Document:

Exhibit 10.3

 

SECURITY AGREEMENT

 

THIS
SECURITY AGREEMENT (this "Agreement"), is entered into as of
February 16, 2018, by and between Ocean Thermal Energy Corporation, a Nevada corporation (the "Borrower"), and
L2 Capital, LLC, a Kansas limited liability company (the "Secured Party" or "Secured Parties").
All capitalized terms not otherwise defined herein shall the meanings ascribed to them in that certain Securities Purchase Agreement
and Note (as defined below) by and between Borrower and the Secured Party of even date (the "Note Purchase Agreement").

 

RECITALS

 

WHEREAS,
the Secured Parties have loaned monies to Borrower,
as more particularly described in the Note Purchase Agreement and as evidenced by the 8% Senior Secured Promissory Note in the
principal amount of $565,555.00 issued by Borrower to the Secured Party (the "Note");

 

WHEREAS,
the term "Secured Party" as used in this Agreement shall mean, collectively, all holders of the Note, including those
persons who become holders of Note subsequent to the date hereof; and

 

WHEREAS,
this Agreement is being executed and delivered by Borrower to secure the Note.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the parties
hereto hereby agrees as follows:

 

1.      Obligations
Secured. This Agreement secures, in part, the prompt payment and performance of all obligations of Borrower under the
Note, and all renewals, extensions, modifications, amendments, and/or supplements thereto (collectively, the
"Secured Obligations").

 

2.     

Grant of Security.

 

a.     Collateral. Borrower hereby grants, pledges, and assigns for the benefit of the Secured Parties, and there is hereby created
in favor of each of the Secured Parties, a security interest in and to all of Borrower’s (inclusive of all of borrower’s
subsidiaries) right, title, and interest in, to, and under all of the collateral set forth on Exhibit A hereto (collectively,
"Collateral").

 

b.    
Effective Date. This grant of security shall be effective as of the date hereof.

 

c.     Subordination. The Note and the Secured Obligations shall not be subordinated, or junior in interest, to any other obligations
of Borrower.

 

d.     Filings to Perfect Security. The Company will (and is hereby authorized to) file with any filing office such financing statements,
amendments, addenda, continuations, terminations, assignments and other records (whether or not executed by Borrower) to perfect
and to maintain perfected security interests in the Collateral by the Secured Parties, whereby (a) promptly upon the execution
of this Agreement, a Financing Statement on Form UCC-1 (the "Financing Statement'') shall be filed on behalf of the
Secured Parties with respect to the Collateral; The Financing Statement shall designate each of the Secured Parties as a Secured
Party and Borrower as the debtor, shall identify the security
interest in the Collateral, and contain any other items required by law. 

 

 

 

 

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The
Financing Statement shall contain a description of collateral consistent with the description
set forth herein and shall not describe the collateral as "all
assets" or "all personal property."

 

3.    
Transfers and Other Liens. Except as set forth herein or in the Note, Borrower shall not, without the prior written consent
of all of the Secured Parties, at their sole and absolute discretion:

 

a.     Sell, transfer, assign, or dispose of (by operation of law or otherwise), any of the Collateral outside of the ordinary course
of business;

 

b.     Create or suffer to exist any lien, security interest,
or other charge or encumbrance upon or with respect to any of the Collateral, except the security interests created hereby; or

 

c.     Permit any of the Collateral to be levied upon under any legal process.

 

4.     Representations and Warranties. Borrower hereby represents and warrants to the Secured Parties as follows: (a) to Borrower'
s knowledge, Borrower is the owner of the Collateral (or, in the case of after-acquired Collateral, at the time Borrower acquires
rights in the Collateral, will be the owner thereat) and that, except as expressly provided herein, no other person has (or, in
the case of after-acquired Collateral, at the time Borrower acquires rights therein, will have) any right, title, claim or interest
(by way of Lien or otherwise) in, against or to the Collateral; (b) to Borrower's knowledge, except as expressly provided herein,
upon the filing of a Financing Statement as provided herein, the Secured Parties (or in the case of after-acquired Collateral,
at the time Borrower acquires rights therein, will have) will have a perfected security interest in the Collateral to the extent
that a security interest in the Collateral can be perfected by such filing; (c) all Accounts Receivable (as defined in Exhibit
A) are genuine and enforceable against the party obligated to pay the same; (d) Borrower has full power and authority
to enter into the transactions provided for in this Agreement and the Note;
(e) this Agreement and the Note, when executed and delivered by
Borrower, will constitute the legal, valid and binding obligations of Borrower enforceable in accordance with their terms; (t)
the execution and delivery by Borrower of this Agreement and the Note and
the performance and consummation of the transactions contemplated hereby and thereby do not and will not violate Borrower's Certificate
of Incorporation or Bylaws or any material judgment, order, writ, decree, statute, rule or regulation applicable to Borrower (g)
there does not exist any default or violation by Borrower of or under any of the terms, conditions or obligations of (i) any indenture,
mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which Borrower is a party or by which Borrower
is bound, or (ii) any law, ordinance, regulation, ruling, order, injunction, decree, condition or other requirement applicable
to or imposed upon Borrower by any law, the action of any court or any governmental authority or agency; and the execution, delivery
and performance of this Agreement will not result in any such default or violation; (h) there is no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand pending or, to the knowledge of Borrower, threatened which adversely affects
Borrower's business or financial condition and there is no basis known to Borrower for any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, or demand which could result in the same; and (i) this Agreement and the Note do
not contain any untrue statement of material fact or omit to state a material fact necessary in order to make the statements contained
in this Agreement and the Note not misleading.

 

5.     Events of Default. For purposes of this Agreement, the term "Event of Default" shall
mean and refer to any of the following:

 

a.     
Failure of Borrower to perform or observe any covenant set forth in this Agreement, or to perform or observe any other term, condition,
covenant, warranty, agreement or other provision contained in this Agreement, where such failure continues for fifteen (15) days
after receipt of written notice from Lender specifying such failure;

 

b.     Any
representation or warranty made or furnished by Borrower in writing in connection with this Agreement and the Note or any statement
or representation made in any certificate, report or opinion delivered pursuant to this Agreement or in connection with this Agreement
is false, incorrect or incomplete in any material respect at the time it is
furnished; or

 

 

 

 

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c.     
Occurrence of any Event of Default as defined in the Note.

 

6.     Remedies. Upon the occurrence and during the continuance
of an Event of Default (subject to the notice and cure provisions provided for herein, if any), each Secured Party shall have the
rights of a secured creditor, all rights granted by the Note, this Security Agreement and by law, including the right to require
Borrower to assemble the Collateral and make it available to the Secured Parties at a place to be designated by Borrower. The rights
and remedies provided in this Agreement and the Note are cumulative and may be exercised independently or concurrently, and are
not exclusive of any other right or remedy provided at law or in equity. No failure to exercise or delay by the Secured Parties
in exercising any right or remedy under this Agreement or the Note shall impair or prohibit the exercise of any such rights or
remedies in the future or be deemed to constitute a waiver or limitation of any such right or remedy or acquiescence therein. Every
right and remedy granted to the Secured Parties under this Agreement and the Note or by law or in equity may be exercised by any
Secured Party at any time and from time to time.

 

7.    
Further Assurances. Borrower agrees that,
from time to time, at its own expense, it will:

 

a.      Protect and defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein, and preserve and protect Secured Party's security interest in the Collateral.

 

 b.     Promptly execute and deliver to Secured Parties all instruments and documents, and take all further action necessary or desirable, as any Secured Party may reasonably request to (i) continue, perfect, or protect any security interest granted or purported to be granted hereby, and (ii) enable a Secured Party to exercise and enforce any of Secured Party's rights and remedies hereunder with respect to any Collateral.

 

 c.      Permit a Secured Party's representatives to inspect and make copies of all books and records relating to the Collateral, wherever such books and records are located, and to conduct an audit relating to the Collateral at any reasonable time or times.

 

8.     Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed telex, e-mail or facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, (c) five (5) days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All communications shall be sent as
follows:

 

If to the Borrower, to:

 

OCEAN THERMAL ENERGY CORPORATION

800 South Queen Street

Lancaster, PA 17603

E-mail: info@otecorporation.com

 

If to the Secured Party:

 

L2 CAPITAL, LLC

8900 State Line Rd.,
Suite 410

Leawood, KS 66206

e-mail: investments@ltwocapital.com

 

 

 

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or to such other address or telecopy number
as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.

 

10.    Amendments and Waivers. No modification, amendment or waiver of any provision of, or consent required by, this Agreement,
nor any consent to any departure herefrom, shall be effective unless it is in writing and signed by each of the parties hereto.
Such modification, amendment, waiver or consent shall be effective only in the specific instance and for the purpose for which
given.

 

11.    Exclusivity and Waiver of Rights. No failure to exercise and no delay in exercising on the part of any party, any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive
of any other rights or remedies provided by law.

 

12.    Invalidity. Any term or provision of this Agreement shall be ineffective to the extent it is declared invalid or unenforceable,
without rendering invalid or enforceable the remaining terms and provisions of this Agreement.

 

13.    Headings. Headings used in this Agreement are inserted for convenience only and shall not affect the meaning of any term
or provision of this Agreement.

 

14.    Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original instrument,
but all of which collectively shall constitute one and the same agreement.

 

15.    Assignment. This Agreement and the rights and obligations hereunder shall not be assignable or transferable by the any of
the parties without the prior written consent of all Secured Parties, at their sole and absolute discretion.

 

16.    Survival. Unless otherwise expressly provided herein, all representations warranties, agreements and covenants contained
in this Agreement shall survive the execution hereof and shall remain in full force and effect until the earliest to occur of (a)
the payment in full of the Note, and (b) the conversion of the principal and accrued and unpaid
interest and all other amounts owing under the Note into common stock of Borrower.

 

17.    Miscellaneous. This Agreement shall inure to the benefit of each of the parties hereto and all their respective successors
and permitted assigns. Nothing in this Agreement is intended or shall be construed to give to any other person, firm or corporation
any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained.

 

18.    GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF KANSAS (WITHOUT
GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAWS PROVISIONS).

 

19.    CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF KANSAS AND COUNTY OF JOHNSON. EACH OF THE PARTIES HERETO AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY MUST BE LITIGATED EXCLUSIVELY
IN ANY SUCH STATE OR FEDERAL COURT, AND ACCORDINGLY, EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH LITIGATION IN ANY SUCH COURT.

 

 

 

 

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20.    WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THISAGREEMENT. EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND EACH OF THE OTHER PARTIES HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.

 

21.    Attorneys' Fees. In the event that any suit or action is instituted to enforce any provision in this Agreement, the prevailing
party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of
such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses
of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.

 

22.    Entire Agreement. This Agreement contains the entire agreement among the parties with respect to the transactions contemplated
by this Agreement and supersedes all prior agreements or understandings among the parties with respect to the subject matter hereof.

 

[SIGNATURE PAGE(S)
FOLLOW]

 

 

 

 

 

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IN
WITNESS WHEREOF, this Security Agreement has been executed as of the date first set written
above.

 

 

 

“SECURED PARTY”

 

L2 CAPITAL, LLC

 

 

	By:	/s/ Adam Long	 
	 	
        Name: Adam Long

        
	 
	 	Title: Managing Partner	 

 

 

 

"BORROWER" 

 

OCEAN THERMAL ENERGY CORPORATION

 

 

	By:	/s/  Jeremy Feakins	 
	 	Name: Jeremy Feakins	 
	 	Title: Chief Executive Officer	 

 

 

 

 

 

 

 

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EXHIBIT
A COLLATERAL

 

Borrower
hereby grants, pledges, and assigns for the benefit of each Secured
Party, and there is hereby created in favor of the Secured Parties, a security interest in and to all of Borrower's right, title,
and interest in, to, and under all assets and all personal property of Borrower, whether now or hereafter existing, or now owned
or hereafter acquired, exclusively located in the United States of America, including but not limited to the following (collectively,
"Collateral"):

 

1.     All accounts, chattel paper, contracts, contract rights, accounts receivable, tax refunds,
Note receivable, documents, other choses in action and general intangibles, including, but not limited to, proceeds of inventory
and returned goods and proceeds from the sale of goods and services, and all rights, liens, securities, guaranties, remedies and
privileges related thereto, including the right of stoppage in transit and rights and property of any kind forming the subject
matter of any of the foregoing ("Accounts Receivable");

 

2.     All time, savings, demand, certificate of deposit or other accounts in the name of Borrower
or in which Borrower has any right, title or interest, including but not limited to all sums now or at any time hereafter on deposit,
and any renewals, extensions or replacements of and all other property which may from time to time be acquired directly or indirectly
using the proceeds of any of the foregoing;

 

3.     All inventory and equipment of every type or description wherever located, including, but not
limited to all raw materials, parts, containers, work in process, finished goods, goods in transit, wares, merchandise furniture,
fixtures, hardware, machinery, tools, parts, supplies, automobiles, trucks, other intangible property of whatever kind and wherever
located associated with the Borrower's business, tools and goods returned for credit, repossessed, reclaimed or otherwise reacquired
by Borrower;

 

4.     All documents of title and other property from time to time received, receivable or otherwise distributed in respect of, exchange
or substitution for or addition to any of the foregoing including, but not limited to, any documents of title;

 

5.     All know-how, information, permits, patents, copyrights, goodwill, trademarks, trade names, licenses and approvals held by Borrower,
including all other intangible property of Borrower;

 

6.     All assets of any type or description that may at any time be assigned or delivered to or come into possession of Borrower for
any purpose for the account of Borrower or as to which Borrower may have any right, title, interest or power, and property in the
possession or custody of or in transit to anyone for the account of Borrower, as well as all proceeds and products thereof and
accessions and annexations thereto; and

 

7.     All proceeds (including but not limited to insurance proceeds) and products of and accessions and annexations to any of the foregoing.

 

 

 

 

 

 

 

 

 

 

    	 	7Exhibit 10.4

 

NEITHER THIS SECURITY NOR THE SECURITIES
AS TO WHICH THIS SECURITY MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH
EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE
OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

OCEAN THERMAL ENERGY CORPORATION

 

Warrant Shares: 242,222

 

Date of Issuance: February 16, 2018 (“Issuance
Date”)

 

This COMMON STOCK PURCHASE
WARRANT (the “Warrant”) certifies that, for value received (in connection with the funding of the purchase price
of $100,000.00, with respect to the first tranche of $121,111.000 issuance of that certain senior secured promissory note in the
original principal amount of $565,555.00 on February 16, 2018 by the Company (as defined below) to the Holder (as defined below))
(the “Note”), L2 Capital, LLC, a Kansas limited liability company (including any permitted and registered assigns, the “Holder”),
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on
or after the date of issuance hereof, to purchase from Ocean Thermal Energy Corporation, a Nevada corporation (the “Company”),
up to 242,222 shares of Common Stock (as defined below) (the “Warrant Shares”) (whereby such number may be adjusted
from time to time pursuant to the terms and conditions of this Warrant) (with the understanding that the Holder shall only be entitled
to the prorated number of Warrant Shares based upon each tranche funded) at the Exercise Price per share then in effect. This Warrant
is issued by the Company as of the date hereof in connection with that certain securities purchase agreement dated February 16,
2018, by and among the Company and the Holder (the “Purchase Agreement”). At the time that each subsequent tranche
under the Note is funded by the Holder in cash, then on such funding date, the Warrant Shares shall immediately and automatically
be increased by the quotient of 50% of the face value of the respective tranche and 110% of the VWAP of the Common Stock on the
Trading Day immediately prior to the funding date of the respective tranche.

 

Capitalized terms
used in this Warrant shall have the meanings set forth in the Purchase Agreement unless otherwise defined in the body of this
Warrant or in Section 13 below. For purposes of this Warrant, the term “Exercise Price” with respect to
the Warrant Shares issued for each tranche funded under the Note, shall mean 110% of the VWAP of the Common Stock on the
Trading Day immediately prior to the funding date of the respective tranche, subject to adjustment as provided herein
(including but not limited to cashless exercise), and the term “Exercise Period” shall mean the period
commencing on the Issuance Date and ending on 5:00 p.m. eastern standard time on the five-year anniversary thereof.

 

1.       EXERCISE
OF WARRANT.

 

(a)       Mechanics
of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or
in part at any time or times during the Exercise Period by delivery of a written notice, in the form attached hereto as Exhibit
A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The Holder shall not
be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting
in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding
number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. On or before
the third Trading Day (the “Warrant Share Delivery Date”) following the date on which the Company shall have
received the Exercise Notice, and upon receipt by the Company of payment to the Company of an amount equal to the applicable Exercise
Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “Aggregate
Exercise Price” and together with the Exercise Notice, the “Exercise Delivery Documents”) in cash
or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise
Price provided), the Company shall (or direct its transfer agent to) issue and dispatch by overnight courier to the address as
specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or
its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery
of the Exercise Delivery Documents, the Holder shall be deemed for all corporate purposes to have become the holder of record of
the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the certificates
evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented
by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company
shall as soon as practicable and in no event later than three Business Days after any exercise and at its own expense, issue a
new Warrant (in accordance with Section 6) representing the right to purchase the number of Warrant Shares purchasable immediately
prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.

 

 

 

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If the Company fails
to cause its transfer agent to transmit to the Holder the respective shares of Common Stock by the respective Warrant Share Delivery
Date, then the Holder will have the right to rescind such exercise in Holder’s sole discretion, and such failure shall be
deemed an event of default under the Note.

 

If (i) the Market Price
of one share of Common Stock is greater than the Exercise Price and (ii) there is no effective registration statement of the Company
covering the Holder’s immediate resale of the Warrant Shares without any limitations, then Holder may elect to receive Warrant
Shares pursuant to a cashless exercise, in lieu of a cash exercise, equal to the value of this Warrant determined in the manner
described below (or of any portion thereof remaining unexercised) by surrender of this Warrant and a Notice of Exercise, in which
event the Company shall issue to Holder a number of Common Stock computed using the following formula:

 

X = Y (A-B)

A

 

	Where  	X =	the number of Shares to be issued
to Holder.
	 	 	 
		Y =	the number of Warrant Shares that the Holder elects to purchase under this Warrant (at the date
of such calculation).
	 	 	 
	 	A =	the
Market Price (at the date of such calculation).
	 	 	 
	 	B =	Exercise
Price (as adjusted to the date of such calculation).

 

(b)       No
Fractional Shares. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment
pursuant hereto. All Warrant Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes
of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise
entitled to such fraction a sum in cash equal to the product resulting from multiplying the then-current fair market value of a
Warrant Share by such fraction.

 

(c)       Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, to the extent that after giving effect to issuance of Warrant Shares upon exercise as set forth on
the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other persons acting as a group
together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation, as defined below. For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by
the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect
to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(i) exercise of the remaining, non-exercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates
and (ii) exercise or conversion of the unexercised or non-converted portion of any other securities of the Company (including without
limitation any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of
this paragraph (d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act, it being acknowledged
by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the
Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent
that the limitation contained in this paragraph applies, the determination of whether this Warrant is exercisable (in relation
to other securities owned by the Holder together with any affiliates) and of which portion of this Warrant is exercisable shall
be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination
of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of
which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall
have no obligation to verify or confirm the accuracy of such determination.

 

 

 

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For purposes of this
paragraph, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares
of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or its transfer
agent setting forth the number of shares of Common Stock outstanding. Upon the request of a Holder, the Company shall within two
Trading Days confirm to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder or its affiliates since the date as of which such number of outstanding shares of Common Stock was
reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The limitations
contained in this paragraph shall apply to a successor Holder of this Warrant. The Company covenants that this Warrant is outstanding,
the Company will reserve from its authorized and unissued Common Stock a number of shares, free from preemptive rights, equal to
three times the number of shares that is actually issuable upon full exercise of the Warrant (based on the Exercise Price in effect
at that time).

 

2.       ADJUSTMENTS.
The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

 

(a)       Distribution
of Assets. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including without limitation any distribution
of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement
or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each
such case:

 

(i)       any
Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of
shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record
date, to a price determined by multiplying such Exercise Price by a fraction (i) the numerator of which shall be the Closing Sale
Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution
(as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (ii) the denominator
of which shall be the Closing Sale Price of the shares of Common Stock on the Trading Day immediately preceding such record date;
and

 

(ii)      the
number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately
prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to
receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i); provided,
however, that in the event that the Distribution is of shares of common stock of a company (other than the Company) whose common
stock is traded on a national securities exchange or a national automated quotation system (“Other Shares of Common Stock”),
then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of
Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into
the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had
the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product
of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms
of the immediately preceding clause (i) and the number of Warrant Shares calculated in accordance with the first part of this clause
(ii).

 

 

 

    	 	3	 

     

    

 

(b)       Anti-Dilution
Adjustments to Exercise Price. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding,
shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce
any offer, sale, grant or any option to purchase or other disposition) any Common Stock or securities entitling any person or entity
to acquire shares of Common Stock (upon conversion, exercise or otherwise) (including but not limited to under the Note), at an
effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such
issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents
so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise
or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance,
be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance
shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price
shall be reduced at the option of the Holder and only reduced to equal the Base Share Price, and the number of Warrant Shares issuable
hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in
the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. The Company shall notify the Holder
in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this
Section 2(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and
other pricing terms (such notice the “Dilutive Issuance Notice”). For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to this Section 2(b), upon the occurrence of any Dilutive Issuance,
after the date of such Dilutive Issuance the Holder is entitled to receive a number of Warrant Shares based upon the Base Share
Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise.

 

3.       FUNDAMENTAL
TRANSACTIONS. If, at any time while this Warrant is outstanding, (i) the Company effects any merger of the Company with or
into another entity and the Company is not the surviving entity (such surviving entity, the “Successor Entity”),
(ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any
tender offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities,
cash or property and the holders of at least 50% of the Common Stock accept such offer, or (iv) the Company effects any reclassification
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged
for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any
such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive the number of shares of Common Stock of the Successor Entity or of the Company and any additional consideration
(the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event (disregarding any limitation on exercise contained herein solely for the purpose of such determination).
For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting
the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice
as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the
extent necessary to effectuate the foregoing provisions, any Successor Entity in such Fundamental Transaction shall issue to the
Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant
into Alternate Consideration.

 

 

 

    	 	4	 

     

    

 

4.       NON-CIRCUMVENTION.
The Company covenants and agrees that it will not, by amendment of its certificate of incorporation, bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good
faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of the Holder.
Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Common
Stock upon the exercise of this Warrant, and (iii) shall, for so long as this Warrant is outstanding, have authorized and reserved,
free from preemptive rights, three times the number of shares of Common Stock issuable under the Warrant to provide for the exercise
of the rights represented by this Warrant (without regard to any limitations on exercise).

 

5.       WARRANT
HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, this Warrant, in and of itself, shall not
entitle the Holder to any voting rights or other rights as a stockholder of the Company. In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant
or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

 

6.       REISSUANCE.

 

(a)       Lost,
Stolen or Mutilated Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the Company will, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof),
issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.

 

(b)       Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date.

 

7.       TRANSFER.

 

(a)       Notice
of Transfer. The Holder agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant
Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. Promptly upon receiving
such written notice, the Company shall present copies thereof to the Company’s counsel. If the proposed transfer may be effected
without registration or qualification (under any federal or state securities laws), the Company, as promptly as practicable, shall
notify the Holder thereof, whereupon the Holder shall be entitled to transfer this Warrant or to dispose of Warrant Shares received
upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company;
provided, however, that an appropriate legend may be endorsed on this Warrant or the certificates for such Warrant Shares respecting
restrictions upon transfer thereof necessary or advisable in the opinion of counsel and satisfactory to the Company to prevent
further transfers which would be in violation of Section 5 of the Securities Act and applicable state securities laws; and provided
further that the prospective transferee or purchaser shall execute the Assignment of Warrant attached hereto as Exhibit B
and such other documents and make such representations, warranties, and agreements as may be required solely to comply with the
exemptions relied upon by the Company for the transfer or disposition of the Warrant or Warrant Shares.

 

 

 

    	 	5	 

     

    

 

(b)       If
the proposed transfer or disposition of this Warrant or such Warrant Shares described in the written notice given pursuant to this
Section 7 may not be effected without registration or qualification of this Warrant or such Warrant Shares, the Holder will limit
its activities in respect to such transfer or disposition as are permitted by law.

 

(c)       Any
transferee of all or a portion of this Warrant shall succeed to the rights and benefits of the initial Holder of this Warrant under
the Purchase Agreement (registration rights, expenses, and indemnity).

 

8.       NOTICES.
Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given in accordance
with the notice provisions contained in the Purchase Agreement. The Company shall provide the Holder with prompt written notice
(i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, the calculation of such adjustment
and (ii) at least 20 days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any stock or other securities
directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock or other property, pro rata to
the holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution
or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such
notice being provided to the Holder.

 

9.       AMENDMENT
AND WAIVER. The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively
or prospectively) only with the written consent of the Company and the Holder.

 

10.      GOVERNING
LAW. This Warrant 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 Warrant
shall be brought only in the state courts or in the federal courts located in the State of Kansas, County of Johnson. The parties
to this Warrant 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 HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY. 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 Warrant 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.

 

11.      ACCEPTANCE.
Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained
herein.

 

12.      CERTAIN
DEFINITIONS. For purposes of this Warrant, the following terms shall have the following meanings:

 

(a)       “Nasdaq”
means www.Nasdaq.com.

 

 

 

 

    	 	6	 

     

    

 

(b)       “Closing
Sale Price” means, for any security as of any date, (i) the last closing trade price for such security on the Principal
Market, as reported by Nasdaq, or, if the Principal Market begins to operate on an extended hours basis and does not designate
the closing trade price, then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Nasdaq, or
(ii) if the foregoing does not apply, the last trade price of such security in the over-the-counter market for such security
as reported by Nasdaq, or (iii) if no last trade price is reported for such security by Nasdaq, the average of the bid and ask
prices of any market makers for such security as reported by the OTC Markets. If the Closing Sale Price cannot be calculated for
a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the
fair market value as mutually determined by the Company and the Holder. All such determinations to be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

 

(c)       “Common
Stock” means the Company’s common stock, and any other class of securities into which such securities may hereafter
be reclassified or changed.

 

(d)       “Common
Stock Equivalents” means any securities of the Company that would entitle the holder thereof to acquire at any time Common
Stock, including without limitation any debt, preferred stock, rights, options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

(e)       [Intentionally
Omitted].

 

(f)       [Intentionally
Omitted].

 

(g)       “Principal
Market” means the primary national securities exchange or marketplace on which the Common Stock is then traded.

 

(h)       “Market
Price” means the highest traded price of the Common Stock during the one hundred fifty Trading Days prior to the date
of the respective Exercise Notice.

 

(i)       “Trading
Day” means (i) any day on which the Common Stock is listed or quoted and traded on its Principal Market, (ii) if the
Common Stock is not then listed or quoted and traded on any national securities exchange, then a day on which trading occurs on
any over-the-counter markets, or (iii) if trading does not occur on the over-the-counter markets, any Business Day.

 

 

 

 

 

* * * * * * *

 

 

 

 

 

    	 	7	 

     

    

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed as of the Issuance Date set forth above.

 

 

OCEAN THERMAL ENERGY CORPORATION

 

 

/s/ Jeremy Feakins                                                               

Name: Jeremy Feakins

Title: Chief Executive Officer

 

 

 

 

 

 

 

    	 	8	 

     

    

 

EXHIBIT A

 

EXERCISE NOTICE

 

(To be executed by the registered holder
to exercise this Common Stock Purchase Warrant)

 

The
Undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant
Shares”) of Ocean Thermal Energy Corporation, a Nevada corporation (the “Company”), evidenced by the attached
copy of the Common Stock Purchase Warrant (the “Warrant”). Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in the Warrant.

 

		1.	Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made
as (check one):

 

		☐	a cash exercise with respect to _________________ Warrant Shares; or
	 	☐ 	by cashless exercise pursuant to the Warrant.

 

		2.	Payment of Exercise Price. If cash exercise is selected above, the holder shall pay the
applicable Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

		3.	Delivery of Warrant Shares. The Company shall deliver to the holder __________________ Warrant
Shares in accordance with the terms of the Warrant.

 

 

 

Date:                                                 

 

	 	 
	 	(Print Name of Registered Holder)
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

 

 

 

 

 

    	 	9	 

     

    

 

EXHIBIT B

 

ASSIGNMENT OF WARRANT

 

(To be signed only upon authorized transfer
of the Warrant)

 

For
Value Received, the undersigned hereby sells, assigns, and transfers unto ____________________ the right to purchase _______________
shares of common stock of Ocean Thermal Energy Corporation, to which the within Common Stock Purchase Warrant relates and appoints
____________________, as attorney-in-fact, to transfer said right on the books of Ocean Thermal Energy Corporation with full power
of substitution and re-substitution in the premises. By accepting such transfer, the transferee has agreed to be bound in all respects
by the terms and conditions of the within Warrant.

 

 

Date:                                                 

 

	 	 
	 	(Signature) *
	 	 
	 	 
	 	(Name)
	 	 
	 	 
	 	(Address)
	 	 
	 	 
	 	(Social Security or Tax Identification
No.)

 

 

 

 

 

 

* The signature on this Assignment of Warrant
must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration
or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate
your position(s) and title(s) with such entity.

 

 

 

 

    	 	10

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