Ocean Thermal Energy Corp. (CPWR)

[Ocean Power]

01/10/19 ... Equity Purchase Agreement and Registration Rights Agreement with L2 Capital, LLC

Subject to the terms and conditions of the Equity Purchase Agreement, we have the right to “put,” or sell, up to $15,000,000 worth of shares of our common stock to L2 Capital. Unless terminated earlier, L2 Capital’s purchase commitment will automatically terminate on the earlier of the date on which L2 Capital has purchased shares for an aggregate purchase price of $15,000,000 or December 11, 2020. We have no obligation to sell any shares under the Equity Purchase Agreement. This arrangement is also sometimes referred to herein as the “Equity Line.”

As provided in the Equity Purchase Agreement, we may require L2 Capital to purchase shares of common stock from time to time by delivering a put notice to L2 Capital specifying the total number of shares to be purchased (such number of shares multiplied by the purchase price described below, the “Investment Amount”); provided there must be a minimum of 10 trading days between delivery of each put notice. We may determine the Investment Amount, provided that such amount may not be more than 300% of the average daily trading volume in dollar amount for our common stock during the five trading days preceding the date on which we deliver the applicable put notice. Additionally, the amount may not be lower than $10,000 or higher than $1,000,000. L2 Capital will have no obligation to purchase shares under the Equity Line to the extent that such purchase would cause L2 Capital to own more than 4.99% of our common stock.

For each share of the our common stock purchased under the Equity Line, L2 Capital will pay a purchase price equal to 85% of the “Market Price,” which is defined as the lowest closing traded price on the OTCQB Marketplace, as reported by Bloomberg Finance L.P., during the five consecutive trading days including and immediately prior to the settlement date of the sale, which in most circumstances will be the trading day immediately following the Put Date or the date that a put notice is delivered to L2 Capital. On the settlement date, L2 Capital will purchase the applicable number of shares subject to customary closing conditions, including a requirement that a registration statement remain effective registering the resale by L2 Capital of the shares to be issued under the Equity Line as contemplated by the Registration Rights Agreement described below. The Equity Purchase Agreement is not transferable and any benefits attached thereto may not be assigned.

The Equity Purchase Agreement contains covenants, representations, and warranties of us and L2 Capital that are typical for transactions of this type. In addition, we and L2 Capital have granted each other customary indemnification rights in connection with the Equity Purchase Agreement. The Equity Purchase Agreement may be terminated by us at any time.

In connection with the Equity Purchase Agreement, we also entered into Registration Rights Agreement with L2 Capital requiring us to prepare and file a registration statement registering the resale by L2 Capital of shares to be issued under the Equity Line, to use commercially reasonable efforts to cause a registration statement to become effective, and to keep such registration statement effective until: (i) three months after the last closing of a sale of shares under the Equity Line; (ii) the date when L2 Capital may sell all the shares under Rule 144 without volume limitations; or (iii) the date L2 Capital no longer owns any of the shares. In accordance with the Registration Rights Agreement, we filed the registration statement, of which this prospectus is a part, registering the resale by L2 Capital of up to 52,631,578 shares that may be issued and sold to L2 Capital under the Equity Line. The registration statement was declared effective on January 29, 2018.

The 52,631,578 shares being offered pursuant to this prospectus by L2 Capital will represent approximately 47% of our shares of common stock issued and outstanding held by nonaffiliates as of the date of this prospectus assuming the offering is fully subscribed.

The foregoing description of the terms of the Equity Purchase Agreement and Registration Rights Agreement 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 and 10.2 to our Current Report on Form 8-K dated December 21, 2017, and incorporated into this prospectus by reference. The benefits and representations and warranties set forth in these agreements and instruments are not intended to, and do not, constitute continuing representations and warranties by us or any other party to persons not a party thereto.

We intend periodically to sell our common stock to L2 Capital under the Equity Purchase Agreement and L2 Capital may, in turn, sell such shares to investors in the market at the market price or at negotiated prices. This may cause our stock price to decline, which will require us to issue increasing numbers of common shares to L2 Capital to raise the intended amount of funds as our stock price declines.

Likelihood of Accessing the Full Amount of the Equity Line

Notwithstanding that the Equity Line is $15,000,000, we anticipate that the actual likelihood that we will be able access the full amount of the Equity Line is low due to several factors ... https://ih.advfn.com/stock-market/USOTC/ocean-thermal-energy-corp-CPWR/stock-news/79031737/post-effective-amendment-to-registration-statement