Document:

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

 

This SECURITIES PURCHASE AGREEMENT (the
“Agreement”), dated as of February 16, 2018, by and between OCEAN THERMAL ENERGY CORPORATION, a Nevada corporation,
with headquarters located at 800 South Queen Street, Lancaster, PA 17603 (the “Company”), and L2 CAPITAL, LLC,
a Kansas limited liability company, with its address at 8900 State Line Rd., Suite 410, Leawood, KS 66206 (the “Buyer”).

 

WHEREAS:

 

A.              
The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration
afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “1933 Act”);

 

B.              
Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement
a 8% senior secured promissory note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal
amount of US$565,555.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect
thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, nil par value per
share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth
in such Note.

 

C.              
The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is
set forth immediately below its name on the signature pages hereto; and

 

NOW THEREFORE, the
Company and the Buyer severally (and not jointly) hereby agree as follows:

 

1.              
PURCHASE AND SALE OF NOTE.

 

a.     
Purchase of Note. On the Closing Date (as defined below), the Company shall issue and
sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below
the Buyer’s name on the signature pages hereto, subject to the express terms of the Note. The Company shall issue to Buyer
as a commitment fee, a warrant to purchase up to 242,222 shares of the Company’s common stock pursuant to the terms therein,
provided, however, that at the time of Buyer’s funding of each additional tranche under the Note, the warrant share amount
shall increase by the quotient of 50% of the face value of the respective tranche and 110% multiplied by the VWAP of the Common
Stock on the trading day immediately prior to the funding date of the respective tranche (all warrants issuable hereunder, including
now and in the future, shall be referred to, in the aggregate, as the “Warrant”)

 

b.    
Form of Payment. On the Closing Date, the Buyer shall pay the purchase price of $100,000.00
(the “Purchase Price”) for the first tranche of $121,111.00 under the Note, by wire transfer of immediately available
funds, in accordance with the Company’s written wiring instructions against delivery, of the Note, pursuant to the terms
of the Note. In the event that Buyer funds additional tranches under the Note, in Buyer’s sole discretion, then such additional
amounts shall be paid in accordance with the Company’s written wiring instructions as well.

 

c.     
Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto
set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the
“Closing Date”) shall be 5:00 P.M., Eastern Standard Time on or about February 16, 2018, or such other mutually agreed
upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing
Date at such location as may be agreed to by the parties.

 

2.              
REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and warrants to the
Company that:

 

a.     
Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the
shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional
shares of Common Stock, if any, as are issuable (i) on account of interest on the Note or (ii) as a result of the events
described in Sections 1.3 and 1.4(g) of the Note, such shares of Common Stock being collectively referred to herein as the “Conversion
Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards
the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act;
provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities
for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant
to a registration statement or an exemption under the 1933 Act.

 

 

 

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b.    
Reliance on Exemptions. The Buyer understands that the Securities are being offered
and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability
of such exemptions and the eligibility of the Buyer to acquire the Securities.

 

c.     
Information. The Buyer and its advisors, if any, have been, and for so long as the
Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors.
The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the
opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material
nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly
following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or
any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations
and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant
degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties
made herein.

 

d.    
Governmental Review. The Buyer understands that no United States federal or state agency
or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

 

e.     
Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities
has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not
be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the
Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and
scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred
may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the
Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor
rule) (“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities
are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have
delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary
for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities
made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable,
any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933
Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation
to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption
thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may
be pledged as collateral in connection with a bona fide margin account or other lending arrangement. 

 

f.     
Legends. The Buyer understands that the Note and, until such time as the Conversion
Shares have been registered under the 1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the
number of securities as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

 

“NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.”

 

 

 

 

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The legend set forth above
shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped,
if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction
as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company
with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect
that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted
by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by
a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any.
In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities
pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of
Default pursuant to Section 3.2 of the Note.

 

g.    
Authorization; Enforcement. This Agreement has been duly and validly authorized. This
Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement
of the Buyer enforceable in accordance with its terms.

 

3.              
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants
to the Buyer that:

 

a.     
Organization and Qualification. The Company and each of its Subsidiaries (as defined
below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which
it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry
on its business as and where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries
of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as
a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or
the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect
on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole,
or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries”
means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly,
any equity or other ownership interest.

 

b.    
Authorization; Enforcement. (i) The Company has all requisite corporate power and authority
to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue
the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by
the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance
of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof)
have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its
Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by
its authorized representative, and such authorized representative is the true and official representative with authority to sign
this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

c.     
Capitalization. Except as disclosed in the SEC Documents, no shares are reserved for
issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other
than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and sufficient shares are reserved
for issuance upon conversion of the Note (as required by the Note and transfer agent share reserve letter). All of such outstanding
shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares
of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company
or any liens or encumbrances imposed through the actions or failure to act of the Company. Except as disclosed in the SEC Documents,
as of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts,
calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries,
or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock
of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries
is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders)
that will be triggered by the issuance of the Note or the Conversion Shares. The Company has filed in its SEC Documents true and
correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company
shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of
the Company as of the Closing Date.

 

 

 

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d.    
Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance
and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable,
and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive
rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

 

e.     
Acknowledgment of Dilution. The Company understands and acknowledges the potentially
dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon conversion of the Note. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the
Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of
other shareholders of the Company.

 

f.     
No Conflicts. The execution, delivery and performance of this Agreement, the Note by
the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation,
the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any
provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument
to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations
to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property
or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither
the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents
and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time
or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries
has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which
any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not,
individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are
not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance
or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933
Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency, regulatory agency, self-regulatory organization or stock
market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Note
in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the
Conversion Shares upon conversion of the Note. All consents, authorizations, orders, filings and registrations which the Company
is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company
is not in violation of the listing requirements of the OTCBB, OTCQX, OTCQB, OTC Pink, the Nasdaq National Market (“Nasdaq”),
the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), the NYSE American,
or any equivalent replacement exchange or quotation system (as applicable at the time, the “Principal Trading Market”),
and does not reasonably anticipate that the Common Stock will be delisted by the Principal Trading Market in the foreseeable future.
The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. 

 

g.    
SEC Documents; Financial Statements. The Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated
by reference therein, being hereinafter referred to herein as the “SEC Documents”). The Company has delivered to the
Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective
dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations
of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None
of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except
for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates,
the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have
been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods
involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in
the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the
Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred
in the ordinary course of business, and (ii) obligations under contracts and commitments incurred in the ordinary course of business
and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually
or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to
the reporting requirements of the 1934 Act. For the avoidance of doubt, filing of the documents required in this Section 3(g) via
the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) shall satisfy all delivery requirements
of this Section 3(g).

 

 

 

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h.    
Absence of Certain Changes. There have been no material adverse change and no material
adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects
or 1934 Act reporting status of the Company or any of its Subsidiaries.

 

i.      
Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or
directors in their capacity as such, that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary
description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of
its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware
of any facts or circumstances which might give rise to any of the foregoing.

 

j.      
Patents, Copyrights, etc. The Company and each of its Subsidiaries owns or possesses
the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary
to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); Except as disclosed
in the SEC Documents, there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s
knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary
to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best
of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes
do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances
which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of their Intellectual Property.

 

k.    
No Materially Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries
is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers has or
is expected to have a Material Adverse Effect.

 

l.      
Tax Status. The Company and each of its Subsidiaries has made or filed all federal,
state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject
(unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate
for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that
are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in
good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be
due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company
has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal,
state or local tax. None of the Company’s tax returns is presently being audited by any taxing authority.

 

m.  
Certain Transactions. Except for arm’s length transactions pursuant to which
the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the
Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule
3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or
any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer,
director, trustee or partner.

 

n.    
Disclosure. All information relating to or concerning the Company or any of its Subsidiaries
set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary
in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading.
No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business,
properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure
or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s
reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the
1933 Act).

 

 

 

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o.    
Acknowledgment Regarding Buyer’ Purchase of Securities. The Company acknowledges
and agrees that the Buyer is acting solely in the capacity of arm’s length purchasers with respect to this Agreement and
the transactions contemplated hereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement
made by the Buyer or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company further
represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives.

 

p.    
No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy
any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer.
The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past,
current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.

 

q.    
No Brokers. Except with respect to Craft Capital Management, LLC, a register broker-dealer,
the Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated hereby. 

 

r.     
Permits; Compliance. The Company and each of its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and
orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively,
the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension
or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default
or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries
has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices
relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse
Effect.

 

s.     
Environmental Matters.

 

(i)                  
There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries
or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material
into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give
rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has
received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened
in connection with any of the foregoing. The term “Environmental Laws” means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases
or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.

 

(ii)                
Other than those that are or were stored, used or disposed of in compliance with applicable
law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any of
its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the
Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries,
except in the normal course of the Company’s or any of its Subsidiaries’ business.

 

(iii)              
There are no underground storage tanks on or under any real property owned, leased or used
by the Company or any of its Subsidiaries that are not in compliance with applicable law.

 

 

 

    	 	6	 

     

    

 

t.      
Title to Property. Except as disclosed in the SEC Documents the Company and its Subsidiaries
have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned
by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances
and defects or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company
and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material
Adverse Effect.

 

u.    
Internal Accounting Controls. Except as disclosed in the SEC Documents the Company
and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company’s
board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general
or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

v.    
Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any
director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act
of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

 

w.   
Solvency. The Company (after giving effect to the transactions contemplated by this
Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities
on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably
conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to,
nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection
therewith as such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its most recent
fiscal year end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any
basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year. For the avoidance of doubt
any disclosure of the Borrower’s ability to continue as a “going concern” shall not, by itself, be a violation
of this Section 3(w).

 

x.    
No Investment Company. The Company is not, and upon the issuance and sale of the Securities
as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment
Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.

 

y.    
Insurance. Upon written request the Company will provide to the Buyer true and correct
copies of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and
commercial general liability coverage, if any.

 

z.     
Breach of Representations and Warranties by the Company. If the Company breaches any
of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer
pursuant to this Agreement, it will be considered an Event of Default under Section 3.4 of the Note.

 

4.              
COVENANTS.

 

a.     
Best Efforts. The parties shall use their commercially reasonable best efforts to satisfy
timely each of the conditions described in Section 6 and 7 of this Agreement. 

 

b.    
Use of Proceeds. The Company shall use the proceeds from the sale of the Note for working
capital and other general corporate purposes and shall not, directly or indirectly, use such proceeds for any loan to or investment
in any other corporation, partnership, enterprise or other person (except in connection with its currently existing direct or indirect
Subsidiaries). 

 

 

 

    	 	7	 

     

    

 

c.     
Financial Information. The Company agrees to send or make available the following reports
to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing
with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K;
(ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and
(iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other
information the Company makes available or gives to such shareholders. For the avoidance of doubt, filing the documents required
in (i) above via EDGAR or releasing any documents set forth in (ii) above via a recognized wire service shall satisfy the delivery
requirements of this Section 4(f).

 

d.    
Listing. The Company shall promptly secure the listing of the Conversion Shares upon
each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject
to official notice of issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares
of Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note.
The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock
on the Principal Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable.
The Company shall promptly provide to the Buyer copies of any material notices it receives from the Principal Trading Market and
any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common
Stock for listing on such exchanges and quotation systems.

 

e.     
Corporate Existence. So long as the Buyer beneficially owns any Note, the Company shall
maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event
of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor
entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered
into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the Principal
Trading Market

 

f.     
No Integration. The Company shall not make any offers or sales of any security (other
than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under
the 1933 Act or cause the offering of the Securities to be integrated with any other offering of securities by the Company for
the purpose of any stockholder approval provision applicable to the Company or its securities.

 

g.    
Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note,
the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting
requirements of the 1934 Act.

 

h.    
Trading Activities. Neither the Buyer nor its affiliates has an open short position
(or other hedging or similar transactions) in the common stock of the Company and the Buyer agree that it shall not, and that it
will cause its affiliates not to, engage in any short sales of or hedging transactions with respect to the common stock of the
Company. 

i.      
Breach of Covenants. If the Company breaches any of the covenants set forth in this
Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an event
of default under Section 3.3 of the Note.

 

5.              
Transfer Agent Instructions. Prior to registration of the Conversion Shares under the
1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of
Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified
in Section 2(g) of this Agreement.  The Company warrants that: (i) no stop transfer instructions to give effect to Section
2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date
on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a
particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities
shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement
and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in
transferring (or issuing) (electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer
upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not
fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing)
any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion
Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement. 
Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to
comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.  If the Buyer provides
the Company, at the cost of the Buyer, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable
transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act
and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant
to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent
to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. 
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating
the intent and purpose of the transactions contemplated hereby.  Accordingly, the Company acknowledges that the remedy at
law for a breach of its obligations under this Section may be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without
any bond or other security being required.

 

 

 

    	 	8	 

     

    

 

6.              
CONDITIONS PRECEDENT TO THE COMPANY’S OBLIGATIONS TO SELL. The obligation of
the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing
Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may
be waived by the Company at any time in its sole discretion:

 

a.     
The Buyer shall have executed this Agreement and delivered the same to the Company.

 

b.    
The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

 

c.     
The representations and warranties of the Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties
that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Closing Date. 

 

d.    
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.

 

7.              
CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATION TO PURCHASE. The obligation of
the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer
at any time in its sole discretion:

 

a.     
The Company shall have executed this Agreement and delivered the same to the Buyer.

 

b.    
The Company shall have delivered to the Buyer duly executed Note (in such denominations as
the Buyer shall request) in accordance with Section 1(b) above.

 

c.     
The representations and warranties of the Company shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties
that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or
prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer
of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested
by the Buyer including, but not limited to certificates with respect to the Company’s Certificate of Incorporation, By-laws
and Board of Directors’ resolutions relating to the transactions contemplated hereby.

 

d.    
No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.

 

e.     
No event shall have occurred which could reasonably be expected to have a Material Adverse
Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the
Company to be timely in its 1934 Act reporting obligations.

 

f.     
The Conversion Shares shall have been authorized for quotation on the Principal Trading Market
or any similar quotation system and trading in the Common Stock on the Principal Trading Market or any similar quotation system
shall not have been suspended by the SEC, the Principal Trading Market, or any similar quotation system.

 

g.    
The Buyer shall have received an officer’s certificate described in Section 3(c) above,
dated as of the Closing Date.

 

 

 

    	 	9	 

     

    

 

8.              
GOVERNING LAW; MISCELLANEOUS.

 

a.     
Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Kansas without regard to principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be brought only in the state or federal courts of Johnson
County, Kansas. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The
Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid
or unenforceable under any applicable statute or rule of law, then such provision shall 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 any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

b.    
Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall
become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed
by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature
of the party so delivering this Agreement.

 

c.     
Headings. The headings of this Agreement are for convenience of reference only and
shall not form part of, or affect the interpretation of, this Agreement.

 

d.    
Severability. In the event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall 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 provision hereof which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

 

e.     
Entire Agreement; Amendments. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically
set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed
by the majority in interest of the Buyer.

 

f.     
Notices. All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier
service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently by written notice. Any notice or other communication required
or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following
the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be: 

 

If to the Company,
to:

 

OCEAN THERMAL ENERGY CORPORATION

800 South Queen Street

Lancaster, PA 17603

E-mail: info@otecorporation.com

 

 

 

    	 	10	 

     

    

 

If to the Holder,
to:

 

L2 CAPITAL, LLC

8900 State Line
Rd., Suite 410

Leawood, KS 66206

E-mail: investments@ltwocapital.com

 

Each party shall provide
notice to the other party of any change in address.

 

g.    
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f),
the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to
any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.

 

h.    
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

i.      
Survival. The representations and warranties of the Company and the agreements and
covenants set forth in this Agreement shall survive the closing hereunder. The Company agrees to indemnify and hold harmless the
Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach
by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and
obligations under this Agreement, including advancement of expenses as they are incurred.

 

j.      
Further Assurances. Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

 

k.    
No Strict Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any
party.

 

l.      
Remedies.

 

(i)             
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach
by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

(ii)           
In addition to any other remedy provided herein or in any document executed in connection
herewith, Borrower shall pay Holder for all costs, fees and expenses in connection with any litigation, contest, dispute, suit
or any other action to enforce any rights of Holder against Borrower in connection herewith, including, but not limited to, costs
and expenses and attorneys' fees, and costs and time charges of counsel to Holder.  In furtherance of the foregoing, Borrower
shall pay an amount equal to $25,000 to the Holder immediately upon the Holder’s filing of any litigation, contest, dispute,
suit or any other action to enforce any rights of Holder against Borrower in connection herewith, which such amount shall be used
to pay Holder’s attorneys’ fees, cost and expenses.  Additional amounts shall be paid by Borrower to Holder immediately
upon Borrower’s receipt of invoices from Holder’s attorney evidencing the charges and fees assessed in connection with
any such litigation, contest, dispute, suit or any other action to enforce any rights of Holder and, upon receiving such invoices
which indicate outstanding fees in excess of $20,000 at any time, Borrower shall promptly pay an additional $25,000 to Holder to
be used in satisfaction of additional attorneys’ fees, and costs and time charges of counsel to Holder.  Such payments
shall continue indefinitely until said litigation, contest, dispute, suit or any other action to enforce any rights of Holder against
Borrower is settled to the satisfaction of the Holder.  Further, Borrower agrees to save and hold Holder harmless from and
against any and all liabilities with respect to or resulting from any delay in paying or omission to pay such costs and expenses. 

 

m.  
Publicity. The Company, and the Buyer shall have the right to review a reasonable period
of time before issuance of any press releases, SEC, Principal Trading Market, or FINRA filings, or any other public statements
with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without
the prior approval of the Buyer, to make any press release or SEC, Principal Trading Market, or FINRA filings with respect to such
transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection
with any such press release prior to its release and shall be provided with a copy thereof).

 

 

 

 

 

[ - signature page follows - ]

 

 

 

 

 

 

    	 	11	 

     

    

 

IN WITNESS WHEREOF, the
undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

 

 

OCEAN THERMAL ENERGY CORPORATION

 

 

By: /s/ Jeremy Feakins

Name: Jeremy Feakins

Title: Chief Executive Officer

 

 

L2 CAPITAL, LLC

 

 

By: /s/ Adam Long

Name: Adam Long

Title: Managing Partner

 

 

 

AGGREGATE SUBSCRIPTION AMOUNT:

 

	Aggregate Principal Amount of Note:	US$565,555.00
	 	 
	Aggregate Purchase Price:	US$500,000.00*

 

 

 

*$100,000.00 of the Purchase Price with respect
to the first tranche of $121,111.00 under the Note shall be paid within a reasonable amount of time after the full execution of
the Note and transactional documents related to this Note.

 

 

 

 

 

    	 	12Exhibit 10.2

 

NEITHER THE ISSUANCE NOR SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION
IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.

 

	Principal Amount: $565,555.00	Issue Date: February 16, 2018

 

SENIOR SECURED PROMISSORY NOTE

 

FOR VALUE RECEIVED,
OCEAN THERMAL ENERGY CORPORATION, a Nevada corporation (hereinafter called the “Borrower”), hereby promises
to pay to the order of L2 CAPITAL, LLC, a Kansas limited liability company, or registered assigns (the “Holder”)
the principal sum of up to $565,555.00 (the “Principal Amount”), together with interest at the rate of eight percent
(8%) per annum (with the understanding that the initial six months of such interest of each tranche funded shall be guaranteed),
at maturity or upon acceleration or otherwise, as set forth herein (the “Note”). The consideration to the Borrower
for this Note is up to $500,000.00 (the “Consideration”) in United States currency, due to the prorated original issuance
discount of up to $55,555.00 (the “OID”) and a $10,000.00 credit for Holder’s transactional expenses. The Holder
shall pay $100,000.00 of the Consideration (the “First Tranche”) within a reasonable amount of time of the full execution
of the transactional documents related to this Note. At the closing of the First Tranche, the outstanding principal amount under
this Note shall be $121,111.00, consisting of the First Tranche plus the prorated portion of the OID (as defined herein) and a
$10,000.00 credit for the Holder’s transactional expenses. The Holder may pay, in its sole discretion, such additional amounts
of the Consideration and at such dates as the Holder may choose in its sole discretion. The maturity date for each tranche funded
shall be six (6) months from the effective date of each payment (the “Maturity Date”), and is the date upon which the
principal sum, as well as any accrued and unpaid interest and other fees for each tranche, shall be due and payable. This Note
may not be repaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this
Note, which is not paid by the Maturity Date, shall bear interest at the rate of the lesser of (i) eighteen percent (18%) per annum
or (ii) the maximum amount allowed by law, from the due date thereof until the same is paid (“Default Interest”). Interest
shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual
number of days elapsed. All payments due hereunder (to the extent not converted into the Borrower’s common stock (the “Common
Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments
shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the
provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business
day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment
date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account
for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day”
shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized
or required by law or executive order to remain closed.

 

This Note is free from
all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

 

This Note shall be a
senior secured obligation of the Borrower, with priority over all existing and future Indebtedness (as defined below) of the Borrower
as provided for herein. The obligations of the Borrower under this Note are secured pursuant to the terms of the security agreement
of even date (the “Security Agreement) by and among the Borrower, its Subsidiaries, and the Secured Parties (as defined therein),
and such security interest includes but is not limited to all of the assets of the Borrower and its Subsidiaries. So long as the
Borrower shall have any obligation under this Note, the Borrower shall not (directly or indirectly through any Subsidiary or affiliate)
incur or suffer to exist or guarantee any Indebtedness that is senior to or pari passu with (in priority of payment and performance)
the Borrower’s obligations hereunder. The term “Borrower” means the Borrower and any Subsidiary of the Borrower.
As used herein, the term “Indebtedness” means (a) all indebtedness of the Borrower for borrowed money or for the deferred
purchase price of property or services, including any type of letters of credit, but not including deferred purchase price obligations
in place as of the Issue Date and as disclosed in the SEC Documents or obligations to trade creditors incurred in the ordinary
course of business, (b) all obligations of the Borrower evidenced by notes, bonds, debentures or other similar instruments, (c)
purchase money indebtedness hereafter incurred by the Borrower to finance the purchase of fixed or capital assets, including all
capital lease obligations of the Borrower which do not exceed the purchase price of the assets funded, (d) all guarantee obligations
of the Borrower in respect of obligations of the kind referred to in clauses (a) through (c) above that the Borrower would not
be permitted to incur or enter into, and (e) all obligations of the kind referred to in clauses (a) through (d) above that the
Borrower is not permitted to incur or enter into that are secured and/or unsecured by (or for which the holder of such obligation
has an existing right, contingent or otherwise, to be secured and/or unsecured by) any lien or encumbrance on property (including
accounts and contract rights) owned by the Borrower, whether or not the Borrower has assumed or become liable for the payment of
such obligation

 

 

 

    	 	1	 

     

    

 

The following additional terms shall also apply
to this Note:

 

ARTICLE I. [Intentionally Omitted].

 

ARTICLE II. CERTAIN COVENANTS

 

2.1          Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not
without the Holder’s written consent

(a)  pay, declare or
set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital
stock other than dividends on shares of Common Stock solely in the form of additional shares of Common Stock or (b) directly or
indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions
pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.

 

2.2           Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall
not without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property
or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower
or any warrants, rights or options to purchase or acquire any such shares.

 

2.3           Repayment from Proceeds. While any portion of this Note is outstanding, if the Borrower receives cash proceeds from any
source or series of related or unrelated sources, including but not limited to, from payments from customers, the issuance of equity
or debt, the conversion of outstanding warrants of the Borrower, the issuance of securities pursuant to an equity line of credit
of the Borrower or the sale of assets, the Borrower shall, within one (1) business day of Borrower’s receipt of such proceeds,
inform the Holder of such receipt, following which the Holder shall have the right in its sole discretion to require the Borrower
to immediately apply up to 75% of such proceeds to repay all or any portion of the outstanding amounts owed under this Note. Failure
of the Borrower to comply with this provision shall constitute an Event of Default. In the event that such proceeds are received
by the Holder prior to the Maturity Date, the required prepayment shall be subject to the terms of Section 4.9 herein.

 

ARTICLE III. EVENTS OF DEFAULT

 

The occurrence of each of the following events
of default (shall each be an “Event of Default”), with no right to notice or cue the right to cure except as specifically:

 

3.1           Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this
Note, whether at maturity, upon acceleration or otherwise.

 

3.2           Conversion and the Shares. The Borrower fails to reserve a sufficient amount of shares of common stock as required under
the terms of this Note (including Section 1.3 of this Note), fails to issue shares of Common Stock to the Holder (or announces
or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of
the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically
or in certificated form) shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and
when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer
agent in transferring (or issuing) (electronically or in certificated form) shares of Common Stock to be issued to the Holder upon
conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer
agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw
any stop transfer instructions in respect thereof) on any shares of Common Stock issued to the Holder upon conversion of or otherwise
pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not
intend to honor the obligations described in this paragraph) and any such failure shall continue uncured (or any written announcement,
statement or threat not to honor its obligations shall not be rescinded in writing) for two (2) business days after the Holder
shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer
agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance
owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s
transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within five (5)
business days, either in cash or as an addition to the balance of the Note, and such choice of payment method is at the discretion
of the Borrower.

 

 

 

    	 	2	 

     

    

 

3.3           Breach of Covenants. The Borrower breaches any material covenant or other material term or condition contained in this Note
and any collateral documents and such breach continues for a period of three (3) days after written notice thereof to the Borrower
from the Holder or after five (5) days after the Borrower should have been aware of the breach.

 

3.4           Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement,
statement or certificate given in writing pursuant hereto or in connection herewith, shall be false or misleading in any material
respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of
the Holder with respect to this Note.

 

3.5           
Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors,
or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business,
or such a receiver or trustee shall otherwise be appointed.

 

3.6            Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary
of the Borrower or any of its property or other assets for more than $100,000, and shall remain unvacated, unbonded or unstayed
for a period of ten (10) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

 

3.7            Bankruptcy. Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary,
for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any
subsidiary of the Borrower.

 

3.8           
Delisting of Common Stock. The Borrower shall fail to maintain the listing or quotation of the Common Stock on the OTCQB
or an equivalent replacement exchange, the Nasdaq Global Market, the Nasdaq Capital Market, the New York Stock Exchange, or the
NYSE American.

 

3.9           Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange
Act (including but not limited to becoming delinquent in its filings), and/or the Borrower shall cease to be subject to the reporting
requirements of the Exchange Act.

 

3.10         Liquidation. Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

 

3.11         Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to
pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a
“going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

 

 

3.12         Financial Statement Restatement. The Borrower replaces its auditor, or any restatement of any financial statements filed
by the Borrower with the Securities and Exchange Commission (the “SEC”).
for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the
result of such restatement would, by comparison to the unrestated financial statement, have constituted an adverse effect on the
Borrower or the rights of the Holder with respect to this Note.

 

3.13        Reverse Splits. The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice
to the Holder.

 

3.14         Replacement of Transfer Agent. In the event that the Borrower replaces its transfer agent, and the Borrower fails to provide
prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions (including but not limited
to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to
Borrower and the Borrower that reserves the greater of (i) total amount of shares previously held in reserve for the Note with
the Borrower’s immediately preceding transfer agent and (ii)
the Reserved Amount.

 

 

 

    	 	3	 

     

    

 

3.15         Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents,
a breach or default by the Borrower of any covenant or other term or condition contained in any other financial instrument, including
but not limited to all convertible promissory notes, currently issued, or hereafter issued, by the Borrower, to the Holder or any
3rd party (the “Other Agreements”), shall, at the option of the Holder, be considered a default under this
Note, in which event the Holder shall be entitled to apply all rights and remedies of the Holder under the terms of this Note by
reason of a default under said Other Agreement or hereunder.

 

3.16         Inside Information. Any attempt by the Borrower or its officers, directors, and/or affiliates to transmit, convey, disclose,
or any actual transmittal, conveyance, or disclosure by the Borrower or its officers, directors, and/or affiliates of, material
non-public information concerning the Borrower, to the Holder or its successors and assigns, which is not immediately cured by
Borrower’s filing of a Form 8-K pursuant to Regulation FD on that same date.

 

3.17         No bid. At any time while this Note is outstanding, the lowest Trading Price on the OTCQB or other applicable principal
trading market for the Common Stock is equal to or less than $0.0001.

 

3.18         Prohibition on Debt and Variable Securities.  So long as the Note is outstanding, the Borrower shall not, without written
consent of the Investor, issue any Variable Security (as defined herein), unless (i) the Borrower is permitted to pay off the Note
in cash at the time of the issuance of the respective Variable Security and (ii) the Borrower pays off the Note, pursuant to the
terms of the Note, in cash at the time of the issuance of the respective Variable Security. A Variable Security shall mean any
security issued by the Borrower that (i) has or may have conversion rights of any kind, contingent, conditional or otherwise in
which the number of shares that may be issued pursuant to such conversion right varies with the market price of the common stock;
(ii) is or may become convertible into common stock (including without limitation convertible debt, warrants or convertible preferred
stock), with a conversion or exercise price that varies with the market price of the common stock, even if such security only becomes
convertible or exercisable following an event of default, the passage of time, or another trigger event or condition; or (iii)
was issued or may be issued in the future in exchange for or in connection with any contract, security, or instrument, whether
convertible or not, where the number of shares of common stock issued or to be issued is based upon or related in any way to the
market price of the common stock, including, but not limited to, common stock issued in connection with a Section 3(a)(9) exchange,
a Section 3(a)(10) settlement, or any other similar settlement or exchange, provided, however, that a Variable Security shall not
include a security with conversion rights subject to a floor price per share of 50% or greater than the closing price of the Common
Stock on the issuance date of the security (such floor price shall not be subject to further lower adjustment for any reason).

 

3.19        Failure to Repay Upon Qualified Offering. The Borrower fails to repay the Note, in its entirety, pursuant to the terms of
the Note, with funds received from its next completed offering of $1,000,000.00 or more (consummated on or after the Issue Date).

 

UPON THE OCCURRENCE OF
ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO
THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED
BY (Z) TWO (2). Upon the occurrence of any Event of Default specified in Sections 3.1, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10,
3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.17, 3.18 and/or 3.19, the Note shall become immediately due and payable and the Borrower
shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to 140% (plus an additional 5% per
each additional Event of Default that occurs hereunder) multiplied by the then outstanding entire balance of the Note (including
principal and accrued and unpaid interest) plus Default Interest, if any, plus any amounts owed to the Holder pursuant
to Sections 1.4(g) hereof (collectively, in the aggregate of all of the above, the “Default Amount”), and all other
amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby
are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder
shall be entitled to exercise all other rights and remedies available at law or in equity. Each time an Event of Default occurs
while this Note is outstanding, an additional discount of five percent (5%) shall be factored into the Conversion Price (as defined
in this Note).

 

 

 

    	 	4	 

     

    

 

The Holder shall have
the right at any time to convert all or any part of the Note into fully paid and non-assessable shares of Common Stock of the Borrower
at the Conversion Price, which is equal to $0.50 per share (the “Fixed Conversion Price”), provided, however, that
at any time on or after the occurrence of any Event of Default under the Note, the Conversion Price shall mean the lesser of the
(i) Fixed Conversion Price and (ii) 65% multiplied by the lowest VWAP of the common stock during the twenty (20) Trading Day (as
defined herein) period ending, in Holder’s sole discretion on each conversion, on either (i) the last complete Trading Day
prior to the conversion date (each a “Conversion Date”) or (ii) the Conversion Date (subject to adjustment as provided
in this Note). In no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of this Note
upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the
Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or
exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion
of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership
by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause
(1) of such proviso. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the principal
securities exchange or other securities market on which the Common Stock is then being traded. All expenses incurred by Holder
for the issuance and clearing of the Common Stock into which this Note is convertible into shall immediately and automatically
be added to the balance of the Note at such time as the expenses are incurred by Holder. If, at any time when the Note is issued
and outstanding, the Borrower issues or sells, or is deemed to have issued or sold, any shares of Common Stock for a consideration
per share less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock
(a “Dilutive Issuance”), then the Holder shall have the right, in Holder’s sole discretion on each conversion
after such Dilutive Issuance, to utilize the price per share of the Dilutive Issuance as the Conversion Price for such conversion.
The Borrower is required at all times to have authorized and reserved three times the number of shares that is actually issuable
upon full conversion of the Note (based on the Conversion Price of the Note as if an Event of Default under the Note has occurred,
even if an Event of Default has not occurred) (the “Reserved Amount”). Upon receipt by the Borrower from the Holder
of a facsimile transmission or e-mail (or other reasonable means of communication) of a notice of conversion in the form attached
hereto as Exhibit A (the “Notice of Conversion”), the Borrower shall issue and deliver or cause to be issued and delivered
to or upon the order of the Holder the Common Stock issuable upon such conversion within two (2) business days after such receipt
(the “Deadline”). Without in any way limiting the Holder’s right to pursue other remedies, including actual damages
and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered
by the Deadline, the Borrower shall pay to the Holder $3,000 per day in cash, for each day beyond the Deadline that the Borrower
fails to deliver such Common Stock. Until such time as the shares of Common Stock issuable upon conversion of this Note have been
registered under the Act or otherwise may be sold pursuant to Rule 144 or other available exemption, the Common Stock issuable
upon conversion of this Note shall bear a restrictive legend in form, substance, and scope customary for such legends.

 

 

ARTICLE IV. MISCELLANEOUS

 

4.1           Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.

 

 

 

    	 	5	 

     

    

 

4.2           Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall
be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or
certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or
(iv) transmitted by hand delivery, telegram, facsimile, or electronic mail addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery, upon electronic mail delivery, or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered
on a business day during normal business hours where such notice is to be received), or the first business day following such delivery
(if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If to the Borrower, to:

OCEAN THERMAL ENERGY CORPORATION

800 South Queen Street

Lancaster, PA 17603

e-mail: info@otecorporation.com

 

If to the Holder:

 

L2 CAPITAL, LLC

8900 State Line Rd., Suite 410 Leawood, KS 66206

e-mail: investments@ltwocapital.com

 

4.3          Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and
the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument
as originally executed, or if later amended or supplemented, then as so amended or supplemented.

 

4.4          Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit
of the Holder and its successors and assigns. Neither the Borrower nor the Holder shall assign this Note or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the foregoing, the Holder may assign its rights hereunder
to any “accredited investor” (as defined in Rule 501(a) of the 1933 Act) in a private transaction from the Holder or
to any of its “affiliates”, as that term is defined under the 1934 Act, without the consent of the Borrower. Notwithstanding
anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bona fide margin account or
other lending arrangement. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that following conversion
of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the
amount stated on the face hereof.

 

4.5           Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection,
including reasonable attorneys’ fees.

 

4.6           Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of Kansas without regard
to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Note shall be brought only in the state and/or federal courts of Johnson County, Kansas. The parties to this Note hereby
irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. In the
event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall 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 any agreement. Each party hereby irrevocably
waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this
Note or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to it under this Note and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.

 

 

 

    	 	6	 

     

    

 

4.7           Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal
amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such
interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note
may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and
is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale
of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant
to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to
the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of
Common Stock.

 

4.8            Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that
the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened
breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

4.9           Repayment. Notwithstanding anything to the contrary contained in this Note, the Borrower may repay any amount outstanding
under this Note, during the 30 calendar day period after the Issue Date, by making a payment to the Holder of an amount in cash
equal to 105% multiplied the amount that the Borrower is repaying. Notwithstanding anything to the contrary contained in this Note,
the Borrower may repay any amount outstanding under this Note, during the 31st through 60th calendar day period after the Issue
Date, by making a payment to the Holder of an amount in cash equal to 110% multiplied the amount that the Borrower is repaying.
Notwithstanding anything to the contrary contained in this Note, the Borrower may repay any amount outstanding under this Note,
during the 61st through 90th calendar day period after the Issue Date, by making a payment to the Holder of an amount in cash equal
to 115% multiplied the amount that the Borrower is repaying. Notwithstanding anything to the contrary contained in this Note, the
Borrower may repay any amount outstanding under this Note, after the 91st calendar day after the Issue Date, by making a payment
to the Holder of an amount in cash equal to 125% multiplied the amount that the Borrower is repaying. In order to repay this Note,
the Borrower shall provide notice to the Holder ten (10) business days prior to such respective repayment date, and the Holder
must receive such repayment within twelve (12) business days of the Holder’s
receipt of the respective repayment notice, but not sooner than ten (10) business days from the date of notice (the “Repayment
Period”). The Holder may convert the Note in whole or in
part at any time during the Repayment Period, subject to the terms and conditions of this Note. Any repayment hereunder shall be
applied to the tranches funded under this Note in reverse chronological order (applied first to the most recently funded tranches
under this Note).

 

4.10         Section 3(a)(10) Transactions. If at any time while this Note is outstanding, the Borrower enters into a transaction structured
in accordance with, based upon, or related or pursuant to, in whole or in part, Section 3(a)(10) of the Securities Act (a “3(a)(10)
Transaction”), then a liquidated damages charge of 100% of the outstanding principal balance of this Note at that time, will
be assessed and will become immediately due and payable to the Holder, either in the form of cash payment, an addition to the balance
of the Note, or a combination of both forms of payment, as determined by the Holder.

 

4.11         Reverse
Split Penalty. If at any time while this Note is outstanding, the Borrower effectuates a reverse split with respect to the
Common Stock, then a liquidated damages charge of 30% of the outstanding principal balance of this Note at that time, will be
assessed and will become immediately due and payable to the Holder, either in the form of cash payment, an addition to the balance
of the Note, or a combination of both forms of payment, as determined by the Holder.

 

4.12         Restriction on Section 3(a)(9) and Section 3(a)(10) Transactions. So long as this Note is outstanding, the Borrower shall
not enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or
in part, either Section 3(a)(9) of the Securities Act (a “3(a)(9) Transaction”) or Section 3(a)(l0) of the Securities
Act (a “3(a)(10) Transaction”), without prior written consent of the Holder. In the event that the Borrower does enter
into, or makes any issuance of Common Stock related to a 3(a)(9) Transaction while this Note is outstanding, a liquidated damages
charge of 25% of the outstanding principal balance of this Note, but not less than $15,000, will be assessed and will become immediately
due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note. Each time, while
this Note is outstanding, the Borrower enters into a Section 3(a)(9) Transaction (including but not limited to the issuance of
new promissory notes or of a replacement promissory note), or Section 3(a)(10) Transaction, in which any 3rd party has the right
to convert monies owed to that 3rd party (or receive shares pursuant to a settlement or otherwise) at a discount to market greater
than the Conversion Price in effect at that time (prior to all other applicable adjustments in the Note), then the Conversion Price
shall be adjusted at the option of the Holder to such greater discount percentage (prior to all applicable adjustments in this
Note) until this Note is no longer outstanding. Each time, while this Note is outstanding, the Borrower enters into a Section 3(a)(9)
Transaction (including but not limited to the issuance of new promissory notes or of a replacement promissory note), or Section
3(a)(10) Transaction, in which any 3rd party has a look back period greater than the look back period in effect under the Note
at that time, then the Holder’s look back period shall be adjusted at the option of the Holder to such greater number of
days until this Note is no longer outstanding. The Borrower shall give written notice to the Holder, with the adjusted Conversion
Price and/or adjusted look back period (each adjustment that is applicable due to the triggering event), within one (1) business
day of an event that requires any adjustment described in the two immediately preceding sentences, and the Holder shall have the
sole discretion in determining whether to utilize the adjusted term pursuant to this section. So long as this Note is outstanding,
if any security of the Borrower contains any term more favorable to the holder of such security or with a term in favor of the
holder of such security that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of
such additional or more favorable term and such term, at Holder’s option, shall become a part of the transaction documents
with the Holder.  

 

 

 

    	 	7	 

     

    

 

4.13         Terms of Future Financings.  So long as this Note is outstanding, upon any issuance by the Borrower or any of its subsidiaries
of any security with any term more favorable to the holder of such security or with a term in favor of the holder of such security
that was not similarly provided to the Holder in this Note, then the Borrower shall notify the Holder of such additional or more
favorable term and such term, at Holder’s option, shall become a part of the transaction documents with the Holder.  The
types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited
to, terms addressing conversion discounts, prepayment rate, conversion look back periods, interest rates, original issue discounts,
stock sale price, private placement price per share, and warrant coverage.

 

4.14        Usury. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law
governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest
permitted under applicable law. The Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time
insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or
other law which would prohibit or forgive the Borrower from paying all or any portion of the principal of or interest on this Note
as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance
of this Note, and the Borrower (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such
law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted
to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

4.15         Right of First Refusal. If at any time after the Issue Date and until the Note is satisfied in full, the Borrower has a
bona fide offer of capital or financing from any 3rd party, that the Borrower intends to act upon, then the Borrower must first
offer such opportunity to the Holder to provide such capital or financing to the Borrower on the same or similar terms as each
respective 3rd party’s terms, and the Holder may in its sole discretion determine whether the Holder will provide all or
a portion of such capital or financing. Except as otherwise provided in this Note, should the Holder be unwilling or unable to
provide such capital or financing to the Borrower within 10 trading days from Holder’s receipt of written notice of the offer
(the “Offer Notice”) from the Borrower, then the Borrower may obtain such capital or financing from that respective
3rd party upon the exact same terms and conditions offered by the Borrower to the Holder, which transaction must be
completed within 15 days after the date of the Offer Notice. Borrower shall, within two (2) business days of the respective closing,
utilize 50% of all proceeds received by Borrower by each respective 3rd party that provides capital or financing to
the Borrower, to repay this Note. If the Borrower does not receive the capital or financing from the respective 3rd
party within 15 days after the date of the respective Offer Notice, then the Borrower must again offer the capital or financing
opportunity to the Holder as described above, and the process detailed above shall be repeated. The Offer Notice must be sent via
electronic mail to investments@ltwocapital.com.

 

4.16         Piggyback Registration Rights. The Borrower shall include on the next registration statement the Borrower files with SEC
(and on each subsequent registration statement thereafter) all shares issuable upon exercise of the Warrant (as defined in the
securities purchase agreement entered into between the Borrower and Holder on the Issue Date). Failure to do so will result in
liquidated damages of 25% of the outstanding principal balance of this Note, but not less than Fifteen Thousand and No/100 United
States Dollars ($15,000), being immediately due and payable to the Holder at its election in the form of cash payment or addition
to the balance of this Note.

 

 

 

 

[signature page to follow]

 

 

 

    	 	8	 

     

    

IN WITNESS WHEREOF, Borrower has caused this
Note to be signed in its name by its duly authorized officer this February 16, 2018.

 

OCEAN THERMAL ENERGY CORPORATION

 

By: /s/ Jeremy Feakins

Name: Jeremy Feakins

Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

    	 	9	 

     

    

 

 

EXHIBIT A -- NOTICE OF CONVERSION

 

The undersigned hereby
elects to convert $_________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued
pursuant to the conversion of the Note (“Common Stock”) as set forth below, of OCEAN THERMAL ENERGY CORPORATION, a
Nevada corporation (the “Borrower”) according to the conditions of the senior secured promissory note of the Borrower
dated as of February 16, 2018 (the “Note”), as of the date written below. No fee will be charged to the Holder for
any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

	☐		The Borrower shall electronically transmit the Common Stock issuable pursuant to this
Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit Withdrawal Agent Commission
system (“DWAC Transfer”).

 

Name of DTC Prime Broker: Account Number:

 

	☐		The undersigned hereby requests that the Borrower issue a certificate or certificates
for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto)
in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:

 

L2 CAPITAL, LLC

8900 State Line Rd., Suite 410 Leawood, KS 66206

e-mail: investments@ltwocapital.com

 

	Date of Conversion:	 
	Applicable Conversion Price:	$_____ Number of Shares of Common Stock to be Issued
	Pursuant to Conversion of the Notes:	_____  Amount of Principal Balance Due remaining
	Under the Note after this conversion:	_____

 

L2 CAPITAL, LLC

 

By:______________________
Name: __________________ Title:_________________ Date: _________________

 

 

 

    	 	10

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