Document:

<PAGE>

                               SECURITY AGREEMENT

                  SECURITY AGREEMENT, dated as of December 22, 1997, between
ROTARY POWER INTERNATIONAL, INC., a Delaware corporation (the "Debtor"), and
CURTISS-WRIGHT FLIGHT SYSTEMS/SHELBY, INC., an Ohio corporation (the "Secured
Party").

                                   WITNESSETH:

                  WHEREAS, on the date hereof, the Debtor has issued its 4.0%
Promissory Note dated December 22, 1997 to the Secured Party in the principal
amount of $400,000 (the "Note"); and

                  WHEREAS, the Debtor has agreed to deliver this Security
Agreement to secure the due and punctual payment of the principal of and
interest on the Note when due and its other obligations to the Secured Party
under the Note.

                  NOW THEREFORE, the parties hereto agree as follows:

                  1. GRANT OF SECURITY INTEREST. (a) For value received, the
Debtor hereby grants to the Secured Party in order to secure the payment when
due of the Secured Obligations (as that term is defined below) a security
interest in and assignment of, and agrees and acknowledges that the Secured
Party has and shall continue to have a security interest in and assignment of,
any and all of the following property of the Debtor, whenever acquired and
wherever located (collectively referred to as the "Collateral"):

                  (i) Any and all of the Debtor's Tangibles (as that term is
defined below); and

                  (ii) The products, proceeds and accessions of any and all of
the foregoing.

                  (b) The lien on and security interest in the Collateral
granted to the Secured Party pursuant to Section 1(a) above is subject and
subordinate to, and junior in all respects, to the lien on and security interest
in the Collateral (the "Bondholders' Security Interest") created by the Debtor
pursuant to the Security Agreement, dated as of December 1, 1997 (the
"Bondholders' Security Agreement"), between the Debtor and Sentinel Trust
Company, as Trustee, in order to secure the Debtor's obligations under its
10.412% Bonds due December 15, 2007 (the "Bonds").

                  2. DEFINITIONS. (a) The term "Secured Obligations" as used
herein shall mean the following:

<PAGE>

                  (i) Any and all obligations of the Debtor to the Secured Party
pursuant to the Note, including, without limitation, the Debtor's obligations in
respect of the payment of the principal of and interest on the Note when due;
and

                  (ii) Any and all other obligations of the Debtor to the
Secured Party hereunder.

                  (b) The term "Tangibles" as used herein includes and shall be
deemed to mean "equipment" as defined in the Uniform Commercial Code as in
effect in the State of New Jersey, including, without limitation, all of the
Debtor's right, title and interest in and to the equipment, machinery, fixtures,
tools, work in process, furniture and other articles of personal property and
all goods and tangible personal property now owned or hereafter acquired by the
Debtor and all replacements and substitutions therefor; provide, however, that
for all purposes of this Security Agreement, "Tangibles" shall not include (i)
the Debtor's interest in any intellectual property or other intangibles, and
(ii) the assets listed on Schedule A attached hereto.

                  (c) Terms used herein which are not expressly defined herein
shall have the meanings ascribed to them in the Note, except that such terms
which are defined in the Uniform Commercial Code as in effect in the State of
New Jersey shall have the same meanings herein as in said Code.

                  (d) As used in this Security Agreement and when required by
the context, each number (singular and plural) shall include all numbers, and
each gender shall include all genders; and unless the context otherwise
requires, the word "person" shall include "corporation, firm or association."

                  3. RELEASE OF SECURITY INTEREST. The Secured Party's security
interest in, and assignment of, all or a part of the Collateral created by this
Security Agreement shall immediately terminate and become null and void upon the
occurrence of the following:

                  (a)  The payment in full of the Secured Obligations;

                  (b) The sale by the Debtor of inventory and finished products
in the ordinary course of business, in which case the lien on and security
interest granted to the Secured Party in the Collateral so sold shall
immediately terminate and become null and void; and

                  (c) The sale by the Debtor of all or a portion of the
Collateral as permitted under the Bondholders' Security Agreement and the use of
the proceeds thereof by the Debtor to mandatorily redeem all or a portion of the
Bonds, in which case the lien on and security interest granted to the Secured
Party in the Collateral so sold shall immediately terminate and become null and
void.

                  4. WARRANTIES, COVENANTS AND AGREEMENTS OF THE DEBTOR. The
Debtor

<PAGE>

warrants, covenants and agrees that:

                  (a) Except for the Bondholders' Security Interest, other
security interest in the Collateral existing on the date hereof and the security
interest granted hereby and except as permitted by the agreements under which
the Secured Obligations are being incurred, the Debtor is, and as to Collateral
acquired after the date hereof the Debtor shall and will be at the time of
acquisition the owner and holder of the Collateral free from any other adverse
claim, security interest, encumbrance, lien, charge, or other right, title or
interest of any person other than the Secured Party and covenants that at all
times the Collateral will be and remain free of all such other adverse claims,
security interests, or other liens or encumbrances; the Debtor has full power
and lawful authority to sell, assign and transfer the Collateral to the Secured
Party and to grant to the Secured Party a security interest therein as herein
provided; the execution and delivery and the performance hereof are not in
contravention of any charter or by-law provision or of any indenture, agreement
or undertaking to which the Debtor is a party or by which the Debtor or its
property are bound; and the Debtor will defend the Collateral against all claims
and demands of all persons (other than those holding security interests in the
Collateral existing as of the date hereof) at any time claiming the same or any
interest therein. Any officer, agent or representative acting for or on behalf
of the Debtor in connection with this Security Agreement or any aspect thereof,
or entering into or executing this Security Agreement or any financing statement
on behalf of the Debtor, has been duly authorized so to do, and is fully
empowered to act for and represent the Debtor in connection with this Security
Agreement and all matters related thereto or in connection therewith.

                  (b) (i) Except with respect to security interest in the
Collateral existing as of the date hereof, the Debtor has not heretofore signed
any financing statement or security agreement which covers any of the
Collateral, and no such financing statement or security agreement is now on file
in any public office (other than any such statements or agreements, if any, that
are permitted hereunder and under the agreements under which the Secured
Obligations are being incurred).

                  (ii) As long as any amount remains unpaid on any of the
Secured Obligations the Debtor will not enter into or execute any security
agreement or any financing statement covering the Collateral, other than those
security agreements and financing statements existing on the date hereof or in
favor of the Secured Party hereunder.

                  (iii) the Debtor authorizes the Secured Party to file, in
jurisdictions where this authorization will be given effect, a financing
statement signed only by the Secured Party covering the Collateral, and hereby
appoints the Secured Party as the Debtor's attorney-in-fact to sign and file any
such financing statements covering the Collateral. At the request of the Secured
Party, the Debtor will join the Secured Party in executing such documents as the
Secured Party may determine, from time to time to be reasonably necessary or
desirable under provisions of any applicable Uniform Commercial Code in effect
where the Collateral is located or where the Debtor conducts business; without
limiting the generality of the foregoing, the Debtor agrees to join the Secured
Party, at the Secured Party's request, in

<PAGE>

executing one or more financing statements in form satisfactory to the Secured
Party, and the Debtor will pay the costs of filing or recording the same, or of
filing or recording this Security Agreement, in all public offices at any time
and from time to time, whenever filing or recording of any such financing
statement or of this Security Agreement is deemed by the Secured Party to be
necessary or desirable. In connection with the foregoing, it is agreed and
understood between the parties hereto (and the Secured Party is hereby
authorized to carry out and implement this agreement and understanding and the
Debtor hereby agrees to pay the costs thereof) that the Secured Party may, at
any time or times, file as a financing statement any counterpart, copy, or
reproduction of this Security Agreement.

                  (c) Except as required in the ordinary course of the Debtor's
business or as specifically otherwise permitted or provided herein, the Debtor's
Tangibles shall remain in the Debtor's possession and control at all times at
the Debtor's risk of loss, and are now kept and at all times shall be kept at
the Debtor's principal place of business.

                  (d) Subject to the provisions of Section 4(c) above, the
Debtor will promptly notify the Secured Party of any change in the location of
any Tangibles other than in the ordinary course of business and of any new
addresses or locations where Tangibles are or may be kept.

                  (e) The Debtor further covenants and agrees that, if any
certificates of title or similar documents are at any time issued or outstanding
with respect to any of the Collateral, the Debtor will promptly advise the
Secured Party thereof, and the Debtor will promptly cause the interest of the
Secured Party to be properly noted thereon, and if any certificates of title or
similar documents are so issued or outstanding at the time this Security
Agreement is executed by or on behalf of the Debtor, then the Debtor shall have
caused the interest of the Secured Party so to have been properly noted at or
before the time of such execution; and the Debtor will further promptly deliver
to the Secured Party any such certificate of title or similar document.

                  (f) Except as provided in Section 3 above, the Debtor will not
sell or offer to sell or otherwise transfer or encumber or dispose of the
Collateral or any interest therein without the prior written consent of the
Secured Party.

                  (g) Notwithstanding anything to the contrary contained herein,
it is understood and agreed that if for any reason Tangibles are at any time
kept or located at locations other than those specified or which may hereafter
be consented to by the Secured Party, the Secured Party shall nevertheless have
and retain a security interest therein.

                  5. SPECIAL PROVISIONS - TANGIBLES. (a) At any time after any
of the Secured Obligations shall become due, all proceeds of the Debtor's
Tangibles, whether cash proceeds or non-cash proceeds, shall be received and
held by the Debtor in trust for the Secured Party, shall not be commingled with
any other funds, accounts, monies or property of the Debtor,

<PAGE>

and shall be promptly accounted for, paid over and delivered to the Secured
Party in the form as received by the Debtor upon receipt thereof by the Debtor.

                  (b) The Debtor will promptly report to the Secured Party any
occurrence or condition known to or which becomes known to the Debtor having any
material adverse effect upon the value and condition of the tangibles taken as a
whole.

                  6. FURTHER AGREEMENTS BETWEEN THE DEBTOR AND THE SECURED
PARTY. (a) The Secured Party shall never be under any obligation to collect,
attempt to collect, protect or enforce the Collateral or any security therefor,
which the Debtor agrees, and undertakes to do at the Debtor's expense, but the
Secured Party may do so in its discretion at any time after any of the Secured
Obligations shall become due and at such time the Secured Party shall have the
right to take any steps by judicial process or otherwise it may deem proper to
effect the collection of all or any portion of the Collateral or to protect or
to enforce the Collateral or any security therefor. All expenses (including,
without limitation, attorneys' fees and expenses) incurred or paid by the
Secured Party in connection with or incident to any such collection or attempt
to collect the Collateral or actions to protect or enforce the Collateral or any
security therefor shall be borne by the Debtor or reimbursed by the Debtor to
the Secured Party upon demand. The proceeds of collection as a result of any
such actions in collecting or enforcing or protecting the Collateral shall be
held by the Secured Party without liability for interest thereon and may be
applied by the Secured Party as the Secured Party may deem appropriate toward
payment of any of the Secured Obligations secured hereby in such order or manner
as the Secured Party may elect.

                  (b) In the event the Secured Party shall pay any such taxes,
assessments, interests, costs, penalties or expenses incident to or in
connection with the collection of the Collateral or protection or enforcement of
the Collateral or any security therefor, the Debtor, upon demand of the Secured
Party, shall pay to the Secured Party the full amount thereof with interest at a
rate per annum equal to 4.0% per annum; and so long as the Secured Party shall
be entitled to any such payment, this Security Agreement shall operate as
security therefor as fully and to the same extent as it operates as security for
payment of the other Secured Obligations secured hereunder, and for the
enforcement of such repayment the Secured Party shall have every right and
remedy provided for enforcement of payment of the Secured Obligations.

                  (c) In the event that the Collateral or any part thereof shall
now or hereafter become so related to particular real estate that an interest in
it may arise under the real estate laws of the state in which such real estate
is located, then the Debtor shall immediately notify the Secured Party of such
fact and take all steps and furnish all information as the Secured Party shall
reasonably request for the purpose of creating or extending (as the case may be)
a valid and enforceable lien in such Collateral, including making such
additional filings or recordings, at the Debtor's expense, as the Secured Party
shall deem necessary or appropriate.

                  7. REMEDIES. (a) After any of the Secured Obligations shall
become due, in

<PAGE>

addition to any other remedies provided for in any of the agreements relating to
any of the Secured Obligations or available under applicable law, the Secured
Party shall have and may exercise with reference to the Collateral and Secured
Obligations any or all of the rights and remedies of a secured party under the
Uniform Commercial Code in effect in the State of New Jersey, and as otherwise
granted herein or under any other applicable law or under any other agreement
executed by the Debtor, including, without limitation, the right and power to
sell, at public or private sale or sales, or otherwise dispose of, lease or
otherwise utilize the Collateral and any part or parts thereof in any manner
authorized or permitted under said Uniform Commercial Code after default by a
debtor, and to apply the proceeds thereof toward payment of any costs and
expenses and attorneys' fees and expenses thereby incurred by the Secured Party
and toward payment of the Secured Obligations (as between the Secured Party and
the Debtor, in such order or manner as the Secured Party may elect).
Specifically and without limiting the foregoing, the Secured Party may require
the Debtor to assemble the Collateral or any security therefor and make it
available to the Secured Party at a place to be designated by the Secured Party;
and the Secured Party shall have the right to take possession of all or any part
of the Collateral or any security therefor and of all books, records, papers and
documents of the Debtor or in the Debtor's possession or control relating to the
Collateral which are not already in the Secured Party's possession, and for such
purpose may enter upon any premises upon which any of the Collateral or any
security therefor or any of said books, records, papers and documents are
situated and remove the same therefrom without any liability for trespass or
damages thereby occasioned. To the extent permitted by law, the Debtor expressly
waives any notice of sale or other disposition of the Collateral and all other
rights or remedies of the Debtor or formalities prescribed by law relative to
sale or disposition of the Collateral or exercise of any other right or remedy
of the Secured Party existing after default hereunder; and to the extent any
such notice is required and cannot be waived, the Debtor agrees that if such
notice is given in the manner provided in Section 8 hereof at least three (3)
days before the time of the sale or disposition, such notice shall be deemed
reasonable and shall fully satisfy any requirement for giving of said notice.

                  (b) After any of the Secured Obligations shall become due, the
Secured Party is expressly granted the right, at its option, to transfer at any
time to itself or to its nominee the Collateral, or any part thereof, and to
receive the payments, collections, monies, income, proceeds or benefits
attributable or accruing thereto and to hold the same as security for the
Secured Obligations or to apply it on the principal and interest or other
amounts owing on any of the Secured Obligations (as between the Secured Party
and the Debtor, in such order or manner as the Secured Party may elect).

                  (c) All rights to marshalling of assets of the Debtor,
including any such right with respect to the Collateral, are hereby waived by
the Debtor to the extent permitted under applicable law.

                  (d) All recitals in any instrument of assignment or any other
instrument executed by the Secured Party incident to sale, lease, transfer,
assignment or other disposition,

<PAGE>

lease or utilization of the Collateral or any part thereof hereunder shall be
full proof of the matters stated therein and no other proof shall be requisite
to establish full legal propriety of the sale or other action taken by the
Secured Party or of any fact, condition or thing incident thereto and all
prerequisites of such sale or other action or of any fact, condition or thing
incident thereto shall be presumed conclusively to have been performed or to
have occurred.

                  8. GENERAL. (a) NO IMPAIRMENT, ETC. The execution and delivery
of this Security Agreement in no manner shall impair or affect any other
security (by endorsement or otherwise) for the payment or performance of the
Secured Obligations and no security taken hereafter as security for payment or
performance of the Secured Obligations shall impair in any manner or affect this
Security Agreement, all such present and future additional security to be
considered as cumulative security. Any of the Collateral may be released from
this Security Agreement without altering, varying or diminishing in any way the
force, effect, lien, security interest, or charge of this Security Agreement as
to the Collateral not expressly released, and this Security Agreement shall
continue as a lien, security interest and charge on all of the Collateral not
expressly released until all the Secured Obligations secured hereby have been
paid or performed in full. Any future assignment of the interest of the Debtor
in and to any of the Collateral shall not deprive the Secured Party of the right
to sell or otherwise dispose of or utilize all or any part of the Collateral as
above provided or necessitate the sale or disposition thereof in parcels or in
severalty.

                  (b) LIABILITY FOR DEFICIENCY. This Security Agreement shall
not be construed as relieving the Debtor from full liability on the Secured
Obligations and any and all future and other indebtedness secured hereby and for
any deficiency thereon.

                  (c) POWERS OF THE SECURED PARTY. In protecting, exercising or
assuring its interests, rights and remedies under this Security Agreement, the
Secured Party may receive, open and dispose of mail addressed to the Debtor and
execute, sign and endorse negotiable and other instruments for the payment of
money, documents of title and other evidences of payment, shipment or storage
for any form of Collateral or proceeds on behalf of and in the name of the
Debtor.

                  (d) SUBROGATION. The Secured Party is hereby subrogated to all
of the Debtor's interests, rights and remedies in respect to the Collateral and
all security now or hereafter existing with respect thereto and all guaranties
and endorsements thereof and with respect thereto.

                  (e) NOTICES. Any communications, notice or demand to be given
hereunder shall be duly given if in writing (including telecopy communications)
and delivered, mailed or telecopied:

                  IF TO THE DEBTOR, AT:

<PAGE>

                       Rotary Power International, Inc.
                       22 Passaic Street
                       P.O. Box 128
                       Wood-Ridge, New Jersey  07075-0128
                       Attention:  President
                       Tel:  (973) 470-7000
                       Fax:  (973) 779-5595

                  IF TO THE SECURED PARTY, AT:

                       Curtiss-Wright Flight Systems/Shelby, Inc.
                       c/o Curtiss-Wright Corporation
                       One Passaic Street
                       Wood-Ridge, New Jersey 07075
                       Attention: Real Estate Department

                       Tel:  (973) 777-4588
                       Fax:  (973) 777-6901

or, as to any party, to such other address as shall be designated by such party
in a prior written notice to each other party similarly given.

                  (f) NO DUTY TO PRESERVE COLLATERAL. The Secured Party shall
not be obligated to take any steps necessary to preserve any rights in the
Collateral or in any security therefor against any other party, which obligation
the Debtor hereby assumes.

                  (g) NO WAIVER. No delay or omission on the part of the Secured
Party in exercising any right hereunder shall operate as a waiver of any such
right or any other right. A waiver on any one or more occasions shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.
The remedies of the Secured Party hereunder are cumulative, and the exercise of
any one or more of the remedies provided for herein shall not be construed as an
election or as a waiver of any of the other remedies of the Secured Party
provided for herein or existing by law or otherwise.

                  (h) ASSIGNMENT. All rights of the Secured Party hereunder
shall inure to the benefit of its successors and assigns; and all obligations of
the Debtor shall bind its successors and assigns.

                  (i) GOVERNING LAW. This Security Agreement shall be governed
by and construed in accordance with the laws of the State of New Jersey, except
as required by mandatory provisions of law and except to the extent that the
validity or perfection of any of the security interests hereunder, or remedies
hereunder, are governed by the laws of a jurisdiction other than the State of
New Jersey.

                  (j) EXECUTION IN COUNTERPARTS. This Security Agreement may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.

<PAGE>

                  IN WITNESS WHEREOF, the Debtor and the Secured Party have duly
executed and delivered this Security Agreement as of the date first above
written.

                                  ROTARY POWER INTERNATIONAL, INC.

                                  By  /s/ Ken Brody
                                     --------------------
                                      Name:   Ken Brody
                                      Title:  President

                                  CURTISS-WRIGHT FLIGHT
                                    SYSTEMS/SHELBY, INC.,
                                    ACTING BY AND THROUGH
                                  CURTISS-WRIGHT CORPORATION

                                  By  /s/ Kent H. Garson
                                     --------------------
                                      Name:   Kent H. Garson
                                      Title:  Director - Corporate Real Estate

<PAGE>

                                   SCHEDULE A

                  List of equipment and machinery to be sold at
                        auction sale on January 27, 1997<PAGE>

                                      Curtiss-Wright Flight Systems/Shelby, Inc.
                                                               December 22, 1997
                                                                          Page 1

                        ROTARY POWER INTERNATIONAL, INC.
                                22 PASSAIC STREET
                                  P.O. BOX 128
                            WOOD-RIDGE, NJ 07075-0128

                                                   December 22, 1997

Curtiss-Wright Flight Systems/Shelby, Inc.
c/o Curtiss-Wright Corporation
One Passaic Street

Wood-Ridge, New Jersey 07075
Attn: Real Estate Department

                      RE: SETTLEMENT OF CLAIMS WITH RPI

Gentlemen:

                  The purpose of this letter is to memorialize and confirm the
agreement and understanding that has been reached between Rotary Power
International, Inc. ("RPI") and Curtiss-Wright Flight Systems/Shelby, Inc.
("Curtiss-Wright") with respect to the settlement of all claims, including
all monetary claims, that Curtiss-Wright has or may have against RPI relating
to RPI's breach of, and default under, the Lease Agreement, dated as of June
1, 1992, as amended (the "Lease") relating to certain premises located at 22
Passaic Street, Wood-Ridge, New Jersey.

                  RPI has heretofore defaulted in several of its obligations
under the Lease, including, without limitation, its obligation to make several
payments to Curtiss-Wright which were required to be paid by RPI in accordance
with the Lease. As of the date hereof, RPI owes Curtiss-Wright an aggregate
amount of approximately $591,000 in connection with its failure to make such
payments. As a result of these past defaults by RPI, Curtiss-Wright has
heretofore terminated the Lease.

                  For good and valuable consideration the receipt of which is
hereby acknowledged by RPI and Curtiss-Wright and in settlement of all claims
RPI and Curtiss-Wright may now have against each other relating to the Lease and
RPI's default thereunder, RPI and Curtiss-Wright agree as follows:

                  1. RPI shall pay $10,000 to Curtiss-Wright on or before
December 23, 1997. Such payment shall be made by check or wire transfer as
requested by Curtiss-Wright.

                  2. RPI is currently scheduled to sell a portion of its
equipment, machinery, furniture and other assets at an auction sale to be held
on January 27, 1997. Within three (3) days after the completion of such auction
sale, RPI shall make a payment of $115,000 to Curtiss-Wright. Such payment shall
be made by check or wire transfer as requested by Curtiss-Wright.

                  3. As soon as practicable after the date hereof, RPI shall
issue its promissory note to Curtiss-Wright in the principal amount of $400,000.
Such promissory note shall be dated the date hereof, shall mature on January 1,
2003 and shall bear interest from its date at a rate of 4.0% per annum. Interest
on the promissory note shall be payable on January 1 in each of the years of
1999, 2000, 2001, 2002 and at maturity on January 1, 2003. RPI shall have the
right to prepay such promissory note in whole or in part at any time without
penalty. Such promissory note shall be secured by a lien on and security
interest in certain equipment, machinery, fixtures, tools, work in progress,
inventory, furniture and other personal property now owned or hereafter acquired
by RPI (but not including RPI's interest in any intellectual property and other
intangibles), subject and subordinate in all respects to the lien on and
security in such property and assets in favor of the holders of RPI's bonds due
December 15,

<PAGE>

                                      Curtiss-Wright Flight Systems/Shelby, Inc.
                                                               December 22, 1997
                                                                          Page 2

2007 which are being issued on the date hereof.

                  4. RPI shall remove all equipment, machinery and other assets
and completely vacate the premises which were the subject of the Lease by no
later than March 1, 1998. RPI shall leave such premises in "broom swept" clean
condition when vacated. Between the date hereof and February 28, 1998, RPI shall
have the peaceable and quiet enjoyment and possession of the premises, without
the obligation to make any additional rent or other payments to Curtiss-Wright
other than the payments required by the terms of this letter.

                  5. The real estate taxes which have been paid on the premises
are currently being appealed by Curtiss-Wright and RPI hereby waives its right
to receive a refund form Curtiss-Wright in the event that such appeal is
successful.

                  6. RPI and Curtiss-Wright hereby release, remise and forever
discharge each other and any and all of their respective officers, directors,
employees, consultants, accountants, attorneys and agents and any and all of
their respective heirs, successors or assigns from any and all demands, debts,
liabilities, claims, rights, actions, causes of action, suits and proceedings
whatsoever of every kind and nature whether known or unknown, foreseen or
unforeseen, whether in law or in equity, which they ever had, now have or may
have against each other and any and all of their respective officers, directors,
employees, consultants, accountants, attorneys and agents and any and all of
their respective heirs, successors or assigns for, upon or by reason of any
matter or cause whatsoever form the beginning of the world to the date of this
letter. Furthermore, Curtiss-Wright hereby specifically releases, remises and
forever discharges any and all liens or security interests it may have, by
statute or otherwise, on any property or other assets whatsoever of RPI.

                  Please acknowledge your agreement to the terms and conditions
described above by signing a copy of this letter where indicated below and
returning a signed copy to the undersigned. Upon your execution of this letter,
this letter shall become a binding agreement between RPI and Curtiss-Wright.

                                        Very truly yours,

                                        ROTARY POWER INTERNATIONAL, INC.

<PAGE>
                                      Curtiss-Wright Flight Systems/Shelby, Inc.
                                                               December 22, 1997
                                                                          Page 3

                                        By:  /s/ Ken Brody
                                           --------------------
                                             Name:    Ken Brody
                                             Title:   President

Acknowledged and agreed this 22nd day of December, 1997:

CURTISS-WRIGHT FLIGHT SYSTEMS/SHELBY, INC.,
acting by and through CURTISS-WRIGHT CORPORATION

By:  /s/ Kent H. Gardon
   -----------------------------
     Name: Kent H. Garson
     Title:   Director - Corporate Real Estate

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00003-of-00352.parquet"}]]