UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) June 29, 2001
HYDRO ENVIRONMENTAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 000-27825 73-1552304
(State of (Commission (I.R.S. Employer
organization) File Number) Identification No.)
5725 S. Valley View, Suite 3, Las Vegas, NV 89118
(Address of principal executive offices)
Registrant's telephone number, including area code (702) 597-9070
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(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS
On June 29, 2001, the Company entered into a Stock Purchase
Agreement with PowerTek Holdings LTD, a Swiss holding company.
The Company is preparing a Proxy Statement in which shareholder
approval of the Agreement will be sought. Closing of the
Agreement will be scheduled immediately following the Company's
Annual Meeting which is proposed to the held on August 15, 2001,
subject to SEC approval of the proxy materials.
Summary of the Agreement
PowerTek Holdings, Ltd., a Swiss holding company, desires to
acquire from the Company (a) the number of shares of the
Company's common stock such that after the acquisition of said
shares, PowerTek shall have acquired 50% of the outstanding
common stock of the Company, on a fully diluted basis (the
"Shares"); and (b) an option to purchase from the Company up to
the number of shares of the Company's outstanding common stock
such that after PowerTek's full exercise of the option, PowerTek
shall have acquired an additional 20% of the outstanding common
stock of the Company, on a fully diluted basis (the "Option
Shares").
Purchase Price
The purchase price for the Shares shall be $500,000. As
additional consideration to the Company, during the two years
following the Closing, PowerTek (or an affiliate) agrees to
expend no less than $2,000,000 on research and development in the
field of hydrogen powered fuel cell technology, which research
and development and related technology shall be licensed to the
Company on a non-exclusive, royalty free basis for a period of 7
years after the date of the commencement of said research and
development subject to certain terms and conditions set forth in
the Agreement.
Additional Agreements
1. Loans to the Company. Provided that the Company is not in
default under the Agreement, prior to Closing, PowerTek agrees to
advance to the Company up to $200,000, which shall be treated as loans
from PowerTek to the Company, bearing interest at the rate of 10%
per annum. Upon Closing, the amounts owing under the loans shall
be credited against the $2,000,000 research and development
expenditure obligation. If Closing does not occur for any reason,
PowerTek shall have the option to either demand immediate payment
in full of the loans or convert the amount of the loans to Hydro's
common stock at 75% of the average of the quoted market price of
the stock at the close of the 30 business days immediately preceding
the demand conversion date. The Company agrees to deliver to
PowerTek convertible promissory notes to memorialize such loans.
The Company's delivery to PowerTek of appropriate convertible notes
is a condition to PowerTek's obligations to make any said loans.
2. Stock Warrants. At Closing, the Company shall issue to
PowerTek a warrant to purchase the Option Shares at a purchase
price equal to 75% of the average of the quoted market price of
the stock at the close of the 30 business days immediately
preceding the Warrant exercise date.
3. Board Appointments. At Closing, the Company agrees to cause
certain shareholders to execute and deliver to PowerTek a Voting
Agreement pursuant to which said shareholders shall agree to vote
their common shares in the Company in a manner that ensures that
PowerTek may nominate, elect and maintain a majority of the board
of directors of the Company.
4. Relocation of the Company's Office. The Company agrees to
relocate its principal place of business and head office to
Sacramento, California upon 30 days' written notice at any time
following the Closing.
5. Registration Rights. The Company agrees to execute and
deliver to PowerTek a Registration Rights Agreement providing for
the registration of PowerTek's common shares to be acquired under
the Agreement.
6. No Further Interest in Company Going Concern. If, after
Closing, PowerTek notifies the Company that it is not in favor of
the Company continuing to develop or exploit the technology of
the Company, then PowerTek agrees to cause at least one of its
designated board members to resign from the Company's board and
thereafter PowerTek agrees to vote for the director that the
Company may nominate as the replacement director and any
successor thereof.
Termination
The Agreement may be terminated at any time prior to or on the
Closing Date by the Company or by PowerTek upon written notice to
the other party. Under the Agreement, the Company granted to
PowerTek, upon 24-hours' written notice delivered to the Company
at any time until 72 hours after termination of the Agreement
prior to Closing, the right to purchase and acquire from the
Company the number of shares of the Company's outstanding common
stock such that after PowerTek's full exercise of said option,
PowerTek shall have acquired 19.9% of the outstanding common
stock of the Company, on a fully diluted basis, against delivery
to the Company of an amount equal to 75% of the average of the
quoted market price of the stock at the close of the 30 business
days immediately preceding the exercise date, times the number of
such shares of stock with respect to which such option is being
exercised. Upon termination of the Agreement, no party shall
have any liability to the other except for the Company's
obligations to repay the loans previously made to the Company by
PowerTek, and to deliver the stock issuable upon exercise of the
option granted to PowerTek upon termination.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized.
Hydro Environmental Resources, Inc.
By: /s/Jack H. Wynn
Jack H. Wynn, President
Date: July 6, 2001