrees to employ Executive and Executive hereby agrees
to accept full time employment as Senior Vice President of Company, upon the terms and conditions
set forth in this Agreement.

     2. Term. The employment of Executive by Company pursuant to this Agreement shall
commence on November 29, 2005, and terminate three (3) years hereafter, unless sooner terminated
pursuant to Section 4 below (hereinafter referred to as the “Service Period”).

     3. Compensation. In consideration for the services to be rendered by Executive, the
Company shall compensate Executive as follows (such compensation and benefits being hereinafter
referred to as “Compensation Benefits”):

     A. Base Salary. Company shall pay to Executive a base annual salary of
£150,000 during the Service Period (such amount, as it may be increased from time to time,
may sometimes hereinafter be referred to as “Base Salary”), which salary constitutes a
continuation of the salary paid to Executive from Ace Telecom Limited (“Ace”). Company
shall conduct a review of Executive twelve

 

 

(12) months from the date of this Agreement at which time Executive’s Base Salary may
be evaluated. Executive acknowledges that this Base Salary shall constitute a mere
continuation of the salary he received from the Company’s subsidiary Ace immediately prior
to the effectiveness of this Agreement, and that such salary shall continue to be paid by
Ace Telecom;

     B. Performance Bonus. In the event Ace generates gross profits of $125,000
during any month in the Service Period, Executive will be paid £12,500 at the end of said
month as a bonus for Executive’s contribution to Ace’s performance.

     C. Discretionary Bonus. Executive shall be eligible to receive annual bonuses to be
determined by the board of directors of Tricell inc..

     D. Year 1 Compensation. As compensation for the first year of Executive
serving as Senior Vice President, the Company shall pay to Executive one million
(1,000,000) shares of the Company’s Common Stock payable immediately upon the effective
date of this Agreement. Executive acknowledges these shares will be restricted as to
resale and may only be resold in accordance with appropriate securities laws;

     E. Year 2 & 3 Compensation. As compensation for the second and third
year of Executive serving as Senior Vice President, Executive shall be granted an option to
purchase one million (1,000,000) shares of the Company’s Common Stock in the event the
Executive continues to serve as the Company’s Senior Vice President on November 29, 2006,
and another option to purchase one million (1,000,000) shares of the Company’s Common Stock
in the event the Executive continues to serve as the Company’s Senior Vice President on
November 29, 2007, for total options to purchase two million (2,000,000) shares, with such
option shares bearing an exercise price equal to the average closing trading price of the
Company’s Common Stock for the thirty (30) business days prior to November 29, 2006, and
prior to November 29, 2007, respectively, as more fully addressed in the Stock Option
Agreement attached hereto as Exhibit A, which is incorporated herein by reference; and

     F. Ace. The Company and the Executive previously agreed that Executive would
receive options to purchase 500,000 shares of common stock which would be payable to the
Executive quarterly pro rata based on the post tax net profitability of Ace being at least
£600,000 at the end of the first full year; However, because of the significant
contribution Ace which satisfied this financial threshold in the first quarter post
acquisition and the Executive have made to the Company as well as for incentive purposes,
the Company decided to issue 500,000 shares of Tricell common stock the Executive
immediately in lieu of options.

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     4. Termination. Executive’s employment hereunder shall terminate as a result of any
of the following events:

     A. Executive’s death;

     B. Executive shall be unable to perform his duties hereunder for a continuous period
of at least six months or an aggregate of nine months during any continuous twelve month
period by reason of illness, accident or other physical or mental disability, as verified
by a licensed physician mutually selected by the Company and Executive (“Disability”);

     C. Termination by Executive upon thirty (30) days advance notice in writing to
Company;

     D. Termination by Company for Cause, where “Cause” shall mean: (i) the final
non-appealable conviction of Executive of a felony; (ii) gross misappropriation or theft of
Company funds; or (iii) complete and total abandonment of duties for thirty (30)
consecutive days (other than for reason of disability); and

     E. Termination by Company by giving thirty (30) days advance notice in writing to
Executive.

     5. Representations and Warranties. Executive hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by Executive does not
and shall not conflict with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Executive is a party or by which Executive is bound,
and (ii) Executive is not a party to or bound by any employment agreement, noncompetition agreement
or confidentiality agreement with any other person or entity which in any way may restrict, impair
or limit the performance of his duties hereunder.

     6. Duties. During the term of this Agreement, Executive shall initially serve as the
Senior Vice President of the Company. Executive shall perform the tasks and have the rights,
powers and obligations normally associated with the office of Senior Vice President, including such
other offices or positions that Company’s board of directors (“Board of Directors”) shall
reasonably request.

     7. Non-Disclosure of Information. In exchange for the various consideration provided
herein, Executive will not, directly or indirectly, during the term of this Agreement and for a
period of one (1) year after the termination of this Agreement, disclose to any person not
authorized by Company to receive or use such information, except for the sole benefit of Company,
any of Company’s confidential or proprietary data, information, or techniques, or give to any
person not authorized by Company to receive any information that is not generally known to anyone
other than Company or that is designated by Company as “Limited,” “Private,” or “Confidential,” or
similarly designated.

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     8. Expenses. Executive may incur reasonable expenses for promoting or developing
Company’s business, including reasonable expenses for entertainment, travel, and similar items. The
Company will reimburse Executive for all such expenses upon Executive’s periodic presentation of an
itemized account of such expenditures.

     9. Entire Agreement. This Agreement constitutes the entire understanding between the
parties hereby supersedes and invalidates any other prior covenants, conditions, representations,
or agreements, oral or written, of any nature whatsoever, other than those herein contained.

     10. Severability. If any term, condition, clause, or provision of this Agreement
shall be deemed to be void or invalid, then that term, condition, clause, or provision shall be
stricken from this Agreement to the extent it is held to be void or invalid, and in all other
respects this Agreement shall be valid and in full force and operation.

     11. Notices. For the purpose of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have been duly given when
received at the addresses written below on (i) the third business day after the date when sent by
certified or registered mail; (ii) the next business day after the date sent by guaranteed
overnight courier; or (iii) the date sent by telecopier or delivered by hand, in each case, to the
addresses set forth below:

	 	 	 	 	 
	 

	 	If to Company:
	 	Tricell, Inc.
	 

	 	 	 	6 Howard Place
	 

	 	 	 	Stoke-on-Trent Staffordshire ST1 4NQ
	 

	 	 	 	United Kingdom
	 

	 	 	 	Attention: Andre Salt, CEO
	 
	 	 	 	 
	 

	 	With a Copy to:
	 	Woltjen Law Firm
	 

	 	 	 	Attn: Kevin S. Woltjen
	 

	 	 	 	4144 N. Central Expwy., Suite 410
	 

	 	 	 	Dallas, Texas 75204
	 

	 	 	 	(214) 742-5555
	 
	 	 	 	 
	 

	 	If to Executive:
	 	Neil Proctor
	 

	 	 	 	33 Lawton St.
	 

	 	 	 	Congleton, Cheshire CW12 1RU
	 

	 	 	 	United Kingdom

or to such other addresses as the parties may specify in writing.

     12. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach of it, shall be settled by arbitration in accordance with the rules of the
American Arbitration Association or any other similar entity.

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     13. Governing Law and Venue. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas without reference to the conflict of laws
principles thereof. In the event any dispute regarding this Agreement arises between the parties
and is not resolved at arbitration, such dispute shall be brought in a proper jurisdiction located
within Dallas County, Texas.

     14. Attorney’s Fees. If any action at law or in equity, including an action for
declaratory relief or any form of dispute resolution, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover actual attorney’s
fees, court costs, and other costs incurred in proceeding with the action from the other party.
The attorney’s fees, court costs or other costs, may be ordered by the fact finder, in any decision
of any action described in this section or may be enforced in a separate action brought for
determining attorney’s fees, court costs, or other costs. In the event Company is represented by
in-house counsel and Company prevails in any such action or dispute resolution, all parties agree
that Company may recover attorney’s fees incurred by that in-house counsel in an amount equal to
that attorney’s normal fees for similar matters, or, should that attorney not normally charge a
fee, by the prevailing rate charged by attorneys with similar background in that legal community.

     15. Assignment. This Agreement shall not be assignable by any party to this
Agreement, except upon the written consent of all parties hereto. Executive shall not have the
right to pledge, encumber, or dispose of the right to receive any Compensation Benefits under this
Agreement, which Compensation Benefits and the right thereto are expressly declared to be
non-assignable and nontransferable and, in the event of any attempted assignment or transfer,
Company shall have no further liability hereunder.

     16. Counterparts. This Agreement may be executed in two counterparts, each of which
shall be deemed an original but both of which together shall constitute one and the same agreement.

     17. Right to Counsel. Executive hereby agrees that Company has advised and encouraged
him to retain his own counsel and that he has had full opportunity to retain such counsel to review
this document and advise him of the terms and conditions set forth herein.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal the day and
year first above written.

	 	 	 	 	 	 	 
	TRICELL, INC.,

	 	 	 	EXECUTIVE — Neil Proctor	 	 
	a Nevada corporation
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Andre Salt
 

Andre Salt, Chief Executive Officer

	 	 
	 	/s/ Neil Proctor
 

Neil Proctor
	 	 

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EXHIBIT A

TRICELL, INC.

NEIL PROCTOR

STOCK OPTION AGREEMENT

     THIS STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of this
29th day of November 2005, by and between Tricell, Inc., a Nevada corporation (the
“Company”), and Neil Proctor (“Optionee”).

Background

     The Company desires to grant Optionee an option to purchase shares of common stock of the
Company in exchange for services rendered by the Optionee to the Company.

Agreement

     NOW, THEREFORE, in consideration of the premises and the covenants contained herein, and other
good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, it is agreed as follows:

     1. Non-Qualified Stock Option to Purchase Shares.

     (a) Number of Option Shares. The Company hereby grants to the Optionee a
non-qualified stock option (the “Option”), to purchase two million (2,000,000) shares (the
“Option Shares”) of the Company’s common stock, par value $0.001 per share (“Common
Stock”).

     (b) Exercise Period. The Option shall be exercisable, in whole or in part,
subject to the vesting schedule and other terms set forth in this Agreement, until November
29, 2010 (the “Exercise Period”).

     (c) Vesting Schedule. The Option to purchase shares granted hereby shall vest
in two (2) equal allotments as follows:

     (i) Fifty percent (50%) of the Option Shares shall be exercisable on November
29, 2006; and

     (ii) Fifty percent (50%) of the Option Shares shall be exercisable on November
29, 2007;

     Provided however that no option share shall vest unless Optionee remains employed by the
Company per the terms of the Employment Agreement dated November 29, 2005 (“Employment Agreement”).

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     (d) Exercise Price. Each of the Option Shares shall be exercisable upon the
Company’s receipt of certified funds equal to, for each Option Share so exercised, the
average closing trading price of the Company’s Common Stock for the thirty (30) business
days prior to the date on which the Option Shares vest, with such payment being made in
certified funds. If the Company’s Common Stock does not trade during the thirty (30)
business days prior to the date on which the Option Shares vest, then the exercise price
per share shall be the price at which the Common Stock last traded.

     2. Manner of Exercise and Terms of Payment.

     (a) Subject to the provisions of this Option, the Optionee may exercise any vested
Options at any time during the Exercise Period; provided that the Option may be exercised
with respect to whole Option Shares only; and provided further that the Option may not be
exercised at any one time as to fewer than 100 Option Shares (or such number of Option
Shares as to which the portion of the Option is then exercisable if such number is less
than 100). In no event shall any portion of the Option be exercisable after the Exercise
Period.

     (b) In accordance with Section 2(a) hereof, the Option may be exercised by delivering
to the Company a notice of intent to exercise. The Optionee shall deliver such notice by
such method (whether telephonic or written) as may be specified by the Company from time to
time. Such notice shall specify the number of Option Shares as to which the Option is being
exercised and shall be accompanied by payment in full, or adequate provision therefore, of
the Option Price and any applicable withholding tax. The payment of the Option Price shall
be made (i) in cash, (ii) by certified check or bank draft payable to the order of the
Company, (iii) by tendering shares of the Company which have been owned by the Optionee for
at least six months (and which are not subject to any pledge or other security interest),
(iv) by having Option Shares with a fair market value on the date of exercise equal the
Option Price sold by a broker-dealer, or (v) by a combination of the foregoing, provided
that the combined value of all cash and cash equivalents and the fair market value of any
such shares so tendered to the Company as of the date of such tender or sold by a
broker-dealer is at least equal to the Option Price. In the event the broker-assisted
cashless exercise procedure is elected, to the extent permitted by applicable law and the
Company, the optionee shall pay such amount to the Company as the Company deems necessary
to satisfy its obligation to withhold federal, state or local income or other taxes
incurred by reason of such exercise or make such other arrangements as are acceptable to
the Company, all in accordance with Section 2 hereof.

     (c) In lieu of the payment methods set forth in this Section 2, the Optionee may elect
to exercise all or some of this Option pursuant to this Section 2(c). If Optionee elects
to exercise this Option as provided in this Section 2(c), Optionee shall tender at the
principal office of the Company or its stock transfer agent, if any, the Option for the
amount being exchanged, along with written

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notice of Optionee’s election to exercise some or all of the Option, and the Company shall
issue and deliver to Optionee, within five (5) days following
the Company’s receipt
of this Option and notice, stock certificates representing the number of shares of the
common stock computed using the following formula:

	 	 	 	 	 	 	 	 	 
	 

	 	
X

	 	  

	 	Y(A-B)
 

     A
	 	 

	 	 	 	 	 	 	 
	Where:

	 	X
	 	=
	 	the number of shares of Common Stock to be issued to Optionee.
	 
	 

	 	Y
	 	=
	 	the number of shares of Common Stock purchasable under the amount of the Option being exchanged (as
adjusted to the date of such calculation).
	 
	 

	 	A
	 	=
	 	the Fair Market Value of one share of the Common Stock.
	 
	 

	 	B
	 	=
	 	Option Price (as adjusted to the date of such calculation).

     3. Withholding. The Optionee agrees to make appropriate arrangements with the
Company for satisfaction of any applicable federal, state, local or foreign tax withholding
requirements or like requirement, including the payment to the Company at the time of any exercise
of the Option of all taxes and requirements, and the Company shall have the right and is hereby
authorized to withhold from the Option Shares transferable to the Optionee upon any exercise of the
Option or from any other compensation of amount owing to the Optionee such amount (in cash, Option
Shares (having a fair market value not in excess of the minimum amount required by law to be
withheld) or other property, as the case may be) as may be necessary in the opinion of the Company
to satisfy all such taxes, requirements and withholding obligations.

     4. Rights as Stockholder. Optionee or a permitted transferee of the Option shall have
no rights as a stockholder of the Company with respect to any shares of common stock subject to
such Option prior to his or her exercise of the Option.

     5. Adjustment of Purchase Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Option and the Option Price shall be subject to
adjustment from time to time, as provided in Schedule A attached hereto.

     6. Investment Representation.

     (a) Optionee represents and warrants to the Company that Optionee is acquiring this
Option and the Option Shares for Optionee’s own account for the purpose of investment and
not with a view toward resale or other distribution thereof in violation of the Securities
Act of 1933, as amended (“1933 Act”). Optionee acknowledges that the effect of the
representations and warranties is that the economic risk of any investment in the Option
and Option Shares must be borne by the Optionee for an indefinite period of time. This
representation and

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warranty shall be deemed to be a continuing representation and warranty and shall be in
full force and effect upon such exercise of the Option granted hereby.

     (b) Optionee understands that, as this Option has not been registered under the 1933
Act, the Company has affixed a restrictive legend stating that the Option is not registered
under the 1933 Act and state securities laws and setting forth or referring to the
restriction on transferability and sale thereof imposed by the 1933 Act or any applicable
state securities law, and that the holder thereof agrees to be bound by such restrictive
legend.

     (c) Optionee understands that, prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each certificate for the
Option Shares issued pursuant hereto, or any certificate issued in exchange therefore,
stating that such securities are not registered under the 1933 Act and state securities
laws and setting forth or referring to the restriction on transferability and sale thereof
imposed by the 1933 Act or any applicable state securities law, and that the holder thereof
agrees to be bound by such restrictive legend.

     7. Exercisability. The Option shall be exercisable only by Optionee, subject to the
terms herein, during his lifetime or by his assigns, heirs, executors or administrators, as the
case may be. The Option granted hereunder and the Option Shares underlying the Option may only be
assigned in compliance with Section 8 herein and applicable securities laws.

     8. Non-Transferability.

     (a) Optionee shall not sell, transfer, assign, pledge for a loan, margin,
hypothecate or exchange the Option or the Option Shares, except pursuant to the laws of
descent, for a period of one (1) year from the date of grant, or otherwise as required by
law.

     (b) Optionee recognizes that the Option Shares received pursuant to this Agreement
will be subject to various restrictions on sale and/or transfer, including but not limited
to, the restrictions imposed by Rule 144 under the 1933 Act. Notwithstanding any rights
that Optionee may possess under the 1933 Act and any applicable state securities laws,
Optionee hereby agrees that he or she shall not be entitled, and the Company shall be under
no obligation, to remove the resale restriction from this Option. Optionee additionally
agrees that the Company is under no obligation to remove the resale restriction from any
Option Shares which exceed one percent (1%) of the Company’s then outstanding common stock
during the ninety (90) days preceding the intended sale.

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     9. Miscellaneous.

     (a) Termination of Other Agreements. This Agreement sets forth the entire
understanding of the parties hereto with respect to the Option and Option Shares, and
supersedes all prior arrangements or understandings among the parties regarding such
matters.

     (b) Notices. Any notices required hereunder shall be deemed to be given upon
the earlier of the date when received at, or (i) the third business day after the date when
sent by certified or registered mail, (ii) the next business day after the date sent by
guaranteed overnight courier, or (iii) the date sent by telecopier or delivered by hand, in
each case, to the addresses set forth in the Employment Agreement.

     (c) Amendments and Waivers. The provisions of this Agreement may be amended
or terminated in a writing signed by the Optionee and the Company.

     (d) Binding Effect. This Agreement will bind and inure to the benefit of the
respective successors (including any successor resulting from a merger or similar
reorganization), assigns, heirs, and personal representatives of the parties hereto.

     (e) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas.

     (f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original instrument and to be
effective as of the date first written above. Each such copy shall be deemed an original,
and it shall not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.

     (g) Interpretation. Unless the context of this Agreement clearly requires
otherwise, (a) references to the plural include the singular, the singular the plural, the
part the whole, (b) references to one gender include all genders, (c) “or” has the
inclusive meaning frequently identified with the phrase “and/or” and (d) “including” has
the inclusive meaning frequently identified with the phrase “but not limited to.” The
section and other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of the Agreement or the interpretation thereof
in any respect.

     (h) Arbitration. In the event of any dispute between the Optionee and the
Company as to the interpretation of any provision of this Agreement or the rights or
obligations of the Optionee and Company hereunder, such dispute shall be resolved through
binding arbitration in accordance with the rules of the American Arbitration Association or
any other similar entity.

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     IN WITNESS WHEREOF, the undersigned have executed, or have caused this Agreement to be
executed, as of the day and year first above written.

	 	 	 	 	 	 	 
	TRICELL, INC.

	 	 	 	OPTIONEE	 	 
	 
	 	 	 	 	 	 
	/s/ Andre Salt
 

Andre Salt,

	 	 
	 	/s/ Neil Proctor
 

Neil Proctor
	 	 
	Chief Executive Officer
	 	 	 	 	 	 

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SCHEDULE A

Effect of Certain Transactions; Adjustment of Purchase Price and Number of Shares.

     1. Change of Control. In the event a “Change of Control” occurs at any time while
this Option remains outstanding and unexpired, all unvested Options then outstanding under this
Agreement shall immediately vest and become exercisable by the Optionee.

     For the purposes of this Agreement, “Change of Control” shall mean:

(a) the approval by the stockholders of the Company of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting securities of
the surviving entity) fifty percent (50%) or more of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or

(b) any approval by the stockholders of the Company of a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets; or

(c) any “person” (as that term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the Company representing 50% or more of the total voting power represented by
the Company’s

then outstanding voting securities; or

(d) a change in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who
either: (a) are directors of the Company as of the Effective Date; or (b) are elected, or
nominated for election, to the Board with the affirmative votes of at least a majority of
those directors whose election or nomination was not in connection with any transaction
described in subsections (a), (b), or (c) above, or in connection with an actual or threatened proxy
contest relating to the election of directors of the Company.

     2. Adjustment. The number and kind of securities purchasable upon the exercise of
this Option and the Option Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:

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(a) Subdivision or Combination of Shares. If the Company at any time while this
Option remains outstanding and unexpired, shall subdivide or combine its Capital Stock, the
Option Price shall be proportionately reduced, in case of subdivision of such shares, as of
the effective date of such subdivision, or, if the Company shall take a record of holders
of its Capital Stock for the purpose of so subdividing, as of such record date, whichever
is earlier, or shall be proportionately increased, in the case of combination of such
            shares, as of the effective date of such combination, or, if the Company shall take a
record of holders of its Capital Stock for the purpose of so combining, as of such record
date, whichever is earlier.

(b) Stock Dividends. If the Company at any time while this Option is outstanding
and unexpired shall pay a dividend in shares of, or make other distribution of shares of,
its Capital Stock, then the Option Price shall be adjusted, as of the date the Company
shall take a record of the holders of its Capital Stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying the Option Price in
effect immediately prior to such payment or other distribution by a fraction (a) the
numerator of which shall be the total number of shares of Capital Stock outstanding
immediately prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Capital Stock outstanding immediately after such dividend
or distribution. The provisions of this subsection 2(b) shall not apply under any of the
circumstances for which an adjustment is provided in subsection 2(a).

(c) Liquidating Dividends, Etc. If the Company at any time while this Option is
outstanding and unexpired makes a distribution of its assets to the holders of its Capital
Stock as a dividend in liquidation or by way of return of capital or other than as a
dividend payable out of earnings or surplus legally available for dividends under
applicable law or any distribution to such holders made in respect of the sale of all or
substantially all of the Company’s assets (other than under the circumstances provided for
in the foregoing subsections (a) through (b)), the holder of this Option shall be entitled
to receive upon the exercise hereof, in addition to the shares of Common Stock receivable
upon such exercise, and without payment of any consideration other than the Option Price,
an amount in cash equal to the value of such distribution per share of Common Stock
multiplied by the number of shares of Common Stock which, on the record date for such
distribution, are issuable upon exercise of this Option (with no further adjustment being
made following any event which causes a subsequent adjustment in the number of shares of
Common Stock issuable upon the exercise hereof), and an appropriate provision therefor
should be made a part of any such distribution. The value of a distribution which is paid
in other than cash shall be determined in good faith by the Board of Directors.

     3. Notice of Adjustments. Whenever any of the Option Price or the number of shares of
Common Stock purchasable under the terms of this Option at that Option

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Price shall be adjusted pursuant to Section 2 hereof, the Company shall promptly make a certificate
signed by its President or a Vice President and by its Treasurer or Assistant Treasurer or its
Secretary or Assistant Secretary, setting forth in reasonable detail the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment was calculated
(including a description of the basis on which the Company’s Board of Directors made any
determination hereunder), and the Option Price and number of shares of Common Stock purchasable at
that Option Price after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be mailed (by first class and postage prepaid ) to the registered holder of this
Option.

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NOTICE OF EXERCISE

(To be signed only upon exercise of Option)

TO: Tricell, Inc.

The undersigned, the owner of Option to purchase                      shares of Common Stock of Tricell,
Inc., a Nevada corporation (“Tricell”), hereby irrevocably elects to exercise such Option and
herewith pays for the shares by giving Tricell a personal check or wire transfer in the amount of
the Option Price as specified in the Option. The undersigned requests that the certificates for
such shares be delivered to them according to instructions indicated below.

DATED this ___ day of                      200___.

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

Instructions for delivery:

 

 

 

 

 

15exv10w7

 

EXHIBIT 10.7

LETTER OF INTENT

     This
Letter of Intent (“Agreement”) is entered into this 14th day of April 2006 by
and between TRICELL, INC., a Nevada corporation (“Tricell”), JAMES REED, a United
Kingdom resident (“Reed”), NEIL PURSELL, a United Kingdom resident (“Pursell”), JOHN SUMNALL, a
United Kingdom resident (“Sumnall”), NEIL PROCTOR, a United Kingdom resident (“Proctor”), (Reed,
Pursell, Sumnall and Proctor shall be collectively referred to as the “N2J Shareholders” or
individually as a “N2J Shareholder”), and N2J LIMITED, a United Kingdom limited company (“N2J”).
This Agreement sets forth, in principle, the terms under which Tricell will acquire all of the
outstanding equity of N2J from the N2J Shareholders under the terms set forth in Exhibit A, which
is hereby incorporated by reference.

     This Agreement is to serve as the basis for a definitive stock purchase agreement (“SPA”) that
will be entered into between Tricell, N2J and the N2J Shareholders. This Agreement will terminate
on May 15, 2006 (“Termination Date”), unless both parties mutually extend the Termination Date.

1. This Agreement is binding as to Tricell, N2J and the N2J Shareholders; the final terms of
the agreement will be incorporated into the SPA. The SPA will contain, in addition to the
conditions and terms therein, all covenants and representations necessary to protect and satisfy
all parties.

2. Prior to the consummation of the transaction contemplated herein, Tricell, N2J and the
N2J Shareholders will cooperate with each other in the exchange of information necessary to
negotiate the SPA.

3. Tricell is a corporation duly organized and validly existing, under the laws of the State
of Nevada, with corporate power to own property and carry on its business as it is now being
conducted.

4. N2J is a limited company under the laws of the United Kingdom, with corporate power to
own property and carry on its business as it is now being conducted.

5. This Agreement has been duly executed by all parties and the execution and performance of
this Agreement will not violate, or result in a breach of, or constitute a default in any
agreement, instrument, judgment, decree, or order to which any party is subject, nor will
such execution and performance constitute a violation or conflict of any fiduciary duty to
which either party is subject.

6. A party to this Agreement will notify all other parties if, subsequent to the date
hereof, that party incurs obligations which could compromise its efforts and obligations
under this Agreement.

 

 

7. Tricell, N2J, and the N2J Shareholders agree to work in good faith expeditiously towards
a closing. N2J and the N2J Shareholders agree that neither, until the earlier of the closing
or the withdrawal of the SPA or Termination Date, will take any action to solicit, initiate,
encourage or assist the submission of any proposal, negotiate or offer from any person or
entity other than that of Tricell.

8. This Agreement contains the entire agreement between the parties with respect to the
transaction contemplated by this Agreement. This Agreement may be executed in any number of
counterparts but the aggregate of the counterparts together constitute only one and the same
instrument. If a party signs this Agreement and transmits an electronic facsimile of the
signature page to the other party, the party who receives the transmission may rely upon the
electronic facsimile as a signed original of this Agreement.

9. In the event that any one or more of the provisions contained in this Agreement, for any
reason, are held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this Agreement, but
this Agreement shall be constructed as if it never contained any such invalid, illegal or
unenforceable provisions.

10. The validity, interpretation, and performance of this Agreement shall be controlled by
and construed under the laws of Nevada.

11. If any action at law or in equity, including an action for declaratory relief, is
brought to enforce or interpret the provisions of this Agreement, the prevailing party shall
be entitled to recover actual attorneys’ fees from the other party. The attorneys’ fees may
be ordered by the court in the trial of any action described in this paragraph or may be
enforced in a separate action brought for determining attorneys’ fees.

12. The parties hereto shall cooperate with each other to achieve the purpose of this
Agreement and shall execute such other and further documents and take such other and further
actions as may be necessary or convenient to affect the transactions described herein.

13. The execution and performance of this Agreement has been duly authorized by all
requisite corporate action of both parties.

14. Each Party hereby acknowledges that they had a full opportunity to seek legal and tax
assistance of their own choosing prior to the execution of this Agreement, and that they have done
so, or have expressly waived their right to such assistance and counsel.

2

 

15. Any notice or other communication required or permitted by this Agreement must be in
writing and shall be deemed to be properly given when delivered in person to an officer of
the other party, when deposited in the United States mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public telegraph company for
transmittal or when sent by facsimile transmission, charges prepaid provided that the
communication is addressed:

	 	 	 	 	 
	 

	 	In the case of N2J:
	 	N2J Limited
	 

	 	 	 	33 Lawton Street
	 

	 	 	 	Congleton, Cheshire CW12 1RU
	 

	 	 	 	United Kingdom
	 

	 	 	 	Attention: Neil Pursell
	 
	 	 	 	 
	 

	 	with copies to:  	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	In the case of N2J
	 	Neil Pursell
	 

	 	Shareholders:
	 	33 Lawton Street
	 

	 	 	 	Congleton, Cheshire CW12 1RU
	 

	 	 	 	United Kingdom
	 
	 	 	 	 
	 

	 	with copies to:  	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	In the case of Tricell:
	 	Tricell, Inc.
	 

	 	 	 	6 Howard Place
	 

	 	 	 	Stoke-on-Trent Staffordshire ST1 4NQ
	 

	 	 	 	United Kingdom
	 

	 	 	 	Attention: Andre Salt
	 
	 	 	 	 
	 

	 	with copies to:  	 	Woltjen Law Firm
	 

	 	 	 	4144 North Central Expressway, Suite 410
	 

	 	 	 	Dallas, Texas 75204
	 

	 	 	 	Attn: Kevin Woltjen
	 

	 	 	 	Tel: (214) 742-5555
	 

	 	 	 	Fax: (214) 742-5545

3

 

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written
above.

	 	 	 	 	 
	 

	 	TRICELL, INC.,
	 	N2J LIMITED,
	 

	 	a Nevada corporation
	 	a United Kingdom limited company

	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Andre Salt
	 	 
	 	By:	 	/s/ Neil Pursell	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Name: Andre Salt	 	 	 	Name:	 	 
	Title: Chief Executive Officer	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	NEIL PURSELL,	 	 
	 	 	 	 	 	 	a United Kingdom resident	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ Neil Pursell	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Neil Pursell	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	JOHN SUMNALL,	 	 
	 	 	 	 	 	 	a United Kingdom resident	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ John Sumnall	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	John Sumnall	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	NEIL PROCTOR,	 	 
	 	 	 	 	 	 	a United Kingdom resident	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ Neil Proctor	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Neil Proctor	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	JAMES REED,	 	 
	 	 	 	 	 	 	A United Kingdom resident	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ James Reed	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	James Reed	 	 

4

 

EXHIBIT A

TERMS OF PROPOSED ACQUISTION OF N2J

	 	 	 
	Consideration:

	 	Tricell will acquire 100% of N2J from the N2J Shareholders
in exchange for 210 million shares* (the “Shares”) of
Tricell’s common stock. The N2J Shareholders will split the
Shares equally at 52.5 million shares apiece.
	 
	 	 
	Issuance Dates:

	 	Tricell will issue 160 million of the Shares on
the closing date of the N2J acquisition. Tricell will issue
the remaining 50 million Shares on January 1, 2007.
	 
	 	 
	Put Option:

	 	120 million of the Shares (“Put Shares”) will be subject to
put options (“Put Options”). The Put Options provide each
N2J Shareholder the unilateral option to put, or sell, to
Tricell 3.75 million shares each month for a period of 8
months following the execution of the SPA (“Put Option
Period”), for a total monthly repurchase of 15 million
shares by Tricell. However, the Put Options will be
available only if N2J satisfies the N2J Profit Requirement.
	 
	 	 
	 

	 	In order for the N2J Shareholders to exercise their Put Options during the
Put Option Period, N2J’s profits for the exercise month must meet or exceed
$1.5 million (“N2J Profit Requirement”). However, N2J may satisfy this N2J
Profit Requirement subsequently by achieving aggregate net profits such that
each completed month of the Put Option Period averages at least $1.5 million
in profit per month. Therefore, in the event N2J does not meet the N2J
Profit Requirement in any month during the Put Option Period, the N2J
shareholders’ right to exercise their Put Options will be reduced on a
pro-rata basis. However, when and if the N2J Profit Requirement is
subsequently met, the N2J Shareholders will regain any and all Put Options
that had previously been reduced.
	 
	 	 
	 

	 	In the event the N2J Profit Requirement is met and each N2J Shareholder
exercises the Put Option for said month or any prior month where the Put
Option was not exercised, Tricell will be obliged to repurchase for each
month of the Put Option Period 10 million shares at $0.11 per share. If on
December 31, 2006, N2J total net profits are less than $18 million, the N2J
shareholders will return to Tricell the corresponding percentage of the Put
Shares equal to the proportion of total N2J Profit Requirement not met. Net
profits shall equal, for purposes of this Agreement, the gross revenues of
N2J, as an operating subsidiary of the Company, from the sale of products
less (a) cost of goods sold, (b) rent and utilities, (c) direct labor and
salary costs, (d) cost of internal accounting and bookkeeping, and (f)
repayment of any financing incurred specifically to allow for the purchase
of goods. The parties expressly agree that all intergroup management charges
will be excluded from the net profit calculation.
	 
	 	 
	 

	 	The determination of whether the N2J Profit Requirement has been met will be
based upon N2J monthly financial statements. Each N2J Shareholder shall have
30 days following the last day of each month

5

 

	 	 	 
	 

	 	during the Put Option Period to notify Tricell that, pending confirmation
that the N2J Profit Requirement has been met, the N2J Shareholder intends to
exercise his Put Option for that month. While Tricell is obligated to
repurchase shares during each month the N2J Profit Requirement is met, the
N2J Shareholders are not required to exercise their Put Options.
	 
	 	 
	Sales of Non-Put Shares:

	 	The N2J Shareholders shall be
eligible to collectively sell 90 million non-Put Shares as long as they remain in the employment of Tricell on each of the following vesting dates:

	 	 	 	 	 
	 

	 	(i)
	 	Twenty five percent (25%) of the non-Put Shares shall vest on January 1, 2007;
	 
	 	 	 	 
	 

	 	(ii)
	 	Twenty five percent (25%) of the non-Put Shares shall vest on January 1, 2008;
	 
	 	 	 	 
	 

	 	(iii)
	 	Twenty five percent (25%) of the non-Put Shares shall vest on January 1, 2009; and
	 
	 	 	 	 
	 

	 	(iv)
	 	Twenty five percent (25%) of the non-Put Shares shall vest on January 1, 2010.
	 
	 	 	 	 
	 	 	In the event of Tricell undergoes a change of control, the non-Put Shares will vest immediately.

 

* The Shares shall be issued pursuant to an exemption from registration under the Securities Act of
1933 (the “1933 Act”) and from registration under any and applicable State securities laws. The
certificates representing the Shares shall bear the restrictive legend set forth in Rule 144 of the
Regulations of the 1933 Act and appropriate legend required under applicable state securities laws.
The shares will not be available for transfer or resale for a period of twelve months.

6

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