ASSIGNMENT AND ASSUMPTION OF LEASE

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.

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.

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

EXHIBIT A

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