Document:

EXHIBIT
10.30

 

SETTLEMENT
AGREEMENT AND MUTUAL RELEASE

 

This
Settlement Agreement and Mutual Release (this “Agreement”) is entered into as of December 16, 2014 (“Effective
Date”), by and between Ener-Core, Inc. (the “Company”), and each of the parties named under Column
I of the table in Exhibit A attached hereto (collectively the “Investors”) (Company and Investors
are hereinafter collectively referred to, at times, as the “Parties,” and each individually, as a “Party”).

 

RECITALS

 

WHEREAS,
on November 18, 2013, the Company entered into that certain Subscription Agreement (the “Subscription Agreement”)
with the Investors, pursuant to which the Company issued and sold to Investors, in a private placement (the “Offering”),
an aggregate 1,500,000 shares of the Company’s common stock, par value $0.0001 per share, at a per share purchase price
of $1.00 per share;

 

WHEREAS,
on November 18, 2013, the Company also entered into that certain Registration Rights Agreement (the “Registration Rights
Agreement”) with the Investors whereby the Company agreed to file a registration statement with the Securities and Exchange
Commission to register the shares acquired by the Investors in the Offering;

 

WHEREAS,
on December 1, 2014 entered into that certain Amendment and Waiver Agreement (the “Amendment”) with the Investors
to amend certain terms of the Subscription Agreement and also to memorialize the agreed upon waiver of certain rights of the Investors
under the Registration Rights Agreement, specifically: (a) the purchase price per share for the shares of Common Stock acquired
by the Investors under the Subscription Agreement was reduced from $1.00 per share to $0.78 per share, resulting in the issuance
of an aggregate 423,077 additional shares to the Investors; (b) the Company agreed to issue a warrant to each Investor (the “Warrant”)
with an exercise price per share of $0.78 per share, which Warrant is immediately exercisable and expires 60 months after the
its date of issuance, for the purchase of up to an additional 50% of the total number of shares acquired by such Investor under
the amended terms of the Subscription Agreement, resulting in the issuance of Warrants to the Investors for the purchase of up
to an aggregate of 961,538 shares; and (c) the Investors agreed to waive their rights under the Registration Rights Agreement
with respect to any and all additional shares of Common Stock issuable to the Investors as a result of the Amendment, including
the Common Stock shares underlying the Warrants;

 

WHEREAS,
a potential dispute (the “Potential Dispute”) has arisen between the Company and Investors in connection with
the Offering; and

 

WHEREAS,
the Parties, each without admission of any liabilities under the Potential Dispute, now desire to enter into this Agreement to
resolve the Potential Dispute and any and all Claims (as defined herein) between them as of the Effective Date.

 

    	1

    	 

    

 

NOW,
THEREFORE, for and in consideration of the mutual releases, promises, covenants, representations, and warranties contained herein
and for other good and valuable consideration, the receipt of sufficiency of which are hereby acknowledged, and intending to be
legally bound, the Parties hereto agree as follows:

 

1.  Incorporation
of Recitals. The above Recitals are hereby incorporated into and made a part of this Agreement.

 

2.  Consideration.
Subject to the terms and conditions set forth in this Agreement, and as consideration for the releases, promises, agreements and
covenants set forth herein:

 

2.1     The
Parties hereby agree to amend the Warrants issued pursuant to the Amendment whereby the “Exercise Price” (as defined
in the Warrants) per share, as set forth in Section 1(b) of the Warrants, shall be reduced from $0.78 per share to $0.50 per share.

 

2.2     Contemporaneous
with the execution and delivery of this Agreement, the Company hereby agrees to issue to each Investor a warrant (each a “New
Warrant” and all such warrants collectively, the “New Warrants”) to purchase up to the number of
shares of the Company’s common stock set forth under Column II titled “Number of New Warrant Shares” in the
New Warrants Table set forth in Exhibit A attached hereto, which New Warrant shall be substantially in the form
attached as Exhibit B to this Agreement. Each New Warrant shall have a per share exercise price of $0.50 per share,
shall be immediately exercisable upon issuance, and shall expire 60 months after the date of its issuance. The Warrants shall
be issued to the entities listed in the New Warrants Table set forth in Exhibit A attached hereto at the sole direction
of the Investors.

 

2.3     Each
Investor signatory to this Agreement hereby agrees that the Registration Rights Agreement shall not apply to, and such Investor
hereby waives all of such Investor’s rights under the Registration Rights Agreement, if any, with respect to the New Warrants
and any and all shares of Company’s common stock issuable pursuant to this Agreement, including the shares of the Company’s
common stock underlying the New Warrants, and will make no claims for damages or for default thereunder; provided, however,
that all other ongoing obligations of the Company under the Registration Rights Agreement shall remain in full force and effect.

 

3.  Mutual
Releases and Covenant Not To Sue.

 

3.1     Except
for such obligations, rights or claims as may be created by, contingent upon or arise from the terms and conditions of this Agreement,
each and every Investor, on behalf of itself and each of its agents, brokers, legatees, devisees, executors, trustees, beneficiaries,
affiliates, administrators, successors in interest, predecessors in interest, assigns, corporations, partners, entities, attorneys,
directors, officers, employees, insurers, and representatives (collectively, the “Investor Releasors”), hereby
releases and forever discharges the Company, and each of its agents, brokers, affiliates, successors in interest, predecessors
in interest, assigns, attorneys, directors, officers, employees, insurers, and representatives (collectively, the “Company
Releasees”), and each of them, separately and collectively, from any and all claims, losses, liens, demands, causes
of action, obligations, damages and liabilities of any kind or nature (collectively, the “Claims”), that relate
to any time up to and including the Effective Date, whether known or unknown, that the Investor Releasors have, had in the past,
or may have in the future, against the Company Releasees, or any of them, of any type whatsoever, including but not limited to
Claims arising out of, in connection with, or relating to, the Subscription Agreement, the Offering or the Potential Dispute.

 

    	2

    	 

    

 

3.2     Except
for such obligations, rights or claims as may be created by, contingent upon or arise from the terms and conditions of this Agreement,
the Company, on behalf of itself and each of its agents, brokers, legatees, devisees, executors, trustees, beneficiaries, affiliates,
administrators, successors in interest, predecessors in interest, assigns, corporations, partners, entities, attorneys, directors,
officers, employees, insurers, and representatives, (collectively, the “Company Releasors”), hereby releases
and forever discharges the Investors, and each of their respective agents, brokers, affiliates, successors in interest, predecessors
in interest, assigns, attorneys, directors, officers, employees, insurers, and representatives, (collectively, the “Investor
Releasees”), and each of them, separately and collectively, from any and all Claims that relate to any time up to and
including the Effective Date, whether known or unknown, that the Company Releasors have, had in the past, or may have in the future,
against the Investor Releasees, or any of them, of any type whatsoever, including but not limited to Claims arising out of, in
connection with, or relating to, the Subscription Agreement, the Offering or the Potential Dispute.

 

3.3     Except
for the enforcement of this Agreement, each of the Parties, for itself, and for its respective Releasors (hereinbefore defined)
hereby covenants not to sue any of the other Parties or their respective Releasees (hereinbefore defined) based on any Claim covered
by the foregoing releases set forth in Sections 3.1 and 3.2.

 

4.  California
Civil Code Section 1542. Except for such obligations, rights or claims as may be created by, contingent upon or arise from
the terms and conditions of this Agreement, each of the Parties hereby agree that this Agreement is a full and final accord and
satisfaction and release as to all Claims for any injuries and damages each Party may ever assert against the other Party in connection
with any time up to and including the Effective Date, relating to the Subscription Agreement, the Offering or the Potential Dispute,
and/or any other Claims relating thereto, whether now known or unknown, contingent or accrued, and whether now existing or resulting
in the future. In furtherance of this intention, and as further consideration for the Agreement, each Party hereby represents
and warrants that it has been informed of, has read, is familiar with, and does hereby expressly waive and relinquish all rights
that it has or may have under Section 1542 of the California Civil Code (“Section 1542”) and all other similar
rights in other states or territories of the United States of America, or any other jurisdiction. Section 1542 provides:

 

“A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

Accordingly,
the releases given herein shall remain in effect notwithstanding the discovery or existence of any additional facts or Claims
in existence at the time this Agreement was executed.

 

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5.  Investor
Representations. Each Investor, severally and not jointly, represents and warrants to the Company, as of the Execution Date,
as follows:

 

5.1     Each
Investor has all requisite legal and other power and authority to execute and deliver this Agreement and to carry out and perform
its obligations under the terms of this Agreement. This Agreement constitutes a valid and legally binding obligation of each Investor
enforceable in accordance with its terms, subject as to enforcement, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors’ rights and to general equity principles.

 

5.2     Each
Investor owns all right, title and interest in and to its respective Claims, if any, and has not sold, assigned or otherwise transferred
to any third party any interest it may have in any of such Claims, respectively.

 

5.3     The
New Warrants and the shares of the Company’s common stock issuable upon exercise of the New Warrants (collectively with
the New Warrants, the “Securities”) are being acquired for investment for each Investor’s own account,
not as a nominee or agent and not with a view to the resale or distribution of any part thereof.

 

5.4     Each
Investor has had an opportunity to ask questions and receive answers and other information from the Company regarding
the terms and conditions of the Securities and the business, properties, prospects, financial condition, and results of operations
of the Company, and each Investor has received sufficient information on which to make an investment decision.

 

5.5     Each
Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated by the Securities
and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities
Act”).

 

5.6     Each
Investor understands that the purchase of the Securities involves substantial risk. Each Investor is a sophisticated and accredited
investor and acknowledges that it can bear the economic risk of its investment and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of its investment in the Securities. Each Investor has
not been organized for the purpose of acquiring the Securities.

 

5.7     Each
Investor understands that:

 

(i)      the
Securities are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are
being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only in certain limited circumstances;

 

(ii)      the
Securities have not been registered under the Securities Act or any state securities laws and are being offered in reliance upon
specific exemptions from the registration requirements of the Securities Act and state securities laws, and the Company is relying
upon the truth and accuracy of, and Investor’s compliance with, the representations, warranties, covenants, agreements,
acknowledgments and understandings of each Investor contained in this Agreement in order to determine the availability of such
exemptions and the eligibility of each Investor to acquire the Securities;

 

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(iii)      the
Securities must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or is exempt
from such registration;

 

(iv)      the
Securities will bear a legend substantially in the form set forth in Section 5(k) herein; and

 

(v)      the
Company will make a notation on its transfer books to such effect.

 

5.8     Each
Investor understands that (i) the sale or resale of the Securities has not been and is not being registered under the Securities
Act or any state securities laws, and the Securities may not be transferred unless: (A) such Investor shall have delivered to
the Company an opinion of Company counsel (which opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration; or (B) sold under and in compliance with Rule 144, as promulgated under the Securities Act
(or a successor rule).

 

5.9     Investor
understands that the certificates evidencing the Securities will bear a legend substantially similar to the following, as well
as any other legends required by applicable law:

 

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 A GENERALLY ACCEPTABLE FORM,
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.

 

5.10     Each
Investor further understands that there are no registration rights associated with the Securities being acquired pursuant to this
Agreement.

 

5.11     The
representations and warranties and statements of fact made by each Investor in this Agreement are, as applicable, accurate, correct
and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements and information contained herein not false or misleading.

 

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6.  Representations
and Warranties of the Company. The Company hereby represents and warrants to each of the Investors as follows:

 

6.1     The
Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada. The Company
has the corporate power and authority to execute, deliver and perform the Agreement, the New Warrant and any other agreements
contemplated hereunder (collectively, the “Transaction Documents”) to which it is a party and to issue, sell
and deliver the Securities.

 

6.2     The
execution and delivery by the Company of the Transaction Documents, the performance by the Company of its obligations thereunder,
and the issuance, sale and delivery of the Securities have been duly authorized by all requisite corporate action. The New Warrants,
when issued pursuant to the Agreement, have been duly authorized and validly issued and are fully paid and nonassessable and free
of preemptive or similar rights, and have been issued in compliance with applicable securities laws, rules and regulations.

 

6.3     The
Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and
stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization
of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation
for issuance) and delivery of the Securities. When delivered in accordance with the terms hereof, the Transaction Documents will
constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally and to general equitable principles.

 

6.4     The
execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities
require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than
filings that have been made pursuant to applicable state securities laws and post-sale filings pursuant to applicable state and
federal securities laws which the Company undertakes to file within the applicable time periods. “Person” means
an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint
venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically
listed herein.

 

6.5     The
execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will
not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i)
the Company’s Articles of Incorporation, as amended, or the Company’s Bylaws, both as in effect on the date hereof
(true and complete copies of which have been filed on EDGAR), or (ii)(a) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the Company, any subsidiary of the Company or any of
their respective assets or properties, or (b) any agreement or instrument to which the Company or any subsidiary of is a party
or by which the Company or a subsidiary is bound or to which any of their respective assets or properties is subject.

 

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6.6     Neither
the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising, as those terms
are used in the provisions of Regulation D in connection with the offer or sale of any of the Securities.

 

6.7     Neither
the Company nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely affect
reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would
require registration of the Securities under the Act.

 

6.8     The
offer and sale of the Securities to the Investors as contemplated hereby is exempt from the registration requirements of the Securities
Act.

 

6.9     The
representations and warranties and statements of fact made by the Company in this Agreement are, as applicable, accurate, correct
and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order
to make the statements and information contained herein not false or misleading.

 

7.  Miscellaneous.

 

7.1     No
Admissions; No Prior Assignment. Neither the negotiation or execution of this Agreement nor the releases and dismissals provided
for herein, nor any other act or agreement in furtherance of this Agreement, shall be construed in any way as an admission of
any kind on the part of any Party hereto for any liability whatsoever, to the other Party, except as may be otherwise expressly
provided for in this Agreement, nor shall any past or present liability or wrongdoing on the part of any Party be implied thereby.
Each Party further agrees that it will not, and will cause its respective officers, directors, employees, agents, representatives,
and subsidiaries not to, directly or indirectly, whether orally or in writing, make any statements or representations to any third
party (i) that the other Party was liable or admitted any liability in connection with the matters covered by this Agreement,
and (ii) regarding the subject matter of this Agreement, including, but not limited to, any and all discussions preceding the
negotiation and execution of this Agreement, except that either Party may disclose the existence of this Agreement and may also
disclose the specific terms set forth herein as may be required pursuant to applicable law, including, but not limited to, the
applicable rules and regulations of the SEC.  Each of the Parties hereto hereby further warrants that it has not previously
assigned, transferred or granted, or purported to assign, transfer or grant, any Claim, matter, or cause of action which is being
released herein.

 

7.2     Successors
and Assigns; Assignment. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the
respective heirs, legal representatives, successors and assigns of the parties. Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. No Party
may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval
of the other Party hereto.

 

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7.3     Survival
of Representations and Warranties. Notwithstanding any provisions in this Agreement to the contrary, the representations and
warranties given or made by the Parties under this Agreement: (i) shall in no way be affected by any investigation or knowledge
of the subject matter thereof made by or on behalf of each Party, and (ii) shall survive the execution and delivery of the Transaction
Documents. Nothing in this Section 7.3 shall impair or alter any covenant or agreement of the Parties which by its terms
contemplates performance after the Execution Date.

 

7.4     Governing
Law/Venue. This Agreement shall be governed by and construed under the laws of the State of California, without regard to
conflicts of laws principles. Each Party hereby waives any right it may have to assert the doctrine of forum non conveniens or
similar doctrine or to object to venue with respect to any Proceeding brought in accordance with this paragraph, and stipulates
that the State and Federal courts located in the City and County of Los Angeles, State of California shall have in personam jurisdiction
and venue over each of them for the purposes of litigating any dispute, controversy or Proceeding in connection with, arising
out of or related to this Agreement.  Each Party hereby authorizes and accepts service of process sufficient for personal
jurisdiction in any action against it as contemplated by this Section 7.4 in the manner set forth in Section 7.6
of this Agreement for the giving of notice.  Any final judgment rendered against a Party in any Proceeding shall be conclusive
as to the subject of such final judgment and may be enforced in other jurisdictions in any manner provided by law. If any Proceeding
arises or is commenced to interpret, enforce or recover damages for the breach of any term of this Agreement, the prevailing party
shall be entitled to recover from the non-prevailing party its reasonable attorneys’ fees actually incurred, together with
other costs relating to any such Proceeding. “Proceeding” shall mean any action, claim, demand, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding and any informal
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination or investigation commenced, brought, conducted
or heard by or before, or that otherwise has involved or may involve, any applicable judicial, governmental, administrative or
regulatory authority or any arbitrator or arbitration panel.

 

7.5     Titles
and Subtitles; Construction. The titles and subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement. The Parties have participated jointly in the negotiation and drafting
of this Agreement.  If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue
of the authorship of any of the provisions of this Agreement. Unless otherwise expressly provided, the word "including"
and its syntactical variants do not limit the preceding words or terms and mean "including, but not limited to."

 

7.6     Notices.  Any
notice, demand, consent, request, instruction or other communication required or permitted hereunder shall be in writing, delivered
via first class certified mail or registered mail (return receipt requested, postage prepaid), via internationally recognized
overnight courier or via hand-delivery to addresses that are set forth on the signature pages hereof, and shall be deemed sufficiently
given, received and effective on the earliest of: (i) if mailed via certified or registered mail return (return receipt requested,
postage prepaid) to the applicable address set forth in the signature pages hereto, five (5) Business days after being mailed;
(ii) the second Business Day following the date of mailing, if sent to the applicable address set forth in the signature pages
hereto by internationally recognized overnight courier service, or (iii) the date of actual receipt by the party to whom such
notice or communication is required or permitted to be given, if such notice or communication is hand-delivered to such party.
If any notice, demand, consent, request, instruction or other communication cannot be delivered because of a changed address of
which no notice was given (in accordance with this Section 7.6), or the refusal to accept same, the notice, demand, consent,
request, instruction or other communication shall be deemed received on the second Business Day the notice is sent (as evidenced
by a sworn affidavit of the sender). “Business Day” means any day except any Saturday, any Sunday, any day
which is a federal legal holiday in the United States or any day on which banking institutions in the State of California are
authorized or required by law or other governmental action to close.

 

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7.7     Separate
Counsel; Expenses. Each Party hereby expressly acknowledges that it has been advised to seek its own separate legal counsel
for advice with respect to this Agreement. Each of the parties shall bear its own costs and expenses incurred with respect to
the review, negotiation, execution, delivery, and performance of this Agreement.

 

7.8     Amendments
and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively), only by an instrument in writing executed by
the Parties. No waiver by any Party of any default or breach by another Party of any representation, warranty, covenant or condition
contained in this Agreement shall be deemed to be a waiver of any subsequent default or breach by such Party of the same or any
other representation, warranty, covenant or condition. No act, delay, omission or course of dealing on the part of any Party in
exercising any right, power or remedy under this Agreement or at law or in equity shall operate as a waiver thereof or otherwise
prejudice any of such Party’s rights, powers and remedies. All remedies, whether at law or in equity, shall be cumulative
and the election of any one or more shall not constitute a waiver of the right to pursue other available remedies.

 

7.9     Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated and the Parties hereby agree to negotiate in good faith
to modify this Agreement to preserve each Party’s anticipated benefits under this Agreement.

 

7.10     Entire
Agreement; Further Assurances. This Agreement represents and constitutes the entire agreement and understanding between the
parties with regard to the subject matter contained herein. All prior agreements, understandings and representations are hereby
merged into this Agreement. Each Party shall execute and/or cause to be delivered to each other Party such instruments and other
documents, and shall take such other actions, as such other Party may reasonably request (prior to, at or after the Execution
Date) for the purpose of carrying out or evidencing any of the transactions contemplated hereunder.

 

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7.11     Specific
Performance. The Parties agree that irreparable damage would occur in the event that any provision of this Agreement were
not performed in accordance with its specific terms or were otherwise breached, and that money damages or other remedies at law
would not be an adequate remedy for any such damages. Accordingly and in addition to any other remedy that may be available at
law or in equity, the Parties acknowledge and hereby agree that in the event of any breach or threatened breach by any Party of
any of its covenants or obligations set forth in this Agreement, the non-breaching Party shall be entitled to apply to a court
of competent jurisdiction for specific performance, or injunctive relief, or such other relief as such court may deem just and
proper, in order to enforce this Settlement Agreement or prevent any violation of the terms hereof, and to the extent permitted
by applicable law, each Party waives the posting of a bond and any objection to the imposition of such relief.

 

7.12     Counterparts.
This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together will constitute one and the same Agreement. This Agreement, to the
extent delivered by means of a facsimile machine or electronic mail (any such delivery, an “Electronic Delivery”),
shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding
legal effect as if it were the original signed version thereof delivered in person. No party hereto shall raise the use of Electronic
Delivery to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through
the use of Electronic Delivery as a defense to the formation of a contract, and each such party forever waives any such defense,
except to the extent such defense related to lack of authenticity.

 

[Signature
pages follow]

  

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[COMPANY
SIGNATURE PAGE]

 

IN
WITNESS WHEREOF, the Parties have each approved and executed this Agreement on the date first set forth above.

 

COMPANY:

 

Ener-Core,
Inc.

 

	By:	 	 
	Name:	Alain
    Castro	 
	Title:	Chief
    Executive Officer	 

 

Address
for Notices:

 

      Ener-Core,
Inc.

      Attn:
Mr. Alain Castro, CEO

      9400
Toledo Way

      Irvine,
CA 92618

      Tel:
(949) 616-3300

 

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[INVESTOR
SIGNATURE PAGE]

 

IN
WITNESS WHEREOF, the Parties have each approved and executed this Agreement on the date set forth above.

 

INVESTOR:

 

Rufus
Dufus, LLC

  

	By:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Title:	 	 

 

Address
for Notices:

 

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

[INVESTOR
SIGNATURE PAGE]

 

IN
WITNESS WHEREOF, the Parties have each approved and executed this Agreement on the date set forth above.

 

INVESTOR:

 

Dylana
Dreams, LLC

 

	By:	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Title:	 	 

 

 

Address
for Notices:

 

	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

  

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EXHIBIT
A

 

NEW
WARRANTS TABLE

 

	(Column I) 
Investor Name:	 	(Column II) 
Number of New Warrant Shares:	 
	Pilly Boy, LLC	 	 	641,026	 
	Island Pickle, LLC	 	 	320,513	 

 

    	E-1

    	 

    

 

EXHIBIT
B

  

NEW
WARRANT

 

[Attached]

 

 

 E-2Exhibit 10.3

 

EQUITY
TRANSFER AGREEMENT

 

This Equity Transfer
Agreement (the “Agreement”) is entered into as of _____ (the “Execution
Date”) by and between:

 

Party A: Mr.
Wang Xiaohong (PRC ID number: 61062719720305055X) (the “Buyer”)

 

Party B: Faith
Bloom Limited (the “Seller”), a company incorporated and existing under the laws of the British Virgin Islands,
with its legal address at Sea Meadow House, Blackburne Highway, Road Town, Tortola, the British Virgin Islands.

 

Party A and Party B
shall hereinafter individually be referred to as “Party” and collectively as the “Parties”.

 

Recital 

 

WHEREAS,the Seller
is the sole shareholder of Shaanxi Haize Nanomaterials Co., Ltd, a wholly owned limited liability company (the “WFOE”)
in Yangyu Town, Qian County, Xianyang, Shaanxi province, the PRC, with a registered capital amount of RMB 50 million;

 

WHEREAS, ShengdaTech,
Inc. (“ShengdaTech”), the US parent company of the Seller, was a NASDAQ-listed company. Before 2011, CHEN Xiangzhi,
the then CEO of ShengdaTech, embezzled a huge amount of ShengdaTech funds for his other companies and personal purposes and conducted
financial frauds, all of which together caused ShengdaTech to be delisted from NASDAQ. In 2011 CHEN Xiangzhi was removed from all
the positions that he held with ShengdaTech and its affiliates. However, CHEN Xiangzhi instructed the personnel under his control
to boycott transferring the control of the Chinese subsidiaries including the WFOE back to ShengdaTech and the Seller;

 

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WHEREAS, on November
15, 2011 as the sole shareholder of the WFOE, the Seller removed LI Fu, the then-incumbent general manager and legal representative
of the WFOE, from his positions and appointed a new general manager and legal representative by adopting shareholder resolutions
in accordance with the WFOE’s Articles of Association. However, although being notified and urged repeatedly, LI Fu persistently
refused to return the WFOE’s seals and licenses and refused to complete the formalities regarding the change of legal representative.
To regain control and save the WFOE as soon as possible, the Seller had no choice but to file a lawsuit with the Intermediate People’s
Court of the Xianyang City (“Xianyang Court”) at the end of 2011. On April 24, 2013, the Xianyang Court ruled for the
Seller and issued a civil judgment (i.e. (2012) Xian Min Chu Zi No.00004-3) (“Trial Judgment”). On January 21, 2014,
the Higher People’s Court of the Shaanxi Province upheld the Trail Judgment and issued the appeal decision on civil cases
(i.e. (2013) Shaan Min San Zhong Zi No. 00075);

 

WHEREAS, although pursuant
to the judgment and decision LI Fu was required to return the WFOE’s seals and licenses including but not limited to the
business license and to assist the WFOE to complete formalities regarding the change of legal representative with the Administration
for Industry and Commerce, LI Fu, among others, refused to comply with the judgment and decision as instructed by CHEN Xiangzhi.
The Seller had to apply to the Xianyang Court for enforcement in accordance with applicable laws and regulations. On November 3,
2014, the Seller entered into the premises of the WFOE as a result of the Xianyang Court’s enforcement. However, the then-incumbent
management of the WFOE severely sabotaged the WFOE’s operation and management orders and took away the WFOE’s seals,
licenses and financial books and records, among other things;

 

WHEREAS, after taking
over the WFOE, the Seller has become aware that the WFOE faces multiple lawsuits and there are encumbrances (such as mortgage and
freezing) on the WFOE’s assets (see Appendix 1 for details). In addition, because the WFOE has been beyond the control of
the Seller for a long time and the WFOE’s records are either lost or inadequate, there may be litigations, mortgage, security
interests and other encumbrances that are unknown to the Seller;

 

WHEREAS, the Buyer
understands the foregoing circumstances and risks and agrees to buy the equity held by the Sellers in the WFOE as it is at its
own risks;

 

NOW, THEREFORE, in
consideration of the mutual covenants set forth below, the Parties agree as follows:

 

		1.	Equity Transfer

 

		1.1	Subject to the terms and conditions herein, the Seller shall transfer and assign to the Buyer all
of its rights, titles and interests in, and shall delegate all corresponding obligations related to, all of its 100% equity interests
in the WFOE (the “Equity”) for a purchase price of Fifteen Million Two Hundred Thousand yuan in words (or RMB
15,200,000 in number) (the “Purchase Price”). The Parties acknowledge that the Purchase Price reflects existing,
potential, unknown or unpredictable future litigation, disputes, mortgage, security interests and asset freezing risks, among other
things, on the WFOE and its asset.

 

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		1.2	On the Execution Date, the non-refundable deposit paid by the Buyer to the Seller previously, i.e.
RMB 2,000,000, shall become a portion of the Purchase Price immediately. In addition, within 2 days after the Execution Date, the
Buyer shall pay the second instalment of the Purchase Price, i.e._RMB Six Million Yuan in words (or RMB 6,000,000 in number)
in cash through wire transfers to the bank account designated by the Seller as follows:

 

			Account Name: Greenberg Traurig, LLP Shanghai Representative Office

Bank: Citibank (China) Co., Ltd.
Shanghai Branch

Bank Address: Lu Jia Zui Finance
and Trade Zone, No.33 Hua Yuan Shi Qiao Road 200120

Account No.:
404003 - 1746068227

 

		1.3	The Buyer shall have a trial operation period of three months upon the Seller’s receipt of
the second instalment payment of the Purchase Price mentioned above paid by the Buyer. During the trial operation period:

			- The Seller shall transfer to the Buyer all the files, books, documents, drawings, client and
vendor lists and other records that the Seller controls (excluding company chops and Business License);

			- The Seller shall control company chops and Business License and shall allow the WFOE and the
Buyer to reasonably use the company chops and Business License during daily operations;

			- The Seller shall transfer to the Buyer the rights to control and operate the WFOE;

			- The Buyer shall be responsible for the operations of the WFOE and all the requirements on funds;

			- The Buyer shall pay in advance at the beginning of each month employees’ compensations
and utility fees (such as those for water and electricity) via the account that the Seller designates;

			- The Buyer shall be responsible for the WFOE’s security expenses, provided that the Parties
shall negotiate to reasonably reduce the security expenses;

 

    	3 / 8

    	 

    

 

			- The Buyer shall not inure extra liabilities to the WFOE and shall purchase raw materials and
conduct other acts in the name of the Buyer rather than the WFOE;

			- The scope of the Buyer’s operations of the WFOE is limited to normal production and sales;
The Buyer shall not sell, lease or otherwise dispose any fixed assets of the WFOE and shall not incur guarantee, security interests,
mortgage or pledge for any third party, among other things; The Seller’s prior written consents shall be obtained for any
material act such as lay-offs;

			- The Buyer shall own profits arising from the operations of the WFOE and shall pay applicable
taxes;

			- The Buyer shall provide written reports on the operations of the WFOE to the Seller on a weekly
basis and shall set forth the WFOE’s procurement and sales lists, financial statements and material issues.

 

		1.4	Upon expiration of or at any time during the trial operation period, if the Buyer notifies the Seller in writing that the Buyer
intends to complete the equity transfer and pays to the bank account that the Seller designates as set forth under Section 1.2
above the balance of the Purchase Price (i.e. RMB Seven Million and Two Hundred Thousand Yuan in words or RMB 7,200,000 in number)
in cash through wire transfer, the WFOE shall submit to approving authorities the Agreement and other necessary documents of the
WFOE as soon as possible for approvals on the equity transfer transaction. The Parties shall provide all necessary documents, cooperation
and assistance required or requested by the approving authorities. The equity transfer transaction contemplated herein shall be
deemed to be completed on the day when a new Business License reflecting the Buyer as the sole owner of the WFOE or the foreign
exchange approval letter for the equity transfer transaction contemplated herein is issued to the WFOE, whichever is later (the
“Equity Transfer Date”). Within 10 business days after the Equity Transfer Date, the Seller shall deliver the
company chops and Business License of the WFOE to the Buyer.

 

		1.5	If the Buyer fails to pay the balance of the Purchase Price (i.eRMB Seven Million and Two Hundred Thousand Yuan in words or
RMB 7,200,000 in number) when the trial operation period expires or if the Buyer actually gives up operating the WFOE during the
trial operation period (such as ceases to provide necessary funds to the WFOE), the Seller is entitled to notify the Buyer in writing
to terminate the Agreement. Upon termination of the Agreement, the Buyer shall return to the Seller the rights to operate and control
the WFOE. The Seller is entitled to sell the WFOE to any third party. The non-refundable deposit and the second instalment payment
of the Purchase Price that the Buyer has previously paid shall not be refunded and shall be owned by the Seller.

 

    	4 / 8

    	 

    

 

		2.	Representations and Warranties of the Seller

 

		2.1	The Seller represents and warrants that it is the legal, effective and beneficial owner of the
Equity to be transferred to the Buyer hereunder and shall have sufficient power and authority to transfer the Equity to the Buyer.

 

		2.2	Other than Section 2.1 above, the Seller makes no representation or warranty with respect to the
Equity or the WFOE, which is sold to the Buyer in whatever condition it presently exists, and the Buyer agrees to purchase the
Equity with all faults, whether or not known or apparent to the Buyer.

 

		2.3	Appendix 1 sets forth litigation, mortgage, security interests and asset freezing, among other
things, involving the WFOE that the Seller knows and confirms as of the Execution Date. However, because the WFOE has been beyond
the control of the Seller for a long time and the WFOE’s records are either lost or inadequate, there may be litigations,
mortgage, security interests and other encumbrances that are unknown to the Seller. Therefore, the Seller is unable to make any
warranty regarding the completeness and accuracy of the contents of Appendix 1. The Buyer acknowledges the foregoing and is willing
to assume related risks.

 

		3.	Covenants after the Equity Transfer

 

		3.1	At any time before the second anniversary of the Equity Transfer Date, the Buyer shall cause the
WFOE to make its best effort to assist the Seller to pursue any claim, liabilities, obligations, damages or compensations against
CHEN Xiangzhi, his relatives, associates, associated companies, affiliated companies, including without limitation, Shandong ShengdaTech
Group Company Limited, or such associated or affiliated companies’ current or former officers, directors, representatives,
employees, shareholders, members, agents, successors or assigns (collectively “Chen’s Group”) by providing
cooperation and assistance as follows:

 

    	5 / 8

    	 

    

 

		(a)	to allow the Seller to have access to and make copies of any of the permits, licenses, approvals,
certificates, records, accounting books, files, documents, drawings, customer lists, supplier lists and other records of the WFOE,
including the ones discovered or generated after the Equity Transfer Date;

 

		(b)	to assist the Seller to take legal actions against Chen’s Group in the name of the WFOE,
including without limitation affixing chops and signatures on legal documents at the request of the Seller, authorizing legal counsels
selected by the Seller to appear in courts, and approving settlements reached by the Seller with Chen’s Group;

 

		(c)	to assist the Seller in obtaining any necessary historical corporate records, including, without
limitation, any bank account records, AIC records or other corporate records or documents, including without limitation affixing
chops and signatures on legal documents at the request of the Seller authorizing such actions to obtain these historical corporate
records; and

 

		(d)	to assist or cooperate with the Seller with respect to any other reasonable requests.

 

		3.2	The Parties agree that any proceeds generated by the claims against Chen’s Group, either
in legal actions or settlements, including the ones made in the name of the WFOE, shall belong to the Seller. If the WFOE or the
Buyer receives any of such proceeds, it shall remit to a bank account designated by the Seller within 10 business days after the
receipt.

 

		3.3	After the equity transfer, the Buyer shall (a) continue to operate the WFOE, (b) not sell all or
a substantial part of the WFOE’s equity or asset to a third party within three years upon the Execution Date, and (c) not
directly or indirectly sell, at any time, the WFOE’s equity or asset to Chen’s Group.

 

		4.	Governing Law

 

This Agreement will be governed
by and construed in accordance with the laws of the PRC.

 

    	6 / 8

    	 

    

  

		5.	Dispute Resolution

 

All disputes, controversies or
differences arising out of or related to this Agreement shall be exclusively and finally settled by arbitration. Said arbitration
shall be conducted in Beijing under the auspices of the China International Economic and Trade Arbitration Commission according
to its rules then in effect. The arbitrators’ ruling and award shall be final. The losing Party shall bear the arbitration
fees and the other Party’s costs including reasonable attorneys’ fees.

 

		6.	Notices

 

All notices,
consents, requests, instructions, approvals, and other communications provided for herein shall be validly given, made, or served
if in writing and (a) sent by certified mail, return receipt requested, postage prepaid, (b) sent by overnight courier delivery
service, receipt acknowledged, fees prepaid, or (c) transmitted by email or facsimile transmission to the telephone numbers set
forth below, transmission confirmed, and addressed to:

 

If to the
Buyer:

Mr. Wang
Xiaohong

Address:
Room 3304, Building C of the Weland International Compound, No.5 Daqing Road, Xi’an City, Shaanxi Province, China

Attention:
Mr. Wang Xiaohong

Tel: +86
- 13909290567

Email:
3208045@qq.com 

 

If to Seller

Faith Bloom
Limited

Address:
A&M, Room 1101-03, MassMutual Tower, 39 Gloucester Road, Wanchai, Hong Kong

Attention:
Faith Bloom Limited

Tel: +852
3102 2600

Fax: +852
2598 0060

 

With a
copy to:

Address:
Greenberg Traurig, LLP, Shanghai Office, Room 3125-3141 Central Plaza, 381 Huaihai Zhong Road, Shanghai 200020

Attention:
Faith Bloom Limited

Tel: +86
21 6391 6633

Fax: +86
21 6391 6232

 

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		7.	Counterparts

 

This Agreement will be executed
in six (6) counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument.

 

		8.	Governing Languages

 

This Agreement shall be executed
in English and Chinese language versions, each of which shall have equal validity. However, in the event of any inconsistency between
the two, the Chinese language version shall govern and control.

 

The Parties have caused this Agreement to
be executed in Xianyang, Shaanxi as of the date first written above.

 

	Buyer:	 
	 	 
	Mr. Wang Xiaohong 	 
	 	 	 
	Signature: 	 	 
	 	 
	Seller:	 
	 	 
	Faith Bloom Limited	 
	 	 	 
	Signature: 	 	 
	By:	 
	Title:	 

 

    	8 / 8

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