Schedule 10.37

DEBT PURCHASE AGREEMENT

THIS DEBT PURCHASE AGREEMENT (“ Agreement ”) is dated the 28 day of February, 2014 and made effective as of the “Effective Date” (as hereinafter defined), by and between TCA GLOBAL CREDIT MASTER FUND, LP , a Cayman Islands limited partnership (the “ Creditor ”) and UNION CAPITAL, LLC , a New York limited liability company (the “ Purchaser ”) with respect to the Company identified on the Transaction Summary attached hereto as Schedule I (the “ Transaction Summary ”), and singing hereto. The Creditor and the Purchaser are sometimes hereinafter individually referred to as a “ Party ” and collectively referred to as the “ Parties ”.

W I T N E S E T H:

WHEREAS , the company named on the Transaction Summary (the “ Company ”) is indebted to the Creditor in the total amount set forth on the Transaction Summary (collectively, the “ Total Indebtedness ”); and

WHEREAS , the Purchaser desires to purchase from Creditor, and the Creditor desires to sell to Purchaser, subject to the terms and conditions hereinafter set forth, that portion of the Creditor’s Total Indebtedness set forth on the Transaction Summary (collectively, the “ Purchased Debt ”); provided, however, that the Purchased Debt shall specifically exclude: (i) the “Remaining Debt” (as defined below); (ii) all collateral and other security rights relating to the Remaining Debt (the “ RD Collateral and Security Rights ”, and together with the RD Collateral Security Rights, the “ Collateral Security Rights ”); and (iii) all rights to receive any cash, interest, fees, expenses, damages, penalties, and/or other amounts with respect to the Remaining Debt or in connection with the RD Collateral and Security Rights (collectively, the “ Additional RD Amounts ”)(the Remaining Debt, the RD Collateral and Security Rights and the Additional RD Amounts sometimes hereinafter collectively referred to as the “ Aggregate Remaining Debt ”);

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto, each intending to be legally bound, do hereby agree as follows:

1.      Recitations . The recitations set forth in the preamble of this Agreement are true and correct and are incorporated herein by this reference.

2.      Sale of Purchased Debt .

(a)     Items Constituting the Purchased Debt. The Total Indebtedness consists of a Senior Secured Debenture (the “ Debenture ”) in the original face amount of $400,000. The Purchased Debt consists of amounts payable, due and owing from Company to Creditor under the Debenture, which amounts include outstanding principal, accrued and unpaid interest, but specifically excluding any portion of the Aggregate Remaining Debt. The Creditor shall maintain possession and control of the original instruments evidencing the Purchased Debt until the Purchase Price for the Purchased Debt is paid in full and received by Creditor as hereby contemplated.

(b)     Sale of Purchased Debt. Effective as of the Effective Date, and subject to the terms and conditions set forth in this Agreement, the Purchaser hereby purchases from the Creditor, and the Creditor hereby sells, transfers, conveys and assigns to the Purchaser, for the consideration set forth herein, all right, title and interest of the Creditor in and to the Purchased Debt (including, without limitation, the right to bring legal action against the Company with respect to the Purchased Debt, but, for the avoidance of doubt, specifically excluding all Aggregate Remaining Debt, and any rights related thereto); provided, however, Creditor shall retain that portion of the Creditor’s Total Indebtedness evidenced by the Debenture, less the Purchased Debt (the “ Remaining Debt ”), together with all RD Collateral and Security Rights relating to the Remaining Debt and the Additional RD Amounts, all of which are not being sold or transferred hereunder and which shall remain owned by Creditor. The Parties hereby acknowledge and agree that with respect to the Collateral Security Rights and, subject to the restrictions in this Section 2(b), the Creditor shall have the sole authority to take any actions (or to not take any actions) with respect to such Collateral Security Rights.

3.      Purchase Price .

(a)      Payment of Purchase Price . The total purchase price for the Purchased Debt (the “ Purchase Price ”) shall be as shown and set forth in the Transaction Summary, and shall be paid by the Purchaser to the Creditor in cash, by wire transfer of immediately available funds in accordance with the wire transfer instructions for the Creditor (or its counsel) attached hereto as Exhibit “B” (subject to modification of such wire instructions at any time upon notice by Creditor to Purchaser), not later than the third (3 ^rd ) trading day after the execution hereof (the “ Payment Deadline ”).

4.      Cooperation . Creditor will furnish Purchaser will all reasonably requested documentation and evidence supporting the Purchased Debt in Creditor’s possession, and reasonably cooperate in providing any other information in Creditor’s possession and taking any other reasonable and lawful action that Purchaser deems reasonably necessary or appropriate to consummate the Exchange. Upon the Purchaser’s reasonable request, the Creditor shall duly execute and deliver, or shall cause to be duly executed and delivered, to the Purchaser such further instruments and do and cause to be done such further acts as may be reasonably necessary or proper in the reasonable opinion of the Purchaser to effectuate the intent and purpose of, and to carry out the terms of, this Agreement, and to cause the Purchaser to become the legal and beneficial owner of the Purchased Debt.

5.      Representations, Warranties and Covenants of the Creditor . Creditor hereby represents, warrants and covenants to Purchaser as follows:

(a)     The Purchased Debt is a bona fide outstanding claim against the Company, and is an enforceable obligation arising in the ordinary course of business, for goods and/or services rendered to Company by Creditor in good faith. The Purchased Debt is currently due and owing and is payable in full.

(b)     The Purchased Debt is secured by a security interest in the property of the Company or an affiliate of the Company or by a guarantee of the Company or of an affiliate of the Company.

(c)     Creditor did not enter into the transaction giving rise to the Purchased Debt in contemplation of any sale or distribution of the Company’s common stock or other securities.

(d)     The amount of the Purchased Debt as set forth in the Transaction Summary is the amount due to Creditor with respect to the Purchased Debt, net of any applicable discounts, allowances or other deductions to which the Company is lawfully entitled. The funding of the Purchased Debt by the Creditor to the Company occurred at least six months prior to the date hereof. Any documents provided by the Creditor to the Purchaser with respect to the Purchased Debt, if any, are true, correct and complete copies of such documents.

(e)     The Purchased Debt is not subject to dispute. The Creditor has not received any written notice from the Company or any other person challenging or disputing the Purchased Debt, or any portion thereof, and the Company is unconditionally obligated to pay the full amount of the Purchased Debt, without defense, counterclaim or offset.

(f)     Creditor is the sole owner of the Purchased Debt, free and clear of all liens, encumbrances and rights of third parties, except as created by this Agreement. Creditor has not previously sold, transferred, encumbered or released any part of the Purchased Debt.

(g)     There has been no modification, compromise, forbearance, or waiver (written or oral) entered into or given by Creditor with respect to the Purchased Debt. There is no action commenced by Creditor and based on the Purchased Debt that is currently pending in any court or other legal venue (except that jurisdiction may be retained by the appropriate court with respect to litigation previously pending against the Company with respect to the Purchased Debt, and previously dismissed in an agreement between the Company and the Creditor), and no judgments based upon the Purchased Debt have been previously entered in favor of Creditor in any legal proceeding.

(h)     Creditor has all necessary power and authority to: (i) execute, deliver and perform all of its obligations under this Agreement; and (ii) sell, convey, transfer and assign the Purchased Debt to Purchaser. Creditor has such knowledge and experience in business and financial matters that it is able to protect its own interests and evaluate the risks and benefits of entering into this Agreement. Creditor acknowledges and agrees that it has had an opportunity to conduct its own due diligence and consult with its own legal counsel, and tax, financial and other advisors, and that Creditor is not relying in that regard on Purchaser. Creditor acknowledges that except as specifically set forth herein, Purchaser is not making any representations or warranties whatsoever, including, without limitation, about the Company.

(i)     The Creditor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate, partnership or other applicable power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Creditor have been duly authorized by all requisite action on the part of the Creditor. This Agreement has been duly executed and delivered by the Creditor and constitutes the legal, valid and binding obligation of the Creditor, enforceable against the Creditor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors’ rights generally or the availability of equitable remedies.

(j)     Creditor is not and within the past ninety (90) days has not been, directly or indirectly through one or more intermediaries, in control, controlled by, or under common control with, the Company and is not an affiliate of the Company as defined in Rule 144 promulgated under the Act.

(k)     The execution and delivery of this Agreement by Creditor and the performance of all of its obligations hereunder: (i) do not and will not violate, conflict with, breach, or constitute a default under, any material contract, agreement or commitment binding upon such Creditor; and (ii) do not and will not conflict with or violate any applicable law, rule, regulation, judgment, order or decree of any court or other government authority having jurisdiction over such Creditor or the Purchased Debt.

(l)     There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of Creditor, threatened against or affecting Creditor or any of its assets before or by any court, arbitrator, governmental or administrative agency, or regulatory authority that materially and adversely affects or challenges the legality, validity or enforceability of the Purchased Debt or this Agreement, or that could have or reasonably be expected to result in a material adverse effect on this Agreement or the Purchased Debt.

(m)     The Creditor is not, directly or indirectly, providing any consideration to or investing in any manner in, and will not at any time in the future provide any consideration or investment to, the Company, any affiliate of the Company, or any other person for or in connection with entering into this Agreement or selling the Purchased Debt.

(n)     The Creditor is not, directly or indirectly, receiving any consideration from or being compensated in any manner by, and will not at any time in the future accept any consideration or compensation from, the Company, any affiliate of the Company, or any other person (except the Purchaser pursuant to this Agreement) for or in connection with entering into this Agreement or selling the Purchased Debt. For the avoidance of doubt, and notwithstanding any other provision of this Agreement to the contrary, the Parties acknowledge and agree that Creditor’s retention of the Aggregate Remaining Debt and the Creditor’s rights to Collateral Proceeds, and the Company’s obligations to Creditor with respect to the Aggregate Remaining Debt, do not and shall not violate this clause 7(n).

(o)     The Creditor is not under the jurisdiction of a court in a Title 11 or similar case (within the meaning of Section 368(a)(3)(A) (or related provisions) of the United States Bankruptcy Code, 11 U.S.C. Section 101 et seq., as amended from time to time) or involved in any insolvency proceeding or reorganization.

(p)     The Creditor is not selling the Purchased Debt “on the basis of” (as defined in Rule 10b5-1 of the Exchange Act) any material, non-public information concerning the Company or any of the Company’s securities.

(q)      Creditor will immediately advise Purchaser if any of the foregoing representations and warranties cease to be fully true and accurate at any time up to and including the date of the closing of the Exchange.

6.      Representations and Warranties of Purchaser . Purchaser hereby represents and warrants to Creditor as follows:

(a)     Purchaser has all necessary power and authority to: (i) execute, deliver and perform all of its obligations under this Agreement; and (ii) purchase and accept the Purchased Debt from Creditor. Purchaser has such knowledge and experience in business and financial matters that it is able to protect its own interests and evaluate the risks and benefits of entering into this Agreement. Purchaser acknowledges and agrees that it has had an opportunity to conduct its own due diligence and consult with its own legal counsel, and tax, financial and other advisors, and that Purchaser is not relying in that regard on Creditor. Purchaser acknowledges that except as specifically set forth herein, Creditor is not making any representations or warranties whatsoever, including, without limitation, about the Company.

(b)     The execution, delivery and performance of this Agreement by Purchaser has been duly authorized by all requisite action on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser.

7.      Fees and Expenses . Except for fees that may be included in the Purchase Price or the Option Purchase Price, as applicable, and except in the event of a default hereunder, each Party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such Party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. Creditor understands that Purchaser shall not be liable for any commissions, selling expenses, orders, purchases, contracts, taxes, withholding, or obligations of any kind resulting from or arising out of the Exchange. In the event it becomes necessary for either Party to litigate in order to enforce its rights under the terms of this Agreement, then, and in that event, the prevailing party shall be entitled to recover reasonable attorneys’ fees, paralegals’ fees and court costs through all negotiations and all trial, arbitration and appellate levels and administrative proceedings in connection with such litigation.

8.      Indemnification . The Creditor agrees to indemnify and hold the Purchaser and its officers, directors, employees, agents and controlling persons harmless from and against any and all losses, claims, damages, costs expenses and liabilities, including without limitation, reasonable attorneys’ fees and expenses, which result from the Creditor’s material breach of any of the Creditor’s representations, warranties, covenants or agreements set forth herein; provided, however , that Creditor shall not be required to make any indemnification that would: (i) violate Section 12 or result in paying any incidental, special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages that are solely and proximately caused by Creditor’s material breach; or (ii) require the Creditor or the Purchaser to disgorge, in whole or in part, or otherwise reimburse (by setoff or otherwise) the Company or any other person or entity for any payments, distributions, property, setoffs or recoupments received, applied or effected by or for the account of the Creditor under or in connection with the Purchased Debt in connection with any Bankruptcy Event (it being acknowledged that the risk of the Company’s filing bankruptcy is a risk that the Purchaser is accepting in entering into this transaction).

9.      Choice of Law . This Agreement shall be governed by and construed according to the laws of the State of New York, without giving effect to its choice of law principles. The Parties agree that all actions and proceedings arising out of or relating directly or indirectly to this Agreement or any ancillary agreement or any other related obligations shall be litigated solely and exclusively in the state or federal courts located in the City of New York, New York, and that such courts are convenient forums. Each Party hereby submits to the personal jurisdiction of such courts for purposes of any such actions or proceedings.

10.      Limitation of Damages . Except as otherwise provided below, each of the Parties hereby waives any right which it may have to claim or recover any incidental, special, exemplary, punitive or consequential damages or any damages other than, or in addition to, actual damages. Notwithstanding anything in this Agreement to the contrary, Purchaser’s sole and only liability under this Agreement for any breach or default by Purchaser hereunder shall be limited solely to a return of the Purchased Debt to Creditor. Creditor’s sole and only liability under this Agreement for a breach or default by Creditor hereunder, or for any other reason, shall be to return any Purchase Price received by Creditor in exchange for a full re-assignment of the Purchased Debt back to Creditor in the manner required by this Agreement.

11.      Notices . Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and in each case properly addressed to the Party to receive the same in accordance with the information below, and will be deemed to have been delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, overnight delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day. Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Agreement may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation) that the notice has been received by the other party.  The addresses and other information for such communications shall be as set forth below, unless such address or information is changed by a notice conforming to the requirements hereof.

12.      Amendments and Waivers . No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Parties, or, in the case of a waiver, by the Party against whom enforcement of such waiver is sought. No waiver of any default shall be deemed to be a continuing or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any Party to exercise any right hereunder in any manner impair the exercise of any such right.

13.      Construction . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rules of strict construction will be applied against any party.

14.      Successors and Assigns; No Third Party Beneficiaries . The Purchaser may assign this Agreement or any rights or obligations hereof to any affiliate of Purchaser with the prior consent of the Creditor, not to be unreasonably withheld. If any such assignment is approved by Creditor, the assignee shall assume all of the rights and obligations of the Purchaser hereunder that have been so assigned simultaneously with such assignment. This Agreement is intended for the benefit of the Creditor and the Purchaser and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

15.      Entire Agreement . This Agreement, together with the exhibits hereto, contains the entire agreement and understanding of the Parties, and supersedes all prior and contemporaneous agreements, letters, discussions, communications and understandings, both oral and written, concerning the sale, transfer, conveyance and assignment of the Purchased Debt, which the Parties acknowledge have been merged into this Agreement.

16.      Confidentiality . Each of the Parties hereby agrees, without the prior written consent of the other, to not disclose, and to otherwise keep confidential, the sale of the Purchased Debt contemplated hereby, except to the extent that disclosure thereof is required by law, rule or regulation or requested by any regulator or regulatory or administrative agency; provided, however, that each of the Parties may disclose information regarding such sale to their respective accountants, attorneys, limited partners, shareholders and other interest holders.

17.      Time is of the Essence . For purposes herein, the Parties agree that time shall be of the essence of this Agreement. The Parties agree that in the event that any date on which performance is to occur falls on a Saturday, Sunday or state or national holiday, then the time for such performance shall be extended until the next business day thereafter occurring.

18.      Signature . This Agreement may be executed in counterparts and by facsimile, portable document format or other electronic means, each of which shall constitute an original and all of which when taken together shall constitute one document.

19.      AS IS Nature of Transaction . Except for the express representations and warranties made by Creditor in this Agreement, the sale, conveyance, and assignment of the Purchased Debt is made AS IS, WHERE IS and WITH ALL FAULTS, and subject to no other representations or warranties of any nature or kind, express or implied, including, without limitation, any warranties of merchantability or warranties that the Purchased Debt is fit for a particular purpose. The Purchaser has not relied upon, and there have been no, promises, understandings or agreements made by Creditor, or any agent or representative of Creditor, with respect to the Purchased Debt, the Company, or any other matter, except as expressly set forth herein. The express representations and warranties of the Creditor made herein shall only survive for a period of ten (10) days following the payment of the Purchase Price, and after such survival period, unless Purchaser shall have commenced an action against Creditor prior to the end of such survival period with respect to the breach of any of the representations or warranties of Creditor in this Agreement, Creditor shall have no liability of any nature whatsoever to Purchaser with respect to any of the representations or warranties of Creditor under this Agreement. Notwithstanding anything contained in this Agreement to the contrary, nothing contained herein shall be deemed or construed as a waiver by Creditor of any defaults, or any of its rights or remedies under the documents underlying the Purchased Debt, nor be deemed or construed as an amendment or modification of any of the documents underlying the Purchased Debt.

20.      Effective Date . The “ Effective Date ” hereunder shall mean the last date when the Agreement becomes fully executed by the Creditor and Purchaser.

[Signatures continued on the following page]

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

Schedule 10.38

THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)

US $ 100,000

REPLACEMENT NOTE- ORIGINALLY ISSUED JULY 31, 2013 IN THE AMOUNT OF $400,000.00

CYCLONE POWER TECHNOLOGIES, INC

10% CONVERTIBLE REDEEMABLE NOTE

DUE FEBRUARY 26, 2015

FOR VALUE RECEIVED, Cyclone Power Technologies, Inc. (the “Company”) promises to pay to the order of UNION CAPITAL, LLC and its authorized successors and permitted assigns (" Holder "), the aggregate principal face amount of One Hundred Thousand dollars exactly (U.S. $100,000.00) on February 26, 2015 (" Maturity Date ") and to pay interest on the principal amount outstanding hereunder at the rate of 10% per annum commencing on February 26, 2014. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at 338 Crown Street, Brooklyn, NY 11225, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer. Interest shall be payable in Common Stock (as defined below) pursuant to paragraph 4(b) herein.

This Note is subject to the following additional provisions:

1.     This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.

2.     The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.

3.     This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (" Act ") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted (" Notice of Conversion ") in the form annexed hereto as Exhibit A . The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.

4.     (a)     The Holder of this Note is entitled, at its option, at any time, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's common stock (the " Common Stock ") without restrictive legend of any nature, at a price (" Conversion Price ") for each share of Common Stock equal to 58% of the average of the two lowest closing prices of the Common Stock as reported on the National Quotations Bureau OTCQB exchange which the Company’s shares are traded or any exchange upon which the Common Stock may be traded in the future (" Exchange "), for the ten prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice of Conversion is delivered by fax or other electronic method of communication to the Company after 4 P.M. Eastern Standard or Daylight Savings Time if the Holder wishes to included the same day closing price). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Common Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of Common Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share . In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 48% instead of 58% while that “Chill” is in effect.

(b)     Interest on any unpaid principal balance of this Note shall be paid at the rate of 10% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares"). The Holder may, at any time, send in a Notice of Conversion to the Company for Interest Shares based on the formula provided in Section 4(a) above. The dollar amount converted into Interest Shares shall be all or a portion of the accrued interest calculated on the unpaid principal balance of this Note to the date of such notice.

(c)     The Company shall have the option to redeem this Note and pay to the Holder 150% of the unpaid principal and accrued interest amount due under this Note, in full. The redemption must be closed and paid for within 3 business days of the Company sending the redemption demand or the redemption will be invalid and the Company may not redeem this Note.

(d)      Upon (i) a transfer of all or substantially all of the assets of the Company to any person in a single transaction or series of related transactions, (ii) a reclassification, capital reorganization or other change or exchange of outstanding shares of the Common Stock, or (iii) any consolidation or merger of the Company with or into another person or entity in which the Company is not the surviving entity (other than a merger which is effected solely to change the jurisdiction of incorporation of the Company and results in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock) (each of items (i), (ii) and (iii) being referred to as a "Sale Event"), then, in each case, the Company shall, upon request of the Holder, redeem this Note in cash for 150% of the principal amount, plus accrued but unpaid interest through the date of redemption, or at the election of the Holder, such Holder may convert the unpaid principal amount of this Note (together with the amount of accrued but unpaid interest) into shares of Common Stock immediately prior to such Sale Event at the Conversion Price.

(e)      In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.

5.     No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.

6.     The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.

7.     The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.

8.     If one or more of the following described "Events of Default" shall occur:

(a)     The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or

(b)     Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or

(c)     The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or

(d)     The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or

(e)     A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or

(f)     Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or

(g)     One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or

(h)     defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period, unless such breach would not reasonably have a material adverse effect on the Company’s ability to fulfill its obligations hereunder; or

(i)     The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;

(j)     If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;

(k)     The Company shall not deliver to the Holder the Common Stock pursuant to paragraph 4 herein without restrictive legend within 3 business days of its receipt of a Notice of Conversion; or

(l)      The Company shall not replenish the reserve set forth in Section 12, within 3 business days of the request of the Holder.

Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law. In the event of a breach of 8(k) the penalty shall be $250 per day the shares are not issued beginning on the 4 ^th day after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10 ^th day.

If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

9.     In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.

10.     Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.

11.     The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.

12.     The Company shall issue irrevocable transfer agent instructions reserving 20,000,000 shares of its Common Stock for conversions under this Note (the “Share Reserve”). The reserve shall be replenished as needed to allow for conversions of this Note. Upon full conversion of this Note, the any shares remaining in the Share Reserve shall be cancelled.

13.     The Company will give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.

14.     This Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of New York. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.

EXHIBIT A

NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Note)

The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Common Stock of Cyclone Power Technologies, Inc (“Shares”) according to the conditions set forth in such Note, as of the date written below.

If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.

Date of Conversion:                                                                                                                            

Applicable Conversion Price:                                                                                                            

Signature:                                                                                                                                             

[Print Name of Holder and Title of Signer]

Address:                                                                                                                                                

SSN or EIN:                                                   

Shares are to be registered in the following name:                                                                                                          

Name:                                                                                                                                                    

Address:                                                                                                                                               

Tel:                                                                

Fax:                                                                 

SSN or EIN:                                                 

Shares are to be sent or delivered to the following account:

Account Name:                                                                                                                                    

Address: