LOAN AGREEMENT
 
 This Loan Agreement (the “Loan Agreement”) is made as of December 22, 2014, by
and between Mart Inn, Inc. (a New York Corporation) (the “Lender”) and Ocean
Thermal Energy Corporation (the “Borrower”).
 
W I T N E S S E T H:
 
 WHEREAS, the Borrower desires to obtain certain credit facilities, as set forth
in this Loan Agreement, and the Lender is willing to provide such credit
facilities on the terms and conditions set forth herein;
 
 NOW, THEREFORE, the Lender and the Borrower, intending to be legally bound,
hereby agree as follows:
 
1.           The Credit Facilities. The Lender agrees, pursuant to the terms and
conditions of this Loan Agreement and the other Loan Documents (as defined
below), to make a loan to the Borrower in a principal amount of Two Hundred
Thousand Dollars ($200,000.00) (the “Loan”). The Loan shall be evidenced by a
Note (the “Note”) and shall be made in accordance with and subject to the terms
and conditions of this Loan Agreement, the Note, and the other Loan Documents.
 
2.           The Loan Documents. The following documents and materials (together
with this Loan Agreement and any other accessory documents executed in
connection herewith, such documents and materials, as they may be amended,
restated, renewed and extended, are collectively referred to herein as the “Loan
Documents”) have been or will be executed in connection with the Loan:
 
a.           Note;
 
b.           Warrants, of even date herewith, granting to Lender, as additional
consideration for making the Loan to the Borrower, the right to purchase up to
200,000 shares of Ocean Thermal Energy Corp. common stock at a price of $1.00
per share.
 
3.           Interest Rate. The Loan shall bear interest as set forth in the
Note.
 
4.           Repayment. Repayment of the Loan shall be made as set forth in the
Note, and pre-payment shall be permitted as therein specified.
 
5.           Use of Proceeds. The proceeds of the Loan shall be used to support
the development and construction costs for the Borrower’s Baha Mar Resort
Seawater Air-conditioning project and general overhead expenses including costs
associated with the Borrower’s public listing.
 
6.           Expenses and Fees. The Borrower and Lender agree that each shall
bear its own expenses and fees related to this transaction.
 
7.           Representations and Warranties. The Borrower, in order to induce
the Lender to make the Loan, make the following representations, warranties, and
promises:
 
a.           Good Standing. The Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, with powers adequate to own its properties, and to carry on its
business as presently conducted by it.
 
 
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b.           Authority; Binding Agreement. The execution, delivery, and
performance of the Loan Documents are within the corporate power of the
Borrower, have been duly authorized by the Borrower, and are not in
contravention of law or the terms of the Borrower’s Certificate of Incorporation
and By-Laws. The execution, delivery and performance of the Loan Documents does
not and will not contravene any documents, agreements or undertakings to which
the Borrower is a party or by which it is bound. No approval of any person,
corporation, governmental body or other entity is a prerequisite to the
execution, delivery, validity or enforceability and performance of the Loan
Documents. When executed by the Borrower, the Loan Documents to which the
Borrower is a party will constitute the legally binding obligations of the
Borrower, enforceable in accordance with their terms except as the
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors’ rights generally.
 
c.           Financial Information. Subject to any limitation stated therein or
in connection therewith, all balance sheets, earning statements, accounts
receivable lists and aging schedules and other financial data which have been or
shall be furnished to the Lender by the Borrower to induce the Lender to enter
into this Loan Agreement or otherwise in connection herewith, do or will fairly
represent the financial condition of the Borrower in all material respects, are
accurate, complete and correct in all material respects insofar as completeness
may be necessary to give the Lender a true and accurate knowledge of the subject
matter as of the date hereof. There are no material liabilities, direct or
indirect, fixed or contingent, of the Borrower as of the date of such financial
statements which are not reflected therein or in the notes thereto. There has
been no material adverse change in the financial condition or operations of the
Borrower since the date of said financial statements or since the respective
dates on which either furnished the Lender with other financial data or other
representations about their financial condition.
 
d.           Solvency. Any borrowings to be made by Borrower under this Loan
Agreement do not and will not render Borrower insolvent. The Borrower is
contemplating neither the filing of a petition under any state or federal
bankruptcy or insolvency laws, nor the liquidation of all or a major portion of
its property, and the Borrower has no knowledge or any reason to know of any
person contemplating the filing of any such petition against it.
 
8.           Covenants. The Borrower agrees with the Lender that during the term
of this Agreement and the other Loan Documents, and any extensions, replacements
or renewals thereof (except as otherwise agreed by the Lender in writing):
 
a.           Insurance. The Borrower shall maintain adequate insurance policies
as are customary.
 
b.           Notice of Default; Litigation. The Borrower shall notify the Lender
in writing immediately upon becoming aware of any default hereunder, or of any
actions, suits, investigations, or proceedings at law, in equity or before any
governmental authority that may have a material adverse effect on the Borrower,
pending or threatened, against or affecting the Borrower or involving the
validity or enforceability of the Loan Documents.
 
c.           Financial Information. The Borrower shall furnish, upon request, to
the Lender on an annual basis, federal income tax returns of the Borrower and
annual financial statements of the Borrower, compiled by certified public
accountants, within one hundred twenty (120) days after the end of each fiscal
year; and (ii) on a fiscal quarter basis, internally-prepared interim financial
statements of the Borrower in a form satisfactory to Lender within thirty (30)
days of the close of each fiscal quarter.
 
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d.           Expenses. Each Party shall pay its own costs and expenses
(including, but not limited to, attorneys’ fees) incidental to the Loan, to the
preservation the Lender’s interests under the Loan Documents and to the
collection of all obligations pursuant to the Loan Documents.
 
e.           Further Assurances. Each Party shall execute such documents as the
as the other Party may reasonably request relating to the Loan.
 
9.           Conditions Precedent. The obligation of the Lender to make the Loan
is subject to the reasonable satisfaction by the Lender of the following
conditions precedent:
 
a.           The Borrower’s representations and warranties as contained herein
shall be accurate and complete as of the date of closing;
 
b.           The Borrower shall not be in default under any of the covenants
contained herein as of the date of closing;
 
c.           The Borrower shall have executed and delivered all of the Loan
Documents to which it is a party;
 
d.           The Borrower shall have delivered to the Lender all of the
documents (fully executed) and materials and satisfied all of the requirements
reasonably requested by Lender to evidence the obligations of Borrower with
respect to the Loan in such form and substance as may be reasonably acceptable
to the Lender; and
 
e.           The Borrower shall provide the Lender with written confirmation
that there are no known disputes or pending actions between the Borrower and the
Internal Revenue Service.
 
10.           Events of Default; Acceleration; Remedies. The occurrence of any
one or more of the following events shall constitute a default (an “Event of
Default”) under this Agreement:
 
a.           If any statement, representation or warranty made by the Borrower
in the Loan Documents, in connection therewith or any financial statement,
report, schedule, or certificate furnished to the Lender by the Borrower, any of
its representatives, employees or accountants during the term of this Agreement
shall prove to have been false or misleading when made, or subsequently becomes
false or misleading, in any material respect;
 
b.           Default by the Borrower in payment within five (5) days of the due
date of any principal or interest or other amounts called for under the Loan
Documents;
 
c.           Default by the Borrower in the performance or observance of any of
its obligations under the provisions, terms, conditions, warranties or covenants
of the Loan Documents and such failure shall continue for a period of thirty
(30) days or more following receipt of written notice thereof from the Lender.
 
d.           The occurrence of an event of default not cured within any
applicable remedy period, under any obligations of the Borrower to the Lender
other than under the Loan Documents, whether created prior to, concurrent with,
or subsequent to obligations arising out of the Loan Documents;
 
 
Loan Agreement
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e.           The Borrowers shall (i) apply for or consent to the appointment of
a receiver, trustee or liquidator of any of their or its property, (ii) admit in
writing their or its inability to pay their or its debts as they mature, (iii)
make a general assignment for the benefit of creditors, (iv) be adjudicated a
bankrupt or insolvent, (v) file a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization to take advantage of any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law or statute, or an answer admitting the material
allegations of a petition filed against it or he in any proceeding under any
such law or (vi) offer or enter into any compromise, extension or arrangement
seeking relief or extension of their or its debts;
 
f.           In the event that proceedings shall be commenced or an order,
judgment or decree shall be entered against the Borrower, without the
application, approval or consent of the Borrower (as the case may be) in or by
any court of competent jurisdiction, relating to the bankruptcy, dissolution,
liquidation, reorganization or the appointment of a receiver, trustee or
liquidator of the Borrower of all or a substantial part of their or its assets,
and such proceedings, order, judgment or decree shall continue undischarged or
unstayed for a period of 90 days.
 
Upon the occurrence of any Event of Default, (i) all of the obligations of the
Borrower to the Lender under this Loan Agreement will immediately become due and
payable without further demand, notice or protest, all of which are hereby
expressly waived; (ii) the Lender may proceed to protect and enforce its rights,
at law, in equity, or otherwise, against the Borrower under the Uniform
Commercial Code, any other applicable law, any Loan Document, any agreement
between the Borrower and the Lender; and/or (iii) the Lender’s commitment to
make further loans under this Agreement or any other agreement with the Borrower
will immediately cease and terminate.
 
11.           General Provisions. The Lender and the Borrower agree as follows
with respect to the Loan Documents:
 
a.           Waivers.
 
i.           The Borrower hereby waives, to the fullest extent permitted by law,
presentment, notice, protest and all other demands and notices of any
description and assent (1) to any extension of the time of payment or any other
indulgence, and (2) to the release of any other person primarily or secondarily
liable for the obligations evidenced hereby.
 
ii.           No delay or omission on the part of the Lender in exercising any
right, privilege, or remedy hereunder shall operate as a waiver of such right,
privilege, or remedy or of any other right, privilege, or remedy under the Loan
Documents. No waiver of any right, privilege or remedy or any amendment to the
Loan Documents shall be effective unless made in writing and signed by the
Lender. A waiver on any one occasion shall not be construed as a bar to or
waiver of any such right, privilege and/or remedy on any future occasion. No
single or partial exercise of any power hereunder shall preclude other or future
exercise thereof or the exercise of any other right. The acceptance by the
Lender of any payment after any default under the Loan Documents shall not
operate to extend the time of payment of any amount then remaining unpaid
hereunder or constitute a waiver of any rights of the Lender hereof under the
Loan Documents.
 
b.           Binding Agreement. The Loan Documents shall inure to the benefit of
and shall be binding upon the parties hereto and their respective heirs, legal
representatives, successors, and assigns;
 
Loan Agreement
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c.           Entire Agreement and Amendment. The Loan Documents constitute the
entire agreement between the Lender and the Borrower with respect to the Loan
and shall not be changed in any respect except by written instrument signed by
the parties thereto;
 
d.           Governing Law. The Loan Documents and all rights and obligations
thereunder, including matters of construction, validity, and performance, shall
be governed by the laws of the Commonwealth of Pennsylvania;
 
e.           Severability. If any term, condition, or provision of the Loan
Documents or the application thereof to any person or circumstance shall, to any
extent, be held invalid or unenforceable according to law, then the remaining
terms, conditions, and provisions of the Loan Documents, or the application of
any such invalid or unenforceable term, condition or provision to persons or
circumstances other than those to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, condition, and provision of the
Loan Documents shall be valid and enforced to the fullest extent permitted by
law;
 
f.           Notice. Any demand or notice required or permitted under the Loan
Documents shall be effective if either: (i) hand-delivered to the addressee, or
(ii) deposited in the mail, registered or certified, return receipt requested
and postage prepaid, or delivered to a private express company addressed to the
addressee: (A) at the address shown below, or (B) if such party has provided the
other in writing with a change of address, at the last address so provided. Any
notice or demand mailed as provided in this paragraph shall be deemed given and
received on the earlier of: (i) the date received; (ii) or the date of delivery,
refusal, or non-delivery as indicated on the return receipt, if sent by mail or
private express as provided above.
 
Borrower:
Lender:
Ocean Thermal Energy Corporation
Mart Inn, Inc.
800 South Queen Street
c/o LaDelfa, Schoder & Walker PC
Lancaster, PA 17603
112 Main Street
 
PO Box 100
 
Mount Morris, NY 14510
With a copy to:
 
Gerald Koenig
 
1629 K Street, NW
 
Suite 300
 
Washington, DC 20006
 
 
 

 
g.           Conflict Among Loan Documents. In the event of any conflict between
the terms, covenants, conditions and restrictions contained in the Loan
Documents, the term, covenant and condition or restriction which grants the
greater benefit upon the Lender shall control. The determination as to which
term, covenant, condition, or restriction is the more beneficial shall be made
by the Lender in its sole discretion.
 
h.           Costs of Collection. The Borrower agrees to pay on demand all
reasonable out-of-pocket costs of collection under the Loan Documents, including
reasonable attorneys’ fees, whether or not any foreclosure or other action is
instituted by the Lender in its discretion.
 
i.           Rights Cumulative. All rights and remedies of the Lender, whether
granted herein or otherwise, shall be cumulative and may be exercised singularly
or concurrently.
 
[SIGNATURE PAGE FOLLOWS]
 
 
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 IN WITNESS WHEREOF, the Borrowers and the Lender have executed this Loan
Agreement as of the date indicated above.
 
OCEAN THERMAL ENERGY CORPORATION
 
By: /s/ Jeremy P. Feakins
Name: Jeremy P. Feakins
Title: Group Executive Chairman
 
 
MART INN, INC.
 
By: /s/ Martin Estruch
Name: Martin Estruch
Title: President
 
 
Loan Agreement
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PROMISSORY NOTE
 
$200,000.00
December 22, 2014

 
 
FOR VALUE RECEIVED, Ocean Thermal Energy Corporation, a Delaware corporation
with an address of 800 South Queen Street, Lancaster, PA 17603 (the “Borrower”),
hereby promises to pay to the order of Mart Inn, Inc. (the “Lender”), at c/o
LaDelfa, Schoder & Walker PC, 112 Main Street, PO Box 100, Mount Morris, NY
14510, or at any other place designated to the Borrower by the Lender in
writing, the principal sum of Two Hundred Thousand Dollars ($200,000.00), with
interest as herein specified, and under the terms and conditions stated herein.
 
1.           Repayment of Principal and Interest. Principal and interest shall
be repaid by Borrower to Lender as follows: The Borrower shall repay the
principal amount of $200,000.00 on the earlier of (i) March 31, 2015, or (ii)
the completion by the Company of equity financing resulting in the Company’s
receipt of gross proceeds of at least $2,000,000, or (iii) the Financial Closing
of the Baha Mar Project and release of funds by Deutsche Bank; (the “Maturity
Date”), the Borrower shall pay to the Lender the unpaid principal balance of the
Loan, all accrued and unpaid interest thereon, and all other costs and amounts
payable to the Lender hereunder.
 
All amounts payable hereunder are payable in lawful money of the United States
of America at the address of the Lender set forth above in immediately available
funds. Prior to a Default, all payments shall be applied first on account of
other charges, second to accrued interest due on the unpaid balance of principal
and finally the remainder of such payments shall be applied to unpaid principal.
If a Default occurs, payments and monies received may be applied in any manner
and order deemed appropriate by the Lender.
 
2.           Rates and Calculation of Interest. Interest on the outstanding and
unpaid principal balance of the Loan shall be calculated for the actual number
of days in the then current calendar year that principal is outstanding, based
upon a year of three hundred sixty (360) days, accrue and shall be paid at the
fixed rate of interest per annum equal to twelve percent (12%).
 
In no event shall the rate of interest hereunder be in excess of the maximum
amount permitted by law. In the event the rate of interest hereunder is
determined to be in excess of the maximum amount permitted by law, such interest
rate shall be automatically decreased to the maximum rate permitted by law.
 
In addition to all other rights contained in this Note, if a Default (defined
herein) occurs and as long as a Default continues, all outstanding sums
hereunder shall bear interest at the interest rate otherwise prevailing under
the preceding paragraph, plus 10% (the “Default Rate”). The Default Rate shall
also apply from acceleration until all unpaid sums and obligations (whether
matured or contingent) hereunder and any judgments thereon are paid in full.
 
3.           Prepayment. This Note may be prepaid in whole or in part at any
time at the option of the Borrower without premium or penalty. Each prepayment
shall be applied first to the payment in full of other charges payable
hereunder, then to accrued interest and the remainder of such payment, if any,
shall be applied to the reduction of the unpaid principal balance.
 
Promissory Agreement
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4.           Loan Agreement. This Note is the Note referred to in the agreements
between the Borrower and the Lender, including, but not limited to the Loan
Agreement of even date herewith (the “Loan Agreement”) and the Loan Documents
referenced therein (the “Loan Documents”). The failure of the Borrower to
execute any such agreement or other document shall not affect the validity of
this Note. This Note shall evidence all obligations of the Borrower to the
Lender under the Loan Agreement and Loan Documents.
 
5.           Integration. The terms and conditions of this Note, together with
the terms and conditions of the Loan Agreement and the Loan Documents, contains
the entire understanding between the Borrower and the Lender with respect to the
indebtedness evidenced hereby. Such understanding may not be amended, modified,
or terminated except in writing duly executed by the parties hereto.
 
6.           Security. This Note is unsecured.
 
7.           Default and Remedies. The occurrence of any default or event of
default (“Default”), as defined in the Loan Agreement and/or the Loan Documents,
shall constitute a Default of and under this Note.
 
When a Default occurs, the Lender, at its option, may declare the entire unpaid
balance of principal of this Note, unpaid interest thereon and all other
charges, costs and expenses provided for herein, in the Loan Agreement and/or
any of the Loan Documents, and/or pursuant to any other agreements between
Borrower and Lender, immediately due and payable without notice to or demand
upon the Borrower. Upon the occurrence of a Default, the Lender shall have all
of the rights and remedies with respect the Loan Agreement, the Loan Documents,
this Note, and/or otherwise provided for by law, in equity, and otherwise.
 
8.           Waiver. The undersigned hereby waives presentment for payment,
demand, notice of nonpayment, notice of protest, and protest of this Note, and
all of the notices in connection with delivery, acceptance, performance,
default, or enforcement of the payment of this Note. The failure by the Lender
to exercise any right or remedy shall not be taken to waive the exercise of the
same thereafter for the same or any subsequent Default. The Borrower waives any
claim of set-off, recoupment and/or counterclaim. All notices to the Borrower
shall be adequately given if mailed postage prepaid to the address appearing in
the Lender’s records. The Borrower intends this Note to be a sealed instrument
and to be legally bound hereby.
 
9.           Holder. The references to “Lender” herein shall be deemed to be
references to any subsequent assignee, transferee, or other holder of this Note.
 
10.           Governing Law. This Note shall be construed in accordance with the
domestic internal laws of the Commonwealth of Pennsylvania, without reference to
any conflict of laws provisions, as a Note made, delivered and to be wholly
performed within the Commonwealth of Pennsylvania.
 
Promissory Agreement
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11.           Judicial Proceedings. Any suit, action, or proceeding, whether
claim or counterclaim, brought or instituted by the Borrower or the Lender, or
any of their successors or assigns, on or with respect to this Note or the
dealings of the Borrower or the Lender with respect hereto, shall be tried only
by a court and not by a jury. THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION, OR
PROCEEDING. In connection therewith, the Borrower agrees that any suit, action,
or proceeding arising hereunder or with respect hereto will be instituted in the
Court of Common Pleas of York County, Pennsylvania, or the United States
District Court for the Middle District of Pennsylvania, and irrevocably and
unconditionally submits to the jurisdiction of each such Court for such purpose.
Further, the Borrower waives any right it may have to claim or recover, in any
such suit, action or proceeding, any special, exemplary, punitive, or
consequential damages or any damages other than, or in addition to, actual
damages. THE BORROWER ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC
AND MATERIAL ASPECT OF THIS NOTE AND THAT THE LENDER WOULD NOT EXTEND CREDIT IF
THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS NOTE.
 
12.           Confession of Judgment. Upon Default, the Borrower hereby
irrevocably authorizes the Prothonotary or any attorney of any court of record
in Pennsylvania or elsewhere to appear for and confess judgment against the
Borrower for any and all amounts unpaid hereunder, together with any other
charges, costs and expenses for which Borrower is liable under this Note, and
together with fees of counsel in the reasonable amount of five percent (5%) of
all of the foregoing (but in no event less than $5,000.00) and costs of suit,
releasing all errors and waiving all rights of appeal. If a copy of this Note,
verified by affidavit, shall have been filed in such proceeding, it shall not be
necessary to file the original as a warrant of attorney. The Borrower hereby
waives the right to any stay of execution and the benefit of all exemption laws
now or hereafter in effect. No single exercise of this warrant and power to
confess judgment shall be deemed to exhaust this power, whether or not any such
exercise shall be held by any court to be invalid, voidable or void, but this
power shall continue undiminished and may be exercised from time to time as
often as the Lender shall elect until all sums due hereunder shall have been
paid in full. Interest shall continue to accrue after entry of judgment
hereunder, by confession, default, or otherwise, at the higher of the prevailing
rate of interest under this Note, or the judgment rate of interest under
applicable law. All waivers granted in this paragraph are given to the extent
permitted by the Pennsylvania Rules of Civil Procedure.
 
13.           NOTICE: THIS NOTE CONTAINS, AT PARAGRAPH 12, A WARRANT OF ATTORNEY
TO CONFESS JUDGMENT AGAINST THE BORROWER. IN GRANTING THIS WARRANT OF ATTORNEY
TO CONFESS JUDGMENT AGAINST THE BORROWER, THE BORROWER HEREBY KNOWINGLY,
INTENTIONALLY, AND VOLUNTARILY, AND ON THE ADVICE OF SEPARATE COUNSEL OF THE
BORROWER, UNCONDITIONALLY WAIVES ANY AND ALL RIGHTS THE BORROWER HAS OR MAY HAVE
TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE
CONSTITUTIONS AND LAWS OF THE UNITED STATES, THE COMMONWEALTH OF PENNSYLVANIA,
OR OF ANY OTHER STATE.
 
BORROWER:
 
OCEAN THERMAL ENERGY CORPORATION
 
By: /s/ Jeremy P. Feakins
Name: Jeremy P. Feakins
Title: Group Executive Chairman
 
 
Promissory Agreement
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WARRANT
to Purchase up to 200,000 Shares of the
Common Stock, $0.0001 Par Value Per Share,
of
OCEAN THERMAL ENERGY CORPORATION
 
 
This is to certify that, for value received, Mart Inn, Inc. (“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, a Delaware corporation (“OTEC”), at any
time on or after the date hereof, an aggregate of up to 200,000 fully paid and
non-assessable shares of common stock, $0.0001 par value (the “Common Stock”),
of OTEC at a price per share equal to $1.00, 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 up to four years hereafter. This Warrant shall be
exercised by presentation and surrender hereof to OTEC at the principal office
of OTEC, accompanied by (i) a written notice of exercise, (ii) payment to OTEC,
for the account of OTEC, 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, OTEC shall issue promptly (and within one
business day if reasonably requested by the Holder) to the Holder or its
assignee, transferee or designee the number of shares of Common Stock to which
the Holder is entitled hereunder. OTEC 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.
 
If this Warrant is exercised in part only, OTEC shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the shares of Common
Stock issuable hereunder. Upon receipt by OTEC of this Warrant, in proper form
for exercise, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of OTEC may then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. OTEC shall pay all expenses, and any and all United States federal,
state and local taxes and other charges, that may be payable in connection with
the preparation, issuance and delivery of stock certificates pursuant to this
Paragraph 1 in the name of the Holder or its assignee, transferee or designee.
 
2.           Reservation of Shares; Preservation of Rights of Holder.
 
OTEC shall at all times while this Warrant is outstanding and unexercised,
maintain and reserve, free from preemptive rights, such number of authorized but
unissued shares of Common Stock as may be necessary so that this Warrant may be
exercised without any additional authorization of Common Stock after giving
effect to all other options, warrants, convertible securities and other rights
to acquire shares of Common Stock at the time outstanding. OTEC further agrees
that (i) it will not, by charter amendment or through reorganization,
consolidation, merger, dissolution or sale of assets, or by any other voluntary
act or omission, avoid or seek to avoid the observance or performance of any of
the covenants, stipulations or conditions to be observed or performed hereunder,
and (ii) it will promptly take all action reasonably necessary to protect the
rights of the Holder against dilution as provided herein.
 
Warrant
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3.           Fractional Shares. OTEC 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 OTEC 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 OTEC 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, OTEC 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.
 
(1)           Stock Dividends. In case OTEC shall pay or make a dividend or
other distribution on any class of capital stock of OTEC 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.
 
 
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(4)           Optional Adjustments. OTEC 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 federal
income 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 Paragraph 5(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)           Certain Sales of Common Stock.
 
(1)           Adjustment to Shares Issuable. If and whenever OTEC sells or
otherwise issues (other than under circumstances in which Paragraph 5(A)
applies) any shares of 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, the denominator of which shall be the number
shares of Common Stock outstanding at the close of business on the day
immediately preceding the date of such sale or issuance and the numerator of
which shall be the sum of such number of shares and the total number of shares
constituting such sale or other issuance, such increase to become effective
immediately after the opening of business on the day following such sale or
issuance.
 
(2)           Adjustment to Exercise Price. If and whenever OTEC sells or
otherwise issues any shares of Common Stock (excluding any stock dividend or
other issuance not for consideration to which Paragraph 5(A) applies or shares
of Common Stock issued or issuable in connection with awards granted under the
OTEC Stock Option Plans) for a consideration per share which is less than the
Exercise Price at the time of such sale or other issuance, then in each such
case the Exercise Price shall be forthwith changed (but only if a reduction
would result) to the price (calculated to the nearest cent) determined by
dividing: (i) an amount equal to the sum of (aa) the number of shares of Common
Stock outstanding immediately prior to such issue or sale, multiplied by the
then effective Exercise Price, plus (bb) the total consideration, if any,
received and deemed received by OTEC upon such issue or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such issue or
sale.
 
(C)           Definition. For purposes of this Paragraph 5, the term “Common
Stock” shall include (1) any shares of OTEC 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 OTEC and which is not subject to redemption by OTEC, 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 Paragraph 5(A) or 5(B) 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(A)(1) or 5(B)(1)
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, OTEC shall
promptly compute such adjustment and mail to the Holder a certificate, signed by
the principal financial officer of OTEC, 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 OTEC’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 OTEC.
 
8.           Termination. This Warrant and the rights conferred hereby shall
terminate four years hereafter.
 
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, except to the extent that Delaware
law may govern certain aspects of this Warrant as it relates to OTEC.
 
Dated: December 22, 2014
 
OCEAN THERMAL ENERGY CORPORATION
 
By: /s/ Jeremy P. Feakins
Name: Jeremy P. Feakins
Title: Group Executive Chairman
 
 
 
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