NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE 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
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE “1933
POWER TECHNOLOGIES, INC.
CONVERTIBLE REDEEMABLE NOTE
MAY 8, 2018
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, defined below, (“Holder”), the aggregate principal face
amount Thirty Thousand Dollars exactly (U.S. $30,000.00) on May 8, 2018 (“Maturity Date”) and to pay interest
on the principal amount outstanding hereunder at the rate of 8% per annum commencing on May 8, 2017. 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 91 Shelton Ave, Suite 107, New Haven, CT 06511, 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. Permitted Assigns means any Holder assignment, transfer or sale of all or a portion of this Note accompanied
by an Opinion of Counsel as provided for in Section 2(f) of the Securities Purchase Agreement.
Note is subject to the following additional provisions:
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. To the extent that Holder subsequently transfers,
assigns, sells or exchanges any of the multiple lesser denomination notes, Holder acknowledges that it will provide the Company
with Opinions of Counsel as provided for in Section 2(f) of the Securities Purchase Agreement.
Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended (“Act”),
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 fmth in Section
4(a), and any prequalified 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 tele-copy) of such Notice of Conversion shall be the Conversion Date. All notices of conversion
will be accompanied by an Opinion of Counsel.
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”) at a price
(“Conversion Price”) for each share of Common Stock equal to 55% of the lowest trading price
of the Common Stock as re ported on the National Quotations Bureau OTC Markets 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 twenty
prior trading days including the day upon which a Notice of Conversion is received by the Company (provided such Notice
of Conversion is delivered together with an Opinion of Counsel, by fax or other electronic method of communication to the Company
Standard or Daylight Savings Time if the Holder wishes to include the same day closing price). If the shares have not been delivered
within 3 business days, the Notice of Con version 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. 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. To the extent the Conversion Price
of the Company’s Common Stock closes below the par value per share, the Company will take all steps necessary to solicit
the consent of the stockholders to reduce the par value to the lowest value possible under law. The Company agrees to honor all
conversions submitted pending this increase. In the event the Company experiences a DTC “Chill” on its shares,
the Conversion Price shall be decreased to 45% instead of 55% while that “Chill” is in effect. If the Company
fails to maintain the share reserve at the 4x discount of the note 60 days after the issuance of the note, the conversion
discount shall be increased by 10%. In no event, shall the Holder be allowed to effect a conversion if such conversion, along
with all other shares of Company Common Stock beneficially owned by the Holder and its affiliates would exceed 4.99% of the outstanding
shares of the Common Stock of the Company (which may be increased up to 9.9% upon 60 days’ prior written notice by the Investor).
on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company
in Common Stock (“Interest Shares”). 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.
the first six months this Note is in effect, the Company may re- deem this Note by paying to the Holder an amount equal to 145%
of the unpaid principal amount of this Note along with any interest that has accrued during that period. This Note may not be
prepaid after the 180th day. 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.
(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 (excluding an increase in authorized capital) or other change or
exchange of out standing shares of the Common Stock, other than a forward or reverse stock split or stock dividend, 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.
case of any Sale Event (not to include a sale of all or substantially all of the Company’s assets) 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 deter mined by the Board of Directors of the Company or successor person or entity acting in good faith.
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.
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.
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.
one or more of the following described “Events of Default” shall occur:
Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company;
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
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
Company shall (1) become insolvent (which does not include a “going concern opinion); (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
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 with in sixty (60) days after such appointment; or
Any governmental agency or any comt 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
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
on or breached any tern1 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; or
Company shall have its Common Stock delisted from an exchange (including the OTC Markets 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 or ceases to file its 1934
act reports with the SEC;
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;
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 which includes an Opinion of Counsel expressing an opinion which supports the removal
of a restrictive legend; or
Company shall not replenish the reserve set forth in Section 12, with- in 3 business days of the request of the Holder.
Company shall be delinquent in its periodic report filings with the Securities and Exchange Commission; or
Company shall cause to lose the “bid” price for its stock in a market (including the OTC marketplace or other exchange).
or at any time thereafter, unless cured within 5 days, 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, with out
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 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 Section S(k) the penalty shall be $250 per day the shares are not issued beginning on the 4th day
after the conversion notice was delivered to the Company. This penalty shall increase to $500 per day beginning on the 10th day.
The penalty for a breach of Section 8(n) shall be an in crease of the outstanding principal amounts by 20%. In case of a breach
of Section 8(i), the out standing principal due under this Note shall increase by 50%. If this Note is not paid at maturity, the
outstanding principal due under this Note shall increase by 10%. Further, if a breach of Section 8(m) occurs or is continuing
after the 6 month anniversary of the Note, then the Holder shall be entitled to use the lowest closing bid price during the delinquency
period as a base price for the conversion. For example, if the lowest closing bid price during the delinquency period is $0.01
per share and the conversion discount is 50% the Holder may elect to convert future con versions at $0.005 per share.
the Holder shall commence an action or proceeding to enforce any provisions of this Note, including, without limitation, engaging
an attorney, then if the Holder prevails in such action, 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.
for Failure to Deliver Loss. At the Holder’s election, if the Company fails for any reason to deliver to the Holder the
conversion shares by the by the 3rd business day following the delivery of a Notice of Conversion to the Company and if the Holder
incurs a Failure to Deliver Loss, then at any time the Holder may provide the Company written notice indicating the amounts payable
to the Holder in respect of the Failure to Deliver Loss and the Company must make the Holder whole as follows:
to Deliver Loss= [(High trade price within 20 trading days or after the day of exercise) x (Number of conversion shares)]
Company must pay the Failure to Deliver Loss by cash payment, and any such cash payment must be made by the third business day
from the time of the Holder’s-written notice to the Company.
case any provision of this Nate 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
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.
Company represents that it is not a “shell” issuer and that if it previously has been a “shell” issuer
that at least 12 months have passed since the Company has re ported Form 10 type information indicating it is no longer a “shell
Company shall issue irrevocable transfer agent instructions reserving 1,033,316,000 shares of its Common Stock for conversions
under this Note and the following Notes in the amounts of: $31,396.00 on August 17, 2015, $58,100.00 on December 18, 2015, $112,000.00
on December 18, 2015, $60,193.00 on January 19, 2016, $210,000.00 on February 8, 2016 (the “Share Reserve”). Upon
full conversion of this Note, any shares remaining in the Share Reserve shall be cancelled. The Company shall pay all transfer
agent costs associated with issuing and delivering the share certificates to Holder. If such amounts are to be paid by the Holder,
it may deduct such amounts from the Conversion Price. The company should at all times reserve a minimum of four times the amount
of shares required if the note would be fully converted. The Holder may reasonably request increases from time to time to reserve
such amounts. The Company will instruct its transfer agent to provide the outstanding share information to the Holder in connection
with its conversions.
Company will give the Holder direct notice of any corporate actions, including but not limited to name changes, stock splits,
recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
Note shall be governed by and construed in accordance with the laws of New York applicable to contracts made and wholly to be
performed within the State of New York and shall be binding upon the successors and assigns of each party hereto. The Holder and
the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of
New York or in the Federal courts sitting in the county or city of New York. This Agreement may be executed in counterparts, and
the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
be Executed by the Registered Holder in order to Convert the Note)
undersigned hereby irrevocably elects to convert$___________________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
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.
of Conversion: _______________________________________________
Conversion Price: ________________________________________
Name of Holder and Title of Signer]
or EIN: __________________________
are to be registered in the following name: ___________________________________________
or EIN: ___________________________
are to be sent or delivered to the following account: