Document:

ex1012form10.htm

MEMORANDUM OF UNDERSTANDING FOR THE CONDUCT OF A FEASIBILITY STUDY ON

OCEAN THERMAL ENERGY CONVERSION PLANTS FOR THE VIRGIN ISLANDS

This Memorandum of Understanding is entered into on this 5th day off March 2014 between the Thirtieth Legislature Virgin Islands, through its President Shawn-Michael Malone (“the Legislature”) of P.O. Box 1690, St. Thomas Virgin Islands 00804 and Ocean Thermal Energy Corporation, a Delaware corporation based in Lancaster Pennsylvania (“OTE Corporation”) of 816 South Queen Street, Lancaster, Pennsylvania 17603-5818.

WHEREAS, the Legislature, as the first branch of government, desires to explore renewable energy resources to promote energy independence, economic development and environmental benefits in the Virgin Islands and draft legislation to implement such objectives, and,

WHEREAS, the Virgin Islands Renewable and Alternative Energy Act of 2009, Act No. 7075, 12 V.I.C. section 1101(f) Includes Ocean Thermal Energy Conversion (“OTEC”) in the definition of “renewable energy,” and,

WHEREAS, the Virgin Islands Renewable and Alternative Energy, Act, 12 V.I.C. section 1103(a) authorizes studies, and experimental, pilot, and demonstration facilities and projects that would lead to the development and more efficient utilization of present, new, or alternative energy sources in this Territory, to the conservation of energy, to the attraction of federal and other development funding in emerging and established national or territory priority areas, or to the enhancement of economic development of the Territory,” and,

WHEREAS, the Legislature desires to evaluate the benefits of and obstacles to installing OTEC renewable energy power plants, Seawater District Cooling plants, and the various ancillary products associated with OTEC and Seawater District Cooling, including potable water, sustainable aquaculture and mariculture, as well as agriculture projects for the Islands of St Thomas and St. Croix, so that the Legislature may develop legislation advancing the use of the most efficient, reliable and cost-effective renewable energy for the Territory; and,

WHEREAS, the Legislature and OTE Corporation desire to examine the feasibility of OTEC, SDC, and their ancillary products, and comprehensive economic development potential in the Virgin Islands, and

WHEREAS, OTE Corporation has unique expertise in OTEC, other renewable energy/energy saving technology applications and the skills and knowledge to develop a comprehensive economic development plan suitable for the Virgin Islands, and

 

WHEREAS, OTE Corporation's unique expertise includes the following: top ocean engineering and science personnel with more than 50 years combined hands-on experience in designing, building and operating both land-based and floating OTEC systems in previously proving this technology; approval of its OTEC systems designs by the United States Department of Defense, Office of Naval Research, for intended U.S. Military installation use; advanced senior technology staff that includes world-renowned OTEC scientists, such as Dr. Ted Johnson, formerly Lockheed Martin's Director of Renewable Energy and Development, where Dr. Johnson focused on OTEC, and, senior executive management and finance staff who have credible track records in managing high-technology companies; and

 

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WHEREAS, the Legislature intends to employ the information gained from OTE Corporation's OTEC study for purposes of informed decision making and energy policy and legislation development; and

WHEREAS, the Legislature has passed a resolution authorizing the President of the Thirtieth Legislature to execute this M.O.U; Now, Therefore, in consideration of the mutual promises contained in this M.O.U., the Legislature and OTE Corporation agree as follows:

1.             DEFINITIONS.  As used in this M.O.U., the term-

	
  

	
(a)

	
“Government” means all three branches of the Government of the Virgin Islands and their departments, agencies and instrumentalities.

	
  

	
(b)

	
“M.O.U.” means this Memorandum of Understanding between the Thirtieth Legislature and OTE Corporation authorized by a resolution of the Legislature.

	
  

	
(c)

	
“OTE Corporation” means the Ocean Thermal Energy Corporation, a Delaware corporation based in Lancaster, Pennsylvania.

	
  

	
(d)

	
“OTEC” means “Ocean Thermal Energy Conversion,” a process that uses the heat energy stored in the Earth's oceans to generate electricity.

	
  

	
(e)

	
“OTEC Projects” means the Ocean Thermal Energy Conversion renewable energy power plants, Seawater District Cooling plants, and the various ancillary products associated with OTEC and Seawater District Cooling, including potable water, sustainable aquaculture and mariculture, as well as agriculture projects for the Islands of St, Thomas and St. Croix proposed under this M.O.U. to be evaluated in the feasibility study.

	
  

	
(f)

	
“SDC” means Seawater District Cooling, a renewable energy technology in which frigid water is pumped from deep ocean depths for air conditioning buildings.

 

 

2.             TERM. This M.O.U. takes effect upon the passage by the Legislature of a resolution approving this and terminates on January 11, 2015. However, OTE Corporation's covenant to submit the report referenced in paragraph 10 is not extinguished on the date of termination.

3.             SCOPE OF INVESTIGATION AND STUDY.

(a)           OTE Corporation shall conduct a feasibility study toward the evaluation of the preliminary costs for the OTEC Projects including a comprehensive economic development plan utilizing the OTEC ancillary products such as potable/bottle water and high-profit aquaculture, mariculture and agriculture opportunities. The study must also investigate the short-term and long-term impact of the technology on the environment, including coral reefs, deep-sea ecology, the fisheries and their habitats, mitigation methods to eliminate or substantially reduce adverse environmental impacts, the effect of tropical storms and other ocean natural features on OTEC plants, siting of plants, permitting and licensing, grid integration, economic and social impacts, including job creation, comprehensive economic development costs, construction costs, and preliminary and long-term operational costs, the projected number of megawatts of power output, the number of refrigeration tons that the SDC is expected to produce, sources of federal funding available to states and territories for OTEC projects, and such other information as OTE Corporation in its professional opinion believes would be useful in assisting with Legislature's decision and policymaking.

 

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(b)           OTE Corporation is responsible for all materials, equipment, labor, insurance and work under this M.O.U.

4.             COLLABORATION WITH UNIVERSITY. OTE Corporation shall use its best efforts to work with the University of the Virgin Islands in its research endeavors towards the completion of a comprehensive feasibility study, including but not limited to technical, environmental, agricultural, marine and economic growth/economic development factors.

5.             SHARING OF INFORMATION. The Legislature shall provide OTE Corporation with any background information it has available to it which OTE Corporation reasonably requires to make its preliminary findings in the evaluation of the feasibility of completing the OTEC Projects.

6.             INTELLECTUAL PROPERTY. It is agreed and understood by the parties that any graphic, pictorial or literary works, including, without limitation, pamphlets, books, articles manuscripts, manuals, reports, surveys, software, memoranda and other intellectual property created by OTE Corporation under this M.O.U. shall remain the property of OTE Corporation.

7.             NO COSTS TO LEGISLATURE. The Legislature shall bear no costs under this agreement, except its administrative costs in assisting OTE Corporation with providing the information identified in paragraph 5. OTE Corporation shall bear all costs for the feasibility study and activities related to the Study.

8.             INDEMNITY. Except for the sole negligence of the Legislature, its agents, contractors, and employees, OTE Corporation for itself, its agents and employees agrees to indemnify and save the Legislature harmless from and against all claims and demands, damage or liability, including attorney's fees and the costs and expense to defend any legal action, for any negligence or other wrongful conduct resulting from OTE Corporation's or its agents', subcontractors' or employees' performance under this M.O.U., for or in connection with any accident, injury or damage whatsoever caused to any person or property arising directly, or indirectly, out of the performance of work under this M.O.U., from any act or omission of OTE Corporation or its agents, subcontractors or employees, or from and against any and all costs, expenses and liabilities incurred in connection with any such claim or proceeding brought thereon.

9.             PERMITS AND LICENSES. OTE Corporation warrants that without any expense to the Legislature, OTE Corporation shall obtain and maintain all such licenses, permits and authorizations required to perform the feasibility study under this M.O.U. OTE Corporation shall also be responsible for the payment of all license and permit fees and taxes required by law in connection with the work under this M.O.U., including excise, gross receipt and similar taxes and will comply with all laws and regulations imposed by federal or territorial authorities relating to the work under this M.O.U.

10.           REPORT OF STUDY. OTE Corporation shall submit its feasibility study to the Legislature's standing Committee on Energy and Environmental Protection, or its successor committee, no later than 30 days after its completion.

 

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11.           APPEARANCE BEFORE THE LEGISLATURE. OTE Corporation agrees to appear before the Committee on Energy and Environmental Protection at the beginning stages of its feasibility study and at such other times as mutually determined by the parties to provide progress reports and final conclusions to the Committee.

12.           NONDISCLOSURE. The parties understand and agree that the Legislature and OTE Corporation might exchange certain information that may be considered confidential. To ensure the protection of such information and in consideration of the agreement to exchange information, the parties agree as follows:

	
  

	
(A)

	
The confidential information to be disclosed by OTE Corporation under this M.O.U. includes technical and business information relating to OTE Corporation's proprietary ideas, trade secrets, patentable ideas and copyrights, existing or contemplated products and services, software, schematics, research and development, production, costs, profit and margin information, finances and financial projections, customers, clients, marketing, and current or future business plans and models.

 

 

	
  

	
(B)

	
In addition to the Confidential Information enumerated in subparagraph (A), Confidential Information also includes, and Legislature shall have a duty to protect, other confidential or sensitive information that is disclosed by OTE Corporation in writing and marked as confidential at the time of disclosure.

	
  

	
(C)

	
Legislature shall limit disclosure of Confidential Information within the Legislature to its members, directors, officers, and employees having a need to know and may not disclose Confidential Information to any third party without the prior written consent of OTE Corporation. The Legislature shall have satisfied its obligations under this paragraph if it takes affirmative measures to ensure compliance with these confidentiality obligations by its members and employees and others who are permitted access to or use of the Confidential Information.

	
  

	
(D)

	
This paragraph does not apply to any Confidential Information that is or becomes a matter of public knowledge through no fault of the Legislature; is rightfully received by Legislature from a third party not owing a duty of confidentiality to the OTE Corporation, is disclosed without a duty of confidentiality to a third party by, or with the authorization of, OTE Corporation; or is independently developed by Legislature.

	
  

	
(E)

	
Both parties acknowledge and agree that the exchange of information under this M.O.U. shall not commit or bind either party to any present or future contractual relationship, nor shall the exchange of information be construed as an inducement to act or not to act in any given manner.

 

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(F)

	
If there is a breach or threatened breach of any provision of this paragraph, it is OTE Corporation agrees that pursuant to 33 V.I.C. §3101, it shall not be entitled to money damages, since there has not been and will not be any appropriation bill enacted for such an obligation. However OTE Corporation may be entitled to injunctive relief by a court in the Superior Court of the Virgin Islands. OTE Corporation agrees that any action for the enforcement of the nondisclosure agreement under this paragraph must be brought in the Superior Court of the Virgin Islands, Division of St. Thomas and St. John, and both parties shall assume their own court costs and attorney's fees.

13.           NOTICES & CORRESPONDENCE. Any notice or other correspondence given under this M.O.U. shall be considered to have been sufficiently given when it has been addressed to the party in question at the address as written above, and it has been sent by hand delivery, certified mail, return receipt requested, or by fax, confirmed by telephone. Mailings shall be considered received three days after the post-mark date. Either party may be given written notice of change of mailing address, in which event any such notice or request shall thereafter be given to the party as above provided at the changed address.

 

14.           INDEPENDENT CONTRACTOR. OTE Corporation is an independent contractor with respect to the services to be performed under this M.O.U. Neither OTE Corporation nor its subcontractors, if any, nor its employees or agents may be deemed to be the servants, employees or agents of the Legislature. Nothing in this M.O.U. is intended or may be deemed to constitute a partnership or joint venture between OTE Corporation and the Legislature.

15.           LIMITED BINDING EFFECT. The parties agree that this M.O.U. is binding on the parties only for the purpose of each party's determining in good faith the feasibility of the OTEC Projects referenced in this M.O.U. This M.O.U. does not create a legally binding obligation or any obligation for either party to build or operate any OTEC Project or other Ocean Thermal Energy Conversion facility, or enter into any agreement to acquire the energy services provided by any OTEC Project referenced in this M.O.U. or by any other Ocean Thermal Energy Conversion facility.

16.           THIRD PARTIES. Nothing contained in this M.O.U. may be construed as creating a contractual relationship with or cause of action in favor of a third party against either the Legislature or OTE Corporation.

17.           GOVERNMENT OFFICIAL NOT TO PROFIT. No member of Congress or the Legislature of the Virgin Islands, no officer or official of the United States Government or Government of the Virgin Islands, or any of their instrumentalities shall be admitted to any benefit of value that may arise from this Contract.

18.           CAPTIONS. The captions of the sections of this M.O.U. are for convenience only and do not control or affect the meaning or construction of any of the terms, conditions or provisions of this M.O.U.

19.           VIRGIN ISLANDS LAW. This M.O.U. must be construed under the laws of the Virgin Islands.

20.           COUNTER PARTS; FAXED SIGNATURES. This M.O.U. may be executed in two or more counterparts, each of which constitutes an original, and all of which constitute one of the same instrument. The M.O.U. may also be executed by faxed signatures.

 

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21.           ENTIRE AGREEMENT. This instrument embodies the whole agreement of the parties. There are no promises, terms, conditions or obligations other than those contained in this M.O.U. This M.O.U. supersedes all previous communications, representations and agreements, either verbal or written between the parties. The terms and conditions of the M.O.U. may be modified or supplemented, only through formal written amendments.

 

IN WITNESS WHEREOF, the parties have executed this M.O.U. in St. Thomas, Virgin Islands on the date first written above

 

	 	THIRTIETH LEGISLATURE OF THE VIRGIN ISLANDS
	 	 	 	 
	 	By:	 /s/Shawn-Michael Malone	 
	 	 	SHAWN-MICHAEL MALONE, PRESIDENT
	 	 	 	 
	 	OCEAN THERMAL ENERGY CORPORATION
	 	 	 	 
	 	By:	 /s/Jeremy P. Feakins	 
	 	 	JEREMY P. FEAKINS, CHIEF OPERATING OFFICER

 

WITNESSES:

/s/ [unintelligible]

/s/ [unintelligible]

 

 

6ex1013form10.htm

LOAN AGREEMENT

This Loan Agreement (the “Loan Agreement”) is made as of April 1, 2014, by and between Jeremy P. Feakins & Associates, LLC (the “Lender”) and Ocean Thermal Energy Corporation (the “Borrower”).

WITNESSETH:

WHEREAS, the Borrower desires to obtain certain credit facilities, as set forth in this Loan Agreement, and the Lender is willing to provide such credit facilities on the terms and conditions set forth herein;

NOW, THEREFORE, the Lender and the Borrower, intending to be legally bound, hereby agree as follows:

1.           The Credit Facilities. The Lender agrees, pursuant to the terms and conditions of this Loan Agreement and the other Loan Documents (as defined below), to make a loan to the Borrower in a principal amount of up to Two Million Two Hundred Sixty-five Thousand Dollars ($2,265,000) (the “Loan”). The Loan shall be evidenced by a Note (the “Note”) and shall be made in accordance with and subject to the terms and conditions of this Loan Agreement, the Note and the other Loan Documents.

2.           The Loan Documents. The following documents and materials (together with this Loan Agreement and any other accessory documents executed in connection herewith, such documents and materials, as they may be amended, restated, renewed and extended, are collectively referred to herein as the “Loan Documents”) have been or will be executed in connection with the Loan:

a.           Note;

b.           Warrants, of even date herewith, granting to Lender, as additional consideration for making the Loan to the Borrower, the right to purchase up to 12,912,500 shares of Ocean Thermal Energy Corp. common stock at a price of $0.425 per share.

3.           Interest Rate. The Loan shall bear interest as set forth in the Note.

4.           Repayment. Repayment of the Loan shall be made as set forth in the Note, and pre-payment shall be permitted as therein specified.

5.           Use of Proceeds. The proceeds of the Loan shall be used to support the development and construction costs for the Borrower’s Baha Mar Resort Seawater Air-conditioning project and general overhead expenses including costs associated with the Borrower’s public listing.

6.           Expenses and Fees. The Borrower agrees to pay the Lender a Facility Fee of $25,000.00 payable to the Lender upon execution of this Loan Agreement.

7.           Representations and Warranties. The Borrower, in order to induce the Lender to make the Loan, make the following representations, warranties and promises:

a.           Good Standing. The Borrower is a corporation, duly organized, validly existing and in good standing under the laws of the state of its incorporation, with powers adequate to own its properties, and to carry on its business as presently conducted by it.

 

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b.           Authority; Binding Agreement. The execution, delivery and performance of the Loan Documents are within the corporate power of the Borrower, have been duly authorized by the Borrower and are not in contravention of law or the terms of the Borrower’s Certificate of Incorporation and By-Laws. The execution, delivery and performance of the Loan Documents does not and will not contravene any documents, agreements or undertakings to which the Borrower is a party or by which it is bound. No approval of any person, corporation, governmental body or other entity is a prerequisite to the execution, delivery, validity or enforceability and performance of the Loan Documents. When executed by the Borrower, the Loan Documents to which the Borrower is a party will constitute the legally binding obligations of the Borrower, enforceable in accordance with their terms except as the enforceability may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors’ rights generally.

c.           Financial Information. Subject to any limitation stated therein or in connection therewith, all balance sheets, earning statements, accounts receivable lists and aging schedules and other financial data which have been or shall be furnished to the Lender by the Borrower to induce the Lender to enter into this Loan Agreement or otherwise in connection herewith, do or will fairly represent the financial condition of the Borrower in all material respects, are accurate, complete and correct in all material respects insofar as completeness may be necessary to give the Lender a true and accurate knowledge of the subject matter as of the date hereof. There are no material liabilities, direct or indirect, fixed or contingent, of the Borrower as of the date of such financial statements which are not reflected therein or in the notes thereto. There has been no material adverse change in the financial condition or operations of the Borrower since the date of said financial statements or since the respective dates on which either furnished the Lender with other financial data or other representations about their financial condition.

d.           Solvency. Any borrowings to be made by Borrower under this Loan Agreement do not and will not render Borrower insolvent. The Borrower is contemplating neither the filing of a petition under any state or federal bankruptcy or insolvency laws, nor the liquidation of all or a major portion of its property, and the Borrower has no knowledge or any reason to know of any person contemplating the filing of any such petition against it.

8.           Covenants. The Borrower agrees with the Lender that during the term of this Agreement and the other Loan Documents, and any extensions, replacements or renewals thereof (except as otherwise agreed by the Lender in writing):

a.           Insurance. The Borrower shall maintain adequate fire and extended coverage insurance, with the Lender named as lender loss payee, as well as general liability, business interruption and other insurance policies as are customary. All such insurance:

i.           Shall be issued in such amounts and by such companies as are satisfactory to the Lender; and

ii.           Shall contain provisions providing for thirty (30) days’ prior written notice to the Lender of any intended change or cancellation and providing that no such change or cancellation shall be effective as to the Lender in the absence of such notice.

b.           Notice of Default; Litigation. The Borrower shall notify the Lender in writing immediately upon becoming aware of any default hereunder, or of any actions, suits, investigations, or proceedings at law, in equity or before any governmental authority that may have a material adverse effect on the Borrower, pending or threatened, against or affecting the Borrower or involving the validity or enforceability of the Loan Documents.

 

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c.           Financial Information. The Borrower shall furnish or cause to be furnished to the Lender (i) on an annual basis, federal income tax returns of the Borrower and annual financial statements of the Borrower, compiled by certified public accountants, within one hundred twenty (120) days after the end of each fiscal year; and (ii) on a fiscal quarter basis, internally-prepared interim financial statements of the Borrower in a form satisfactory to Lender within thirty (30) days of the close of each fiscal quarter.

d.           Expenses. The Borrower shall pay all costs and expenses (including, but not limited to, attorneys’ fees) incidental to the Loan, to the preservation the Lender’s interests under the Loan Documents and to the collection of all obligations pursuant to the Loan Documents.

e.           Further Assurances. The Borrower shall execute such documents as the Lender may reasonably request relating to the Loan.

9.           Conditions Precedent. The obligation of the Lender to make the Loan is subject to the satisfaction by the Borrower of the following conditions precedent:

a.           The Borrower’s representations and warranties as contained herein shall be accurate and complete as of the date of closing;

b.           The Borrower shall not be in default under any of the covenants contained herein as of the date of closing;

c.           The Borrower shall have executed and delivered all of the Loan Documents to which it is a party;

d.           The Borrower shall have delivered to the Lender all of the documents (fully executed) and materials and satisfied all of the requirements reasonably requested by Lender to evidence the obligations of Borrower with respect to the Loan in such form and substance as may be reasonably acceptable to the Lender.

e.           The Borrower shall have paid all costs incurred in connection with the closing of the Loan, including without limitation, the attorneys’ fees of the Lender’s counsel (up to a maximum of $5,000) and all filing fees. To the extent that such costs are not paid at closing, the Borrower hereby authorizes the Lender to pay the same from the proceeds of the Loan; and

f.           The Borrower shall provide the Lender with written confirmation that there are no known disputes or pending actions between the Borrower and the Internal Revenue Service.

g.           The Borrower shall furnish the Lender with such other documents, opinions, certificates, evidence and other matters as may be reasonably requested by the Lender at or prior to closing.

10.           Events of Default; Acceleration; Remedies. The occurrence of any one or more of the following events shall constitute a default (an “Event of Default”) under this Agreement:

a.           If any statement, representation or warranty made by the Borrower in the Loan Documents, in connection therewith or any financial statement, report, schedule, or certificate furnished to the Lender by the Borrower, any of its representatives, employees or accountants during the term of this Agreement shall prove to have been false or misleading when made, or subsequently becomes false or misleading, in any material respect;

 

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b.           Default by the Borrower in payment within five (5) days of the due date of any principal or interest or other amounts called for under the Loan Documents;

c.           Default by the Borrower in the performance or observance of any of its obligations under the provisions, terms, conditions, warranties or covenants of the Loan Documents and such failure shall continue for a period of thirty (30) days or more following receipt of written notice thereof from the Lender.

d.           The occurrence of an event of default not cured within any applicable remedy period, under any obligations of the Borrower to the Lender other than under the Loan Documents, whether created prior to, concurrent with, or subsequent to obligations arising out of the Loan Documents;

e.           The occurrence of an event of default not cured within any applicable remedy period, under any other obligation of the Borrower in an aggregate amount of Ten Thousand Dollars ($10,000.00) or more, for borrowed money or under any lease;

f.           The dissolution, termination of existence, merger or consolidation of the Borrower, or a sale of all or substantially all of the assets of the Borrower out of the ordinary course of business;

g.           A change in the beneficial ownership of fifty percent (50%) or more (in the aggregate) of the issued and outstanding voting capital stock of the Borrower from the ownership on the date of this Loan Agreement, whether through transfer, issuance of stock or membership interests or otherwise.

h.           The Borrowers shall (i) apply for or consent to the appointment of a receiver, trustee or liquidator of any of their or its property, (ii) admit in writing their or its inability to pay their or its debts as they mature, (iii) make a general assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or insolvent, (v) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization to take advantage of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it or he in any proceeding under any such law or (vi) offer or enter into any compromise, extension or arrangement seeking relief or extension of their or its debts;

i.           In the event that proceedings shall be commenced or an order, judgment or decree shall be entered against the Borrower, without the application, approval or consent of the Borrower (as the case may be) in or by any court of competent jurisdiction, relating to the bankruptcy, dissolution, liquidation, reorganization or the appointment of a receiver, trustee or liquidator of the Borrower of all or a substantial part of their or its assets, and such proceedings, order, judgment or decree shall continue undischarged or unstayed for a period of 90 days;

j.           A final and unappealable judgment for the payment of money in excess of Ten Thousand Dollars ($10,000.00) shall be rendered against the Borrower and the same shall remain undischarged for a period of 60 days, during which period execution shall not be effectively stayed; or

 

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Upon the occurrence of any Event of Default, automatically upon an Event of Default under subsection (h) or (i) of this Section or otherwise at the election of the Lender, (i) all of the obligations of the Borrower to the Lender, either under this Loan Agreement or otherwise, will immediately become due and payable without further demand, notice or protest, all of which are hereby expressly waived; (ii) the Lender may proceed to protect and enforce its rights, at law, in equity, or otherwise, against the Borrower under the Uniform Commercial Code, any other applicable law, any Loan Document, any agreement between the Borrower and the Lender; and/or (iii) the Lender’s commitment to make further loans under this Agreement or any other agreement with the Borrower will immediately cease and terminate.

11.           General Provisions. The Lender and the Borrower agree as follows with respect to the Loan Documents:

a.           Waivers.

i.           The Borrower hereby waives, to the fullest extent permitted by law, presentment, notice, protest and all other demands and notices of any description and assent (1) to any extension of the time of payment or any other indulgence, and (2) to the release of any other person primarily or secondarily liable for the obligations evidenced hereby.

ii.           No delay or omission on the part of the Lender in exercising any right, privilege or remedy hereunder shall operate as a waiver of such right, privilege or remedy or of any other right, privilege or remedy under the Loan Documents. No waiver of any right, privilege or remedy or any amendment to the Loan Documents shall be effective unless made in writing and signed by the Lender. A waiver on any one occasion shall not be construed as a bar to or waiver of any such right, privilege and/or remedy on any future occasion. No single or partial exercise of any power hereunder shall preclude other or future exercise thereof or the exercise of any other right. The acceptance by the Lender of any payment after any default under the Loan Documents shall not operate to extend the time of payment of any amount then remaining unpaid hereunder or constitute a waiver of any rights of the Lender hereof under the Loan Documents.

b.           Binding Agreement. The Loan Documents shall inure to the benefit of and shall be binding upon the parties hereto and their respective heirs, legal representatives, successors, and assigns;

c.           Entire Agreement and Amendment. The Loan Documents constitute the entire agreement between the Lender and the Borrower with respect to the Loan and shall not be changed in any respect except by written instrument signed by the parties thereto;

d.           Governing Law. The Loan Documents and all rights and obligations thereunder, including matters of construction, validity, and performance, shall be governed by the laws of the Commonwealth of Pennsylvania;

e.           Severability. If any term, condition, or provision of the Loan Documents or the application thereof to any person or circumstance shall, to any extent, be held invalid or unenforceable according to law, then the remaining terms, conditions, and provisions of the Loan Documents, or the application of any such invalid or unenforceable term, condition or provision to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each term, condition, and provision of the Loan Documents shall be valid and enforced to the fullest extent permitted by law;

 

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f.            Notice. Any demand or notice required or permitted under the Loan Documents shall be effective if either: (i) hand-delivered to the addressee, or (ii) deposited in the mail, registered or certified, return receipt requested and postage prepaid, or delivered to a private express company addressed to the addressee: (A) at the address shown below, or (B) if such party has provided the other in writing with a change of address, at the last address so provided. Any notice or demand mailed as provided in this paragraph shall be deemed given and received on the earlier of: (i) the date received; (ii) or the date of delivery, refusal or non-delivery as indicated on the return receipt, if sent by mail or private express as provided above.

	
Borrower:

	
Lender:

	
Ocean Thermal Energy Corporation

	
Jeremy P. Feakins & Associates LLC

	
800 South Queen Street

	
800 South Queen Street

	
Lancaster, PA 17603

	
Lancaster, PA 17603

	  	  
	
With a copy to:

	
With copy to:

	
Gerald Koenig

	
Jeremy P. Feakins

	
8220 Crestwood Heights Drive, #1105

	
1200 West Penn Grant Road

	
McLean VA 22102

	
Lancaster, PA 17603

g.           Conflict Among Loan Documents. In the event of any conflict between the terms, covenants, conditions and restrictions contained in the Loan Documents, the term, covenant and condition or restriction which grants the greater benefit upon the Lender shall control. The determination as to which term, covenant, condition or restriction is the more beneficial shall be made by the Lender in its sole discretion.

h.           Costs of Collection. The Borrower agrees to pay on demand all reasonable out-of-pocket costs of collection under the Loan Documents, including reasonable attorneys’ fees, whether or not any foreclosure or other action is instituted by the Lender in its discretion.

i.            Set-Off, Etc. As additional collateral, the Borrower grants (1) a security interest in, or pledges, assigns and delivers, to the Lender, as appropriate, all deposits, credits and other property now or hereafter due from the Lender to the Borrower and (2) the right to set-off and apply (and a security interest in said right), from time to time hereafter and without demand or notice of any nature, all, or any portion, of such deposits, credits and other property, against the indebtedness evidenced by any of the Notes, whether the other collateral, if any, is deemed adequate or not.

j.            Rights Cumulative. All rights and remedies of the Lender, whether granted herein or otherwise, shall be cumulative and may be exercised singularly or concurrently.

IN WITNESS WHEREOF, the Borrowers and the Lender have executed this Loan Agreement as of the date indicated above.

 

 

	 	
OCEAN THERMAL ENERGY CORPORATION

 

By: /s/ Jeremy P. Feakins

Name: Jeremy P. Feakins

Title: Group Executive Chairman

 

JEREMY P. FEAKINS & ASSOCIATES, LLC

 

By: /s/ Edward M. Baer

Name: Edward M. Baer

Title: Partner & Chief Administrative Officer

 

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