Secondary Revolving Promissory Note for Operating Capital

 

Date:   October 1, 2011       Borrower:   Flux Power, Inc.       Borrower's
Address:   2240 Auto Park Way     Escondido, CA 92029       Lender:   Esenjay
Investments, LLC       Place for Payment:   500 N. Water, Suite 1100S     Corpus
Christi, TX 78471       Principal Amount:   $1,000,000.00       Annual Interest
Rate:   Eight percent (8%)       Primary Use of Funds:   To be used as bridge
capital for operating expenses.       Maturity Date:   Upon receipt of new
capital from the next round of financing but not later than May 30, 2012

 

Annual Interest Rate on Matured, Unpaid Amounts:

 

18% or the highest rate allowed by law, whichever is less

 

Terms of Payment (principal and interest):

 

The Principal Amount may be prepaid in whole or in part at any time, or from
time to time, without notice, penalty, or premium. The Principal Amount and all
accrued interest shall be due and payable on the Maturity Date. Partial
prepayments of principal shall be applied to installments of principal in
reverse order of maturity.

 

Security for Payment: This note is secured by the general assets of Flux Power
Inc.

 

Notwithstanding any provision herein to the contrary, it is expressly understood
that this note is a revolving note, and Payee may in his discretion, but shall
not be obligated to, advance funds pursuant to this note from time to time until
90 days from the Maturity Date, after which no advances shall be made under this
note. A notation made by Payee in his records regarding this note hereunder
shall reflect each advance and each payment of principal. The aggregate unpaid
amount of advances reflected by the notation shall be deemed rebuttably
presumptive evidence of the principal amount owing under this note, which amount
the undersigned unconditionally promises to pay to the order of Payee under the
terms hereof. The minimum amount of any advance shall be $50,000.00. The
advances and repayments of principal under this note are not limited to
$1,000,000.00 of principal, but to $1,000,000.00 of principal at any one time
outstanding.

 

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Borrower promises to pay to the order of Lender the Principal Amount plus
interest at the Annual Interest Rate. This note is payable at the Place for
Payment and according to the Terms of Payment. All unpaid amounts are due by the
Maturity Date. After maturity, Borrower promises to pay any unpaid principal
balance plus interest at the Annual Interest Rate on Matured, Unpaid Amounts.

 

If Borrower defaults in the payment of this note or in the performance of any
obligation in any instrument securing or collateral to this note, or if Lender
in good faith deems himself insecure, Lender may declare the unpaid principal
balance and earned interest on the note immediately due. Borrower and each
surety, endorser, and guarantor waive all demand for payment, presentation for
payment, notice of intention to accelerate maturity, notice of acceleration of
maturity, protest, and notice of protest, to the extent permitted by law.

 

Borrower also promises to pay reasonable attorney's fees and court and other
costs if this note is placed in the hands of an attorney to collect or enforce
the note. These expenses will bear interest from the date of advance at the
Annual Interest Rate on Matured, Unpaid Amounts. Borrower will pay Lender these
expenses and interest on demand at the Place for Payment. These expenses and
interest will become part of the note and will be secured by any security for
payment.

 

Interest on the debt evidenced by this note will not exceed the maximum rate or
amount of nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law. Any interest in excess of that maximum amount
will be credited on the Principal Amount or, if the Principal Amount has been
paid, refunded. On any acceleration or required or permitted prepayment, any
excess interest will be canceled automatically as of the acceleration or
prepayment or, if the excess interest has already been paid, credited on the
Principal Amount or, if the Principal Amount has been paid, refunded. This
provision overrides any conflicting provisions in this note and all other
instruments concerning the debt.

 

Each Borrower is jointly and severally responsible for all obligations
represented by this note.

 

When the context requires, singular nouns and pronouns include the plural.

 

Esenjay Investments, LLC   Flux Power, Inc.         By: /s/Michael E. Johnson  
By: /s/Chris Anthony       Name: Michael Johnson   Chris Anthony       Title:  
CEO and President

 

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Agreement to Amend Revolving Note to Extend Maturity Date

Between

Flux Power Inc. and Esenjay Investments

 

This Amendment (“Amendment”) for the Secondary Revolving Promissory Note for
Operating Capital Loan (“Secondary Note”) by and between Flux Power Inc.,
("Flux”, “Borrower” and/or “Corporation") with a principal address of 2240 Auto
Pkwy Escondido CA 92029 and Esenjay Investments LLC, ("Purchaser") with a
principal address in Corpus Christi, TX and shall be effective on October 19,
2011 (the “Amendment Effective Date”).

 

Whereas, the parties desire by this Amendment to amend the Secondary Note. All
references to articles and sections and use of defined terms herein shall have
the same meanings and effect as stated in the Secondary Note unless otherwise
stated in this Amendment.

 

AGREEMENT. The Parties agree to the following:

 

1.Amendment to Secondary Note. To amend the Secondary Note to extend the
maturity date of the note from May 30, 2012 to September 30, 2013 and remove the
stipulation of repayment upon next round of financing. The language below will
replace the maturity date language in the Secondary Note in its entirety:

 

“Maturity Date:                       September 30, 2013”

 

IN WITNESS HEREOF, the parties hereto have executed this Amendment as of the
Effective Date written above.

 

Esenjay Investments LLC   Flux Power Inc.           Signature: /s/Howard
Williams   Signature: /s/Chris Anthony   Howard Williams, Treasurer     Chris
Anthony, CEO           Date: 10/20/2011   Date: 10/19/2011

  

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