Item 1.01 Entry into a Material Definitive Agreement.
On December 28, 2017, Ocean Thermal Energy Corporation, a Nevada corporation
(the "Company"), entered into a Note and Warrant Purchase Agreement with certain
accredited investors (the "Investors") pursuant to which the Company issued a
series of unsecured promissory notes (the "Notes") to the Investors, in the
aggregate principal amount of $480,000. The Notes accrue interest at a rate of
10% per annum payable on a quarterly basis and are not convertible into shares
of capital stock of the Company. The Notes are payable within five (5) business
days after receipt of funds under that certain Equity Purchase Agreement equal
to 20% of the total funds received by the Company payable on a pro rata basis to
all holders of the Notes. The Company may prepay the Notes in whole or in part
without penalty or premium on or before the maturity date of July 30, 2019. The
Equity Purchase Agreement and related agreements were previously disclosed on
our Current Report on Form 8-K filed on December 21, 2017.
In connection with the issuance of the Notes, each holder received a common
stock purchase warrant (the "Warrants") equal to 2,000 warrant shares for every
$10,000 in Notes purchased. The Warrants are exercisable for a period of three
(3) years from date of issuance. The exercise price per share of the Warrants is
equal to Eighty-Five Percent (85%) of the closing price of the Company's common
stock on the day immediately preceding the exercise of the relevant Warrant,
subject to adjustment as provided in the Warrants. The Warrants include a
cashless net exercise provision whereby the holder can elect to receive shares
equal to the value of the Warrant minus the fair market value of shares being
surrendered to pay for the exercise.
The foregoing description of the terms of the Note and Warrant Purchase
Agreement, Notes and Warrants does not purport to be complete and is subject to
and qualified in its entirety by reference to the agreements and instruments
themselves, copies of which are filed as Exhibits 10.1, 10.2 and 10.3 to this
Current Report on Form 8-K and incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information provided above in "Item 1.01 - Entry into a Material Definitive
Agreement" of this Current Report on Form 8-K is incorporated by reference into
this Item 3.02.
The issuance of the Notes, the Warrants and the issuance of the shares of the
Company's common stock upon exercise of the Warrants in connection with the
above offering is exempt from registration under the Securities Act of 1933, as
amended (the "Act"), in reliance on exemptions from the registration
requirements of the Act in transactions not involved in a public offering
pursuant to Rule 506(b) of Regulation D, as promulgated by the Securities and
Exchange Commission under the Act.
Item 9.01 Financial Statements and Exhibits.
10.1 Note and Warrant Purchase Agreement, dated December 28, 2017, by and
between the Company and Investors.
10.2 Form of Unsecured Promissory Note, by and between the Company and each
10.3 Form of Common Stock Purchase Warrant, by and between the Company and each
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