SEC Contract Filing

Filing Date: 2015-11-18

Document Content:
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>7
<FILENAME>separation_agreement71414fin.htm
<DESCRIPTION>SEPARATION AGREEMENT BETWEEN Q2POWER AND CYCLONE
<TEXT>
<HTML>
<head><title>SEPARATION AGREEMENT</title> </head> <body style="FONT-SIZE:10pt; FONT-FAMILY:'Times New Roman'; COLOR:#000000; MARGIN-TOP:0px"> <div style=WIDTH:624px> <p style="FONT-SIZE:12pt; MARGIN:0px" align=center><b><u>SEPARATION AGREEMENT</u></b></p> <p style=MARGIN:0px align=center><br></p> <p style="FONT-SIZE:7.2pt; MARGIN:0px" align=justify><b>THIS SEPARATION AGREEMENT</b> <font style=FONT-SIZE:12pt>(&#147;</font><font style=FONT-SIZE:12pt><u>Agreement</u></font><font style=FONT-SIZE:12pt>&#148;) is entered into as of July 27<a name=_GoBack />, 2014 (the &#147;</font><font style=FONT-SIZE:12pt><u>Effective Date</u></font><font style=FONT-SIZE:12pt>&#148;), by and between:</font></p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; PADDING-LEFT:48px; MARGIN:0px; PADDING-RIGHT:30px" align=justify><b>Cyclone Power Technologies, Inc.</b>, a Florida Corporation, having its offices located at 601 NE 26th Court, Pompano Beach, Florida 33064 (&#147;<u>Cyclone</u>&#148;); and &nbsp;</p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; PADDING-LEFT:48px; MARGIN:0px; PADDING-RIGHT:30px" align=justify><b>WHE Generation Corp. </b>(f/k/a Cyclone-WHE LLC), a Delaware corporation having its offices located at 3590 Dolson Ct., Carroll, Ohio 43112 (&#147;<u>WHE GEN</u>&#148;) and a majority-owned subsidiary of Cyclone.</p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; MARGIN:0px" align=justify><b>WHEREAS</b>, Cyclone established WHE GEN as a subsidiary in 2010 to pursue business opportunities in the waste heat recovery (&#147;<u>WHR</u>&#148;) industry, and at such time, provided WHE GEN with an exclusive worldwide License Agreement to pursue such WHR opportunities; </p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; MARGIN:0px" align=justify><b>WHEREAS</b>, Cyclone has developed (and continues to develop) and patent several models of a heat-regenerative external combustion engine, which it has full rights and authority to license to third parties, including WHE GEN; and </p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; MARGIN:0px" align=justify><b>WHEREAS</b>, since 2010 WHE GEN has grown its team and further developed its business to also include stationary waste to power (&#147;<u>W2P</u>&#148;) applications (the WHR and W2P specifically being referred to in this Agreement as the &#147;<u>WHE GEN Business</u>&#148;); and </p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; MARGIN:0px" align=justify><b>WHEREAS</b>, WHE GEN desires to secure formal rights from Cyclone to utilize all intellectual property created by Cyclone (the &#147;<u>Technology</u>&#148;), including but not limited to the WHE Mark and S series engines (the &#147;<u>Cyclone Engines</u>&#148;) for use in its WHE GEN Business, which rights are set forth in an Amended and Restated License Agreement (the &#147;<u>Amended License</u>&#148;), to be executed concurrently with this Agreement; and &nbsp;</p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; MARGIN:0px" align=justify><b>WHEREAS</b>, the Board of Directors of Cyclone (the &#147;Board&#148;) seeks to raise capital to continue to fund research and development of the Technology and to advance its own business model of licensing the Technology to WHE GEN and to others companies in different fields including but not limited to: automotive, marine surface and undersea propulsion, off-road equipment and vehicles, and distributed and mobile/auxiliary power utilizing traditional or biofuels (collectively, the &#147;<u>Cyclone Business</u>&#148;); and </p> <p style=MARGIN:0px align=justify><br></p> <p style="FONT-SIZE:12pt; MARGIN:0px" align=justify><b>WHEREAS</b>, the Board of Cyclone has determined that a series of transactions to fund and ultimately &#147;spin-off&#148; as a separate company its subsidiary WHE GEN, consistent with Cyclone&#146;s long-term strategy, will have the following positive benefits for Cyclone and its shareholders:</p> <p style=MARGIN:0px align=justify><br></p> <p style="MARGIN-BOTTOM:-2px; FONT-SIZE:12pt; WIDTH:72px; FLOAT:left; MARGIN-TOP:0px; TEXT-INDENT:48px">1)</p> <p style="FONT-SIZE:12pt; PADDING-LEFT:72px; MARGIN:0px; TEXT-INDENT:-2px" align=justify>Monetizing its investment in WHE GEN, part of which can be sold to private investors to raise non-dilutive capital for Cyclone to repay debt and support operations;</p> <p style="CLEAR:left; MARGIN:0px" align=justify><br></p> <p style=MARGIN:0px align=justify> <hr> <br><br></p> <p style="MARGIN-BOTTOM:-4pt; FONT-SIZE:4pt; PAGE-BREAK-BEFORE:always; MARGIN-TOP:0px" /> <p style="MARGIN-BOTTOM:-2px; FONT-SIZE:12pt; WIDTH:72px; FLOAT:left; MARGIN-TOP:0px; TEXT-INDENT:48px">2)</p> <p style="FONT-SIZE:12pt; PADDING-LEFT:72px; MARGIN:0px; TEXT-INDENT:-2px" align=justify>Distributing a portion of WHE GEN&#146;s stock to Cyclone&#146;s shareholders, subject to applicable law, to allow them diversify their portfolio risks and directly share in the potential future value appreciation of WHE GEN;</p> <p style="CLEAR:left; MARGIN:0px"><br></p> <p style="MARGIN-BOTTOM:-2px; FONT-SIZE:12pt; WIDTH:72px; FLOAT:left; MARGIN-TOP:0px; TEXT-INDENT:48px">3)</p> <p style="FONT-SIZE:12pt; PADDING-LEFT:72px; MARGIN:0px; TEXT-INDENT:-2px" align=justify>Paying to Cyclone approximately $250,000 (inclusive of debt repayment to Cyclone&#146;s creditors), and transferring to WHE GEN approximately $200,000 in current payables, $400,000 in future obligations, and an additional $250,000 in balance sheet liabilities as further detailed herein;</p> <p style="CLEAR:left; MARGIN:0px" align=justify><br></p> <p style="MARGIN-BOTTOM:-2px; FONT-SIZE:12pt; WIDTH:72px; FLOAT:left; MARGIN-TOP:0px; TEXT-INDENT:48px">4)</p> <p style="FONT-SIZE:12pt;