Ener-Core, Inc. and Alain J. Castro entered into a Separation Agreement and General Release of All Claims, pursuant to which the company and Mr. Castro mutually agreed to terminate Mr. Castro's employment with the company, as well as his position as Chief Executive Officer of the company, along with any officer, director or employee positions with the company's subsidiaries and affiliates, effective as of a date no later than May 31, 2018. Mr. Castro will remain employed and will continue to serve as both Chief Executive Officer and a member of the Company's board of directors during the six-month notice period, beginning on December 1, 2017 and ending on the Termination Date, subject to the following conditions: (i) if the company hires a new chief executive officer during the Notice Period, Mr. Castro will continue to remain employed by the company as a special advisor for the remainder of the Notice Period and will perform duties under the direction of the Board; (ii) Mr. Castro will resign as a member of the Board at the request of the Board at any time during the Notice Period;(iii) during the Notice Period, the company will pay Mr. Castro a base salary of $20,000 per month, the company will continue to reimburse Mr. Castro for certain out-of-pocket expenses and Mr. Castro may continue to participate in the company's health and insurance plans; and (iv) the options awarded to Mr. Castro on or about April 6, 2017 and November 28, 2014 and the restricted stock awarded to Mr. Castro on or about April 6, 2017 will accelerate and be fully vested on the effective date of the Severance Agreement and General Release of All Claims that Mr. Castro has agreed to execute upon effectiveness of his termination. In addition, the November 28, 2014 option will remain exercisable through November 28, 2020, and the April 6, 2017 option will be exercisable for a period of five years following his departure from the company pursuant to the terms of the Separation Agreement.

During the Notice Period, Mr. Castro may spend a reasonable amount of time searching for alternate employment, and in the event he leaves to begin full time employment elsewhere during the Notice Period, he will forfeit any additional compensation due under the Separation Agreement.