ENER-CORE, Inc. (OTCMKTS:ENCR) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01

November 2016 Financing

On November 23, 2016, Ener-Core, Inc. (the Company) entered into
a securities purchase agreement (the Purchase Agreement), to
which it intends to issue to 15 accredited investors (each, an
Investor) unregistered convertible senior secured promissory
notes in principal amount of approximately $3.6 million (the
Convertible Senior Notes) and five-year warrants (each, a
Warrant) to purchase an aggregate of 1,423,200 shares of the
Companys common stock, par value $0.0001 per share (Common Stock)
at an exercise price of $3.00 per share (the Warrant Shares),
with aggregate net proceeds to the Company after an original
issue discount and Placement Agent (as defined below) fee of
approximately $3.0 million (the November 2016 Financing). The
Company expects that the initial closing of the November 2016
Financing will occur on November 29, 2016 (the Initial Closing
Date). Under the terms of the Purchase Agreement, the Company may
issue up to an additional $900,000 in principal amount of
Convertible Senior Notes and related Warrants, on the same terms
as the Investors who purchased Convertible Senior Notes and
Warrants on the Initial Closing Date, at a subsequent closing to
occur on or prior to December 12, 2016.

In connection with the November 2016 Financing, the Company will
pay a fee of $250,000 to the placement agent for the transaction
(the “Placement Agent”).

Securities Purchase Agreement

to the terms of the Purchase Agreement, the Company agreed to
sell and issue the Convertible Senior Notes and Warrants
(collectively, the Securities) to the Investors with each
Convertible Senior Note to be issued at a 10% original issue
discount and with associated Warrants to purchase 400 shares of
Common Stock for each $1,000 of principal amount of Convertible
Senior Notes purchased by such Investor. The Purchase Agreement
contains representations, warranties and covenants of the
Investors and the Company that are typical for transactions of
this type. The Company agreed to use the proceeds from the sale
of the Securities for working capital and general corporate
purposes. The Company also agreed to secure the listing of its
Common Stock on a national securities exchange by no later than
December 31, 2017.

Convertible Senior Secured Notes

The Convertible Senior Notes will bear no ordinary interest, as
the principal amount of the Convertible Senior Notes will include
an original issue discount. Upon an Event of Default (as defined
in the Convertible Senior Notes), however, the Notes will bear
interest at a rate of 10% per annum. The Notes will mature on
December 31, 2018. The Convertible Senior Notes will rank
pari passu with the outstanding convertible senior
secured promissory notes of the Company issued in April and May
2015, and rank senior to the convertible unsecured promissory
notes of the Company issued in September 2016 (the Convertible
Junior Notes), as more fully set forth in the Subordination and
Intercreditor Agreement, as amended to date (as described below).
The Convertible Senior Notes will be convertible at the option of
the holder into Common Stock at an exercise price of $2.50 (as
subject to adjustment therein) and will automatically convert
into shares of Common Stock on the fifth trading day immediately
following the issuance date of the Convertible Senior Notes on
which (i) the Weighted Average Price (as defined in the
Convertible Senior Notes) of the Common Stock for each trading
day during a twenty trading day period equals or exceeds $5.00
(as adjusted for any stock dividend, stock split, stock
combination, reclassification or similar transaction) and no
Equity Conditions Failure (as defined in the Convertible Senior
Notes) has occurred. The Convertible Senior Notes will also
contain a blocker provision that prevents the Company from
effecting a conversion in the event that the holder, together
with certain affiliated parties, would beneficially own in excess
of either 4.99% or 9.99%, with such threshold to be determined by
the holder prior to issuance, of the shares of Common Stock
outstanding immediately after giving effect to such conversion.

Upon an Event of Default and delivery to the holder of the
Convertible Senior Note of notice thereof, such holder may
require the Company to redeem all or any portion of its
Convertible Senior Note at a price equal to 115% of the
Conversion Amount (as defined in the Convertible Senior Notes)
being redeemed. Additionally, upon a Change of Control (as
defined in the Convertible Senior Notes) and delivery to the
holder of the Convertible Senior Note of notice thereof, such
holder may also require the Company to redeem all or any portion
of its Convertible Senior Note at a price equal to 115% of the
Conversion Amount being redeemed. Further, at any time from and
after January 1, 2018 and provided that the Company has not
received either (i) initial deposits for at least eight 2 MW
Power Oxidizer units or (ii) firm purchase orders totaling not
less than $3,500,000 and initial payment collections of at least
$1,600,000, in each case during the period commencing on the
issuance date of the Convertible Senior Notes and ending on
December 31, 2017, the holder of the Convertible Senior Note may
require the Company to redeem all or any portion of its
Convertible Senior Note at a price equal to 100% of the
Conversion Amount being redeemed.

At any time after the issuance date of the Convertible Senior
Notes, the Company may redeem all or any portion of the then
outstanding principal and accrued and unpaid interest with
respect to such principal, at 100% of such aggregate amount;
provided, however, that the aggregate Conversion Amount to be
redeemed to all Convertible Senior Notes must be at least
$500,000, or such lesser amount as is then outstanding. The
portion of the Convertible Senior Note(s) to be redeemed shall be
redeemed at a price equal to the greater of (i) 110% of the
Conversion Amount of the Convertible Senior Note being redeems
and (ii) the product of (A) the Conversion Amount being redeemed
and (B) the quotient determined by dividing (I) the greatest
Weighted Average Price (as defined in the Convertible Senior
Notes) of the shares of Common Stock during the period beginning
on the date immediately preceding the date of the notice of such
redemption by the Company and ending on the date on which the
redemption by the Company occurs by (II) the lowest Conversion
Price (as defined in the Convertible Senior Notes) in effect
during such period.

The Convertible Senior Notes will contain a provision that
prevents the Company from entering into or becoming party to a
Fundamental Transaction (as defined in the Convertible Senior
Notes) unless the Companys successor entity assumes all of the
Companys obligations under the Convertible Secured Notes and the
related transaction documents (the Transaction Documents) to
written agreements in form and substance satisfactory to at least
a certain number of holders of the Convertible Senior Notes.

In connection with the execution of the Purchase Agreement and
forthcoming issuance of the Convertible Senior Notes, Ener-Core
Power, Inc., the Companys wholly-owned subsidiary (the
Subsidiary), entered into a Guaranty, to which the Subsidiary has
agreed to guarantee all of the obligations of the Company under
the Purchase Agreement, the Convertible Senior Notes and the
Transaction Documents.

Warrants

Each Warrant will be exercisable immediately in exchange for
cash. In addition, unless all of the Warrant Shares that are
subject to an exercise notice with respect to any Warrant are
registered for resale to an effective registration statement and
are issuable without any restrictive legend, such Warrant may
also be exercised by way of a cashless exercise. The Warrants
will also provide that the exercise price of each Warrant will be
adjusted upon the occurrence of certain events such as stock
dividends, stock splits and other similar events. The Warrants
will include a blocker provision that prevents the Company from
effecting any exercise in the event that the holder, together
with certain affiliated parties, would beneficially own in excess
of either 4.99% or 9.99%, with such threshold to be determined by
the holder prior to issuance, of the shares of Common Stock
outstanding immediately after giving effect to such exercise.

The Warrants will contain a provision that prevents the Company
from entering into or becoming party to a Fundamental Transaction
(as defined in the Warrants) unless the Companys successor entity
assumes all of the Companys obligations under the Warrants and
the related transaction documents to written agreements in form
and substance satisfactory to at least a certain number of
holders of the Warrants.

The Securities to be issued to the Investors and the underlying
shares of Common Stock have not been registered under the
Securities Act of 1933, as amended (the Securities Act), or the
securities laws of any state, and were offered and will be sold
and issued in reliance on the exemption from registration under
the Securities Act provided by Section 4(a)(2) of the Securities
Act and/or Rule 506 of Regulation D promulgated thereunder
(Regulation D). The shares of Common Stock issuable to Investors
upon conversion of the Convertible Senior Notes (the Conversion
Shares) and the Warrant Shares issuable to Investors upon
exercise of the Warrants were not registered under the Securities
Act, or the securities laws of any state, and were offered in
reliance on the exemption from registration under the Securities
Act provided by Section 4(a)(2) of the Securities Act and/or Rule
506 of Regulation D and may be sold upon exercise to an available
exemption, including Section 4(a)(2) and Section 3(a)(9) of the
Securities Act. Each Investor was an accredited investor (as
defined in Rule 501 of Regulation D under the Securities Act) at
the time of the November 2016 Financing.

Registration Rights Agreement

In connection with the November 2016 Financing, the Company
entered into a Registration Rights Agreement with the Investors
(the Registration Rights Agreement) to which the Company will be
required to file one or more registration statements with the
Securities and Exchange Commission to register for resale by the
Investors the Shares and Warrant Shares and use its best efforts
to maintain the effectiveness of such registration statement(s).
The Company will be required to file the first such registration
statement promptly following the Initial Closing Date, but in no
event later than the date that is forty-five (45) days after the
Initial Closing Date. The Company is required to have the
registration statement mandated by the Registration Rights
Agreement declared effective by specified deadlines contained in
the Registration Rights Agreement.

If the Company fails to register the required number of
securities, including the Conversion Shares and Warrant Shares,
to the terms of the Registration Rights Agreement, or is unable
to maintain a registration statement to the terms thereof, the
Company is obligated to pay to each holder of securities
registrable under such Registration Rights Agreement a cash
amount equal to two percent of the aggregate purchase price of
such Investors registrable securities, in the manner and subject
to the conditions set forth in such Registration Rights
Agreement.

First Amendment to Subordination and Intercreditor Agreement
(September 2016)

On November 23, 2016, the Company entered into a First Amendment
to Subordination and Intercreditor Agreement, dated as of
November 2, 2015, (the First Amendment to November Subordination
Agreement) which amends that certain Subordination and
Intercreditor Agreement, dated as of November 2, 2015 (the
November Subordination Agreement), to provide that the
Convertible Senior Notes issued to the Purchase Agreement, as
well as the convertible senior notes (the 2015 Notes) issued to
that certain securities purchase agreement dated as of April 22,
2015 (the April 2015 SPA) and that certain securities purchase
agreement dated as of May 7, 2015 (the May 2015 SPA), as amended
and restated to date, will rank pari passu as Senior
Note Debt (as defined in the November Subordination Agreement).

First Amendment to Subordination and Intercreditor Agreement
(November 2015)

On November 23, 2016, the Company entered into a First Amendment
to Subordination and Intercreditor Agreement, dated as of
September 1, 2016 (the First Amendment to September Subordination
Agreement), which amends that certain Subordination and
Intercreditor Agreement, dated as of September 1, 2016 (the
September Subordination Agreement), to provide that the
Convertible Senior Notes issued to the Purchase Agreement, as
well as the 2015 Notes issued to the April 2015 SPA and May 2015
SPA, as amended and restated to date, will rank pari
passu as Senior Note Debt (as defined in the September
Subordination Agreement).

Second Amendment to Pledge and Security Agreement

On November 23, 2016, the Company entered into a Second Amendment
to Pledge and Security Agreement dated as of April 23, 2015 (the
Security Amendment Agreement), which amends that certain Pledge
and Security Agreement dated as of April 23, 2015 (the Security
Agreement), to provide for the grant by the Company and the
Subsidiary (collectively, the Grantors), to the Investors of a
security interest in all personal property (subject to certain
exceptions specified therein) of the Grantors to secure all of
the Companys obligations to such Investors, such that the
Investors and the holders of the 2015 Notes will each have a
first priority perfected security interest in all of the current
and future assets of the Company and direct and indirect
subsidiaries of the Company, except for the Excluded Assets (as
defined in the Security Agreement)

Amendment Agreements

On November 23, 2016, the Company and certain investors holding
2015 Notes executed amendment agreements (the Amendment
Agreements) to amend and restate the 2015 Notes in order to (i)
provide that the 2015 Notes will rank pari passu with
the Convertible Senior Notes and (ii) adjust the terms of such
2015 Notes, including without limitation the initial conversion
price per share, to conform to the Convertible Secured Notes.
Additionally, the Amendment Agreements provide that the exercise
price of certain warrants held by the investors holding 2015
Notes will be adjusted to $3.00 per share. The Amendment
Agreements are binding upon all of the issued 2015 Notes to the
terms thereof.

First Amendments to Securities Purchase Agreement (September
2016)

On November 23, 2016, the Company and certain investors holding
Convertible Junior Notes executed First Amendments (the November
Amendments) to the Securities Purchase Agreement dated September
1, 2016 (the September 2016 SPA) to (i) extend the deadline for
the Company to commence trading on a Qualified Eligible Market
(as defined in the September 2016 SPA) to no later than December
31, 2017; and (ii) reduce the exercise price of certain warrants
held by the investors holding Convertible Junior Notes to $3.00
per share.

First Amendments to Convertible Junior Notes

On November 23, 2016, the Company and certain investors holding
Convertible Junior Notes executed First Amendments (the
Convertible Junior Notes Amendments) to such Convertible Junior
Notes to reduce the initial conversion price per share of such
Convertible Junior Notes to $2.50 and adjust certain definitions.
The Convertible Junior Notes Amendments are binding upon all of
the issued Convertible Junior Notes to the terms thereof.

The forms of Securities Purchase Agreement, Registration Rights
Agreement, First Amendment to September Subordination Agreement,
First Amendment to November Subordination Agreement, Security
Amendment Agreement and November Amendments are attached as
Exhibits 10.1, 10.2, 10.3, 10.4, 10.5 and 10.6, respectively, to
this Current Report on Form 8-K and are incorporated herein by
reference. The forms of Convertible Senior Note, Warrant,
Amendment Agreement and Convertible Junior Note Amendments are
attached as Exhibits 4.1, 4.2, 4.3 and 4.4, respectively, to this
Current Report on Form 8-K and are also incorporated herein by
reference. The foregoing descriptions of these agreements and
instruments do not purport to be complete and are qualified in
their entirety by reference to such exhibits.

As more fully described in Item 1.01 above, which disclosure
regarding the Convertible Senior Notes and Warrants is
incorporated by reference herein, on November 23, 2016, the
Company agreed to issue the Convertible Senior Notes and the
Warrants to the Investors to the Purchase Agreement. The issuance
of the Convertible Senior Notes, and upon conversion of the Notes
in accordance with their terms, the issuance of the shares of
Common Stock upon such conversion will be, and the issuance of
the Warrants, and upon exercise of the Warrants in accordance
with their terms, the issuance and sale of the Warrant Shares
will be, exempt from registration to an exemption afforded by
Section 4(a)(2) of the Securities Act and Rule 506(b) of
Regulation D, based on representations of the Investors, which
included, in pertinent part, that each recipient is an accredited
investor as that term is defined in Rule 501 of Regulation D, who
is acquiring such Convertible Senior Note and Warrant for
investment purposes for its own account and not as nominee or
agent, and not with a view to the resale or distribution thereof,
and that such the investor understands that the Convertible
Senior Note and Warrant may not be sold or otherwise disposed of
without registration under the Securities Act or an applicable
exemption therefrom.

On November 25, 2016, the Company issued a press release
regarding the November 2016 Financing, which is attached as
Exhibit 99.1 to this Current Report on Form 8-K and incorporated
herein by reference.

(d) Exhibits.

About ENER-CORE, Inc. (OTCMKTS:ENCR)

Ener-Core, Inc. designs, develops, manufactures and has commercially deployed products based on technologies that generate base-load, clean power from polluting waste gases that are otherwise destroyed or vented into the atmosphere by a range of industries. The Company also designs its technologies to provide power generation solutions with reduced air emissions. Its Power Oxidation technology offers an alternative to traditional methods of destroying gaseous pollution, by simultaneously enabling industrial facilities. Its commercial products include Ener-Core Powerstation EC250 (EC250) and Ener-Core Powerstation EC333 (EC333), which combine its Power Oxidizer with an approximately 250 kilowatt (kW)and over 333 kW gas turbine, respectively. It is also engaged in developing a product, which is called the KG2-3GEF/PO (KG2 with Power Oxidizer (KG2/PO)). It has over two powerstations in operation at a landfill site in the Netherlands and at the University of California, Irvine.

ENER-CORE, Inc. (OTCMKTS:ENCR) Recent Trading Information

ENER-CORE, Inc. (OTCMKTS:ENCR) closed its last trading session 00.00 at 2.75 with shares trading hands.