Ener-Core, Inc. (Form: 8-K, Received: 07/06/2016 07:16:53)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 6, 2016

ENER-CORE, Inc.

(Exact name of registrant as specified in its charter)

Delaware		000-55400		45-0525350
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

9400 Toledo Way
Irvine, California 92618

(Address of principal executive offices) (Zip Code)

(949) 616-3300

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01

Entry into a Material Definitive Agreement.

Commercial and Manufacturing License Agreement

On June 29, 2016, Ener-Core, Inc. (the “Company”), through its wholly-owned subsidiary Ener-Core Power, Inc., a Delaware corporation (the “Subsidiary”), entered into a Commercial and Manufacturing License Agreement (the “CMLA”) with the Dresser-Rand Company (“Dresser Rand”). Pursuant to the CMLA, the Company and Dresser-Rand will jointly and collaboratively commercialize a single integrated unit composed of the Company’s Power Oxidizer and the Dresser-Rand KG2-3GEF gas turbine generator (the “KG2” and, together with the Power Oxidizer, the “Combined System”). Upon successful completion of a Full-Scale Acceptance Test (the “FSAT”) prior to December 31, 2016, which consists of the building and installation of a full prototype of a working 2 MW KG2 unit at a site in Southern California (the “Completed Test”), under the Company’s Commercial License Agreement, dated November 14, 2014, between the Subsidiary and Dresser-Rand (as amended, the “CLA”), the CLA will terminate and the CMLA will provide the terms of the commercial relationship between the Company and Dresser-Rand. The CMLA will not become effective until the achievement of the Completed Test, at which time the effective date of the CMLA will be deemed November 14, 2014. In the event the Company is unable to achieve the Completed Test, the CLA will continue to govern the commercial relationship between the Company and Dresser-Rand.

Pursuant to the CMLA, Dresser-Rand will have a worldwide license to manufacture, market, commercialize and sell the Power Oxidizer as part of the Combined System within the 1 MW to 4 MW range of power capacity (the “License”). Initially, the License will be exclusive, even as to the Company, and will remain exclusive for so long as Dresser-Rand sells a minimum of number of units of the Combined System in each calendar year beginning in 2017 (the “Sales Threshold”), subject to certain conditions and exceptions. If Dresser-Rand does not meet the Sales Threshold in any calendar year and the Sales Threshold is not otherwise waived, Dresser-Rand may maintain exclusivity of the License by making a true-up payment to the Company for each unit that is in deficit of the Sales Threshold (a “True-Up Payment”); provided, however , that Dresser-Rand may not maintain an exclusive License by making a True-Up Payment for more than two consecutive calendar year periods. In the event Dresser-Rand does not meet the Sales Threshold, does not qualify for a waiver and elects not to make the True-Up Payment, the License will convert to a nonexclusive License.

Upon a sale by Dresser-Rand of a Combined System unit to a customer, the CMLA requires Dresser-Rand to make a License fee payment to the Company equal to a percentage of the sales price of the Combined System purchased, in accordance with a predetermined fee schedule that is anticipated to result in a payment of between $370,000 and $600,000 per Combined System unit sold (the “License Fee”).

Dresser-Rand may also request that the Company undertake design and development work on modifications to the Combined Systems (each, a “Bespoke Development”). The Company and Dresser-Rand will negotiate any fees resulting from any such Bespoke Development on a case-by-case basis. Further, any obligation by the Company to undertake such Bespoke Development will be conditioned upon the execution of mutually agreed-upon documentation.

As long as the exclusive License remains in effect, the Company will provide certain ongoing sales and marketing support services, at no additional cost to Dresser-Rand, subject to certain restrictions. Any additional sales and marketing services agreed upon by the Company and Dresser-Rand will be compensated at an hourly rate to be upwardly adjusted annually.

If the Company and Dresser-Rand so elect, the Company will manufacture a certain number of Power Oxidizers as part of a certain number of Combined System projects during a transition period (the “Transition Phase”) beginning after execution of the CMLA and prior to the period in which Dresser-Rand manufactures its first three Power Oxidizers as part of at least two individual Combined System projects (the “Initial Manufacturing Phase”), as mutually agreed by the parties. So long as the License remains exclusive during the Transition Phase, if any, and the Initial Manufacturing Phase, the Company will provide a mutually agreed upon number of hours of engineering support services. After the conclusion of the Initial Manufacturing Phase, the Company will, for so long as the License remains exclusive, continue providing up to an agreed upon number of hours of such support services on an annual basis at no additional cost to Dresser-Rand, subject to certain conditions. Any additional engineering support services agreed upon by the Company and Dresser-Rand will be compensated at an hourly rate, to be upwardly adjusted annually. During the Transition Phase, the Company must also develop the spare parts list pertaining to the scope of supply to allow Dresser-Rand to offer service agreements for the Combined System.

The Company must maintain its existing backstop security (the “Backstop Security”) under the CLA in favor of Dresser-Rand in support of all products manufactured, supplied or otherwise provided by the Company during the period beginning on the execution date of the CMLA (the “Execution Date”) and continuing through the expiration of the warranty period for the Combined System units sold to customers as of the Execution Date; however, if the Company and Dresser-Rand mutually agree to engage in a Transition Phase, then such Backstop Security must be extended to support all products manufactured, supplied or otherwise provided by the Company during such Transition Phase.

Dresser-Rand must also: (i) develop the controls strategy for the Dresser-Rand gas turbine control system and integrate it with the Power Oxidizer control system; (ii) with support from the Company, manufacture and commercialize the Combined System following the Transition Phase; (iii) with support from the Company, develop and prioritize sales opportunities for the Combined System; (iv) assume the sales lead role with respect to each customer; and (v) take commercial lead in developing sales to customers. In addition, Dresser-Rand will be primarily responsible for overall warranty and other commercial conditions to Combined System customers, as well as sole project and service provider and interface with customers. Dresser-Rand will also be responsible for warranty, service and after-sales technical assistance for all portions of Combined Systems that comprise Dresser-Rand products. The Company, however, will be responsible for warranty and service for all Company products manufactured or otherwise provided by the Company prior to or during the Transition Phase.

The CMLA prohibits the Company from, without the prior written consent of Dresser-Rand, permitting the creation of any encumbrance, lien or pledge of its intellectual property which would result in any modification to, revocation of, impairment of or other adverse effect on Dresser-Rand’s rights with respect to the exclusive License. In addition, all intellectual property rights that are owned by either the Company or Dresser-Rand as of the Execution Date will remain the sole property of such party, subject to the licenses described in the CMLA. The CMLA also contains provisions that govern the treatment of process and technology developments and any joint inventions that (i) relate to the subject matter of the CMLA and (ii) occur after the Execution Date and during the term thereof.

The CMLA also contains certain restrictions on publicity and obligates Dresser-Rand to use its commercially reasonable efforts to include the Company’s name and logo and otherwise promote the Company’s brand and Power Oxidizers in a mutually agreed-upon manner.

The CMLA contains reciprocal indemnification obligations, but provides that the Company has no obligation with respect to allegations arising out of any modification of any Company products by Dresser-Rand that is not authorized by the Company or the CMLA. Additionally, the CMLA includes certain customary representations and warranties, as well as provisions that govern the treatment, use and disclosure of confidential information.

Unless otherwise terminated in accordance with its terms, the CMLA will expire on the tenth anniversary of the Execution Date, unless the Company and Dresser-Rand elect to extend the term thereof. If either party defaults in its performance of a material obligation and does not substantially cure such default or commence a cure within 30 days after receiving written notice, the non-defaulting party may terminate the CMLA. Either party may terminate the CMLA with immediate effect in the event of a force majeure event or in the event of a breach by the other party of its representations and warranties with respect to the Foreign Corrupt Practices Act of 1977. In addition, (i) Dresser-Rand may terminate the CMLA with immediate effect if, at any time during the Transition Phase, the Company ceases development and manufacturing of Power Oxidizers for use in the Combined Systems and (ii) the Company may terminate the CMLA with immediate effect if Dresser-Rand ceases development and manufacturing of its relevant gas turbines for use in the Combined Systems. During the term of the CMLA and upon termination of the CMLA for any reason, for a period of 12 months after such termination, neither the Company nor Dresser-Rand may directly or indirectly solicit or attempt to employ any employees of the other party, except as mutually agreed-upon.

The CMLA is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. Portions of Exhibit 10.1 have been omitted pursuant to a FOIA Confidential Treatment Request to the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. The foregoing description does not purport to be complete and is qualified in its entirety by reference to such exhibit.

Offer Letter

As described in Item 5.02 below, effective as of June 29, 2016, the Company entered into an offer letter (the “Offer Letter”) with Stephen Markscheid in connection with his appointment to the Board of Directors of the Company (the “Board”). Additional information regarding the Offer Letter is incorporated herein by reference to “Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers” of this Current Report on Form 8-K.

Employment Agreement

As described in Item 5.02 below, effective as of June 29, 2016, the Company entered into an executive employment agreement (the “Employment Agreement”) with Douglas Hamrin, the Company’s Vice President of Engineering. Additional information regarding the Employment Agreement is incorporated herein by reference to “Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers” of this Current Report on Form 8-K.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Director Appointment; Offer Letter

Effective as of June 29, 2016, the Board appointed Stephen Markscheid to fill a vacancy on the Board. Mr. Markscheid has not yet been appointed as a member of any committee of the Board; however, he is expected to be appointed to the Audit and Compensation Committees of the Board. Mr. Markscheid is an “independent director” for purposes of the Company’s Corporate Governance Guidelines, with reference to the relevant rules of the national securities exchanges in the United States, although such definitions do not currently apply to the Company because its securities are not listed on a national securities exchange.

Mr. Markscheid accepted the foregoing appointment pursuant to an Offer Letter from the Company, dated as of June 29, 2016, which provides for the grant of an option (the “Option”) under the Company’s 2015 Omnibus Incentive Plan (the “2015 Plan”), effective July 1, 2016, to purchase 6,000 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), at an exercise price per share of $4.31, which price is at or above the fair market value per share of Common Stock on such date. In addition, Mr. Markscheid will be entitled to reimbursement for reasonable travel expenses incurred to attend meetings of the Board, in accordance with the Company’s expense reimbursement policy as in effect from time to time, as well as to indemnification in his capacity as a director. Mr. Markscheid is also entitled to an annual director’s fee of $40,000.

In connection with the above-described Option, the Company and Mr. Markscheid entered into a stock option agreement (the “Option Agreement”), in the form provided by the 2015 Plan. The Option Agreement provides for 1/4 of the total number of shares to vest after twelve months and 1/48 of the total number of shares to vest each month commencing each month thereafter. The Option will expire on July 1, 2026 and will become fully exercisable immediately prior to, and contingent upon, a “Change in Control” (as defined in the 2015 Plan).

The Offer Letter and the Option Agreement are attached as Exhibits 10.2 and 10.3 to this Current Report on Form 8-K and are incorporated herein by reference. The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to such exhibits.

Mr. Markscheid brings over 30 years of corporate finance experience in the United States, Asia and Europe, including experience in mergers and acquisitions, strategic investments, joint ventures and new business development across industries in emerging markets. Mr. Markscheid has served as Chief Executive Officer of Synergenz BioScience Inc. since 2007, head of international business for Mammoth Industries since 2013 and partner of Wilton Partners since 2014. He has also been an independent member of the boards of directors of CNinsure, Inc. since 2007, Jinko Solar, Inc. since 2009, China Integrated Energy Corporation since 2011, China Ming Yang Wind Power Group since 2011 and ChinaCast Education Corporation since 2011. Mr. Markscheid was previously a representative of the US-China Business Council from 1978 to 1983, a vice president of Chase Manhattan Bank from 1984 to 1988, a vice president of First Chicago Bank from 1988 to 1993, a case leader of Boston Consulting Group from 1994 to 1997, a director of business development of GE Capital (Asia Pacific) from 1998 to 2001, a senior vice president of GE Healthcare Financial Services from 2003 to 2006 and the chief executive officer of HuaMei Capital Company, Inc. from 2006 to 2007. Mr. Markscheid received his bachelor’s degree in East Asian studies from Princeton University in 1976, a master’s degree in international affairs and economics from Johns Hopkins University (SAIS) in 1980 and an MBA from Columbia University in 1991.

The Board concluded that Mr. Markscheid’s extensive experience as an independent director and his substantial corporate finance experience, particularly in Asia, made his appointment to the Board appropriate. Further, Mr. Markscheid possesses financial management experience that qualifies him as an “audit committee financial expert” as defined by the rules and regulations of the Securities and Exchange Commission (the “SEC”).

There is no family relationship between Mr. Markscheid and any of the registrant’s current directors, executive officers or persons nominated or charged to become directors or executive officers, or those of the Subsidiary. There are no transactions between the registrant and Mr. Markscheid that would require disclosure under Item 404(a) of Regulation S-K.

In connection with Mr. Markscheid’s appointment to the Board, the Company also entered into an indemnification agreement with Mr. Markscheid, substantially in the form previously filed with the SEC by the Company.

Employment Agreement

Effective as of June 29, 2016, the Company entered into the Employment Agreement with Douglas Hamrin (“Hamrin”), the Company’s Vice President of Engineering. Pursuant to the Employment Agreement, Mr. Hamrin will receive an annual base salary of $180,000 and is eligible to receive an annual bonus and/or other annual incentive compensation in accordance with any applicable executive bonus plan applicable to Mr. Hamrin as may be adopted by the Board in its sole discretion. The Employment Agreement also provides that the Company will reimburse Hamrin for reasonable expenses that he incurs in performing his duties. During the term of his employment, Mr. Hamrin will also be entitled to up to 15 days of paid time off (“PTO”) annually (adjusted annually based on years of service with the Company) and to participate in the Company’s benefit plans and programs. The initial term of the Employment Agreement is one year, which may be automatically extended for successive one year terms unless terminated by either party upon at least 30 days prior notice.

If the Company terminates Mr. Hamrin’s services for Cause (whether during or at the end of an employment year), the Company is obligated to pay him the sum of (i) his salary and bonuses, if any, through the date of termination, (ii) any earned but unused vacation time/PTO, and (iii) any unreimbursed expenses. “Cause” means his (A) willful dishonesty or fraud with respect to the Company’s business affairs, (B) willful falsification of any employment or other of the Company’s records, (C) misappropriation of or intentional damage to the Company’s business or property, including the improper use or disclosure of its confidential or proprietary information, (D) conviction (including any plea of guilty or nolo contendere ) of a felony or crime that involves moral turpitude, (E) willful and continued failure to comply with the Company’s reasonable written directives after his receipt of written notice from the Company of such refusal and a reasonable opportunity to cure, or (F) the misappropriation of any corporate opportunity, or otherwise obtaining personal profit from any transaction which is adverse to the Company’s interests or to the benefits to which it is entitled.

If Mr. Hamrin’s services are terminated upon his death or disability, then (i) the Company is obligated to pay to him or his estate the same economic benefits as if his services were terminated for Cause and (ii) he or his estate may also be granted (A) additional vesting of then-unvested stock or stock options, (B) a proportional amount of any earned and unpaid annual bonus based on his performance through the date of termination, and/or (C) severance payments. “Disability” means Mr. Hamrin’s inability to perform one or more of the essential functions of his job due to his physical or mental impairment, with or without reasonable accommodation as required by law, for any period aggregating more than 120 days in any 365-consecutive day period.

If the Company terminates Mr. Hamrin’s services for any other reason, then the Company is obligated to pay him (i) the same economic benefits as if his services were terminated for Cause, (ii) monthly cash severance payments at his then effective salary rate, and (iii) continuation of the Company’s provided health insurance coverage, each to be paid during the six-month period immediately following the termination date, subject to earlier termination in the event that he obtains new employment or engages (or assists any other person or entity to engage) in any activity competitive with the Company’s business. Further, if during the six-month period immediately preceding or following a Change of Control (as hereinafter defined), the Company terminates his employment without Cause, then all of his then-unvested outstanding options will immediately vest. A “Change of Control” occurs when (i) any person becomes the beneficial owner of securities that then represents 50% or more of the total voting power of the Company’s outstanding voting securities, unless such person was the beneficial owner of at least 20% of its voting power as of the effective date of the Employment Agreement, and does not become the beneficial owner of 80% or more of the Company’s voting power, (ii) the Company consummates the sale, exchange, lease, or other disposition of all or substantially all of its assets to a person or group of related persons, (iii) the Company consummates a merger, reorganization, recapitalization, consolidation, or similar transaction with any other corporation or other business entity, in one transaction or a series of related transactions (except one in which (A) the holders of the Company’s voting securities outstanding immediately before such transaction continue to hold at least 50% of the voting power in the surviving entity or (B) a transaction in which a single party (or a group of affiliated parties) acquires the Company’s voting securities and the holders of the Company’s voting securities immediately before the transaction do not dispose of a majority of their interests in connection with that transaction), or (iv) the Company dissolves or liquidates.

Mr. Hamrin may terminate his employment at any time and for any reason. Such resignation will not become effective until the earlier of (i) 90 days after the date resignation notice is given to the Board or (ii) a date specified by the Company. If Mr. Hamrin terminates his employment, he has agreed to make himself available to the Company during the 30-day period following his termination, without any compensation (subject to exception): (i) to facilitate an efficient transition of his job-related responsibilities and duties and (ii) to respond to questions regarding information and/or activities in which he had been engaged while employed by the Company.

During his employment with the Company and for a designated period after his termination, Mr. Hamrin is subject to restrictive covenants that provide he will not: (i) call on, solicit, divert, interfere with or take away (or attempt to call on, solicit, divert or interfere with or take away) any of our projects, business, clients, customers or prospects with whom or with which Mr. Hamrin had contact during his employment with us by promoting or selling services or products that compete with us or our affiliates; or (ii) solicit, influence or induce (or attempt to solicit, influence or induce) any employees as of his termination date with whom Mr. Hamrin had direct contact during his employment with us.

The Employment Agreement also contains other restrictive covenants further prohibiting: (a) disparagement of the Company or its affiliates during Hamrin’s employment and thereafter, (b) the improper solicitation of the Company’s customers following the expiration or termination his employment with the Company and (c) the use or disclosure of confidential business information during or at any time after termination of his employment.

The Employment Agreement is attached as Exhibit 10.4 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description does not purport to be complete and is qualified in its entirety by reference to such exhibit.

Item 8.01

Other Events.

On June 30, 2016, the Company issued a press release regarding the execution of the CMLA, which is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein be reference.

On July 6, 2016, the Company issued a press release regarding the appointment of Mr. Markscheid to the Board, which is attached as Exhibit 99.2 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits.

	Exhibit Number		Description
	10.1†		Commercial and Manufacturing License Agreement, dated June 29, 2016, between the Company and Dresser-Rand Company
	10.2+		Offer Letter, dated June 29, 2016, from the Company to Stephen Markscheid
	10.3+		Option Agreement, dated July 1, 2016, between the Company and Stephen Markscheid
	10.4+		Executive Employment Agreement, dated June 29, 2016, between the Company and Douglas Hamrin
	99.1		Press Release dated June 30, 2016
	99.2		Press Release dated July 6, 2016

	†	Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the SEC.
	+	Indicates a management contract or compensatory plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ENER-CORE, Inc.

Dated: July 6, 2016	By:	/s/ Domonic J. Carney
		Domonic J. Carney
		Chief Financial Officer

EXHIBIT INDEX

	Exhibit Number		Description
	10.1†		Commercial and Manufacturing License Agreement, dated June 29, 2016, between the Company and Dresser-Rand Company
	10.2+		Offer Letter, dated June 29, 2016, from the Company to Stephen Markscheid
	10.3+		Option Agreement, dated July 1, 2016, between the Company and Stephen Markscheid
	10.4+		Executive Employment Agreement, dated June 29, 2016, between the Company and Douglas Hamrin
	99.1		Press Release dated June 30, 2016
	99.2		Press Release dated July 6, 2016

	†	Confidential treatment requested as to portions of the exhibit. Confidential materials omitted and filed separately with the SEC.
	+	Indicates a management contract or compensatory plan.

Exhibit 10.1

[***] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to this omitted information.

EXECUTION VERSION

COMMERCIAL AND MANUFACTURING LICENSE AGREEMENT

This COMMERCIAL AND MANUFACTURING LICENSE AGREEMENT (“ Agreement ”) is executed as of this 29th day of June, 2016 (“ Execution Date ”), by and between Dresser-Rand Company, a New York general partnership (“ D-R ”), and Ener-Core Power, Inc., a Delaware corporation (“ E-C ”) (each a “ Party ” and, together, the “ Parties ”).

WHEREAS , D-R is in the business of building gas turbines;

WHEREAS , E-C is in the business of building power oxidizers, which would be complementary to D-R Gas Turbines;

WHEREAS , the Parties have entered into a Commercial License Agreement, dated November 14, 2014 (the “ CLA ”), pursuant to which the Parties have been working on the Initial System Project (as defined in the CLA), which included (i) E-C developing a power oxidizer with certain controls for the D-R KG2-3GEF gas turbine, and (ii) D-R developing the D-R KG2-3GEF gas turbine with certain controls, all specific to a product configured as a single integrated unit consisting of a combination of the power oxidizer with the D-R KG2-3GEF gas turbine;

WHEREAS , the Parties are now in a position to commence a Full-Scale Acceptance Test or “ FSAT ” of a Combined System (as defined below) unit in accordance with the terms of the CLA;

WHEREAS , upon a Completed Test (as defined below), the Parties desire to terminate the CLA and, notwithstanding the Execution Date hereof, allow the terms of this Agreement to apply retroactively to the Effective Date (defined below), in accordance with the terms and conditions hereof, to govern the manufacturing and commercialization of a Combined System unit;

WHEREAS , furthermore, upon a Completed Test, the Parties intend to amend and restate this Agreement to reflect the termination of the CLA and the inapplicability of its terms and conditions to this Agreement; and

WHEREAS , if a Completed Test is not achieved, the Parties acknowledge and agree that this Agreement will be null and void, and have no force or effect, and that the terms of the CLA will continue to exist and govern the Parties’ relationship with respect to the subject matter thereunder.

NOW, THEREFORE , in consideration of the premises and the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS . Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings set forth in this Section.

“ Affiliate ” shall mean, with respect to any Person, any other person or entity that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. For the purpose of this Agreement the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person or entity, whether through ownership of voting securities, by contract or otherwise. A person or entity shall be deemed an Affiliate of another person or entity only during such time as such control exists.

“ Combined System ” shall have the meaning given to that term in the applicable Annex A . The initial Annex A to this Agreement will be labeled, “ Annex A-1 ,” and any subsequent Annex A the Parties mutually agree to will be labeled sequentially Annex A-2 , A-3 , etc. For the avoidance of doubt, each Annex A to this Agreement will define the Specifications for the applicable Combined System thereunder only, and the Specifications contained in another annex for a Combined System therein will not apply with respect to any other Annex A .

“ Completed Test ” shall have meaning given to that term in the CLA.

“ Customer ” means the Person who purchases, or contracts for the purchase of, a Combined System from D-R.

“ D-R Background Intellectual Property ” shall mean (a) all Inventions, Intellectual Property, and all other proprietary rights owned or controlled (with the right to (sub)license as contemplated herein) by D-R as of the Execution Date, and (b) all Improvements of the Inventions and Intellectual Property described in (a), above, and associated intellectual property rights owned or controlled (with the right to (sub)license as contemplated herein) by D-R after the Execution Date and during the Term.

“ D-R Gas Turbine ” means the gas turbine as further described in the applicable Annex A attached hereto. The initial Annex A to this Agreement will be labeled, “ Annex A-1 ,” and any subsequent Annex A the Parties mutually agree to will be labeled sequentially Annex A-2 , A-3 , etc. For the avoidance of doubt, each Annex A to this Agreement will define the Specifications for the applicable D-R Gas Turbine thereunder only, and the Specifications contained in another annex for a D-R Gas Turbine therein will not apply with respect to any other Annex A .

“ D-R Hardware ” shall mean the D-R Gas Turbine products, components and spare parts, integrated controls, and packaging, all designed for the Combined System.

“ D-R Products ” shall mean D-R Hardware and on-site commissioning and technical support that D-R has agreed to provide or deliver to a Customer or End-User pursuant to the terms of this Agreement, but excluding any E-C Products.

“ E-C Background Intellectual Property ” shall mean (a) all Inventions, Intellectual Property, and all other proprietary rights owned or controlled (with the right to (sub)license as contemplated herein) by E-C as of the Execution Date and (b) all Improvements of the Inventions, Intellectual Property described in (a), above, and associated intellectual property rights owned or controlled (with the right to (sub)license as contemplated herein) by E-C after the Execution Date and during the Term.

“ E-C Hardware ” shall mean E-C’s Power Oxidizer products, components, spare parts, and controls, all designed for the Combined System.

“ E-C Indemnifiable Claim ” means any claim, action, allegation or Damages sustained by any D-R Indemnitee in connection with D-R exercising its rights with respect to the Licensed IP and determined, pursuant to [***] except in all cases to the extent due to E-C’s compliance with specifications required by D-R.

“ E-C Products ” shall mean E-C Hardware and on-site commissioning and technical support, training of D-R field support personnel, Engineering Support Services, Marketing Support Services, and all other services that E-C has agreed to provide or deliver to D-R pursuant to the terms of this Agreement.

“ Effective Date ” means November 14, 2014.

“ End-User ” means the Person for whose benefit the Combined System was purchased or installed, if that Person is not the Customer.

“ Fundamental Process ” means a process (including sensors, instrumentation, controls and heat exchangers) designed for the primary purpose of achieving heat release from any fuel whereby such fuel is gradually oxidized in a high-temperature vessel maintained at such high temperature.

“ Fundamental Process Technology Developments ” shall mean any Inventions relating to the Fundamental Process conceived, invented, discovered, developed or created during the Term of this Agreement (i) solely by one or more employees, contractors or agents of D-R or an Affiliate of D-R, or (ii) jointly by employees, contractors or agents of D-R or an Affiliate on the one hand and by one or more employees, contractors or agents of E-C or an Affiliate of E-C on the other hand, in each case based upon or resulting from the use of E-C Background Intellectual Property disclosed to D-R as E-C Confidential Information (as defined in Section 13.1) or licensed to D-R pursuant to Section 3.7 of this Agreement.

“ Gas Turbine Technology Developments ” shall mean any Inventions relating to gas turbines conceived, invented, discovered, developed or created during the Term of this Agreement (i) solely by employees or agents of E-C or an Affiliate of E-C, or (ii) jointly by one or more employees, contractors or agents of E-C or an Affiliate of E-C on the one hand and one or more employees, contractors or agents of D-R or an Affiliate of D-R on the other hand, in each case based upon or resulting from the use of D-R Background Intellectual Property disclosed to E-C as D-R Confidential Information (as defined in Section 13.1) or licensed to E-C pursuant to Section 3.7 of this Agreement.

“ Governmental Body ” means any government or governmental or regulatory body thereof, or political subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).

“ Initial Manufacturing Phase ” or “ IMP ” means the period during which D-R manufactures its first three Power Oxidizer units as part of no less than two individual Combined System projects.

“ Improvements ” means any and all improvements, derivative works, additions, modifications, enhancements, changes, updates and upgrades, whether or not patentable.

“ Intellectual Property ” shall mean all right, title and interest of a Party or the Parties in intellectual property, whether protected, created or arising under the laws of the United States or any other jurisdiction, including: (i) Patents; (ii) trademarks, service marks, trade names, service names, brand names, trade dress rights, corporate names, trade styles, logos and other source or business identifiers and general intangibles of a like nature, together with the goodwill associated with any of the foregoing, along with all applications, registrations, renewals and extensions thereof (“ Trademarks ”); (iii) Internet domain names; (iv) copyrights and mask work, database and design rights, whether or not registered or published, all registrations and recordations thereof and all applications in connection therewith, along with all reversions, extensions and renewals thereof; (iv) trade secrets and other proprietary Confidential Information; (v) Inventions; and (vi) contracts granting any right relating to or under the foregoing.

“ Invention ” shall mean all tangible or intangible ideas, know-how, knowledge, concepts, analyses, evaluations, developments, designs, Improvements, formulae, software, processes, inventions, discoveries, methods, compositions, techniques, designs or manufacturing specifications, and procedures, whether or not patentable.

“ Joint Inventions ” shall mean all Inventions conceived, reduced to practice, invented, discovered, developed, created or authored during the Term of this Agreement, jointly by some combination of an employee, contractor or agent of E-C or an Affiliate of E-C on the one hand, and an employee, contractor or agent of D-R or an Affiliate of D-R on the other hand, and all rights in any of the foregoing; provided , however , that Joint Inventions shall not include Fundamental Process Technology Developments or Gas Turbine Technology Developments.

“ Licensed IP ” means all designs, drawings, documents, specifications and other Intellectual Property owned by or licensed to E-C that are necessary for D-R to manufacture, commercialize, market and sell the E-C Products as part of the Combined System. The Licensed IP includes, without limitation, E-C Background Intellectual Property, Fundamental Process Technology Developments and Joint Inventions.

“ Patent ” shall mean any United States or foreign patent application, provisional patent application, and any patent issuing there from anywhere in the world (including by way of example and not limitation, patents of importation, patents of confirmation, patents of improvement, patents and certificates of addition and utility model patents, together with any extension, registration, confirmation, reissue, continuation, division, continuations-in-part, reexamination or other post-issuance certificate, certificate of invention and application for certificate of invention, revalidation, renewal, substitution, supplementary protection certificate, or any addition or term restoration thereof, utility models, and industrial designs. The term “ Patent ” does not include copyrights or trademarks.

“ Person ” means any individual, corporation, limited liability company, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.

“ Power Oxidizer ” means a pressurized packed bed reactor vessel, including interfaces with a D-R Gas Turbine, implementing the Fundamental Process, as further described in the applicable Annex A attached hereto. The initial Annex A to this Agreement will be labeled, “ Annex A-1 ,” and any subsequent Annex A the Parties mutually agree to will be labeled sequentially Annex A-2 , A-3 , etc. For the avoidance of doubt, each Annex A to this Agreement will define the Specifications for the applicable Power Oxidizer thereunder only, and the Specifications contained in another annex for a Power Oxidizer therein will not apply with respect to any other Annex A .

“ Rated Power ” means the nominal electric power rating of a Combined System, further defined as the electric power output of a Combined System measured on such Combined System’s generator contacts connected to a resistive-only load (power factor of unity) as measured at ISO conditions according to generally accepted power generation industry measurement standards.

“ Sales Price ” means the price for sales of the Combined System to Customers as established by D-R in a fair and transparent manner.

“ Specifications ” means, as the context requires, the performance specifications for the Power Oxidizer, D-R Gas Turbine, or any Combined System, all as set forth on the applicable Annex A or the performance guarantees set forth for the Combined System in any Customer purchase order. The initial Annex A to this Agreement will be labeled “ Annex A-1 ,” and any subsequent Annex A the Parties mutually agree to will be labeled sequentially Annex A-2 , A-3 , etc.

“ Transition Phase ” means an optional period as mutually elected by both Parties that occurs before IMP but after the Execution Date, during which E-C manufactures a certain number of Power Oxidizers as part of a certain number of Combined System projects, all as mutually agreed by the Parties.

“ Work Product ” shall mean any drawing, designs, specifications, results or output of investigations, including, without limitation, any designs, models, drawings, prints, samples, transparencies, specifications, reports, documents, spreadsheets, manuscripts, working notes, documentation, manuals, photographs, negatives, tapes, discs, software or any other similar items, or any modifications thereto, which are prepared by a Party under this Agreement.

PARTIES’ OBLIGATIONS .

2.1

E-C Specific Obligations . E-C hereby agrees to do the following:

2.1.1

Within thirty (30) days following the Execution Date, E-C shall provide D-R with copies of all Patents that cover or claim the manufacture, use, offer for sale, sale or import of E-C Products as part of a Combined System.

2.1.2

Provide Marketing Support Services as further described in Section 6.1.

2.1.3

Provide Engineering Support Services as further described in Section 7.2.

2.1.4

Obtain and maintain the Backstop Security in accordance with Section 7.1.3.

2.1.5

During the Transition Phase only, develop the spare parts list pertaining to the E-C scope of supply to allow D-R to offer service agreements for the Combined System.

2.2

D-R Specific Obligations . D-R agrees to do the following:

2.2.1

Develop the controls strategy for the D-R Gas Turbine control system and integrate it with the Power Oxidizer control system.

2.2.2

With support from E-C as expressly provided herein, manufacture and commercialize the Combined System following the Transition Phase.

2.2.3

With support from E-C as expressly provided herein, develop and prioritize sales opportunities for the Combined System.

2.2.4

Assume the sales lead role with respect to each Customer. D-R may, at its sole discretion, allow qualified E-C distributors to support D-R’s commercial lead throughout the sales cycles for particular Customers. All such E-C distributors will be obligated to maintain strict adherence to D-R business policies, including D-R’s Code of Business Conduct attached hereto as Annex D .

2.2.5

Take commercial lead in developing sales to Customers.

2.3

Third-Party Contractors . In the event that either Party employs the services of third-party contractors for performance of any task(s) assigned to that Party, that Party shall, before such third party or third-party personnel are provided any information regarding the Combined System or any components or portions thereof: (i) notify the other Party of the third party’s involvement; and (ii) require that such third party and all third-party personnel involved in performance of the task(s) execute non-disclosure agreements containing confidentiality obligations at least as restrictive as those contained herein and invention disclosure and assignment agreements consistent with the obligations of the Parties hereunder.

2.4

Joint Oversight Team . The Parties will establish a Joint Oversight Team as listed in Annex C ; and through the Joint Oversight Team, cooperate in biennial joint review processes for both manufacturing and commercialization of the Combined System, and share lessons learned from the Power Oxidizer and Fundamental Process technology applications outside of the License range.

GRANT OF LICENSES

3.1

Grant to D-R of License . Subject to the terms and conditions of this Agreement, E-C hereby grants D-R a worldwide license under the Licensed IP for D-R to: (i) make, have made, sell, offer for sale and import E-C Products, and (ii) market and commercialize the E-C Products, in both cases as part of the Combined System with Rated Power that is greater than 1MWe and less than 4 MWe (the “ License ”). For the sake of clarity, D-R shall not have the right to commercialize or sell Power Oxidizers in non-turbine applications, or to commercialize or sell Power Oxidizers as part of Combined Systems in per Combined System-unit power range outside of 1 to 4 MWe and any breach by D-R of this express limitation on the grant of rights set forth herein shall constitute grounds for immediate termination of the this Agreement on notice to D-R without the right to cure. For avoidance of doubt, and subject to the remainder of this Section 3.1, the License includes the right to sell multiple Combined Systems to a Customer, resulting in Customer projects being rated in excess of 4MWe. The License shall initially be an exclusive license (the “ Exclusive License ”) and, for the avoidance of doubt, such exclusive license is exclusive of all others, including E-C.

3.2

Sales Thresholds; True-Up Payments . The License will remain an Exclusive License for so long as D-R sells a minimum of [***] units of the Combined System in each calendar year after the Execution Date (the “ Sales Threshold ”); provided, that the first calendar year will begin on the Execution Date and will terminate at the end of the next full calendar year (e.g., if the Execution Date of this Agreement is June 1, 2016, the first calendar year for purposes of calculating the Sales Threshold will end on December 31, 2017). [***] (the “ Sales Threshold Waiver ”).

3.2.1

If the Sales Threshold is not met in any calendar year and is not waived pursuant to the Sales Threshold Waiver described in Section 3.2, D-R will have the right, exercisable by delivery of written notice to E-C prior to the end of the applicable calendar year, to maintain exclusivity for the License by paying E-C a true-up payment equal to[***] (the “ True-Up Payment ”). Notwithstanding anything in this paragraph to the contrary, in no event will D-R be permitted to maintain the Exclusive License by making a True-Up Payment for more than two consecutive calendar year periods.

3.2.2

If D-R does not meet the Sales Threshold, does not qualify for the Sales Threshold Waiver, and does not elect to pay the True-Up Payment, then the License will convert to a nonexclusive license. In addition, D-R will provide E-C with notice by August 31 of each calendar year of either of the following events: (i) D-R plans to make sales of the Combined System before the end of the then-current calendar year such that it would meet the applicable Sales Threshold; or (ii) if D-R does not expect to meet the Sales Threshold for that particular year, a notice that D-R will either pay or not pay the True-Up Payment for that particular calendar year. Failure by D-R to provide such notice shall constitute a material breach of this Agreement.

3.3

Fundamental Process Technology Developments . Subject to the terms and conditions of this Agreement, D-R hereby irrevocably assigns to E-C all rights in and to any Fundamental Process Technology Developments developed during the Term of this Agreement.

3.4

Gas Turbine Technology Developments . Subject to the terms and conditions of this Agreement, E-C hereby irrevocably assigns to D-R all rights in and to any Gas Turbine Technology Developments developed during the Term of this Agreement.

3.5

Joint Inventions . The Parties agree that D-R and E-C shall jointly own any Joint Inventions developed during the Term of this Agreement. Each Party shall have unrestricted rights to use such Joint Inventions during the Term of this Agreement and perpetually thereafter, without accounting to the other Party.

3.6

Sublicense Rights . Other than as expressly provided herein, the licenses granted under Section 3 include the right to grant sublicenses to Affiliates and other contractors solely for the purpose of exercising the rights granted pursuant to such license. In other words, such sublicense rights do not include the general right to sublicense to third parties, but permit sublicenses in order for D-R to effectuate the commercialization, manufacture and sale of Combined Systems.

3.7

Background Intellectual Property . E-C shall have the right to use D-R Background Intellectual Property and D-R shall have the right to use E-C Background Intellectual Property, in each case, only as is necessary to perform such Party’s obligations and exercise such Party’s rights under this Agreement.

3.8

Negative Pledge . E-C shall not, during the Term, without the prior written consent of D-R, which consent shall not be unreasonably withheld, delayed or conditioned, allow the creation of any encumbrance, lien or pledge of the E-C Intellectual Property which would, upon the enforcement or execution of such encumbrance, lien or pledge by the beneficial holder result in any modification to, revocation of, impairment of, or other adverse effect on D-R’s right to exercise its rights with respect to the Exclusive License.

3.9

Cooperation . Each Party shall take all reasonable actions necessary to evidence, protect, or convey the ownership rights set forth in this Section 3 , including but not limited to the acquisition of assignments of any and all Intellectual Property rights from any contractors, subcontractors, employees or any other entity providing services to one or both Parties that results in the development of Intellectual Property rights to be conveyed hereunder. All conveyances shall be free and clear of any claims, liens, security interests or other encumbrances or interests by the transferring Party and any third parties claiming through such Party.

3.10

Bespoke Improvements . D-R shall have the right, at any time during Term while the Exclusive License remains in effect, to request that E-C undertake design and development work on modifications to the Combined Systems developed under this Agreement (each, a “ Bespoke Development ”). Within thirty (30) days following the receipt of any such request E-C shall respond to D-R indicating the terms and conditions, if any, on which it is willing to undertake such Bespoke Development including, without limitation, modifications to terms and conditions of this Agreement on which such work would be conditioned and which may include, without limitation, compensation to E-C in the form of cash payment or increased license fees with respect to the Combined Systems which result from or are the subject of such Bespoke Development. The obligation of E-C to undertake a Bespoke Development shall be conditioned upon execution of mutually agreed-upon documentation, which may include, without limitation, memorialization of the respective positions of the Parties as to the economic value of such Bespoke Development.

LICENSE FEES; TAXES

4.1

License Fees . As consideration for the License, upon a sale by D-R of a Combined System unit(s) to a Customer (i.e., upon D-R’s written acceptance of a purchase order with a Customer for a single or multiple Combined System unit(s)), D-R will pay E-C a license fee equal to a percentage of the Sales Price of Combined Systems purchased by Customers in accordance with the following schedule (the “ License Fee ”): [***].

4.2

Payment Terms . D-R will pay the License Fees with respect to a particular sale of the Combined System in accordance with the following schedule: (i) 50% of the License Fee for the sale of a Combined System will be due 30 days from D-R’s written acceptance of the purchase order from Customer for the single or multiple Combined System unit(s)) and (ii) the remaining 50% will be due 12 months thereafter, or upon full collection by D-R of payment from the applicable Customer, whichever occurs first. Upon E-C request, D-R will provide E-C with an itemized purchase order for the sales of Combined Systems hereunder to Customers.

4.3

Taxes .

4.3.1

“ Tax ” or “ Taxes ” shall mean all taxes, charges, duties, fees, levies or other assessments, including income, excise, property, sales, consumption, use, value added, profits, license, withholding (with respect to compensation or otherwise), payroll, employment, net worth, capital gains, transfer, stamp, social security, environmental, occupation and franchise taxes, imposed by any Governmental Body, and including any interest, penalties and additions attributable thereto, and all amounts payable pursuant to an agreement or arrangement with respect to taxes.

4.3.2

As between the Parties, D-R shall be responsible for the collection, remittance and payment of any or all Taxes of any kind imposed by any governmental authority in respect of the purchase, importation, sale, lease or other distribution of the Combined System.

4.3.3

As between the Parties, D-R shall be responsible for obtaining any necessary import licenses or permits necessary for the entry of the Combined System into each country, or its delivery to D-R, and D-R shall be responsible for any and all customs duties, clearance charges, taxes, brokers’ fees and other amounts payable in connection with the exportation, importation and delivery of Combined System to or by D-R.

4.3.4

The Parties agree to cooperate and produce on a timely basis any Tax forms or reports reasonably requested by the other Party in connection with any payment made under this Agreement. Each Party further agrees to provide reasonable cooperation to the other Party, at the other Party’s expense, in connection with any official or unofficial Tax audit or contest relating to payments made by the other Party under this Agreement.

4.3.5

Any payments made by a Party pursuant to this Agreement shall not be reduced on account of any Taxes unless required by applicable law. E-C shall be responsible for paying any and all Taxes (other than withholding taxes required to be paid by D-R under applicable law) levied on account of, or measured in whole or in part by reference to, any payments it receives hereunder. D-R shall deduct or withhold from any such payments to E-C any Taxes that D-R is required to deduct or withhold under applicable law. Notwithstanding the foregoing, if E-C is entitled under any applicable Tax treaty to a reduction in the rate of, or the elimination of, applicable withholding Tax, it may deliver to D-R or the appropriate governmental authority (with the assistance of D-R to the extent that such assistance is reasonably required and is requested in writing) the prescribed forms necessary to reduce the applicable rate of withholding or to relieve D-R of its obligation to withhold Tax, and D-R shall apply the reduced rate of withholding, or dispense with withholding, as the case may be, provided that D-R has received evidence, in a form reasonably satisfactory to D-R, of E-C’s delivery of all applicable forms (and, if necessary, its receipt of appropriate governmental authorization) at least 10 days prior to the time that the payments are due. If, in accordance with the foregoing, D-R withholds any amount, it shall (i) timely remit to E-C the balance of such payment; (ii) timely remit the full amount withheld to the proper governmental authority; and (iii) send to E-C written proof of remittance of the full amount withheld within 30 days following remittance.

5.	OWNERSHIP AND PROTECTION OF INTELLECTUAL PROPERTY

5.1

Ownership . For the avoidance of doubt, all Intellectual Property rights that are owned by a Party as of the Execution Date shall remain the sole property of that Party, subject to the licenses expressly set forth in this Agreement, and no other rights are granted hereunder by implication, by estoppel, or otherwise.

5.2

Protection of Joint Inventions . The Parties will mutually agree on the adoption and implementation of measures and procedures to safeguard the value of the Joint Inventions. The Parties may issue instructions to guide the handling of the Joint Inventions constituting trade secrets. In any event, each Party will be obligated to treat the Joint Inventions in accordance with the same degree of care such Party uses to protect its own trade secrets, but in no event less than a reasonable degree of care.

5.3

Prosecution and Maintenance . Each Party shall have the sole right to file, prosecute, maintain, register, or otherwise secure protection for all Intellectual Property solely owned by such Party, in its discretion and at its sole cost and expense using agents, attorneys and others selected by such Party.

5.4

Notice of Abandonment and Cooperation . In the event E-C decides to abandon any of the Patents included in the Licensed IP, whether by express abandonment or through inaction, then E-C shall provide written notice to D-R prior to such abandonment, which notice will include the details of the particular Patent and the prospective abandonment date thereof (“ Abandonment Date ”); (ii) if requested by D-R, E-C will permit D-R to maintain such Patent such that it does not go abandoned; and (iii) E-C shall provide such notice of the prospective abandonment at least 10 days in advance of the Abandonment Date.

5.5

Enforcement .

5.5.1

Except as otherwise provided herein, each Party shall have the sole right to enforce or otherwise prevent violations of all Intellectual Property solely owned by or exclusively licensed to such Party, in its discretion and at its sole cost and expense using agents, attorneys and others selected by such Party. If either Party believes that any E-C Patent included in the Fundamental Process is being infringed or is being misused by a third party, such Party will promptly notify the other Party of such infringement or misuse. If, within sixty (60) days from the date such notice is received, the Parties agree that action is warranted, the Parties will cooperate in the filing and maintenance of a claim, demand, investigation, suit or other proceeding (an “ Action ”), as appropriate, regarding such infringement or misuse. Each of the Parties will bear its own internal costs and expenses in connection with the filing and prosecution of such Action, and out-of-pocket fees and expenses will be borne equally by the Parties. With respect to any monetary damages, profits, awards and royalties (“ Recovery ”) obtained by the Parties in connection with such Action, such Recovery will be allocated to the Parties as follows: firstly, out-of-pocket fees and expenses will be reimbursed to each Party, and then secondly, E-C will receive the remainder of the Recovery.

5.5.2

If either Party declines to participate in, or the Parties are unable to agree on, the filing of an Action within the sixty (60) day period set forth in Section 5.5.1 , then the other Party (the “ Participating Party ”) may proceed in its sole discretion and at its sole expense to file and prosecute such Action for infringement or misuse in its own name or, if required by law, jointly with the other Party and in such event the Participating Party is hereby authorized to take action in the name of the other Party as well; provided however, that if the Participating Party takes action in the name of the other Party, the Participating Party will indemnify and hold the other Party harmless from and against any and all monetary damages, fines, fees, penalties, obligations, deficiencies, losses and out-of-pocket expenses that the other Party incurs or is subject to directly as a result of such Action. The Participating Party will receive for its sole benefit any damages, profits, awards and royalties recoverable for such infringement or misuse as the result of such Action.

5.5.3

If both Parties initially agree to jointly bring any Action, either Party may elect at any time to settle or withdraw for any reason from the proceedings related to such Action; provided, however, the settling Party will not as part of any settlement grant a license in the E-C Patent that renders the Action moot without the consent of the other Party. Going forward, the continuing Party will bear all of the fees and expenses incurred for such Action and may proceed in its sole discretion to prosecute, settle (including, but not limited to, licenses granted in connection therewith) or discontinue prosecution of such Action. Any damages, profits, awards and royalties recovered or to be recovered for such Action will be apportioned between the Parties in direct proportion to the ratio of each Party’s out-of-pocket fees and expenses compared to the total out-of-pocket fees and expenses of both Parties and taking into account any benefits recovered by the non-continuing Party as the result of any settlement.

SALES AND MARKETING

6.1

Sales and Marketing Support . For so long as the Exclusive License remains in effect E-C will, at no additional cost to D-R, provide ongoing sales and marketing support services (“ Marketing Support Services ”) in the following amounts: (i) up to 1,000 hours over a duration of 24 months beginning on the Execution Date (provided, that in no event will such Marketing Support Services exceed 160 hours in any given 30 day period); and (ii) up to 300 hours on an annual basis thereafter, with such obligations pro-rated in the event that the Exclusive License becomes non-exclusive mid-year. The nature and scope of the Marketing Support Services provided by E-C will be as mutually agreed by the Parties, and may include: (a) attendance by E-C at quarterly sales and marketing planning meetings; (b) attendance by E-C at D-R’s (or Siemens’) booth during key industry conferences; (c) participation by E-C in the drafting and reviewing of sales brochures, presentations and supporting materials; (d) E-C’s development and refinement of specific value propositions (and sales tools) for each target industry; (e) training of regional sales teams, specific to pollution abatement and calculating financial payback of customer-specific projects (taking all costs and benefits into account, including monetization of NOx reductions, avoided costs of pollution abatement, monetization of GHG reductions, etc.); (f) developing “teaming agreements” with prospective project partners (providers of industry-specific engineering services, dryers, boilers, rotary concentrators, etc.) that improve the value proposition; (g) writing and publishing white papers specific to the Combined System; (h) providing information to the D-R sales force about available grants that could benefit the projects; and (i) providing support in completing the grant applications.

6.2

Customer Referrals . Each Party shall endeavor to notify the other Party of any sales leads it becomes aware of for the Combined System. In the event that a Party encounters an opportunity to refer a potential customer to the other Party (regardless of whether such opportunity involves a Combined System), such recommendation shall be given. Neither Party will be obligated to actively pursue and develop business for the other Party. The obligations in this paragraph will only apply for so long as the License remains an Exclusive License.

6.3

Publicity . E-C will not release any promotional materials concerning this Agreement or the collaboration between the Parties unless and until D-R has provided written approval of such materials. D-R will use commercially reasonable efforts to include E-C’s name and logo and otherwise promote the E-C brand and Power Oxidizers in brochures, press releases, white papers and trade booth materials, all in a manner mutually agreed by the Parties. D-R will use commercially reasonable efforts to accommodate reasonable requests by E-C to include the E-C logo on Power Oxidizers within Combined Systems. E-C hereby grants D-R a worldwide, nonexclusive, and royalty-free license under E-C’s Trademarks in order for D-R to comply with the requirements of this paragraph. The preceding license will be sub-licensable only as provided in Section 3.6, above. It is understood that both D-R and E-C retain all rights in their individual Trademarks. The use of any joint letterhead or other material with joint logos affixed to any Work Product will not affect the Intellectual Property ownership as described in this Agreement.

TRANSITION PHASE; INITIAL MANUFACTURING PHASE

7.1

Transition Phase Obligations .

7.1.1

If a Transition Phase is agreed to by the Parties, during the Transition Phase D-R will purchase from E-C, and E-C will sell to D-R, E-C Products for inclusion in Combined System. Unless otherwise agreed in writing between D-R and E-C, D-R 195 Terms of Purchase shall be used as the guide for preferred terms and conditions on all purchase orders between D-R and E-C for the supply of E-C Products. D-R shall issue a request for quote (“ Quote ”) to E-C for each Combined System opportunity that D-R intends to quote to the Customer. Based on the Quote received, D-R may issue purchase orders (“ D-R Purchase Orders ”) detailing the quantity and delivery specifications for E-C Products with a lead-time to be negotiated between the Parties or set forth in a contractual commitment with a Customer, but otherwise complying the D-R Purchase Order for which E-C has issued an official order acknowledgement. Unless otherwise provided herein, within five (5) business days of receipt of a D-R Purchase Order, E-C will issue a written acknowledgment (electronically or by facsimile) to D-R; provided, however, that if E-C has good-faith questions concerning the details of the D-R Purchase Order, the acknowledgment will be sent within three (3) business days after such questions have been resolved. If E-C does not notify D-R with questions regarding the D-R Purchase Order or does not acknowledge the D-R Purchase Order, E-C will be considered to have accepted the D-R Purchase Order. All D-R proposals to purchase E-C Products shall be subject to change at any time prior to D-R’s acceptance of a Customer purchase order that includes such E-C Products and shall expire at the end of the validity period stipulated in such proposal. If no such period is stipulated in a proposal, then the proposal shall expire sixty (60) days from the date of issuance.

7.1.2

During the Transition Phase, E-C shall keep accurate records of the costs incurred, including standard overhead charges applied, in delivering E-C Products for each Combined System produced and sold under this Agreement, in such amounts as are reflected on its financial statements.

7.1.3

During the Transition Phase, E-C will maintain and provide to D-R by the 30th day of each month therein, a reconciliation of E-C’s actual and forecasted (i) quarterly cash inflows and expenditures, and (ii) balance sheet account balances, with explanations as necessary to explain variances in actual or forecasted values (the “ E-C Company Budget ”). E-C will participate in monthly reviews of the E-C Company Budget with D-R.

7.2

Engineering Support Services . During the Transitional Phase, if any, and Initial Manufacturing Phase (but only if at such time the Exclusive License remains exclusive), E-C will provide up to 4000 man-hours of engineering support services in scope mutually agreed by the Parties (“ Engineering Support Services ”), of which a minimum of 2000 man-hours will be applied to an IMP project. During the Initial Manufacturing Phase, as part of the Engineering Support Services, E-C will provide D-R (i) with all trade secrets, designs, drawings, graphs, reports, analyses, specifications, processes, techniques, formulae, systems, methods, technical data, information, tools, inventions (whether or not patentable or reduced to practice), works of authorship and other similar materials, and other writings embodying the Licensed IP (the foregoing in a documented or electronic form, “ Know-How ”), and (ii) all other non-documented Know-How, in each case, as is necessary for D-R to exercise the rights granted with respect to the Licensed IP. After the conclusion of the Initial Manufacturing Phase, E-C will, for so long as the Exclusive License remains exclusive, continue providing up to five hundred (500 man-hours of Engineering Support Services in scope mutually agreed by the Parties on an annual basis at no additional cost to D-R, with such obligations pro-rated in the event that the Exclusive License becomes non-exclusive mid-year. Regardless of whether the Exclusive License is in effect, additional Engineering Support Services may be mutually agreed by the Parties at a rate of $150 per man-hour, which will be upwardly adjusted on an annual basis beginning on the first anniversary of the Execution Date at a rate of two percent (2%) per calendar year. Such Engineering Support Services may include engineering and field warranty support for the E-C Products included in each Combined System on the terms stipulated in D-R’s contract with the Customer purchasing the Combined System and in D-R’s corresponding purchase contract with E-C.

TERM AND TERMINATION

8.1

Effectiveness This Section 8.1 shall be effective and binding on the Parties as of the Execution Date. Notwithstanding the execution of this Agreement, the remainder of this Agreement shall not become binding or effective until a Completed Test has occurred and one Party has deliver notice thereof to the other Party. If a Completed Test has not occurred on or before December 31, 2016, this Section 8.1 shall expire and this Agreement shall be of no further force and effect.

8.2

Term . Upon the occurrence of a Completed Test prior to December 31, 2016, and notice thereof by either Party to the other, the CLA will automatically terminate, and this Agreement shall be deemed to have become effective as of the Effective Date. Unless otherwise terminated as provided herein, the term of this Agreement (the “ Term ”) shall expire on the 10 ^th anniversary of the Execution Date. Upon written request by D-R no more than 180 days and no fewer than 90 days prior to the date on which this Agreement would otherwise expire, the Parties shall in good faith meet to discuss mutually agreed upon terms and conditions on which the Term would be extended; provided, however, that the Parties shall be under no obligation to extend the Term beyond the tenth anniversary of the Execution Date.

8.3

Termination for Default . Except in circumstances specifically described in Sections 3.1 , 8.4 and 8.5 , which shall control in those events, if either Party defaults in the performance of any of its material obligations under this Agreement and does not substantially cure such default, or commence a cure, within 30 days after being given written notice specifying the default, the non-defaulting Party may, by giving written notice to the defaulting Party, terminate this Agreement as of a date specified in such notice of termination, such date to be no earlier than the date of written notice of the default.

8.4

Termination by D-R . D-R will have the right to immediately terminate this Agreement upon delivery of written termination notice to E-C in the event that:

8.4.1

In accordance with the provisions of Section 16.1 ;

8.4.2

In accordance with the provisions of Section 16.17 ; or

	8.4.3	If at any time during the Transition Phase E-C, directly or through one or more contract manufacturers, licensees or successors in interest ceases development and manufacturing of Power Oxidizers for use in the Combined Systems.

8.5

Termination by E-C . E-C will have the right to immediately terminate this Agreement upon delivery of written termination notice to D-R in the event that

8.5.1

In accordance with the provisions of Section 16.1 ;

8.5.2

In accordance with the provisions of Section 16.17 ; or

8.5.3

D-R, directly or through one or more contract manufacturers, licensees or successors in interest, ceases development and manufacturing of D-R Gas Turbines for use in the Combined Systems.

8.6

Effect of Termination; Survival . Following termination of this Agreement, E-C will fulfill and D-R will make payments in accordance with all D-R Purchase Orders that were accepted prior to the non-terminating Party’s receipt of written notice of termination. Notwithstanding the termination of this Agreement, those provisions that, by their nature, are intended to survive termination shall so survive termination, including without limitation, the following sections: 1, 3.9, 5.1 through 5.3, 8.1, 8.6, 9 through 13, 15, and 16.

INDEMNIFICATION

9.1

Indemnification by D-R . D-R agrees to, at its own expense, protect, defend, hold harmless and indemnify E-C, its successors and assigns and their respective directors, officers, employees, agents, contractors, customers and Affiliates (collectively, the “ E-C Indemnitees ”) from and against any and all claims, proceedings and lawsuits brought by third parties for any and all losses, damages, liabilities, penalties, fines, forfeitures, attorneys’ fees, costs, and expenses of any kind and nature whatsoever (“ Damages ”), alleging that any of the D-R Products infringe or misappropriate any Intellectual Property of others; provided that (i) E-C promptly notifies D-R in writing of any such claim and (ii) D-R is given the opportunity to settle or defend such claim or make changes to the accused D-R Products for the purpose of avoiding infringement.

9.2

Indemnification by E-C . E-C agrees to, at its own expense, protect, defend, hold harmless and indemnify D-R Indemnitees (defined below) from and against any and all claims, proceedings and lawsuits brought by third parties for Damages alleging that any of the E-C Products infringe or misappropriate any Intellectual Property of others; provided that (i) D-R promptly notifies E-C in writing of any such claim and (ii) E-C is given the opportunity to settle or defend such claim or make changes to the accused E-C Products for the purpose of avoiding infringement. Notwithstanding the foregoing, E-C shall have no obligation with respect to allegations arising out of any modification of any E-C Products by D-R that is not authorized by E-C or this Agreement.

9.3

Remedies . If an injunction, decree or judgment is entered providing that either Party may not use any of the E-C Products or D-R Products or any component or portion of a completed version of the Combined System (collectively, “ Enjoined Technology ”) in the manner contemplated by this Agreement without violating the Intellectual Property rights of a third party, the Party responsible for the development or design of the Enjoined Technology shall, at its sole option and expense, either [***].

9.4

Indemnification Exclusive . The foregoing indemnification provisions are the sole and exclusive remedy for any third-party claim of Intellectual Property infringement, misappropriation or violation.

9.5

Indemnification for Acts or Omissions . Each Party agrees to, at its own expense, protect, defend, hold harmless and indemnify the other Party, its successors and assigns, and its respective directors, officers, employees, agents, contractors, customers and Affiliates, from and against any and all claims, proceedings and lawsuits brought by third parties for Damages against the Party for injury to persons (including libel, slander or death) or loss or damage to tangible or intangible property to the extent it results from any grossly negligent, willful or fraudulent act or omission of the Party under this Agreement.

9.6

Additional E-C Obligations . With respect to E-C Indemnifiable Claims, E-C agrees, at its own expense, to protect, defend, hold harmless and indemnify D-R, its successors and assigns and their respective directors, officers, employees, agents, contractors, customers and Affiliates (collectively, the “ D-R Indemnitees ”) from and against any and all claims, proceedings and lawsuits brought by third parties for any and all Damages of any kind and nature whatsoever, including but not limited to (a) any performance or delivery liquidated damages or other damages which are incurred by the Customer or the End User, (b) any incremental costs incurred by D-R during the Transition Phase to develop and implement an alternative combustion system with appropriate emissions control technology (“ Plan B ”) to replace such E-C Products, and (c) any power shortfall claims for the period until either (i) such E-C Products can be corrected to comply with the Specifications or (ii) Plan B can be implemented to replace such E-C Products (collectively, “ Costs ”) arising out of (x) E-C’s failure to timely supply E-C Products or (y) E-C Products’ failure to meet the Specifications, which in either (x) or (y) results in a material breach by D-R of its obligations to the Customer under the sales contract, except to the extent that any such Costs result from (p) the gross negligence or intentional misconduct of a D-R Indemnitee or Customer, or (q) a material breach by D-R of its obligations hereunder or material breach by a Customer of its obligations thereunder.

9.7

Conduct of Personnel . Each Party covenants that it has used and will use reasonable efforts to obligate those employees, agents or contractors of such Party involved in activities pursuant to this Agreement, to assign Inventions to the respective Party, consistent with the obligations of such Party hereunder with respect to Inventions. Personnel of a Party visiting the premises of the other Party shall observe and act in accordance with any and all work, security, health and safety standards as may be formulated by the host Party in accordance with and subject to statutory or other governmental administrative requirements. Each Party shall be responsible for its employees and contractors when they are visiting the premises of the other Party.

10.

THIRD PARTY CLAIMS

10.1

Notice of Third Party Claims . If a Party (“ Indemnified Party ”) receives notice of the assertion by a third party of any claim, or of the commencement by a third party (including, without limitation, a customer of D-R with respect to a Combined System) of any action, which the Indemnified Party believes is or may be subject to a claim for indemnification against the other Party under Section 9 , (an “ Indemnifiable Claim ”), then the Indemnified Party shall, within 30 days of receipt of such notice, notify the other Party (“ Indemnifying Party ”) in writing (the “ Claim Notice ”) of the Indemnifiable Claim; provided, that the Indemnifying Party is not obligated to indemnify and defend the Indemnified Party with respect to an Indemnifiable Claim (or portions of an Indemnifiable Claim) if the Indemnified Party fails to promptly send the Claim Notice to the Indemnifying Party and fails to provide reasonable cooperation and information to defend or settle the Indemnifiable Claim, if, and only to the extent that, the failure to provide such Claim Notice materially prejudices the Indemnifying Party’s ability to satisfactorily defend or settle the Indemnifiable Claim.

10.2

Right to Defend . The Indemnifying Party shall have the right, at its option, to defend or settle, at its own expense and with its own counsel, the Indemnifiable Claim. The Indemnified Party will have the right, at its option, to participate in the defense of the Indemnifiable Claim, with its own counsel and at its own expense, but the Indemnifying Party will have the right to control the defense or settlement; provided, however, that the Indemnifying Party will not enter into any settlement that imposes any liability or obligation, or acknowledges any culpability on the part of, the Indemnified Party without the Indemnified Party’s prior written consent. The Parties will cooperate in the defense of each Indemnifiable Claim, which shall include, where practicable, entering into a common interest or joint defense agreement to preserve confidentiality and privilege, joint retention of experts necessarily or useful for the evaluation or defense of the Indemnifiable Claim and the exchange, subject to appropriate obligations of confidentiality, the opinions of any such experts. The Parties may also, individually or jointly, conduct a root cause analysis or other independent third party analysis of the claim to assess, inter alia, whether and to what extent such claim constitutes an E-C Indemnifiable Claim.

10.3

Other Rights of Indemnified Party . If the Indemnifying Party (i) fails to notify the Indemnified Party of the Indemnifying Party’s intent to take any action within thirty (30) days after receipt by both Parties of the results of the root cause analysis or other independent third party analysis of such claim, or (ii) fails to proceed in good faith with the prompt resolution of the Indemnifiable Claim, the Indemnified Party, with prior written notice to the Indemnifying Party and without waiving any rights to indemnification, may defend or settle the Indemnifiable Claim without the prior written consent of the Indemnifying Party; provided, however, that the Indemnifying Party shall have the right to participate in the defense of the Indemnifiable Claim (in an observational role only, subject to separate obligations of confidentiality mutually agreed between the Parties, without the ability or authority to control the defense, settlement or resolution of the Indemnifiable Claim) with its own counsel and at its own expense. The Indemnifying Party will reimburse the Indemnified Party on demand for all Damages incurred by the Indemnified Party in defending or settling the Indemnifiable Claim; provided, however, that with respect to out-of-pocket expenses (e.g., attorneys’ and expert fees) incurred by the Indemnified Party in connection with such Indemnifiable Claim, the Indemnifying Party’s obligation to reimburse the Indemnified Party for such expenses will be limited to those that are reasonable.

10.4

Resolution of Indemnification Obligations . Nothing in this Article 10 shall preclude a Party from referring the question of whether such Party has any indemnification obligation hereunder with respect to the facts referred to in the Claim Notice to dispute resolution pursuant to Section 16.15.

11.

LIMITATION OF LIABILITY

11.1

Backstop Security . For all E-C Products manufactured, supplied or otherwise provided by E-C, including but not limited to any ongoing warranty obligations and other Damages with respect thereto for which E-C is responsible under this Agreement (e.g., amounts arising under indemnification obligations with respect to the foregoing in accordance with this Agreement), during the period beginning on the Execution Date and continuing until the later of the expiration of the warranty period for (i) Combined Systems sold to customers as of the Execution Date, or (ii) the most recent project contracted under the Transition Phase, E-C shall provide a backstop security to D-R in a form substantively consistent with Annex E and approved by D-R (the “ Backstop Security ”), which approval shall not be unreasonably withheld or delayed. The Backstop Security may be provided by E-C via an amendment to the current backstop security in place, or a new letter of credit executed by a new financial institution. The Backstop Security shall serve as partial collateral and will, as to each Combined System, be in an amount [***]; provided, however, that in no event will the Backstop Security be operative for less than [***]. The Backstop Security operative amount shall be adjusted at the end of each calendar quarter for new and expiring projects for the purpose of the calculation and to reflect expiry of warranty period for projects subject to the Backstop Security obligation. In no event will the Backstop Security limit E-C’s Damages under or in connection with this Agreement, or otherwise alter or impact the interpretation of Section 11.

11.2

DISCLAIMER ON CERTAIN DAMAGES . EXCEPT AS EXPRESSLY SET FORTH HEREIN, NEITHER PARTY NOR ITS AFFILIATES SHALL BE LIABLE TO THE OTHER PARTY FOR ANY CONSEQUENTIAL, INDIRECT, EXEMPLARY, SPECIAL, PUNITIVE OR INCIDENTAL DAMAGES OR LOST PROFITS, WHETHER FORESEEABLE OR UNFORESEEABLE, EVEN IF SUCH PARTY HAS PREVIOUSLY BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF BREACH OR FAILURE OF EXPRESS OR IMPLIED WARRANTY, BREACH OF CONTRACT, MISREPRESENTATION, NEGLIGENCE, STRICT LIABILITY IN TORT OR OTHERWISE FROM DAMAGES ARISING UNDER THIS AGREEMENT.

11.3

LIMITATION OF LIABILITY . EXCEPT FOR AMOUNTS ARISING UNDER EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT, BUT SUBJECT TO SECTION 11.4, THE TOTAL AGGREGATE LIABILITY OF EITHER PARTY WITH RESPECT TO ANY CLAIMS UNDER THIS AGREEMENT OR REGARDING THE EQUIPMENT, SERVICES, WORK, SPARE OR REPLACEMENT PARTS AND SERVICES INCIDENTAL THERETO AS FURNISHED HEREUNDER, WHETHER BASED IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE, SHALL NOT EXCEED [***].

11.4

LIMITATION WITH RESPECT TO CUSTOMER AGREEMENTS . NOTWITHSTANDING SECTION 11.3, SOLELY WITH RESPECT TO ANY CLAIMS, ALLEGATIONS, ACTIONS OR OTHER PROCEEDINGS BETWEEN D-R AND A D-R CUSTOMER, OR E-C AND A D-R CUSTOMER, RESULTING FROM THE USE OF A COMBINED SYSTEM SOLD TO SUCH CUSTOMER (A “ CUSTOMER CLAIM ”), THE SALE OF WHICH IS GOVERNED BY THE TERMS AND CONDITIONS BETWEEN D-R AND SUCH CUSTOMER (THE “ CUSTOMER AGREEMENT ”), [***].

12.

WARRANTIES ON PRODUCTS SOLD; TERMS OF CONTRACTS

12.1

E-C Warranties . D-R shall be prime on Customer contracts as far as the overall warranty and other commercial conditions to the Customer are concerned and the sole project and service provider and interface with the Customer. E-C shall be responsible for warranty and service for all E-C Products manufactured or otherwise provided by E-C prior to or during the Transition Phase.

12.2

D-R Warranties . D-R shall be responsible for warranty, service, and after-sales technical assistance for all portions of Combined Systems that comprise D-R Products.

12.3

Terms . The work performed by E-C under this Agreement shall be governed by D-R195 Terms and Conditions for Purchase with regard to D-R’s purchases from E-C, a form of which is attached hereto as Annex B . Further, E-C will assume all warranty responsibilities and liabilities associated with E-C Products manufactured by E-C per contract between D-R and the Customer and in D-R’s corresponding purchase contract with E-C. Warranties shall be as set forth in D-R 195 Terms and Conditions for Purchase, unless otherwise agreed by D-R and E-C on individual commercial transactions.

13.

CONFIDENTIAL INFORMATION

13.1

Confidential Information . Neither D-R nor E-C has any intention pursuant to this Agreement of developing Intellectual Property that falls within each other’s core space, and each will endeavor to limit disclosures of Confidential Information strictly to that which is necessary to achieve the purpose of this Agreement. Subject to Section 13.2 , “ Confidential Information ” means confidential business information, including research and development, formulae, compositions, processes, techniques, methodologies, technical information, designs, industrial models, manufacturing, engineering and technical drawings, specifications, research records, records of inventions, test information, customer and supplier lists, customer data, pricing and cost information, and business and marketing plans and proposals, all proprietary, non-public information that has commercial value or other utility in a Party’s business, or the unauthorized disclosure of which could be detrimental to the Party’s interests, including the terms and conditions of this Agreement (but not its mere existence) and any other information exchanged between the Parties pursuant hereto, if any, provided by one Party (a “ Disclosing Party ”) to the other Party (a “ Receiving Party ”) in any form, and all copies thereof made, in whole or in part, by the Receiving Party in any form. Each Party shall be deemed a Receiving Party to the terms and conditions of this Agreement. Notwithstanding the foregoing, (a) to the extent to which any Fundamental Process Technology Developments are first disclosed by a representative of D-R or its Affiliate to a representative of E-C or its Affiliate, such things are the Confidential Information of E-C and (b) to the extent to which any Gas Turbine Technology Developments are first disclosed by a representative of E-C or its Affiliate to a representative of D-R or its Affiliate, such things are the Confidential Information of D-R and clauses (i) and (ii) of Section 13.2 shall not apply to Fundamental Process Technology Developments and Gas Turbine Technology Developments.

13.2

Not Confidential Information . Confidential Information shall not include, and the duties and obligations of this Section 13 shall not apply to, information for which the receiving Party can demonstrate through documentary evidence: (i) was known to the Receiving Party at the time of disclosure in its fully consolidated form as disclosed under this Agreement and without any obligation of confidentiality; (ii) can be shown by corroborated records to have been independently developed by the Receiving Party without breach of this Agreement or reference to or use of the Confidential Information disclosed by the Disclosing Party; (iii) is or becomes part of the public domain through no wrongful act of the Receiving Party, its Affiliates or their respective representatives; (iv) is rightfully received from a third party without restriction on disclosure; or (v) is approved for release upon prior written consent of the Disclosing Party.

13.3

Restrictions on Use and Disclosure . The Receiving Party shall not use the Confidential Information of the Disclosing Party for any purpose other than to exercise the rights conveyed to it and to perform its obligations under this Agreement. The Receiving Party also shall not disclose the Confidential Information of the Disclosing Party to any third party, except to its Affiliates and their and the Receiving Party’s respective employees, contractors and consultants. The Receiving Party and such third parties to whom disclosure is permitted shall only disclose such Confidential Information to their employees, contractors, and consultants who have a need to know such information to exercise the rights conveyed or to perform the obligations under this Agreement and who have first agreed to restrictions regarding use and disclosure at least as protective of the Disclosing Party as those set forth in this Agreement. The Receiving Party shall, and shall cause all others to whom it discloses the Confidential Information of the Disclosing Party, to take reasonable security measures and use reasonable care to preserve and protect the secrecy of the Disclosing Party’s Confidential Information. E-C may not use the existence of this Agreement or the content of this Agreement in efforts to solicit, negotiate or reach an agreement with an original equipment manufacturer that could be deemed a competitor of D-R.

13.4

Certain Permitted Disclosures . Notwithstanding Section 13.3 , a Receiving Party may disclose the Confidential Information of the other Party to the limited extent that such disclosure (i) is inherent in products sold or otherwise disposed of by the Party or its Affiliates in accordance with this Agreement and subject to reasonable commercial terms regarding preservation of confidentiality of that material, (ii) to parties assisting such Party in evaluating the potential market for products to be developed under this Agreement, subject to reasonable commercial terms regarding preservation of confidentiality of that material or (iii) is otherwise strictly necessary in connection with the exercise of any of the rights licensed to it under this Agreement.

13.5

Further Permitted Disclosures . Notwithstanding Section 13.3 , either Party may disclose the Confidential Information of the other Party: (i) to Governmental Bodies in order to respond to inquiries, requests or investigations relating to this Agreement, provided, however, that such Party shall provide the Disclosing Party notice of its intent to disclose that information so that the Disclosing Party may seek protective orders and the like; (ii) in connection with prosecuting or defending litigation as permitted by this Agreement, provided, however, that such Party shall use reasonable efforts to limit the dissemination of such information, including by use of protective orders and the like, as such Party would use for its own similar types of confidential information; (iii) in connection with the resolution of disputes under this Agreement, provided, however, that such Party shall use reasonable efforts to limit the dissemination of such information, including by use of protective orders and the like, as such Party would use for its own similar types of confidential information; (iv) in connection with filings required by security and tax regulations and the rules and regulations of any securities exchanges upon which a Party’s or its Affiliate’s securities are traded, provided, however, that such Party shall use reasonable efforts to limit the dissemination of such information, including by use of protective orders and the like, as such Party would use for its own similar types of confidential information; (v) to a Party’s actual and potential lenders, private investors, bankers, accountants, and lawyers who are subject to an obligation of confidentiality prohibiting further disclosure of the information; and (vi) to a Party’s actual and bona fide potential assignees or transferees permitted in accordance with Section 16.12 subject to an obligation of confidentiality prohibiting further disclosure of the information.

13.6

Survival . The obligations of this Section 13 will survive any termination or expiration of this Agreement for, with respect to all Confidential Information, at least five (5) years, and for trade secrets within the Confidential Information, as long as such trade secrets remain a trade secret under applicable law.

13.7

Return/Destruction of Information . Upon request after termination of this Agreement by a Party for return of the Confidential Information of such Party, the other Party shall, within sixty (60) business days of the request, use commercially reasonable efforts to either return or destroy all written or tangible material containing or reflecting Confidential Information of the requesting Party (whether prepared by the requesting Party or otherwise), without retaining any copies, summaries, analyses, or abstracts thereof, except that each Party’s independent outside counsel may retain one copy for attorneys’ eyes only. An authorized individual of the Receiving Party shall confirm in writing Receiving Party’s compliance with this Section within sixty (60) business days after the other Party’s request for the return or destruction of Confidential Information.

14.

REPRESENTATIONS AND WARRANTIES

14.1

Authority . Each Party represents and warrants that the individuals signing this Agreement have full authority to execute this Agreement for, and on behalf of, and to bind the Parties, and that, when signed, this Agreement will be binding and enforceable according to its terms.

14.2

No Conflicts . Each Party represents and warrants that neither it, nor any of its Affiliates, will enter into any other agreement or understanding in conflict with the provisions contained in this Agreement.

14.3

Financial Status . E-C represents and warrants that it has sufficient financial resources to fully and timely perform its obligations to develop and manufacture E-C Products for the Combined System under the terms of this Agreement.

14.4

Right and Title.

14.4.1

E-C represents and warrants to D-R that: (i) E-C has the right to grant the license in the E-C Intellectual Property upon the terms and conditions set forth in this Agreement; (ii) E-C has not granted and will not grant any licenses or rights under the E-C Intellectual Property that would conflict with the licenses and rights granted to D-R hereunder; (iii) there are no liens, pledges, deed of trusts, security interests, claims, leases, charges, options, rights of first refusal, easements, servitudes, proxies, voting trusts or agreements, transfer restrictions under any equity holder, conveyances, mortgages, assignments, encumbrances, or other obligations affecting the E-C Intellectual Property; and (iv) E-C’s disclosure or transfer of possession of any Confidential Information to D-R will not infringe any copyright or misappropriate any trade secrets of any third party.

14.4.2

D-R represents and warrants to E-C that: (i) D-R has the right to grant the license in the Intellectual Property of D-R and its Affiliates upon the terms and conditions set forth in this Agreement; (ii) D-R has not granted and will not grant any licenses or rights under the Intellectual Property of D-R and its Affiliates that would conflict with the licenses and rights granted to E-C hereunder; (iii) there are no liens, pledges, deed of trusts, security interests, claims, leases, charges, options, rights of first refusal, easements, servitudes, proxies, voting trusts or agreements, transfer restrictions under any equity holder, conveyances, mortgages, assignments, encumbrances, or other obligations that would prevent or impair the full and complete exercise of the terms of this Agreement; and (iv) D-R’s disclosure or transfer of possession of any copies of any Confidential Information to E-C will not infringe any copyright or misappropriate any trade secrets of any third party.

14.5

Noninfringement . Each Party represents and warrants to the other that, as of the Execution Date, it has not received any notice that any of the E-C Intellectual Property or the use thereof, misappropriates, infringes, constitutes an unauthorized use of, or dilutes any Intellectual Property rights (including any copyrights, patents, trade secrets or trademarks) of any third party.

14.6

DISCLAIMER . EXCEPT AS OTHERWISE EXPRESSLY STATED IN SECTIONS 9 , 11.1 AND 14.1 THROUGH 14.5 , NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO ANY INTELLECTUAL PROPERTY OR ANY OTHER SUBJECT MATTER UNDER THIS AGREEMENT. EXCEPT AS OTHERWISE EXPRESSLY STATED IN SECTIONS 9.6 , 11.1 , AND 14.1 THROUGH 14.5 , EACH PARTY DISCLAIMS ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR AGAINST INFRINGEMENT.

15.

INDEPENDENT CONTRACTOR

15.1

Status . The Parties are and shall remain independent contractors with respect to all performances rendered pursuant to this Agreement. Further, neither Party nor any employee or agent of either Party shall be considered an employee, agent or representative of the other Party for any purpose. Neither Party, nor its employees, shall have any authority to act for, bind or otherwise create or assume any obligation on behalf of the other Party for any purpose, nor shall it or they hold itself or themselves out as having such authority. Each Party shall be responsible for its actions and the actions of its personnel in rendering performance pursuant to this Agreement, and shall be solely responsible for supervising, providing daily direction and control, paying the salaries (including withholding of income taxes and social security), worker’s compensation, disability benefits and the like of its personnel.

15.2

No Joint Venture . Nothing contained in this Agreement shall be deemed or construed as creating a joint venture or partnership between D-R and E-C. The Parties agree that they will not by their conduct form such a joint venture or partnership and that they will not be deemed to be partners or joint venturers unless they agree in writing that they are such. Neither Party is by virtue of this Agreement authorized as an agent, employee or legal representative of the other. Neither Party shall have power to control the activities and operations of the other and their status is, and at all times shall continue to be, that of independent contractors. Neither Party shall have any power or authority to bind or commit the other.

16.

MISCELLANEOUS

16.1

Force Majeure . Either Party shall be excused from delays in performing or from its failure to perform hereunder to the extent that such delays or failures result from causes beyond the reasonable control of such Party; provided that, in order to be excused from delay or failure to perform, such Party must act diligently to remedy the cause of such delay or failure. Notwithstanding the foregoing, if either Party’s performance is delayed by more than ninety (90) calendar days for any reason, the other Party shall have the right to terminate this Agreement without any further liability to the non-performing Party, except for fulfillment of obligations previously incurred under this Agreement (e.g., outstanding purchase orders, shipments and payment of invoices).

16.2

Construction . Unless the context requires otherwise: (a) the gender (or lack of gender) of all words used in this Agreement includes the masculine, feminine, and neuter; (b) the term “include” or “includes” means “includes, without limitation,” and “including” means “including, without limitation”; (c) references to laws refer to such laws as they may be amended from time to time, and references to particular provisions of a law include any corresponding provisions of any succeeding law; and (d) references to money or $ refer to legal currency of the United States of America.

16.3

Specific Performance . Each Party acknowledges and agrees that a breach of Section 5.2 and Section 13 of this Agreement would cause irreparable damage to the other Party and that the non-breaching Party will not have an adequate remedy at law. Therefore, the obligations of E-C and D-R under this Agreement in Sections 5.2 and Section 13 shall be enforceable by a decree of specific performance issued by any court of competent jurisdiction, and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any Party may have under this Agreement or otherwise.

16.4

Multiple Counterparts . This Agreement may be executed in two counterparts, both of which taken together shall constitute one single Agreement between the Parties.

16.5

Section and Annex Headings . The section and subsection headings used herein are for reference and convenience only, and shall not enter into the interpretation hereof. The annexures referred to herein and attached hereto, or to be attached hereto, are incorporated herein to the same extent as if set forth in full herein.

16.6

Required Approvals . Where agreement, approval, acceptance, or consent by either Party is required by any provision of this Agreement, such action shall not be unreasonably delayed, conditioned or withheld.

16.7

No Waiver . No delay or omission by either Party hereto to exercise any right or power arising upon any noncompliance or default by the other Party with respect to any of the terms of this Agreement shall impair any such right or power or be construed to be a waiver thereof. A waiver by either of the Parties hereto of any of the covenants, conditions, or agreements to be performed by the other shall not be construed to be a waiver of any succeeding breach thereof or of any other covenant, condition, or agreement herein contained. Unless stated otherwise, all remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to either Party at law, in equity, or otherwise.

16.8

Governing Law . This Agreement and the License shall be construed as to both validity and performance and enforced in accordance with the laws of the State of New York, without giving reference to its principles of conflicts of law.

16.9

Entire Agreement; Amendment . This Agreement and the Annexures attached hereto constitute the entire agreement between the Parties with respect to the subject matter hereof, and specifically supersede all previous agreements, oral or written, regarding the subject matter hereof. No amendment, waiver, or discharge hereof shall be valid unless it is executed by the Party against whom such amendment, waiver, or discharge is sought to be enforced.

16.10

Severability . If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

16.11

Notices . Any notices to be given hereunder by either Party to the other shall be in writing on paper and be delivered either by personal delivery (including delivery by Federal Express or similar reputable overnight courier) or by mail, registered or certified, postage prepaid with return receipt requested. Mailed notices shall be addressed to the Parties at the addresses appearing in this Section of this Agreement, but each Party may change such address by written notice in accordance with this paragraph. Notices delivered personally, including via overnight courier, shall be deemed communicated as of actual receipt. Notices forwarded via the United States mail shall be deemed communicated as of five (5) days after mailing.

If to E-C, to:

ENER-CORE POWER, INC.

9400 Toledo Way

Irvine, CA 92618

Attn:

Alain Castro, Chief Executive Officer

Boris Maslov, President and Chief Technology Officer

with a copy, which shall not constitute notice, to:

McDermott Will & Emery LLP

4 Park Plaza, Suite 1700

Irvine, CA 92614

Attention: Andrew Mickelsen

If to D-R, to:

DRESSER-RAND COMPANY

Paul Clark Drive

Olean, New York 14760

Attention: David J. Grenell, Assistant General Counsel

with a copy, which shall not constitute notice, to:

Haynes and Boone, LLP

1221 McKinney Street, Suite 2100

Houston, Texas 77010

Attention: Bill Nelson

16.12

Binding Effect; Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Except as provided herein, neither Party shall assign or delegate this Agreement in whole or in part, or any of the licenses, rights, covenants, or duties under this Agreement, by agreement, merger, reorganization, sale of assets, operation of law or otherwise, including in connection with the insolvency or bankruptcy of the Party, without the prior written consent of the other Party. Notwithstanding the foregoing, either Party may (i) assign or otherwise transfer this Agreement in its entirety to (a) an acquirer of all or substantially all of the assets of a Party’s business to which this Agreement relates or (b) the surviving entity in any merger, consolidation, equity exchange, reorganization or other change of control transaction involving such Party.

16.13

Bankruptcy . The Parties acknowledge and agree that the E-C Intellectual Property is “intellectual property” as defined in Section 101(35A) of the United States Bankruptcy Code (the “ Code ”), as the same may be amended from time to time, that has been licensed hereunder in a contemporaneous exchange for value. E-C acknowledges that if E-C, as a debtor in possession or a trustee in bankruptcy in a case under the Code, rejects this Agreement, D-R may elect to retain its rights under this Agreement as provided in Section 365(n) of the Code. Upon written request from D-R to E-C or the bankruptcy trustee of E-C’s election to proceed under section 365(n), E-C or the bankruptcy trustee shall comply in all respects with 365(n), including, without limitation, by not interfering with the rights of D-R as provided by this Agreement.

16.14

Costs and Expenses . The Parties shall each be responsible for all of its own expenses (including legal, accounting, investment banking and financial advisory fees and expenses) incident to the negotiation, documentation and consummation of this Agreement.

16.15

Dispute Resolution .

16.15.1

In the event of any dispute between the Parties relating to this Agreement which has not been resolved after reasonable attempts by either Party to do so, including without limitation any dispute relating to the interpretation of any provision of this Agreement, the performance or non-performance by either Party hereunder, or the amount of any disputed consideration arising hereunder, then, upon the written request of either Party, each of the Parties will appoint a designated executive management representative, whose task it will be to meet for the purpose of endeavoring to resolve such dispute. The designated representatives shall meet as often as the Parties reasonably deem necessary in order to gather and furnish to the other all information with respect to the matter in issue which the Parties believe to be appropriate and germane in connection with its resolution. Such representatives shall discuss the problem and negotiate in good faith in an effort to resolve the dispute without the necessity of any formal proceeding relating thereto. During the course of such negotiation, all reasonable requests made by one Party to the other for information will be honored in order that each of the Parties may be fully advised in the premises of the dispute. The specific format for such discussions will be left to the discretion of the designated representatives but may include the preparation of agreed upon statements of fact or written statements of position furnished to the other Party. Formal proceedings for the resolution of such dispute pursuant to Section 16.15.2 hereof may not be commenced until the earlier to occur of (i) the designated representatives concluding in good faith that amicable resolution through continued negotiation of the matter in issue does not appear likely, or (ii) thirty (30) days after the initial request to negotiate such dispute. The Parties hereby waive the expiration of any applicable statute of limitations during such thirty (30) day period and for the thirty (30) days next following. Except where clearly prevented by the area in dispute, both Parties agree to continue performing their respective obligations under this Agreement while the dispute is being resolved unless and until this Agreement expires or is terminated. The provisions of this Section 16.15.1 shall not apply to any actions of the Parties for equitable relief.

16.15.2

Arbitration of Disputes . Any claim or controversy arising out of or relating to this Agreement, or the breach thereof, including any anticipated breach or disagreement as to interpretation of this Agreement, which is not resolved pursuant to Section 16.15.1 hereof, shall be settled by arbitration as follows:

(a)

No arbitration governed by this Section 16.15.2 may be commenced until thirty (30) days after the Party wishing to commence an arbitration proceeding shall have given the other Party written notice describing the dispute to be arbitrated. During that thirty (30) days the Parties shall attempt to resolve the dispute amicably by negotiation. A written request by either Party to resolve a dispute pursuant to Section 16.15.1 hereof shall constitute notice of a dispute for purposes of this Section 16.15.2 (a) .

(b)

Except as provided below and to the extent the Parties may otherwise agree in writing, any arbitration under this Section 16.15.2 (the “ Arbitration ”) shall be conducted in accordance with the rules of the American Arbitration Association (the “ AAA Rules ”) by three arbitrators, none of whom shall be a current or former officer, Manager, or employee of any Party hereto or its Affiliates, selected as provided in the AAA Rules.

(c)

The Arbitration shall be governed by the United States Arbitration Act, 9 U.S.C. § 1 et seq., and judgment upon the award rendered by the arbitrators may be entered by any court of competent jurisdiction.

(d)

The Arbitration shall take place in New York, New York. The arbitrators may hold individual hearings at any location they deem appropriate.

(e)

The arbitrators shall hold a pre-hearing conference as promptly as possible after the selection of the arbitrators and shall hold the first hearing within thirty (30) days after the selection of the arbitrators. If additional hearings are needed, they shall be held as promptly as possible thereafter, so that all hearings that may be required are concluded within ninety (90) days after the selection of the arbitrators. The arbitrators shall render their award within thirty (30) days after the last hearing.

(f)

The Parties may by written notice to each other and the arbitrators freely specify further controversies or claims to be arbitrated up until the date of the pre-hearing conference. Thereafter, additional controversies or claims may be added only with the consent of the arbitrators.

(g)

The arbitrators may make interim awards and may award equitable and declaratory relief.

(h)

The costs and expenses of the Arbitration (including reasonable attorneys’ fees) shall be borne equally between the Parties.

(i)

The arbitrators shall not consider, nor shall any award include amounts for, punitive, exemplary, or consequential damages.

(j)

It shall not be inconsistent with this Section 16.15.2 for either Party to seek from any court of competent jurisdiction interim relief in aid of arbitration or to protect the rights of either Party pending the establishment of the arbitral tribunal.

16.16

Export Control . If either Party determines that any information, technology or data that is to be transferred, shared or contributed (collectively a “ Transfer ”) pursuant to this Agreement is subject to export control restrictions under the U.S. Export Administration Regulations, the International Traffic in Arms Regulations or any other U.S. law or regulation, such Party may withhold such information, technology or data from Transfer without being in violation of this Agreement. In the event of such restrictions, transferring-Party will take reasonable steps to obtain an export license to permit the Transfer, so long as such Transfer would not violate any transferring-Party policy.

16.17

FCPA .

16.17.1

Each Party warrants that it and its Affiliates have not made, offered, or authorized and will not make, offer, or authorize with respect to the matters which are the subject of this Agreement, any payment, gift, promise or other advantage, whether directly or through any other person or entity, to or for the use or benefit of any public official (i.e., any person holding a legislative, administrative or judicial office, including any person employed by or acting on behalf of a public agency, a public enterprise or a public international organization) or any political party or political party official or candidate for office, where such payment, gift, promise or advantage would violate the applicable laws of the United States of America or of any other country in which the Parties are together in business. Each Party shall defend, indemnify and hold the other Party harmless from and against any and all claims, damages, losses, penalties, costs and expenses arising from or related to, any breach by such first Party of such warranty. Such indemnity obligation shall survive termination or expiration of this Agreement. Each Party shall in good time (i) respond in reasonable detail to any notice from any other Party reasonably connected with the above-stated warranty; and (ii) furnish applicable documentary support for such response upon request from such other Party.

16.17.2

Each Party agrees to (i) maintain adequate internal controls; (ii) properly record and report all transactions; and (iii) comply with the laws referred to in Section 18.17.1 above. Each Party must rely on the other Party’s system of internal controls and on the adequacy of full disclosure of the facts, and of financial and other data provided under this Agreement. No Party is in any way authorized to take any action on behalf of the other Party that would result in an inadequate or inaccurate recording and reporting of assets, liabilities or any other transaction, or which would put such Party in violation of its obligations under the laws applicable to this Agreement. Each Party, at its own expense and upon providing reasonable notice to the other Party, shall have the right to audit the books and records of the other Party to the extent necessary to verify compliance with the provisions of this Section.

16.17.3

In the event of a breach of this Section of the Agreement, the non-breaching Party may terminate this Agreement immediately without any further liability or obligation.

16.18

Non-Solicitation . During the term of this Agreement, and upon termination of this Agreement for any reason (including the expiration of the term hereof or any extension thereof) then for the period of twelve (12) months after such termination, neither Party shall directly or indirectly, solicit or attempt to employ, any employees of the other Party, except as mutually agreed by the Parties

16.19

Time is of the Essence . Time shall be of the essence with respect to all time periods and notice periods set forth in this Agreement.

IN WITNESS THEREOF, E-C and D-R have caused this Agreement to be signed and delivered by their duly authorized officers, all as of the date first hereinabove written.

	ENER-CORE POWER, INC.

	By:

	Name:

	Title:

	Date:


	Dresser-Rand Company

	By:

	Name:

	Title:

	Date:

[Signature Page to Commercial Manufacturing License Agreement]

ANNEX A-1

Description and Specifications of Combined System, D-R Gas Turbines and Power Oxidizer

The Combined System consists of an externally fired version of the D-R Gas Turbine configured as a generator set and E-C Power Oxidizer designed to provide sufficient pressure and flow of gas to deliver specified Rated Power for the Combined System at generator terminals based on ISO conditions.

Exclusions: Any balance of plant components, including but not limited to Heat Recovery Steam Generator, supervision, engineering, and commissioning services, grid connection, emergency/backup generator to support the Customer power needs when Combined System is down, foundation, control room, storage box.

Inclusions: Switch Gear, Emergency/Backup Generator for powering the Combined System during grid interruptions and emergency stops, GBR, Fuel Compressors and Fuel Trains (for Startup Fuel as well as Main Fuel, as well as Aspirated Fuel/VOC); all Combined System’s Controls that generate control signals to the Combined System

[ *** ]

D-R Gas Turbine Specifications

D-R Gas Turbine is D-R industrial gas turbine type KG-2 3G externally fired suitable for connection to the E-C Power Oxidizer. D-R Gas Turbine may consist, by the way of example, of the components marked in the column labeled “Level 1B” in the chart below, but may also include additional or different components. Some of possible D-R Gas Turbine configurations are designated by D-R as “Level 0”, “Level 1A”, “Level 1B”, or “Level 2” D-R Gas Turbines, however different designations may exist. D-R Gas Turbine shall also include additional packaging and certain turbine controls that are required to operate such D-R Gas Turbine as a part of Combined System.

Example of “Level 1B” configuration of G-T Gas Turbine

The “Level 1B” of the D-R Gas Turbine in the example consists of the items marked with an “x” in the column labeled “Level 1B” in the tables below.

Scope of Supply	Level 1B
Gas Turbine
KG2-3G industrial heavy duty gas turbine for external firing with a gradual oxidizer including speed-reduction gearbox:
· 1,500 rpm output shaft speed for 50 Hz applications
· 1,800 rpm output shaft speed for 60 Hz applications	X
Mounting legs/structure for mounting the gas turbine onto the skid	X

Annex A-1

Scope of Supply	Level 1B
Driven Equipment
IP 23 brushless AC generator, 50Hz, incl. AVR
· 400V, 2650 kVA
· 6.0kV, 2750 kVA
· 11kV, 2850 kVA
IP 23 brushless AC generator, 60Hz, incl. AVR
· 480V, 2750 kVA
· 600V, 2750 kVA
· 4160V, 2750 kVA
· 13.2kV, 2750 kVA
Coupling
Low-speed flexible dry coupling
Coupling guard
Control System
PLC-based turbine control panel (TCP), respectively unit control panel (UCP) for mounting in external, controlled atmosphere or control room, comprising;
· Connecting and cable entry panel	X
· Turbine Control panel IP23 with touch-screen HMI including turbine control	X
· Internal cabling	X
· Generator control and protection including manual/auto synchronizing equipment
· MCC, Motor Control Center. Distribution of 400/240V circuits and 24V DC circuits
· Main Circuit Breaker
Base Plate
Common base plate structure for gas turbine and generator	X
Start System
On-engine start motor (on gearbox):
· hydraulic	X
· air
Off-engine electro-hydraulic start motor 50-55 kW, external start contactor in MCC. Hydraulic pump included	X
Off-engine hydraulic high-pressure piping (max. pressure 420 barg)	X
Optional: Instrumentation (pressure measurement for start pump)
Lubricating Oil System
Lube oil reservoir min. 400 liters integrated into gas turbine skid, with level gauge, drain and vent connections	X
Oil breather vent from oil reservoir through exhaust pipe	X

Annex A-1

Scope of Supply	Level 1B
Lubricating oil acc. to D-R lube oil specification (min. 400 liters)
Lube oil heaters (min. 2x 3kW)	X
Accessory-gear mounted main lube oil pump	X
Electric Motor-driven pre/post lube oil pump	X
Duplex filters for filtration to 10 µ m	X
Thermostatic valve	X
Lube Oil Cooling System
Lube oil cooler
Stainless piping between oil cooler and turbine lube oil system
Instrumentation (reservoir level transmitter, temp/pressure monitoring for lube oil supply, temp monitoring in scavenge line)
Gas Turbine Enclosure
Acoustic outdoor enclosure, IP rating 23, acc. To ATEX 95; for ambient conditions -20C/ -4F to +40 C/ 104F
Enclosure ventilation
One stage of ventilation air filtration (G4 according to EN 779:2002)
Fire detection
Gas detection
Fire Suppression System
· CO2
Combustion Air Inlet System
Air inlet plenum on-engine	X
High frequency silencer
Air inlet filter house for combustion and ventilation air
Two stages of combustion air filtration (G4, F9 acc. To EN779:2002)
Air inlet ducting
Optional: Anti-icing system (if required by ambient conditions)
Exhaust System
Exhaust diffusor bellow from gas turbine	X
Silencer
Transition piece with flexible expansion bellows
Exhaust stack with silencer
Optional: heat-recovery system
Optional equipment and Services
Liquid Fuel System (OPTIONAL)
Main liquid fuel pump (accessory gear-driven)

Annex A-1

Scope of Supply

Level 1B

AC motor driven auxiliary pump
Separate liquid fuel module including
· Filtration system
· Double block and bleed shut-off valves
· Digital fuel metering valves
Stainless steel piping/tubing
Instrumentation (temp. monitoring at fuel inlet, diff. pressure over filters, pressure monitoring at fuel supply)
Compressor Cleaning System
Cleaning fluid tank
Stainless steel or brass piping with divider valve for duplex strainers
Check valves
Spray manifolds mounted in the intake plenum of the gas turbine
Other Equipment and Services
Packing of all equipment to manufacturer’s standard
Testing of gas turbine in Kongsberg, Norway. Test can be witnessed by client
Unit set covered in high quality tarpaulin where applicable. Other equipment packed in standard containers.	X
User documentation in English language, electronic copy	X
UPS system for 24V systems (pre/ post lube oil pump and UCP)
Two year Spare parts package
Installation, Commissioning and Product Training at D-R field service rates
Package lifting tool (spreader bar and straps)
Commissioning of gas turbine package on site by D-R service personnel and commissioning spares

Terminal Points

Customer Connection Terminal Points	Level 1B
Lube Oil System
Lube oil piping to cooler
Lube oil piping from cooler	X
Lube oil cooler vent return	X
Lube oil Tank
Oil tank filling cap	X
Oil tank drain	X

Annex A-1

Customer Connection Terminal Points

Level 1B

Gas and Liquid Fuel
Customer gas fuel supply flange at skid edge (Inlet gas fuel specification acc. DR 568871-01_Rev02)
Instrument Air
Instrument air inlet	X
Mechanical interfaces
Turbine clean air inlet flange	X
Turbine exhaust bellow flange	X
Gearbox output shaft	X
Base plate (to enclosure and generator)	X
Compressed air exit flange	X
Hot gas inlet flange	X

Electric & Control System
Control cabinet connection terminals	X
On skid control system junction box	X
Starter motor electrical junction box	X
UPS supply terminals	X
Lube oil tank heater electrical junction box (X2)	X

Required plant air connection and supply:

Component	Supply Pressure	Consumption		In Operation
---	barg	nlpm	lpm	---
Rotor Seal Air	2,00	162	54	Lube oil Aux. Pump on

D-R Gas Turbine will deliver the following performance (as defined at ISO Conditions):

Outlet of the Gas Turbine Compressor - Gas Flow: 9.2 kg/s at 102 psia at 536 F temperature

Gas Turbine flange Inlet – Gas Flow: 9.2 kg/s (plus additional flow created by fuel directly injected into the Power Oxidizer) at 87 psig (less pressure drop across the entire Power Oxidizer flange-to-flange and check valve) at 1778 F temperature for the simple cycle

Rated Power – 1.75 MWe

[ *** ]

------------------------------------

Annex A-1

ANNEX B: D-R Terms of Purchase (DR195)

DRESSER-RAND COMPANY

TERMS AND CONDITIONS OF PURCHASE
D-R195 Terms and Conditions –USA - Effective May 20, 2015

1. ACCEPTANCE-ENTIRE AGREEMENT.

(a) Seller agrees to be bound by and to comply with all the terms and conditions of this order, including any supplements thereto, and all specifications and other documents referred to in this order. Seller undertaking, in whole or in part, the performance called for by this order shall be deemed an unconditional acceptance of this order and the terms and conditions (T&Cs) of the same. THIS ORDER DOES NOT CONSTITUTE AN ACCEPTANCE BY BUYER OF ANY OF SELLER’S OFFERS TO SELL, QUOTATIONS, OR ANY PROPOSALS. REFERENCE IN THIS ORDER TO ANY SUCH OFFER TO SELL, QUOTATION, OR ANY PROPOSAL SHALL IN NO WAY CONSTITUTE A MODIFICATION OF ANY OF THE TERMS AND CONDITIONS OF THIS ORDER. BUYER EXPRESSLY OBJECTS IN ADVANCE TO THE INCLUSION OF ANY ADDITIONAL, INCONSISTENT OR DIFFERENT TERMS PROPOSED BY SELLER IN THE ACCEPTANCE OR ACKNOWLEDGMENT OF THIS ORDER. THE INCLUSION OF SUCH TERMS BY SELLER WILL BE OF NO SIGNIFICANCE, AND SUCH PROPOSED TERMS WILL NOT BE CONDITIONS OR ADDITIONAL TERMS TO THIS ORDER, AND BUYER’S ACCEPTANCE OF SELLER’S GOODS OR SERVICES SHALL NOT BE DEEMED AN ACCEPTANCE OF ANY SUCH DIFFERENT AND/OR ADDITIONAL TERMS AND/OR CONDITIONS. The Supplier Code of Conduct, which is available on Buyer’s website at www.dresser-rand.com is hereby incorporated by reference in its entirety. Unless otherwise stated on the face of this order, the following terms and conditions shall exclusively govern Buyer’s purchase of goods and services from Seller.

(b) This order, with such documents as are expressly incorporated herein by reference, is intended by the parties as a final expression of their agreement with respect to such terms as are included herein and is intended also as a complete and exclusive statement of the T&Cs of their agreement. No course of prior dealings between the parties and no usage of the trade shall be relevant to determine the meaning of this agreement.

2. PRICE.

The prices for the goods or services purchased by Buyer pursuant to this order will be Seller's prices specified on the face of this order. However, if this order is submitted pursuant to the terms of a “long term agreement” (LTA) by and between Seller and Buyer, then Seller and Buyer agree that the pricing set forth in the LTA shall govern. Seller warrants that the prices for the goods or services sold to Buyer under this order are not less favorable than those currently extended to any other customer for the same or like goods or services in equal or less quantities. In the event Seller reduces its price for such goods or services during the term of this order, Seller agrees to reduce the prices hereof

correspondingly. No extra charges of any kind including interest charges, service charges or carrying charges will be allowed unless specifically agreed to in writing by Buyer. Seller shall invoice orders performed on “time and material” basis as soon as otherwise practical. Unless otherwise noted, quotations are valid for one hundred eighty (180) calendar days and shall also be exclusively governed by the T&Cs of this order.

3. TAXES AND OTHER CHARGES.

The price for the goods or services include, unless otherwise agreed and specifically listed on the face hereof, all packing, inspection, insurance and shipping costs and all federal, state and local excise, sales, use, value added, transfer or other taxes assessable against the production, sale, shipment or use of any goods or services covered by this order. Seller will accept a valid tax exemption certificate from Buyer. Seller shall indemnify and hold harmless Buyer from all claims and liabilities arising from Seller’s failure to report or pay any taxes, tariffs or duties for which Seller is responsible.

4. DELIVERY AND DEFAULT.

Time is of the essence in the performance of this order. Unless otherwise stated by Buyer, all goods must be shipped FCA Point of Manufacture (pursuant to INCOTERMS in effect on the date of Buyer’s purchase order). If the parties elect to ship DDU, Buyer shall prepare and file all import documentation. At all times, Seller shall be responsible for preparing and filing all export documentation for all shipments. To the extent Seller is responsible for any transportation in connection with such shipments, Seller shall ship at the most advantageous rates unless otherwise authorized in writing by Buyer. Any extra expense in effecting delivery of goods not so shipped will be charged to Seller. Buyer may instruct Seller to ship goods to a third party selected by Buyer, including, without limitation, Buyer’s customers’ locations. Delivery shall not be deemed to be complete until goods or services have actually been accepted by Buyer or its representative. Delivery of goods or services must be made within the time specified in this order (or applicable change order as the case may be). In the event Seller for any reason anticipates difficulty in complying with the required delivery date, or in meeting any of Buyer’s other requirements, then Seller shall promptly notify Buyer in writing. If Seller does not comply with Buyer’s delivery schedule, Buyer may require delivery by fastest way and charges resulting from the premium transportation must be fully prepaid and absorbed by Seller. Buyer may by written notice of default to Seller terminate the whole or any part of this order (i) if Seller fails to perform within the time specified herein or any extension thereof; or (ii) if Seller fails to perform any of the provisions of this order. In the event of termination pursuant to this section, Buyer shall have the right, in addition to any other rights and remedies conferred by law or under this order, to procure, upon such terms and in such manner as Buyer may

Annex B

DRESSER-RAND COMPANY

TERMS AND CONDITIONS OF PURCHASE
D-R195 Terms and Conditions –USA - Effective May 20, 2015

deem appropriate, goods or services similar to those terminated, and Seller shall be liable to Buyer for any excess costs for such similar goods or services. Unless otherwise agreed in writing, Seller shall not make material commitments or production arrangements in excess of the amount or in advance of the time necessary to meet the agreed upon delivery schedule. It is Seller's responsibility to comply with this schedule, but not to anticipate Buyer's requirements.

5. PACKAGING REQUIREMENTS.

Buyer requires and the Seller agrees that all packaging materials shall be of sufficient construction to ensure the integrity and stability of the entire package so as to ensure and provide for the safe handling upon the delivery of the same to Buyer. With respect to heavy components that are shipped to Buyer, or to other locations designated by Buyer, Seller agrees to meet Buyer’s requirement that the components will be configured inside the package so as to ensure safe handling and Seller further agrees and promises that banding and/or shrink wrap will be used, where necessary, to reinforce the strength of the packaging.

6. QUANTITY.

Goods may not be shipped to Buyer’s designated location in advance of Buyer’s delivery schedule without Buyer’s prior written approval. Any unapproved shipments may be returned to Seller at Seller's expense, shipping charges collect.

7. IDENTIFICATION.

Each shipment under this order must be positively identified by suitable marking on the outside of each package. An itemized list of contents must be contained in each shipment bearing the order number and on the outside of each shipment in format approved by Buyer. No charge will be allowed by Buyer for cartage or packing unless agreed upon beforehand in writing. All expenses incurred by Seller’s failure to furnish necessary shipping documents shall be charged to Seller and may delay payment of invoices.

8. QUALITY AND INSPECTION.

(a) Notwithstanding (i) payment, (ii) passage of title, or (iii) prior inspection or test, all goods or services delivered shall at all times be subject to Buyer's and its customers’ final acceptance, inspection and testing but neither Buyer's or its customers’ acceptance, inspection or testing nor failure to inspect or test shall relieve Seller from full responsibility for furnishing goods and services conforming to the requirements of the order, nor prejudice any claim, right or privilege Buyer or its customers may have because of defective or unsatisfactory goods or services. Buyer and its customers reserve the right to reject and return at the risk and expense of Seller such portion of any shipment which may be defective or fails to comply with specifications without invalidating the remainder of the order. Any goods or services rejected or

otherwise not meeting the standards set forth above may be held for disposition at the expense and risk of Seller or, at Buyer's or its customers’ sole discretion, be returned for credit or promptly replaced or re-performed by Seller at Seller's sole expense. At all reasonable times during the period of Seller’s performance hereunder, including the period of manufacture, Buyer and its customers may inspect and/or test the goods and services to be furnished hereunder at any location where the work associated with the goods and services are being performed, including those of Seller’s suppliers, and Seller shall provide, without additional charge, reasonable facilities and assistance for safe and convenient inspection and testing. Seller shall provide and maintain an inspection and process control system acceptable to Buyer covering the goods and services hereunder. Records of all inspection services by Seller shall be kept complete and available to Buyer during the performance of this order and for such longer periods as may be specified in this order or as otherwise required by Buyer . Buyer or its customers may furnish to Seller a list of noncompliant items following inspection, and such list shall constitute Buyer’s or its customers’ non-acceptance of the noncompliant items listed.

(b) Seller shall promptly, prior to or with each shipment, provide Buyer with originals of all regulatory required documentation, including but not limited to mill test certificates and test results with delivery of any fabricated metal materials as well as any other documentation requested by Buyer.

9. SUSPENSION OF WORK / CANCELLATION.

(a) Buyer shall have the right to direct Seller by written or electronic notice, or verbal notice confirmed in writing, to suspend all or any part of the work associated with the goods and services being provided pursuant to this order. If the work associated with the goods and services is suspended pursuant to this paragraph, then an equitable adjustment shall be made for any increase in the time and the cost (exclusive of profit) of performing this order necessarily caused by such suspension, and the order will be modified in writing accordingly by change order. No claim will be allowed under this paragraph unless the claim in an amount stated is asserted in writing within ten (10) days after the termination of the suspension. When the suspension has been terminated, Seller shall immediately commence performance, notwithstanding the fact that the amount of the adjustment in price, if any, or a revised delivery schedule of the order has not been agreed to Buyer and Seller.

(b) Buyer may cancel this order at any time for its convenience, in whole or in part, by giving written or electronic notice to Seller. If these terms are made part of an agreement for multiple orders, Buyer may cancel the entire agreement for its convenience by giving written or electronic notice. Upon receipt of such cancellation notice, Seller shall immediately act so that no further costs are incurred, and shall thereafter do only such work as may be necessary to preserve and protect work already in progress and to protect

DRESSER-RAND COMPANY

TERMS AND CONDITIONS OF PURCHASE
D-R195 Terms and Conditions –USA - Effective May 20, 2015

material and goods at the work site or in transit thereto. All cancellation claims must be submitted by Seller in writing to Buyer’s purchasing department within 15 days of the order cancellation date. Buyer’s sole obligation for cancellation under this section shall be to reimburse Seller for (a) those services actually performed and for those goods actually shipped and accepted by Buyer up to the date of cancellation, and (b) costs incurred by Seller for unfinished goods, which are specifically manufactured for Buyer and which are not standard goods of Seller, as of the date of cancellation. In no event shall Buyer be responsible for loss of anticipated profit nor shall reimbursement exceed the order value. In no case shall Buyer’s responsibility be greater than liability equal to thirty (30) days of finished goods and/or services in process (WIP) and thirty (30) days of raw material unless specifically agreed to in writing by Buyer.

10. CHANGES.

Buyer shall have the right to make changes to this order, including, without limitation, quantities, specifications and/or delivery schedules, but no additional charges will be allowed unless authorized in writing by Buyer. If such changes affect delivery or the amount to be paid by Buyer, Seller shall notify Buyer within ten (10) days following a change requested by Buyer with Seller’s proposal for adjustments to price or schedule along with sufficient supporting data to justify such adjustments for Buyer's consideration and discussion with Seller. Any request from Seller for a price increase or extension of time for delivery shall not be binding on Buyer unless evidenced in Buyer’s change order. If Seller and Buyer fail to agree upon any adjustments to the price or time, then Seller agrees to proceed promptly and diligently with the prosecution of the requested changes as set forth in the applicable change order and any disputes that remain unresolved between Seller and Buyer after thirty (30) days with respect to any change order shall be subject to the dispute resolution process as provided for in these T&Cs.

11. CONFIDENTIAL INFORMATION.

Seller agrees not to make use of nor disclose to third parties any data, designs, drawings, specifications and other information furnished to it by Buyer, except for the performance of this order. Upon completion, cancellation or termination of this order, Seller shall return to Buyer, all such data, designs, drawings, specifications and other information, including copies made by Seller. This order is confidential between Buyer and Seller, and it is agreed by Seller that none of the details connected herewith shall be published or disclosed to any third party without Buyer’s prior written permission. Any knowledge or information which Seller shall have disclosed or may hereafter disclose to Buyer and which in any way relates to the goods or services covered by this order shall not unless otherwise specifically agreed to in writing by Buyer be deemed to be confidential or proprietary information and shall be acquired by Buyer free from any restrictions as part of the consideration for this order.

12. PAYMENTS / WAIVER OF LIENS.

(a) Payment terms Net 25th 2 ^nd Prox will be paid on the 25 ^th day of the second month following the later of the receipt complete and accurate invoice and related documents, or the receipt of acceptable goods or services purchased. Related documentation includes invoices with bills of lading, express receipts and bills for prepaid transportation charges attached. Payment of invoices will be made in accordance with those terms appearing on the face of this purchase order herein. All invoices from U.S. manufacturers must bear the following certification in order to be passed for payment. “We hereby certify that these goods were produced in compliance with the Fair Labor Standards Act of 1938 as amended, and regulations and orders issued by the United States Department ofLabor thereunder.”

(b) At no time shall Seller, nor shall Seller allow its subcontractors or suppliers, to assert a lien against Buyer or Buyer’s customer with respect to any goods or services provided pursuant to this order. Along with all requests for payments, Seller agrees to provide Buyer with Seller’s and Seller’s supplier’s and subcontractor’s waiver of liens in a form and format acceptable to Buyer. Buyer’s receipt of said waiver of liens shall also be a condition precedent to Buyer’s payment of any of Seller’s invoices.

13. ASSIGNMENT.

Neither this order, nor any portion thereof, may be assigned, subcontracted or transferred by Seller without Buyer’s prior written consent.

14. INTELLECTUAL PROPERTY.

Seller hereby grants Buyer a non-exclusive, assignable, transferable, sublicensable worldwide license to any of Seller’s or its supplier’s intellectual property to the extent same is required for use of the goods sold and services performed under this order. Seller warrants that goods sold and services performed under this order do not, and will not, infringe any valid patent, copyright, trademark, trade secret or any other intellectual property interest owned or controlled by any other person, and Seller agrees to indemnify, defend and hold harmless Buyer, its officers, employees, agents, representatives, successors, assigns and any of Buyer’s customers buying or using the goods or services specified herein, from any all losses, liabilities, damages, penalties, injuries, claims, demands, actions, suits, costs and expenses (including, without limitation, reasonable attorney and other professional fees and disbursements) arising out of a claim or suit at law or equity for actual or alleged infringement of such intellectual property interests, by reason of the buying, selling or using the goods or services supplied under this order, and Seller will assume the defense of any and all suits and will pay all costs and expenses incidental thereto. If buying, selling or use of said goods or services is enjoined, then Seller shall at its own

DRESSER-RAND COMPANY

TERMS AND CONDITIONS OF PURCHASE
D-R195 Terms and Conditions –USA - Effective May 20, 2015

expense and at Buyer’s option either procure for Buyer the right to continue buying, selling and using said goods or services or replace the same with a non-infringing equivalent; or remove said goods or services from commerce and refund to Buyer the purchase price and the related transportation and handling costs thereof. Unless otherwise agreed to in writing by Seller and Buyer, all right, title and interest in any inventions, developments, improvements or modifications of or for goods and services shall exclusively belong to Buyer as part of this work for hire.

15. INDEMNITY.

Seller shall defend, indemnify and hold harmless Buyer, its officers, employees, agents, representatives, successors, assigns and any of Buyer’s customers buying or using the goods or services specified herein, from and against any and all losses, liabilities, damages, penalties, injuries, claims, demands, actions, suits, costs and expenses (including, without limitation, reasonable attorney and other professional fees and disbursements) of whatsoever kind and nature, in contract or tort, or under any other theory of law: (i) arising out of any misrepresentation by Seller or relating to any breach or default in the performance of Seller’s obligations under this order with respect to ownership, possession, use, operation, condition, sale, purchase, lease, maintenance, selection, manufacture, or delivery of any item or items of goods or services (including, without limitation, latent and other defects, whether or not discoverable by Buyer); (ii) arising out of any claims for injury to or death of persons or damage to property in any manner due to, in whole or in part, any act or omission on the part of Seller; (iii) and any defects in goods sold or services provided to Buyer pursuant to this order. This indemnity shall survive the termination, cancellation or expiration of this order.

16. COMPLIANCE WITH LAW.

Seller warrants that, in the performance of this order, Seller and all goods and services provided hereunder will comply with all applicable federal, foreign, state and local laws, ordinances, codes, regulations, and orders now in effect or which may become effective and which may apply to the goods or services provided hereunder, including, but not limited to, the Occupational Safety and Health Act of 1970 as amended (“OSHA”); Toxic Substance Control Act as amended (“TSCA”); the Equal Employment Opportunity Act and the Regulations and Standards issued pursuant thereto (“EEOC”); and the Fair Labor Standards Act of 1938 as amended (“FLSA”). Additionally, Seller represents and warrants that it shall supply Buyer with such information as may be necessary to permit Buyer to comply with the Federal Hazard Communication Standard as set forth in 29 CFR 1910 . 1200 (or the equivalent of 29 CFR 1910.1200 in the applicable local jurisdiction). Seller shall supply such data safety sheets (SDS) to Buyer and the receiving facility at the time of making its first delivery pursuant to this order, and shall revise or amend such SDS

as necessary during the course of fulfilling this offer. Failure of Seller to supply such SDS shall be conclusively presumed to mean that such data is not required for the goods supplied. Further, Seller warrants that the goods furnished by it will be in compliance with the Consumer Product Safety Act (“CPSA”), National Highway Safety Act (“NHSA”); and regulations issued pursuant thereto. Additionally, Seller shall encourage Diverse Business Entities (DBEs) to bid for, and shall endeavor to use DBE’s, in any supply or subcontract opportunity related to this Order. Seller shall, upon request of Buyer, report such use of such DBE’s in connection with this Order. A DBE is Minority Owned Businesses, Women-Owned Businesses, Veteran Owned Businesses, Small Disadvantaged Businesses, Certified Section 8 (a) Businesses, Small Businesses, HUB Zone Businesses, Veteran Disabled Owned Businesses and Disabled Owned Businesses.

17. CONTINGENCIES.

In the event of war, declared or undeclared, acts of terrorism, fire, flood, strike, labor trouble, riot, act of governmental authority, acts of God or other similar contingencies beyond the reasonable control of Seller, or in the event of plant shutdown or closing or sale by Seller, Seller shall notify Buyer of such delaying event or occurrence and take all steps necessary to end such delay, including procurement of materials from alternate sources and acceleration of activities to meet Buyer's schedule. If in Buyer’s discretion the delay is not capable of prompt remedy, Buyer may terminate this order for its own convenience pursuant to the terms of this order. Buyer shall not be liable for damages resulting from delays arising out of causes beyond its control, including but not limited to, acts of God, acts of any government, fires, floods, epidemics, quarantine restrictions, strikes, labor shortages, material shortages or significant price increases, freight embargoes, and severe weather, nor shall such delay affect the remainder of this order.

18. WARRANTIES.

(a) Seller warrants that all goods and services delivered under or pursuant to this order shall be free of any claim of any nature by any third person and that Seller will convey clear unencumbered title thereto to Buyer as provided hereunder. Seller also warrants that all goods and services sold hereunder or pursuant hereto will be of the best quality of their respective kinds and free from all defects in design, material and workmanship, and shall conform strictly to the specifications, drawings, samples or other requirements including performance specifications, specified or furnished and shall be merchantable and fit for Buyer's intended purposes. Seller warrants its goods for a period of twelve (12) months from the date Buyer sells such goods to Buyer’s customer or twenty-four (24) months from the date Buyer ships such goods to Buyer’s customers, or twenty-four (24) months from the date Seller ships such goods to Buyer’s customer, whichever occurs last. Seller warrants

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TERMS AND CONDITIONS OF PURCHASE
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all services for a period of twelve (12) months from the completion of the work and Buyer’s customer’s acceptance of the same. These warranties shall run to Buyer, its successors, assigns, customers, and other users of the goods or services. For any breach of these warranties, Seller shall at Buyer’s direction do any of the following (i) take all necessary action, at Seller’s full cost and expense, to correct such breach in the most expeditious manner possible; (ii) refund an equitable portion of the contract price; (iii) furnish replacement goods, as necessary, at the original shipping point; or (iv) in the case of services, re-perform the services . All costs incurred in the expedient correction of breach, (including premium time, de-installation, installation, re-commissioning and freight if required by Buyer's operating needs) shall be borne by Seller. In the event of failure by Seller to correct defects in or replace nonconforming goods or services expeditiously, Buyer, after reasonable notice to Seller, may make such corrections or replace such goods and services and charge Seller for the full cost incurred by Buyer thereby. With respect to goods furnished but not manufactured by Seller, Seller shall assign to Buyer (or upon direction from Buyer, assign to Buyer’s customers) all warranties that Seller receives from the manufacturer. However, Seller agrees to be Buyer's primary contact on all warranty claims. With respect to any goods and services that are being directly or indirectly procured by Buyer and/or by Buyer’s affiliated companies for the benefit of their respective customers, Seller expressly agrees to be additionally bound to Buyer and to Buyer’s affiliates to the same degree and extent that Buyer's or Buyer’s affiliate’s obligations under the terms and conditions with their respective customers (which are hereby incorporated into this agreement by reference) exceed Seller’s obligations and duties to Buyer or Buyer’s affiliate as provided for in this order

(b) Seller further certifies, represents and warrants to Buyer that Seller, and any subcontractors utilized by Seller in providing any goods and/or in performing any services for Buyer, its affiliates and their customers, are in full compliance with all applicable Federal and State laws regarding the documentation of employees as to their eligibility to work in the United States as set forth in the Immigration Reform and Control Act of 1986 and the regulations promulgated hereunder, including the completion of Form I-9s (Employment Eligibility Verification) by all such employees. Seller further expressly certifies to Buyer that Seller agrees to immediately notify Buyer, but in no event later than five business days, in the event any Federal or State agency should assert, in whole or in part, that Seller or Seller’s subcontractors and/or suppliers are in violation of any such requirements. Seller further agrees that if the foregoing certification, representations and warranties are determined to be false or misleading, then Buyer may: (a) immediately terminate any and all agreements and business dealings with Seller without any cost nor obligation to Buyer; and (b) Seller shall defend, indemnify and hold Buyer, its customers and their respective affiliates and the respective directors, officers and

employees of the same, harmless from any and all damages, liabilities, penalties and/or fines (given as examples only) arising from this certification, representation and warranty, as well as paying all attorneys' fees and costs; and (3) Buyer and the foregoing shall also be entitled to avail itself to all its other legal and equitable remedies.

19. GOVERNMENT CONTRACTS.

If this order indicates, or if Seller is otherwise informed, that it is placed, directly or indirectly, under a contract of the United States Government or any State or other governmental authority, then the following forms, as well as Attachment 1 to D-R195 for US Government Related Purchases, at the revision level in effect at the time purchase order is issued, shall also apply to this order: Form D-R-193, United States Government Subcontractor Certifications - Annual; Form D-R-194, United States Government Subcontractors Certifications - Proposals over $10,000. To the extent that the terms of this order are inconsistent with any such required terms and conditions, then the required terms and conditions will prevail and be binding on both Buyer and Seller. Seller agrees, upon request, to furnish Buyer with a certificate or certificates in such form as Buyer may require certifying that Seller is in compliance with all such terms and conditions as well as any applicable law or regulation. Upon Seller’s written request, Buyer will promptly make available to Seller copies of all pertinent terms and conditions required by any such government contract. It is Seller’s ultimate responsibility to ensure its compliance with all government contracting standards including, but not limited to, Attachment 1 to DR195 for US Government Related Purchases, D-R 193 and D-R194.

20. BUYER'S PROPERTY.

Unless otherwise agreed to in a writing signed by an authorized representative of Buyer, all drawings, sketches, blueprints, specifications, designs, models, tools, molds, jigs, dies, patterns and other material and information furnished or paid for by Buyer pursuant to this order or any applicable order and any replacement thereof or any materials affixed or attached thereto shall be and remain the exclusive property of Buyer and shall be delivered to Buyer or otherwise disposed of in accordance with Buyer's instructions. Such property, and whenever practical each individual item thereof shall be plainly marked or otherwise adequately identified by Seller as “Property of Buyer” and shall be safely stored separate from Seller's property. Seller shall not substitute any property for Buyer's property and shall not use such property except in filling Buyer's orders. Seller assumes all risk and liability for loss of or damage to Buyer's property in its custody or control, except for normal wear and tear, and shall insure such property at its own expense for an amount at least equal to the replacement cost thereof, with loss payable to Buyer and such property shall be subject to removal at

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Buyer's written request in which event Seller shall prepare such property for shipment and shall redeliver to Buyer in the same condition as originally received by Seller, reasonable wear and tear expected, all at Seller's expense. Unless previously known to Seller and free of any obligation to keep it confidential, all information of Buyer shall be kept confidential by Seller and such information and other property of Buyer shall be used only in performing under this order and may not be used for other purposes. Such property while in Seller's custody or control shall be held free of any liens at Seller's risk.

21. SURVIVAL.

The obligations of the parties under this order which by their nature would continue beyond the termination, cancellation or expiration of this order, including by way of illustration and not limitation, those in sections 8, 11, 14, 15, 16, 18, 20 , 21, 22, 26, 27, 31, 32 and 35 shall survive termination, cancellation or expiration of this order.

22. TITLE AND RISK OF LOSS.

Seller assumes the following risks: (a) all risks of loss or damage to all goods, work in process, materials and other things until the delivery thereof as herein provided in Section 4; (b) all risks of loss or damage to third persons and their property until the delivery of all goods as herein provided in Section 4; (c) all risks of loss or damage to any property received by Seller from or held by Seller or its suppliers for the account of Buyer, until such property has been delivered as herein provided in Section 4, and (d) all risk of loss or damage to any of the goods or part thereof rejected by Buyer, from the time of shipment thereof to Seller until redelivery thereof as herein provided in Section 4. Title to goods and services purchased by Buyer hereunder shall pass to Buyer simultaneously when risk of loss to such goods and services passes to Buyer in accordance with the terms herein.

23. COMPLIANCE WITH EXPORT CONTROL AND ANTI-BRIBERY LAWS.

Seller will comply with all applicable export and re-export control laws including, without limitation, laws related to export licensing, in connection with performing its obligations hereunder. Seller will, upon request, provide Buyer with the Export Control Classification Number, or such similar number from other jurisdictions. Seller represents, warrants, and covenants that it, its owners, employees, representatives, and agents have not and will not violate any provision of any applicable law related to bribery or corruption, including the U.S. Foreign Corrupt Practices Act, and the U.K. Bribery Act of 2010 in connection with this order or its relationship with Buyer. Without limiting the generality of the foregoing, Seller will not, nor will any of its officers, employees, representatives or agents, directly or indirectly, offer, give, or agree to offer or give any payment, gift, or other advantage: (1) which is intended to, or does, influence any person to act or reward any person for acting in breach of an expectation of good faith, impartiality or trust;

(2) which it would otherwise be improper for the recipient to accept; or (3) which is made to or for a public official with the intention of influencing them to allow Seller or Buyer to obtain or retain business or a business advantage (“Corrupt Act”). Seller covenants not to seek to, directly or indirectly, improperly or corruptly influence or attempt to influence a public official, or any individual to act to the advantage of either Seller or Buyer or otherwise to perform their duties improperly and Seller covenants not to use proceeds of any payment made under this Order, directly or indirectly, for this purpose or otherwise for the purpose of or in connection with any Corrupt Act. Seller covenants to notify Buyer immediately if, at any time, it becomes aware that any of the representations, warranties, and covenants set out in this Article are no longer correct. If Buyer in good faith has reasonable concern that there has been a breach of this provision, notwithstanding any other provision herein, Buyer may immediately terminate this Order and any other agreement without notice or penalty and without further liability or obligation. If Seller fails to meet its obligations in this paragraph, Seller shall defend, indemnify and hold Buyer harmless from and against any fines, penalties and/or damages resulting there from. In addition, Buyer may, at its discretion, terminate this order without any further liability or obligation.

24. WAIVER.

A holding that any term or condition hereof is void or unenforceable shall not render void or unenforceable any other terms or conditions of this order. No claim or right arising out of a breach of this order can be discharged in whole or in part by a waiver or renunciation of the claim or right unless the waiver or renunciation is supported by consideration and is in writing signed by the aggrieved party. The failure of Buyer to enforce at any time or for any period of time any of the provisions hereof shall not be construed to be a waiver of such provisions nor the right of Buyer thereafter to enforce each and every such provision. The rights and remedies of Buyer provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this order.

25. SETOFF.

Buyer shall have the right at any time to set-off any amount owed by Buyer (or by Buyer’s affiliated companies) to Seller or to Seller’s affiliated companies.

26. SERVICES ON BUYER'S PREMISES.

If Seller's performance under this Order involves operations by Seller on the premises of Buyer or Buyer’s customer, Seller shall take all necessary precautions to prevent the occurrence of any injury to person or property during the progress of such services. Seller shall maintain such public liability, property damage and employees' liability and compensation insurance as will protect Buyer from said risk and from any claims under applicable worker’s

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compensation and occupational disease acts. Seller hereby agrees on behalf of its employees, agents and representatives, to submit to any security requirements of Buyer, or Buyer’s customer, and to comply with all rules and regulations established by Buyer. Buyer shall be named as an additional insured on all public liability, property damage and employee’s liability insurance. Seller shall provide Buyer with a certificate of insurance evidencing the kinds and amounts of insurance to at all times be carried by Seller so that the same are acceptable to Buyer. Buyer shall be provided at least thirty-(30) days prior notice before changes to or termination of any such insurance coverage. Seller shall have sole responsibility for all governmental taxes and contributions imposed with respect to all persons compensated by Seller while such persons are on the premises of Buyer or Buyer’s customer.

27. LIMITATION ON BUYER 'S LIABILITY.

In no event will Buyer, nor shall Buyer’s customers nor shall their affiliated companies, be liable to Seller for any indirect, incidental, consequential, or punitive damages, or for loss of profits, revenue, or data, whether in an action in contract, tort, strict liability, or otherwise, even if advised of the possibility of those damages. Buyer's liability on any claim of any kind for any loss or damage arising out of or in connection with or resulting from this order or from the performance or breach thereof shall in no case exceed the price allocable to the goods or services or unit thereof, which gives rise to the claim. Buyer shall not be liable for penalties of any kind. Any action resulting from any breach on the part of Buyer as to the goods or services delivered hereunder must be commenced within one (1) year after the cause of action has accrued and all rights of Seller to commence any court action or proceeding with respect to this order shall terminate one (1) year after the cause of action has accrued.

28. IMPORT RELATED PROVISIONS.

(a) ANTI-DUMPING. (i) If Buyer is serving as the “Importer of Record” the following applies to all transactions involving imported goods; then “(a)(ii) ” below does not apply. Seller warrants that all sales made hereunder are or will be made at not less than fair value under applicable “ANTI-DUMPING” or countervailing duty laws and Seller will indemnify, defend and hold Buyer and its customers and their affiliated companies, harmless from and against any costs or expenses (including but not limited to any anti-dumping or countervailing duties which may be imposed) arising out of or in connection with any breach of this warranty.

(ii) If the front side of this order indicates Seller is, or if Seller acts as Importer of Record the following apply to all transactions involving imported goods; then “(a)” above does not apply. Seller agrees that Buyer will not be the “IMPORTER OF RECORD” nor a party to the importation of the goods that the transaction(s) represented by this order will be consummated subsequent to importation, and that Seller will neither cause nor permit Buyer’s name to be shown as Importer of Record on any customs declaration.

(b) DRAWBACK. Buyer shall be entitled to all customs duty and import drawback rights, including, without limitation, those provided under United States law, and upon request and where applicable, Seller will provide Buyer with requested and appropriate documentation, including, without limitation, U.S. Customs Form 7543 entitled "Certificate of Delivery" properly executed to transfer such rights to Buyer.

(c) ASSISTS AND OTHER CHARGES THAT AFFECT THE VALUE OF THE GOODS. Seller will provide commercial invoice(s) for all goods that will be imported into the United States. Seller will identify the proper US HTS codes for all goods sold. Any charges for assists (as defined in US Customs laws and regulations) or other charges, costs, fees and payments that could affect the declared value of the goods shall be properly identified on the commercial invoice.

(d) IMPORTER SECURITY FILING. – When Buyer is serving as Importer of Record for goods being transported to the United States via ocean shipment, Seller will timely and accurately supply all data elements necessary to the Importer Security Filing as required by US Customs. Seller will supply such data elements to Buyer or to the appropriate customs broker, as directed by Buyer.

(e) CERTIFICATES OF ORIGIN. Seller will provide certificates of origin relating to such products within the meaning of the rules of origin of the NAFTA preferential duty provisions and execute such other documents as may be necessary for Buyer to claim duty preference under any applicable programs.

(f) INDEMNIFICATION. Seller will defend, indemnify and hold Buyer harmless against any penalties, fines or other damages resulting from or arising out of Seller’s failure to comply with the provisions of this Article.

29. DISPUTE RESOLUTION.

Seller and Buyer agree that if a party hereto is claimed by the other to this agreement to be in default in their performance of any of their obligations as provided for in this order, and/or have a claim based on or arising out of this order, and such claimed default continues after thirty (30) days' notice in writing by the party hereto claiming the default and what must be done to remedy the same, then the board of arbitration (as opposed to either party filing a lawsuit in a court of law with respect to such dispute) as hereinafter provided for, shall first determine whether such specified default has occurred. In no event shall said board of arbitration expand nor restrict any of Buyer’s or Seller’s respective rights or obligations beyond those as provided for in this order. If such default is found to exist, the board shall fix the time within which it must be cured, and shall assess such damages and impose on the party in default such other requirement as may seem to the board to be proper under the circumstances. Each party hereto agrees that

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it will pay such damages and comply with such requirements as may be specified by the board of arbitration. All disputes arising under this order, except as otherwise provided for herein, shall be settled by binding arbitration in accordance with the rules, then pertaining, of the American Arbitration Association. The site of arbitration shall be in Houston, Texas or Buffalo, New York, or other mutually agreed upon location. The board of arbitration shall be comprised of three (3) arbitrators. Each party shall each select 1 (one) arbitrator and the third arbitrator shall be selected by the two arbitrators. The 3 (three) arbitrators shall comprise the board of arbitration. A majority vote of the 3 (three) arbitrators shall be considered a final decision by the board of arbitration. The arbitration award shall be a speaking award setting out reasons for the same. To the extent that either party hereto prevails in any such disputed, said prevailing party shall be entitled to be awarded that proportion of its reasonable costs and expense (including attorney’s fees) that it actually incurred in the matter. Such final decisions may be enforced in the courts located in Buffalo, New York or Houston, Texas.

30. GOVERNING LAW / JURISDICTION.

(a) This Agreement shall be governed by and be construed in accordance with the laws of the State of Texas, excluding its conflicts of laws. The parties waive all rights under and agree that the United Nations Convention on the International Sale of Goods does not apply. Seller and Buyer agree that all actions, suits or proceedings arising out of or based upon this order shall be brought and maintained exclusively in the state or federal courts located in Houston, Texas or Buffalo, NY and Seller and Buyer expressly consent to the personal and subject matter jurisdiction of said courts.

(b) Seller acknowledge that Seller’s breach of the terms of this order, and the agreement between Seller and Buyer, will cause Buyer to suffer irreparable harm, the extent of which would be difficult to ascertain and, in any event, money damages would be inadequate in the event of such a breach. Accordingly, Seller agrees that in the event of a breach of this agreement by Seller, Buyer shall be entitled to specific performance and injunctive or other equitable relief as the board or arbitration (referenced above) or as a court may deem appropriate, and such remedies shall not be deemed to be the exclusive remedy for Seller’s breach of this Agreement, but shall be in addition to all other remedies available at law or equity or as otherwise provided for in this order, which constitutes the agreement by and between Seller and Buyer.

31. SUPPORT OF GOODS.

Seller warrants that goods and services purchased under this order, including the sub-assemblies and spare parts, shall be made available by Seller to Buyer and its customers during the operational life of the items purchased or for ten (10) years after the date of final shipment under this order, whichever is later. Further, during said period, Seller shall continue to provide technical support and service at the same level as presently provided. In the event Seller discontinues manufacture of the aforementioned items, sub-assemblies or spare parts thereof

does not provide any of them in a timely manner for Buyer’s requirements, Seller shall make available to Buyer all drawings, specifications, data and know-how which will enable and facilitate Buyer, its suppliers or its customers to manufacture or procure and use and sell said items, sub-assemblies and spare parts under a royalty-free license which is hereby granted.

32. CERTIFICATION OF ORIGIN.

For all goods covered by this order, Seller shall provide to Buyer an up-to-date certificate of origin, including, without limitation, certificates of origin that identify the goods as originating under applicable under applicable free trade agreements such as the North American Free Trade Agreement, or as otherwise requested by Buyer either at the time the order is placed or after.

33. HEADINGS.

Headings are for convenience only and shall be given no force or effect. Fax and electronic copies shall be given the full force and effect as an original.

34. INDEPENDENT CONTRACTORS.

The parties to this Agreement are independent contractors and neither party will have the power to bind the other or incur obligations on the other’s behalf without the other’s prior written consent.

35. RECORDS.

Seller will maintain complete and accurate records regarding production and manufacture of goods for a period of ten (10) years following expiration of this Agreement. Upon reasonable advanced notice, Buyer may inspect and make copies of such books and records during normal business hours to verify compliance with the terms and conditions of this Agreement.

36. AUDIT.

At all reasonable times and with reasonable advance notice, Buyer contemplates and Seller further agrees to permit Buyer to audit all records relating to the goods and services that Seller is providing to Buyer at Seller’s place of manufacture, or at any of Seller’s subcontractor's place of manufacture or performance (which Seller shall ensure that Buyer has the right to undertake), or at any other place where any of the goods are being manufactured and/or services are being performed. Buyer may elect to conduct inspections on Seller’s or its subcontractor’s premises either on a random or 100 percent inspection basis. During the time Buyer is on Seller’s or its subcontractor’s site, Buyer shall be provided reasonable private office space at no charge. Seller and its subcontractors shall provide Buyer with copies of all records pertaining to said goods and services upon Buyer’s request.

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D-R195 Terms and Conditions –USA - Effective May 20, 2015

37. C-TPAT COMPLIANCE.

Seller warrants that it shall be compliant with the requirements of the Customs-Trade Partnership Against Terrorism initiative (“C-TPAT”). Without limiting the generality of the foregoing, Seller shall take an active role in ensuring the security of its cargo by ensuring that the goods and containers are properly secured and have not been compromised or tampered with from the initial point of origin to their final destination. This may include physical security, access control, procedural security, personnel security, education and training awareness in furtherance of such objective. All goods and other and materials related to this order will be stored in a safe and secure area within the designated facility. Additionally Seller shall introduce the C-TPAT program to its key manufacturing, shipping and receiving and distribution locations worldwide and all of Seller’s commercial trade partners, including vendors, carriers and freight forwarders. A copy of the applicable C-TPAT minimum security guidelines may be found at: http://www.cbp.gov/xp/cgov/trade/cargo security/ctpat/secu rity criteria/

38. COUNTRY OF ORIGIN MARKING.

Seller will conspicuously mark the country of origin on all goods. Such marking shall be legible, permanent, in English, and in close proximity to any other Seller markings. In the event such marking would impair the functionality of such goods, or if marking would be impossible, Seller must, in the alternative, conspicuously mark the country of origin on the packaging containing such goods.

39. EQUAL OPPORTUNITY EMPLOYER.

Buyer is an equal opportunity employer and federal contractor or subcontractor. Consequently, the parties agree that, as applicable, they will abide by the requirements of 41 CFR 60-1.4(a), 41 CFR 60-300.5(a) and 41 CFR 60741.5(a) and that these laws are incorporated herein by reference. These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, or national origin. These regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, protected veteran status or disability. The parties also agree that, as applicable, they will abide by the requirements of Executive Order 13496 (29 CFR Part 471, Appendix A to Subpart A), relating to the notice of employee rights under federal labor laws.

END OF TERMS

ANNEX C: Joint Oversight Team

From E-C:

	1.	Boris Maslov, President

	2.	Douglas Hamrin, VP of Engineering

From D-R:

Thomas Soulas, Director Business Development

Stephen Veigel, Vice President Global Solutions

Mike Cormier, Business Development Director

Annex C

ANNEX D: Code of Business Conduct

Annex D

ANNEX E: Performance Security—Letter of Credit Form

Issue date:

L/C No.:

Dresser-Rand Company

{Beneficiary Full Name/Address}

Currency & Amount: ------------------------------------

Gentlemen:

We have issued our irrevocable standby letter of credit no. --------in your favor up to an aggregate amount of--------{currency and amount in words/numbers}_____ expiring at our counters with our close of business on __________ (the expiry date).

This letter of credit is available with ---------{issuing bank}------- against presentation of your draft(s) at sight on------------ when accompanied by the document indicated below.

Beneficiary’s dated statement purportedly signed by one of its authorized representatives stating:

“The amount of this drawing represents a sum due us under your letter of credit number -------------We hereby demand payment of ------------------{currency and amount}. (Applicant)------------- is in breach of their contractual performance obligations under the Contract/Purchase Order No. ---------- for the supply of------------------{insert brief description of goods}”

This letter of credit sets forth in full the terms of our Undertaking and such undertaking shall not in any way be modified, amended or amplified by reference to any note, document, instrument or agreement referred to herein or in which this letter of credit is referred to or to which this Letter of credit relates, and any such reference shall not me deemed to incorporate herein by reference any such note, document, instrument or agreement.

We hereby engage with you to honor your document(s) as specified above, drawn under and in compliance with the terms and conditions of this standby, if presented as specified herein on or before the stated expiration date.

Any demand made under and in compliance with the terms and conditions of this standby will be duly honored if received at our above-mentioned office on or prior to the Expiry Date of this Letter of Credit.

Except as otherwise expressly stated herein, this Letter of Credit is subject to ISP98 International Chamber of Commerce, Publication No. 590 and engages us in accordance with the terms thereof and as to matters not addressed by ISP98 shall be governed and construed in accordance to the laws of State of New York and applicable U.S. federal law.

Annex E

Exhibit 10.2

Ener-Core, Inc.
9400 Toledo Way
Irvine, CA 92618

949-616-3300
949-616-3399 Fax

June 29, 2016

Stephen Markscheid

419 Washington Avenue

Wilmette, Illinois 60091

Dear Stephen,

On behalf of Ener-Core, Inc., a Delaware corporation (the “Company”) or its successors, I am pleased to invite you to join the Company’s Board of Directors (the “Board”), subject to your election to the Board by the stockholders or directors, as appropriate (the date of such election being the “Effective Date”), which we anticipate will be approximately June 29, 2016 or at which date Ener-Core’s CFO informs the Board of Directors that all necessary paperwork and checks have been completed. You will serve as a director from the Effective Date until the date upon which you are not re-elected or your earlier removal or resignation.

In consideration for your service on the Board and subject to approval by the Board, you will be granted an option under the Company’s Stock Incentive Plan (the “Plan”) to purchase 6,000 shares of the Company’s common stock at an exercise price of $4.31 per share.

We will recommend that the Board set your vesting schedule as follows: (i) 1/4 of the total number of options will be vested after twelve months from the Effective Date, and (ii) 1/48 of the total number of options will be vested after each month thereafter.

In addition to the shares granted to you under the Company’s Stock Incentive Plan, that you will receive an annual director’s fee of $40,000 payable monthly for your services as an independent director (“Annual Stipend”). There are no assurances that the Company will pay you the Annual Stipend, in addition to the shares being granted to you under the Plan, however, it is the Company’s intention to provide cash compensation to board members in the future.

The Company will reimburse you for all reasonable travel expenses that you incur in connection with your attendance at meetings of the Board, in accordance with the Company’s expense reimbursement policy as in effect from time to time. In addition, you will receive indemnification as a director of the Company to the maximum extent extended to directors of the Company generally, as set forth in the Company’s certificate of incorporation, bylaws, an indemnification agreement between the Company and you (which will be provided to you upon the Effective Date), and any reasonable Director and Officer Insurance the Company may have and maintain from time to time.

Every January the Board’s compensation committee will conduct an annual review of your compensation to ensure that the compensation remains adjusted to the company’s and market conditions with final approval of any changes to the structure upon the approval of the Board and potentially a shareholder vote.

In accepting this offer, you are representing to us that (i) you do not know of any conflict which would restrict your service on the Board and (ii) you will not provide the Company with any documents, records, or other confidential information belonging to other parties.

This letter sets forth the initial compensation you will receive for your service on the Board. The Board’s compensation committee will conduct an annual review of the Board compensation to ensure that the compensation remains adjusted to the company’s and market conditions. Nothing in this letter should be construed as an offer of employment. If the foregoing terms are agreeable, please indicate your acceptance by signing the letter in the space provided below and returning this letter to the Company.

Sincerely,

ENER-CORE, INC.

By:
	Michael J. Hammons

Chairman

Accepted and agreed:

Stephen Markscheid

Date

Exhibit 10.3

NOTICE OF GRANT OF NON-QUALIFIED STOCK OPTION

ENER-CORE, INC.
2015 OMNIBUS INCENTIVE PLAN

FOR GOOD AND VALUABLE CONSIDERATION, Ener-Core, Inc. (the “ Company ”) hereby grants, pursuant to the provisions of the Ener-Core, Inc. 2015 Omnibus Incentive Plan (the “ Plan ”), to the Grantee designated in this Notice of Grant of Non-Qualified Stock Option (the “ Notice of Grant ”) a Non-qualified Stock Option to purchase the number of Shares set forth in the Notice of Grant (the “ Option ”), subject to certain terms and conditions as outlined below in the Notice of Grant and the additional terms and conditions set forth in the attached Terms and Conditions of Stock Option (together with the Notice of Grant, the “ Award Agreement ”).

Grantee:		Stephen Markscheid

Type of Option:		Non-qualified Stock Option

Grant Date:		July 1, 2016

Number of Shares Purchasable:		6,000 Shares of Common Stock

Option Price per Share:		$4.31, which is at or above the Fair Market Value as of the Grant Date

Expiration Date:		July 1, 2026, which is 10 years from the Grant Date

Exercisability Schedule:		Vesting schedule as follows: (i) 1/4 of the total number of options will be vested on June 29, 2017, and (ii) 1/48 of the total number of options will be vested after each month thereafter. Notwithstanding the foregoing Exercisability Schedule, exercisability of all or some portion of the Option may be accelerated in accordance with the terms and conditions of Section 2(c) of the attached Terms and Conditions.

Exercise after Separation from Service:		Separation from Service for any reason other than death, Disability or Cause : any non-exercisable portion of the Option expires immediately and any exercisable portion of the Option remains exercisable for 90 days following Separation from Service for any reason other than death, Disability or Cause; Separation from Service due to death or Disability : any non-exercisable portion of the Option expires immediately and any exercisable portion of the Option remains exercisable for 12 months following Separation from Service due to death or Disability; and Separation from Service for Cause : the entire Option, including any exercisable and non-exercisable portion, expires immediately upon Separation from Service for Cause. In no event may THE Option be exercised after the Expiration Date as provided above.

Notice of Grant - Page 1

By signing below, the Grantee agrees that the Option is granted under and governed by the terms and conditions of the Plan and the Award Agreement, as of the Grant Date.

GRANTEE		ENER-CORE, INC.

Sign Name:	/s/ Stephen Markscheid	Sign Name:	/s/ Alain Castro

Print Name:	Stephen Marksheid	Print Name:	Alain Castro

		Title:	Chief Executive Officer

Notice of Grant - Page 2

TERMS AND CONDITIONS OF STOCK OPTION

1. Grant of Option . The Option granted to the Grantee and described in the Notice of Grant is subject to the terms and conditions of the Plan. The terms and conditions of the Plan are hereby incorporated herein by reference. Except as otherwise expressly set forth herein, the Award Agreement shall be construed in accordance with the terms and conditions of the Plan. Any capitalized term not otherwise defined in the Award Agreement shall have the definition set forth in the Plan.

The Board and the stockholders of the Company have approved the Plan. The Committee has approved the grant to the Grantee of the Option, conditioned upon the Grantee’s acceptance of the terms and conditions of the Award Agreement within 60 days after the Award Agreement is presented to the Grantee for review.

If designated in the Notice of Grant as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option. To the extent that the Option fails to meet the requirements of an Incentive Stock Option or is not designated as an Incentive Stock Option, the Option shall be treated as a Non-qualified Stock Option.

2. Exercise of Option .

(a) Right to Exercise . The Option shall be exercisable, in whole or in part, during its term in accordance with the Exercisability Schedule set forth in the Notice of Grant and with the applicable provisions of the Plan and the Award Agreement. No Shares shall be issued pursuant to the exercise of the Option unless the issuance and exercise comply with applicable laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Grantee on the date on which the Option is exercised with respect to such Shares. Until such time as the Option has been duly exercised and Shares have been delivered, the Grantee shall not be entitled to exercise any voting rights with respect to such Shares, shall not be entitled to receive dividends or other distributions with respect thereto and shall not have any other rights of a stockholder with respect thereto.

(b) Method of Exercise . The Grantee may exercise the Option by delivering an exercise notice in a form approved by the Company (the “ Exercise Notice ”), which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Option Price as to all Shares exercised. The Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Option Price (as well as any applicable withholding or other taxes).

(c) Acceleration of Exercisability under Certain Circumstances . The exercisability of the Option shall not be accelerated under any circumstances, except as otherwise provided in the Plan; provided , however , that the Option shall become fully exercisable immediately prior to, and contingent upon, a Change in Control.

3. Method of Payment . If the Grantee elects to exercise the Option by submitting an Exercise Notice in accordance with Section 2(b) above, the aggregate Option Price (as well as any applicable withholding or other taxes) shall be paid by cash or check; provided, however , that the Committee may consent to payment in any of the following forms, or a combination of them:

(a) cash or check;

Terms and Conditions - Page 1

(b) a “net exercise” under which the Company reduces the number of Shares issued upon exercise by the largest whole number of Shares with a Fair Market Value that does not exceed the aggregate Option Price and any applicable withholding, or such other consideration received by the Company under a cashless exercise program approved by the Company in connection with the Plan;

(c) surrender of other Shares owned by the Grantee that have a Fair Market Value on the date of surrender equal to the aggregate Option Price of the exercised Shares and any applicable withholding; or

(d) any other consideration that the Committee deems appropriate and in compliance with applicable law.

4. Restrictions on Exercise . The Option may not be exercised until such time as the Plan has been approved by the stockholders of the Company, or if the issuance of the Shares upon exercise or the method of payment of consideration for those Shares would constitute a violation of any applicable law, regulation or Company policy.

5. Non-Transferability of Option . The Option may not be transferred in any manner other than by will or by the laws of descent or distribution and may be exercised during the lifetime of the Grantee only by the Grantee; provided , however , that the Grantee may transfer the Option (a) pursuant to a domestic relations order by a court of competent jurisdiction or (b) to any Family Member of the Grantee in accordance with Section 17.9.2 of the Plan by delivering to the Company a notice of assignment in a form acceptable to the Company. No transfer or assignment of the Option to or on behalf of a Family Member under this Section 5 shall be effective until the Company has acknowledged such transfer or assignment in writing.

6. Term of Option . The Option may be exercised only within the term set forth in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of the Award Agreement.

7. Withholding .

(a) The Committee shall determine the amount of any withholding or other tax required by law to be withheld or paid by the Company with respect to any income recognized by the Grantee with respect to the Option.

(b) The Grantee shall be required to meet any applicable tax withholding obligation in accordance with the provisions of Section 17.3 of the Plan.

(c) Subject to any rules prescribed by the Committee, the Grantee shall have the right to elect to meet any withholding requirement (i) by having withheld from the Option at the appropriate time that number of whole Shares whose Fair Market Value is equal to the amount of any taxes required to be withheld with respect to the Option, (ii) by direct payment to the Company in cash of the amount of any taxes required to be withheld with respect to the Option or (iii) by a combination of Shares and cash.

(d) If the Grantee makes any disposition of Shares delivered pursuant to the exercise of an Incentive Stock Option under the circumstances described in Code Section 421(b) (relating to certain disqualifying dispositions), the Grantee shall notify the Company of such disposition within 10 days of such disposition.

8. Adjustment . Upon any event described in Section 15.1 of the Plan occurring after the Grant Date, the adjustment provisions as provided for under Section 15.1 of the Plan shall apply to the Option.

Terms and Conditions - Page 2

9. Bound by Plan and Committee Decisions . By accepting the Option, the Grantee acknowledges that the Grantee has received a copy of the Plan, has had an opportunity to review the Plan, and agrees to be bound by all of the terms and conditions of the Plan. In the event of any conflict between the provisions of the Award Agreement and the Plan, the provisions of the Plan shall control. The authority to manage and control the operation and administration of the Award Agreement and the Plan shall be vested in the Committee, and the Committee shall have all powers with respect to the Award Agreement as it has with respect to the Plan. Any interpretation of the Award Agreement or the Plan by the Committee and any decision made by the Committee with respect to the Award Agreement or the Plan shall be final and binding on all persons.

10. Grantee Representations . The Grantee hereby represents to the Company that the Grantee has read and fully understands the provisions of the Award Agreement and the Plan and that the Grantee’s decision to participate in the Plan is completely voluntary. Further, the Grantee acknowledges that the Grantee is relying solely on his or her own advisors with respect to the tax consequences of the Option.

11. Regulatory Limitations on Exercises . Notwithstanding the other provisions of the Award Agreement, the Committee may impose such conditions, restrictions and limitations (including suspending the exercise of the Option and the tolling of any applicable exercise period during such suspension) on the issuance of Common Stock with respect to the Option unless and until the Committee determines that such issuance complies with (a) any applicable registration requirements under the Securities Act or the Committee has determined that an exemption therefrom is available, (b) any applicable listing requirement of any stock exchange on which the Common Stock is listed, (c) any applicable Company policy or administrative rules and (d) any other applicable provision of state, federal or foreign law, including foreign securities laws where applicable.

12. Miscellaneous.

(a) Notices . Any notice that either party hereto may be required or permitted to give to the other shall be in writing and may be delivered personally, by intraoffice mail, by fax, by electronic mail or other electronic means, or via a postal service, postage prepaid, to such electronic mail or postal address and directed to such person as the Company may notify the Grantee from time to time; and to the Grantee at the Grantee’s electronic mail or postal address as shown on the records of the Company from time to time, or at such other electronic mail or postal address as the Grantee, by notice to the Company, may designate in writing from time to time.

(b) Waiver . The waiver by any party hereto of a breach of any provision of the Award Agreement shall not operate or be construed as a waiver of any other or subsequent breach.

(c) Entire Agreement . The Award Agreement and the Plan constitute the entire agreement between the parties with respect to the Option. Any prior agreements, commitments or negotiations concerning the Option are superseded.

(d) Binding Effect; Successors . The obligations and rights of the Company under the Award Agreement shall be binding upon and inure to the benefit of the Company and any successor corporation or organization resulting from the merger, consolidation, sale, or other reorganization of the Company, or upon any successor corporation or organization succeeding to substantially all of the assets and business of the Company. The obligations and rights of the Grantee under the Award Agreement shall be binding upon and inure to the benefit of the Grantee and the beneficiaries, executors, administrators, heirs and successors of the Grantee.

(e) Governing Law; Consent to Jurisdiction; Consent to Venue . The Award Agreement shall be construed and interpreted in accordance with the internal laws of the State of Delaware without regard to principles of conflicts of law thereof, or principles of conflicts of laws of any other jurisdiction that could cause the application of the laws of any jurisdiction other than the State of Delaware. For purposes of resolving any dispute that arises directly or indirectly from the relationship of the parties evidenced by the Option or the Award Agreement, the parties hereto hereby submit to and consent to the exclusive jurisdiction of the State of California and agree that any related litigation shall be conducted solely in the courts of Orange County, California or the federal courts for the United States for the Central District of California, where the Award Agreement is made and/or to be performed, and no other courts.

Terms and Conditions - Page 3

(f) Headings . The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of the Award Agreement.

(g) Amendment . The Award Agreement may be amended at any time by the Committee, provided that no amendment may, without the consent of the Grantee, materially impair the Grantee’s rights with respect to the Option.

(h) Severability . The invalidity or unenforceability of any provision of this Award Agreement shall not affect the validity or enforceability of any other provision of this Award Agreement, and each other provision of this Award Agreement shall be severable and enforceable to the extent permitted by law.

(i) No Rights to Service . Nothing contained in the Award Agreement shall be construed as giving the Grantee any right to be retained, in any position, as a director, officer, employee, or consultant of the Company or its Affiliates, or shall interfere with or restrict in any way the rights of the Company or its Affiliates, which are hereby expressly reserved, to remove, terminate or discharge the Grantee at any time for any reason whatsoever or for no reason, subject to the Company’s articles of incorporation, bylaws and other similar governing documents and applicable law.

(j) Section 409A . It is intended that the Award Agreement and the Option will be exempt from (or in the alternative will comply with) Code Section 409A, and the Award Agreement shall be administered accordingly and interpreted and construed on a basis consistent with such intent. This Section 12(j) shall not be construed as a guarantee of any particular tax effect for the Grantee’s benefits under the Award Agreement and the Company does not guarantee that any such benefits will satisfy the provisions of Code Section 409A or any other provision of the Code.

(j) Further Assurances . The Grantee agrees, upon demand of the Company or the Committee, to do all acts and execute, deliver and perform all additional documents, instruments and agreements that may be reasonably required by the Company or the Committee, as the case may be, to implement the provisions and purposes of the Award Agreement and the Plan.

(k) Confidentiality . The Grantee agrees that the terms and conditions of the Option award reflected in the Award Agreement are strictly confidential and, with the exception of the Grantee’s counsel, tax advisor, immediate family, or as required by applicable law, have not and shall not be disclosed, discussed or revealed to any other persons, entities or organizations, whether within or outside Company, without prior written approval of Company. The Grantee shall take all reasonable steps necessary to ensure that confidentiality is maintained by any of the individuals or entities referenced above to whom disclosure is authorized.

Terms and Conditions - Page 4

Exhibit 10.4

ENER-CORE, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “ Agreement ”) is entered into as of June 29, 2016 (the “ Effective Date ”), by and between Ener-Core, Inc., a Delaware corporation (the “ Company ”), and Douglas Hamrin (“ Executive ”).

AGREEMENT

In consideration of the premises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:

1. Duties and Scope of Employment .

(a) Title and Duties . As of the Effective Date, Executive will be employed as the Company’s Vice President of Engineering reporting to the President of the Company. During the Employment Term (as defined in Section 2 below), Executive will have authority and render such business and professional services in the performance of Executive’s duties as are customarily associated with Executive’s position within the Company and Executive agrees to perform such other duties and functions as may from time to time be reasonably assigned or delegated to Executive by the Company’s President.

(b) Obligations . During the Employment Term, and excluding any periods of vacation and sick leave to which the Executive is entitled, Executive will perform Executive’s duties faithfully and to the best of Executive’s ability and will devote such time as reasonably necessary to fulfill Executive’s responsibilities in the position. It will be at the Executive’s discretion to determine the time that is reasonable to fulfill this obligations. Executive and the Company agree that the Company represents Executive’s principal business focus. Executive agrees to travel as reasonably necessary to fulfill Executive’s responsibilities in the position. During the Employment Term, Executive agrees that Executive shall maintain loyalty to the Company, shall take no action that would be injurious to the Company interests, and shall comply with all rules, regulations and policies of the Company. During the Employment Term, it shall not be a violation of this Agreement for Executive to (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions, (iii) manage personal investments and business endeavors, including but not limited to advisory services, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

(c) Executive’s Employability . Executive represents and warrants that: (i) Executive has the right to execute, deliver and perform Executive’s duties under this Agreement, and (ii) Executive is not a party to any other agreements, arrangements or obligations (e.g. confidentiality agreements, noncompetition agreements), whether written, oral or implied, which include terms that would limit Executive’s ability to execute, deliver and perform Executive’s duties under this Agreement or which are otherwise inconsistent with this Agreement. This warranty will remain in full force and effect throughout the Employment Term (as defined in Section 2 below).

2. Employment Term . The “ Employment Term ” under this Agreement will commence on the Effective Date and will continue, unless sooner terminated as provided by this Agreement, for one (1) year thereafter (the “ Initial Term ”); provided , however , that the Initial Term will automatically be extended for successive one (1) year terms, unless either party gives the other party written notice no less than 30 days prior to the end of the Initial Term or any extension thereof stating that this Agreement will terminate at the expiration of the Initial Term or any extension thereof. Notwithstanding anything in this Agreement to the contrary, this Agreement and Executive’s employment will terminate automatically at the conclusion of an unrenewed Initial Term or extension thereof and, in such event, the Company will have no obligation or liability to Executive thereafter except for the obligations of the Company specifically set forth in Sections 7, 8 and 15(a).

3. Compensation .

(a) Base Salary . During the Employment Term, the Company will pay Executive as compensation for Executive’s services a base salary at rate of $180,000 per year (which salary may be increased but not decreased by the Board in its sole discretion) (the “ Base Salary ”). The Base Salary will be paid in regular installments in accordance with the Company’s normal payroll practices, subject to applicable deductions and withholdings. The first and last payment will be adjusted, if necessary, to reflect a commencement or termination date other than the first or last working day of a pay period.

(b) Annual Bonus. Executive shall be eligible for an annual bonus and/or other annual incentive compensation (collectively the “ Annual Bonus ”) during the Employment Term, in accordance with any applicable executive bonus plan applicable to Executive as may be adopted by the Board in its sole discretion. Any such Annual Bonus earned by Executive shall be paid no later than seventy-five (75) days following the end of the year during which the Annual Bonus is earned, unless Executive shall elect to defer the receipt of such Annual Bonus pursuant to a Company-sponsored deferred compensation plan then in effect to the extent the Company’s bonus and deferred compensation plans allow for such a deferral.

(c) Equity Incentive/Option Plan Eligibility . Executive shall be eligible to participate in the Company’s equity incentive plan or incentive option plan, as applicable, with grants and vesting schedules as determined by the Board (at their sole discretion) from time to time. Any such grant shall be conditioned upon Executive’s execution of such documentation (such as, but not limited to, a grant notice) as the Board deems reasonably necessary in connection with such grant.

4. Employee Benefits . During the Employment Term, Executive will be considered a full-time employee and be entitled to participate in the employee benefit plans and programs currently and hereafter maintained by the Company of general applicability to other Employees of Executive’s classification at the Company (the “ Benefits ”). The Company reserves the right to cancel or change the Benefit plans and programs it offers to its employees at any time.

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5. Vacation . Executive shall be entitled to fifteen (15) days of Paid Time Off per year, which shall be adjusted annually based on years of service with the Company, in accordance with Company’s standard policy, as may be amended from time to time, with the timing and duration of specific vacations mutually and reasonably agreed to by Executive and the Company. For the purposes of this section, years of service with the Company shall be calculated starting with the effective employment date of May 1, 2008.

6. Business Expenses . During the Employment Term, the Company will reimburse Executive for reasonable, customary and documented business, travel and related expenses, incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time (the “ Expense Reimbursement ”). Reimbursement of expenses under this Section 6 shall be made within 30 days following submission of a completed expense reimbursement form and Executive shall submit such completed expense reimbursement form no later than six (6) months after such expense was incurred by Executive.

7. Termination; Severance .

(a) Termination by the Company for Cause. The Company may terminate Executive’s employment for “Cause” (defined below). If the Company terminates Executive’s employment or gives written notice of a non-renewal of this Agreement for Cause, then this Agreement shall terminate without further obligations to Executive, other than for payment of the sum of: (i) Executive’s Base Salary and bonuses, if any, through the date of termination to the extent not therefore paid; (ii) any earned but unused vacation and PTO time; and (iii) Expense Reimbursement, to the extent not theretofore paid (the sum of the amounts described in clauses (i), (ii) and (iii) shall be hereinafter referred to as “ Accrued Obligations ”).

(b) Termination by the Company other than for Cause, Death or Disability .

(i) In General . Except as otherwise provided in Section 7(b)(ii) below, if the Company terminates Executive’s employment or gives written notice of a non-renewal of this Agreement without Cause, then Executive will be entitled to receive (i) Accrued Obligations, (ii) monthly cash severance payments at the Base Salary rate, less standard withholdings and deductions, paid during the six (6) month period immediately following the termination date of Executive’s employment and (iii) continuation of Company provided health insurance coverage to Executive and his dependents covered as of the termination date, or reimbursement to Executive for equivalent COBRA coverage, paid during the six (6) month period immediately following the termination date of Executive’s employment ; provided , however , that Executive’s right to receive any of the payments set forth in clause (ii) or (iii) above will be conditioned upon Executive and Executive’s spouse, if Executive has one at the time, executing, and not revoking, a general release of claims and affirmation of Executive’s other continuing obligations under this Agreement in a form acceptable to and provided by the Company (including without limitation an unconditional release, representations that no claims have been filed, confidentiality, nondisparagement, transition, no admission, etc.). All such payments will cease as of the earlier of the date on which Executive obtains new employment or the date on which Executive engages (or assist any other person or entity to engage) in any activity competitive with the business of the Company. If Executive obtains new full-time employment during the severance period or engages in a competitive activitiy, Executive is responsible for notifying the Company immediately.

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(ii) During Change of Control Period . If, during the six (6)-month period immediately preceding or following a Change of Control, the Company terminates Executive’s employment or gives written notice of a non-renewal of this Agreement without Cause, then Executive will be entitled to receive (i) Accrued Obligations, (ii) monthly cash severance payments at the Base Salary rate, less standard withholdings and deductions, paid during the six (6) month period immediately following the termination date of Executive’s employment, and (iii) immediate vesting of all unvested outstanding options issued in the Executive’s name; provided , however , that Executive’s right to receive any the payments set forth in clause (ii) above will be conditioned upon Executive and Executive’s spouse, if Executive has one at the time, executing, and not revoking, a general release of claims and affirmation of Executive’s other continuing obligations under this Agreement in a form acceptable to and provided by the Company (including without limitation unconditional release, representations that no claims have been filed, confidentiality, nondisparagement, transition, no admission, etc.). All such payments will cease as of the earlier of the date on which Executive obtains new employment or the date on which Executive engages (or assist any other person or entity to engage) in any activity competitive with the business of the Company. If Executive obtains new full-time employment during the severance period or engages in a competitive activitiy, Executive is responsible for notifying the Company immediately.

(c) Termination by Executive Generally . Executive may terminate this Agreement at any time by written notice of resignation (a “ Resignation Notice ”) to the Board; provided that:

(i) Executive’s resignation will not become effective until the earlier of (A) 90 days after the date the Resignation Notice is given to the Board, or (B) the date on which the Company specifies that such resignation will become effective; and

(ii) For a period of 30 days following the effective date of Executive’s resignation, Executive shall make himself or herself available to the Company and/or its agents (A) for the purpose of facilitating an efficient transition of Executive’s job related responsibilities and duties to other designated individuals, and (B) to respond to questions from the Company and/or its agents regarding information and/or activities in which Executive was engaged while employed by the Company. The parties acknowledge and agree that (I) this Section 7(c)(ii) is premised on Executive’s reasonable efforts to cooperate, and the Company’s reasonable use of Executive’s time, and (II) Executive will not be compensated for Executive’s time under this Section 7(c)(ii) except that if Executive is required for more than 40 hours of service under this Section 7(c)(ii).

(d) Definitions.

(i) Cause . For purposes of this Agreement, “ Cause ” means (A) Executive’s willful dishonesty or fraud with respect to the business affairs of the Company; (B) Executive’s willful falsification of any employment or Company records; (C) Executive’s misappropriation of or intentional damage to the business or property of the Company, including the improper use or disclosure of the confidential or proprietary information of the Company (excluding damage of little or no consequence to the business or property of the Company); (D) Executive’s conviction (including any plea of guilty or nolo contendere) of a felony or crime that involves moral turpitude; (E) Executive’s willful and continued failure to comply with reasonable written directives of the company after Executive’s receipt of written notice by the Company of the refusal and a reasonable opportunity to cure (as described below); or (F) the misappropriation of any corporate opportunity, or otherwise obtaining personal profit from any transaction which is adverse to the interests of the Company or to the benefits of which the Company is entitled. The Company must give Executive written notice of its intention to terminate Executive for Cause, which notice must (I) state the grounds on which the proposed termination for Cause is based, and (II) be given no later than 90 days after the later of occurrence of the event giving rise to these grounds or the discovery thereof by the Board. Executive must have 30 days after receiving this notice to cure these grounds (if cure is possible). If Executive fails to cure these grounds within 30 days, “Cause” will exist for the Company’s termination of Executive’s employment. For purposes of this definition, no act, or failure to act, by Executive will be considered “willful” if done, or omitted to be done, by Executive in good faith and in the reasonable belief that the act or omission was in the best interest of the Company or required by applicable law.

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(ii) Change of Control . For purposes of this Agreement, a “ Change of Control ” occurs when:

(1) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended from time to time (“ Exchange Act ”)), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (“ Voting Power ”), unless such “person” was the “beneficial owner” of at least 20% of the Voting Power as of the Effective Date and does not become the “beneficial owner” of 80% or more of the Voting Power; or

(2) The Company consummates the sale, exchange, lease or other disposition of all or substantially all of its assets to a person or group of related persons, as such terms are defined or described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act; or

(3) The Company consummates a merger, reorganization, recapitalization, consolidation, or similar transaction with any other corporation or other business entity, in one transaction or a series of related transactions (except one in which (A) the holders of the Company’s voting securities outstanding immediately before such merger or consolidation continue to hold at least 50% of the voting power in the surviving entity, or (B) a transaction in which a single party (or a group of affiliated parties) acquires voting securities of the Company and the holders of voting securities of the Company immediately before the transaction do not dispose of a majority of their interests in the Company in connection with that transaction); or

(4) The Company dissolves or liquidates; or

For purposes of this Section 7(e)(ii), “Company” includes Company’s affiliates and successors.

(e) Limited Rights to Severance Payments. For clarity, Executive shall only be entitled to any severance payments of any kind pursuant to this Agreement as provided under Section 7(b) hereof. No Severance Payment obligations shall arise out of (i) a termination or nonrenewal of this Agreement by the Company with Cause, or (ii) a termination of this Agreement by the Executive except as otherwise provided under Section 7(b)(ii)(B).

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8. Death or Disability . The Employment Term and Executive’s employment will terminate upon Executive’s death or Disability. Upon termination of Executive’s employment for either death or Disability, Executive or Executive’s estate, as the case may be, will be entitled to receive any Accrued Obligations and health benefits as described in section 7(b). In addition, Executive or Executive’s estate, as the case may be, may be granted (i) additional vesting of then-unvested stock or stock options, as applicable, (ii) a proportional amount of any earned and unpaid Annual Bonus based on Executive’s performance through the date of termination, (iii) severance payments as described in section 7(b); provided, however, that any payments of items (i), (ii), and (iii) will be conditioned upon Executive (or Executive’s estate) and Executive’s spouse (if Executive has one at the time), executing, and not revoking, a general release of claims and affirmation of Executive’s other continuing obligations under this Agreement in a form acceptable to and provided by the Company (including without limitation unconditional release, representations that no claims have been filed, confidentiality, nondisparagement, transition, no admission, etc.). Upon termination of Executive’s employment due to death or Disability pursuant to this Section, Executive or Executive’s estate, as the case may be, will have no further rights to any compensation or any other benefits under this Agreement except as noted in this section. All other benefits, if any, due Executive following Executive’s termination for death or Disability will be determined in accordance with the Company’s plans and practices. For purposes of this Agreement, “ Disability ” means Executive’s inability to perform one or more of the essential functions of Executive’s job due to Executive’s physical or mental impairment, with or without reasonable accommodation as required by law, for any period aggregating more than 120 days in any 365 consecutive day period. If the Company determines that Executive has become Disabled, the Company shall notify Executive of its determination. Executive may then request an accommodation from the Company to assist in his return to work. The Company will determine whether Executive’s request can be accommodated without undue hardship no later than 30 days after Executive requests an accommodation. In the event Executive’s request cannot be accommodated, the Company may, by notice given in the manner provided in this Agreement, terminate the status of Executive as an executive and employee of the Company. Any such termination shall become effective 30 days after such notice of termination is given, unless within such 30 day period, Executive becomes capable of rendering services of the character contemplated hereby (and a physician chosen by the Company so certifies in writing) and Executive in fact resumes such services.

9. Confidential Information .

(a) Executive covenants that Executive will not use for Executive’s benefit, or disclose, communicate or divulge to, or use for the direct or indirect benefit of any Person other than the Company, any confidential, proprietary or unique information (“ Confidential Information ”) belonging to, used by or in possession of the Company including, but not limited to, the methods, policies, procedures, techniques, trade secrets, software, products, customer lists or other knowledge or processes used or developed by the Company or other information concerning the Company of which Executive became aware as a result of Executive’s employment with the Company. If Executive is uncertain about whether certain information or material is Confidential Information, then Executive shall treat that information or material as Confidential Information. The foregoing restrictions will not apply to (i) information which is or becomes, other than as a result of a breach of this Agreement or a similar confidentiality obligation generally available to the public, or (ii) the disclosure of information required pursuant to a subpoena or other legal process; provided that Executive will notify the Company, in writing, of the receipt of any such subpoena or other legal process requiring such disclosure immediately after receipt thereof and the Company will have a reasonable opportunity to quash such subpoena or other legal process prior to any disclosure by Executive. For purposes of this Agreement the word “ Person ” means and includes any: (i) natural person; (ii) firm; (iii) partnership; (iv) joint venture; (v) corporation; (vi) limited liability company; (vii) limited liability partnership; (viii) business venture; (ix) trust; (x) association; (xi) consumer organization; (xii) state, local or federal government agency, branch, department or other governmental unit; (xiii) bankruptcy or other trustee; or (xiv) any other Person.

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(b) During the Employment Term and after the expiration thereof, regardless of the reason, Executive shall not use the Confidential Information for the benefit of Executive or any other Person other than the Company. During the Employment Term, Executive shall keep the Confidential Information in the strictest confidence and share it with other Persons only for the benefit of the Company. Moreover, from and after the expiration of the Employment Term, regardless of reason, Executive will not disclose any Confidential Information to any Persons other than the Company, in whole or in part, in any matter either directly or indirectly.

(c) From and after the expiration or termination of Executive’s employment with the Company, regardless of the reason, Executive shall not make copies of any Confidential Information in any form or manner whatsoever (including, but not limited to, computer printouts, computer tapes, discs, etc.). Moreover, immediately upon and after the expiration or termination of Executive’s employment with the Company, regardless of the reason, Executive shall surrender, transfer possession of, and deliver (collectively, “ Transfer ”) to the Company all originals and all copies, in whatever form (whether written, contained on computer media or otherwise) of: (i) all Confidential Information; and (ii) all property, notes, manuals, reports, documents and other things that relate in any way, directly or indirectly, to any Confidential Information (subparts (i) and (ii) are referred to collectively as “ Information ”), as are in Executive’s possession, custody or control. If requested by the Company, the Transfer shall be accompanied by a written statement executed by Executive, certifying that: (A) all originals and all copies of all Information have been returned to the Company; and (B) Executive has not retained any original or copy of any Information. Notwithstanding anything to the contrary contained in this Section 9(c), Executive may comply with any properly issued subpoena or order of an administrative or judicial body, provided that Executive shall give the Company written notice of such subpoena or order at least 10 days prior to Executive’s compliance therewith.

(d) Executive shall also execute the Company’s standard confidentiality and invention assignment agreement, as it may be updated from time to time.

(e) All restrictive covenants contained in this Section 9 shall survive termination of this Agreement.

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10. Restrictive Covenants .

(a) No Solicitation . Executive acknowledges and agrees that the Company has devoted, and will devote, significant effort, time, and expense to the creation and development of the goodwill of the customers that they serve and the personnel that they employ, that the identities of many of the customers and prospects represent trade secrets of the Company, and that Executive will benefit from, and will be expected to nurture these relationships while Executive is employed by the Company. Executive further acknowledges and agrees that it would be unfair and would cause irreparable injury to the Company if, following the expiration or termination of Executive’s employment with the Company, regardless of the reason, Executive were to solicit any of the Company’s customers with whom Executive had direct contact during Executive’s employment with the Company to promote or sell any product or service that competes with the Company or its affiliates, or to induce any of the Company’s officers, directors, managers, members, employees, subcontractors or agents (collectively, “ Employees ”) with whom Executive had direct contact during Executive’s employment with the Company to terminate their relationship with the Company. Accordingly, Executive agrees that, during the Time Period set forth in Section 10(d) below, Executive shall not, directly or with or through any other Person, directly or indirectly, whether as an officer, director, partner, employee, agent, member, stockholder, or in any other capacity whatsoever: (i) call on, solicit, divert, interfere with or take away, or attempt to call on, solicit, divert, interfere with or take away, any of the projects, business, clients, customers or prospects (or employees of such customers or prospects) of the Company with whom Executive had contact during Executive’s employment with the Company by promoting or selling any product or service that competes with the Company or its affiliates, either for Executive’s own benefit or for any other Person; provided that, to insure Executive’s compliance with this subpart (i), promptly following the expiration or termination of Executive’s employment with the Company, regardless of the reason, the Company will provide Executive a list of customers and prospects of the Company with whom Executive had direct contact during Executive’s employment with the Company; or (ii) solicit, attempt to solicit, cause the solicitation of, induce or influence, or seek to induce or influence, any employees of the Company on the effective date of Executive’s termination with whom Executive had direct contact during Executive’s employment with the Company (excluding any Employees who are no longer in the employ of the Company), for employment by any Person other than the Company and/or to terminate their relationship with the Company.

(b) Non-Disparagement . Executive agrees that, during Executive’s employment with the Company and thereafter, Executive shall not, directly or with or through any other Person, directly or indirectly, make, issue, release, or authorize any written or oral statements to any third Person that are derogatory or defamatory in nature with respect to the Company, or any of their respective members, directors, officers, employees, subcontractors or agents.

(c) Irreparable Harm . The restrictive covenants contained in Section 9 and this Section 10 are, and shall be construed as constituting, agreements independent of any other Sections of this Agreement. Executive acknowledges and agrees that the restrictions and covenants contained in Section 9 and this Section 10 are reasonable and necessary in order to protect the Company’s legitimate business and proprietary interests, and that any violation thereof would result in irreparable injury to the Company. Accordingly, if Executive violates any of the restrictive covenants contained in Section 9 or this Section 10, then: (i) the Company shall be authorized and entitled to obtain from any Court of competent jurisdiction preliminary and permanent injunctive relief, as well as an equitable accounting of all profits and benefits arising out of such violation, which rights and remedies shall be cumulative and in addition to any other right and remedy to which the Company shall be entitled; and (ii) the Company’s obligation to make any payment or provide any benefit under this Agreement, including without limitation any severance payment, shall cease immediately.

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(d) Enforceability .

(i) Definition of “Time Period” . For purposes of Section 10, “Time Period” shall mean and include the period beginning as of the date of Executive’s employment with the Company and ending after the shorter of (A) the number of months after Executive ceases to be employed by the Company (for whatever reason, whether voluntarily or involuntarily) equal to the number of full months that Executive was actually employed by the Company under this Agreement; or (B) 12 months after Executive ceases to be employed by the Company (for whatever reason, whether voluntarily or involuntarily), provided, however, that if a court of competent jurisdiction determines that such 12-month period is unenforceable, then 6 months after Executive ceases to be employed by the Company (for whatever reason, whether voluntarily or involuntarily).

(ii) Enforceability of Covenants . Notwithstanding Section 10(d), should any court of competent jurisdiction determine that any of the covenants in this Agreement are unreasonable as to duration or scope, the covenants shall be enforceable as provided herein with respect to such duration or scope as the court determines to be reasonable.

(e) Severability . The remaining provisions of this Section 10 shall not otherwise be affected by a court’s actions described in this Section 10.

11. Intellectual Property .

(a) For purposes of this Agreement, the term “ Intellectual Property ” shall mean and include discoveries, concepts, ideas, and improvements to existing technology whether or not written down or otherwise converted to tangible form, patents, designs, trademarks, trade names, goodwill, copyrights, all rights in inventions, designs, processes, formulae, notations, improvements, know-how, plans, models, artistic works and all other forms of industrial or intellectual property (in each case in any part of the world and whether or not registered or registerable and to the fullest extent thereof and for the full period thereof and all extensions and renewals thereof) and all appplications for registration thereof and all rights and interests, present and future, thereto and therein.

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(b) Employee acknowledges that there is no Intellectual Property conceived, designed, originated, written, discovered, developed, learned, created, reduced to practice, or made (collectively, “ Develop ”, “ Develops ”, and/or “ Developed ”, as appropriate) by Executive, alone or with others, prior to execution of this Agreement that is not listed and described on Schedule B to this Agreement. Executive shall promptly disclose in writing to the Company, and to the extent necessary assign to the Company (and/or any successor, subsidiary or affiliate thereof, as determined by the Company) any and all Intellectual Property that Executive Develops during Executive’s employment with the Company, whether such is Developed solely or jointly with others, whether or not patentable or registerable under copyright or similar statutes, and whether or not such conception, design, origination, writing, discovery, development, creation, reduction to practice, or making involves the use of the time, facilities, equipment or personnel of the Company (and/or any successor, subsidiary or affiliate thereof) (“ Inventions ”). Executive acknowledges and agrees that any and all such Inventions are “works for hire” under applicable law, and all right, title and interest therein shall belong to the Company (and/or any successor, subsidiary or affiliate thereof, as determined by the Company). Executive further agrees to assign, and does hereby assign, to the Company (and/or any successor, subsidiary or affiliate thereof, as determined by the Company) all right, title and interest in and to any and all such Inventions and agrees to execute all documents deemed necessary or desirable by the Company in connection therewith, including patent and/or copyright assignments, and to cooperate both during Executive’s employment and after the termination or expiration of the Agreement, regardless of the reason, at the Company’s expense, in all further actions deemed necessary or desirable to confirm, register, protect or enforce the rights therein of the Company (and/or any successor, subsidiary or affiliate thereof). Notwithstanding anything to the contrary contained in this Section 11: (i) this Section 11 shall not apply to any Inventions of Executive that qualify fully under the provisions of California Labor Code Section 2870, the provisions of which are set forth in Schedule A , and (ii) the assignment obligations and rights do not relate to any Inventions Developed on Executive’s own time using no resources of the Company (and/or any successor, subsidiary or affiliate thereof) and which do not relate to the business, actual or reasonably contemplated, of the Company (and/or any successor, subsidiary or affiliate thereof). Executive (a) represents and warrants that Executive has identified on Schedule B all Intellectual Property, if any, Developed by Executive (alone or with others) in which Executive claims any ownership or other right, and (b) agrees that any Intellectual Property that is not identified on Schedule B was not Developed before commencement of Executive’s employment by the Company.

(c) If any Person makes any claim and/or files a lawsuit or other proceeding (collectively, “ Proceedings ”) against the Company alleging any infringement of its Intellectual Property rights by reason of the use or exploitation of any Intellectual Property rights Developed by Executive, then Company shall indemnify, defend and hold Executive harmless from such Proceedings; provided, however that (i) Executive will promptly give the Company written notice of any such Proceedings; (ii) the Company will give Executive all reasonable assistance in connection with the Proceedings at Company’s cost and expense.

12. Assignment . This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation or benefits pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. None of the obligations of Executive under this Agreement may be assigned or transferred. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

13. Notices . All notices, requests, demands and other communications called for under this Agreement will be in writing and will be delivered personally by hand or by courier, mailed by United States first-class mail, postage prepaid, or sent by facsimile or by other electronic means directed to the party to be notified at the address or facsimile number indicated for such party on the signature page to this Agreement, or at such other address or facsimile number as such party may designate by 10 days’ advance written notice to the other parties hereto. All such notices and other communications will be deemed given upon personal delivery, 3 days after the date of mailing, or upon confirmation of facsimile transfer.

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14. Severability . In the event that any provision(s) of this Agreement becomes or is declared by an arbitrator or a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without such provision(s).

15. Indemnification .

(a) The Company agrees to hold Executive harmless for, from and to defend and indemnify Executive against any and all liabilities, losses, costs, damages and expenses including without limitation, reasonable attorneys’ fees and expenses arising out of any acts and omissions of Executive in connection with Executive’s position, provided , that Executive acted in good faith and in a manner Executive reasonably believed to be in or not opposed to the best interests of the Company and/or upon advice of the Company’s counsel or directive of the Board.

(b) Executive agrees to hold the Company harmless for, from and to defend and indemnify the Company against any and all liabilities, losses, costs, damages and expenses including without limitation, reasonable attorneys’ fees and expenses arising out of Executive’s breach of this Agreement.

16. Arbitration .

(a) Executive and the Company agree that any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, will be settled by binding arbitration to be held in Costa Mesa, California in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “ Rules ”). The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator will be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having jurisdiction.

(b) The arbitrator(s) will apply California law to the merits of any dispute or claim, without reference to rules of conflicts of law. The arbitration proceedings will be governed by federal arbitration law and by the Rules, without reference to state arbitration law.

(c) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, DISCRIMINATION CLAIMS.

17. Integration/Waiver . This Agreement and the confidentiality and invention assignment agreement described in Section 9(d) above represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements whether written or oral. No waiver, alteration or modification of any of the provisions of this Agreement will be binding unless in writing and signed by duly authorized representatives of the parties hereto.

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18. Tax Withholding . All payments made pursuant to this Agreement will be subject to applicable taxes and other withholdings or deductions authorized or required by law.

19. Governing Law; Consent to Personal Jurisdiction . THIS AGREEMENT WILL BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD FOR CONFLICTS OF LAWS PRINCIPLES. EACH PARTY EXPRESSLY CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE CENTRAL DISTRICT OF CALIFORNIA SUBJECT TO THE ARBITRATION PROVISION SET FORTH IN SECTION 16.

20. Attorneys’ Fees . In the event of arbitration or litigation arising from this Agreement, the prevailing party will be entitled to such party’s reasonable attorneys’ fees and costs and expenses including expert witness fees. For purposes of this clause, the term “prevailing party” means the net winner of the dispute, taking into account the claims pursued, the claims on which the pursuing party was successful, the amount of money sought, the amount of money awarded, and offsets or counterclaims pursued (successfully or unsuccessfully) by the other party.

21. Construction of Agreement. The parties have participated jointly in the negotiating and drafting of this Agreement. If a question concerning intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship.

22. Captions. Titles or captions contained in this Agreement are for convenience and are not intended to affect the substantive meaning of any provision.

23. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

24. Code Section 409A. To the fullest extent applicable, amount and other benefits payable under this Agreement are intended to be exempt from the definition of “nonqualified deferred compensation” under section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) in accordance with one or more of the exemptions available under the final Treasury regulations promulgated under Section 409A and, notwithstanding anything in the Agreement to the contrary, to the extent that any such amount or benefit is or becomes subject to Section 409A due to a failure to qualify for an exemption from the definition of nonqualified deferred compensation in accordance with such final Treasury regulations, this Agreement must be interpreted and administered to the extent possible, or amended, to comply with the applicable requirements of Section 409A with respect to these amounts or benefits.

[Signature page follows]

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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by their duly authorized officers, as of the day and year first above written.

	“COMPANY”

	Ener-Core, Inc.

	By:
	Name:	Alain Castro
	Title:	Chief Executive Officer

	Address:

	9400 Toledo Way
	Irvine, CA 92618

	Fax #: 949-616-3399

	“EXECUTIVE”


	Douglas Hamrin

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Schedule A

California Labor Code Section 2870

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information, except for those inventions that either:

(1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or

(2) Result from any work performed by the employee for the employer.

(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

Schedule B

1. Proprietary Information . Except as set forth below, I acknowledge that at this time I know nothing about the business or proprietary information of the Company, other than information I have learned from the Company in the course of being hired: _________________

2. Reserved Creations . Except as set forth below, there are no ideas, processes, inventions, technology, writings, programs, designs, formulas, discoveries, patents, copyrights, or trademarks, or any claims, rights, or improvements to the foregoing, that I wish to exclude from the operation of this Agreement: _______________________________________________________________________________________________

	Signature:

	Print Name:	Douglas Hamrin

	Date:	June 29, 2016

Exhibit 99.1

Ener-Core and the Dresser-Rand business enter into commercial and

manufacturing license agreement for Ener-Core’s Power Oxidizers

The Dresser-Rand business gains exclusive rights to manufacture and sell Ener-Core’s

1 – 4 MW range Power Oxidizers to industrial customers

Ener-Core shifts to a licensing fee business model with the Dresser-Rand business

IRVINE, CA – June 30, 2016 -- Ener-Core, Inc. (OTCQB: ENCR), the world’s only provider of Power Oxidation technology and equipment that generates clean power from waste and low-quality gases from a wide variety of industries, signed a Commercial and Manufacturing License Agreement (CMLA) with the Dresser-Rand business, part of Siemens Power and Gas Division. The Agreement grants the Dresser-Rand business the exclusive right to manufacture Ener-Core’s Power Oxidizers within the 1 to 4 MW power capacity range and to sell the Power Oxidizers (integrated with the 2 MW KG2 turbine manufactured by the Dresser-Rand business) directly to industrial customers.

The CMLA will be effective upon the successful completion of the Full-Scale Acceptance Test of the 2 MW system, which is expected to reach completion in July.

The CMLA will replace the existing November 2014 Commercial License Agreement (CLA), which did not allow for the manufacture of the Power Oxidizer system; upon the effectiveness of the CMLA, the existing Commercial License Agreement (CLA) between the Dresser-Rand business and Ener-Core will expire.

As this new CMLA will allow the Dresser-Rand business to manufacture Ener-Core’s Power Oxidation systems, it will enable Ener-Core to reduce its manufacturing infrastructure and lower its operating costs, thereby allowing Ener-Core to focus on its core business of developing and deploying additional applications for its groundbreaking technology.

Ener-Core will collect a license fee payment for each unit that the Dresser-Rand business sells, with the precise fee payable based on a percentage of the total value of each system sold. Ener-Core expects to collect license fees between $370,000 and $600,000 per unit. The Dresser-Rand business expects manufacturing of Ener-Core’s Power Oxidizer units to begin by the end of 2016 with initial sales occurring within calendar year 2016. The Dresser-Rand business has additionally agreed to minimum sales thresholds, beginning in 2017, to sustain the terms of exclusivity. Ener-Core expects that these minimum payments, combined with Ener-Core’s reduced operating expenses, will enable Ener-Core to be cash flow positive within 12 to 18 months.

For Ener-Core, this new agreement represents the third portion of a two-year strategic evolution of its business model. In 2014, Ener-Core launched its 250kW power-stations, manufacturing in-house and selling the systems directly to industrial customers. Ener-Core then scaled up the capacity of these systems by a factor of eight times (to 2 MW) and contemporaneously signed a Commercial Licensing agreement whereby the Dresser-Rand business secured the license to sell Ener-Core’s technology coupled with the Dresser-Rand business’ KG2 turbines. This new agreement allows the Dresser-Rand business to also manufacture the Ener-Core Power Oxidizers that are sold to industrial customers.

Alain Castro, CEO of Ener-Core, said, “With the signing of the CMLA, Ener-Core continues its transformation to a low-cost, high-margin license fee business for our technology. We believe that by leveraging the economies of scale and supply chain efficiencies of large multinational companies as Siemens and the Dresser-Rand business, we can accelerate the adoption of our technology and shorten our pathway to profitability. Furthermore, given the advanced commercial pipeline of opportunities that has been developed over the last 18 months through the collaborative efforts between Ener-Core and the Dresser-Rand business’ sales teams, we believe the Dresser-Rand business will be able to start closing additional commercial sales in 2016 and rapidly ramp up to exceed the minimum threshold of annual sales beginning in 2017. Those minimum annual sales thresholds are aligned with Ener-Core’s pathway to profitability mandate. Lastly, through this shift in our business model, we can substantially reduce our costs as we will no longer have a need to maintain our current levels of manufacturing infrastructure. We are very enthusiastic about this new era for Ener-Core and are looking forward to a prosperous collaboration with our colleagues at the Dresser-Rand business. ”

Paulo Ruiz, Vice President of Commercialization for the Dresser-Rand business, said, “This Agreement marks a new phase of cooperation between our two companies. Our engineering teams have been working closely with the Ener-Core team over the last 18 months, while our commercial teams have been actively developing a strong commercial pipeline of opportunities for this breakthrough technology. We look forward to working with Ener-Core as we ramp up our manufacturing and sales activities of Power Oxidizers for the benefit of a potentially wide range of industrial customers.”

About Ener-Core

Irvine, California-based Ener-Core, Inc. (ENCR) designs, manufactures and has commercially deployed unique systems that generate base load, clean power from polluting waste gases including methane. Ener-Core's patented Power Oxidizer turns one of the most potent pollution sources into a profitable, "always on" source of clean energy. Ener-Core's technology offers an alternative to the flaring (burning) of gaseous pollution while generating operating efficiencies and reducing the costs of compliance with costly environmental regulations. Ener-Core offers the 250kW Ener-Core EcoStation EC250 ("EC250") and the larger counterpart, the 2MW Ener-Core Powerstation KG2-3GEF/PO.

About Dresser-Rand

The Dresser-Rand business, part of Siemens Power and Gas (PG), is a leading supplier of mission-critical, high-speed rotating equipment solutions to the worldwide oil, gas, petrochemical, and process industries. As part of the global Siemens family, the Dresser-Rand business offers an equipment portfolio that includes turbo and reciprocating compressors; steam turbines; industrial and aero-derivative gas turbines; high-speed engines; and modular power substations. With the world's largest installed base, one of the world's largest technical support and service center networks, and a presence in more than 150 countries worldwide, the Dresser-Rand business delivers local solutions and services on a global scale.

Cautionary Statement Regarding Forward-Looking Statements

Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Information provided by Ener-Core, Inc., such as online or printed documents, publications or information available via its website may contain forward-looking statements that involve risks, uncertainties, assumptions, and other factors, which, if they do not materialize or prove correct, could cause its results to differ materially from historical results, or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words "plans," "expects," "believes," "strategy," "opportunity," "anticipates," “potentially,” “should,” and similar words. These statements may include, among others, plans, strategies, and objectives of management for future operations; any statements regarding proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statements of assumptions underlying any of the foregoing. The information contained in this release is as of the date of this press release. Except as otherwise expressly referenced herein, Ener-Core assumes no obligation to update forward-looking statements.

Contact:

Dian Griesel Int’l.

212-825-3210

Investor Relations:

Cheryl Schneider

Media Relations:

Susan Forman

Exhibit 99.2

Ener-Core Appoints Stephen Markscheid to Board of Directors

Brings More Than 30 Years of Global Experience in Corporate Finance, Industrials and Clean Tech

IRVINE, CA – July 06, 2016 – Ener-Core, Inc. (OTCQB: ENCR), the world’s only provider of Power Oxidation technology and equipment that generates clean power from waste and low-quality gases from a wide variety of industries, appointed Stephen Markscheid to its Board of Directors, effective immediately. This brings the total number of Ener-Core Board members to seven.

Mr. Markscheid is a corporate finance professional who brings to Ener-Core more than 30 years of experience working in the U.S., Asia and Europe, with expertise in a wide range of sectors including clean tech. He currently serves as a partner at Wilton Partners, a Shanghai-based financial advisory firm. He previously worked at GE Capital for eight years, where he led business development activity in China and Asia Pacific. Prior to GE, he worked with the Boston Consulting Group throughout Asia. He was also a commercial banker for 10 years in London, Chicago, New York, Hong Kong and Beijing with Chase Manhattan Bank and First National Bank of Chicago.

Mr. Markscheid serves as an independent director on the boards of Jinko Solar, Inc., the world’s largest solar panel manufacturer; CNinsure, China’s largest independent insurance broker; ChinaCast Education Corporation; and Asian Capital Holdings, Limited. He also serves on the advisory boards of Clean Energy Trust, a Chicago-based non-profit clean tech accelerator, Kearsage Energy, a Boston-based renewable energy developer, and Intelligent Generation, a renewable energy software company. Mr. Markscheid is a trustee of Princeton-in-Asia, a non-profit service organization. He earned an MBA from Columbia University, an MA from Johns Hopkins University and a BA from Princeton University.

Alain Castro, CEO of Ener-Core, said, “Stephen brings a tremendous amount of experience to Ener-Core and we are truly privileged to have him serve on our Board. His sterling track record in helping guide emerging clean tech companies make him a natural choice to help guide Ener-Core through the next phase of its growth, particularly now that we are licensing the manufacturing of our technology to partners. We look forward to him joining our team and contributing to our business through his wealth of knowledge and experience in the months and years ahead.”

Mr. Markscheid said, “I have been following Ener-Core’s business for the last three years and have been particularly impressed with how management executed a strategic conversion from an in-house manufacturer of relatively small 250 kW power systems to much larger and more profitable systems (2 MW). Now, with a new business model in which the sales and the manufacturing are licensed to globally recognized leaders such as Dresser-Rand and Siemens, Ener-Core is poised to benefit from a much faster route to profitability. With my experience as independent director of several US-listed renewable energy firms, I am well aware of what it takes for OEMs of alternative energy technology companies to grow into global leadership positions. I am excited about working with Ener-Core’s management team to continue executing on its business strategy.”

About Ener-Core

Ener-Core offers the 250kW Ener-Core EcoStation EC250 ("EC250") and the larger counterpart, the 2MW Ener-Core Powerstation KG2-3GEF/PO.

Cautionary Statement Regarding Forward-Looking Statements

Forward-looking statements contained in this press release are made under the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. Information provided by Ener-Core, Inc., such as online or printed documents, publications or information available via its website may contain forward-looking statements that involve risks, uncertainties, assumptions, and other factors, which, if they do not materialize or prove correct, could cause its results to differ materially from historical results, or those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words "planned," "expects," "believes," "strategy," "opportunity," "anticipates," and similar words. These statements may include, among others, plans, strategies, and objectives of management for future operations; any statements regarding proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statements of assumptions underlying any of the foregoing. The information contained in this release is as of the date of this press release. Except as otherwise expressly referenced herein, Ener-Core assumes no obligation to update forward-looking statements.

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