Document:

ex1018form10.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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Agreement

	
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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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Agreement

	
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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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WARRANT

 

to Purchase up to
12,912,500 Shares of the

 

Common Stock,
$0.0001 Par Value Per Share,

 

of

 

OCEAN
THERMAL ENERGY CORPORATION

 

This is to certify
that, for value received, Jeremy P. Feakins & Associates, LLC
(“Lender”) or
any permitted transferee (Lender or such transferee being
hereinafter called the “Holder”) is entitled to purchase,
subject to the provisions of this Warrant, from Ocean Thermal
Energy Corporation, a Delaware corporation (“OTEC”), at any time on or after
the date hereof, an aggregate of up to 12,912,500 fully paid and
non-assessable shares of common stock, $0.0001 par value (the
“Common Stock”),
of OTEC at a price per share equal to $0.425, subject to adjustment
as herein provided (the “Exercise Price”).

 

1.           Exercise
of Warrant. Subject to the provisions hereof, this Warrant
may be exercised, in whole or in part, or sold, assigned or
transferred at any time or from time to time on or after the date
hereof This Warrant shall be exercised by presentation and
surrender hereof to OTEC at the principal office of OTEC,
accompanied by (i) a written notice of exercise, (ii) payment to
OTEC, for the account of OTEC, of the Exercise Price for the number
of shares of Common Stock specified in such notice, and (iii) a
certificate of the Holder specifying the event or events which have
occurred and entitle the Holder to exercise this Warrant. The
Exercise Price for the number of shares of Common Stock specified
in the notice shall be payable in immediately available
funds.

 

Upon such
presentation and surrender, OTEC shall issue promptly (and within
one business day if reasonably requested by the Holder) to the
Holder or its assignee, transferee or designee the number of shares
of Common Stock to which the Holder is entitled hereunder. OTEC
covenants and warrants that such shares of Common Stock, when so
issued, will be duly authorized, validly issued, fully paid and
non-assessable, and free and clear of all liens and
encumbrances.

 

If this Warrant is
exercised in part only, OTEC shall, upon surrender of this Warrant
for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the shares
of Common Stock issuable hereunder. Upon receipt by OTEC of this
Warrant, in proper form for exercise, the Holder shall be deemed to
be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of
OTEC may then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to the
Holder. OTEC shall pay all expenses, and any and all United States
federal, state and local taxes and other charges, that may be
payable in connection with the preparation, issuance and delivery
of stock certificates pursuant to this Paragraph 1 in the name of
the Holder or its assignee, transferee or designee.

 

2.           Reservation
of Shares; Preservation of Rights of Holder.

 

OTEC shall at all
times while this Warrant is outstanding and unexercised, maintain
and reserve, free from preemptive rights, such number of authorized
but unissued shares of Common Stock as may be necessary so that
this Warrant may be exercised without any additional authorization
of Common Stock after giving effect to all other options, warrants,
convertible securities and other rights to acquire shares of Common
Stock at the time outstanding. OTEC further agrees that (i) it will
not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary
act or omission, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder, and (ii) it will promptly take
all action reasonably necessary to protect the rights of the Holder
against dilution as provided herein.

 

 

	
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3.           Fractional
Shares. OTEC shall not be required to issue any fractional
shares of Common Stock upon exercise of this Warrant. In lieu of
any fractional shares, the Holder shall be entitled to receive an
amount in cash equal to the amount of such fraction multiplied by
the Exercise Price.

 

4.           Exchange
or Loss of Warrant. This Warrant is exchangeable, without
expense, at the option of the Holder, upon presentation and
surrender hereof at the principal office of OTEC for other warrants
of different denominations entitling the Holder to purchase, in the
aggregate, the same number of shares of Common Stock issuable
hereunder. The term “Warrant” as used herein includes
any warrants for which this Warrant may be exchanged. Upon receipt
by OTEC of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, OTEC will execute and deliver a new Warrant
of like tenor and date.

 

5.           Adjustment.
The number of shares of Common Stock issuable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment
from time to time as provided in this Paragraph.

 

(A)           Stock
Dividends, etc.

 

(1)           Stock
Dividends. In case OTEC shall pay or make a dividend or
other distribution on any class of capital stock of OTEC payable in
Common Stock, the number of shares of Common Stock issuable upon
exercise of this Warrant shall be increased by multiplying such
number of shares by a fraction of which the denominator shall be
the number of shares of Common Stock outstanding at the close of
business on the day immediately preceding the date of such
distribution and the numerator shall be the sum of such number of
shares and the total number of shares of Common Stock constituting
such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day
following such distribution.

 

(2)           Subdivisions.
In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the number of shares of
Common Stock issuable upon exercise of this Warrant at the opening
of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased,
and, conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock,
the number of shares of Common Stock issuable upon exercise of this
Warrant at the opening of business on the day following the day
upon which such combination becomes effective shall be
proportionately decreased, such increase or decrease, as the case
may be, to become effective immediately after the opening of
business on the day following the date upon which such subdivision
or combination becomes effective.

 

(3)           Reclassifications.
The reclassification of Common Stock into securities (other than
Common Stock) and/or cash and/or other consideration shall be
deemed to involve a subdivision or combination, as the case may be,
of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number or amount of
securities and/or cash and/or other consideration outstanding
immediately thereafter and the effective date of such
reclassification shall be deemed to be “the day upon which
such subdivision becomes effective,” or “the day upon
which such combination becomes effective,” as the case may
be, within the meaning of clause (2) above.

 

	
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(4)           Optional
Adjustments. OTEC may make such increases in the number of
shares of Common Stock issuable upon exercise of this Warrant, in
addition to those required by this subparagraph (A), as shall be
determined by its Board of Directors to be advisable in order to
avoid taxation so far as practicable of any dividend of stock or
stock rights or any event treated as such for federal income tax
purposes to the recipients.

 

(5)           Adjustment
to Exercise Price. Whenever the number of shares of Common
Stock issuable upon exercise of this Warrant is adjusted as
provided in this Paragraph 5(A), the Exercise Price shall be
adjusted by a fraction in which the numerator is equal to the
number of shares of Common Stock issuable prior to the adjustment
and the denominator is equal to the number of shares of Common
Stock issuable after the adjustment, rounded to the nearest
cent.

 

(B)           Certain
Sales of Common Stock.

 

(1)           Adjustment
to Shares Issuable. If and whenever OTEC sells or otherwise
issues (other than under circumstances in which Paragraph 5(A)
applies) any shares of Common Stock, the number of shares of Common
Stock issuable upon exercise of this Warrant shall be increased by
multiplying such number of shares by a fraction, the denominator of
which shall be the number shares of Common Stock outstanding at the
close of business on the day immediately preceding the date of such
sale or issuance and the numerator of which shall be the sum of
such number of shares and the total number of shares constituting
such sale or other issuance, such increase to become effective
immediately after the opening of business on the day following such
sale or issuance.

 

(2)           Adjustment
to Exercise Price. If and whenever OTEC sells or otherwise
issues any shares of Common Stock (excluding any stock dividend or
other issuance not for consideration to which Paragraph 5(A)
applies or shares of Common Stock issued or issuable in connection
with awards granted under the OTEC Stock Option Plans) for a
consideration per share which is less than the Exercise Price at
the time of such sale or other issuance, then in each such case the
Exercise Price shall be forthwith changed (but only if a reduction
would result) to the price (calculated to the nearest cent)
determined by dividing: (i) an amount equal to the sum of (aa) the
number of shares of Common Stock outstanding immediately prior to
such issue or sale, multiplied by the then effective Exercise
Price, plus (bb) the total consideration, if any, received and
deemed received by OTEC upon such issue or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such
issue or sale.

 

(C)           Definition.
For purposes of this Paragraph 5, the term “Common
Stock” shall include (1) any shares of OTEC of any class or
series which has no preference or priority in the payment of
dividends or in the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of OTEC and
which is not subject to redemption by OTEC, and (2) any rights or
options to subscribe for or to purchase shares of Common Stock or
any stock or securities convertible into or exchangeable for shares
of Common Stock (such convertible or exchangeable stock or
securities being hereinafter called “Convertible Securities”), whether
or not such rights or options or the right to convert or exchange
any such Convertible Securities are immediately exercisable. For
purposes of any adjustments made under Paragraph 5(A) or 5(B) as a
result of the distribution, sale or other issuance of rights or
options or Convertible Securities, the number of shares of Common
Stock outstanding after or as a result of the occurrence of events
described in Paragraph 5(A)(1) or 5(B)(1) shall be calculated by
assuming that all such rights, options or Convertible Securities
have been exercised for the maximum number of shares issuable
thereunder.

 

 

	
Warrant

	
3

	
 

 

 

 

 

 

6.           Notice.
Whenever the number of shares of Common Stock for which this
Warrant is exercisable is adjusted as provided in Paragraph 5, OTEC
shall promptly compute such adjustment and mail to the Holder a
certificate, signed by the principal financial officer of OTEC,
setting forth the number of shares of Common Stock for which this
Warrant is exercisable as a result of such adjustment having become
effective.

 

7.           Rights
of the Holder.

 

(A)           Without
limiting the foregoing or any remedies available to the Holder, it
is specifically acknowledged that the Holder would not have an
adequate remedy at law for any breach of the provisions of this
Warrant and shall be entitled to specific performance of
OTEC’s obligations under, and injunctive relief against any
actual or threatened violation of the obligations of any person
subject to, this Warrant.

 

(B)           The
Holder shall not, by virtue of its status as Holder, be entitled to
any rights of a stockholder in OTEC.

 

8.           Termination.
This Warrant and the rights conferred hereby shall terminate one
year from the date of OTEC’s initial public offering on a
public exchange.

 

9.           Governing
Law. This Warrant shall be deemed to have been delivered in,
and shall be governed by and interpreted in accordance with the
substantive laws of, the Commonwealth of Pennsylvania, except to
the extent that Delaware law may govern certain aspects of this
Warrant as it relates to OTEC.

 

 Dated: April 1,
2014

 

 

	
 

	
OCEAN THERMAL
ENERGY CORPORATION

 

By: /s/ Jeremy P.
Feakins

Name: Jeremy P.
Feakins

Title: Group
Executive Chairman

 

 

	
Warrant

	
4

	
 

 

 

 

 

 

PROMISSORY
NOTE

 

	
$2,265,000

	
April 1,
2014

 

FOR VALUE RECEIVED,
Ocean Thermal Energy Corporation, a Delaware corporation with an
address of 800 South Queen Street, Lancaster, PA 17603 (the
“Borrower”),
hereby promises to pay to the order of Jeremy P. Feakins &
Associates, LLC (the “Lender”), at 800 South Queen
Street, Lancaster, PA 17603, or at any other place designated to
the Borrower by the Lender in writing, the principal sum of Two
Million Two Hundred Sixty-five Thousand Dollars ($2,265,000), with
interest as herein specified, and under the terms and conditions
stated herein.

 

1.           Repayment
of Principal and Interest. Principal and interest shall be
repaid by Borrower to Lender as follows: The Borrower shall repay
the principal amount of $550,000.00 on October 31, 2014;
$990,000.00 on November 30, 2014; $450,000.00 on December 31, 2014;
and $275,000.00 on January 31, 2015 (the “Maturity Dates”), the Borrower
shall pay to the Lender the unpaid principal balance of the Loan,
all accrued and unpaid interest thereon, and all other costs and
amounts payable to the Lender hereunder.

 

All amounts payable
hereunder are payable in lawful money of the United States of
America at the address of the Lender set forth above in immediately
available funds. Prior to a Default, all payments shall be applied
first on account of other charges, second to accrued interest due
on the unpaid balance of principal and finally the remainder of
such payments shall be applied to unpaid principal. If a Default
occurs, payments and monies received may be applied in any manner
and order deemed appropriate by the Lender.

 

2.           Rates
and Calculation of Interest. Interest on the outstanding and
unpaid principal balance of the Loan shall be calculated for the
actual number of days in the then current calendar year that
principal is outstanding, based upon a year of three hundred sixty
(360) days, accrue and shall be paid at the fixed rate of interest
per annum equal to ten percent (10%).

 

In no event shall
the rate of interest hereunder be in excess of the maximum amount
permitted by law. In the event the rate of interest hereunder is
determined to be in excess of the maximum amount permitted by law,
such interest rate shall be automatically decreased to the maximum
rate permitted by law.

 

In addition to all
other rights contained in this Note, if a Default (defined herein)
occurs and as long as a Default continues, all outstanding sums
hereunder shall bear interest at the interest rate otherwise
prevailing under the preceding paragraph, plus 3% (the
“Default Rate”).
The Default Rate shall also apply from acceleration until all
unpaid sums and obligations (whether matured or contingent)
hereunder and any judgments thereon are paid in full.

 

3.           Prepayment.
This Note may be prepaid in whole or in part at any time at the
option of the Borrower without premium or penalty. Each prepayment
shall be applied first to the payment in full of other charges
payable hereunder, then to accrued interest and the remainder of
such payment, if any, shall be applied to the reduction of the
unpaid principal balance.

 

4.           Loan
Agreement. This Note is the Note referred to in the
agreements between the Borrower and the Lender, including, but not
limited to the Loan Agreement of even date herewith (the
“Loan
Agreement”) and the Loan Documents referenced therein
(the “Loan
Documents”). The failure of the Borrower to execute
any such agreement or other document shall not affect the validity
of this Note. This Note shall evidence all obligations of the
Borrower to the Lender under the Loan Agreement and Loan
Documents.

 

 

	
Promissory
Note

	
1

	
 

 

 

 

 

5.           Integration.
The terms and conditions of this Note, together with the terms and
conditions of the Loan Agreement and the Loan Documents, contains
the entire understanding between the Borrower and the Lender with
respect to the indebtedness evidenced hereby. Such understanding
may not be amended, modified, or terminated except in writing duly
executed by the parties hereto.

 

6.           Security.
This Note is unsecured.

 

7.           Default
and Remedies. The occurrence of any default or event of
default (“Default”), as defined in the Loan
Agreement and/or the Loan Documents, shall constitute a Default of
and under this Note.

 

When a Default
occurs, the Lender, at its option, may declare the entire unpaid
balance of principal of this Note, unpaid interest thereon and all
other charges, costs and expenses provided for herein, in the Loan
Agreement and/or any of the Loan Documents, and/or pursuant to any
other agreements between Borrower and Lender, immediately due and
payable without notice to or demand upon the Borrower. Upon the
occurrence of a Default, the Lender shall have all of the rights
and remedies with respect the Loan Agreement, the Loan Documents,
this Note, and/or otherwise provided for by law, in equity, and
otherwise.

 

8.           Waiver.
The undersigned hereby waives presentment for payment, demand,
notice of nonpayment, notice of protest, and protest of this Note,
and all of the notices in connection with delivery, acceptance,
performance, default, or enforcement of the payment of this Note.
The failure by the Lender to exercise any right or remedy shall not
be taken to waive the exercise of the same thereafter for the same
or any subsequent Default. The Borrower waives any claim of
set-off, recoupment and/or counterclaim. All notices to the
Borrower shall be adequately given if mailed postage prepaid to the
address appearing in the Lender’s records. The Borrower
intends this Note to be a sealed instrument and to be legally bound
hereby.

 

9.           Holder.
The references to “Lender” herein shall be deemed to be
references to any subsequent assignee, transferee, or other holder
of this Note.

 

10.         Governing
Law. This Note shall be construed in accordance with the
domestic internal laws of the Commonwealth of Pennsylvania, without
reference to any conflict of laws provisions, as a Note made,
delivered and to be wholly performed within the Commonwealth of
Pennsylvania.

 

11.         Judicial
Proceedings. Any suit, action, or proceeding, whether claim
or counterclaim, brought or instituted by the Borrower or the
Lender, or any of their successors or assigns, on or with respect
to this Note or the dealings of the Borrower or the Lender with
respect hereto, shall be tried only by a court and not by a jury.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. In connection therewith, the Borrower agrees that any
suit, action or proceeding arising hereunder or with respect hereto
will be instituted in the Court of Common Pleas of York County,
Pennsylvania, or the United States District Court for the Middle
District of Pennsylvania, and irrevocably and unconditionally
submits to the jurisdiction of each such Court for such purpose.
Further, the Borrower waives any right it may have to claim or
recover, in any such suit, action or proceeding, any special,
exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages. THE BORROWER ACKNOWLEDGES
AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND MATERIAL ASPECT OF
THIS NOTE AND THAT THE LENDER WOULD NOT EXTEND CREDIT IF THE
WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART OF THIS
NOTE.

 

 

	
Promissory
Note

	
2

	
 

 

 

 

 

12.         Confession
of Judgment. Upon Default, the Borrower hereby irrevocably
authorizes the Prothonotary or any attorney of any court of record
in Pennsylvania or elsewhere to appear for and confess judgment
against the Borrower for any and all amounts unpaid hereunder,
together with any other charges, costs and expenses for which
Borrower is liable under this Note, and together with fees of
counsel in the reasonable amount of five percent (5%) of all of the
foregoing (but in no event less than $5,000.00) and costs of suit,
releasing all errors and waiving all rights of appeal. If a copy of
this Note, verified by affidavit, shall have been filed in such
proceeding, it shall not be necessary to file the original as a
warrant of attorney. The Borrower hereby waives the right to any
stay of execution and the benefit of all exemption laws now or
hereafter in effect. No single exercise of this warrant and power
to confess judgment shall be deemed to exhaust this power, whether
or not any such exercise shall be held by any court to be invalid,
voidable or void, but this power shall continue undiminished and
may be exercised from time to time as often as the Lender shall
elect until all sums due hereunder shall have been paid in full.
Interest shall continue to accrue after entry of judgment
hereunder, by confession, default, or otherwise, at the higher of
the prevailing rate of interest under this Note, or the judgment
rate of interest under applicable law. All waivers granted in this
paragraph are given to the extent permitted by the Pennsylvania
Rules of Civil Procedure.

 

13.         NOTICE:
THIS NOTE CONTAINS, AT PARAGRAPH 12, A WARRANT OF ATTORNEY TO
CONFESS JUDGMENT AGAINST THE BORROWER. IN GRANTING THIS WARRANT OF
ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER, THE BORROWER
HEREBY KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY, AND ON THE ADVICE
OF SEPARATE COUNSEL OF THE BORROWER, UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS THE BORROWER HAS OR MAY HAVE TO PRIOR NOTICE AND AN
OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS
OF THE UNITED STATES, THE COMMONWEALTH OF PENNSYLVANIA, OR OF ANY
OTHER STATE.

 

 

	
 

	
BORROWER:

 

OCEAN THERMAL
ENERGY CORPORATION

 

By: /s/ Jeremy P.
Feakins

Name: Jeremy P.
Feakins

Title: Group
Executive Chairman

Taxpayer I.D. No.:
80-0968237

 

 

	
Promissory
Note

	
3

	
 

 

 

 

 

 

DISCLOSURE FOR
CONFESSION OF

JUDGMENT AND EXECUTION FOR
NON-INDIVIDUALS

 

DATE: April 1,
2014

 

1.           TODAY,
THE UNDERSIGNED FIRM IS EXECUTING A PROMISSORY NOTE AND OTHER
RELATED INSTRUMENTS FOR $2,265,000, OBLIGATING THE UNDERSIGNED FIRM
TO PAY THAT AMOUNT.

 

2.           A
REPRESENTATIVE OF THE LENDER (OR OUR INDEPENDENT LEGAL COUNSEL)
(THE “REPRESENTATIVE”) HAS EXPLAINED TO US IN OUR
CAPACITIES AS A REPRESENTATIVE OF THE UNDERSIGNED FIRM THAT THE
NOTE THE UNDERSIGNED FIRM IS SIGNING CONTAINS WORDING THAT WOULD
PERMIT THE LENDER TO OBTAIN A JUDGMENT AGAINST THE UNDERSIGNED FIRM
AT THE COURTHOUSE. THE REPRESENTATIVE HAS ALSO EXPLAINED TO US IN
OUR CAPACITIES OF PRESIDENT AND SECRETARY RESPECTIVELY OF THE
UNDERSIGNED FIRM THAT THE JUDGMENT MAY BE OBTAINED AGAINST THE
UNDERSIGNED FIRM WITHOUT NOTICE TO THE UNDERSIGNED FIRM AND WITHOUT
OFFERING THE UNDERSIGNED FIRM AN OPPORTUNITY TO DEFEND AGAINST THE
ENTRY OF THE JUDGMENT, AND THAT THE JUDGMENT MAY BE COLLECTED BY
ANY LEGAL MEANS.

 

3.           THE
REPRESENTATIVE HAS ALSO EXPLAINED TO US IN OUR CAPACITIES AS A
REPRESENTATIVE OF THE UNDERSIGNED FIRM THAT COLLECTION OF THE
JUDGMENT MAY BE ACCOMPLISHED BY THE ISSUANCE OF A WRIT OF
EXECUTION, GARNISHMENT, LEVY AND/OR OTHER EXECUTION PROCEEDINGS
WHICH MAY BE COMMENCED AGAINST THE UNDERSIGNED FIRM BY THE LENDER
WITHOUT PRIOR NOTICE AND HEARING AND THAT EXECUTION PROCEEDINGS MAY
INVOLVE THE SEIZURE AND SALE OF THE UNDERSIGNED FIRM’S
PROPERTY BY A SHERIFF, MARSHALL OR OTHER AUTHORITY.

 

4.           IN
SIGNING THE NOTE, THE UNDERSIGNED FIRM IS KNOWINGLY,
UNDERSTANDINGLY AND VOLUNTARILY CONSENTING TO THE CONFESSION OF
JUDGMENT AND THE UNDERSIGNED FIRM IS WAIVING THE UNDERSIGNED
FIRM’S RIGHTS, TO THE EXTENT PERMITTED BY LAW, TO RESIST THE
ENTRY OF JUDGMENT AGAINST THE UNDERSIGNED FIRM AT THE COURTHOUSE
INCLUDING:

 

(a)

THE RIGHT TO NOTICE
AND A HEARING;

(b)

THE RIGHT TO REDUCE
OR SET-OFF A CLAIM BY DEDUCTING A CLAIM THE UNDERSIGNED FIRM MAY
HAVE AGAINST THE LENDER (CALLED THE “RIGHT OF
DEFALCATION”);

(c)

RELEASE OF
ERROR;

(d)

INQUEST (THE RIGHT
TO ASCERTAIN WHETHER THE RENTS AND PROFITS OF THE UNDERSIGNED
FIRM’S REAL ESTATE WILL BE SUFFICIENT TO SATISFY THE JUDGMENT
WITHIN SEVEN YEARS);

(e)

STAY OF
EXECUTION;

(f)

EXEMPTION LAWS NOW
IN FORCE OR HEREAFTER TO BE PASSED;

(g)

THE RIGHT TO DEFEND
AGAINST THE ENTRY OF JUDGMENT AGAINST THE UNDERSIGNED
FIRM.

 

 

	
Promissory
Note

	
4

	
 

 

 

 

 

5.           IN
SIGNING THE NOTE, THE UNDERSIGNED FIRM IS KNOWINGLY,
UNDERSTANDINGLY AND VOLUNTARILY CONSENTING TO THE ISSUANCE AND
PURSUIT AGAINST THE UNDERSIGNED FIRM OF EXECUTION, GARNISHMENT,
LEVY AND/OR OTHER EXECUTION PROCEEDINGS AND WAIVING THE UNDERSIGNED
FIRM’S RIGHTS, TO THE EXTENT PERMITTED BY LAW, TO NOTICE AND
A HEARING PRIOR TO THE ISSUANCE AND PURSUIT OF EXECUTION,
GARNISHMENT, LEVY AND/OR OTHER EXECUTION PROCEEDINGS.

 

6.           THE
UNDERSIGNED FIRM CERTIFIES THAT THE UNDERSIGNED FIRM HAS DISCUSSED
THIS DISCLOSURE WITH THE UNDERSIGNED FIRM’S ATTORNEY-AT-LAW
AND THE ATTORNEY-AT-LAW FULLY EXPLAINED TO THE UNDERSIGNED FIRM THE
CONTENTS AND MEANING OF THIS DISCLOSURE.

 

THE UNDERSIGNED
FIRM IS A CORPORATION WHICH IS INCORPORATED UNDER THE LAWS OF THE
STATE OF DELAWARE AND THE UNDERSIGNED INDIVIDUALS ARE THE
REPRESENTATIVES OF THE UNDERSIGNED FIRM DULY AUTHORIZED TO EXECUTE
THIS DISCLOSURE ON BEHALF OF THE UNDERSIGNED FIRM. WE CERTIFY THAT
THE BLANKS IN THIS DISCLOSURE WERE FILLED IN WHEN WE INITIALED AND
SIGNED IT, AND THAT THE UNDERSIGNED FIRM RECEIVED A COPY OF THE
DISCLOSURE AT THE TIME OF SIGNING.

 

TERMS USED HEREIN
SHALL BE CONSTRUED AS USED AND/OR DEFINED IN THE NOTE.

 

	
NAME OF
FIRM:

	
 

	
OCEAN THERMAL
ENERGY CORPORATION

	
 

	
 

	
 

	
 

	
 

	
By:/s/ Jeremy P.
Feakins

	
 

	
 

	
Name: Jeremy P.
Feakins

	
 

	
 

	
Title: Group
Executive Chairman

 

The foregoing Note
and Disclosure sworn to and subscribed before me this 21st day of
April, 2015.

 

 

	
 

	
/s/ George A.
Duncan

Notary
Public

My Commission
Expires: July 11, 2015

 

 

 

 

Commonwealth of
Pennsylvania

County of
Lancaster

[Notarial
Seal]

 

 

	
Promissory
Note

	
5

	
 

 

 

 

FORBEARANCE
AND LOAN EXTENSION AGREEMENT

 

 This FORBEARANCE AND LOAN
EXTENSION AGREEMENT (this “Amendment”), is entered into this
4th day of April, 2016, by and between OCEAN THERMAL ENERGY
CORPORATION (“OTE”), a Delaware corporation with an
address of 800 South Queen Street, Lancaster, PA 17603 (the
“Borrower”), and
JEREMY P. FEAKINS & ASSOCIATES, LLC, a Delaware limited
liability company with an address of 800 South Queen Street,
Lancaster, PA 17603 (the “Lender”), on the
following:

 

Premises

 

 Borrower and Lender entered
into that certain Loan Agreement as of April 1, 2014 (the
“Loan
Agreement”), providing for a loan of $2,265,000 from
Lender to Borrower (the “Loan”). The obligation to repay
the Loan is evidenced by that certain Promissory Note of even date
executed and delivered by Borrower to Lender (the
“Note”). As
additional consideration for the Loan, Borrower granted to Lender a
warrant to purchase 12,912,500 shares of Borrower’s common
stock at a price of $0.425 per share at any time on or before one
year from the date of OTE’s initial public offering on a
public exchange (the “Warrant”). The Loan Agreement, the
Note, and the Warrant are together referred to as the
“Loan
Documents.” Pursuant to the terms of the Loan
Documents, the Note was payable in full on or before January 31,
2015. The Note was not paid when due and is now in
default.

 

 Lender desires to forbear
from seeking collection of the Note and exercising its remedies
under the Loan Documents in order to enhance its financial recovery
and obtain an extension of the Warrant.

 

Agreement

 

 NOW THEREFORE, for and in
consideration of the foregoing premises, which are incorporated
herein by reference, the mutual promises and covenants set forth
herein, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree
as follows.

 

 1.           Confirmation
of Indebtedness. Borrower confirms the indebtedness due
Lender under the Loan Documents.

 

 2.           Waiver
of Default. Lender waives Borrower’s default as of the
date of this Amendment under the Loan Documents and agrees not to
take any action or seek any remedy or relief under any of the Loan
Documents arising from the non-payment by Borrower of the Note and
Loan as of the date hereof.

 

 3.           Forbearance
and Extension. Lender shall forbear from collecting the Loan
and Note under the Loan Documents or exercising any right or remedy
thereunder as of the date hereof and extends the due date for
repayment of the Loan and the payment of the Note to January 31,
2017. The Lender shall mark conspicuously on the original of the
Note in Lender’s possession the foregoing extension or, at
the request of the Borrower, execute and deliver to Borrower an
amendment or allonge to be affixed to the Note further evidencing
such extension.

 

 4.           Extension
of Warrant. Borrower extends the expiration date of the
Warrant so that it evidences the right of the Lender to purchase
12,912,500 shares of Borrower’s common stock at a price of
$0.425 per share at any time on or before the later of January 31,
2017 or before one year from the date of OTE’s initial public
offering on a public exchange. At the request of Lender, Borrower
will execute and deliver to Lender a new replacement Warrant
reflecting these revised terms against surrender of the original
Warrant.

 

1

 

 

 

 

 

 5.           Confirmation
of Loan Documents. Except as expressly modified by the terms
of this Amendment, the terms, covenants, conditions,
representations, and warranties, and each of them, shall remain in
full force and effect.

 

 6.           Signature.
This Amendment may be executed in multiple counterparts of like
tenor, each of which shall be deemed an original and all of which
taken together will constitute one and the same instrument.
Counterpart signatures of this Amendment that are manually signed
and delivered by a uniquely marked, computer-generated signature in
portable document format (PDF) or other electronic method shall be
deemed to constitute signed original counterparts hereof and shall
bind the parties signing and delivering in such manner and shall be
the same as the delivery of an original.

 

 DATED as of the year and date first
above written by the undersigned duly authorized
signatories.

 

BORROWER:

 

OCEAN THERMAL
ENERGY CORPORATION

 

By: /s/ Jeremy
Feakins

Name: Jeremy
Feakins

Title: Chairman
& CEO

 

LENDER

 

JEREMY P. FEAKINS
& ASSOCIATES LLC

 

By: /s/ Edward M.
Baer

Name: Edward M.
Baer

Title: Partner
& CFO

 

2ex1021form10.htm

 

LOAN
AGREEMENT

 

 This Loan Agreement (the
“Loan
Agreement”) is made as of December 22, 2014, by and
between Mart Inn, Inc. (a New York Corporation) (the
“Lender”) and
Ocean Thermal Energy Corporation (the “Borrower”).

 

W
I T N E S S E T H:

 

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

 

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

 

1.           The
Credit Facilities. The Lender agrees, pursuant to the terms
and conditions of this Loan Agreement and the other Loan Documents
(as defined below), to make a loan to the Borrower in a principal
amount of Two Hundred Thousand Dollars ($200,000.00) (the
“Loan”). The
Loan shall be evidenced by a Note (the “Note”) and shall be made in
accordance with and subject to the terms and conditions of this
Loan Agreement, the Note, and the other Loan
Documents.

 

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

 

a.           Note;

 

b.           Warrants,
of even date herewith, granting to Lender, as additional
consideration for making the Loan to the Borrower, the right to
purchase up to 200,000 shares of Ocean Thermal Energy Corp. common
stock at a price of $1.00 per share.

 

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

 

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

 

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

 

6.           Expenses
and Fees. The Borrower and Lender agree that each shall bear
its own expenses and fees related to this transaction.

 

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

 

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

 

 

	
Loan
Agreement

	
1

	
 

 

 

 

 

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

 

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

 

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

 

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

 

a.           Insurance.
The Borrower shall maintain adequate insurance policies as are
customary.

 

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

 

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

 

	
Loan
Agreement

	
2

	
 

 

 

 

 

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

 

e.           Further
Assurances. Each Party shall execute such documents as the
as the other Party may reasonably request relating to the
Loan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

	
Loan
Agreement

	
3

	
 

 

 

 

 

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

 

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

 

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

 

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

 

a.           Waivers.

 

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

 

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

 

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

 

	
Loan
Agreement

	
4

	
 

 

 

 

 

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

 

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

 

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

 

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

 

	
Borrower:

	
Lender:

	
Ocean Thermal
Energy Corporation

	
Mart Inn,
Inc.

	
800 South Queen
Street

	
c/o LaDelfa,
Schoder & Walker PC

	
Lancaster, PA
17603

	
112 Main
Street

	
 

	
PO Box
100

	
 

	
Mount Morris, NY
14510

	
With a copy
to:

	
 

	
Gerald
Koenig

	
 

	
1629 K Street,
NW

	
 

	
Suite
300

	
 

	
Washington, DC
20006

	
 

	
 

	
 

 

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

 

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

 

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

 

[SIGNATURE PAGE
FOLLOWS]

 

 

	
Loan
Agreement

	
5

	
 

 

 

 

 

 

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

 

OCEAN THERMAL
ENERGY CORPORATION

 

By: /s/ Jeremy P.
Feakins

Name: Jeremy P.
Feakins

Title: Group
Executive Chairman

 

 

MART INN,
INC.

 

By: /s/ Martin
Estruch

Name: Martin
Estruch

Title:
President

 

 

	
Loan
Agreement

	
6

	
 

 

 

 

 

 

PROMISSORY
NOTE

 

	
$200,000.00

	
December 22,
2014

 

 

FOR VALUE RECEIVED,
Ocean Thermal Energy Corporation, a Delaware corporation with an
address of 800 South Queen Street, Lancaster, PA 17603 (the
“Borrower”),
hereby promises to pay to the order of Mart Inn, Inc. (the
“Lender”), at
c/o LaDelfa, Schoder & Walker PC, 112 Main Street, PO Box 100,
Mount Morris, NY 14510, or at any other place designated to the
Borrower by the Lender in writing, the principal sum of Two Hundred
Thousand Dollars ($200,000.00), with interest as herein specified,
and under the terms and conditions stated herein.

 

1.           Repayment
of Principal and Interest. Principal and interest shall be
repaid by Borrower to Lender as follows: The Borrower shall repay
the principal amount of $200,000.00 on the earlier of (i) March 31,
2015, or (ii) the completion by the Company of equity financing
resulting in the Company’s receipt of gross proceeds of at
least $2,000,000, or (iii) the Financial Closing of the Baha Mar
Project and release of funds by Deutsche Bank; (the
“Maturity
Date”), the Borrower shall pay to the Lender the
unpaid principal balance of the Loan, all accrued and unpaid
interest thereon, and all other costs and amounts payable to the
Lender hereunder.

 

All amounts payable
hereunder are payable in lawful money of the United States of
America at the address of the Lender set forth above in immediately
available funds. Prior to a Default, all payments shall be applied
first on account of other charges, second to accrued interest due
on the unpaid balance of principal and finally the remainder of
such payments shall be applied to unpaid principal. If a Default
occurs, payments and monies received may be applied in any manner
and order deemed appropriate by the Lender.

 

2.           Rates
and Calculation of Interest. Interest on the outstanding and
unpaid principal balance of the Loan shall be calculated for the
actual number of days in the then current calendar year that
principal is outstanding, based upon a year of three hundred sixty
(360) days, accrue and shall be paid at the fixed rate of interest
per annum equal to twelve percent (12%).

 

In no event shall
the rate of interest hereunder be in excess of the maximum amount
permitted by law. In the event the rate of interest hereunder is
determined to be in excess of the maximum amount permitted by law,
such interest rate shall be automatically decreased to the maximum
rate permitted by law.

 

In addition to all
other rights contained in this Note, if a Default (defined herein)
occurs and as long as a Default continues, all outstanding sums
hereunder shall bear interest at the interest rate otherwise
prevailing under the preceding paragraph, plus 10% (the
“Default Rate”).
The Default Rate shall also apply from acceleration until all
unpaid sums and obligations (whether matured or contingent)
hereunder and any judgments thereon are paid in full.

 

3.           Prepayment.
This Note may be prepaid in whole or in part at any time at the
option of the Borrower without premium or penalty. Each prepayment
shall be applied first to the payment in full of other charges
payable hereunder, then to accrued interest and the remainder of
such payment, if any, shall be applied to the reduction of the
unpaid principal balance.

 

	
Promissory
Agreement

	
1

	
 

 

 

 

 

4.           Loan
Agreement. This Note is the Note referred to in the
agreements between the Borrower and the Lender, including, but not
limited to the Loan Agreement of even date herewith (the
“Loan Agreement”) and the Loan Documents referenced
therein (the “Loan Documents”). The failure of the
Borrower to execute any such agreement or other document shall not
affect the validity of this Note. This Note shall evidence all
obligations of the Borrower to the Lender under the Loan Agreement
and Loan Documents.

 

5.           Integration.
The terms and conditions of this Note, together with the terms and
conditions of the Loan Agreement and the Loan Documents, contains
the entire understanding between the Borrower and the Lender with
respect to the indebtedness evidenced hereby. Such understanding
may not be amended, modified, or terminated except in writing duly
executed by the parties hereto.

 

6.           Security.
This Note is unsecured.

 

7.           Default
and Remedies. The occurrence of any default or event of
default (“Default”), as defined in the Loan
Agreement and/or the Loan Documents, shall constitute a Default of
and under this Note.

 

When a Default
occurs, the Lender, at its option, may declare the entire unpaid
balance of principal of this Note, unpaid interest thereon and all
other charges, costs and expenses provided for herein, in the Loan
Agreement and/or any of the Loan Documents, and/or pursuant to any
other agreements between Borrower and Lender, immediately due and
payable without notice to or demand upon the Borrower. Upon the
occurrence of a Default, the Lender shall have all of the rights
and remedies with respect the Loan Agreement, the Loan Documents,
this Note, and/or otherwise provided for by law, in equity, and
otherwise.

 

8.           Waiver.
The undersigned hereby waives presentment for payment, demand,
notice of nonpayment, notice of protest, and protest of this Note,
and all of the notices in connection with delivery, acceptance,
performance, default, or enforcement of the payment of this Note.
The failure by the Lender to exercise any right or remedy shall not
be taken to waive the exercise of the same thereafter for the same
or any subsequent Default. The Borrower waives any claim of
set-off, recoupment and/or counterclaim. All notices to the
Borrower shall be adequately given if mailed postage prepaid to the
address appearing in the Lender’s records. The Borrower
intends this Note to be a sealed instrument and to be legally bound
hereby.

 

9.           Holder.
The references to “Lender” herein shall be deemed to be
references to any subsequent assignee, transferee, or other holder
of this Note.

 

10.           Governing
Law. This Note shall be construed in accordance with the
domestic internal laws of the Commonwealth of Pennsylvania, without
reference to any conflict of laws provisions, as a Note made,
delivered and to be wholly performed within the Commonwealth of
Pennsylvania.

 

	
Promissory
Agreement

	
2

	
 

 

 

 

11.           Judicial
Proceedings. Any suit, action, or proceeding, whether claim
or counterclaim, brought or instituted by the Borrower or the
Lender, or any of their successors or assigns, on or with respect
to this Note or the dealings of the Borrower or the Lender with
respect hereto, shall be tried only by a court and not by a jury.
THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION, OR
PROCEEDING. In connection therewith, the Borrower agrees that any
suit, action, or proceeding arising hereunder or with respect
hereto will be instituted in the Court of Common Pleas of York
County, Pennsylvania, or the United States District Court for the
Middle District of Pennsylvania, and irrevocably and
unconditionally submits to the jurisdiction of each such Court for
such purpose. Further, the Borrower waives any right it may have to
claim or recover, in any such suit, action or proceeding, any
special, exemplary, punitive, or consequential damages or any
damages other than, or in addition to, actual damages. THE BORROWER
ACKNOWLEDGES AND AGREES THAT THIS PARAGRAPH IS A SPECIFIC AND
MATERIAL ASPECT OF THIS NOTE AND THAT THE LENDER WOULD NOT EXTEND
CREDIT IF THE WAIVERS SET FORTH IN THIS PARAGRAPH WERE NOT A PART
OF THIS NOTE.

 

12.           Confession
of Judgment. Upon Default, the Borrower hereby irrevocably
authorizes the Prothonotary or any attorney of any court of record
in Pennsylvania or elsewhere to appear for and confess judgment
against the Borrower for any and all amounts unpaid hereunder,
together with any other charges, costs and expenses for which
Borrower is liable under this Note, and together with fees of
counsel in the reasonable amount of five percent (5%) of all of the
foregoing (but in no event less than $5,000.00) and costs of suit,
releasing all errors and waiving all rights of appeal. If a copy of
this Note, verified by affidavit, shall have been filed in such
proceeding, it shall not be necessary to file the original as a
warrant of attorney. The Borrower hereby waives the right to any
stay of execution and the benefit of all exemption laws now or
hereafter in effect. No single exercise of this warrant and power
to confess judgment shall be deemed to exhaust this power, whether
or not any such exercise shall be held by any court to be invalid,
voidable or void, but this power shall continue undiminished and
may be exercised from time to time as often as the Lender shall
elect until all sums due hereunder shall have been paid in full.
Interest shall continue to accrue after entry of judgment
hereunder, by confession, default, or otherwise, at the higher of
the prevailing rate of interest under this Note, or the judgment
rate of interest under applicable law. All waivers granted in this
paragraph are given to the extent permitted by the Pennsylvania
Rules of Civil Procedure.

 

13.           NOTICE:
THIS NOTE CONTAINS, AT PARAGRAPH 12, A WARRANT OF ATTORNEY TO
CONFESS JUDGMENT AGAINST THE BORROWER. IN GRANTING THIS WARRANT OF
ATTORNEY TO CONFESS JUDGMENT AGAINST THE BORROWER, THE BORROWER
HEREBY KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY, AND ON THE ADVICE
OF SEPARATE COUNSEL OF THE BORROWER, UNCONDITIONALLY WAIVES ANY AND
ALL RIGHTS THE BORROWER HAS OR MAY HAVE TO PRIOR NOTICE AND AN
OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE CONSTITUTIONS AND LAWS
OF THE UNITED STATES, THE COMMONWEALTH OF PENNSYLVANIA, OR OF ANY
OTHER STATE.

 

BORROWER:

 

OCEAN THERMAL
ENERGY CORPORATION

 

By: /s/ Jeremy P.
Feakins

Name: Jeremy P.
Feakins

Title: Group
Executive Chairman

 

 

	
Promissory
Agreement

	
3

	
 

 

 

 

WARRANT

to Purchase up to
200,000 Shares of the

Common Stock,
$0.0001 Par Value Per Share,

of

OCEAN
THERMAL ENERGY CORPORATION

 

 

This is to certify
that, for value received, Mart Inn, Inc. (“Lender”) or any permitted
transferee (Lender or such transferee being hereinafter called the
“Holder”) is
entitled to purchase, subject to the provisions of this Warrant,
from Ocean Thermal Energy Corporation, a Delaware corporation
(“OTEC”), at any
time on or after the date hereof, an aggregate of up to 200,000
fully paid and non-assessable shares of common stock, $0.0001 par
value (the “Common
Stock”), of OTEC at a price per share equal to $1.00,
subject to adjustment as herein provided (the “Exercise Price”).

 

1.           Exercise
of Warrant. Subject to the provisions hereof, this Warrant
may be exercised, in whole or in part, or sold, assigned or
transferred at any time or from time to time up to four years
hereafter. This Warrant shall be exercised by presentation and
surrender hereof to OTEC at the principal office of OTEC,
accompanied by (i) a written notice of exercise, (ii) payment to
OTEC, for the account of OTEC, of the Exercise Price for the number
of shares of Common Stock specified in such notice, and (iii) a
certificate of the Holder specifying the event or events, which
have occurred and entitle the Holder to exercise this Warrant. The
Exercise Price for the number of shares of Common Stock specified
in the notice shall be payable in immediately available
funds.

 

Upon such
presentation and surrender, OTEC shall issue promptly (and within
one business day if reasonably requested by the Holder) to the
Holder or its assignee, transferee or designee the number of shares
of Common Stock to which the Holder is entitled hereunder. OTEC
covenants and warrants that such shares of Common Stock, when so
issued, will be duly authorized, validly issued, fully paid and
non-assessable, and free and clear of all liens and
encumbrances.

 

If this Warrant is
exercised in part only, OTEC shall, upon surrender of this Warrant
for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the shares
of Common Stock issuable hereunder. Upon receipt by OTEC of this
Warrant, in proper form for exercise, the Holder shall be deemed to
be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of
OTEC may then be closed or that certificates representing such
shares of Common Stock shall not then be actually delivered to the
Holder. OTEC shall pay all expenses, and any and all United States
federal, state and local taxes and other charges, that may be
payable in connection with the preparation, issuance and delivery
of stock certificates pursuant to this Paragraph 1 in the name of
the Holder or its assignee, transferee or designee.

 

2.           Reservation
of Shares; Preservation of Rights of Holder.

 

OTEC shall at all
times while this Warrant is outstanding and unexercised, maintain
and reserve, free from preemptive rights, such number of authorized
but unissued shares of Common Stock as may be necessary so that
this Warrant may be exercised without any additional authorization
of Common Stock after giving effect to all other options, warrants,
convertible securities and other rights to acquire shares of Common
Stock at the time outstanding. OTEC further agrees that (i) it will
not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary
act or omission, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder, and (ii) it will promptly take
all action reasonably necessary to protect the rights of the Holder
against dilution as provided herein.

 

	
Warrant

	
1

	
 

 

 

 

 

3.           Fractional
Shares. OTEC shall not be required to issue any fractional
shares of Common Stock upon exercise of this Warrant. In lieu of
any fractional shares, the Holder shall be entitled to receive an
amount in cash equal to the amount of such fraction multiplied by
the Exercise Price.

 

4.           Exchange
or Loss of Warrant. This Warrant is exchangeable, without
expense, at the option of the Holder, upon presentation and
surrender hereof at the principal office of OTEC for other warrants
of different denominations entitling the Holder to purchase, in the
aggregate, the same number of shares of Common Stock issuable
hereunder. The term “Warrant” as used herein includes
any warrants for which this Warrant may be exchanged. Upon receipt
by OTEC of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, OTEC will execute and deliver a new Warrant
of like tenor and date.

 

5.           Adjustment.
The number of shares of Common Stock issuable upon the exercise of
this Warrant and the Exercise Price shall be subject to adjustment
from time to time as provided in this Paragraph.

 

(A)           Stock
Dividends, etc.

 

(1)           Stock
Dividends. In case OTEC shall pay or make a dividend or
other distribution on any class of capital stock of OTEC payable in
Common Stock, the number of shares of Common Stock issuable upon
exercise of this Warrant shall be increased by multiplying such
number of shares by a fraction of which the denominator shall be
the number of shares of Common Stock outstanding at the close of
business on the day immediately preceding the date of such
distribution and the numerator shall be the sum of such number of
shares and the total number of shares of Common Stock constituting
such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day
following such distribution.

 

(2)           Subdivisions.
In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the number of shares of
Common Stock issuable upon exercise of this Warrant at the opening
of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased,
and, conversely, in case outstanding shares of Common Stock shall
each be combined into a smaller number of shares of Common Stock,
the number of shares of Common Stock issuable upon exercise of this
Warrant at the opening of business on the day following the day
upon which such combination becomes effective shall be
proportionately decreased, such increase or decrease, as the case
may be, to become effective immediately after the opening of
business on the day following the date upon which such subdivision
or combination becomes effective.

 

(3)           Reclassifications.
The reclassification of Common Stock into securities (other than
Common Stock) and/or cash and/or other consideration shall be
deemed to involve a subdivision or combination, as the case may be,
of the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number or amount of
securities and/or cash and/or other consideration outstanding
immediately thereafter and the effective date of such
reclassification shall be deemed to be “the day upon which
such subdivision becomes effective,” or “the day upon
which such combination becomes effective,” as the case may
be, within the meaning of clause (2) above.

 

 

	
Warrant

	
2

	
 

 

 

 

(4)           Optional
Adjustments. OTEC may make such increases in the number of
shares of Common Stock issuable upon exercise of this Warrant, in
addition to those required by this subparagraph (A), as shall be
determined by its Board of Directors to be advisable in order to
avoid taxation so far as practicable of any dividend of stock or
stock rights or any event treated as such for federal income tax
purposes to the recipients.

 

(5)           Adjustment
to Exercise Price. Whenever the number of shares of Common
Stock issuable upon exercise of this Warrant is adjusted as
provided in this Paragraph 5(A), the Exercise Price shall be
adjusted by a fraction in which the numerator is equal to the
number of shares of Common Stock issuable prior to the adjustment
and the denominator is equal to the number of shares of Common
Stock issuable after the adjustment, rounded to the nearest
cent.

 

(B)           Certain
Sales of Common Stock.

 

(1)           Adjustment
to Shares Issuable. If and whenever OTEC sells or otherwise
issues (other than under circumstances in which Paragraph 5(A)
applies) any shares of Common Stock, the number of shares of Common
Stock issuable upon exercise of this Warrant shall be increased by
multiplying such number of shares by a fraction, the denominator of
which shall be the number shares of Common Stock outstanding at the
close of business on the day immediately preceding the date of such
sale or issuance and the numerator of which shall be the sum of
such number of shares and the total number of shares constituting
such sale or other issuance, such increase to become effective
immediately after the opening of business on the day following such
sale or issuance.

 

(2)           Adjustment
to Exercise Price. If and whenever OTEC sells or otherwise
issues any shares of Common Stock (excluding any stock dividend or
other issuance not for consideration to which Paragraph 5(A)
applies or shares of Common Stock issued or issuable in connection
with awards granted under the OTEC Stock Option Plans) for a
consideration per share which is less than the Exercise Price at
the time of such sale or other issuance, then in each such case the
Exercise Price shall be forthwith changed (but only if a reduction
would result) to the price (calculated to the nearest cent)
determined by dividing: (i) an amount equal to the sum of (aa) the
number of shares of Common Stock outstanding immediately prior to
such issue or sale, multiplied by the then effective Exercise
Price, plus (bb) the total consideration, if any, received and
deemed received by OTEC upon such issue or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such
issue or sale.

 

(C)           Definition.
For purposes of this Paragraph 5, the term “Common
Stock” shall include (1) any shares of OTEC of any class or
series which has no preference or priority in the payment of
dividends or in the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of OTEC and
which is not subject to redemption by OTEC, and (2) any rights or
options to subscribe for or to purchase shares of Common Stock or
any stock or securities convertible into or exchangeable for shares
of Common Stock (such convertible or exchangeable stock or
securities being hereinafter called “Convertible
Securities”), whether or not such rights or options or the
right to convert or exchange any such Convertible Securities are
immediately exercisable. For purposes of any adjustments made under
Paragraph 5(A) or 5(B) as a result of the distribution, sale or
other issuance of rights or options or Convertible Securities, the
number of shares of Common Stock outstanding after or as a result
of the occurrence of events described in Paragraph 5(A)(1) or
5(B)(1) shall be calculated by assuming that all such rights,
options or Convertible Securities have been exercised for the
maximum number of shares issuable thereunder.

 

	
Warrant

	
3

	
 

 

 

 

6.           Notice.
Whenever the number of shares of Common Stock for which this
Warrant is exercisable is adjusted as provided in Paragraph 5, OTEC
shall promptly compute such adjustment and mail to the Holder a
certificate, signed by the principal financial officer of OTEC,
setting forth the number of shares of Common Stock for which this
Warrant is exercisable as a result of such adjustment having become
effective.

 

7.           Rights
of the Holder.

 

(A)           Without
limiting the foregoing or any remedies available to the Holder, it
is specifically acknowledged that the Holder would not have an
adequate remedy at law for any breach of the provisions of this
Warrant and shall be entitled to specific performance of
OTEC’s obligations under, and injunctive relief against any
actual or threatened violation of the obligations of any person
subject to, this Warrant.

 

(B)           The
Holder shall not, by virtue of its status as Holder, be entitled to
any rights of a stockholder in OTEC.

 

8.           Termination.
This Warrant and the rights conferred hereby shall terminate four
years hereafter.

 

9.           Governing
Law. This Warrant shall be deemed to have been delivered in,
and shall be governed by and interpreted in accordance with the
substantive laws of, the Commonwealth of Pennsylvania, except to
the extent that Delaware law may govern certain aspects of this
Warrant as it relates to OTEC.

 

Dated: December 22,
2014

 

OCEAN
THERMAL ENERGY CORPORATION

 

By: /s/ Jeremy P.
Feakins

Name: Jeremy P.
Feakins

Title: Group
Executive Chairman

 

 

 

	
Warrant

	
4

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