Document:

ASSIGNMENT AND ASSUMPTION OF LEASE

 

 

THIS ASSIGNMENT AND
ASSUMPTION OF LEASE (this “Assignment”) is made effective as of August 1, 2013 (the “Effective
Date”), by and between FLEXENERGY, INC., a Delaware corporation, (“Assignor”), and ENER-CORE,
INC., a Nevada corporation, (“Assignee”).

 

WITNESSETH:

 

WHEREAS, Assignor
and Meehan Holdings, LLC, a California limited liability company (“Lessor”), entered into that certain
lease dated May 26, 2011 for approximately 32,649 rentable square feet in a freestanding building located at 9400 Toledo Way, Irvine,
California 92618 (“Lease”); and

 

WHEREAS, Assignor
desires to assign the Lease to Assignee and Assignee desires to accept the assignment of the Lease from Assignor and to assume
all of Lessee’s duties, obligations, and liabilities thereunder from and after the Effective Date; and

 

NOW, THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby
agree as follows:

 

1.          Assignment.
As of the Effective Date, Assignor hereby assigns, gives, grants, bargains, sells, conveys, transfers and sets over unto Assignee,
all of Assignor’s right, title, interest, duties, obligations, and liabilities in, to, and under the Lease, including, without
limitation, the Security Deposit in the amount of Twenty-Seven Thousand Six Hundred Twenty-Nine and 87/100 Dollars ($27,629.87)
and the Lessee Owned Alterations and/or Utility Installations.

 

2.          Assumption.
Assignee hereby accepts the foregoing assignment and, in consideration thereof, Assignee hereby covenants and agrees that Assignee
will assume, observe, perform, fulfill and be bound by all terms, covenants, conditions, duties, obligations, and liabilities of
Assignor, as Lessee under the Lease, which arise on and after the Effective Date. Assignee agrees that the provisions of Paragraph
12 of the Lease shall continue to be binding upon Assignee with respect to all future assignments or subleases.

 

3.          Assignor’s
Representation. The Lease attached hereto as Exhibit A and made a part hereof is a true and complete copy
and there have been no amendments or modifications thereto except as otherwise set forth in Exhibit A.

 

4.          Service
Contracts. Within five (5) days after the execution of this Assignment, Assignor agrees to provide Assignee with a copy
of each service contract relating to the Premises.

 

    	 

    	 

    

 

5.          Indemnification.
(a) Assignee hereby indemnifies and agrees to defend and hold harmless Assignor, its members, managers, stockholders, directors,
officers, successors and assigns from and against any and all actual or alleged claims, demands, liability, loss, damage, cost
and expense, including without limitation reasonable attorneys’ fees, which Assignor may or shall incur under the Lease by
reason of any failure or alleged failure of Assignee to perform or fulfill the duties, obligations, and liabilities of the Lessee
under the Lease from and after the Effective Date.

 

(b) Assignor hereby indemnifies
and agrees to defend and hold harmless Assignee its members, managers, stockholders, directors, officers, successors and assigns
from and against any and all actual or alleged claims, demands, liability, loss, damage, cost and expense, including without limitation
reasonable attorneys’ fees, which Assignee may or shall incur by reason of any failure or alleged failure of Assignor to
have complied with, performed, or fulfilled the duties, obligations, and liabilities of the Lessee under the Lease prior to the
Effective Date.

 

6.          Contribution
Agreement. As of the Effective Date, Assignor, its parents and subsidiaries (including, without limitation FlexEnergy Systems,
Inc.) hereby release and hold harmless Assignee, its parents and subsidiaries (including, without limitation, Flex Power Generation,
Inc.) from all obligations relating to the Lease arising from and after the Effective Date as set forth in that certain Contribution
Agreement effective as of November 12, 2012, which obligations include, but are not limited to, the obligation of Assignee to reimburse
Assignor for one-third (1/3) of the liabilities associated with the Lease.

 

7.          Successors
and Assigns. The terms and conditions of this Assignment shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns, subject to the restrictions on assignment in the Lease.

 

8.          Counterparts.
This Assignment may be executed in counterparts, each of which shall be deemed an original, and all of which shall constitute one
document. Facsimile and electronic signatures will be effective as original signatures with regard to this Assignment.

 

9.          Governing
Law. This Assignment shall be construed, and the rights and obligations of Assignor and
Assignee hereunder shall be determined, in accordance with the substantive laws of the State of California without regard
to any choice of law provisions therein. Venue is proper in the county in which the Premises is located.

 

10.        Effectiveness
of Assignment. Both Assignor and Assignee acknowledge that this Assignment is not effective unless and until the Lessor
under this Lease has consented hereto in writing (the “Approval Date”). Within two (2) business days
after the Approval Date, Assignee shall pay to Assignor all of the Rent and other charges paid by Assignor to Lessor under the
Lease for the period from and after the Effective Date. Assignor has provided a list of the other charges to Assignee prior to
the date hereof.

 

11.        Construction.
Any capitalized terms used in this Assignment and not defined shall have the same meaning as set forth in the Lease unless otherwise
expressly set forth herein to the contrary.

 

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12.        Attorneys’
Fees. If either party hereto brings an action or proceeding against the other party to enforce or interpret any of the
covenants, conditions, agreements, or other provisions of this Assignment, the prevailing party shall be entitled to recover as
an element of its cost of suit, and not as damages, actual attorneys’ fees to be fixed by the court. The “prevailing
party” shall be the party who is entitled to recover his costs of suit, whether or not the suit proceeds to final judgment.
The party not entitled to recover his costs shall not recover attorneys’ fees.

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Assignment to be duly executed on the day and year first set forth above.

 

	ASSIGNOR:	 	ASSIGNEE:
	 	 	 
	FLEXENERGY, INC.,	 	ENER-CORE, INC.,
	a Delaware corporation	 	a Nevada corporation
	 	 	 
	By:	/s/ Mark G. Schnepel	 	By:	/s/ Boris A. Maslov
	Name:	 Mark G. Schnepel	 	Name:	 Boris  Maslov
	Title:	President	 	Title:	President

 

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EXHIBIT A

 

LEASE

 

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    	A-19LESSOR’S CONSENT TO ASSIGNMENT
AND SUBLEASE

 

MEEHAN HOLDINGS, LLC,
a California limited liability company (“Lessor”), hereby consents to: (a) the assignment by FLEXENERGY,
INC., a Delaware corporation (“Lessee”), the tenant under a lease dated as of May 26, 2011 for approximately
32,649 rentable square feet in a freestanding building located at 9400 Toledo Way, Irvine, California 92618 (“Lease”),
of the Lease in its entirety to ENER-CORE, INC., a Nevada corporation (“Assignee”), pursuant to that
certain Assignment and Assumption of Lease (“Assignment”), a copy of which is attached hereto as Exhibit
A and incorporated herein and (b) the sublease of a portion of the Premises by Assignee to Lessee, pursuant to that certain
Sublease Agreement (“Sublease”), a copy of which is attached hereto as Exhibit B and incorporated
herein. Lessor’s consent to the Assignment and Sublease (“Consent”) is subject to all of the terms
and conditions contained herein. All capitalized terms used herein and not defined shall have the meaning ascribed to such terms
in the Lease. This Consent is effective as of the date set forth next to Lessor’s signature below (“Effective
Date”).

 

1.          Lessee
and Assignee jointly and severally covenant to deliver to Lessor contemporaneously with the delivery of an executed original copy
of this Consent, a fully executed copy of each of the Assignment and Sublease. Lessor’s Consent is conditioned upon Lessor’s
receipt of a fully executed copy of each of the Assignment and Sublease.

 

2.          In
the event of any inconsistency between the terms and conditions of this Consent and the terms and conditions of the Lease, the
terms and conditions of this Consent shall prevail as between Lessor, on the one hand, and Assignee and/or Lessee, on the other
hand.

 

3.          Nothing
herein contained shall be construed to modify, waive, impair or affect any of the provisions, covenants, agreements, terms or conditions
contained in the Lease (except as may be herein expressly provided). All provisions, covenants, agreements, terms and conditions
of the Lease are hereby declared by Lessor, Lessee and Assignee to be in full force and effect and Lessee and Lessor further declare
and acknowledge that neither party is in default under any of its obligations under the Lease.

4.          Notwithstanding
Paragraph 12.2 of the Lease, Lessee is hereby released of all obligations that accrue under the Lease on or after the Effective
Date. Lessee shall remain responsible for all obligations that accrued under the Lease prior to the Effective Date.

 

5.          Notwithstanding
Paragraph 39.2 of the Lease, Lessor hereby consents and agrees to the assignment of the Option to Extend contained in Paragraph
56 of the Lease by Lessee to Assignee. Assignee shall be entitled to exercise the Option to Extend in accordance with the terms
of the Lease.

 

6.          Lessee
and Assignee jointly and severally covenant to deliver to Lessor contemporaneously with the delivery of an executed original copy
of this Consent, a check or checks from Lessee and/or Assignee, subject to collection, made payable to the order of Lessor, in
an amount equal to $500.00, representing Lessor’s administrative fees in connection with the granting of this Consent, plus
such additional amount as may be requested by Lessor to reimburse Lessor for the reasonable attorneys’ fees incurred
in connection with the granting of this Consent.

 

    	 

    	 

    

 

7.          This
Consent shall be construed and enforced in accordance with the laws of the State of California. Venue is proper in the county in
which the Premises is located.

 

8.          If
any one or more of the provisions contained in this Consent shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.

 

9.          Lessor’s
Consent hereunder is not, and shall not be construed as consent by Lessor to any further assignment or reassignment of the Lease
by Lessee or Assignee or to any further subletting of all or any portion of the Premises. The Lease shall not be further assigned
or reassigned nor shall all or any portion of the Premises be further sublet without complying with the terms of Paragraph 12 of
the Lease in each instance.

 

10.        Any
bills, statements, notices, demands, requests, consents or other communications given or required to be given to Assignee under
the Lease shall be effective if rendered or given at the Premises or at the address for notice provided for in the Assignment.

 

11.        This
Consent shall not be effective until executed by all the parties hereto and may be executed in several counterparts, each of which
will constitute an original instrument and all of which will together constitute one and the same instrument.

 

12.        The
terms and provisions of this Consent bind and inure to the benefit of the parties hereto and their respective permitted successors
and assigns.

 

13.        This
Consent constitutes the entire agreement of the parties hereto with respect to the matters stated herein and may not be altered,
amended, modified or changed orally, except by an agreement signed by the party against whom enforcement of any such alteration,
amendment, modification or change is being sought.

 

14.        Lessor,
Lessee and Assignee each represent and warrant to the other that it is authorized to enter into this Consent and that the party
executing this Consent has the power and authority to bind Lessor, Lessee or Assignee, as the case may be.

 

[SIGNATURE PAGE TO FOLLOW]

 

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IN WITNESS WHEREOF,
the parties hereto have hereunto set their hands and seals as of the Effective Date.

 

	LESSOR:	 	 
	 	 	 
	MEEHAN HOLDINGS, LLC,	 	Effective Date: September 4, 2013
	a California limited liability company	 	 
	 	 	 
	By:	/s/ John Meehan	 	 
	Name:	 John Meehan	 	 
	Title:	CEO	 	 

 

	LESSEE:	 	ASSIGNEE:
	 	 	 
	FLEXENERGY, INC.,	 	ENER-CORE, INC.,
	a Delaware corporation	 	a Nevada corporation
	 	 	 
	By:	/s/ Mark G. Schnepel	 	By:	/s/ Alain Castro
	Name:	 Mark G. Schnepel	 	Name:	 Alain Castro
	Title:	President	 	Title:	CEO

 

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EXHIBIT A

 

ASSIGNMENT AND ASSUMPTION OF LEASE

 

    	A-1

    	 

    

 

EXHIBIT B

 

SUBLEASE AGREEMENT

 

    	B-1

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