Document:

Exhibit 4.1

 

AMENDMENT AGREEMENT

 

This AMENDMENT
AGREEMENT (the “Agreement”), dated as of November 23, 2016, is made by and between Ener-Core, Inc., a Delaware
corporation, with headquarters located at 9400 Toledo Way, Irvine, California 92618 (the “Company”), and
the investor listed on the signature page attached hereto (the “Holder”). Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the April 2015 SPA and May 2015 SPA (each as defined
below), as applicable.

 

WHEREAS:

 

A.         Reference is made to that certain Securities Purchase Agreement dated as of April 22, 2015, by and among the Company, the Holder
(if applicable) and the other investors (the “April 2015 Other Holders”) listed on the signature pages attached
thereto (the “April 2015 SPA”) and, if applicable, the Senior Secured Convertible Notes issued to the Holder
pursuant thereto (as amended from time to time prior to the date hereof, the “April 2015 Notes”);

 

B.          Reference is made to that certain Securities Purchase Agreement dated as of May 7, 2015, by and among the Company, the Holder (if
applicable) and the other investors (the “May 2015 Other Holders” and together with the April 2015 Other Holders,
the “Other Holders” and together with the Holder, the “Holders”) listed on the signature
pages attached thereto (the “May 2015 SPA” and together with the April 2015 SPA, individually, an “SPA”
and collectively, the “SPAs”), and, if applicable, the Senior Secured Convertible Notes issued to the Holder
pursuant thereto (as amended from time to time prior to the date hereof, the “May 2015 Notes” and together with
the April 2015 Notes, the “2015 Notes”);

 

C.         The Company and the Holder desire to amend and restate each of the 2015 Notes as set forth on Exhibit A attached hereto
(the 2015 Notes as amended and restated pursuant to this Agreement and the Other Agreements, the “Notes”).

 

D.         In compliance with Section 15 of the 2015 Notes, this Agreement shall only be effective upon the execution and delivery of this
Agreement and agreements in form and substance identical to this Agreement (other than with respect to the identity of the Holder
and any provision regarding the reimbursement of legal fees) (the “Other Agreements” and together with this
Agreement, the “Agreements”) by other holders of the 2015 Notes (each an “Other Holder”)
representing on the Closing Date at least the Required Holders (as defined in each of the 2015 Notes) (such time, the “Effective
Time”).

 

NOW THEREFORE,
in consideration of the foregoing mutual premises and the covenants and agreements hereinafter set forth, and for other good and
valuable consideration, the receipt, and legal adequacy of which is hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

 

	 	1.	INCORPORATION OF PREMISES; CAPITALIZED TERMS.

 

(a)          
The Company and the Holder agree that the premises of this Agreement set forth above are incorporated into and form an integral
part of this Agreement.

 

      

     

    

 

(b)            Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the applicable SPA.

  

	 	2.	AMENDMENTS. 

 

(a)          
2015 Notes. As of the Effective Time and subject to the satisfaction (or waiver) of the conditions set forth in Section
5 and 6 below, the Company and the Holder hereby agree that each of the 2015 Notes shall be amended and restated as set forth on
Exhibit A attached hereto.

 

(b)           Applicable Warrants. Pursuant to Section 2(a) of each of the Warrants set forth on Schedule 2(b) attached hereto (the “Applicable
Warrants”), effective as of the Warrant Effective Time (as defined below), the exercise price of each of the Applicable Warrants
shall be adjusted from $4.00 per share to $3.00 per share (as adjusted for any stock dividend, stock split, stock combination,
reclassification or similar transaction occurring after the date hereof). As used herein, “Warrant Effective Time”
means the time of execution and delivery of this Agreement and agreements in form and substance identical to this Agreement (other
than with respect to the identity of the Holder and any provision regarding the reimbursement of legal fees) by holders of the
Applicable Warrants representing on the Closing Date at least the Required Holders (as defined in each of the Applicable Warrants).

 

(c)          
Warrant Issuances. As of the Effective Time and subject to the satisfaction (or waiver) of the conditions set forth in Section
5 and 6 below, the Company and the Holder hereby agree that each Holder and each Other Holder shall be issued Warrants, in substantially
the form attached hereto as Exhibit B (the “Amendment Warrants”), representing the right to acquire 4
shares of Common Stock for each $10 aggregate principal amount of Notes to be amended and restated pursuant to this Agreement.

 

	 	3.	AMENDMENT; CLOSING; no novation; ratification; conflicts.

 

(a)          
Procedure. At the Closing (as defined in Section 3(b) hereof), the Company shall duly execute and deliver to the Holder
the Notes (with each Holder to receive $1.00 principal amount of Notes for each $0.90 principal amount of 2015 Notes held by such
Holder). As soon as practicable following the Closing Date (as defined in Section 3(b)), the Holder shall return the original certificate(s)
of the 2015 Notes to the Company.

 

(b)           Closing. The date and time of the closing (the “Closing”) of the transactions specified in Sections 2
and 3(a) above (the “Closing Date”) shall be at the Effective Time (or such later date and time as is mutually
agreed to by the Company and the Holder), subject to the notification of satisfaction (or waiver) of the conditions to Closing
set forth in Sections 5 and 6 hereof. The Closing shall occur at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue,
New York, New York 10022 and may be undertaken remotely by electronic exchange of documentation.

 

(c)          
No Novation. This Agreement is not in any way intended to (1) constitute a novation of the obligations and liabilities existing
under the 2015 Notes or evidence payment of all or any portion of such obligations and liabilities thereunder or (2) impair or
affect the liens and/or security interests granted, pledged or assigned by the Grantors (as defined in the Security Agreement (as
defined in each SPA)) to the Collateral Agent (as defined in the Security Agreement (as defined in each SPA)) for the Holders in
accordance with the terms of the Security Agreement (as defined in each SPA) and the various other security documents, executed
in connection therewith or related thereto. The Grantors (as defined in the Security Agreement (as defined in each SPA)) acknowledge
their prior grant of liens and security interests under the Security Agreement (as defined in each SPA) and confirm that such liens
continue to secure the Obligations (as defined in the Security Agreement (as defined in each SPA)) under the Notes.

 

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(d)           Ratification. Except as otherwise expressly provided herein, the 2015 Notes and each other Transaction Document (as defined
in each SPA), are, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except
that on and after the Closing Date (i) all references in any of the 2015 Notes to “this Note”, “hereto”,
“hereof”, “hereunder” or words of like import referring to such 2015 Notes shall mean such 2015 Notes as
amended and restated by the Agreements, and (iii) all references in the other Transaction Documents, to any “Notes”
(and corollary references to “thereto”, “thereof”, “thereunder” or words of like import referring
to any of the 2015 Notes) shall mean the applicable 2015 Notes as amended and restated by the Agreements. Except as expressly set
forth herein, this Agreement shall not be deemed to be a waiver, amendment or modification of any provisions of any of the 2015
Notes, or of any right, power or remedy of the Holder, or constitute a waiver, amendment or modification of any provision of such
2015 Notes (except to the extent explicitly set forth herein), or any other document, instrument and/or agreement executed or delivered
in connection therewith, in each case whether arising before or after the date hereof or as a result of performance hereunder or
thereunder, all of which (except as specified herein) remain in full force and effect.

 

(e)          
Conflicts. In the event of any conflict between: (i) this Agreement; and (ii) the 2015 Notes, this Agreement shall control.

 

	 	4.	REPRESENTATIONS, AGREEMENTS, WARRANTIES AND COVENANTS.

 

(a)          
Holder Representations, Warranties and Covenants. The Holder hereby represents and warrants to the Company that:

 

(i)           
Authorization; Enforcement; Validity. The Holder has the power and authority to execute and deliver this Agreement and perform
its obligations hereunder; and this Agreement and the transactions contemplated hereby have been duly authorized by the Holder.
This Agreement has been duly and validly authorized, executed and delivered on behalf of the Holder and shall constitute the legal,
valid and binding obligations of the Holder enforceable against the Holder in accordance with its terms, except as such enforceability
may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(ii)           No Conflicts. The execution, delivery and performance by the Holder of this Agreement and the consummation by the Holder
of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Holder or (ii)
conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Holder is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to the Holder, except in the case of clauses (ii) and (iii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse
effect on the ability of the Holder to perform its obligations hereunder.

 

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(b)           Company Representations, Warranties and Covenants. The Company hereby represents, warrants, agrees and covenants, as applicable,
to and with the Holder that:

 

(i)           
Organization and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized and validly
existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authorization
to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of
the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary,
except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material
Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material adverse effect on the
business, properties, assets, liabilities, operations, results of operations, condition (financial or otherwise) or prospects of
the Company and its Subsidiaries, individually or taken as a whole, or on the transactions contemplated hereby or by the agreements
and instruments to be entered into in connection herewith, or on the authority or ability of the Company to perform any of its
obligations hereunder.

 

(ii)           Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and perform
its obligations under this Agreement and to amend and restate the 2015 Notes in accordance with the terms hereof. The execution
and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, including,
without limitation, the amendment and restatement of the 2015 Notes, have been duly authorized by the Company’s Board of
Directors and no further filing, consent or authorization is required by the Company, its Board of Directors or its stockholders.
This Agreement has been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(iii)          No Conflicts. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby (including, without limitation, the amendment and restatement of the 2015 Notes) will not
(i) result in a violation of the Company’ Certificate of Incorporation or Bylaws or other organizational documents of the
Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the articles of association
or bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal and state securities
laws and regulations and the rules and regulations of Principal Market and including all applicable foreign, federal laws, rules
and regulations) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of
its Subsidiaries is bound or affected.

 

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(iv)          Consents. The Company is not required to obtain any consent from, authorization or order of, or make any filing or registration
with any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute,
deliver or perform any of its obligations under or contemplated by this Agreement in accordance with the terms hereof. All consents,
authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have
been obtained or effected on or prior to the Closing Date, and the Company is unaware of any facts or circumstances which might
prevent the Company from obtaining or effecting any of the registration, application or filings contemplated by this Agreement.
The Company is not in violation of the requirements of the Principal Market and has no knowledge of any facts or circumstances
which could reasonably lead to delisting or suspension of the Common Stock in the foreseeable future. The amendment and restatement
of the 2015 Notes as contemplated hereby shall not have the effect of delisting or suspending the Common Stock from the Principal
Market.

 

(v)           Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market,
any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s Subsidiaries or any
of the Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in
their capacities as such, except as set forth in Schedule 4(b)(v). The matters set forth in Schedule 4(b)(v) would
not reasonably be expected to have a Material Adverse Effect.

 

(vi)          Other Agreements. The Company will not amend any 2015 Notes of any Other Holders with a more favorable terms than is provided
to the Holder hereunder or offer any consideration (other than the reimbursement of legal fees) to any Other Holder without offering
the same consideration to the Holder.

 

(vii)         SEC Filings. As of their respective filing dates, the Company’s filings with the SEC under the 1934 Act since December
31, 2015 (the “SEC Documents”), complied in all material respects with the requirements of the 1934 Act and
the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at
the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading.  The Company represents that, as of the date hereof, no material event or circumstance has occurred
which would be required to be publicly disclosed or announced on a Current Report on Form 8-K, either as of the date hereof or
solely with the passage of time by the Company but which has not been so publicly announced or disclosed.

 

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(viii)        Rule 144. For purposes of Rule 144 of the 1933 Act, the Company acknowledges and agrees that the holding period of the April
2015 Notes, as amended by the Agreements, commenced on April 23, 2015 and that the holding period of the May 2015 Notes, as amended
by the Agreements, commenced on May 7, 2015 and the Company agrees not to take a position contrary thereto or inconsistent therewith.

 

(ix)           Disclosure of Transactions and Other Material Information. The Company shall file a current report on Form 8-K on or before
8:30 a.m., New York City time, on the first Business Day after both this Agreement and the Other Agreements have been duly executed
and delivered, in the form required by the 1934 Act, relating to the transactions contemplated by this Agreement and the Other
Agreements and attaching a form of this Agreement (including, without limitation, all schedules and exhibits to such agreement,
if any, the “8-K Filing”) as an exhibit to such filing. From and after the filing of the 8-K Filing with the
SEC, the Holder shall not be in possession of any material, nonpublic information received from the Company, any of its Subsidiaries
or any of their respective officers, directors, affiliates, employees or agents, that is not disclosed in the 8-K Filing. In addition,
effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations
under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers,
directors, affiliates, employees or agents, on the one hand, and the Holder or any of its affiliates, on the other hand, shall
terminate and be of no further force of effect. The Company shall not, and shall cause each of its Subsidiaries and its and each
of their respective officers, directors, affiliates, employees and agents, not to, provide the Holder with any material, nonpublic
information regarding the Company or any of its Subsidiaries from and after the date hereof without the express prior written consent
of the Holder. To the extent that the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates
employees or agents delivers any material, non-public information to the Holder without the Holder’s express prior written
consent, the Company hereby covenants and agrees that the Holder’s shall not have any duty of confidentiality to the Company,
any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents with respect to, or a duty
to the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents not to
trade on the basis of, such material, non-public information. The Company understands and confirms that the Holder will rely on
the foregoing representations in effecting transactions in securities of the Company.

 

(x)            Reporting Status. Until the earlier of (i) the date on which the Holder has sold all the shares of Common Stock issuable
upon conversion of the Notes (without regard to any limitation on conversions of the Notes) and all of the shares of Common Stock
issuable upon exercise of the Amendment Warrants (without regard to any limitation on exercise of the Amendment Warrants) (collectively,
the “Underlying Shares”), and (ii) the date on which the Holder may sell all of the Underlying Shares without
restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1) (or any successor
thereto) promulgated under the 1933 Act, the Company shall timely file all reports required to be filed with the SEC pursuant to
the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the
1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.

 

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(xi)           Public Information. At any time during the period commencing on the Closing Date and ending at such time that all of the
Underlying Shares may be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance
with Rule 144(c)(1), if a registration statement is not otherwise available for the resale of all of the Underlying Shares and
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (a “Public Information Failure”) then, as partial relief for the damages to any holder
of Underlying Shares by reason of any such delay in or reduction of its ability to sell the Underlying Shares (which remedy shall
not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash
equal to two percent (2.0%) of the aggregate Fair Market Value (as defined below) of the Underlying Shares on the day of a Public
Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier
of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required
pursuant to Rule 144. The payments to which a holder shall be entitled pursuant to this Section 4(b)(xi) are referred to herein
as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of
(I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business
Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails
to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at
the rate of 1.5% per month (prorated for partial months) until paid in full. The “Fair Market Value” of each
Underlying Share will be determined based on the highest Weighted Average Price (as defined in the Notes) of the Common Stock during
the period beginning on the date of each applicable Public Information Failure and ending on the date the applicable Public Information
Failure Payment relating to such Public Information Failure is satisfied in full.

 

(xii)          Most Favored Nation. The Company hereby represents and warrants as of the date hereof and covenants and agrees from and
after the date hereof that none of the terms offered to any Person with respect to any consent, release, amendment, settlement
or waiver relating to the terms, conditions and transactions contemplated hereby (each an “Amendment Document”),
is or will be more favorable to such Person than those of the Holder and this Agreement (other than as to legal expenses). If,
and whenever on or after the date hereof, the Company enters into an Amendment Document, then (i) the Company shall provide notice
thereof to the Holder immediately following the occurrence thereof and (ii) the terms and conditions of this Agreement shall be,
without any further action by the Holder or the Company, automatically amended and modified in an economically and legally equivalent
manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth
in such Amendment Document, provided that upon written notice to the Company at any time the Holder may elect not to accept the
benefit of any such amended or modified term or condition, in which event the term or condition contained in this Agreement shall
apply to the Holder as it was in effect immediately prior to such amendment or modification as if such amendment or modification
never occurred with respect to the Holder. The provisions of this Section 4(b)(xii) shall apply similarly and equally to each Amendment
Document.

 

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	 	5.	CONDITIONS TO ComPANY’S OBLIGATIONs hereunder.

 

The obligations
of the Company to the Holder hereunder are subject to the satisfaction of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing
the Holder with prior written notice thereof:

 

(a)          
The Holder shall have duly executed this Agreement and delivered the same to the Company; and

 

(b)           The representations and warranties of the Holder shall be true and correct as of the date when made and as of the Closing Date
as though made at that time (except for representations and warranties that speak as of a specific date which shall be true and
correct as of such specified date), and the Holder shall have performed, satisfied and complied with the covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied with by the Holder at or prior to the Closing
Date.

 

	 	6.	CONDITIONS TO HOLDER’S OBLIGATIONs HEREUNDER.

 

The obligations
of the Holder hereunder are subject to the satisfaction of each of the following conditions, provided that these conditions are
for the Holder’s sole benefit and may be waived by the Holder in respect of itself at any time in its sole discretion by
providing the Company with prior written notice thereof:

 

(a)          
The Company shall have duly executed this Agreement and delivered the same to the Holder;

 

(b)           The Other Holders shall have duly executed and delivered to the Company the Other Agreements;

 

(c)          
The representations and warranties of the Company under this Agreement shall be true and correct in all respects as of the date
when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a
specific date which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied
in all respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing Date;

 

(d)           The Common Stock (i) shall be designated for quotation or listed on the Principal Market and (ii) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC
or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market
or (B) by falling below the minimum listing maintenance requirements of the Principal Market;

 

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(e)          
The Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the transactions
contemplated hereby; and

 

(f)          
Since the date hereof, no event has caused, or that could be reasonably expected to cause, a Material Adverse Effect to have occurred.

 

	 	7.	TERMINATION.

 

In the event that
the Closing shall not have occurred by on or before three (3) Business Days from the date hereof, due to the Company’s or
the Holder’s failure to satisfy the conditions set forth in Sections 5 and 6 hereof (and the nonbreaching party’s failure
to waive such unsatisfied conditions(s)), the nonbreaching party shall have the option to terminate this Agreement with respect
to such breaching party at the close of business on such date without liability of any party to any other party. Upon such termination,
the terms hereof shall be null and void.

 

	 	8.	MISCELLANEOUS.

 

(a)          
General. This Agreement shall be governed and construed under the laws of the State of New York, York (without giving effect
to the conflict of laws principles thereof). The courts of the State of New York shall have exclusive jurisdiction to resolve any
and all disputes that may arise under this Agreement. This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument. A facsimile or other electronic transmission of
this signed Agreement shall be legal and binding on all parties hereto. This Agreement shall be binding on and shall inure to the
benefit of the parties and their respective successors and permitted assigns. In the event that any provision of this Agreement
is found to be void or invalid, then such provision shall be deemed to be severable from the remaining provisions of this Agreement,
and it shall not affect the validity of the remaining provisions, which provisions shall be given full effect as if the void or
invalid provision had not been included herein so long as this Agreement as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s). The terms and provisions of this Agreement
shall inure to the benefit of and be binding upon the heirs, successors and assigns of the parties. Any amendments or modifications
hereto must be executed in writing by the Company and the Required Holders (as defined in the April 2015 Notes) and the Required
Holders (as defined in the May 2015 Notes). Each party hereto shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any
other party may reasonably request in order to carry out the intent and accomplish the purposes of this letter agreement. This
Agreement shall supersede all other prior oral or written agreements among the Holder, the Company, their Affiliates and persons
acting on their behalf with respect to the matters discussed herein and therein, and this Agreement, and the instruments referenced
herein contain the entire understanding of the parties with respect to the matters covered herein and therein. Any notices, consents,
waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will
be deemed to have been delivered if delivered pursuant to Section 9(f) of the applicable SPA.

 

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(b)           Independent Nature of Holder’s Obligations and Rights. The obligations of the Holder under this Agreement are several
and not joint with the obligations of any Other Holder, and the Holder shall not be responsible in any way for the performance
of the obligations of any Other Holder under any Other Agreement. Nothing contained herein or in any Other Agreement, and no action
taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and Other Holders as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the Holder and Other Holders are in any way acting in
concert or as a group with respect to such obligations or the transactions contemplated by this Agreement or any Other Agreement
and the Company acknowledges that, to the best of its knowledge, the Holder and the Other Holders are not acting in concert or
as a group with respect to such obligations or the transactions contemplated by this Agreement or any Other Agreement. The Company
and the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby
with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any Other Holder to
be joined as an additional party in any proceeding for such purpose.

 

(c)          
Fees and Expenses. [INSERT ONLY IN AGREEMENT OF EMPERY: The Company shall reimburse the Holder for its legal fees
and expenses in connection with the preparation and negotiation of this Agreement and transactions contemplated thereby, by paying
any such amount to Schulte Roth & Zabel LLP (the “Holder Counsel Expense”) by wire transfer of immediately
available funds in accordance with the written instructions of Schulte Roth & Zabel LLP delivered to the Company on or prior
to the Closing. The Holder Counsel Expense shall be paid by the Company whether or not the transactions contemplated by this Agreement
are consummated. Except as otherwise set forth above, each party shall pay the fees and expenses of its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery
and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection with the transactions
contemplated hereby, if any.] [INSERT ONLY IN OTHER AGREEMENTS: Each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation,
execution, delivery and performance of this Agreement. The Company shall pay all stamp and other taxes and duties levied in connection
with the transactions contemplated hereby, if any.]

  

[Signature Page Follows]

 

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IN WITNESS WHEREOF,
the Holder and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first
written above.

  

	 	COMPANY:
	 	 
	 	ENER-CORE, INC.
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:  	 

 

 

[Signature Page to Amendment Agreement]

 

      

     

    

 

IN WITNESS WHEREOF,
the Holder and the Company have caused their respective signature pages to this Agreement to be duly executed as of the date first
written above.

 

	 	HOLDER:
	 	 
	 	[          ]
	 	 
	 	By:	 
	 	 	Name:	 
	 	 	Title:  	 

  

      

     

    

 

Schedule 2(b)

 

	Issuance Date	 	 Applicable Warrants	 
	 	 	 	 
	4/23/15	 	2015 (Warrant numbers 1–11)	 
	12/30/15	 	W-A2015 (Warrant numbers 1–11)	 
	2/3/16	 	W-A2016 (Warrant numbers 1–11)	 
	3/31/16	 	W-E2016 (Warrant numbers 1–11)	 
	9/1/16	 	W-B2016 (Warrant numbers 1–5)	 
	11/1/16	 	W-BA2016 (Warrant numbers 1–5)	 

  

      

     

    

 

Schedule 4(b)(v)

 

On June 13, 2016, SAIL Venture Partners
LLC, SAIL Capital Management LLC and all SAIL affiliates owning shares of the Company (collectively, “SAIL”) filed
a Schedule 13D in which it set forth various complaints and demands with respect to the Company. The Company has disputed all such
complaints and demands; see Form 8-K filed June 14, 2016.

 

On September 23, 2016 AMTRA ENGINEERING
B.V. filed a civil lawsuit (Case number 30-2016-00877078-CU-BC-CJC) in the Superior Court, County of Orange, California against
Ener-Core Power, Inc. alleging breach of contract and breach of warranty. To date, the Company and Ener-Core Power, Inc. have
not been legally served on this matter. The lawsuit is due to a billing dispute surrounding a contractor for the Attero 250Kw
unit delivered in June 2014 to the Netherlands. The Company has accrued $50,000 for this disputed amount as of December 31, 2015
based solely on billings received. In the event of service, the Company believes it has a substantial defense including proper
jurisdiction, will dispute all demands, and has a counter-claim against the contractor for $30,000.Exhibit 4.2

 

[FORM OF WARRANT]

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.

 

ENER-CORE,
INC.

 

Warrant To
Purchase Common Stock

 

Warrant No.:                             

Number of Shares of Common Stock: _____________

Date of Issuance: December [__], 2016 (“Issuance
Date”)

 

Ener-Core, Inc., a Delaware corporation
(the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, [HOLDER], the registered holder hereof or its permitted
assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at
the Exercise Price (as defined below) then in effect, at any time or times on or after the Issuance Date, but not after 11:59 p.m.,
New York time, on the Expiration Date, (as defined below), ______________ (_____________) fully paid nonassessable shares of Common
Stock, subject to adjustment as provided herein (the “Warrant Shares”). Except as otherwise defined herein,
capitalized terms in this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange,
transfer or replacement hereof, this “Warrant”), shall have the meanings set forth in Section 17. This Warrant
is one of the Warrants to purchase Common Stock (the “Amendment Warrants”) issued pursuant to Section 2 of those
certain Amendment Agreements, dated as of November 23, 2016 (the “Subscription Date”), by and among the Company
and each holder listed on the signature pages attached thereto (the “Holders”) referred to therein (the “Amendment
Agreement”). Capitalized terms used herein and not otherwise defined shall have the definitions ascribed to such terms
in the Amendment Agreements.

 

    	 		 

     

    

 

1.       EXERCISE
OF WARRANT.

 

(a)       Mechanics
of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section
1(f)), this Warrant may be exercised by the Holder at any time or times on or after the Issuance Date, in whole or in part, by
(i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”),
of the Holder’s election to exercise this Warrant and (ii) (A) payment to the Company of an amount equal to the applicable
Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate
Exercise Price”) in cash by wire transfer of immediately available funds or (B) by notifying the Company that this Warrant
is being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the
original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than
all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares. On or before the first (1st) Trading Day following the
date on which the Company has received the Exercise Notice, the Company shall transmit by facsimile or electronic mail an acknowledgment
of confirmation of receipt of the Exercise Notice to the Holder and the Company’s transfer agent (the “Transfer
Agent”). On or before the earlier of (i) the third (3rd) Trading Day and (ii) the number of Trading Days comprising the
Standard Settlement Period, in each case, following the date on which the Holder has delivered the Exercise Notice, so long as
the Holder delivers the Aggregate Exercise Price (or notice of a Cashless Exercise) on or prior to the second (2nd) Trading Day
following the date on which the Company has received the Exercise Notice (such earlier date, the “Share Delivery Date”)
(provided that if the Aggregate Exercise Price has not been delivered by such date, the Share Delivery Date shall be one (1) Trading
Day after the Aggregate Exercise Price (or notice of a Cashless Exercise) is delivered), the Company shall (X) provided that the
Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program,
credit such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s
or its designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system, or (Y) if the Transfer Agent
is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address
as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder
or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise. The Company shall
be responsible for all fees and expenses of the Transfer Agent and all fees and expenses with respect to the issuance of Warrant
Shares via DTC, if any. Upon delivery of the Exercise Notice, the Holder shall be deemed for purposes of Rule 200(b) of Regulation
SHO to have become the owner of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates evidencing such
Warrant Shares, as the case may be, provided that the Holder delivers the Aggregate Exercise Price (or a duly executed notice
of a Cashless Exercise) on or prior to the second (2nd) Trading Day following the date on which the Exercise Notice
has been delivered to the Company. If this Warrant is physically delivered to the Company in connection with any exercise pursuant
to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number
of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three
(3) Trading Days after any exercise and at its own expense, issue to the Holder (or its designee) a new Warrant (in accordance
with Section 7(d)) representing the right to purchase the number of Warrant Shares issuable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised. No fractional Warrant Shares
are to be issued upon the exercise of this Warrant, but rather the number of Warrant Shares to be issued shall be rounded up to
the nearest whole number. The Company shall pay any and all taxes which may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant. The Company’s obligations to issue and deliver Warrant Shares in accordance
with the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any
Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination; provided, however,
that the Company shall not be required to deliver Warrant Shares with respect to an exercise prior to the Holder’s delivery
of the Aggregate Exercise Price (or notice of a Cashless Exercise) with respect to such exercise.

 

(b)       Exercise
Price. For purposes of this Warrant, “Exercise Price” means $3.00, subject to adjustment as provided herein.

 

    	 	- 2 -	 

     

    

 

(c)       Company’s
Failure to Timely Deliver Securities. If the Company shall fail for any reason or for no reason to issue to the Holder on or
prior to the Share Delivery Date either (I) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, a certificate for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common
Stock on the Company’s share register or if the Transfer Agent is participating in the DTC Fast Automated Securities Transfer
Program, to credit the Holder’s balance account with DTC, for such number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise of this Warrant or (II) if a registration statement covering the resale of all of the
Warrant Shares that are the subject of the Exercise Notice (the “Unavailable Warrant Shares”) is not available
for the resale of such Unavailable Warrant Shares and the Company fails to promptly, but in no event later than one Business Day
thereafter, (x) so notify the Holder and (y) deliver the Warrant Shares electronically without any restrictive legend by crediting
such aggregate number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the Holder’s or its
designee’s balance account with DTC through its Deposit / Withdrawal At Custodian system (the event described in the immediately
foregoing clause (II) is hereinafter referred as a “Notice Failure” and together with the event described in
clause (I) above, an “Exercise Failure”), then, in addition to all other remedies available to the Holder, and
if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving
from the Company (a “Buy-In”), then the Company shall, within three (3) Trading Days after the Holder’s
request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total
purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue
such shares of Common Stock) or credit such Holder’s balance account with DTC for such shares of Common Stock shall terminate,
or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common
Stock or credit such Holder’s balance account with DTC, as applicable, and pay cash to the Holder in an amount equal to the
excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) any trading price
of the Common Stock selected by the Holder in writing as in effect at any time during the period beginning on the applicable Exercise
Date and ending on the applicable Share Delivery Date. Nothing shall limit the Holder’s right to pursue any other remedies
available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to electronically
deliver such shares of Common Stock) upon the exercise of this Warrant as required pursuant to the terms hereof.

 

(d)       Cashless
Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering the resale of the
Unavailable Warrant Shares is not available for the resale of such Unavailable Warrant Shares, the Holder may, in its sole discretion,
elect to exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to
the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net
Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B)
- (A x C)

D

 

For purposes of the foregoing
formula:

 

	 	A =	the total number of shares with respect to which this Warrant is then being exercised.

 

    	 	- 3 -	 

     

    

 

	 	B =	the arithmetic average of the Closing Sale Prices of the Common Stock for the five (5) consecutive Trading Days ending on the
date immediately preceding the date of the Exercise Notice.

 

	 	C =	the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

	 	D =	 the Closing Sale Price of the Common Stock on the date of the Exercise Notice.

 

For purposes of Rule 144(d) promulgated
under the 1933 Act, as in effect on the date hereof, it is intended that the Warrant Shares issued in a Cashless Exercise shall
be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced,
on the date this Warrant was originally issued pursuant to an Amendment Agreement.

 

(e)       Disputes.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance
with Section 12.

 

(f)       Beneficial Ownership.
Notwithstanding anything to the contrary contained herein, the Company shall not effect the exercise of any portion of this Warrant,
and the Holder shall not have the right to exercise any portion of this Warrant, pursuant to the terms and conditions of this Warrant
and any such exercise shall be null and void and treated as if never made, to the extent that after giving effect to such exercise,
the Holder together with the other Attribution Parties collectively would beneficially own in excess of [4.99%/9.99%]1
(the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect
to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by
the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon
(A) exercise of the remaining, unexercised portion of this Warrant beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including,
without limitation, any convertible notes or convertible preferred stock or warrants, including the other Amendment Warrants) beneficially
owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation
contained in this Section 1(f). For purposes of this Section 1(f), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”). For purposes of this Warrant,
in determining the number of outstanding shares of Common Stock the Holder may acquire upon the exercise of this Warrant without
exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public
filing with the Securities and Exchange Commission (the “SEC”), as the case may be, (y) a more recent public
announcement by the Company or (3) any other written notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives an Exercise Notice
from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share
Number, the Company shall (i) notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the
extent that such Exercise Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this
Section 1(f), to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Warrant Shares to be
purchased pursuant to such Exercise Notice (the number of shares by which such purchase is reduced, the “Reduction Shares”)
and (ii) as soon as reasonably practicable, the Company shall return to the Holder any exercise price paid by the Holder for the
Reduction Shares. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1)
Business Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including this Warrant, by the Holder and any other Attribution Party since the date as of which
the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon
exercise of this Warrant results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate,
more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the
1934 Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial
ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled
ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. As soon as reasonably practicable
after the issuance of the Excess Shares has been deemed null and void, the Company shall return to the Holder the exercise price
paid by the Holder for the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase
or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i)
any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice
is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties
and not to any other holder of Amendment Warrants that is not an Attribution Party of the Holder. For purposes of clarity, the
shares of Common Stock issuable pursuant to the terms of this Warrant in excess of the Maximum Percentage shall not be deemed to
be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act.
No prior inability to exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the provisions
of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed
and implemented in a manner otherwise than in strict conformity with the terms of this Section 1(f) to the extent necessary to
correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership
limitation contained in this Section 1(f) or to make changes or supplements necessary or desirable to properly give effect to such
limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of this Warrant.

 

 

1
NTD: At the Holder’s election.

 

    	 	- 4 -	 

     

    

 

(g)       Insufficient
Authorized Shares. If at any time while this Warrant remains outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of this Warrant at least
a number of shares of Common Stock equal to 100% of the number of shares of Common Stock as shall from time to time be necessary
to effect the exercise of all of this Warrant then outstanding (the “Required Reserve Amount” and the failure
to have such sufficient number of authorized and unreserved shares of Common Stock, an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock
to an amount sufficient to allow the Company to reserve the Required Reserve Amount for this Warrant then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share
Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold
a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection
with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit
its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend
to the stockholders that they approve such proposal. Notwithstanding the foregoing, if any such time of an Authorized Share Failure,
the Company is able to obtain the written consent of a majority of the shares of its issued and outstanding Common Stock to approve
the increase in the number of authorized shares of Common Stock, the Company may satisfy this obligation by obtaining such consent
and submitting for filing with the SEC an Information Statement on Schedule 14C. In the event that upon any exercise of this Warrant,
the Company does not have sufficient authorized shares to deliver in satisfaction of such exercise, then unless the Holder elects
to void such attempted exercise, the Holder may require the Company to pay to the Holder within three (3) Trading Days of the applicable
exercise, cash in an amount equal to the product of (i) the quotient determined by dividing (x) the number of Warrant Shares that
the Company is unable to deliver pursuant to this Section 1(g), by (y) the total number of Warrant Shares issuable upon exercise
of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant) and (ii) the Black Scholes Value;
provided, that (x) references to “the day immediately following the public announcement of the applicable Fundamental Transaction”
in the definition of “Black Scholes Value” shall instead refer to “the date the Holder exercises this Warrant
and the Company cannot deliver the required number of Warrant Shares because of an Authorized Share Failure” and (y) clause
(iii) of the definition of “Black Scholes Value” shall instead refer to “the underlying price per share used
in such calculation shall be the highest Weighted Average Price during the period beginning on the date of the applicable date
of exercise and the date that the Company makes the applicable cash payment.”

 

    	 	- 5 -	 

     

    

 

2.       ADJUSTMENT OF EXERCISE
PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and the number of Warrant Shares shall be adjusted from time to time
as follows:

 

(a)       Voluntary
Adjustment By Company. The Company may at any time during the term of this Warrant, with the prior written consent of the Required
Holders, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors
of the Company.

 

(b)       Adjustment
Upon Subdivision or Combination of Shares of Common Stock. If the Company at any time on or after the Subscription Date subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock
into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced
and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Subscription Date
combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased
and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(b) shall become effective
at the close of business on the date the subdivision or combination becomes effective.

 

3.       RIGHTS
UPON DISTRIBUTION OF ASSETS. If the Company shall declare or make any dividend or other distribution of its assets (or rights
to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation,
any distribution of cash, stock or other securities, property, options, evidence of indebtedness or any other assets by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant,
including without limitation, the Maximum Percentage) immediately before the date of which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the
participation in such Distribution (provided, however, that to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the
Holder shall not be entitled to participate in such Distribution to such extent (and shall not be entitled to beneficial ownership
of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the Holder until such time or times as its right thereto would not result
in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted
such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent Distribution held similarly
in abeyance) to the same extent as if there had been no such limitation).

 

    	 	- 6 -	 

     

    

 

4.       PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.

 

(a)       Purchase
Rights. In addition to any adjustments pursuant to Section 2 above, if at any time on or after the Subscription Date and on
or prior to the Expiration Date, the Company grants, issues or sells any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any limitations or restrictions on exercise of this Warrant, including without
limitation, the Maximum Percentage) immediately before the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum
Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (and shall not be entitled
to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to such extent)
and such Purchase Right to such extent shall be held in abeyance for the benefit of the Holder until such time or times as its
right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time
or times the Holder shall be granted such right (and any Purchase Right granted, issued or sold on such initial Purchase Right
or on any subsequent Purchase Right held similarly in abeyance) to the same extent as if there had been no such limitation).

 

    	 	- 7 -	 

     

    

(b)       Fundamental
Transactions. The Company shall not enter into or be party to a Fundamental Transaction unless the Successor Entity assumes
in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the
provisions of this Section 4(b) pursuant to written agreements in form and substance satisfactory to the Required Holders and
approved by the Required Holders prior to such Fundamental Transaction, including agreements, if so requested by the Holder, to
deliver to each holder of the Amendment Warrants in exchange for such Amendment Warrants a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by the terms of such Fundamental Transaction, and exercisable
for a corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction,
and satisfactory to the Required Holders, and with an exercise price which applies the exercise price hereunder to such shares
of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction
and the value of such shares of capital stock, such adjustments to the number of shares of capital stock and such exercise price
being for the purpose of protecting the economic value of this Warrant immediately prior to the occurrence or consummation of
such Fundamental Transaction). Upon the occurrence or consummation of any Fundamental Transaction, and it shall be a required
condition to the occurrence or consummation of any Fundamental Transaction that, the Company and the Successor Entity or Successor
Entities, jointly and severally, shall succeed to, and the Company shall cause any Successor Entity or Successor Entities to jointly
and severally succeed to, and be added to the term “Company” under this Warrant (so that from and after the date of
such Fundamental Transaction, each and every provision of this Warrant referring to the “Company” shall refer instead
to each of the Company and the Successor Entity or Successor Entities, jointly and severally), and the Company and the Successor
Entity or Successor Entities, jointly and severally, may exercise every right and power of the Company prior thereto and shall
assume all of the obligations of the Company prior thereto under this Warrant with the same effect as if the Company and such
Successor Entity or Successor Entities, jointly and severally, had been named as the Company in this Warrant, and, solely at the
request of the Holder, if the Successor Entity and/or Successor Entities is/are a publicly traded corporation whose common stock
is quoted on or listed for trading on an Eligible Market, shall deliver (in addition to and without limiting any right under this
Warrant) to the Holder in exchange for this Warrant a security of the Successor Entity and/or Successor Entities evidenced by
a written instrument substantially similar in form and substance to this Warrant and exercisable for a corresponding number of
shares of capital stock of the Successor Entity and/or Successor Entities (the “Successor Capital Stock”) equivalent
to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the
exercise of this Warrant) prior to such Fundamental Transaction (such corresponding number of shares of Successor Capital Stock
to be delivered to the Holder shall be equal to the greater of (A) the quotient of (i) the aggregate dollar value of all consideration
(including cash consideration and any consideration other than cash (“Non-Cash Consideration”), in such Fundamental
Transaction, as such values are set forth in any definitive agreement for the Fundamental Transaction that has been executed at
the time of the first public announcement of the Fundamental Transaction or, if no such value is determinable from such definitive
agreement, as determined in accordance with Section 12 with the term “Non-Cash Consideration” being substituted for
the term “Exercise Price”) that the Holder would have been entitled to receive upon the happening of such Fundamental
Transaction or the record, eligibility or other determination date for the event resulting in such Fundamental Transaction, had
this Warrant been exercised immediately prior to such Fundamental Transaction or the record, eligibility or other determination
date for the event resulting in such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant)
(the “Aggregate Consideration”) divided by (ii) the per share Closing Sale Price of such Successor Capital
Stock on the Trading Day immediately prior to the consummation or occurrence of the Fundamental Transaction and (B) the product
of (i) the Aggregate Consideration and (ii) the highest exchange ratio pursuant to which any stockholder of the Company may exchange
Common Stock for Successor Capital Stock) (provided, however, to the extent that the Holder’s right to receive any such
shares of publicly traded common stock (or their equivalent) of the Successor Entity would result in the Holder and its other
Attribution Parties exceeding the Maximum Percentage, if applicable, then the Holder shall not be entitled to receive such shares
to such extent (and shall not be entitled to beneficial ownership of such shares of publicly traded common stock (or their equivalent)
of the Successor Entity as a result of such consideration to such extent) and the portion of such shares shall be held in abeyance
for the Holder until such time or times, as its right thereto would not result in the Holder and its other Attribution Parties
exceeding the Maximum Percentage, at which time or times the Holder shall be delivered such shares to the extent as if there had
been no such limitation), and such security shall be satisfactory to the Holder, and with an identical exercise price to the Exercise
Price hereunder (such adjustments to the number of shares of capital stock and such exercise price being for the purpose of protecting
after the consummation or occurrence of such Fundamental Transaction the economic value of this Warrant that was in effect immediately
prior to the consummation or occurrence of such Fundamental Transaction, as elected by the Holder solely at its option). Upon
occurrence or consummation of the Fundamental Transaction, and it shall be a required condition to the occurrence or consummation
of such Fundamental Transaction that, the Company and the Successor Entity or Successor Entities shall deliver to the Holder confirmation
that there shall be issued upon exercise of this Warrant at any time after the occurrence or consummation of the Fundamental Transaction,
as elected by the Holder solely at its option, shares of Common Stock, Successor Capital Stock or, in lieu of the shares of Common
Stock or Successor Capital Stock (or other securities, cash, assets or other property purchasable upon the exercise of this Warrant
prior to such Fundamental Transaction), such shares of stock, securities, cash, assets or any other property whatsoever (including
warrants or other purchase or subscription rights), which for purposes of clarification may continue to be shares of Common Stock,
if any, that the Holder would have been entitled to receive upon the happening of such Fundamental Transaction or the record,
eligibility or other determination date for the event resulting in such Fundamental Transaction, had this Warrant been exercised
immediately prior to such Fundamental Transaction or the record, eligibility or other determination date for the event resulting
in such Fundamental Transaction (without regard to any limitations on the exercise of this Warrant), as adjusted in accordance
with the provisions of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to the occurrence
or consummation of any Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities,
cash, assets or other property with respect to or in exchange for shares of Common Stock (a “Corporate Event”),
the Company shall make appropriate provision to insure that, and any applicable Successor Entity or Successor Entities shall ensure
that, and it shall be a required condition to the occurrence or consummation of such Corporate Event that, the Holder will thereafter
have the right to receive upon exercise of this Warrant at any time after the occurrence or consummation of the Corporate Event,
shares of Common Stock or Successor Capital Stock or, if so elected by the Holder, in lieu of the shares of Common Stock (or other
securities, cash, assets or other property) purchasable upon the exercise of this Warrant prior to such Corporate Event (but not
in lieu of such items still issuable under Sections 3 and 4(a), which shall continue to be receivable on the Common Stock or on
such shares of stock, securities, cash, assets or any other property otherwise receivable with respect to or in exchange for shares
of Common Stock), such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other
purchase or subscription rights and any shares of Common Stock) which the Holder would have been entitled to receive upon the
occurrence or consummation of such Corporate Event or the record, eligibility or other determination date for the event resulting
in such Corporate Event, had this Warrant been exercised immediately prior to such Corporate Event or the record, eligibility
or other determination date for the event resulting in such Corporate Event (without regard to any limitations on exercise of
this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the
Holder. The provisions of this Section 4(b) shall apply similarly and equally to successive Fundamental Transactions and Corporate
Events.

    	 	- 8 -	 

     

    

 

(c)       Notwithstanding
the foregoing, in the event of a Fundamental Transaction, at the request of the Holder delivered before the thirtieth (30th) day
after the occurrence or consummation of such Fundamental Transaction, the Company (or the Successor Entity) shall purchase this
Warrant from the Holder by paying to the Holder, within ten (10) Business Days after such request (or, if later, on the effective
date of the Fundamental Transaction), at the option of the Company, either (x) Common Stock (or corresponding consideration payable
as provided in the third-to-last sentence of Section 4(b) in connection with a Corporate Event, as applicable) valued at the value
of the consideration received by the shareholders in such Change of Control or (y) cash, in each case, in an amount equal to the
Black Scholes Value of the remaining unexercised portion of this Warrant on the effective date of such Fundamental Transaction..

 

5.       NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation or Bylaws,
or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of
securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
and will at all times in good faith carry out all of the provisions of this Warrant and take all action as may be required to protect
the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value
of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the Amendment Warrants
are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock,
solely for the purpose of effecting the exercise of the Amendment Warrants, 100% of the number of shares of Common Stock as shall
from time to time be necessary to effect the exercise of the Amendment Warrants then outstanding (without regard to any limitations
on exercise).

 

6.       WARRANT HOLDER NOT
DEEMED A STOCKHOLDER. Except as otherwise specifically provided herein, the Holder, solely in such Person’s capacity
as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of capital stock of the
Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s
capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance
to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition,
nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

 

7.       REISSUANCE OF WARRANTS.

 

(a)       Transfer
of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the
Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less
than the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section
7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

 

(b)       Lost,
Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by
the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the
Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase
the Warrant Shares then underlying this Warrant.

 

(c)       Exchangeable
for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the
Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion
of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Amendment
Warrants for fractional Warrant Shares shall be given.

 

    	 	- 9 -	 

     

    

 

(d)       Issuance
of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to
purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a)
or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying
the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date,
and (iv) shall have the same rights and conditions as this Warrant.

 

8.       NOTICES. The Company
shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail
a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written
notice to the Holder (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying,
the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books
or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to
holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution
or liquidation; provided in each case that such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder. It is expressly understood and agreed that the time of exercise specified by the
Holder in each Exercise Notice shall be definitive and may not be disputed or challenged by the Company. Any notices, consents,
waivers or other communications required or permitted to be given under the terms of this Warrant must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) upon receipt,
if sent by e-mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the sending party and
the sending party does not immediately receive an automatically generated message from the recipient’s e-mail server that
such e-mail could not be delivered to such recipient) or (iv) one Business Day after deposit with an overnight courier service,
in each case properly addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such
communications shall be:

 

If to the Company:

 

Ener-Core, Inc.

9400 Toledo Way

Irvine, California 92618

	 	Telephone:	(949) 616-3333

	 	Facsimile:	(949) 616-3399
	 	Attention: 	Mr. Domonic J. Carney, CFO

	 	Email:	DJ.Carney@ener-core.com

 

With a copy (for informational purposes only) to:

 

K&L Gates LLP

1 Park Plaza, 12th Floor

Irvine CA 92614

	 	Telephone:	(949) 623-3545

	 	Facsimile:	(949) 623-4477

	 	Attention:	Shoshannah D. Katz, Esq.

	 	Email:	shoshannah.katz@klgates.com

 

    	 	- 10 -	 

     

    

 

If to the Transfer Agent:

 

VStock Transfer, LLC.

18 Lafayette Place

Woodmere, New York 11598

	 	Telephone:	(212) 828-8436

	 	Facsimile:	(646) 536-3179

	 	Attention:	Yoel Goldfeder

	 	E-mail:	yoel@vstocktransfer.com

 

If to the Holder, to its address,
facsimile number and e-mail address set forth on the books and records of the Company, or to such other address, facsimile number
and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice given
to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient
of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile
machine or e-mail containing the time, date, recipient facsimile number and an image of the first page of such transmission or
(C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt
from an overnight courier service in accordance with clause (i), (ii) or (iv) above, respectively. A copy of the e-mail transmission
containing the time, date and recipient e-mail address shall be rebuttable evidence of receipt by e-mail in accordance with clause
(iii) above

 

9.       AMENDMENT AND WAIVER.
Except as otherwise provided herein, the provisions of this Warrant may be amended or waived and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written
consent of the Required Holders.

 

10.     GOVERNING LAW; JURISDICTION;
JURY TRIAL. This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of
New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York. The
Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is improper. The Company hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the
Company at the address set forth in Section 8 of the this Warrant and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Holder from bringing suit or
taking other legal action against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder,
to realize on any collateral or any other security for such obligations, or to enforce a judgment or other court ruling in favor
of the Holder. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

    	 	- 11 -	 

     

    

 

11.     CONSTRUCTION; HEADINGS.
This Warrant shall be deemed to be jointly drafted by the Company and all the Holders and shall not be construed against any Person
as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant.

 

12.     DISPUTE RESOLUTION.
In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall submit the disputed determinations or arithmetic calculations via facsimile or electronic mail within two (2) Business
Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company
are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three (3) Business
Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two
(2) Business Days submit via facsimile or electronic mail (a) the disputed determination of the Exercise Price to an independent,
reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the
Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank
or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of
the results no later than ten (10) Business Days from the time it receives the disputed determinations or calculations. Such investment
bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent
demonstrable error.

 

13.     REMEDIES, OTHER OBLIGATIONS,
BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and in addition to all other remedies
available under this Warrant and the other Transaction Documents, at law or in equity (including a decree of specific performance
and/or other injunctive relief), and nothing herein shall limit the right of the Holder to pursue actual damages for any failure
by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to
all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without
any bond or other security being required.

 

14.     TRANSFER; LEGENDS.This
Warrant and the Warrant Shares may be offered for sale, sold, transferred, pledged or assigned without the consent of the Company,
except as may otherwise be required by Section 2(f) of that certain [Securities Purchase Agreement, dated as of April 22, 2015
by and among the Company and the investors listed on the signature pages attached thereto][Securities Purchase Agreement, dated
as of May 7, 2015 by and among the Company and the investors referred to therein], as amended as of the Issuance Date.

 

15.     SEVERABILITY.If
any provision of this Warrant is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Warrant so long as this Warrant as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties
or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which
comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

 

    	 	- 12 -	 

     

    

 

16.     DISCLOSURE.
Upon receipt or delivery by the Company of any notice in accordance with the terms of this Warrant, unless the Company has in good
faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company
or its subsidiaries, the Company shall within one (1) Business Day after any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains
material, nonpublic information relating to the Company or its Subsidiaries, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters
relating to such notice do not constitute material, nonpublic information relating to the Company or its Subsidiaries.

 

17.     CERTAIN DEFINITIONS.
For purposes of this Warrant, the following terms shall have the following meanings:

 

(a)       “1933
Act” means the Securities Act of 1933, as amended.

 

(b)       “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common
control with, such Person, it being understood for purposes of this definition that “control” of a Person means the
power directly or indirectly either to vote 10% or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

(c)       “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder
funds or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by
the Holder’s investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder
or any of the foregoing, (iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any
of the foregoing and (iv) any other Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution Parties to the Maximum Percentage.

 

(d)       “Black
Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg determined as of the day immediately following the public announcement of the applicable Fundamental Transaction,
or, if the Fundamental Transaction is not publicly announced, the date the Fundamental Transaction is consummated, for pricing
purposes and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining
term of this Warrant as of such date of request, (ii) an expected volatility equal to the greater of 100% and the 100 day volatility
obtained from the HVT function on Bloomberg as of the day immediately following the public announcement of the applicable Fundamental
Transaction, or, if the Fundamental Transaction is not publicly announced, the date the Fundamental Transaction is consummated,
(iii) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if
any, plus the value of any non-cash consideration, if any, being offered in the Fundamental Transaction, (iv) a zero cost of borrow
and (v) a 360 day annualization factor.

 

    	 	- 13 -	 

     

    

 

(e)       “Bloomberg”
means Bloomberg Financial Markets.

 

(f)       “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed.

 

(g)       “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price
and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as
the case may be, then the last bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such
security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing
bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security
by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported
in the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Bid Price
or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted for any stock dividend,
stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.

 

(h)       “Common
Stock” means (i) the Company’s shares of common stock, par value $0.0001 per share, and (ii) any capital
stock into which such common stock shall have been changed or any capital stock resulting from a reclassification of such common
stock.

 

(i)        “Convertible
Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable
or exchangeable for shares of Common Stock.

 

(j)        “Eligible
Market” means the Principal Market, the NYSE MKT LLC, The NASDAQ Global Market, The NASDAQ Global Select Market, The
NASDAQ Capital Market or The New York Stock Exchange, Inc.

 

(k)       “Expiration
Date” means the date sixty (60) months after the Issuance Date or, if such date falls on a day other than a Business
Day or on which trading does not take place on the Principal Market (a “Holiday”), the next day that is not
a Holiday.

 

    	 	- 14 -	 

     

    

 

(l)       “Fundamental
Transaction” means (A) that the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or
otherwise, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving
corporation) another Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of
the properties or assets of the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation
S-X) to one or more Subject Entities, or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be
subject to or have its Common Stock be subject to or party to one or more Subject Entities making, a purchase, tender or exchange
offer that is accepted by the holders of at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding
shares of Common Stock calculated as if any shares of Common Stock held by all Subject Entities making or party to, or Affiliated
with any Subject Entities making or party to, such purchase, tender or exchange offer were not outstanding; or (z) such number
of shares of Common Stock such that all Subject Entities making or party to, or Affiliated with any Subject Entity making or party
to, such purchase, tender or exchange offer, become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934
Act) of at least 50% of the outstanding shares of Common Stock, or (iv) consummate a stock purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or
more Subject Entities whereby all such Subject Entities, individually or in the aggregate, acquire, either (x) at least 50% of
the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock calculated as if any shares
of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity making or party to,
such stock purchase agreement or other business combination were not outstanding; or (z) such number of shares of Common Stock
such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least
50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, (B) that
the Company shall, directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one or more related transactions,
allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance,
tender, tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock,
(y) at least 50% of the aggregate ordinary voting power represented by issued and outstanding Common Stock not held by all such
Subject Entities as of the Subscription Date calculated as if any shares of Common Stock held by all such Subject Entities were
not outstanding, or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common
Stock or other equity securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger
or other transaction requiring other stockholders of the Company to surrender their shares of Common Stock without approval of
the stockholders of the Company or (C) directly or indirectly, including through Subsidiaries, Affiliates or otherwise, in one
or more related transactions, the issuance of or the entering into any other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in which case this definition shall be construed and implemented
in a manner otherwise than in strict conformity with the terms of this definition to the extent necessary to correct this definition
or any portion of this definition which may be defective or inconsistent with the intended treatment of such instrument or transaction.

 

(m)      “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.

 

(n)       “Lead
Investor” means Empery Asset Master, Ltd.

 

(o)       “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

 

(p)       “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person, including such entity
whose common shares or common stock or equivalent equity security is quoted or listed on an Eligible Market (or, if so elected
by the Required Holders, any other market, exchange or quotation system), or, if there is more than one such Person or such entity,
the Person or such entity designated by the Required Holders or in the absence of such designation, such Person or entity with
the largest public market capitalization as of the date of consummation of the Fundamental Transaction.

 

    	 	- 15 -	 

     

    

 

(q)       “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization,
any other entity and a government or any department or agency thereof.

 

(r)       “Principal
Market” means the OTCQB.

 

(s)       “Required
Holders” means the holders of the Amendment Warrants representing at least a majority of the shares of Common Stock underlying
the Amendment Warrants then outstanding and shall include the Lead Investor so long as the Lead Investor or any of its Affiliates
holds any Amendment Warrants.

 

(t)       “Standard
Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s
principal Eligible Market with respect to the Common Stock that is in effect on the date of receipt of an applicable Exercise Notice.

 

(u)       “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.

 

(v)       “Successor
Entity” means one or more Person or Persons (or, if so elected by the Holder, the Company or Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or one or more Person or Persons (or, if so elected by the Holder, the
Company or the Parent Entity) with which such Fundamental Transaction shall have been entered into.

 

(w)       “Trading
Day” means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common
Stock is then traded.

 

(x)       “Weighted
Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market during the period beginning at 9:30:01 a.m., New York time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” function
or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York time (or such other time
as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York time (or such other time
as such market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the average of the highest Closing Bid Price and the lowest
closing ask price of any of the market makers for such security as reported in the OTC Link or “pink sheets” by OTC
Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Weighted Average Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved pursuant to Section 12 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.” All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar transaction during the applicable calculation period.

 

[Signature Page Follows]

 

    	 	- 16 -	 

     

    

 

IN WITNESS WHEREOF, the
Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

 

	 	ENER-CORE, INC.
	 	 	 
	 	By:	 
	 	Name:	Alain J. Castro
	 	Title:	Chief Executive Officer

 

    	 	- 17 -	 

     

    

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS

WARRANT TO PURCHASE COMMON STOCK

 

ENER-CORE,
inc. 

 

The undersigned holder hereby exercises
the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Ener-Core, Inc.,
a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Form of Exercise Price. The
Holder intends that payment of the Exercise Price shall be made as:

 

____________a
“Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

____________a
“Cashless Exercise” with respect to _______________ Warrant Shares.

 

2. Payment of Exercise Price. In
the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto,
the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms
of the Warrant.

 

3. Delivery of Warrant Shares.
The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.

 

Date: _______________ __, ______

 

	 	 
	Name of Registered Holder	 
	 	 	 

	By:	 	 
	 	Name:	 
	 	Title:	 

 

    	 		 

     

    

 

ACKNOWLEDGMENT

 

The Company hereby acknowledges
this Exercise Notice and hereby directs VStock Transfer, LLC to issue the above indicated number of shares of Common Stock in accordance
with the Transfer Agent Instructions dated November [●], 2016 from the Company and acknowledged and agreed to by VStock Transfer,
LLC.

 

	 	ENER-CORE, INC.
	 	 	 

	 	By:	 
	 	Name:	 
	 	Title:

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