On November 14, 2014, Ener-Core, Inc. entered into a commercial license agreement with Dresser-Rand Company (D-R). Pursuant to the agreement, the company and D-R will jointly and collaboratively develop and commercialize the company's Gradual Oxidizer (the E-C Product) with the D-R KG2-3GEF gas turbine generator. In accordance with the Agreement, D-R will provide up to $1,600,000 in cash for a prepaid exclusive four year license to commercialize the E-C Products and fundamental process technology developments for gas turbine generators in the range of 1 to 4 WM per unit.

All payments are conditioned on the company meeting certain conditions, including, but not limited to, conducting additional tests on the E-C Products, securing additional funding to complete the development of the E-C Products, and providing quarterly financial reports to D-R of the company's expenditures. The following is a summary of the material terms of the agreement: The company shall grant D-R a worldwide right to market and commercialize the company's Gradual Oxidizer technology integrated with D-R gas turbine generators in the range of 1 to 4 MW per unit. The License shall be an exclusive license for the first four years, subject to extension if commercial performance parameters are met and to cancellation for non-performance.

Upon the satisfaction of conditions precedent contained within the Agreement, D-R must make quarterly installment payments totaling $1.6 million dollars, as a prepaid license fee, in order to secure the initial 4-year exclusivity of the License. Both the company and D-R are required to collaborate jointly in the technical development of the first commercial order. The company is required to contribute $4.2 million towards such development including 15,000 hours of labor and paying D-R a flat fee of $500,000 for up to 3,000 hours of D-R labor; D-R is required to contribute $1.6 million towards such development, inclusive of the license fee payment.

The resulting product that will be marketed and sold by D-R shall be a combination of the Company's Gradual Oxidizer integrated with D-R's 2MW-class gas turbine. The integrated product will be branded and sold as a D-R product, bearing D-R's name KG2-3GEF/GO and manufactured, warranted, maintained, serviced, and overhauled by D-R, with back-to-back respective obligations of the company in all technical areas relating to the company's Gradual Oxidizer component of such products. Unless the License is terminated, the Company also grants to D-R an expanded non-exclusive license to commer cialize E-C Technology for projects larger than 4MW that are comprised of the 2MW KG2 Oxidizer Turbine in multiple power blocks.

D-R shall be responsible for worldwide commercial end-sales of the jointly developed 2MW KG2 Oxidizer Turbine. The company is required to support those commercial efforts and to manufacture and sell to D-R such Gradual Oxidizers as will be required by respective commercial orders from D-R customers. The Agreement also provides for a supply agreement whereby the Company will manufacture and sell to D-R E-C Product components for inclusion in KG2-3GEF/GO, consisting of the Gradual Oxidizer, interfaces and interconnections, instrumentation, controls, software, and related parts and services.

Within six months from the effective date of the Agreement, both parties agree to mutually negotiate a worldwide manufacturing agreement that would allow D-R to manufacture E-C Product components for use in the 2MW KG2 Oxidizer Turbine. The Agreement shall remain in effect until the termination of the License unless terminated earlier in accordance with the Agreement.