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Form 8-K for POWERVERDE, INC.
4-Feb-2011
Entry into a Material Definitive Agreement, Financial Statements and Exhibits
Item 1.01 Entry into a Material Definitive Agreement.
On January 31, 2011, the Company entered into a Binding Letter of Intent for European Distribution (the "Letter of Intent") with Newton Investments BV, a Dutch corporation based in Leeuwarden, Netherlands ("Newton"). Pursuant to the Letter of Intent, the Company and Newton agreed to enter into a definitive agreement within 60 days, pursuant to which Newton will, for a period of 10 years, be the exclusive manufacturer and distributor of the Company's proprietary emissions-free electrical power generation systems (the "Systems") in the 27 countries which are currently members of the European Union, subject to Newton achieving minimum sales of at least 100 Systems per year and investing at least $750,000 in establishing its manufacturing facility and distribution network, as well as other terms and conditions set forth in the Letter of Intent.
The Company will receive as a royalty an amount equal to 20% of the gross sale price of each System sold by Newton. Newton also agreed to purchase an initial System from the Company for a price of $90,000. Also, pursuant to the Letter of Intent, an affiliate of Newton invested $250,000 in the Company by privately purchasing 333,333 restricted shares of the Company's common stock at a price of $.75 per share. In connection with this purchase, the Company issued to the investor a three-year warrant to buy an additional 333,333 shares at a price of $.75 per share. The definitive documentation will contain representations, covenants, conditions and indemnities which are customary for comparable transaction.
Prior to the date of the Letter of Intent, neither the Company nor any affiliate of the Company had any material relationship with Newton other than in respect of the negotiation of the Letter of Intent.
