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.

 

 
 

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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 (3rd) 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.

 

 
 

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(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.

 

 
 

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(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.

 

 
 

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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.

 

 
 

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If to Purchaser:

Union Capital LLC

Attn: Yakov Boresentein - Managing Member

338 Crown Street

Brooklyn NY 11225

Office 718-506-9240

   

With a Copy to:

Tomer Tal, Esq.

 

900 East Hamilton Ave Suite 100

 

Campbell, CA 95008

 

Tel: 408-879-7440

Fax: 408-583-4180

Email: tomer@newventureattorneys.com

     

If to the Creditor:

TCA Global Credit Master Fund, LP

 

1404 Rodman Street

 

Hollywood, FL 33020

 

Attention: Robert Press, Director

 

E-Mail: bpress@tcaglobalfund.com

   

With a Copy to:

David Kahan, P.A.

 

6420 Congress Ave., Suite 1800

 

Boca Raton, Florida 33487

 

Telephone: (561) 672-8330

 

 

Facsimile: (561) 672-8301

   

E-Mail: david@dkpalaw.com

 

 

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.

 

 
 

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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]

 

 
 

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

 

 

PURCHASER:

     

UNION CAPITAL, LLC

             

By: /s/ Yakov Borenstein

 

       Yakov Borenstein, Managing Member

     

Date: 2/28/14

         

CREDITOR:

     

TCA GLOBAL CREDIT MASTER FUND, LP

     

By: TCA Global Credit Fund GP, Ltd.

             

By: /s/ Robert Press

 

       Robert Press, Director

 

Date: 2/28/14

         

COMPANY:

 

CYCLONE POWER TECHNOLOGIES, INC.

 

 

By: /s/ Christopher Nelson

       Christopher Nelson, President

Date: 2/27/14