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June 14, 2012

 

Mr. Chris Anthony

Chief Executive Officer

Flux Power Holdings, Inc.

2240 Auto Parkway

Escondido, CA 92029

 

Dear Mr. Anthony,

 

This letter agreement (“Agreement”) serves to confirm the agreement entered into
between us whereby Flux Power Holdings, Inc., a Nevada corporation (“Flux” or
the “Company”) retains Baytree Capital Associates LLC, a Delaware limited
liability company, (the “Consultant”) as the Company’s non-exclusive financial
advisor for a period of twenty-four (24) months to perform business and
financial consulting services for the Company, unless terminated pursuant to the
terms of this Agreement This Agreement is intended to be executed at the closing
of the acquisition of Flux Power, Inc. (“Flux”) by Flux Power Holdings, Inc.,
(formerly known as Lone Pine Holdings, Inc.). As part of its duties, the
Consultant shall, use its best efforts to provide advice and guidance in the
following areas

 

1.          Assist the Company in long-term financial planning, and expansion;

 

2.          Review and assist in the preparation of budgets and financial
forecasts prepared by employees of the Company as requested;

 

3.          Review internal and other financial statements prepared by employees
or consultants to the Company as requested;

 

4.          Assist management and its counsel in negotiating any proposed equity
or debt financing, whether such financing involves conventional institutional
loans or public or private offerings of securities;

 

5.          Assist management and others in the preparation of presentations;

 

6.          Work with the Company's counsel and auditors in conjunction with the
preparation of any documentation referred to above or any financing negotiations
and preparation referred to above;

  

--------------------------------------------------------------------------------

Baytree Capital Associates, LLC

The Trump Building

40 Wall Street, 58th Floor

New York, NY 10005

 

 

 

 

Flux Power Holdings, Inc.

June 14, 2012

Page 2

 

7.          Provide advice to the Company's management concerning proposed
agreements;

 

8.          If requested by the Company, communicate, correspond and negotiate
on behalf of the Company with regard to the potential acquisition or sale of
other businesses and entities; and

 

9.          If requested, evaluate the financial condition and review the
financial information supplied relating to the business' entities referred to in
Section 8 above.

 

In providing the services hereunder, Consultant agrees to comply with all
applicable law including state and federal securities laws.

 

In addition, as part of its duties, the Consultant agrees to use its best
efforts to consult the Company in regard to the following:

 

1.          Although we do not engage in the practice of investor relations or
public relations, at Company’s request we will act as your agent in that we will
be allowed to interface with the Company’s investor and public relations firms
with regard to communications and presenting the Company to the investment
community;

 

2.          Although we do not engage in the practice of law, the Consultant
will provide advice to the Company with respect to its proposed filings with the
Securities and Exchange Commission; as requested.

 

Notwithstanding the foregoing, the Consultant’s Managing Member, Michael
Gardner, shall not be obligated to attend any meetings outside of its offices or
prepare any written reports, documents or responses. All services shall be
performed by the Consultant from its offices in New York.

 

The Company agrees to pay the Consultant 100,000 restricted shares of newly
issued common stock at the commencement of each six month period in return for
its services hereunder, which shares shall be deemed earned upon the
commencement of each six month period. The Company agrees to grant the Company
piggy-back registration rights to register any then outstanding shares at the
time of an appropriate registration by the Company. The Company shall pay for
any expenses incurred by the Consultant pursuant to this Agreement, except that
any expenses over $1,000 (either individually or in the aggregate) shall be
subject to approval by the Company in advance.

 

In addition, the Company agrees to grant Consultant a warrant to purchase
1,837,777 restricted shares of common stock of Flux for a period of (five) years
at an exercise price of forty-one cents ($0.41) cents. Such warrant shall
include a provision for a cashless exercise. A copy of said warrant is Exhibit I
to this agreement. All securities of the Company issued in connection with this
letter shall be “restricted securities” as such term is defined under Rule 144
of the Securities Act of 1933, as amended.

 

The Company may not terminate this Agreement for twenty-four (24) months except
if the Consultant is in material breach of this Agreement, or willfully refuses
to perform services required by this Agreement and the Company has first given
the Consultant 30 days written notice of such breach or willful refusal and in
connection with such notice, supplies the Consultant with detailed documentation
concerning this breach or willful refusal. In the event that after receipt of
such notice, the Consultant fails to cure such breach or willfully fails to
perform reasonable services requested, this Agreement shall expire at the
expiration of such 30-day period. Notwithstanding any termination, the
Consultant shall not be required to refund any shares delivered to it or fees
paid to it.

 

 

 

 

Flux Power Holdings, Inc.

June 14, 2012

Page 3

 

Any controversy, dispute or claim arising out of or relating to this Agreement,
or its interpretation, application, implementation, breach or enforcement which
the parties are unable to resolve by mutual agreement, shall be settled by
submission by either party of the controversy, claim or dispute to binding
arbitration in New York, N.Y., (unless the parties agree in writing to a
different location) before a single arbitrator in accordance with the rules of
the American Arbitration Association then in effect. In any such arbitration
proceeding the parties agree to provide all discovery deemed necessary by the
arbitrator. The decision and award made by the arbitrator shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.

 

As agreed upon indemnification agreement is included as Exhibit II.

 

This Agreement and any dispute, disagreement, or issue of construction or
interpretation arising hereunder whether relating to its execution, its
validity, the obligations provided therein or performance shall be governed or
interpreted according to the laws of the State of New York.

 

If the foregoing is acceptable to you, please execute a copy and return it to
me.

 

  Very truly yours,           /s/ Michael Gardner   Michael Gardner, Managing
Member

 

 

 

 

Flux Power Holdings, Inc.

June 14, 2012

Page 4

 

We hereby agree to the contents of the foregoing letter agreement.

 

  Flux Power Holdings, Inc.       Date:  June 14, 2012 By: /s/ Chris Anthony    
Chris Anthony, Chief Executive Officer

 

 

 

 

ANNEX A

 

Flux Power Holdings, Inc.

2240 Auto Parkway

Escondido, CA 92029

  

June 14, 2012

 

Baytree Capital Associates, LLC

40 Wall Street, 58th Floor

New York, NY 10005

 

Gentlemen:

 

In connection with the engagement of Baytree Capital Associates, LLC (“Baytree”)
to advise and assist Flux Power Holdings, Inc.(together with its affiliates and
subsidiaries, referred to as the “Company”) with the matters set forth in the
Letter Agreement, dated June 14, 2012 between the Company and Baytree (the
“Agreement”), in the event that Baytree becomes involved in any capacity in any
claim, suit, action, proceeding, investigation or inquiry (including, without
limitation, any shareholder or derivative action or arbitration proceeding)
(collectively, a “Proceeding”) in connection with any matter in any way relating
to or referred to in the Agreement or arising out of the matters contemplated by
the Agreement, the Company agrees to indemnify, defend and hold Baytree harmless
to the fullest extent permitted by law, from and against any losses, claims,
damages, liabilities and expenses in connection with any matter in any way
relating to or referred to in the Agreement or arising out of the matters
contemplated by the Agreement, provided however, Company shall not be obligated
under this Agreement to indemnify Baytree with respect to:

 

(a)          any claim, issue or matter after Baytree is finally adjudged to be
liable to the Company by a court of competent jurisdiction due to gross
negligence or willful misconduct unless and to the extent that a court or the
court in which the action was heard determines that Baytree is entitled to
indemnification for such amounts as the court deems proper;

 

(b)          the reporting or accounting of profits made from the purchase or
sale by Baytree of securities of the Company within the meaning of Section 16 of
the Securities Exchange Act of 1934 as amended, or similar provisions of any
state statutory or common law;

 

(c)           any claims or investigations conducted by the Securities and
Exchange Commission relating to Baytree and/or its affiliates; or

 

 

 

 

(d)          any act or omission by Baytree that constitutes a breach of or
default under any agreement between Baytree and the Company. In addition, in the
event that Baytree becomes involved in any capacity in any Proceeding in
connection with any matter in any way relating to or referred to in the
Agreement or arising out of the matters contemplated by the Agreement, the
Company will reimburse Baytree for its legal and other expenses (including the
cost of any investigation and preparation) as such expenses are incurred by
Baytree in connection therewith provide however, in no event shall the Company
be obligated to pay for indemnification losses and expenses incurred by Baytree
in excess of the amount of fees actually received by Baytree pursuant to the
Agreement. If such indemnification were not to be available for any reason, the
Company agrees to contribute to the losses, claims, damages, liabilities and
expenses involved (i) in the proportion appropriate to reflect the relative
benefits received or sought to be received by the Company and its stockholders
and affiliates and other constituencies, on the one hand, and Baytree, on the
other hand, in connection with the matters contemplated by the Agreement or (ii)
if (but only if and to the extent) the allocation provided for in clause (i) is
for any reason held unenforceable, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) but also the
relative fault of the Company and its stockholders and affiliates and other
constituencies, on the one hand, and the party entitled to contribution, on the
other hand, as well as any other relevant equitable considerations.  The Company
agrees that for the purposes of this paragraph the relative benefits received,
or sought to be received, by the Company and its stockholders and affiliates and
other constituencies, on the one hand, and the party entitled to contribution,
on the other hand, in connection with the matters contemplated by the Agreement
shall be deemed to be in the same proportion that the total value received or
paid or contemplated to be received or paid by the Company or its stockholders
or affiliates and other constituencies, as the case may be, as a result of or in
connection with the matters (whether or not consummated) for which Baytree has
been retained to perform financial services bears to the fees paid to Baytree
under the Agreement; provided, that in no event shall the Company’s contribution
be more than the amount of fees actually received by Baytree pursuant to the
Agreement.  Relative fault shall be determined by reference to, among other
things, whether any alleged untrue statement or omission or any other alleged
conduct relates to information provided by the Company or other conduct by the
Company (or its employees or other agents), on the one hand, or by Baytree, on
the other hand.  The Company will not settle any Proceeding in respect of which
indemnity may be sought hereunder, whether or not Baytree is an actual or
potential party to such Proceeding, without Baytree’s prior written consent if
any admission of wrong-doing, negligence or improper activity of any kind of
Baytree is a part of such settlement. Baytree shall not settle any action or
proceeding which settlement requires the Company (or any insurance company
providing coverage to the Company) to pay any sums of money or property
(including issuing any securities) without the express written consent of the
Company.  For purposes of this Indemnification Agreement, Baytree shall include
Baytree Capital Associates, LLC, any of its affiliates, each other person, if
any, controlling Baytree or any of its affiliates, their respective officers,
current and former directors, employees and agents, and the successors and
assigns of all of the foregoing persons.  The foregoing indemnity and
contribution agreement shall be in addition to any rights that any indemnified
party may have at common law or otherwise.

 

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             This INDEMNIFICATION Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way relating
to this Agreement (“Claim”), DIRECTLY OR INDIRECTLY, shall be governed by and
construed in accordance with the laws of the State of New York.  Except as set
forth below, no Claim may be commenced, prosecuted or continued in any court
other than the courts of the State of New York located in the City and County of
New York or in the United States District Court for the Southern District of New
York, which courts shall have exclusive jurisdiction over the adjudication of
such matters, and the Company and BAYTREE consent to the jurisdiction of such
courts and personal service with respect thereto.  The Company hereby consents
to personal jurisdiction, service and venue in any court in which any claim
arising out of or in any way relating to this agreement is brought by anY third
party against BAYTREE or any indemnified party.  the Company waives all right to
trial by jury in any proceEding or claim (whether based upon contract, tort or
otherwise) arising out of or in any way relating to this Agreement.  The Company
agrees that a final judgment in any proceEding or claim arising out of or in any
way relating to this agreement brought in any such court shall be conclusive and
binding upon the Company and may be enforced in any other courts to the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.

  

  Very truly yours,       /s/ Chris Anthony   Chris Anthony, Chief Executive
Officer

 

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