Exhibit 10.2

 

FORM OF LOCK-UP AGREEMENT

 

ENER-CORE, INC.

 

April __, 2015

 

Ener-Core, Inc.

9400 Toledo Way

Irvine, California 92618

Attention: Mr. Domonic J. Carney, CFO

E-mail: DJ.Carney@ener-core.com

 

  Re: Ener-Core, Inc. - Lock-Up Agreement

 

Dear Sirs:

 

Reference is hereby made to that certain Exchange Agreement (the "Exchange
Agreement"), dated as of April __, 2015 (the “Exchange Date”) by and among
Ener-Core, Inc. (the "Company") and the undersigned, with respect to the
exchange of (i) Warrants issued pursuant to that certain Securities Purchase
Agreement dated as of April 15, 2014 by and among the Company, the undersigned
and certain other investors party thereto (the "Warrants"), representing the
right to acquire shares of Company's common stock, par value $0.0001 per share
(the "Common Stock"), for (ii) a number of shares of Common Stock set forth on
the undersigned's signature page attached to the Exchange Agreement (the shares
of Common Stock issued to the undersigned pursuant to the Exchange Agreement are
referred to herein as the "Exchange Shares"). Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the
Exchange Agreement.

 

For good and valuable consideration, the sufficiency of which is hereby
acknowledged and agreed, the undersigned agrees that, commencing on the Exchange
Date and ending on the earlier of (i) the sixtieth (60th) calendar day following
the Exchange Date and (ii) the first date that the Weighted Average Price (as
defined in the Warrants) of the Common Stock equals or exceeds $0.30 (as
adjusted for any stock split, stock dividend, stock combination,
reclassification or similar transaction occurring after the Exchange Date) for
each of ten (10) consecutive Trading Days (as defined in the Warrants) (the
"Lock-Up Period"), the undersigned will not, and will cause all affiliates (as
defined in Rule 144 promulgated under the Securities Act of 1933, as amended) of
the undersigned not to, (i) sell, offer to sell, contract or agree to sell,
hypothecate, pledge (other than pursuant to customary prime brokerage
arrangements), grant any option to purchase, make any short sale or otherwise
dispose of or agree to dispose of, directly or indirectly, any Exchange Shares
and any securities received in substitution or replacement of the Exchange
Shares (collectively, the "Lock-Up Shares"), or establish or increase a put
equivalent position or liquidate or decrease a call equivalent position within
the meaning of Section 16 of the Securities and Exchange Act of 1934, as amended
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder with respect to any Lock-Up Shares, or (ii) enter into
any swap or other arrangement that transfers to another, in whole or in part,
any of the economic consequences of ownership of any of the Lock-Up Shares,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of shares of Common Stock or other securities, in cash or
otherwise or (iii) make any offer, sale, pledge (other than pursuant to
customary prime brokerage arrangements) or disposition, or enter into any
transaction, swap, hedge (including, without limitation, any short sale) or
other arrangement relating to any Lock-Up Shares or (iv) publicly disclose the
intention to do any of the foregoing. Notwithstanding anything to the contrary
contained in this Lock-Up Agreement, the Company and the undersigned hereby
acknowledge and agree that the provisions of this Lock-Up Agreement shall not
apply to any securities of the Company other than the Lock-Up Shares.

 

 

 

 

The foregoing restriction is expressly agreed to preclude the undersigned, and
any affiliate of the undersigned, from engaging in any hedging or other
transaction which is designed to or which reasonably could be expected to lead
to or result in a sale or disposition of the Lock-Up Shares even if the Lock-Up
Shares would be disposed of by someone other than the undersigned. Such
prohibited hedging or other transactions would include, without limitation, any
short sale or any purchase, sale or grant of any right (including, without
limitation, any put or call option) with respect to any of the Lock-Up Shares or
with respect to any security that includes, relates to, or derives any
significant part of its value from the Lock-Up Shares.

 

Notwithstanding the foregoing, the undersigned may transfer during the Lock-Up
Period (i) the Lock-Up Shares as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound in writing by the restrictions set
forth herein, or (ii) the Lock-Up Shares to any trust for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned, provided
that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value. For purposes of this Lock-Up Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. The undersigned now has, and, except as otherwise
expressly contemplated or permitted by the terms hereof, for the duration of the
Lock-Up Period will have, good and marketable title to the Lock-Up Shares, free
and clear of all liens, encumbrances, and claims whatsoever (other than the
restrictions contained herein). The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company's transfer agent (the
"Transfer Agent") and registrar against the transfer of the Lock-Up Shares
except in compliance with the foregoing restrictions.

 

In order to enforce this covenant, the Company shall impose irrevocable
stop-transfer instructions preventing the Transfer Agent from effecting any
actions in violation of this Lock-Up Agreement.

 

The undersigned hereby represents that the undersigned has the power and
authority to execute, deliver and perform this Lock-Up Agreement and that the
undersigned has received adequate consideration therefor.

 

The undersigned understands and agrees that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.

 

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This Lock-Up Agreement may be executed in two counterparts, each of which shall
be deemed an original but both of which shall be considered one and the same
instrument. No consideration shall be offered or paid to any Other Holder to
amend or consent to a waiver or modification of any provision of any of lock-up
agreement executed contemporaneously with this Lock-Up Agreement unless the same
consideration (other than the reimbursement of legal fees) also is offered to
the undersigned. Notwithstanding anything to the contrary set forth in this
Lock-Up Agreement, if any Other Holder (x) is or becomes subject to a less
restrictive lock-up agreement than the undersigned (including, without
limitation, through any waiver, amendment, modification or termination of any
provision thereof) or (y) ceases to be bound any provision(s) of a lock-up
agreement, the undersigned shall automatically, without any action by the
undersigned or the Company, be subject to the terms of such less restrictive
lock-up agreement in the case of clause (x) or cease to be bound by such
provision(s) in the case of clause (y) (as applicable).

 

This Lock-Up Agreement will be governed by and construed in accordance with the
laws of the State of New York, without giving effect to any choice of law or
conflicting provision or rule (whether of the State of New York, or any other
jurisdiction) that would cause the laws of any jurisdiction other than the State
of New York to be applied. In furtherance of the foregoing, the internal laws of
the State of New York will control the interpretation and construction of this
Lock-Up Agreement, even if under such jurisdiction's choice of law or conflict
of law analysis, the substantive law of some other jurisdiction would ordinarily
apply.

 

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  Very truly yours,           Exact Name of Shareholder           Authorized
Signature           Title

 

Agreed to and Acknowledged:       ENER-CORE, INC.       By:       Name:    
Title:  

 

 

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