Document:

ex1006form10.htm

OCEAN THERMAL ENERGY CORPORATION

SUBSCRIPTION AGREEMENT

This offer and agreement (this “Subscription Agreement”) of the undersigned (“Purchaser”) relates to the purchase of Series A Units of the Company (the “Units”) in connection with the Company’s private offering of up to $3 million worth of Units (the “Offering”). Each Unit consists of a 10% Unsecured $[amount] Note (the “Note”) plus a warrant to purchase [amount] shares of the Company’s Common Stock (the “Warrant”) at an offering price of $[amount] per Unit (the “Offering Price”). The Units, the Notes, the Warrants and the underlying Common Stock are referred to collectively herein as the “Securities.”

1.           Amount of Investment. Purchaser, having received and read in its entirety the Company’s Confidential Private Placement Memorandum dated February 1, 2012, and all supplements and amendments thereof if any (the “PPM”), hereby offers to purchase the number of Units set forth on page 3 for a total purchase price of such number of Units times the Offering Price (the “Subscription Amount”). (For more information regarding the Units, please refer to the PPM.)

2.           Purchaser Representations, Warranties, Covenants and Agreements. Purchaser represents, warrants, covenants and agrees with the Company as follows, as a material inducement to the Company entering into and performing this Subscription Agreement:

2.1           Background Information and Investment Representations. All information that Purchaser has provided to the Company in response to the questions posed by that certain confidential purchaser questionnaire executed by Purchaser on or about the date hereof (the “Purchaser Questionnaire”), including without limitation, information concerning Purchaser’s suitability to invest in the Securities, is complete, accurate and correct as of the date of the signature on the last page of this Subscription Agreement. Purchaser hereby agrees to notify the Company immediately of any material change in any such information occurring prior to the acceptance of this Subscription Agreement.

2.1.1           Enforceability. This Subscription Agreement has been duly executed and delivered by Purchaser and constitutes a valid and legally binding agreement of Purchaser, enforceable against Purchaser in accordance with its terms, subject, as to the enforcement of remedies, to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

2.1.2           Effect and Time of Representations. The representations, warranties and agreements made by Purchaser as set forth in this Subscription Agreement are true, and have been complied with, as of the date of the execution of this Subscription Agreement and shall be true, and shall have been complied with, until such time as the subscription is accepted or rejected. If in any respect such representations, warranties or agreements shall not be true, or shall not have been complied with, as of any date set forth in the preceding sentence, Purchaser will promptly give written notice of such fact to the Company and shall specify which representations, warranties or agreements are not true or have not been complied with, along with the reasons therefor. Purchaser acknowledges that the Company has relied and will rely upon Purchaser’s representations, warranties and agreements as set forth in this Subscription Agreement and that all such representations and agreements shall survive the issuance and delivery of the Securities hereunder and shall remain in effect thereafter. Purchaser hereby agrees and acknowledges that this subscription is irrevocable with respect to Purchaser and agrees and acknowledges that the agreements and representations herein set forth shall become effective and binding upon Purchaser and Purchaser’s heirs, legal representatives, successors and assigns upon the Company’s acceptance hereof.

2.2           Execution Authority. If an individual, Purchaser represents and warrants that Purchaser is of majority age under the laws applicable to him or her and under no disability with respect to entering into a contractual relationship with the Company by executing this Subscription Agreement.

 

 

	Subscription Agreeement	 1	 

  

  

  

 

3.           Indemnification. Purchaser understands the meaning and legal consequences of the representations, warranties and agreements set forth in this Subscription Agreement and agrees to indemnify and hold harmless the Company, its officers, directors, employees, agents and controlling persons thereof, past, present or future, from and against any and all liabilities, losses, costs, damages and expenses, including costs and reasonable attorneys’ fees, arising out of or related to (i) the resale or other distribution by Purchaser of all or any portion of the Securities in violation of the Securities Act or of any applicable state securities laws, and/or (ii) any breach of any of Purchaser’s representations, warranties or agreements contained in this Subscription Agreement or in any other document provided by Purchaser to the Company in connection with Purchaser’s investment in the Securities.

4.           Offer Irrevocable; Acceptance Procedure. Execution and delivery of this Subscription Agreement shall constitute an irrevocable offer to purchase the number of Securities equal to the Subscription Amount, which offer may be accepted or rejected by the Company. Deposit of checks or of funds into an account shall not constitute acceptance of a subscription. The Company will determine in its sole discretion whether to accept this subscription for Securities for all or any portion of the Units applied for or whether to reject this subscription in its entirety. In the event that the Company rejects all or a portion of the requested subscription offer, the Company will refund to Purchaser all, or the appropriate portion of, the amount remitted with this Subscription Agreement. The Company, in its sole discretion, will decide which subscription offers (or portions thereof) to accept, and all appropriate refunds will be mailed, no later than two weeks following the earlier of the closing, termination or expiration of the Offering. If for any reason this Subscription Agreement has been executed and delivered without payment in full and the Company accepts such subscription and notifies Purchaser of the date of the closing of the Offering, Purchaser agrees to provide payment in full for all units subscribed for hereunder within days of the date of such notice.

IMPORTANT: TWO COPIES OF THIS SUBSCRIPTION AGREEMENT, MUST BE RECEIVED BY THE COMPANY BY 5 P.M., EASTERN TIME, ON OR BEFORE MARCH 31, 2012, UNLESS EXTENDED BY THE COMPANY (the “Offering Expiration Date”). WE URGE YOU TO REMIT PROMPTLY SINCE THE OFFERING MAY CLOSE PRIOR TO THE OFFERING EXPIRATION DATE.

PLEASE MAIL TWO COPIES OF THIS SUBSCRIPTION AGREEMENT TO:

Edward M. Baer

Chief Financial Officer and Treasurer

Ocean Thermal Energy Corporation

800 South Queen Street

Lancaster, PA 17603-5818

United States of America

Payment may only be made by check or funds payable to “Ocean Thermal Energy Corporation”:

Subscriptions are irrevocable. Funds delivered by a subscriber in connection with their Subscription Application will not be returned to a subscriber for any reason, in the Company’s sole discretion, unless the Company rejects a subscriber’s subscription, and in the event of rejection, only the portion of the funds that represent the portion of the subscription rejected will be returned, without any accrued interest.

The subscription price will be deemed to have been received only upon receipt of collected funds, in the full amount of the subscription price. If paying by uncertified personal check, funds paid thereby may take at least five business days or more to clear. Accordingly, a subscriber who wishes to pay the subscription price by means of uncertified personal check is urged to make payment sufficiently in advance of the Offering Expiration Date or any earlier termination date to ensure that the subscriber’s check is received and clears by the Offering Expiration Date and is urged to consider an alternative means of payment, such as by means of certified or cashier’s check, money order or wire transfer of funds.

5.           Entire Agreement. Except as otherwise expressly stated herein, this Subscription Agreement and Purchaser Questionnaire constitute the entire agreement between Purchaser and the Company with respect to the subject matter hereof, and supersedes all prior or contemporaneous understandings or agreements, whether oral or written, This Subscription Agreement can only be amended by a writing signed by both Purchaser and the Company, except as provided herein with respect to rejection of this Subscription Agreement by the Company.

 

 

	Subscription Agreeement	 2	 

  

  

  

 

6.           Notice to Residents of All States: THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF CERTAIN STATES AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, OFFICE OF THRIFT SUPERVISION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THE PPM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

7.           Title. Title to the Securities being purchased is to be held in the name or names as printed immediately below (Please print or type exact name(s) the certificates should be issued in): _____________

8.           Residency. My primary state of residence (for a natural person) or the state where the principal executive office is located (for an entity) is: ______________________________

[This may be different from the address below and is important for the Company to confirm compliance with applicable securities laws.]

Number of Units Subscribed: _____________

Total Purchase Price (Number of Units Subscribed times the purchase price per Unit of $[amount]) (“Subscription Amount”): _____________

The form of ownership of the Securities being purchased is as follows (circle one):

	
  

	
1.1

	
Separate Property (one party must sign) but in community property states, if the Purchaser is married, then his (her) spouse must sign and submit the Consent of Spouse form attached hereto as Attachment A;

	
  

	
1.2

	
Joint Tenants (all must sign and please describe relationship);

	
  

	
1.3

	
Tenants in Common (all parties must sign);

	
  

	
1.4

	
Community Property (both husband and wife must sign);

1.5           Other, e.g., custodian, trustee, etc. Describe fully:

_______________________________________

_______________________________________

_______________________________________

Name and Address of Purchaser for mailing notices and certificates:

_______________________________________

_______________________________________

_______________________________________

Federal Tax ID Number or Social Security Number: _________________

PLEASE RETURN TWO COPIES OF THIS SUBSCRIPTION AGREEMENT TO THE COMPANY AND RETAIN THE ONE COPY FOR YOUR RECORDS

 

 

 

	Subscription Agreeement	 3	 

  

  

  

 

IN WITNESS WHEREOF, the undersigned has executed and entered into this Subscription Agreement on behalf of Purchaser.

If Units to be held jointly by more than one owner, all joint owners should sign this Subscription Agreement below. Each of the undersigned has executed this Subscription Agreement and returned two hereof to the Company at the address set forth above, accompanied by payment in full in the manner set forth above. Each of the undersigned understands that all information submitted on this Subscription Agreement will be treated confidentially.

	
Signature:

	  	  	
Date:

	  
	  	  	  	  	  
	
Print Name:

	  	  	  	  
	  	  	  	  	  
	
Title:

	  	  	  	  
	  	  	  	  	  
	
Signature:

	  	  	
Date:

	  
	  	  	  	  	  
	
Print Name:

	  	  	  	  
	  	  	  	  	  
	
Title:

	  	  	  	  

Subscription Agreement Accepted by Ocean Thermal Energy Corporation:

	
Signature:

	  	  	
Date:

	  
	  	  	  	  	  
	
Print Name:

	  	  	  	  
	  	  	  	  	  
	
Title:

	  	  	  	  

 

 

	Subscription Agreeement	 4	 

  

  

  

 

ATTACHMENT A

CONSENT OF SPOUSE

(For purchasers in community property states, which are currently

Alaska, Arizona, California, Idaho, Louisiana, Nevada,

New Mexico, Texas, Washington and Wisconsin)

 

	I, _______________________________________________________________________________________,	 spouse of 	 ______________________________________________________________________________________
	
[print name]

	 	
[print name]

have read and hereby approve of the Ocean Thermal Energy Corporation Subscription Agreement (the “Subscription Agreement”), which my spouse has signed and to which this Consent of Spouse is attached. I hereby appoint my spouse as my attorney-in-fact with respect to the exercise of any rights related to a purchase of any Common Stock and agree to be bound by the provisions of the Subscription Agreement, the Confidential Private Placement Memorandum of Ocean Thermal Energy Corporation dated February 1, 2012, and all Exhibits thereto (“Memorandum”), and any other documents related to the purchase of any such Common Stock (collectively, the “Purchase Documents”) insofar as I may have any rights in said Purchase Documents or any property or interest subject thereto under the community property laws of the State of __________________ or similar laws relating to marital property in effect in the state of our residence as of the date of signing of the Subscription Agreement and/or the Purchase Documents.

	
Dated: _______________________, 20____

	  
	  	
[signature]

 

 

 

	Subscription Agreeement	 5	 

  

  

  

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW (COLLECTIVELY, “SECURITIES LAWS”). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF EITHER: (1) AN EFFECTIVE REGISTRATION STATEMENT FOR THE NOTE UNDER THE SECURITIES LAWS; OR (2) AN OPINION OF COUNSEL PROVIDED TO THE ISSUER OF THE NOTE IN FORM, SUBSTANCE AND SCOPE REASONABLY ACCEPTABLE TO THE ISSUER SHOWING THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES LAWS DUE TO AN EXEMPTION FROM THEIR REGISTRATION REQUIREMENTS.

OCEAN THERMAL ENERGY CORPORATION

SERIES A 10% UNSECURED NOTE

	
$[amount]

	
[issuance date], 2012

	
NOTE # __________

	  
	  	  

OCEAN THERMAL ENERGY CORPORATION, a Delaware corporation (“OTE”), for value received, hereby promises to pay to [name of holder] (“Holder”), its successors and assigns, the principal sum of [NOTE AMOUNT] DOLLARS ($[note amount]), with interest on the unpaid principal amount of this Note from time to time outstanding, computed on the basis of a 365-day year for the actual number of days elapsed, at the fixed annual rate of ten percent (10%).

	
1.

	
This Note is issued pursuant to OTE’s Confidential Private Placement Memorandum dated [February/April] 1, 2012 regarding the offering of Series A Units of OTE, each consisting of a $[amount] 10% Unsecured Note and a warrant to purchase [amount] shares of the common stock of OTE (the “Offering”).

	
2.

	
The principal sum shall bear interest; commencing on the date hereof to and including the date it is repaid in full, at a rate of ten percent (10%) per annum. OTE will pay interest only on the outstanding principal balance of this Note, at the foregoing rate, quarterly. in arrears beginning on the last business day of each of August, November, February and May commencing on [date] and continuing until all amounts owing under this Note, including principal and accrued interest thereon, have been paid in full. This Note shall mature on [date], whereupon the entire unpaid principal amount of this Note shall be due and payable in full.

	
3.

	
All cash payments on or in respect of this Note, including principal and interest thereon, shall be made in such coin and currency of the United States as at the time of payment is legal tender for the payment of public and private debts, by wire transfer pursuant to written wire transfer instructions given by Holder to OTE from time to time or, at Holder’s option, in such manner and at such other place in the United States as Holder shall designate to OTE in writing. Such designation shall be provided in writing to OTE no later than ten (10) business days before any payment on the Note is due.

	
4.

	
This Note is subject to optional prepayment by OTE without penalty.

	
5.

	
Any of the following is an Event of Default, entitling Holder to demand immediate payment of the entire unpaid principal balance of this Note and any accrued interest thereon:

	
  

	
a.

	
OTE’s failure to make an interest or principal payment that is due and payable for a period of ten (10) business days following its receipt of written notice from Holder that it has not made such payment.

	
  

	
b.

	
OTE becomes insolvent, admits in writing its inability to pay its debts as they become due, makes an assignment for the benefit of creditors, commences proceedings for its dissolution, or applies for or consents to the appointment of a trustee, liquidator, or receiver for its or for a substantial part of its property or business.

 

 

	Series A 10% Unsecured Note	 1	 

  

  

  

 

	
  

	
c.

	
A trustee, liquidator or receiver is appointed for OTE or for a substantial part of its property or business without its consent and such appointment is not discharged within sixty (60) days thereafter,

	
  

	
d.

	
A governmental agency or court of competent jurisdiction assumes custody or control of the whole or a substantial portion of the properties or assets of OTE.

	
  

	
e.

	
Any money judgment, writ or note of attachment, or similar process in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate is entered against OTE or any of its properties or assets and OTE has not taken appropriate steps within fifteen (15) days of its entry to arrange for payment or to have the process vacated, bonded or stayed.

	
  

	
f.

	
Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors are instituted by OTE or against OTE and are either not dismissed within sixty (60) days thereafter or OTE by any action or answer approves of, consents to or acquiesces in any such proceedings or admits the material allegations of or defaults in answering a petition filed in any such proceeding.

	
  

	
g.

	
A sale of all or substantially all of the outstanding capital shares or assets of OTE.

	
6.

	
Notices shall be made by any means by which delivery is verified to the following:

If to Holder:

___________________

___________________

___________________

If to OTE:

800 South Queen Street

Lancaster, PA 17603

Attn: Jeremy P. Feakins, Chairman and CEO

	
7.

	
This Note shall be binding upon OTE, its successors and permitted assigns, and shall inure to the benefit of the OTE, its successors and assigns.

	
8.

	
This Note is a contract made under and governed by, and shall be construed and enforced in accordance with, the laws of the State of Pennsylvania, without regard to conflict of laws principles.

OCEAN THERMAL ENERGY CORPORATION

By: /s/ authorized officer

 

	Series A 10% Unsecured Note	 2	 

  

  

  

 

FORM OF WARRANT

WARRANT TO PURCHASE SHARES OF COMMON STOCK

OF

OCEAN THERMAL ENERGY CORPORATION

THIS WARRANT AND THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF WITHOUT AN EFFECTIVE REGISTRATION THEREOF OR AN OPINION OF COUNSEL THAT IS DELIVERED TO AND SATISFACTORY TO OCEAN THERMAL ENERGY CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

OCEAN THERMAL ENERGY CORPORATION (the “Company”) certifies that the Holder hereof has the right to purchase from the Company a number of duly authorized, validly issued, fully paid and non-assessable shares of the Company’s Common Stock, no par value (“Common Stock”), at the Exercise Price, during the Exercise Term and subject to the terms and conditions provided below.

Holder agrees that this Warrant is issued and all rights hereunder are held subject to all of the terms and conditions set forth herein.

Holder

[holder name] or any subsequent Holder (collectively, “Holder”).

Date of Issuance

[date of issuance]

Number of Shares of Common Stock

[number] shares of the Company’s Common Stock, no par value.

Exercise Price

$3.00 per share.

Term of Warrant

This Warrant is valid from its Date of Issuance through the close of business (Eastern Time) on May 31, 2017 (the “Expiration Date”).

Exercise Term

This Warrant may be exercised at any time during the Term of this Warrant.

Method of Exercise

	
1.

	
Manner of Exercise. Holder may exercise this Warrant for a number of full shares of Common Stock covered by this Warrant by sending all of the following to the Company at its offices located at c/o 800 South Queen Street, Lancaster, Pennsylvania 17603, United States of America:

a.           This Warrant.

b.           A completed Exercise Form (see attachment).

c.           The full Exercise Price for each share of Common Stock for which this Warrant is exercised.

 

 

	Warrant	 1	 

  

  

  

 

	
2.

	
Date of Exercise. The date of exercise shall be the date on which the Company receives the Warrant, the completed Exercise Form and the full Exercise Price.

	
3.

	
Cancellation of Warrant. The Company will cancel this Warrant upon exercise. If this Warrant is not exercised in full, the Company will issue to Holder a new Warrant containing terms identical to this Warrant for any unexercised portion of this Warrant.

	
4.

	
Delivery of Shares. The Company will deliver to Holder the number of shares that Holder purchased upon such exercise as soon as practicable after the date of exercise.

	
5.

	
Shareholder of Record. The Company shall deem the person(s) to whom it is to deliver shares from the exercise of this Warrant to be the shareholder(s) of record of such shares as of the date of exercise irrespective of the date of delivery of such shares.

Payment of Exercise Price

The Exercise Price may be paid made by tender of United States currency in the form of cash, certified check, cashier’s check, wire transfer or a combination thereof.

Anti-Dilution Provisions

	
1.

	
Recapitalization, Reclassification Stock Dividend or Stock Split. If the Company effects a recapitalization, reclassification, stock dividend, stock split or other similar transaction where its shares of Common Stock are changed into or become exchangeable for a larger or smaller number of shares, the number of shares of Common Stock and the Exercise Price of this Warrant shall be changed in direct proportion thereto.

	
2.

	
Notice of Corporate Change. In the event of a merger, consolidation, exchange of shares, recapitalization, reorganization or similar event where shares of Company Common Stock will be changed into a different number of shares or another class of securities or other assets of the Company or another entity or there will be a sale of all or substantially all the Company’s assets (“Corporate Change”), the Company will give Holder thirty days prior notice and an opportunity to exercise this Warrant in that period.

Reservation of Shares

The Company shall reserve a sufficient number of duly authorized and unissued shares of Common Stock for exercise of this Warrant, and such shares will be free of all taxes, liens and charges created by or through the Company.

Restrictions on Transfer of Warrant and Shares

	
1.

	
Registration or Exemption Required. This Warrant has been issued and the shares of Common Stock issuable hereunder will be issued in a transaction exempt from the registration requirements of the Act and applicable state securities laws. Therefore, they may not be sold, transferred, or otherwise disposed of in any manner except pursuant to an effective registration statement or an exemption from the registration requirements.

	
2.

	
Restrictive Legend. The shares issuable hereunder shall be imprinted with a legend in substantially the same form as appears on this Warrant.

	
3.

	
Warranty of Holder. Holder represents and warrants to the Company that Holder’s acquisition of this Warrant and the shares of Common Stock issuable hereunder are solely for Holder’s own account and not as a nominee for any other party, that the acquisition is for investment purposes only and that Holder will not offer, sell, transfer or otherwise dispose of this Warrant or any shares issuable hereunder except pursuant to an effective registration statement or an exemption from registration under the Act and applicable state securities laws.

Limitation

This Warrant confers rights and obligations only upon the Company and Holder and upon no other person or entity.

 

 

	Warrant	 2	 

  

  

  

 

Governing Law

Pennsylvania law governs all matters related to this Warrant without regard to conflict of laws principles.

Loss of Warrant

If this Warrant is lost, stolen, destroyed or mutilated, the Company will reissue a Warrant on the same applicable terms after its receipt of (a) satisfactory evidence of the loss, theft, destruction or mutilation of this Warrant and (b) either indemnity or security reasonably satisfactory to the Company in the case of loss, theft or destruction, or this Warrant in the case of mutilation.

Costs

Holder shall pay all costs associated with the exercise or transfer of this Warrant including, without limitation, reasonable attorney’s fees incurred by the Company.

Notice

	
1.

	
Holder shall send all notices to the Company by certified or registered mail return receipt requested postage prepaid, and addressed to Ocean Thermal Energy Corporation, c/o 800 South Queen Street, Lancaster, Pennsylvania 17603, United States of America.

	
2.

	
The Company shall send all notices to Holder by certified or registered mail return receipt requested, postage prepaid, and addressed to Holder’s address set forth below, provided that Holder may designate another address for notices in writing to the Company:

Name and address

_________________________

_________________________

_________________________

IN WITNESS WHEREOF, the undersigned has executed this Warrant.

OCEAN THERMAL ENERGY CORPORATION

By: /s/ authorized officer

 

 

	Warrant	 3	 

  

  

  

WARRANT EXERCISE FORM

TO: Ocean Thermal Energy Corporation

The undersigned hereby irrevocably exercises the right to purchase __________ shares of Common Stock, no par value, of Ocean Thermal Energy Corporation (the “Company”).

Enclosed is the original Warrant issued by the Company entitling the undersigned to such exercise.

Enclosed in full payment of the total Exercise Price of $__________ for __________ shares at $3.00 per share.

The undersigned requests that the Company issue stock certificates for __________ shares to the following:

Holder

Name and address

_________________________

_________________________

_________________________

The undersigned understands that the purchased shares have not been registered under the Securities Act of 1933, as amended (the “Act”) or any state securities law (the “Securities Laws”), and are therefore restricted securities which may not be sold, transferred, or otherwise disposed unless the shares are registered in accordance the Securities Laws or the undersigned has delivered an opinion of counsel satisfactory to the Company that the shares are exempt from registration under the Securities Laws.

Date: __________

Holder Signature: ________________________________________

Print name and address:

________________________________________

________________________________________

________________________________________

 

	Warrant	 4	 

  

  

  

	
Series A Notes and Warrants

	
Name

	
 Note Amount

	
Note Issuance

	
# of Warrants

	
Exercise Price

	
Warrant Issuance

	
Expiration

	  	  	  	  	  	  	  
	
Lori Townsend

	
 $           50,000.00

	
03/26/12

	
  50,000

	
$3.00

	
03/31/12

	
03/31/17

	
Michael Baer

	
 $           50,000.00

	
03/27/12

	
  50,000

	
$3.00

	
03/31/12

	
03/31/17

	
Steven Triantafyllou

	
 $         100,000.00

	
03/07/12

	
100,000

	
$3.00

	
03/07/12

	
03/31/17

	
Gergory Orloff

	
 $         100,000.00

	
03/07/12

	
100,000

	
$3.00

	
03/31/12

	
03/31/17

	
James Bergdoll (B&B Enterprises)

	
 $           25,000.00

	
03/14/12

	
  25,000

	
$3.00

	
03/31/12

	
03/31/17

	
R. Elliot Katherman (Sundazed)

	
 $           25,000.00

	
03/07/12

	
  25,000

	
$3.00

	
03/31/12

	
03/31/17

	
Sunny & Jon Corbin

	
 $           50,000.00

	
04/01/12

	
  50,000

	
$3.00

	
05/11/12

	
03/31/17

	
John Briggs

	
 $           25,000.00

	
04/24/12

	
  25,000

	
$3.00

	
04/24/12

	
03/31/17

	
Jeremy Feakins

	
 $         200,000.00

	
04/16/12

	
200,000

	
$3.00

	
04/16/12

	
03/31/17

	
Edward Baer

	
 $         100,000.00

	
04/13/12

	
100,000

	
$3.00

	
04/13/12

	
03/31/17

	
James Greenberg

	
 $         100,000.00

	
04/16/12

	
100,000

	
$3.00

	
04/16/12

	
03/31/17

	
Charles Baer

	
 $         100,000.00

	
04/01/12

	
100,000

	
$3.00

	
05/29/12

	
03/31/17

	
James Bernieri

	
 $           50,000.00

	
06/29/12

	
  50,000

	
$3.00

	
06/29/12

	
03/31/17

	
John Senft

	
 $           50,000.00

	
04/01/12

	
  50,000

	
$3.00

	
09/04/12

	
03/31/17

	
Essam El-Magrabi

	
 $           50,000.00

	
7/6/2012

	
  50,000

	
$3.00

	
07/06/12

	
03/31/17

	  	  	  	  	  	  	  
	  	
 $      1,075,000.00

	  	
1,075,000    

	  	  	  
	  	  	  	  	  	  	  

 

	Scheduleex1007form10.htm

GENERAL TERMS AGREEMENT

This General Terms Agreement (hereinafter referred to as the “Agreement”), is entered into this 15th day of April, 2013 between OCEAN THERMAL ENERGY CAYMAN LTD, a Cayman Islands Company having its registered office at P.O. Box 268, Grand Cayman, KY1-1104 Cayman Islands (hereinafter referred to as “OTE”, which term shall include its successors, assigns and affiliated companies), and OCEAN ENERGY LTD, a Cayman Islands Company having its registered office at P.O. Box 10335, Grand Cayman, KY1-1003, Cayman Islands (hereinafter referred to as “OEL”, which term shall include its successors and assigns).

RECITALS

WHEREAS, OTE intends to design, engineer, construct, finance, own, operate and maintain Ocean Thermal Energy Conversion (“OTEC”) and Seawater District Cooling (“SDC”) facilities in the Cayman Islands (hereinafter referred to as the “Cayman Venture”); and

WHEREAS, the parties shall enter into a specific “Task Order” with respect to each project relating to the Cayman Venture (hereinafter “Project”). Such Task Order shall be reduced to writing, executed in the same manner as this Agreement and shall set forth the terms of each Project, including, without limiting the generality of the foregoing, the design, engineering, construction, financing, ownership, operation and/or maintenance of the Project.

WHEREAS, OEL has unique expertise, resources and relationships in the Cayman Islands that would be beneficial to OTE with regard to the Projects; and

WHEREAS, the Parties further desire to provide for joint ownership for each Project through equity participation, as may be stated in the Task Order specific to the Project;

NOW THEREFORE, in consideration of the mutual covenants and promises herein set forth, the Parties agree as follows:

1.             Relationship of the Parties

The Parties agree to deal with each other on an entirely exclusive basis on the Cayman Venture and all related Projects as defined by specific Task Orders. In order to give OEL adequate assurance and comfort, OTE explicitly agrees not to deal with Dart Enterprises, Ltd. or any affiliate thereof. Nothing herein shall be construed as providing for the sharing of profits or losses arising out of the efforts of the Parties except as may be provided for in the Task Order for the Project. Each such Task Order shall be negotiated and agreed to by the Parties and shall relate to a specific off-take agreement and also address the creation of Project-specific special purpose entities (“SPEs”), the terms of joint equity participation therein and the other matters referred to in the recitals above.

2.             Proposal Preparation

The Parties shall support each other, on an exclusive basis, during the Cayman Venture and all related Project proposal efforts. Such support shall include, but is not necessarily limited to, interaction with end-user customers and preparation of proposed off-take agreements and response to questions from relevant third parties. In support of such proposals (“Proposals”), the Parties shall provide each other, when requested, technical and pricing data as may be required by the requesting Party and/or the intended end-user, in sufficient detail to negotiate a Task Order.

 

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3.             Marketing

The Parties will cooperate in the conduct of marketing activities related to the Proposals and agree to provide such complementary marketing support as reasonably requested. Neither Party shall make any presentation directly to an end-user without the consent of the other Party.

4.             Costs

Each Party will bear its own expenses, costs, risks and liabilities arising out of the making of Proposals and any other efforts performed under this Agreement and neither will make any claim or charges against the other, except to the extent that any of the foregoing may be recovered as development costs attributable to a specific Project, which shall be addressed in a Task Order.

5.             Non-Limiting Agreement

Nothing herein shall be deemed to restrict either Party from offering, licensing, transferring or selling to any other party any goods or services that it may regularly offer, license, transfer or sell to other parties, except for Projects, as that term is defined in this Agreement.

6.             Proprietary Information

	
  

	
(a)

	
During the course of this Agreement either Party may exchange or disclose to the other information and data either in written or electronic format or orally which it considers to be proprietary (“Proprietary Information”). Proprietary Information disclosed orally shall be reduced to writing by the disclosing Party as soon as possible after disclosure. If the Proprietary Information reduced to writing is conspicuously identified by the disclosing Party as proprietary by an appropriate stamp or legend thereon and is transmitted in writing or in other tangible, retainable form, the recipient Party agrees that it will use the same only in connection with the Projects contemplated by this Agreement, and the performance of any resultant Task Orders to the extent set forth in such Task Orders, and that it will not disclose the same to third parties without the written consent of the disclosing Party; provided, however, that the recipient Party shall not be liable for any disclosure of such Proprietary Information to others:

	
  

	
(1)

	
if the recipient Party has utilized the same degree of care in protecting the Proprietary Information as would be utilized in connection with protecting its own proprietary information;

(2)           after three years from the termination date of this Agreement;

	
  

	
(3)

	
if the Proprietary Information is within, or later falls within, the public domain through no fault of recipient Party;

	
  

	
(4)

	
if the Proprietary Information is in possession of the recipient Party, its divisions, subsidiaries, parent or affiliates without restriction on disclosure as substantiated by documentation dated prior to the disclosure thereof by the disclosing Party;

	
  

	
(5)

	
if the Proprietary Information is legally obtainable without restriction from another source;

 

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(6)

	
if the Proprietary Information is not identified as being proprietary as required under the terms of this Agreement;

	
  

	
(7)

	
if the Proprietary Information has been or later is disclosed by the disclosing Party to others on an unrestricted basis;

	
  

	
(8)

	
if the receiving Party reasonably believes, based on advice from legal counsel, that it is required to disclose the Proprietary Information in order to comply with applicable law, rule, regulation, or court order or other compulsory process of a court or other governmental body. In such case, the receiving Party shall promptly notify the disclosing Party, in writing, of its intent to disclose the Proprietary Information, if it reasonably believes, based on the advice of legal counsel, that it can do so without violating the applicable law, rule, regulation, or court order or other compulsory process of a court or other governmental body, so that the disclosing Party can take such action as it deems appropriate to protect its Proprietary Information.

	
  

	
(b)

	
Each Party agrees that all Proprietary Information marked as such in accordance with this Agreement:

	
  

	
(1)

	
will be disclosed only to personnel of the recipient Party having a “need to know” in connection with performance of effort within the intent and provisions of this Agreement and to the Client or an authorized representative thereof in the performance by either Party of its portion of the Project; provided, however, that any Proprietary Information proprietary to either Party which is disclosed under this provision by the other Party to the Client shall be marked with a stamp or legend as is appropriate and permissible under applicable laws and regulations;

	
  

	
(2)

	
if reproduced in whole or in part in accordance with this Agreement, will carry a proprietary mark or legend at least similar to that with which the information is disclosed to the recipient Party, except as provided in Item (1) of this subparagraph (b) relative to information disclosed to the Client.

	
  

	
(c)

	
Except as provided in the Rights in Inventions clause of this Agreement, engineering data jointly developed for the purpose of a Proposal shall be the sole property of OTE and shall be considered a “work for hire.”

	
  

	
(d)

	
The obligations of this Proprietary Information clause shall survive any termination of this Agreement pursuant to Termination clause herein.

	
  

	
(e)

	
Neither this Agreement nor any disclosure of Proprietary Information hereunder shall be construed to grant either Party any right, license or immunity from suit for infringement, either directly or by implication, estoppel, or otherwise in or under any issued, pending, or after-acquired patent, copyright or patent application or proprietary technical information of the other Party except as expressly recited herein; provided, however, that each Party hereby grants to the other Party an immunity from suit for enabling such other Party to perform its obligations under the activity contemplated by this Agreement and the performance of resultant contracts, to the extent set forth in such contracts.

 

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(f)

	
Such Proprietary Information as may be disclosed or exchanged by the respective Parties under this Agreement shall not constitute any representation, warranty, assurance, guarantee, or inducement by either Party to the other with respect to the infringement of any patent or other proprietary right owned or controlled by any third party and nothing in this Agreement shall be construed as a warranty, or representation of any kind with respect to the content or accuracy of Proprietary Information disclosed or exchanged by the Parties under this Agreement.

	
  

	
(g)

	
This Proprietary Information clause shall not apply to any data, information or technology developed by the receiving Party independently from the Proprietary Information governed by this clause.

	
  

	
(h)

	
Each Party agrees to adhere to any applicable US and foreign export control laws and regulations and shall not export or re-export any technical data or products received or the direct product of such technical data except in compliance with the applicable export control laws of the US Government International Traffic in Arms Regulations (ITAR) and/or the Export Administration Regulations (EAR).

	
  

	
(i)

	
Should a Party need to provide Proprietary Information to the Client, that Party will negotiate and enter into a Non-Disclosure Agreement with the Client that contains the provisions of this Proprietary Information clause.

7.             Rights in Inventions

	
  

	
(a)

	
Any invention jointly conceived or jointly first actually reduced to practice by employee(s) of both Parties hereto in the course of this activity (“Joint Invention”) shall be the sole property of OTE and shall be considered a “work for hire.” If both Parties develop the Joint Invention using either Party’s or both Parties’ Proprietary Information, then each Party grants the other Party a perpetual, royalty-free, non-exclusive, non-transferable license to use the licensing Party’s Proprietary Information and Joint Invention for the Project. The Parties shall use and protect such Inventions only in accordance with the provisions of subparagraph (c) of the Proprietary Information clause of this Agreement. The filing of patent applications on such Joint Inventions shall be at OTE’s sole discretion with expenses for such filing, subsequent prosecution and any taxes and fees being at OTE’s sole expense. Compliance with regulations with respect to any country in which an application is filed shall be borne by the Party so filing.

	
  

	
(b)

	
Inventions conceived in the course of a Proposal effort by employee(s) of OEL only shall also be considered “works for hire.” As such, OTE shall have the entire right, title and interest in such inventions and the exclusive right to file patent applications thereon in its own name, subject to royalty-free, nonexclusive and irrevocable license (without the right to grant sublicenses) to OEL to use the inventions only in the Projects contemplated by this Agreement and the performance of any resultant Task Order(s) to the extent set forth in such Task Order(s).

 

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8.             Publicity

Except as may be required by applicable law or regulation, courts of competent jurisdiction, to meet credit and financing arrangements or as required or appropriate in the reasonable judgment of either Party to satisfy the disclosure requirement of any securities laws or regulations, no publicity or advertising shall be released by OEL in connection with this Agreement nor any Project contemplated hereby without the prior written approval of OTE. Neither Party, however, shall be precluded from revealing to an end user the existence and contents of this Agreement. In the event of any Task Order under this Agreement, OEL shall not make any releases for publication in media intended for public circulation without OTE’s prior approval thereof. In all cases where the prior approval of OTE is not required, OEL shall provide OTE prior notice of any such disclosure as well as a copy of what will be disclosed.

9.             Independent Contractors

Each Party hereto shall act as an independent contractor, and this Agreement shall not constitute, create, give effect to or otherwise recognize a joint venture, pooling arrangement, partnership, or formal business organization of any kind. No relationship, other than that created by and set forth in this Agreement, shall be intended or established by any reference to the Parties operating as a “Team” or as “Team Members.”

10.           Termination

This Agreement and all rights and duties hereunder, except those in the Proprietary Information clause herein, shall terminate upon the happening of the earliest of any of the following:

(a)           Mutual agreement in writing of the Parties hereto;

	
  

	
(b)

	
Expiration of a period of thirty-six (36) months from the effective date of this Agreement, unless the term of an executed Task Order has not yet expired and then only with respect to that Task Order;

	
  

	
(c)

	
Failure of the Parties to enter into a Task Order after negotiating in good faith for a reasonable time, provided that either Party gives the other Party thirty (30) days written notice of its intention to terminate; or

	
  

	
(d)

	
Breach by either Party of the United States Foreign Corrupt Practices Act or and the United Kingdom Bribery Act.

11.           Entire Agreement

This Agreement contains the entire Agreement of the Parties and supersedes any previous understanding, commitments or agreements, oral or written, with respect to the subject matter hereof.

12.           Modifications

This Agreement may be modified from time to time by the mutual written consent of the Parties.

 

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13            Assignment

Neither Party hereto will assign its rights or delegate its duties hereunder without the express prior written consent of the other Party and any attempted assignment of rights or delegation of duties in contravention of this Article shall be void and of no effect.

14.           Severability

Each provision of this Agreement is severable. If any is declared void, illegal or unenforceable, the remaining paragraphs shall retain their full force and effect.

15.           Applicable Law

This Agreement and the interpretation thereof shall be governed by the laws of the Cayman Islands, excluding its choice of law provisions. It is further understood that activity under this Agreement is subject to Cayman Islands government approval of OTE’s local companies control law license.

16.           Counterparts

This Agreement may be signed in more than one counterpart, which counterparts, when taken together, shall constitute this Agreement.

17.           Notices

A notice under this Agreement shall be in writing and shall be delivered by: (a) hand delivery to the address stated in this Agreement, or such other address as may be notified to the other Party; (b) electronic transmission to the e-mail address provided for such purpose to the other Party; or (c) facsimile transmission to such telephone number as may be provided for that purpose to the other Party. A notice given in one or more of the aforementioned ways shall be deemed to have been delivered on the date of receipt, if a business day; if not a business day, on the first business day immediately following.

18.           Jurisdiction

The courts of the Cayman Islands shall have exclusive jurisdiction to adjudicate any and all disputes arising out of this Agreement.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed effective as of the day and year above provided.

OCEAN ENERGY LTD

Signature: /s/ Gene Thompson

Name: Gene Thompson

Title: Director

Date: 4/15/2013

OCEAN THERMAL ENERGY CAYMAN LTD

Signature: /s/ Jeremy P. Feakins

Name: Jeremy P. Feakins

Title: Chief Executive Officer

Date: 4/15/2013

 

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