Exhibit 10.23


 


FLUX POWER HOLDINGS, INC.


a Nevada Corporation


 


2014 EQUITY INCENTIVE PLAN


 


1.PURPOSE. The purpose of this Plan is to provide
incentives to attract, retain and motivate Eligible Persons whose present and potential contributions are important to the success
of the Company by offering them an opportunity to participate in the Company’s future performance through awards of Incentive
and Non-Qualified Stock Options (“Options”), and Stock (“Restricted Stock” or “Unrestricted
Stock”). This Plan is not intended to replace any current plan of, or awards issued by, the Company, nor will it limit
the ability of the Company to create additional or new plans, or to issue additional or new awards. Capitalized terms not defined
in the text are defined in Section 28.


 


2.ADOPTION AND STOCKHOLDER APPROVAL. This Plan will
be effective upon adoption by the Board (the “Effective Date”) and continuance of the Plan for Incentive Stock
Options shall be subject to approval by the Stockholders within twelve (12) months after the date the Plan is adopted. Such Stockholder
approval shall be obtained in the manner and to the degree required under the applicable laws. No Award will be granted after termination
of this Plan but all Awards granted prior to termination will remain in effect in accordance with their terms. So long as the Company
is subject to Section 16(b) of the Exchange Act, the Company will comply with the requirements of Rule 16b-3 (or its successor),
as amended.


 


3.TERM OF PLAN. Unless earlier terminated as provided
herein, this Plan will terminate ten (10) years from the date this Plan is adopted by the Board.


 


4.SHARES SUBJECT TO THIS PLAN.


 


4.1.Number of Shares Available.
Subject to Section 4.2, the total number of Shares


reserved and available for grant and issuance pursuant to this
Plan will be ten million (10,000,000) (the “Maximum Number”). Not more than the Maximum Number of shares of
Stock shall be granted in the form of Incentive Stock Options. Shares issued under the Plan will be drawn from authorized and unissued
shares or shares now held or subsequently acquired by the Company.


 


4.1.1.Future Awards. Subject to
Section 4.2 and to the fullest extent permissible under Rule 16b-3 under the Exchange Act and Section 422 of the Code
and any other applicable laws, rules and regulations, (i) if an Award is canceled, terminates, expires, is forfeited or lapses
for any reason without having been exercised or settled, any shares of Stock subject to the Award will be added back into the Maximum
Number and will again be available for the grant of an Award under the Plan and (ii) and the number of shares of Stock withheld
to satisfy a Participant’s minimum tax withholding obligations will be added back into the Maximum Number and will be available
for the grant of an Award under the Plan. Also, only the net numbers of Shares that are issued pursuant to the exercise of an Award
will be counted against the Maximum Number.


 






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However, in the event that prior to the
Award’s cancellation, termination, expiration, forfeiture or lapse, the holder of the Award at any time received one or more
elements of “beneficial ownership” pursuant to such Award (as defined by the SEC, pursuant to any rule or interpretations
promulgated under Section 16 of the Exchange Act), the Shares subject to such Award will not again be made available for re-grant
under the Plan.


 


4.1.2.Acquired Company Awards. Notwithstanding
anything in the Plan to the contrary, the Plan Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if the other plans are or were plans of other acquired
entities (“Acquired Entities”) (or the parent of an Acquired Entity) and the new Award is substituted, or the
old award is assumed, by reason of a merger, consolidation, acquisition of property or stock, reorganization or liquidation (the
“Acquisition Transaction”). In the event that a written agreement pursuant to which the Acquisition Transaction
is completed is approved by the Board and said agreement sets forth the terms and conditions of the substitution for or assumption
of outstanding awards of the Acquired Entity, said terms and conditions will be deemed to be the action of the Plan Administrator
without any further action by the Plan Administrator, except as may be required for compliance with Rule 16b-3 under the Exchange
Act, and the persons holding such awards will be deemed to be Participants.


 


4.1.3.Reserve of Shares.
At all times, the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements
of all outstanding Awards granted under this Plan. The Shares to be issued hereunder upon exercise of an Award may be either authorized
but unissued; supplied to the Plan through acquisitions of Shares on the open market; Shares purchased under the Plan and forfeited
back to the Plan; Shares surrendered in payment of the exercise price of an option; or Shares withheld for payment of applicable
employment taxes and/or withholding obligations resulting from the exercise of an Option. The following rules will apply for purposes
of the determination of the number of Shares available for grant under the Plan:


 


i.Grants. The grant of an Award
will reduce the Shares available for grant under the Plan by the number of Shares subject to such Award.


 


ii.Outstanding. While an Award
is outstanding, it will be counted against the authorized pool of Shares regardless of its vested status.


 


4.2.Adjustments. Should any change
be made to the Stock of the Company by reason of any stock split (including reverse stock split), stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Company’s
receipt of consideration, the Administrator will make the appropriate adjustments to (i) the maximum number and/or class of securities
issuable under the Plan; and (ii) the number and/or class of securities and the exercise price per Share in effect under each outstanding
Award in order to prevent the dilution or enlargement of benefits thereunder; provided however, that the number of Shares subject
to any Award will always be a whole number and the Administrator will make such adjustments as are necessary to insure Awards of
whole Shares.


 






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4.3.Limitations on Awards. Notwithstanding
any provision in the Plan to the contrary (but subject to adjustment as provided in Section 4.2), the Maximum Number of Shares
of Stock with respect to one or more Options that may be granted during any one fiscal year under the Plan to any one Participant
will be one million (1,000,000). Determinations under the preceding sentence will be made in a manner that is consistent with Section
162(m) of the Code and regulations promulgated thereunder. The provisions of this Section will not apply in any circumstance with
respect to which the Administrator determines that compliance with Section 162(m) of the Code is not necessary.


 


4.4.No Repricing. Absent stockholder approval,
neither the Administrator nor the Board will have any authority, with or without the consent of the affected holders of Awards,
to “reprice” an Award in the event of a decline in the price of Shares after the date of their initial grant either
by reducing the exercise price from the original exercise price or through cancellation of outstanding Awards in connection with
re-granting of Awards at a lower price to the same individual. This paragraph may not be amended, altered or repealed by the Administrator
or the Board without approval of the stockholders of the Company.


 


4.5.No Reloading. No Option will provide for
the automatic grant of replacement or reload Options upon the Participant exercising the Option and paying the Exercise Price by
tendering Shares of Stock, net exercise or otherwise. This paragraph may not be amended, altered or repealed by the Administrator
or the Board without approval of the stockholders of the Company.


 


4.6.Maximum Number Limitations. From the
date this Plan was first adopted until twenty four (24) months thereafter, the Company shall not increase the Maximum Number except
as may be required pursuant to Section 4.2.


 


5.ADMINISTRATION OF THIS PLAN.


 


5.1.Authority. Authority to control
and manage the operation and administration of this Plan will be vested in a committee consisting of two (2) or more members of
the Board (the “Committee”) or in the Board acting as the Committee if no formal Committee is created by the
Board. It is intended that the directors appointed to serve on the Committee will be “non-employee directors” (within
the meaning of Rule 16b-3 promulgated under the Exchange Act) and “outside directors” (within the meaning of Section
162(m) of the Code) to the extent that Rule 16b-3 and, if necessary for relief from the limitation under Section 162(m) of the
Code and such relief sought by the Company, Section 162(m) of the Code, respectively, are applicable. However, the mere fact that
a Committee member will fail to qualify under either of the foregoing requirements will not invalidate any Award made by the Committee
which Award is otherwise validly made under the Plan. Members of the Committee may be appointed from time to time by, and will
serve at the pleasure of, the Board. As used herein, the term “Administrator” means the Committee.


 






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5.2.Interpretation. Subject to the express provisions
of this Plan, the Administrator will have the exclusive power, authority and discretion to:


 


(1)construe and interpret this Plan and
any agreements defining the rights and obligations of the Company and Participants under this Plan;


 


(2)select Participants;


 


(3)determine the terms and conditions
of any Award granted under the Plan, including, but not limited to, the Exercise Price, grant price or purchase price, any restrictions
or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of the Award,
and acceleration or waivers thereof, based in each case on such considerations as the Administrator in its sole discretion determines
that is not inconsistent with any rule or regulation under any tax or securities laws or includes an alternative right that does
not disqualify an Incentive Stock Option under applicable regulations. Determinations made by the Administrator under this Plan
need not be uniform but may be made on a Participant-by-Participant basis;


 


(4)determine the number of Shares or other
consideration subject to Awards;


 


(5)determine whether Awards will be subject
to a condition, or grant a right, that is not inconsistent with any rule or regulation under any tax or securities laws or includes
an alternative right that does not disqualify an incentive stock option under applicable regulations;


 


(6)prescribe the form of each Award Agreement,
which need not be identical for each Participant;


 


(7)further define the terms used in this
Plan;


 


(8)correct any defect or supply any omission
or reconcile any inconsistency in this Plan or in any Award Agreement;


 


(9)provide for rights of refusal and/or
repurchase rights;


 


(10)amend outstanding Award Agreements
to provide for, among other things, any change or modification which the Administrator could have provided for upon the grant of
an Award or in furtherance of the powers provided for herein that does not disqualify an Incentive Stock Option under applicable
regulations unless the Participant so consents;


 


(11)prescribe, amend and rescind rules
and regulations relating to the administration of this Plan; and


 


(12)make all other determinations necessary
or advisable for the administration of this Plan.


 






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5.3.Decisions Binding. Any decision or action
of the Administrator in connection with this Plan or Awards granted or shares of Stock purchased under this Plan will be final
and binding. The Administrator will not be liable for any decision, action or omission respecting this Plan, or any Awards granted
or shares of Stock sold under this Plan.


 


5.4.Limitation on Liability. To the extent permitted
by applicable law in effect from time to time, no member of the Committee will be liable for any action or omission of any other
member of the Committee nor for any act or omission on the member’s own part, excepting only the member’s own willful
misconduct, gross negligence, or bad faith and without reasonable belief that it was in the best interests of the Company, arising
out of or related to this Plan. The Company will pay expenses incurred by, and satisfy a judgment or fine rendered or levied against,
a present or former member of the Committee in any action against such person (whether or not the Company is joined as a party
defendant) to impose liability or a penalty on such person for an act alleged to have been committed by such person while a member
of the Committee arising with respect to this Plan or administration thereof or out of membership on the Committee or by the Company,
or all or any combination of the preceding, provided, the Committee member was acting in good faith, within what such Committee
member reasonably believed to have been within the scope of his or her employment or authority and for a purpose which he or she
reasonably believed to be in the best interests of the Company or its stockholders. Payments authorized hereunder include amounts
paid and expenses incurred in settling any such action or threatened action. The provisions of this section will apply to the estate,
executor, administrator, heirs, legatees or devisees of a Committee member, and the term “person” as used on this section
will include the estate, executor, administrator, heirs, legatees, or devisees of such person.


 


6.GRANT OF OPTIONS; TERMS AND CONDITIONS OF GRANT.


 


6.1.Grant of Options. One or
more Options may be granted to any Eligible Person. Subject to the express provisions of this Plan, the Administrator will determine
from the Eligible Persons those individuals to whom Options under this Plan may be granted. Each Option granted under this Plan
will be evidenced by an Award Agreement, which will expressly identify the Option as an Incentive Stock Option or a Non-Qualified
Stock Option. The Shares underlying a grant of an Option may be in the form of Restricted Stock or Unrestricted Stock.


 


Further, subject to the express provisions
of this Plan, the Administrator will specify the grant date (the “Grant Date”), the number of Shares covered
by the Option, the Exercise Price and the terms and conditions for exercise of the Options. As soon as practicable after the Grant
Date, the Company will provide the Participant with a written Award Agreement in the form approved by the Administrator.


 


The Administrator may, in its absolute discretion,
grant Options under this Plan at any time and from time to time before the expiration of this Plan.


 


6.2.General Terms and Conditions.
Except as otherwise provided herein, the Options will be subject to the following terms and conditions and such other terms and
conditions not inconsistent with this Plan as the Administrator may impose:


 






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6.2.1.Exercise of Option. The Administrator may
determine in its discretion whether any Option will be subject to vesting and the terms and conditions of any such vesting. The
Award Agreement will contain any such vesting schedule.


 


6.2.2.Option Term. Each Option and all rights
or obligations thereunder will expire on such date as will be determined by the Administrator, but not later than ten (10) years
after the Grant Date (five (5) years in the case of an Incentive Stock Option when the Optionee owns more than ten percent (10%)
of the total combined voting power of all classes of stock of the Company (“Ten Percent Stockholder”)), and
will be subject to earlier termination as hereinafter provided.


 


6.2.3.Exercise Price. The Exercise
Price of any Option will be determined by the Administrator when the Option is granted and may not be less than one hundred percent
(100%) of the Fair Market Value of the Shares on the Grant Date, and the Exercise Price of any Incentive Stock Option granted to
a Ten Percent Stockholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the Grant
Date. Payment for the Shares purchased will be made in accordance with Section 9 of this Plan. The Administrator is authorized
to issue Options, whether Incentive Stock Options or Non-Qualified Stock Options, at an option price in excess of the Fair Market
Value on the Grant Date.


 


6.2.4.Method of Exercise. Options may be exercised
only by delivery to the Company of a stock option exercise agreement (the “Exercise Agreement”) in a form approved
by the Administrator (which need not be the same for each Participant), stating the number of Shares being purchased, the restrictions
imposed on the Shares purchased under such Exercise Agreement, if any, and such representations and agreements regarding the Participant’s
investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply
with applicable securities laws, together with payment in full of the Exercise Price for the number of Shares being purchased.
The Form must be duly executed by Participant and be accompanied by payment in cash, or by check payable to the Company, in full
for the Exercise Price for the number of Shares being purchased. Alternatively, but only if the Administrator authorizes at the
time of exercise at its sole discretion, and where permitted by law (i) by surrender of shares of Stock of the Company that have
been owned by the Participant for more than six (6) months or lesser period if the surrender of Shares is otherwise exempt from
Section 16 of the Exchange Act and if such shares were purchased from the Company by use of a promissory note, such note has been
fully paid with respect to such shares, (ii) by forfeiture of Shares equal to the value of the exercise price pursuant to a “deemed
net-stock exercise” as provided for in the Plan, (iii) by broker sale by following the required instructions therefore including
as so authorized by the Administrator and its sole discretion instructions to a broker to deliver promptly to the Company the amount
of sale or loan proceeds necessary to pay the exercise price and the amount of any required tax or other withholding obligations,
or (iv) by any combination of the foregoing methods of payment or any other consideration or method of payment.


 


6.2.5.Transferability of Options.
Except as otherwise provided below for Non-Qualified Stock Options, no Option will be transferable other than by will or by the
laws of descent and distribution and during the lifetime of a Participant only the Participant, his guardian or legal representative
may exercise an Option, except that Non-Qualified Stock Options may be transferred to a Participant's former spouse pursuant to
a property settlement made part of an agreement or court order incident to the divorce.


 






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At its discretion, the Administrator may
provide for transfer of an Option (other than an Incentive Stock Option), without payment of consideration, to the following family
members of the Participant, including adoptive relationships: a child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, niece, nephew, former
spouse (whether by gift or pursuant to a domestic relations order), any person sharing the employee’s household (other than
a tenant or employee), a family-controlled partnership, corporation, limited liability company and trust, or a foundation in which
family members heretofore described control the management of assets (collectively “Family Member”). The assigned
portion may only be exercised by the person or persons who acquire a proprietary interest in the Option pursuant to the assignment.
The terms applicable to the assigned portion will be the same as those in effect for the Option immediately prior to such assignment
and will be set forth in such documents issued to the assignee as the Administrator may deem appropriate. A request to assign an
Option may be made only by delivery to the Company of a written stock option assignment request in a form approved by the Administrator,
stating the number of Options and Shares underlying Options requested for assignment, that no consideration is being paid for the
assignment, identifying the proposed transferee, and containing such other representations and agreements regarding the Participant’s
investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply
with applicable securities laws.


 


Notwithstanding anything to the contrary
in the Plan, the Award or any charter, by-laws or other instrument or document governing or applicable to the Options or shares
of Common Stock, if and to the extent the Administrator determines that it is necessary to rely on the 12h-1(f) Exemption with
respect to the Options outstanding under this Plan, each Option, including any Option granted prior to, on or after the date of
any such determination by the Administrator, will be further restricted as follows, if applicable:


 


(A) The Options and, prior to exercise, the shares of
Common Stock to be issued upon exercise of the Options will be restricted as to transfer by the Optionee other than to persons
who are Family Members through gift or domestic relations order, or to an executor or guardian of the Optionee upon the
death or disability of the Optionee, until the Company becomes subject to the reporting requirements of Section 13 or Section 15(d)
of the Exchange Act or is no longer relying on the 12h-1(f) Exemption; provided, that the Optionee may transfer the Options to
the Company, or in connection with a change of control or other acquisition transaction involving the Company, if, after such transaction,
the Options will no longer be outstanding, and the Company no longer will be relying on the 12h-1(f) Exemption; and


 


(B) The Options, and the shares of Common Stock issuable
upon exercise of such Options, will be restricted as to any pledge, hypothecation or other transfer, including any short position,
any “put equivalent position” (as defined in Rule 16a-1(h) of the Exchange Act), or any “call equivalent position”
(as defined in Rule 16a-1(b) of the Exchange Act) by the Optionee prior to exercise of an Option, except in the circumstances permitted
until the Company becomes subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act or is no longer
relying on the 12h-1(f) Exemption.


 






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6.2.6.Beneficiaries. Notwithstanding
Section 6.2.5, a Participant may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights
of the Participant and to receive any distribution with respect to any Option upon the Participant’s death. If no beneficiary
has been designated or survives the Participant, payment will be made to the Participant’s estate. Subject to the foregoing,
a beneficiary designation may be changed or revoked by a Participant at any time, provided the change or revocation is filed with
the Administrator.


 


6.2.7.Exercise After Certain Events.


 


		i.	Termination of Employment - Employee/Officer



 


(1)Incentive Stock Options.


 


(a)Termination of All Services. If for any reason
other than retirement (as defined below), permanent and total Disability (as defined below) or death, a Participant Terminates
employment with the Company (including employment as an Officer of the Company), vested Incentive Stock Options held at the date
of such termination may be exercised, in whole or in part, at any time within three (3) months after the date of such Termination
or such lesser period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Incentive
Stock Option as set forth in the Award Agreement, and (ii) ten (10) years from the Grant Date (five (5) years for a Ten Percent
Stockholder)).


 


(b)Continuation of Services as Consultant. If
a Participant granted an Incentive Stock Option terminates employment but continues as a Consultant or in a similar capacity to
the Company or any of its Subsidiaries, Participant need not exercise the Incentive Stock Option within three (3) months of Termination
of employment but will be entitled to exercise within three (3) months of Termination of services to the Company (one (1) year
in the event of permanent and total Disability or death) or such lesser or greater period specified in the Award Agreement (but
in no event after the earlier of (i) the expiration date of the Option as set forth in the Award Agreement, and (ii) ten (10) years
from the Grant Date). However, if Participant does not exercise within three (3) months of Termination of employment, the Option
will not qualify as an Incentive Stock Option.


 


(c)Right to Extend Exercise Period. Notwithstanding
Section 6.2.7(i)(1)(a) above, a Participant may, in the manner determined by the Administrator pursuant to the Award Agreement,
need not exercise the Incentive Stock Option within three (3) months of Termination of employment but will be entitled to exercise
within such period as specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option
as set forth in the Award Agreement, and (ii) ten (10) years from the Grant Date). However, if Participant does not exercise within
three (3) months of Termination of employment, the Option will not qualify as an Incentive Stock Option.


 






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(2)Non-Qualified Stock Options.


 


(a)Termination of All Services.
If for any reason other than Retirement (as defined below), permanent and total Disability (as defined below) or death, a Participant
terminates employment with the Company (including employment as an Officer of the Company), vested Options held at the date of
such Termination may be exercised, in whole or in part, at any time within three (3) months of the date of such Termination or
such lesser period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option
as set forth in the Award Agreement, and (ii) ten (10) years from the Grant Date).


 


(b)Continuation of Services as Consultant. If
a Participant Terminates employment but continues as a Consultant or in a similar capacity to the Company or any of its Subsidiaries,
Participant need not exercise the Option within three (3) months of Termination but will be entitled to exercise within three (3)
months of Termination of services to the Company (one (1) year in the event of permanent and total Disability or death) or such
lesser or greater period specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the
Option as set forth in the Award Agreement, and (ii) ten (10) years from the Grant Date).


 


(c)Right to Extend Exercise Period. Notwithstanding
Section 6.2.7(i)(2)(a) above, a Participant may, in the manner determined by the Administrator pursuant to the Award Agreement,
provide that need not exercise the Option within three (3) months of Termination but will be entitled to exercise within such period
as specified in the Award Agreement (but in no event after the earlier of (i) the expiration date of the Option as set forth in
the Award Agreement, and (ii) ten (10) years from the Grant Date).


 


ii.Retirement. If a Participant ceases to be
an employee of the Company (including as an officer of the Company) as a result of Retirement, Participant need not exercise the
Option within three (3) months of Termination of employment but will be entitled to exercise the Option within the maximum term
of the Option to the extent the Option was otherwise exercisable at the date of Retirement. However, if a Participant does not
exercise within three (3) months of Termination of employment, the Option will not qualify as an Incentive Stock Option if it otherwise
so qualified. The term “Retirement” as used herein means such Termination of employment as will entitle the Participant
to early or normal retirement benefits under any then existing pension or salary continuation plans of the Company excluding 401(k)
participants (except as otherwise covered under other pension or salary continuation plans).


 


iii.Permanent Disability and Death. If a Participant
becomes permanently and totally Disabled while employed by the Company (including as an officer of the Company), or dies while
employed by the Company (including as an Officer of the Company) or death occurs three (3) months thereafter, vested Options then
held may be exercised by the Participant, the Participant’s personal representative, or by the person to whom the Option
is transferred by will or the laws of descent and distribution, in whole or in part, at any time within one (1) year after the
Termination of employment because of the Disability or death or any lesser period specified in the Award Agreement (but in no event
after the earlier of (i) the expiration date of the Option as set forth in the Award Agreement, and (ii) ten (10) years from the
Grant Date).


 






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6.3.Limitations on Grant of
Incentive Stock Options.


 


6.3.1.Threshold.  


 


The aggregate Fair Market Value (determined
as of the Grant Date) of the Shares for which Incentive Stock Options may first become exercisable by any Participant during any
calendar year under this Plan, together with that of Shares subject to Incentive Stock Options first exercisable by such Participant
under any other plan of the Company or any Subsidiary, will not exceed $200,000. For purposes of this Section, all Options in excess
of the $200,000 threshold will be treated as Non-Qualified Stock Options notwithstanding the designation as Incentive Stock Options.
For this purpose, Options will be taken into account in the order in which they were granted, and the Fair Market Value of the
Shares will be determined as of the date the Option with respect to such Shares is granted.


 


6.3.2.Compliance with Section 422 of the Code.
 


 


There will be imposed in the Award Agreement
relating to Incentive Stock Options such terms and conditions as are required in order that the Option be an “incentive stock
option” as that term is defined in Section 422 of the Code.


 


6.3.3.Requirement of Employment.  


 


No Incentive Stock Option may be granted to
any person who is not an Employee of the Company or a Subsidiary of the Company.


 


6.4Risk And Financial Information Pursuant To The
12h-1(F) Exemption. Notwithstanding anything to the contrary in the Plan, the Award or any charter, by-laws or other instrument
or document governing or applicable to the Options or shares of Common Stock, if and to the extent the Administrator determines
that it is necessary to rely on the 12h-1(f) Exemption with respect to the Options outstanding under the Plan, and until the Company
becomes subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act or is no longer relying on the
12h-1(f) Exemption, the Company will, subject to the last sentence of this Section 6.4, provide to each Optionee the information
described in Rules 701(e)(3), (4) and (5) under the Securities Act every six months with the financial statements required to be
provided thereunder being not more than 180 days old and with such information provided either by physical or electronic delivery
to each Optionee or by written notice to each Optionee of the availability of the information on an Internet site that may be password-protected
and of any password needed to access the information. The information described in Rules 701(e)(3), (4) and (5) consists of (i)
information about the risks associated with investment in Options and the shares of Common Stock purchased upon exercise of an
Option, (ii) the Company’s financial statements required to be furnished by Part F/S of Form 1-A under Regulation A of the
Securities Act, and (iii) if the Company is relying on Rule 701(d)(2)(ii) under the Act to use the total assets of the Company
to determine the amount of Options that may be granted, the financial statements of the Company. The Company may request that the
Optionee agree to keep the information to be provided pursuant to this Section 6.4 confidential and shall not be required to provide
such information if an Optionee does not agree to keep the information confidential.


 






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7.RESTRICTED STOCK AWARDS.


 


7.1.Grant of Restricted Stock Awards.
Subject to the terms and provisions of this Plan, the Administrator is authorized to make awards of Restricted Stock to any Eligible
Person in such amounts and subject to such terms and conditions as may be selected by the Administrator (a “Restricted
Stock Award”). All Restricted Stock Awards will be evidenced by an Award Agreement.


 


7.2.Issue Date and Vesting Date. At the time
of the grant of shares of Restricted Stock, the Administrator will establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such Shares. The Administrator may divide such shares of Restricted Stock into classes and assign
a different Issue Date and/or Vesting Date for each class. If the Participant is employed by the Company on an Issue Date (which
may be the date of grant), the specified number of shares of Restricted Stock will be issued in accordance with the provisions
of Section 7.6. Provided that all conditions to the vesting of a share of Restricted Stock imposed hereto are satisfied, such share
will vest and the restrictions will cease to apply to such share.


 


7.3. Conditions to Vesting. Restricted Stock
will be subject to such restrictions on or conditions to vesting as the Administrator may impose (including, without limitation,
as a condition to the vesting of any class or classes of shares of Restricted Stock, that the Participant or the Company achieves
such performance goals as the Administrator may specify as provided for in this Plan, limitations on the right to vote Restricted
Stock or the right to receive dividends on the Restricted Stock). These restrictions may lapse separately or in combination at
such times, under such circumstances, in such installments, time-based, or upon the satisfaction of performance goals as provided
for in this Plan, as the Administrator determines at the time of the grant of the Award or thereafter.


 


7.4.Voting and Dividends. Unless
the Administrator in its sole and absolute discretion otherwise provides in an Award Agreement, holders of Restricted Stock will
have the right to vote such Restricted Stock and the right to receive any dividends declared or paid with respect to such Restricted
Stock. The Administrator may require that any dividends paid on Restricted Stock will be held in escrow until all restrictions
on such Restricted Stock have lapsed and/or the Administrator may provide that any dividends paid on Restricted Stock must be reinvested
in Stock, which may or may not be subject to the same vesting conditions and restrictions applicable to such Restricted Stock.
All distributions, if any, received by a Participant with respect to Restricted Stock as a result of any stock split, stock dividend,
combination of stock, or other similar transaction will be subject to the restrictions applicable to the original Award.


 


7.5. Forfeiture. Except as otherwise
determined by the Administrator at the time of the grant of the Award or thereafter, upon failure to affirmatively accept the
grant of a Restricted Stock Award by execution of a Restricted Stock Award Agreement, termination of employment during the applicable
restriction period, failure to satisfy the restriction period or failure to satisfy a performance goal during the applicable restriction
period, Restricted Stock that is at that time subject to restrictions will immediately be forfeited and returned to the Company;
provided, however, that the Administrator may provide in any Award Agreement that restrictions or forfeiture conditions
relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes,
and the Administrator may in other cases waive in whole or in part restrictions or forfeiture conditions relating to Restricted
Stock. The Company also will have the right to require the return of all dividends paid on such shares, whether by termination
of any escrow arrangement under which such dividends are held or otherwise.


 






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7.6. Certificates for Restricted Stock. Restricted
Stock granted under the Plan may be evidenced in such manner as the Administrator will determine. The Administrator may provide
in an Award Agreement that either (i) the Secretary of the Company will hold such certificates for the Participant’s benefit
pursuant to the provisions of this Plan until such time as the Restricted Stock is forfeited to the Company or the restrictions
lapse or (ii) such certificates will be delivered to the Participant, provided, however, that such certificates will bear a legend
or legends that comply with the applicable securities laws and regulations and make appropriate reference to the restrictions imposed
under this Plan and the Award Agreement.


 


7.7.Restrictions on Transfer Prior to Vesting.
Unless otherwise provided, prior to the vesting of Restricted Stock, Restricted Stock Awards, granted under this Plan, and any
rights and interests therein, including the Restricted Stock itself, will not be transferable or assignable by the Participant,
and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution
or as consistent with the Award Agreement provisions relating thereto. Unless otherwise provided in this Plan, during the lifetime
of the Participant, a Restricted Stock Award and any rights and interests therein, will be exercisable only by the Participant,
and any election with respect thereto may be made only by the Participant. Any attempt to transfer a Restricted Stock Award or
any rights and interests therein including the Restricted Stock itself, will be void and unless the Administrator determines in
its sole and absolute discretion that the attempt was inadvertent or unintentional, such Award, including the Restricted Stock
itself and any rights and interests therein, will be forfeited by the Participant.


 


7.8.Consequences of Vesting. Upon the vesting
of a share of Restricted Stock pursuant to the terms of the Plan and the applicable Award Agreement, the restrictions as provided
by the Administrator will cease to apply to such share. Reasonably promptly after a share of Restricted Stock vests, the Company
will cause to be delivered to the Participant to whom such shares were granted, a certificate evidencing such share, free of the
legend referenced with respect to such restriction. Notwithstanding the foregoing, such share still may be subject to restrictions
on transfer as a result of applicable securities laws or otherwise pursuant to this Plan.


 


8. UNRESTRICTED STOCK AWARDS. The Administrator may,
in its sole discretion, award Unrestricted Stock to any Participant as a Stock Bonus or otherwise pursuant to which such Participant
may receive shares of Stock free of restrictions or limitations that would otherwise be applied under Section 7 of this Plan.


 






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9.PAYMENT FOR SHARE PURCHASES.


 


9.1.Payment. Payment for Shares
purchased pursuant to this Plan may be made in cash (by check) or, where expressly approved for the Participant at the sole discretion
of the Administrator and where permitted by law as follows:


 


9.1.1.Cancellation of Indebtedness. By cancellation
of indebtedness of the Company to the Participant.


 


9.1.2.Surrender of Shares. By surrender of shares
of Stock of the Company that have been owned by the Participant for more than six (6) months or lesser period if the surrender
of Shares is otherwise exempt from Section 16 of the Exchange Act and, if such shares were purchased from the Company by use of
a promissory note, such note has been fully paid with respect to such shares.


 


9.1.3.Deemed Net-Stock Exercise. By forfeiture
of Shares equal to the value of the exercise price pursuant to a “deemed net-stock exercise” by requiring the Participant
to accept that number of Shares determined in accordance with the following formula, rounded down to the nearest whole integer:


 


 


 


where:


 


a =net Shares to be issued to Participant


 


b =number of Awards being exercised


 


c = Fair Market Value of a Share


 


d =Exercise price of the Awards


 


9.1.4.Broker-Assisted. By delivering a properly
executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the
Company the amount of sale or loan proceeds necessary to pay the exercise price and the amount of any required tax or other withholding
obligations.


 


9.1.5Combination of Methods. By
any combination of the foregoing methods of payment or any other consideration or method of payment as will be permitted by applicable
corporate law.


 


10.WITHHOLDING TAXES.


 


10.1.Withholding Generally. Whenever
Shares are to be issued in satisfaction of Awards granted under this Plan or Shares are forfeited pursuant to a “deemed net-stock
exercise,” the Company may require the Participant to remit to the Company by cash, or check payable to the Company, an amount
sufficient to satisfy federal, state and local taxes and FICA withholding requirements prior to the delivery of any certificate
or certificates for such Shares. When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise
or vesting of any Award, the Company will have the authority and right to deduct or withhold an amount sufficient to satisfy federal,
state, and local taxes and FICA withholding requirements with respect to such transactions. Any such payment must be made, or any
such withholding may be made, promptly when the amount of such obligation becomes determinable.


 






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10.2.Stock for Withholding. To
the extent permissible under applicable tax, securities and other laws, the Administrator may, in its sole discretion and upon
such terms and conditions as it may deem appropriate, permit a Participant to satisfy his or her obligation to pay any such withholding
tax, in whole or in part, with Stock up to an amount not greater than the Company’s minimum statutory withholding rate for
federal and state tax purposes, including payroll taxes. The Administrator may exercise its discretion, by (i) directing the Company
to apply shares of Stock to which the Participant is entitled as a result of the exercise of an Award, or (ii) delivering to the
Company Shares of Stock owned by the Participant for more than six (6) months, unless the delivery of the Shares is otherwise exempt
from Section 16 of the Exchange Act. A Participant who has made an election pursuant to this Section 10.2 may satisfy his or her
withholding obligation only with shares of Stock that are not subject to any repurchase, forfeiture, unfulfilled vesting or other
similar requirements. The shares of Stock so applied or delivered for the withholding obligation will be valued at their Fair Market
Value as of the date of measurement of the amount of income subject to withholding.


 


11.PROVISIONS APPLICABLE TO AWARDS.


 


11.1.Acceleration. The Administrator may, in
its absolute discretion, without amendment to the Plan, (i) accelerate the date on which any Award granted under the Plan becomes
exercisable, (ii) waive or amend the operation of Plan provisions respecting exercise after termination of service or otherwise
adjust any of the terms of such Award and (iii) accelerate the Vesting Date, or waive any condition imposed hereunder, with respect
to any share of Restricted Stock or otherwise adjust any of the terms applicable to such share.


 


11.2.Compliance with Section 162(m)
of the Code. Notwithstanding any provision of this Plan to the contrary, if the Administrator determines that compliance with
Section 162(m) of the Code is required or desired, all Awards granted under this Plan to Named Executive Officers will comply with
the requirements of Section 162(m) of the Code. In addition, in the event that changes are made to Section 162(m) of the Code to
permit greater flexibility with respect to any Award or Awards under this Plan, the Administrator may make any adjustments it deems
appropriate.


 


11.3.Performance Goals. In order to preserve
the deductibility of an Award under Section 162(m) of the Code, the Administrator may determine that any Award granted pursuant
to this Plan to a Participant that is or is expected to become a Covered Employee will be determined solely on the basis of (a) the
achievement by the Company or Subsidiary of a specified target return, or target growth in return, on equity or assets, (b) the
Company’s stock price, (c) the Company’s total stockholder return (stock price appreciation plus reinvested dividends)
relative to a defined comparison group or target over a specific performance period, (d) the achievement by the Company or
a Parent or Subsidiary, or a business unit of any such entity, of a specified target, or target growth in, net income, earnings
per share, earnings before income and taxes, and earnings before income, taxes, depreciation and amortization, or (e) any combination
of the goals set forth in (a) through (d) above, and will be subject to any additional limitations set forth in Section
162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations or rulings issued thereunder that
are requirements for qualification as qualified performance-based compensation as described in Section 162(m)(4)(C) of the Code,
and the Plan will be deemed amended to the extent deemed necessary by the Administrator to conform to such requirements. If an
Award is made on such basis, the Administrator will establish goals prior to the beginning of the period for which such performance
goal relates (or such later date as may be permitted under Section 162(m) of the Code or the regulations thereunder but not later
than ninety (90) days after commencement of the period of services to which the performance goal relates), and the Administrator
has the right for any reason to reduce (but not increase) the Award, notwithstanding the achievement of a specified goal. Any payment
of an Award granted with performance goals will be conditioned on the written certification of the Administrator in each case that
the performance goals and any other material conditions were satisfied.


 






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In addition, to the extent that Section
409A is applicable, (i) performance-based compensation will also be contingent on the satisfaction of pre-established organizational
or individual performance criteria relating to a performance period of at least twelve (12) consecutive months in which the Eligible
Participant performs services, and (ii) performance goals will be established not later than ninety (90) days after the beginning
of any performance period to which the performance goal relates, provided that the outcome is substantially uncertain at the time
the criteria are established.


 


11.4.Compliance with Section 409A of the Code.
Notwithstanding any provision of this Plan to the contrary, if any provision of this Plan or an Award Agreement contravenes any
regulations or Treasury guidance promulgated under Section 409A of the Code or could cause an Award to be subject to the interest
and penalties under Section 409A of the Code, such provision of this Plan or any Award Agreement will be modified to maintain,
to the maximum extent practicable, the original intent of the applicable provision without violating the provisions of Section
409A of the Code. In addition, in the event that changes are made to Section 409A of the Code to permit greater flexibility with
respect to any Award under this Plan, the Administrator may make any adjustments it deems appropriate.


 


11.5.Section 280G of the Code.
Notwithstanding any other provision of this Plan to the contrary, unless expressly provided otherwise in the Award Agreement, if
the right to receive or benefit from an Award under this Plan, either alone or together with payments that a Participant has a
right to receive from the Company, would constitute a “parachute payment” (as defined in Section 280G of the Code),
all such payments will be reduced to the largest amount that will result in no portion being subject to the excise tax imposed
by Section 4999 of the Code. 


 






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11.6.Cancellation of Awards.
In the event a Participant’s Continuous Services has been terminated for “Cause,” he or she will immediately
forfeit all rights to any and all Awards outstanding. The determination by the Board that termination was for Cause will be final
and conclusive. In making its determination, the Board will give the Participant an opportunity to appear and be heard at a hearing
before the full Board and present evidence on the Participant's behalf. Should any provision to this Section be held to be invalid
or illegal, such illegality will not invalidate the whole of this Section, but rather this Plan will be construed as if it did
not contain the illegal part or narrowed to permit its enforcement, and the rights and obligations of the parties will be construed
and enforced accordingly.


 


12.PRIVILEGES OF STOCK OWNERSHIP. No Participant
will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant. After Shares
are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such
Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares;
provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become
entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate
or capital structure of the Company will be subject to the same restrictions as the Restricted Stock. The Company will issue (or
cause to be issued) such stock certificate promptly upon exercise of the Award. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is issued.


 


13.RESTRICTION ON SHARES. At the discretion of the
Administrator, the Company may reserve to itself and/or its assignee(s) in the Award Agreement that the Participant not dispose
of the Shares for a specified period of time, or that the Shares are subject to a right of first refusal or a right to repurchase
at the Shares Fair Market Value at the time of sale. The terms and conditions of any such rights or other restrictions will be
set forth in the Award Agreement evidencing the Award.


 


14.CERTIFICATES. All certificates for Shares or other
securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Administrator
may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules,
regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be
listed or quoted.


 


15.ESCROW, PLEDGE OF SHARES. To enforce any restrictions
on a Participant’s Shares, the Administrator may require the Participant to deposit all certificates representing Shares,
together with stock powers or other instruments of transfer approved by the Administrator, appropriately endorsed in blank, with
the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the
Administrator may cause a legend or legends referencing such restrictions to be placed on the certificates. In connection with
any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form, as the
Administrator will from time to time approve.


 






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16.SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.


 


16.1.Compliance With Applicable Laws.
An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules
and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the Grant Date and also on the date of exercise or other issuance.
Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares
under this Plan prior to (i) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable;
and/or (ii) completion of any registration or other qualification of such Shares under any state or federal laws or rulings of
any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register
the Shares with the SEC or to effect compliance with the registration, qualification or listing requirements of any state securities
laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.
Upon exercising all or any portion of an Award, a Participant may be required to furnish representations or undertakings deemed
appropriate by the Company to enable the offer and sale of the Shares or subsequent transfers of any interest in such Shares to
comply with applicable securities laws. Evidences of ownership of Shares acquired pursuant to an Award will bear any legend required
by, or useful for purposes of compliance with, applicable securities laws, this Plan or the Award Agreement.


 


16.2.Rule 16b-3 Exemption. During
any time when the Company has a class of equity security registered under Section 12 of the Exchange Act, it is the intent
of the Company that Awards pursuant to the Plan and the exercise of Awards granted hereunder will qualify for the exemption provided
by Rule 16b-3 under the Exchange Act. To the extent that any provision of the Plan or action by the Board or the Administrator
does not comply with the requirements of Rule 16b-3, it will be deemed inoperative to the extent permitted by law and deemed
advisable by the Board or the Administrator, and will not affect the validity of the Plan. In the event that Rule 16b-3 is
revised or replaced, the Board or the Administrator may exercise its discretion to modify this Plan in any respect necessary to
satisfy the requirements of, or to take advantage of any features of, the revised exemption or its replacement.


 


17.No Obligation
to Employ. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant
any right to continue in the employ of, or to continue any other relationship with, the Company or to limit in any way the right
of the Company to terminate such Participant’s employment or other relationship at any time, with or without cause.


 


18.ADJUSTMENT FOR CHANGES IN CAPITALIZATION. The
existence of outstanding Awards will not affect the Company’s right to effect adjustments, recapitalizations, reorganizations
or other changes in its or any other corporation’s capital structure or business, any merger or consolidation, any issuance
of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock, the dissolution or liquidation of the
Company’s or any other corporation’s assets or business or any other corporate act whether similar to the events described
above or otherwise.


 






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19.DISSOLUTION, LIQUIDATION, MERGER.


 


19.1.Company Not the Survivor.
In the event of a dissolution or liquidation of the Company, a merger, consolidation, combination or reorganization in which the
Company is not the surviving corporation, or a sale of substantially all of the assets of the Company (as determined in the sole
discretion of the Board), the Administrator, in its absolute discretion, may cancel each outstanding Award upon payment in cash
or stock, or combination thereof, as determined by the Board, to the Participant of the amount by which any cash and the fair
market value of any other property which the Participant would have received as consideration for the Shares covered by the Award
if the Award had been exercised before such liquidation, dissolution, merger, consolidation, combination, reorganization or sale
exceeds the Exercise Price of the Award or negotiate to have such option assumed by the surviving corporation and, in its absolute
discretion, may accelerate the time within which each outstanding Award may be exercised, provided however, that the Change of
Control in Section 20 will control with respect to acceleration in vesting in the event of a merger, consolidation, combination
or reorganization that results in a change of control as so defined. The exercise or vesting of any Award that was permissible
solely by reason of this section and the applicable Award Agreement will be conditioned upon the consummation of the applicable
event. Upon consummation of such dissolution, liquidation, merger, consolidation, combination, reorganization or sale of substantially
all of the assets, any outstanding but unexercised Options not otherwise canceled, assumed or substituted as provided for above,
will terminate.


 


19.2.Company is the Survivor.
In the event of a merger, consolidation, combination or reorganization in which the Company is the surviving corporation (“Survivor
Event”), the Board, as it was comprised before the Survivor Event, will determine the appropriate adjustment of the number
and kind of securities with respect to which outstanding Awards may be exercised, and the exercise price at which outstanding Awards
may be exercised. The Board will determine, in its sole and absolute discretion, when the Company will be deemed to survive for
purposes of this Plan.


 


20.CHANGE OF CONTROL. The Administrator will have
the authority, in its absolute discretion exercisable either in advance of any actual or anticipated “change of control”
in the Company, to fully vest all outstanding Awards. A “change of control” will mean an event involving one transaction
or a related series of transactions, in which (i) the Company issues securities equal to 50% or more of the Company’s issued
and outstanding voting securities, determined as a single class, to any individual, firm, partnership, limited liability company,
or other entity, including a “group” within the meaning of Exchange Act Rule 13d-3, (ii) the Company issues voting
securities equal to 50% or more of the issued and outstanding voting stock of the Company in connection with a merger, consolidation
other business combination, (iii) the Company is acquired in a merger, consolidation, combination or reorganization in which the
Company is not the surviving company, or (iv) all or substantially all of the Company’s assets are sold or transferred.


 


21.DEFERRAL OF AWARDS. The Administrator may permit
or require the deferral of payment or settlement of any Stock Award subject to such rules and procedures as it may establish. Payment
or settlement of Options may not be deferred unless such deferral would not cause the provisions of Section 409A of the Code to
be violated.


 






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22.NOTIFICATION OF ELECTION UNDER SECTION 83(b) OF THE
CODE. If any Participant will, in connection with the acquisition of shares of Company Stock under the Plan, make the election
permitted under Section 83(b) of the Code (i.e., an election to include in gross income in the year of transfer the amounts specified
in Section 83(b)), such Participant will notify the Company of such election within ten days of filing notice of the election with
the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under the authority
of Code Section 83(b).


 


23.TERMINATION; AMENDMENT. The Board may amend, suspend
or terminate this Plan at any time and for any reason; provided, however, that stockholder approval will be required for the following
types of amendments to this Plan: (i) any increase in Maximum Number of Common Stock issuable under the Plan or the maximum number
of shares of Common Stock available as incentive stock options, except for a proportional increase in the Maximum Number or maximum
number of shares of Common Stock available as incentive stock options, as a result of stock split or stock dividend or (ii) a change
in the class of Employees entitled to be granted Incentive Stock Options. Further, the Board may, in its discretion, determine
that any amendment should be effective only if approved by the Stockholders even if such approval is not expressly required by
this Plan or by law. No Awards will be made after the termination of the Plan. At any time and from time to time, the Administrator
may amend or modify any outstanding Award or Award Agreement without approval of the Participant; provided, however, that
no amendment or modification of any Award will adversely affect any outstanding Award without the written consent of the Participant;
provided further, however, that the original term of any Award may not be extended unless it would not cause the
provisions of Section 409A to be violated. No termination, amendment, or modification of the Plan will adversely affect
any Award previously granted under the Plan, without the written consent of the Participant. Notwithstanding any provision herein
to the contrary, the Administrator will have broad authority to amend this Plan or any outstanding Award under this Plan without
approval of the Participant to the extent necessary or desirable (i) to comply with, or take into account changes in, applicable
tax laws, securities laws, accounting rules and other applicable laws, rules and regulations, or (ii) to ensure that an Award is
not subject to interest and penalties under Section 409A of the Code or the excise tax imposed by Section 4999 of the Code.


 


24.TRANSFERS UPON DEATH; NONASSIGNABILITY. Upon the
death of a Participant outstanding Awards granted to such Participant including Options and Stock may be transferred and exercised
only by the executor or administrator of the Participant's estate or by a person who will have acquired the right to such exercise
by will or by the laws of descent and distribution in accordance with and as provided for in this Plan. No transfer of an Award
by will or the laws of descent and distribution will be effective to bind the Company unless the Company will have been furnished
with (a) written notice thereof and with a copy of the will and/or such evidence as the Administrator may deem necessary to establish
the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Award that
are or would have been applicable to the Participant and to be bound by the acknowledgments made by the Participant in connection
with the grant of the Award. Except as otherwise provided, no Award or interest in it may be transferred, assigned, pledged or
hypothecated by the Participant, whether by operation of law or otherwise, or be made subject to execution, attachment or similar
process.


 






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25.FAILURE TO COMPLY. In addition to the remedies
of the Company elsewhere provided for herein, failure by a Participant (or beneficiary) to comply with any of the terms and conditions
of the Plan or the applicable Award Agreement, unless such failure is remedied by such Participant (or beneficiary) within ten
days after notice of such failure by the Administrator, will be grounds for the cancellation and forfeiture of such Award, in whole
or in part, as the Administrator, in its sole discretion, may determine.


 


26.GOVERNING LAW. Except to the extent preempted
by any applicable federal law, this Plan and the rights of all persons under this Plan will be construed in accordance with and
under applicable provisions of the laws of the State of California, without reference to the principles of conflicts of laws thereunder.


 


27.MISCELLANEOUS.
Except as specifically provided in a retirement or other benefit plan of the company or a related
entity, Awards will not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of
the Company or a related entity, and will not affect any benefits under any other benefit plan of any kind or any benefit plan
subsequently instituted under which the availability or amount of benefits is related to level of compensation. This Plan is not
a “retirement plan” or “welfare plan” under the Employee Retirement Income Security Act of 1974,
as amended.


 


28.DEFINITIONS. As used in this Plan, the following
terms will have the following meanings:


 


“12h-1(f) Exemption” means the exemption from registration
under Section 12(g) of the Exchange Act by operation of Rule 12h-1(f) of the Exchange Act.


 


“Administrator” means the Committee appointed by
the Board to administer this Plan or if there is no such Committee, the Board itself.


 


“Award” means, individually and collectively, any
award under this Plan, including any Option, Restricted Stock Award, or Unrestricted Stock Award.


 


“Award Agreement” means, with respect to each Award,
the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award.


 


“Board” means the Board of Directors of the Company.


 


“Cause” means, termination of employment of a Participant
for cause under the Company's generally applicable policies and procedures or, in the case of a non-employee director of the Company,
for circumstances which would constitute cause if such policies and procedures were applicable.


 






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“Code” means the Internal Revenue Code of 1986,
as amended.


 


“Committee” means the Committee appointed by the
Board to administer this Plan.


 


“Company” means Flux Power Holdings, Inc., a Nevada
corporation, or any successor corporation, and its Subsidiary as the context so warrants.


 


“Consultant” means any consultant or advisor to
the Company or any of its Subsidiaries who may be offered securities registrable on Form S-8 under the Securities Act or pursuant
to an offer that is exempt from registration requirement under Section 5 of the Securities Act under Rule 701 promulgated under
the Securities Act.


 


“Continuous Service” means that the provision of
services to the Company or a Subsidiary in any capacity of employee, director or Consultant that is not interrupted or terminated.
Continuous Service will not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers between
locations of the Company or among the Company, any Subsidiary, or any successor, in any capacity of employee, director or Consultant,
or (iii) any change in status as long as the individual remains in the service of the Company or a Subsidiary in any capacity of
employee, director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence will include
sick leave, maternity or paternity leave, military leave, or any other authorized personal leave as determined by the Administrator.
For purposes of incentive stock options, no such leave may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract.


 


“Covered Employee” means a covered employee as defined
in Section 162(m)(3) of the Code, provided that no employee will be a Covered Employee until the deduction limitations of Section
162(m) of the Code are applicable to the Company and any reliance period under Treasury Regulation Section 1.162-27(f) has expired.


 


“Disability” or “Disabled” means a disability
covered under a long-term disability plan of the Company applicable to a Participant. The Committee may require such medical or
other evidence as it deems necessary to judge the nature and permanency of the Participant’s condition. Notwithstanding the
above, (i) with respect to an Incentive Stock Option, “Disability” or “Disabled” will mean permanent and
total disability as defined in Section 22(e)(3) of the Code and (ii) to the extent an Option is subject to Section 409A of the
Code, and payment or settlement of the Option is to be accelerated solely as a result of the Eligible Participant's Disability,
Disability will have the meaning ascribed thereto under Section 409A of the Code and the Treasury guidance promulgated thereunder.


 


“Effective Date” has the meaning set forth in Section
2.


 


“Eligible Person” means any (i) director, officer
or employee of the Company or any of its Subsidiaries who, in the opinion of the Committee, is rendering valuable services to the
Company or any of its Subsidiaries, or (ii) Consultant to the Company or any of its Subsidiaries.


 






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“Employee” means any and all employees of the Company
or of a Subsidiary.


 


“Exchange Act” means the Securities Exchange Act
of 1934, as amended from time to time and any successor statute.


 


“Exercise Agreement” has the meaning set forth in
Section 6.2.4.


 


“Exercise Price” means the price at which a holder
of an Option may purchase the Shares issuable upon exercise of the Option.


 


“Fair Market Value” means on the date in question:


 


(i)Listed Stock. If the Stock is traded on any
established stock exchange or quoted on a national market system, the closing sales price for the Stock as quoted on that stock
exchange or system for the date the value is to be determined (the “Value Date”). If no sales are reported as
having occurred on the Value Date, fair market value will be that closing sales price for the last preceding trading day on which
sales of Stock are reported as having occurred. If no sales are reported as having occurred during the five (5) trading days before
the Value Date, fair market value will be the closing sales price for the first sale following the grant date and if no sale follows
the grant date for five (5) trading days then the fair market value will be the closing bid for Stock on the Value Date or the
trading date preceding the Value Date. If Stock is listed on multiple exchanges or systems, fair market value will be based on
sales or bids on the primary exchange or system on which Stock is traded or quoted.


 


(ii)Stock Quoted by Securities Dealer. If the
Stock is regularly quoted by a recognized securities dealer but selling prices are not reported on any established stock exchange
or quoted on a national market system, fair market value will be the closing bid for the Stock on the Value Date or the trading
date preceding the Value Date. If no prices are quoted for the Value Date or the trading date preceding the Value Date, fair market
value will be the arithmetic mean between the high bid and low asked prices on the Value Date or the trading day preceding the
Value Date. Otherwise, fair market value will be determined using any other reasonable method using actual transactions in such
Stock as reported by such market.


 


(iii)No Established Market. If Stock is not traded
on any established stock exchange or quoted on a national market system and are not quoted by a recognized securities dealer, the
Administrator will determine fair market value based upon a reasonable application of a reasonable valuation method.


 


“Incentive Stock Option” means an Option within
the meaning of Section 422 of the Code.


 


“Issue Date” means the date established by the Administrator
on which stock certificates representing shares of Restricted Stock will be issued by the Company pursuant to the terms of this
Plan.


 






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“Named Executive Officer” means, if applicable,
a Participant who, as of the date of vesting and/or payout of an Award is one of the group of “covered employees,”
as defined in the regulations promulgated under Section 162(m) of the Code, or any successor statute.


 


“Non-Qualified Stock Option” means an Option which
is not an Incentive Stock Option.


 


“Officer” means an officer of the Company and an
officer who is subject to Section 16 of the Exchange Act.


 


“Option” means an award of an option to purchase
Shares pursuant to Section 6.


 


“Optionee” means the holder of an Option.


 


“Participant” means a person who receives an Award
under this Plan.


 


“Plan” means this Flux Power Holdings, Inc. 2012
Equity Incentive Plan, as amended from time to time.


 


“Restricted Stock Award” means an award of Shares
pursuant to Section 7.


 


“Rule 16b-3” means Rule 16b-3 under Section 16(b)
of the Exchange Act, as amended from time to time, and any successor rule.


 


“SEC” means the Securities and Exchange Commission.


 


“Securities Act” means the Securities Act of 1933,
as amended from time to time.


 


“Shares” means shares of the Company’s Stock
reserved for issuance under this Plan, as adjusted pursuant to this Plan, and any successor security.


 


“Stock” means the Common Stock, $.001 par value,
of the Company, and any successor entity.


 


“Stock Award” means an Award of Restricted Stock
or Unrestricted Stock.


 


“Subsidiary” means any corporation in an unbroken
chain of corporations beginning with the Company if, at the time of granting of an Award, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.


 


“Ten Percent Stockholder” has the meaning set forth
in Section 6.2.2.


 


“Termination” or “Terminated” means,
for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as
an employee, officer, director, or Consultant of the Company or any of its Subsidiaries. An employee will not be deemed to have
ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by
the Administrator; provided, that such leave is for a period of not exceeding three (3) months, or if longer, so long as reemployment
with the Company granting the option or the corporation assuming or substituting an option under Section 1.424-1(a) of the Income
Tax Regulations upon the expiration of such leave is guaranteed by contract or statute.


 






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“Unrestricted Stock Award” means an award of Shares
pursuant to Section 8.


 


“Vesting Date” will mean the date established by
the Administrator on which a Share of Restricted Stock may vest.


 






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