Document:

ex1010form10.htm

WARRANT

To Purchase from Ocean Thermal Energy Corporation

up to 300,000 Shares of the Common Stock, $0.001 - Par Value Per Share,

of

Ocean Thermal Energy Corporation

This is to certify that, for value received, Jeremy P. Feakins & Associates, LLC (“Lender”) or any permitted transferee (Lender or such transferee being hereinafter called the “Holder”) is entitled to purchase, subject to the provisions of this Warrant, from Ocean Thermal Energy Corporation (“OTE”) at any time on or after the IPO of Ocean Thermal Energy Corporation, an aggregate of up to 300,000 fully paid and non-assessable shares of common stock, $0.001 par value (the “Common Stock”), of OTE at a price equal to or greater of a 50% discount off the price of OTE’s common stock as at the time of the IPO/Listing of OTE on the NASDAQ Stock Exchange or other stock exchange, or $0.425 per share subject to adjustment as herein provided (the “Exercise Price”).

 

1.           Exercise of Warrant. Subject to the provisions hereof, this Warrant may be exercised, in whole or in part, or sold, assigned or transferred at any time or from time to time following OTE’s IPO and up to one year thereafter. This Warrant shall be exercised by presentation and surrender hereof to Ocean Thermal Energy Corporation at the principal office of OTE, accompanied by (i) a written notice of exercise, (ii) payment to OTE, for the account of OTE of the Exercise Price for the number of shares of Common Stock specified in such notice, and (iii) a certificate of the Holder specifying the event or events which have occurred and entitle the Holder to exercise this Warrant. The Exercise Price for the number of shares of Common Stock specified in the notice shall be payable in immediately available funds.

Upon such presentation and surrender, OTE shall arrange for a prompt issuance to the Holder or its assignee, transferee or designee the number of shares of Common Stock to which the Holder is entitled hereunder. Partial exercise of this Warrant is authorized. OTE covenants and warrants that such shares of Common Stock, when so issued, will be duly authorized, validly issued, fully paid and non-assessable, and free and clear of all liens and encumbrances.

2.           Reservation of Shares; Preservation of Rights of Holder. OTE shall at all times while this Warrant is outstanding and unexercised, maintain and reserve such number of shares of OTE Common Stock as may be necessary so that this Warrant may be exercised.

3.           Fractional Shares. OTE shall not be required to issue any fractional shares of Common Stock upon exercise of this Warrant. In lieu of any fractional shares, the Holder shall be entitled to receive an amount in cash equal to the amount of such fraction multiplied by the Exercise Price.

4.           Exchange or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof at the principal office of OTE for other warrants of different denominations entitling the Holder to purchase, in the aggregate, the same number of shares of Common Stock issuable hereunder. The term “Warrant” as used herein includes any warrants for which this Warrant may be exchanged. Upon receipt by OTE of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, OTE will execute and deliver a new Warrant of like tenor and date.

5.           Adjustment. The number of shares of Common Stock issuable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as provided in this Paragraph.

(A)           Stock Dividends, etc.

 

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(1)           Stock Dividends. In case OTE shall pay or make a dividend or other distribution on any class of capital stock of OTE payable in Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased by multiplying such number of shares by a fraction of which the denominator shall be the number of shares of Common Stock outstanding at the close of business on the day immediately preceding the date of such distribution and the numerator shall be the sum of such number of shares and the total number of shares of Common Stock constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following such distribution.

(2)           Subdivisions. In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately decreased, such increase or decrease, as the case may be, to become effective immediately after the opening of business on the day following the date upon which such subdivision or combination becomes effective.

(3)           Reclassifications. The reclassification of Common Stock into securities (other than Common Stock) and/or cash and/or other consideration shall be deemed to involve a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number or amount of securities and/or cash and/or other consideration outstanding immediately thereafter and the effective date of such reclassification shall be deemed to be “the day upon which such subdivision becomes effective,” or “the day upon which such combination becomes effective,” as the case may be, within the meaning of clause (2) above.

(4)           Optional Adjustments. OTE may make such increases in the number of shares of Common Stock issuable upon exercise of this Warrant, in addition to those required by this Subparagraph (A), as shall be determined by its Board of Directors to be advisable in order to avoid taxation so far as practicable of any dividend of stock or stock rights or any event treated as such for tax purposes to the recipients.

(5)           Adjustment to Exercise Price. Whenever the number of shares of Common Stock issuable upon exercise of this Warrant is adjusted as provided in this Subparagraph (A), the Exercise Price shall be adjusted by a fraction in which the numerator is equal to the number of shares of Common Stock issuable prior to the adjustment and the denominator is equal to the number of shares of Common Stock issuable after the adjustment, rounded to the nearest cent.

(B)           Definition. For purposes of this Paragraph 5, the term “Common Stock” shall include (1) any shares of OTE of any class or series which has no preference or priority in the payment of dividends or in the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of OTE and which is not subject to redemption by OTE and (2) any rights or options to subscribe for or to purchase shares of Common Stock or any stock or securities convertible into or exchangeable for shares of Common. Stock (such convertible or exchangeable stock or securities being hereinafter called “Convertible Securities”), whether or not such rights or options or the right to convert or exchange any such Convertible Securities are immediately exercisable. For purposes of any adjustments made under this Paragraph 5 as a result of the distribution, sale or other issuance of rights or options or Convertible Securities, the number of shares of Common Stock outstanding after or as a result of the occurrence of events described in Paragraph 5 shall be calculated by assuming that all such rights, options or Convertible Securities have been exercised for the maximum number of shares issuable thereunder.

 

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6.           Notice. Whenever the number of shares of Common Stock for which this Warrant is exercisable is adjusted as provided in Paragraph 5, OTE shall promptly compute such adjustment and mail to the Holder a certificate, signed by the principal financial officer of OTE setting forth the number of shares of Common Stock for which this Warrant is exercisable as a result of such adjustment having become effective.

7.           Rights of the Holder.

(A)           Without limiting the foregoing or any remedies available to the Holder, it is specifically acknowledged that the Holder would not have an adequate remedy at law for any breach of the provisions of this Warrant and shall be entitled to specific performance of OTE’s obligations under, and injunctive relief against any actual or threatened violation of the obligations of any person subject to, this Warrant.

(B)           The Holder shall not, by virtue of its status as Holder, be entitled to any rights of a stockholder in OTE.

8.           Termination. This Warrant and the rights conferred hereby shall terminate one year after the date of OTE’s IPO.

9.           Governing Law. This Warrant shall be deemed to have been delivered in, and shall be governed by and interpreted in accordance with the substantive laws of, the Commonwealth of Pennsylvania.

Dated: November 1, 2013

 

 

	 	
Ocean Thermal Energy Corporation

By:/s/ Jeremy P. Feakins

Name: Jeremy P. Feakins

Title: Chairman & CEO

 

3ex1011form10.htm

OCEAN THERMAL ENERGY CORPORATION

PROMISSORY NOTE

	
US$290,000.00

	
December 31, 2013

FOR VALUE RECEIVED, the undersigned, OCEAN THERMAL ENERGY CORPORATION, a Delaware corporation (the “Company”), or its successors or assigns, hereby promises to pay to the order of THEODORE HERMAN, an individual, or his assigns (collectively, the “Holder”), the principal amount of Two Hundred Ninety Thousand Dollars (US $290,000), together with any accrued and unpaid interest thereon as described herein. The Company and the Holder may hereinafter be referred to individually as a “Party” and collectively as “Parties.”

1.              Definitions. In addition to the terms defined elsewhere in this Promissory Note (this “Note”), the following terms have the meanings indicated:

“BBNA” means Broadband Network Affiliates, Inc., a Delaware corporation.

“Business Day” means any day other than a Saturday, Sunday or other day on which banks in New York, New York are required to be closed.

“Maturity Date” means December 31, 2015.

“Merger Agreement” means the Agreement and Plan of Merger among BBNA, the Company and Theodore Herman dated December 24, 2013, as amended.

“Reverse Merger” means a business combination transaction involving the Company and BBNA after which BBNA continues and survives but less than five percent (5%) of the combined voting power of the then-outstanding securities of BBNA immediately after such transaction are held, directly or indirectly, in the aggregate by the holders of securities entitled to vote generally in the election of directors of BBNA immediately prior to such transaction, as described in the Merger Agreement.

“Warrants” means those warrants of BBNA, the form of which is attached as Exhibit A, and that were issued to the holders referred in Schedule 2 of the Merger Agreement to purchase up to an aggregate of 10,000,000 shares of the Company’s common stock with a Class A of 2,000,000 warrants at a warrant exercise price of $0.50 per share; with a Class B of 2,000,000 warrants at a warrant exercise price of $0.50 per share; with a Class C of 2,000,000 warrants at a warrant exercise price of $0.75 per share; with a Class D of 2,000,000 warrants at a warrant exercise price of $1.00 per share; with a Class E of 2,000,000 warrants at a warrant exercise price of $1.25 per share.

2.              Principal Amount. The principal amount represented by this Note is Two Hundred and Ninety Thousand Dollars (US$290,000).

3.              Interest. The unpaid principal balance from time to time outstanding hereunder shall bear interest from the date of the Reverse Merger until paid in full at a fixed rate of eight percent (8%) per annum. Interest will accrue on this Note from the date of the Reverse Merger on the basis of a 360-day year consisting of twelve 30-day months.

 

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4.              Payment of Principal and Interest.

(a)           Payment. Subject to reduced payment as provided for in Section 9 of this Note, the Company shall pay to the Holder the principal amount of this Note, and all accrued and unpaid interest thereon, upon the earlier to occur of (i) the Maturity Date, or (ii) as set forth in Sections 4(b)(i), (ii), (iii), (iv) or (v), considered separately. Principal and interest due hereunder shall be paid in lawful money of the United States of America in immediately available federal funds or the equivalent at the address of the Holder set forth in Section 5 below or at such other address as the Holder may designate. All payments made hereunder shall first be applied to interest then due and payable and any excess payment shall then be applied to reduce the principal amount then due and payable. Upon payment in full of all principal and interest payable hereunder, the Holder shall surrender this Note to the Company for cancellation.

(b)           Amount and Timing of Payment. Subject to reduced payment as provided for in Section 9 of this Note, the Company shall pay principal under this Note on the following schedule:

	
  

	
(i)

	
$50,000 triggered by receipt by the Company of cash in connection with the exercise of Class A Warrants;

	
  

	
(ii)

	
$50,000 triggered by receipt by the Company of cash in connection with the exercise of Class B Warrants;

	
  

	
(iii)

	
$60,000 triggered by receipt by the Company of cash in connection with the exercise of Class C Warrants;

	
  

	
(iv)

	
$60,000 triggered by receipt by the Company of cash in connection with the exercise of Class D Warrants; and

	
  

	
(v)

	
$70,000 triggered by receipt by the Company of cash in connection with the exercise of Class E Warrants.

5.              Notices. All notices and other communications required or permitted hereunder to be given to a Party to this Note shall be in writing and shall be faxed, mailed by registered or certified mail postage prepaid, delivered by a national overnight delivery service, or otherwise delivered by hand, electronically (including by email) or by messenger, addressed to such Party’s address as set forth below:

	
If to the Company:

	
Ocean Thermal Energy Corporation

	  	
Attention: Jeremy Feakins, Chief Executive Officer

	  	
800 South Queen Street

	  	
Lancaster, PA 17603

	  	
Facsimile: (717) 299-1336

	  	
Email: jeremv.feakins@otecorporation.com

	  	  
	  	
With a copy (not constituting notice) to:

	  	  
	  	
Procopio, Cory, Hargreaves & Savitch, LLP

	  	
Attention: John P. Cleary, Esq.

	  	
12544 High Bluff Drive, Suite 300

	  	
San Diego, CA 92130

	  	
Email: john.cleary@procopio.com

 

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If to the Holder:

	
Theodore Herman

	  	
9909 Topanga Canyon Boulevard, Suite 122

	  	
Chatsworth, CA 91311

 

or such other address with respect to a Party as such Party shall notify each other Party in writing as above provided. Any notice sent in accordance with this Section 5 shall be effective upon the earlier of: (i) if mailed, seven (7) Business Days after mailing; (ii) if sent by messenger, upon delivery; (iii) if sent by a nationally recognized overnight delivery service, one Business Day after having been dispatched; (iv) if sent electronically (including by email), upon transmission and electronic confirmation of transmission or (if transmitted and received on a non-Business Day) on the first Business Day following transmission and electronic confirmation of transmission; and, (v) upon the actual receipt thereof.

6.              Default and Remedies.

(a)           An “Event of Default” under this Note shall mean the occurrence of any of the following events:

	
  

	
(i)

	
If the Company shall fail to make any payment when required by this Note; or

	
  

	
(ii)

	
The commencement by the Company of any bankruptcy, insolvency, receivership or similar proceedings under any federal or applicable state law; or the commencement against the Company of any bankruptcy, insolvency, receivership or similar proceeding under any federal or applicable state law by creditors of the Company or other similar law of any jurisdiction, provided, that such proceeding shall not be deemed an Event of Default if such proceeding is dismissed within ninety (90) days of commencement.

(b)           Upon and during the continuation of an Event of Default, the Holder may declare the outstanding principal amount, and all accrued and unpaid interest on such principal amount, immediately due and payable, and such amount shall be collectible immediately or at any time after such Event of Default. The rights and remedies provided by this Note shall be cumulative, and shall be in addition to, and not exclusive of, any other rights and remedies available at law or in equity.

7.              Assignability. Neither Party may assign this Note without prior notice to the other Party. No such assignment shall constitute a novation or release of either Party of their obligations hereunder.

8.              Usury Laws. It is the intention of the Company and the Holder to conform strictly to all applicable usury laws now or hereafter in force, arid any interest payable under this Note shall be subject to reduction to an amount that is the maximum legal amount allowed under the applicable usury laws as now or hereafter construed by the courts having jurisdiction over such matters. The aggregate of all interest (whether designated as interest, service charges, points or otherwise) contracted for, chargeable, or receivable under this Note shall under no circumstances exceed the maximum legal rate upon the principal amount remaining unpaid from time to time. If such interest does exceed the maximum legal rate, it shall be deemed a mistake and such excess shall be canceled automatically and, if theretofore paid, rebated to the Company or credited on the principal amount, or if this Note has been repaid, then such excess shall be rebated to the Company.

 

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9.              Offset. The Company shall be entitled to deduct from any amount of principal or interest that is or may become otherwise due under this Note any and all amounts due and owing from Theodore Herman pursuant to the Herman Obligations (as defined in the Merger Agreement).

10.            Miscellaneous.

(a)           Any amendment hereto or waiver of any provision hereof must be in writing and signed by both the Company and the Holder.

(b)           Wherever in this Note reference is made to the Company or the Holder, such reference shall be deemed to include, as applicable, a reference to their respective successors and permitted assigns, and the provisions of this Note shall be binding upon and shall inure to the benefit of such successors and permitted assigns.

(c)           This Note shall in all respects be governed by and construed in accordance with the laws of the State of Delaware without regard to conflict of laws principles of any jurisdiction to the contrary.

(d)           The captions of the Sections of this Note are inserted solely for ease of reference and shall not be considered in the interpretation or construction of this Note.

(e)           The Holder, by acceptance of this Note, hereby represents and warrants that (i) the Holder has been offered the opportunity to obtain information from the Company, to verify the accuracy of the information received by it and to evaluate the merits and risks of its investment in the Company, and to ask questions of and receive satisfactory answers concerning the terms and conditions of its investment in the Company, and (ii) the Holder has acquired this Note for investment only and not for resale or distribution. The Holder, by acceptance of this Note, further understands, covenants and agrees that the Company is under no obligation and has made no commitment to provide for registration of this Note.

(f)           The Company waives presentment, notice and demand, notice of protest, notice of demand and dishonor, and notice of nonpayment of this Note.

(g)           In the event that any provision of this Note is invalid or unenforceable under any applicable statute or rule of law, then such provision shalt be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Note. THE PARTIES HEREBY IRREVOCABLY WAIVE ANY RIGHT EITHER MAY HAVE, AND AGREE NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

(h)           No delay in the exercise of any right or remedy of any Party shall operate as a waiver thereof, and no single or partial exercise of any such right or remedy shall preclude other or future exercise thereof or the exercise of any other right or remedy.

(i)           It is expressly understood and agreed by the Parties hereto that if it is necessary to enforce payment of this Note through the engagement or efforts of an attorney or by suit, the Company shall pay reasonable attorneys’ fees, expenses of counsel, and other costs of collection incurred by the Holder.

 

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(j)           This Note may be executed in counterparts, each of which shall be deemed an original, but both of which shall constitute one and the same Note.

IN WITNESS WHEREOF, the Company has executed, acknowledged and delivered this Note as of the day and year first above written.

 

 

	 	
OCEAN THERMAL ENERGY CORPORATION

 

By: /s/ Jeremy P. Feakins

Name: Jeremy P. Feakins

Its: Chief Executive Officer

 

 

AGREED TO AND ACCEPTED BY:

By: /s/ Theodore Herman

Name: Theodore Herman

Exhibits

Exhibit A  Form of Warrants

5

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