Ener-Core, Inc. (OTCPK:ENCR) announced a private placement of unregistered convertible senior secured promissory notes for gross proceeds of $3,200,000 on November 23, 2016. The notes have a par value of $3,555,555.56 and will be issued at a discount of 10%. The notes will bear no interest and will mature on December 31, 2018. The notes will bear interest at a rate of 10% per annum in the event of default. Each note will be convertible at the option of the holder into common stock at a fixed conversion price of $2.50 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; the weighted average price of the common stock for each trading day during a twenty trading day period equals or exceeds $5 and no equity conditions failure 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 note of notice thereof, such holder may require the company to redeem all or any portion of its note at a price equal to 115% of the conversion amount. Additionally, upon a change of control and delivery to the holder of the note of notice thereof, such holder may also require the company to redeem all or any portion of its 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; initial deposits for at least eight 2 MW Power Oxidizer units or 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 notes and ending on December 31, 2017, the holder of the note may require the company to redeem all or any portion of its note at a price equal to 100% of the conversion amount being redeemed. At any time after the issuance date of the 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 pursuant to all notes must be at least $500,000, or such lesser amount as is then outstanding. The portion of the notes to be redeemed shall be redeemed at a price equal to the greater of; 110% of the conversion amount of the note being redeems and the product of the conversion amount being redeemed and the quotient determined by dividing the greatest weighted average price of the shares 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 the lowest conversion price in effect during such period. The company will issue associated warrants to purchase 400 shares of common stock for each $1,000 of principal amount of convertible senior notes purchased by the investors resulting in a total of 1,423,200 warrants. Each such warrant will be exercisable into a common share at $3 per share for a period of five years from the date of issue. The company has entered into a securities purchase agreement with 15 accredited investors including returning investor, Empery Asset Master Ltd, a fund managed by Empery Asset Management, LP, acting as a lead investor. The company will issue securities pursuant to exemption provided under Regulation D. The transaction is expected to close on November 29, 2016. The company may receive further $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 in the initial closing, at a subsequent closing to occur on or prior to December 12, 2016. The company shall reimburse Empery Asset Master Ltd for all costs and expenses incurred in connection with the transaction in the maximum amount of $60,000. The notes to be issued are guaranteed by Ener-Core Power, Inc., the subsidiary of the company.