Document:

Exhibit

Exhibit 10.1

KIMBALL INTERNATIONAL, INC.
ANNUAL PERFORMANCE SHARE AWARD AGREEMENT
FISCAL YEAR 2020
This ANNUAL PERFORMANCE SHARE AWARD AGREEMENT (the “Award Agreement”) dated the       day of                     , 2019 is granted by KIMBALL INTERNATIONAL, INC., an Indiana corporation (“Company”), to                              (“Employee”) pursuant to the terms of the Company’s 2017 Stock Incentive Plan or any successor plan (“Plan”).
WHEREAS, the Board of Directors and the Compensation & Governance Committee of the Company (“Committee”) believe it to be in the best interests of the Company and its shareowners for officers and other key employees to obtain or increase their stock ownership interest in the Company in order that they will have a greater incentive to work for and manage the Company’s affairs in such a way that its shares may become more valuable, thereby aligning the personal interests of officers and key employees with those of the Company’s shareowners; and 
WHEREAS, the Employee is employed by the Company or one of its subsidiaries as an officer or key employee;
NOW THEREFORE, in consideration of these premises and of services to be performed by the Employee, the Company hereby grants this Annual Performance Share Award to the Employee on the terms and conditions hereinafter expressed and subject to the terms of the Plan.
		
	1.
	GRANT OF PERFORMANCE SHARES

The Company hereby grants to the Employee            Target Performance Shares (“Target Shares”), subject to the eligibility, performance and other terms and conditions set forth in this Award Agreement and the Plan (“Award”).
		
	2.
	DETERMINATION OF SHARES ISSUED

Subject to the eligibility conditions described in Section 3 of this Award Agreement, the actual number of Shares issued shall be determined by the Committee as soon as administratively practical following the end of the fiscal year (the date of such determination by the Committee, which is referred to as the “Determination Date”), based on the Company’s consolidated “Return on Invested Capital,” as defined below, for the fiscal year ended June 30, 2020:
	
		
	Return on Invested Capital
	Actual Shares to be Issued for FY 2020

	44.4%
	200% of Target Shares

	37.2%
	100% of Target Shares 

	34.1%
	50% of Target Shares

	<34.1%
	0

For any Return on Invested Capital between 34.1% and 37.2% or between 37.2% and 44.4%, the payout percentage of the Target Shares shall be interpolated. 
In computing the Shares to be issued to the Employee, the Shares will be rounded down to the number of full shares excluding any fractional shares. The Shares, if any, to be issued to the Employee under the Award Agreement will be delivered, without restriction, to the Employee as soon as administratively 

practical after the Determination Date, but no later than sixty (60) days after the end of the fiscal year, except as provided in Section 10 below. The Award will be payable in Stock.
For purposes herein, “Return on Invested Capital” shall mean EBITA multiplied by (1-tax rate) divided by average net debt plus average equity. The following adjustments shall be made to EBITA: the costs of restructuring shall be included but amortized evenly over FY20 and FY21; the financial impact of any acts of God, including natural disasters, shall be excluded; financial results and due diligence costs of acquisitions shall be excluded in the year of the acquisition; due diligence costs arising from acquisition targets that do not close shall be excluded.
		
	3.
	ELIGIBILITY CONDITIONS

		
	A.
	To receive Shares earned under this Award Agreement as determined by the Committee, the Employee must have remained in Continuous Service from the date hereof to June 30, 2020 (the “Vesting Date”), except as provided in subsection (C) below.

		
	B.
	If the Employee ceases Continuous Service before the Vesting Date for any reason other than Disability, death or Retirement, the Employee will forfeit all rights with respect to any Shares under this Award Agreement. 

		
	C.
	Disability, Death or Retirement. As permitted by Section 6(d)(ii) of the Plan, the following (and not the provisions of Section 6(d)(ii)(A) of the Plan) shall govern if the Employee ceases Continuous Service prior to the Vesting Date by reason of Disability, death or Retirement:

		
	(i)
	If the Employee ceases Continuous Service before the Vesting Date because of Disability or Retirement, the number of Shares to which the Employee may be entitled under this Award Agreement, if any, will be determined on the Determination Date based on the Company’s performance for the fiscal year ended June 30, 2020, but shall be prorated to reflect the portion of the fiscal year that the Employee worked prior to such Disability or Retirement. Except as provided in Section 10, the Shares shall be issued no later than sixty (60) days following the end of the fiscal year. 

		
	(a)
	To be considered a Retirement under this Award Agreement, the Employee must comply with the process for approval of Retirement established by the Company and must have incurred a Separation of Service, as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). “Separation from Service” shall mean a “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i) and Treasury regulation section 1.409A-1(h) and shall mean with respect to an Employee, the complete termination of the employment relationship between the Employee and the Company and/or all affiliated employers within the meaning of Code Section 414(b) or (c), for any reason other than death.

		
	(b)
	Shares will be prorated by multiplying the Shares determined to be earned for the fiscal year by a fraction determined by:

		
	•
	Numerator = number of months in the fiscal year that the Employee maintained Continuous Service, including the month in which the Continuous Service ceased, which shall be considered a full month.

		
	•
	Denominator = total number of months from the Award Date to the Determination Date.

		
	(ii)
	If the Employee ceases Continuous Service before the Vesting Date by reason of the Employee’s death, the number of Shares earned by the Employee shall equal the Target Shares, pro rated to reflect the portion of the fiscal year that the Employee worked prior to his/her death, using the fraction described in (i)(b) above. Except as provided in Section 10 below, such earned Shares shall be paid within thirty (30) days following the date of the Employee’s death. 

		
	D.
	Notwithstanding anything to the contrary set forth in the Plan or this Award Agreement, the Employee shall forfeit any Performance Shares awarded hereunder in the event that:    

		
	(i)
	The Employee is discharged by the Company from his or her employment with the Company for Cause. For purposes herein, “Cause” shall mean, with respect to termination of the Employee’s employment with the Company, one or more of the following occurrences: (1) Employee’s willful and continued failure to perform substantially the duties or responsibilities of Employee’s position (other than by reason of Disability) or the willful and continued failure to follow lawful instructions of a senior executive or the Board of Directors, if such failure continues for a period of five days after the Company delivers to Employee a written notice identifying such failure; (2) Employee’s conviction of a felony or of another crime that reflects in a materially adverse manner on the Company in its markets or business operations; (3) Employee’s engaging in fraudulent or dishonest conduct, gross misconduct that is injurious to the Company, or any misconduct that involves moral turpitude; or (4) Employee’s failure to uphold a fiduciary duty to the Company or its shareholders; or

		
	(ii)
	The Employee breaches any of his or her employee and ancillary agreements, including without limitation, any confidentiality or non-solicitation obligation documented by agreement (collectively, “Employee Agreement”). In addition, for purposes herein, an Employee shall be deemed to have breached an Employee Agreement if the Employee seeks judicial intervention to limit or nullify the terms of such Employee Agreement. 

		
	E.
	In the event that Shares are earned by and issued to the Employee under this Award Agreement and within twelve (12) months after the issuance of such Shares to the Employee, (a) the Company identifies facts that result in, or, in the event of issuance of such Shares as a result of Retirement or Disability, would have resulted in, a termination for Cause, or (b) the Employee breaches an Employee Agreement, then, in addition to the forfeiture under Section 3.D. of this Award Agreement, the Employee agrees to repay the value of such Shares received under this Award Agreement within thirty (30) days of the date of written demand by the Company (“Clawback Amount”).

After the Committee approves the final calculation of Shares to be issued, no adjustments will be made to reflect any subsequent change in accounting, the effect of federal, state or municipal taxes later assessed or determined, or otherwise. Notwithstanding the foregoing, the Company reserves the right to and, in appropriate cases, will, seek recovery of all or any portion of the Share distribution if (i) the amount of the Share distribution was calculated based upon the achievement of certain financial results that were subsequently the subject of a restatement of all or a portion of the Company’s financial statements; (ii) the Employee engaged in intentional misconduct that caused or partially caused the need for such a restatement; and (iii) the amount of the Share distribution that would have been issued to the Employee had the financial results been properly reported would have been lower than the actual Share distribution.  This subsection is not intended to limit the Company’s power to take such other actions as it deems necessary to remedy the 

misconduct, prevent its recurrence and, if appropriate, based on all relevant facts and circumstances, punish the wrongdoer in a manner it deems appropriate.
		
	F.
	Awards and any compensation or benefits associated therewith shall also be subject to repayment or forfeiture as may be required to comply with (i) any applicable listing standards of a national securities exchange adopted in accordance with Section 10D of the Exchange Act (regarding recovery of erroneously awarded compensation) and any implementing rules and regulations of the U.S. Securities and Exchange Commission adopted thereunder; (ii) similar rules under the laws of any other jurisdiction; and (iii) any policies adopted by the Company to implement such requirements, all to the extent determined by the Company in its discretion to be applicable to a Participant. This Award Agreement may be unilaterally amended by the Committee to comply with any such compensation recovery policy.

		
	4.
	CHANGES IN CAPITALIZATION; CHANGE IN CONTROL

		
	A.
	If the Company shall at any time change the number of shares of its Stock without new consideration to the Company (such as by stock dividend or stock split), the total number of Shares subject to the Award Agreement hereunder shall be changed in proportion to the change in issued shares. If, during the term of this Award Agreement, the Stock of the Company shall be changed into another kind of securities of the Company or into cash, securities, or evidences of indebtedness of another corporation, other property, or any combination thereof, whether as a result of reorganization, sale, merger, consolidation, or other similar transaction, the Company shall cause adequate provision to be made whereby the Employee shall thereafter be entitled to receive, under this Award Agreement, the cash, securities, evidences of indebtedness, other property, or any combination thereof, the Employee would have been entitled to receive for Stock acquired through this Award Agreement immediately prior to the effective date of such transaction. If appropriate, the number of Shares of this Award Agreement following such reorganization, sale, merger, consolidation, or other similar transaction, may be adjusted in each case in such equitable manner as the Committee may select.

		
	B.
	In the event of a Change in Control that involves a Corporate Transaction, Section 12(b) of the Plan will govern this Award.  In the event of a Change in Control that does not involve a Corporate Transaction, Section 12(c) of the Plan will govern this Award.

		
	5.
	TRANSFER

Neither this Award nor any right or interest of the Employee in any Award under the Plan may be assigned, encumbered, transferred or exchanged, voluntarily or involuntarily, otherwise than by will or the laws of descent and distribution.
		
	6.
	VOTING RIGHTS AND DIVIDENDS

The Employee will not have any voting rights with respect to the Target Shares and shall not be entitled to receive any dividends paid or dividends declared with respect to the Target Shares subject to this Award Agreement. The Employee will obtain voting rights and become entitled to receive any dividends only after any earned Shares are transferred to the Employee. 
		
	7.
	TAXES AND WITHHOLDING

Issuance of the Award under this Award Agreement, under current applicable laws, will result in various federal and/or state taxes becoming due, including, but not limited to, income and social security. The Employee is responsible for the timely payment of these taxes, and provision will be made by the Company to satisfy these obligations by withholding of Shares having a Fair Market Value on the date the 

taxes are required to be withheld approximately equal to the amount of federal, state and local taxes required to be withheld (but not to exceed the maximum individual statutory tax rate in each applicable jurisdiction). The value of the Shares withheld will be determined by using the appropriate method under applicable tax regulations.
		
	8.
	ADMINISTRATION

This Award Agreement and your rights under it are subject to all terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The parties acknowledge that the Committee or its designee is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, in its sole discretion, all of which shall be binding on the Employee.
		
	9.
	AMENDMENTS

In the event any new modifications or changes are made to existing laws or applicable stock exchange rules that render any or all of this Award Agreement illegal or unenforceable, this Award Agreement may be amended to the extent necessary in order to carry out the intention of the Award to the Employee. The Committee may amend this Award Agreement in other respects, without the Employee’s consent, if the amendment will not materially impair the Employee’s rights under this Award Agreement as in effect immediately before the amendment.
		
	10.
	CODE SECTION 409A

		
	A.
	The parties intend that the payments and benefits under the Plan and this Award Agreement comply with Code Section 409A, to the extent applicable, and accordingly, to the maximum extent permitted, the Plan and this Award Agreement shall be interpreted and administered to be in compliance therewith. Any payments described in this Award Agreement or the Plan that are due within the “short-term deferral period” as defined in Code Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise.

		
	B.
	Notwithstanding any provisions in the Plan to the contrary, to the extent that the Company has any stock which is publicly traded on an established securities market or otherwise, if the Employee is a Specified Employee and a Separation from Service occurs, any payment of deferred compensation, within the meaning of Code Section 409A, otherwise payable under this Award Agreement because of employment termination will be suspended until, and will be paid to the Employee on, the first day of the seventh month following the month in which Separation from Service occurs. Payments delayed by the preceding sentence shall be accumulated and paid on the earliest administratively feasible date permitted by such sentence. “Specified Employee” shall mean an individual who, at the time of his or her Separation from Service, is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i) and Treasury regulation section 1.409A-1(i). For purposes of the preceding sentence, the “specified employee identification date” shall be December 31 (of the prior Plan year) and the “specified employee effective date” shall be the following April 1.

		
	11.
	PLAN CONTROLLING

The Award is subject to all of the terms and conditions of the Plan except to the extent that those terms and conditions are supplemented or modified by this Award Agreement, as authorized by the Plan. Capitalized terms used in this Award Agreement and not otherwise defined herein shall have the meanings 

assigned to them in the Plan. All determinations and interpretations of the Committee shall be binding and conclusive upon the Employee and his or her legal representatives.
		
	12.
	QUALIFICATION OF RIGHTS

Neither this Award Agreement nor the existence of the Award shall be construed as giving the Employee any right (a) to be retained as an employee of the Company; or (b) as a shareholder with respect to the Shares of Stock earned pursuant to the Award until the certificates for the Stock have been issued and delivered to the Employee or a book entry has been recorded in the name of the Employee with the Company’s transfer agent.
		
	13.
	GOVERNING LAW

This Award Agreement shall be governed by and construed in accordance with the laws of the State of Indiana, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Award Agreement to the substantive law of another jurisdiction. Any action or proceeding seeking to enforce the terms of this Award Agreement or based on any right arising out of this Award Agreement must be brought in the appropriate court located in Dubois County, Indiana, or if jurisdiction will so permit, in the Federal District Court for the Southern District of Indiana located in Evansville, Indiana. The parties hereto consent to the jurisdiction and venue of said courts.
		
	14.
	REPRESENTATIONS AND WARRANTIES

		
	A.
	The Employee represents and warrants that he or she has received and reviewed a Plan Memorandum, which summarizes the provisions of the Plan.

		
	B.
	The Company makes no representations or warranties as to the tax consequences of and benefits vested or payable under this Award, and in no event shall the Company be responsible or liable for any taxes, penalties or interest assessed against the Employee for any benefit or payment provided under this Award.

		
	C.
	The Employee represents and warrants his/her understanding that the grant of the Performance Shares by the Company is voluntary and does not create in the Employee any contractual or other right to receive future grants of Performance Shares or benefits in lieu of Performance Shares in any circumstance. All decisions with respect to any future awards will be made in the sole discretion of the Company. 

		
	15.
	SUCCESSORS AND ASSIGNS

This Award Agreement shall be binding upon and inure to the benefit of the successors, assigns and heirs of the respective parties, subject to the other provisions hereof.
		
	16.
	WAIVER

The failure of a party to insist upon strict adherence to any term of this Award Agreement on any occasion shall not be considered a waiver thereof or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Award Agreement.

		
	17.
	TITLES

Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Award Agreement.
		
	18.
	COUNTERPARTS/ COPIES 

This Award Agreement may be signed in one or more counterparts, each of which will be deemed to be an original and all of which when taken together will constitute the same agreement. Any copy of this Award Agreement made by reliable means (for example, photocopy, scanned copy or facsimile), is considered an original.
IN WITNESS WHEREOF, the Company has caused the execution hereof by its duly authorized officer and Employee has agreed to the terms and conditions of this Award Agreement, all as of the day and date first above written.
Kimball International, Inc.

By:                                                               
[Name]
[Title]
Kimball International, Inc. 

The undersigned employee has read, acknowledged and accepts the terms of the Award, the Award Agreement, and the Plan.

	
				
	                                                                                
	 
	 
	                                                  

	Employee Signature
	 
	 
	DateBlueprint

 

Exhibit 10.17

 

 

[FORM OF REPRESENTATIVES’ WARRANT]

 

 

THE
HOLDER OF THIS WARRANT BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN
PROVIDED AND THE HOLDER OF THIS WARRANT AGREES THAT IT WILL NOT
SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS WARRANT FOR A
PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE LATER OF THE DATE
THAT THE REGISTRATION STATEMENT (AS DEFINED BELOW) IS DECLARED
EFFECTIVE BY THE SECURITIES AND EXCHANGE COMMISSION OR THE
COMMENCEMENT OF SALES OF THE OFFERING TO WHICH THIS WARRANT RELATES
TO ANYONE OTHER THAN (I) A REPRESENTATIVE (AS DEFINED BELOW) AN
UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING,
OR (II) A BONA FIDE OFFICER OR PARTNER OF A REPRESENTATIVE OR OF
ANY SUCH UNDERWRITER OR SELECTED DEALER.

 

THIS
PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO [●]1. VOID AFTER 5:00
P.M., EASTERN TIME, [●]2.

 

 

 

FLUX POWER HOLDINGS, INC.

 

Warrant To Purchase Common Stock

 

Warrant
No.: RW-1

Number
of Shares of Common Stock: [●]

Date of
Issuance: [●](“Issuance
Date”)

 

Flux
Power Holdings, Inc., a Nevada corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, [●], the registered holder
hereof or its permitted assigns (the “Holder”), is entitled, upon the
terms and subject to the conditions set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in
effect, at any time or times on or after [●]3(the
“Initial Exercisability
Date”), but not after 11:59 p.m., Eastern time, on the
Expiration Date (as defined below), up to
[●]([●]4) fully paid
non-assessable shares of Common Stock (as defined below), subject
to adjustment as provided herein (the “Warrant Shares”). Except as
otherwise defined herein, capitalized terms in this Warrant to
Purchase Common Stock (including any Warrants to Purchase Common
Stock issued in exchange, transfer or replacement hereof, this
“Warrant”),
shall have the meanings set forth in Section 16. This Warrant is
one of the Representatives’ Warrants to Purchase Common Stock
(the “Warrants”)
issued pursuant to (i) that certain Underwriting Agreement, dated
as of [●](the “Subscription Date”) among the
Company and Roth Capital Partners, LLC and Maxim Group LLC (each, a
“Representative”), of the several
underwriters named therein (the “Underwriting Agreement”), (ii) the
Company’s Registration Statement on Form S-1 (File number
333-231766 (the “Registration
Statement”) and (iii) the Company’s prospectus
dated as of [●] (the “Prospectus”) relating to the
offering (the “Offering”) of the securities
referenced therein (the “Securities”).

 

1 Date that is 180
days from the effective date of the offering.

 

2 Date that is five
years from the effective date of the offering.

 

3 Date that is 180
days from the effective date of the offering.

 

4 Aggregate of 5.5% of
the shares sold in the offering.

 

1

 

 

1. EXERCISE
OF WARRANT.

 

(a) Mechanics of Exercise. Upon the
terms and subject to the conditions hereof (including, without
limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder at any time or times on or
after the Initial Exercisability Date, in whole or in part, by delivery
(whether via facsimile, electronic mail or otherwise) of a written
notice, in the form attached hereto as Exhibit A (the
“Exercise
Notice”), of the Holder’s election to exercise
this Warrant. Within one (1) Trading Day following the delivery of
the Exercise Notice, the Holder shall make payment to the Company
of an amount equal to the Exercise Price in effect on the date of
such exercise multiplied by the number of Warrant Shares as to
which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash
by wire transfer of immediately available funds or by notifying the
Company that this Warrant is being exercised pursuant to a Cashless
Exercise (as defined in Section 1(d)). The Holder shall not be
required to deliver the original Warrant in order to effect an
exercise hereunder (until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been
exercised in full), nor shall any ink-original signature or
medallion guarantee (or other type of guarantee or notarization)
with respect to any Exercise Notice be required. Execution and
delivery of the Exercise Notice with respect to less than all of
the Warrant Shares shall have the same effect as cancellation of
the original Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares and the
Holder shall not be required to physically surrender this Warrant
to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in
full, in which case, the Holder shall surrender this Warrant to the
Company for cancellation within three (3) Trading Days of the date
on which the final Notice of Exercise is delivered to the Company.
On or before the first (1st) Trading Day
following the date on which the Holder has delivered the applicable
Exercise Notice, the Company shall transmit by facsimile or
electronic mail an acknowledgment of confirmation of receipt of the
Exercise Notice, in the form attached to the Exercise Notice, to
the Holder and the Company’s transfer agent (the
“Transfer
Agent”). So long as the Holder delivers the Aggregate
Exercise Price (or notice of a Cashless Exercise, if applicable) on
or prior to the first (1st) Trading Day
following the date on which the Exercise Notice has been delivered
to the Company, then on or prior to the earlier of (i) the second
(2nd)
Trading Day and (ii) the number of Trading Days comprising the
Standard Settlement Period, in each case following the date on
which the Exercise Notice has been delivered to the Company, or, if
the Holder does not deliver the Aggregate Exercise Price (or notice
of a Cashless Exercise, if applicable) on or prior to the first
(1st)
Trading Day following the date on which the Exercise Notice has
been delivered to the Company, then on or prior to the first
(1st)
Trading Day following the date on which the Aggregate Exercise
Price (or notice of a Cashless Exercise, if applicable) is
delivered (such earlier date, or if later, the earliest day on
which the Company is required to deliver Warrant Shares pursuant to
this Section 1(a), the “Share
Delivery Date”), the Company shall (X) provided that
the Transfer Agent is participating in The Depository Trust Company
(“DTC”) Fast
Automated Securities Transfer Program, credit such aggregate number
of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder’s or its designee’s balance
account with DTC through its Deposit / Withdrawal At Custodian
system, or (Y) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, issue and dispatch
by overnight courier to the address as specified in the Exercise
Notice, a certificate, registered in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise. The Company shall be
responsible for all fees and expenses of the Transfer Agent and all
fees and expenses with respect to the issuance of Warrant Shares
via DTC, if any, including without limitation for same day
processing. Upon delivery of the Exercise Notice, the Holder shall
be deemed for all corporate purposes to have become the holder of
record and beneficial owner of the Warrant Shares with respect to
which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder’s DTC account
or the date of delivery of the certificates evidencing such Warrant
Shares, as the case may be. If this Warrant is physically delivered
to the Company in connection with any exercise pursuant to this
Section 1(a) and the number of Warrant Shares represented by this
Warrant submitted for exercise is greater than the number of
Warrant Shares being acquired upon an exercise, then the Company
shall as soon as practicable and in no event later than three (3)
Trading Days after any exercise and at its own expense, issue and
deliver to the Holder (or its designee) a new Warrant (in
accordance with Section 7(d)) representing the right to purchase
the number of Warrant Shares issuable immediately prior to such
exercise under this Warrant, less the number of Warrant Shares with
respect to which this Warrant is exercised. No fractional Warrant
Shares are to be issued upon the exercise of this Warrant, but
rather the number of Warrant Shares to be issued shall be rounded
to the nearest whole number. The Company shall pay any and all
transfer, stamp, issuance and similar taxes, costs and expenses
(including, without limitation, fees and expenses of the Transfer
Agent) which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. The
Company’s obligations to issue and deliver Warrant Shares in
accordance with the terms and subject to the conditions hereof are
absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or termination;
provided,
however, that the
Company shall not be required to deliver Warrant Shares with
respect to an exercise prior to the Holder’s delivery of the
Aggregate Exercise Price (or notice of a Cashless Exercise, if
applicable) with respect to such exercise.

 

 

2

 

 

(b) Exercise Price. For purposes of
this Warrant, “Exercise
Price” means $[●]5 per share, subject
to adjustment as provided herein.

 

(c) Company’s Failure to Timely
Deliver Securities. If the Company fails for any reason to
deliver to the Holder the Warrant Shares subject to a Notice of
Exercise by the Share Delivery Date, the Company shall pay to the
Holder, in cash, as liquidated damages and not as a penalty, for
each $1,000 of Warrant Shares subject to such exercise (based on
the VWAP of the Common Stock on the date of the applicable Notice
of Exercise), $10 per Trading Day (increasing to $20 per Trading
Day on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Share Delivery Date until
such Warrant Shares are delivered or Holder rescinds such exercise.
In addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder
the Warrant Shares in accordance with the provisions of Section
1(a) above pursuant to an exercise on or before the Share Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) or the
Holder’s brokerage firm otherwise purchases, shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such
exercise (a “Buy-In”), then the Company shall
(A) pay in cash to the Holder the amount, if any, by which (x) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of
Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (2) the price
at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company
shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver shares of
Common Stock upon exercise of the Warrant as required pursuant to
the terms hereof. The Company’s current transfer agent
participates in the DTC Fast Automated Securities Transfer Program
(“FAST”). In the
event that the Company changes transfer agents while this Warrant
is outstanding, the Company shall use commercially reasonable
efforts to select a transfer agent that participates in FAST. While
this Warrant is outstanding, the Company shall request its transfer
agent to participate in FAST with respect to this
Warrant.

 

(d) Cashless Exercise.  Notwithstanding anything contained
herein to the contrary, the Holder may, in its sole discretion,
exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company
upon such exercise in payment of the Aggregate Exercise Price,
elect instead to receive upon such exercise the “Net
Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):

 

5 120% of the public
offering price per share set forth in the final
prospectus.

 

 

3

 

 

Net
Number = (A x B) - (A x
C)

B

 

For
purposes of the foregoing formula:

 

A= the
total number of shares with respect to which this Warrant is then
being exercised.

 

B= the
average of the Closing Sale Prices of the shares of Common Stock
(as reported by Bloomberg) for five consecutive Trading Days ending
on the date immediately preceding the Exercise Date.

 

C= the
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.

 

If Warrant Shares are issued in such a cashless
exercise, the Company acknowledges and agrees that in accordance
with Section 3(a)(9) of the Securities Act of 1933, as amended, the
Warrant Shares shall take on the registered characteristics of the
Warrants being exercised, and the holding period of the Warrants
being exercised may be tacked on to the holding period of the
Warrant Shares. The Company agrees not to take any position
contrary to this Section 1(d).  Except as
expressly set forth in Section 4(b) herein, nothing in this Warrant
shall require the Company to effect cash settlement of this
Warrant.

 

(e) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
11.

 

(f) Beneficial
Ownership. Notwithstanding
anything to the contrary contained herein, the Holder shall not be
entitled to receive shares of Common Stock upon exercise this
Warrant to the extent that after giving effect to such exercise,
the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the
“Maximum
Percentage”) of the
number of shares of Common Stock outstanding immediately after giving effect to
such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by the Holder and the other
Attribution Parties shall include the number of shares of
Common Stock held by the Holder and
all other Attribution Parties plus the number of shares of
Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of
shares of Common Stock which would be
issuable upon (A) exercise of the remaining, unexercised portion of
this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company (including, without limitation, any convertible notes or
convertible preferred stock or warrants, including the other
Warrants) beneficially owned by the Holder or any other Attribution
Party subject to a limitation on conversion or exercise analogous
to the limitation contained in this Section 1(f). For purposes of
this Section 1(f), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “1934 Act”), it being acknowledged by the Holder that
the Company is not representing to the Holder that such calculation
is in compliance with Section 13(d) of the Exchange Act and the
Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation
contained in this Section 1(f) applies, the determination of
whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates and
Attribution Parties) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the
Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a determination as to any group
status as contemplated above shall be determined by the Holder in
accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Warrant,
in determining the number of outstanding shares of Common
Stock the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the
Company’s most recent Annual Report on Form 10-K, Quarterly
Report on Form 10-Q and Current Reports on Form 8-K or other public
filing with the Securities and Exchange Commission (the
“SEC”), as the
case may be, (y) a more recent public announcement by the Company
or (z) any other written notice by the
Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding (the “Reported Outstanding Share
Number”).
If the Company receives an Exercise
Notice from the Holder at a time when the actual number of
outstanding shares of Common Stock is less than the Reported
Outstanding Share Number, the Company shall (i) notify the Holder
in writing of the number of shares of Common Stock then outstanding
and, to the extent that such Exercise Notice would otherwise cause
the Holder’s beneficial ownership, as determined pursuant to
this Section 1(f), to exceed the Maximum Percentage, the Holder
must notify the Company of a reduced number of Warrant Shares to be
purchased pursuant to such Exercise Notice (the number of shares by
which such purchase is reduced, the “Reduction
Shares”) and (ii) as soon
as reasonably practicable, the Company shall return to the Holder
any exercise price paid by the Holder for the Reduction
Shares. For any reason at any time, upon the written request
of the Holder, the Company shall
within two (2) Business Days confirm orally and in writing or by
electronic mail to such Holder the number of shares of
Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock
shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder and any other Attribution
Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of
Common Stock to the Holder upon
exercise of this Warrant results in the Holder and the other
Attribution Parties being deemed to beneficially own, in the
aggregate, more than the Maximum Percentage of the number of
outstanding shares of Common Stock (as determined under Section 13(d) of the 1934
Act), the number of shares so issued by which the Holder’s
and the other Attribution Parties’ aggregate beneficial
ownership exceeds the Maximum Percentage (the
“Excess
Shares”) shall be deemed
null and void and shall be cancelled ab initio, and the Holder
shall not have the power to vote or to transfer the Excess Shares.
As soon as reasonably practicable after the issuance of the Excess
Shares has been deemed null and void, the Company shall return to
the Holder the exercise price paid by the Holder for the Excess
Shares. Upon delivery of a written notice to the Company,
the Holder may from time to time increase or decrease the Maximum
Percentage to any other percentage not in excess of 4.99% as
specified in such notice; provided that (i) any such increase in
the Maximum Percentage will not be effective until the sixty-first
(61st) day
after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of Warrants that is
not an Attribution Party of the Holder. For purposes of clarity,
the shares of Common Stock issuable pursuant to the terms of this
Warrant in excess of the Maximum Percentage shall not be deemed to
be beneficially owned by the Holder for any purpose including for
purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No
prior inability to exercise this Warrant pursuant to this paragraph
shall have any effect on the applicability of the provisions of
this paragraph with respect to any subsequent determination of
exercisability. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 1(f) to
the extent necessary to correct this paragraph or any portion of
this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section
1(f) or to make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not
be waived and shall apply to a successor holder of this
Warrant.

 

 

4

 

 

(g) Required Reserve Amount. 
So long as this Warrant remains outstanding, the Company shall at
all times keep reserved for issuance under this Warrant a number of
shares of Common Stock at least equal to 100% of the maximum number
of shares of Common Stock as shall be necessary to satisfy the
Company’s obligation to issue shares of Common Stock under
the Warrants then outstanding (without regard to any limitations on
exercise) (the “Required
Reserve Amount”); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this
Section 1(g) be reduced other than in connection with any exercise
of Warrants or such other event covered by Section 2 below. 
The Required Reserve Amount (including, without limitation, each
increase in the number of shares so reserved) shall be allocated
pro rata among the holders of the Warrants based on the number of
shares of Common Stock issuable upon exercise of Warrants held by
each holder thereof on the Issuance Date (without regard to any
limitations on exercise) (the “Authorized Share Allocation”). In
the event that a holder shall sell or otherwise transfer any of
such holder’s Warrants, each transferee shall be allocated a
pro rata portion of such holder’s Authorized Share
Allocation. Any shares of Common Stock reserved and allocated to
any Person which ceases to hold any Warrants shall be allocated to
the remaining holders of Warrants, pro rata based on the number of
shares of Common Stock issuable upon exercise of the Warrants then
held by such holders thereof (without regard to any limitations on
exercise).

 

(h) Insufficient Authorized Shares.
If at any time while this Warrant remains outstanding the Company
does not have a sufficient number of authorized and unreserved
shares of Common Stock to satisfy its obligation to reserve for
issuance the Required Reserve Amount (an “Authorized Share Failure”), then
the Company shall promptly take all action reasonably necessary to
increase the Company’s authorized shares of Common Stock to
an amount sufficient to allow the Company to reserve the Required
Reserve Amount for this Warrant then outstanding. Without limiting
the generality of the foregoing sentence, as soon as practicable
after the date of the occurrence of an Authorized Share Failure,
but in no event later than ninety (90) days after the occurrence of
such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of
authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement
and shall use its reasonable best efforts to solicit its
stockholders’ approval of such increase in authorized shares
of Common Stock and to cause its board of directors to recommend to
the stockholders that they approve such proposal. Notwithstanding
the foregoing, if any such time of an Authorized Share Failure, the
Company is able to obtain the written consent of a majority of the
shares of its issued and outstanding shares of Common Stock to
approve the increase in the number of authorized shares of Common
Stock, the Company may satisfy this obligation by obtaining such
consent and submitting for filing with the SEC an Information
Statement on Schedule 14C.

 

2. ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES UPON SUBDIVISION OR COMBINATION OF COMMON
STOCK. (a) Stock
Dividends and Splits. If the Company at any time on or after
the Subscription Date subdivides (by any stock split, stock
dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares,
the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced and the number of Warrant Shares
will be proportionately increased. If the Company at any time on or
after the Subscription Date combines (by combination, reverse stock
split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price
in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares will be
proportionately decreased. Any adjustment under this
Section 2(a) shall become effective at the close of business
on the date the subdivision or combination becomes
effective.

 

 

5

 

 

(b)
Voluntary Adjustment by
Company. The
Company may at any time during the term of this Warrant reduce the
then current Exercise Price to any amount and for any period of
time deemed appropriate by the Board of Directors of the
Company.

 

3. [RESERVED]

 

4. FUNDAMENTAL TRANSACTIONS. The
Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant in accordance
with the provisions of this Section 4, including agreements to
deliver to the Holder in exchange for this Warrant a security of
the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant,
including, without limitation, which is exercisable for a
corresponding number of shares of capital stock equivalent to the
shares of Common Stock acquirable and receivable upon exercise of
this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such
shares of capital stock (but taking into account the relative value
of the shares of Common Stock pursuant to such Fundamental
Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction). Notwithstanding the foregoing, in the
event of an all-cash sale of the Company, at the Company’s
option, the Company or the Successor Entity shall have the right to
purchase this Warrant from the Holder by paying to the Holder on
the effective date of the Fundamental Transaction, cash in an
amount equal to the Black-Scholes Value of the remaining
unexercised portion of this Warrant on the date of such Fundamental
Transaction. Except in the case of the purchase of this Warrant
pursuant to the terms of the immediately preceding sentence, upon
the consummation of each Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for the Company (so
that from and after the date of the applicable Fundamental
Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the
obligations of the Company under this Warrant with the same effect
as if such Successor Entity had been named as the Company herein.
Notwithstanding the foregoing, and without limiting Section 1(f)
hereof, the Holder may elect, at its sole option, by delivery of
written notice to the Company to waive this Section 4 to permit the
Fundamental Transaction without the assumption of this Warrant. In
addition to and not in substitution for any other rights hereunder,
prior to the consummation of each Fundamental Transaction pursuant
to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for
shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that the Holder will
thereafter have the right to receive upon an exercise of this
Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu
of the shares of the Common Stock (or other securities, cash,
assets or other property (except such items still issuable under
Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction, such shares of stock, securities,
cash, assets or any other property whatsoever (including warrants
or other purchase or subscription rights) (collectively, the
“Corporate Event
Consideration”) which the Holder would have been
entitled to receive upon the happening of the applicable
Fundamental Transaction had this Warrant been exercised immediately
prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant). The provision
made pursuant to the preceding sentence shall be in a form and
substance reasonably satisfactory to the Holder. The provisions of
this Section 4 shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events. Notwithstanding
anything to the contrary, in the event of a Fundamental
Transaction, the Company or any Successor Entity shall, at the
Holder’s option, exercisable at any time concurrently with,
or within 30 days after, the consummation of the Fundamental
Transaction (or, if later, the date of the public announcement of
the applicable Fundamental Transaction), purchase this Warrant from
the Holder by paying to the Holder an amount of cash equal to the
Black-Scholes Value of the remaining unexercised portion of this
Warrant on the date of the consummation of such Fundamental
Transaction; provided, however, if the Fundamental Transaction is
not within the Company's control, including not approved by the
Company's Board of Directors, Holder shall only be entitled to
receive from the Company or any Successor Entity, as of the date of
consummation of such Fundamental Transaction, the same type or form
of consideration (and in the same proportion), at the Black-Scholes
Value of the unexercised portion of this Warrant, that is being
offered and paid to the holders of Common Stock of the Company in
connection with the Fundamental Transaction, whether that
consideration be in the form of cash, shares or any combination
thereof, or whether the holders of Common Stock are given the
choice to receive from among alternative forms of consideration in
connection with the Fundamental Transaction.

 

 

6

 

 

5. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation or Bylaws, or through any
reorganization, transfer of assets, consolidation, merger, scheme,
arrangement, dissolution, issuance or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, and will at all
times in good faith carry out all of the provisions of this Warrant
and take all action as may be required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, (ii) shall take all such
actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii)
shall, so long as any of the Warrants are outstanding, take all
action necessary to reserve and keep available out of its
authorized and unissued shares of Common Stock, solely for the
purpose of effecting the exercise of the Warrants, the number of
shares of Common Stock as shall from time to time be necessary to
effect the exercise of the Warrants then outstanding (without
regard to any limitations on exercise).

 

6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a
holder of this Warrant, shall not be entitled to vote or receive
dividends or be deemed the holder of capital stock of the Company
for any purpose, nor shall anything contained in this Warrant be
construed to confer upon the Holder, solely in such Person’s
capacity as the Holder of this Warrant, any of the rights of a
stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue
of stock, reclassification of stock, consolidation, merger,
conveyance or otherwise), receive notice of meetings, receive
dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is
then entitled to receive upon the due exercise of this Warrant. In
addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of
the Company, whether such liabilities are asserted by the Company
or by creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders; provided that the failure to deliver such notice or
any defect therein or in the delivery thereof shall not affect the
validity of any corporate action required to be specified in such
notice.

 

7. REISSUANCE OF
WARRANTS.

 

(a) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company and deliver a completed and executed form or
assignment, substantially in the form of the Assignment Form
attached hereto as Exhibit B, whereupon the Company will forthwith
issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may
request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the
Holder representing the right to purchase the number of Warrant
Shares not being transferred.

 

 

7

 

 

(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary form (but without the obligation to post a
bond) and, in the case of mutilation, upon surrender and
cancellation of this Warrant, the Company shall execute and deliver
to the Holder a new Warrant (in accordance with Section 7(d))
representing the right to purchase the Warrant Shares then
underlying this Warrant.

 

(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender.

 

(d) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to
the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares
then underlying this Warrant (or in the case of a new Warrant being
issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares
designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.

 

8. NOTICES. Whenever notice is
required to be given under this Warrant, including, without
limitation, an Exercise Notice, unless otherwise provided herein,
such notice shall be given in writing, (i) if delivered (a) from
within the domestic United States, by first-class registered or
certified airmail, or nationally recognized overnight express
courier, postage prepaid, electronic mail or by facsimile or (b)
from outside the United States, by International Federal Express,
electronic mail or facsimile, and (ii) will be deemed given (A) if
delivered by first-class registered or certified mail domestic,
three (3) Business Days after so mailed, (B) if delivered by
nationally recognized overnight carrier, one (1) Business Day after
so mailed, (C) if delivered by International Federal Express, two
(2) Business Days after so mailed and (D) at the time of
transmission, if delivered by electronic mail to the email address
specified in this Section 8 prior to 5:00 p.m. (New York time) on a
Trading Day, (E) the next Trading Day after the date of
transmission, if delivered by electronic mail to the email address
specified in this Section 8 on a day that is not a Trading Day or
later than 5:00 p.m. (New York time) on any Trading Day and (F) if
delivered by facsimile, upon electronic confirmation of delivery of
such facsimile, and will be delivered and addressed as
follows:

 

 

(i) 

if to the Company,
to:

 

Flux
Power Holdings, Inc.

2685 S.
Melrose Drive

Vista,
CA 92081

Attention: Chief
Financial Officer

Facsimile:
760-741-3535

Email:
cscheiwe@fluxpower.com

 

 

8

 

 

(ii) if
to the Holder, at such address or other contact information
delivered by the Holder to Company or as is on the books and
records of the Company.

 

The
Company shall provide the Holder with prompt written notice of all
actions taken pursuant to this Warrant, including in reasonable
detail a description of such action and the reason therefor.
Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) immediately upon any
adjustment of the Exercise Price, setting forth in reasonable
detail, and certifying, the calculation of such adjustment and (ii)
at least fifteen (15) days prior to the date on which the Company
closes its books or takes a record (A) with respect to any dividend
or distribution upon the shares of Common Stock, (B) with respect
to any grants, issuances or sales of any Options, Convertible
Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of
Common Stock or (C) for determining rights to vote with respect to
any Fundamental Transaction, dissolution or liquidation;
provided in each
case that such information shall be made known to the public prior
to or in conjunction with such notice being provided to the Holder;
provided, further, that the failure to deliver such notice or any
defect therein or in the delivery thereof shall not affect the
validity of the corporate action required to be specified in such
notice. It is expressly understood and agreed that the time of
exercise specified by the Holder in each Exercise Notice shall be
definitive and may not be disputed or challenged by the
Company.

 

9. AMENDMENT AND WAIVER. Except as
otherwise provided herein, the provisions of this Warrant may be
amended or waived and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written
consent of the Holders of Warrants to purchase a majority of the
Warrant Shares sold pursuant to the Registration
Statement.

 

10. GOVERNING
LAW; JURISDICTION; JURY TRIAL. This Warrant shall be
governed by and construed and enforced in accordance with, and all
questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws
of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of
New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State
of New York. The Company hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of
such suit, action or proceeding is improper. The Company hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof to the Company at the address set forth in
Section 8(i) above or such other address as the Company
subsequently delivers to the Holder and agrees that such service
shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law.
Nothing contained herein shall be deemed or operate to preclude the
Holder from bringing suit or taking other legal action against the
Company in any other jurisdiction to collect on the Company’s
obligations to the Holder, to realize on any collateral or any
other security for such obligations, or to enforce a judgment or
other court ruling in favor of the Holder. If either party shall
commence an action, suit or proceeding to enforce any provisions of
this Warrant, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for their
reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding. THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES
NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR
ANY TRANSACTION CONTEMPLATED HEREBY.

 

 

 

9

 

 

11. DISPUTE RESOLUTION. In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within two (2) Business Days of
receipt of the Exercise Notice or other event giving rise to such
dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation
of the Exercise Price or the Warrant Shares within three (3)
Business Days of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall,
within two (2) Business Days submit via facsimile or electronic
mail (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and
approved by the Holder or (b) the disputed arithmetic calculation
of the Warrant Shares to the Company’s independent, outside
accountant. The Company shall cause at its expense the investment
bank or the accountant, as the case may be, to perform the
determinations or calculations and notify the Company and the
Holder of the results no later than ten (10) Business Days from the
time it receives the disputed determinations or calculations. Such
investment bank’s or accountant’s determination or
calculation, as the case may be, shall be binding upon all parties
absent demonstrable error.

 

12. REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available
under this Warrant, at law or in equity (including a decree of
specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder to pursue actual damages
for any failure by the Company to comply with the terms of this
Warrant. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and
that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or
threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach,
without the necessity of showing economic loss and without any bond
or other security being required.

 

13. TRANSFER. The registered Holder
of this Warrant agrees by his, her or its acceptance hereof, that
such Holder will not: (a) sell, transfer, assign, pledge or
hypothecate this Warrant for a period of one hundred eighty (180)
days following the later of the date that the Registration
Statement is declared effective by the SEC or the commencement of
sales of the Offering (the later of such dates, the
“Transferability
Date”) to anyone other than: (i) a Representative or
an underwriter or a selected dealer participating in the Offering,
or (ii) a bona fide officer or partner of a Representative or of
any such underwriter or selected dealer, in each case in accordance
with FINRA Conduct Rule 5110(g)(1), or (b) cause this Warrant or
the securities issuable hereunder to be the subject of any hedging,
short sale, derivative, put or call transaction that would result
in the effective economic disposition of this Warrant or the
securities hereunder, except as provided for in FINRA Rule
5110(g)(2). On and after the Transferability Date, transfers to
others may be made subject to compliance with applicable securities
laws.

 

 

10

 

 

14. SEVERABILITY; CONSTRUCTION;
HEADINGS. If any provision of this Warrant is prohibited by
law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise
be prohibited, invalid or unenforceable shall be deemed amended to
apply to the broadest extent that it would be valid and
enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions
of this Warrant so long as this Warrant as so modified continues to
express, without material change, the original intentions of the
parties as to the subject matter hereof and the prohibited nature,
invalidity or unenforceability of the provision(s) in question does
not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The
parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s). This
Warrant shall be deemed to be jointly drafted by the Company and
the Holder and shall not be construed against any Person as the
drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation
of, this Warrant.

 

15. DISCLOSURE. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Warrant, unless the Company has in good faith determined
that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its
subsidiaries, the Company shall contemporaneously with any such
receipt or delivery publicly disclose such material, nonpublic
information on a Current Report on Form 8-K or otherwise. In the
event that the Company believes that a notice contains material,
nonpublic information relating to the Company or its subsidiaries,
the Company so shall indicate to such Holder contemporaneously with
delivery of such notice, and in the absence of any such indication,
the Holder shall be allowed to presume that all matters relating to
such notice do not constitute material, nonpublic information
relating to the Company or its subsidiaries.

 

16. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the
following meanings:

 

(a) “Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 under the
Securities Act of 1933, as amended.

 

(b) “Attribution Parties” means,
collectively, the following Persons and entities: (i) any
investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Subscription
Date, directly or indirectly managed or advised by the
Holder’s investment manager or any of its Affiliates or
principals, (ii) any direct or indirect Affiliates of the Holder or
any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of
the foregoing and (iv) any other Persons whose beneficial ownership
of the Company’s Common Stock would or could be aggregated
with the Holder’s and the other Attribution Parties for
purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all
other Attribution Parties to the Maximum Percentage.

 

 

11

 

 

(c)  “Bid
Price” means, for any security as of the particular
time of determination, the bid price for such security on the
Principal Market as reported by Bloomberg as of such time of
determination, or, if the Principal Market is not the principal
securities exchange or trading market for such security, the bid
price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported
by Bloomberg as of such time of determination, or if the foregoing
does not apply, the bid price of such security in the
over-the-counter market on the electronic bulletin board for such
security as reported by Bloomberg as of such time of determination,
or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any
market makers for such security as reported in the “pink
sheets” by OTC Markets Group Inc. (formerly Pink Sheets LLC)
as of such time of determination. If the Bid Price cannot be
calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such
security as of such time of determination shall be the fair market
value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market
value of such security, then such dispute shall be resolved in
accordance with the procedures in Section 11. All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during such period.

 

(d) “Bloomberg” means Bloomberg
Financial Markets.

 

(e) “Black-Scholes Value” means the value of this
Warrant calculated using the Black-Scholes Option Pricing Model
obtained from the "OV" function on Bloomberg determined as of the
day immediately following the public announcement of the applicable
Fundamental Transaction, or, if the Fundamental Transaction is not
publicly announced, the date the Fundamental Transaction is
consummated, for pricing purposes and reflecting (i) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of this Warrant as of such date of
request, (ii) an expected volatility equal to the greater of 100%
and the 100 day volatility obtained from the HVT function on
Bloomberg as of the Trading Day immediately following the public
announcement of the applicable Fundamental Transaction, or, if the
Fundamental Transaction is not publicly announced, the date the
Fundamental Transaction is consummated, (iii) the underlying price
per share used in such calculation shall be the greater of (x) the
highest Weighted Average Price of the Common Stock during the
period beginning on the Trading Day prior to the execution of
definitive documentation relating to the applicable Fundamental
Transaction and ending on (A) the Trading Day immediately following
the public announcement of such Fundamental Transaction, if the
applicable Fundamental Transaction is publicly announced or (B) the
Trading Day immediately following the consummation of the
applicable Fundamental Transaction if the applicable Fundamental
Transaction is not publicly announced and (y) the sum of the price
per share being offered in cash, if any, plus the value of any
non-cash consideration, if any, being offered in the Fundamental
Transaction, (iv) a zero cost of borrow and (v) a 365 day
annualization factor.

 

(f) “Business Day” means any day other
than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.

 

 

12

 

 

(g)  “Closing
Bid Price” and “Closing Sale Price” means, for any
security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal
Market begins to operate on an extended hours basis and does not
designate the closing bid price or the closing trade price, as the
case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York
time, as reported by Bloomberg, or, if the Principal Market is not
the principal securities exchange or trading market for such
security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such
security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no closing
bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask
prices, respectively, of any market makers for such security as
reported in the OTC Link or “pink sheets” by OTC
Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing
Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the
Closing Bid Price or the Closing Sale Price, as the case may be, of
such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company
and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to
Section 11. All such determinations to be appropriately adjusted
for any stock dividend, stock split, stock combination,
reclassification or other similar transaction during the applicable
calculation period.

 

(h) “Common Stock” means (i) the
Company’s Common Stock, par value $0.001 per share, and
(ii) any capital stock into which such Common Stock shall have
been changed or any capital stock resulting from a reclassification
of such Common Stock.

 

(i) “Convertible Securities” means any
stock or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of
Common Stock.

 

(j) “Eligible Market” means The Nasdaq
Capital Market, the NYSE American LLC, The Nasdaq Global Select
Market, The Nasdaq Global Market or The New York Stock Exchange,
Inc.

 

(k) “Expiration Date” means the
five-year anniversary of the effective date of the
offering.

 

 

13

 

 

(l) “Fundamental Transaction” means (A)
that the Company shall, directly or indirectly, including through
subsidiaries, Affiliates or otherwise, in one or more related
transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity
(but excluding a merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company),, or (ii) sell,
assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the Company or any
of its “significant subsidiaries” (as defined in Rule
1-02 of Regulation S-X) to one or more Subject Entities, or (iii)
make, or allow one or more Subject Entities to make, or allow the
Company to be subject to or have its shares of Common Stock be
subject to or party to one or more Subject Entities making, a
purchase, tender or exchange offer that is accepted by the holders
of at least either (x) 50% of the outstanding shares of Common
Stock, (y) 50% of the outstanding shares of Common Stock calculated
as if any shares of Common Stock held by all Subject Entities
making or party to, or Affiliated with any Subject Entities making
or party to, such purchase, tender or exchange offer were not
outstanding; or (z) such number of shares of Common Stock such that
all Subject Entities making or party to, or Affiliated with any
Subject Entity making or party to, such purchase, tender or
exchange offer, become collectively the beneficial owners (as
defined in Rule 13d-3 under the 1934 Act) of at least 50% of the
outstanding shares of Common Stock, or (iv) consummate a stock
purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with one or more Subject Entities whereby
all such Subject Entities, individually or in the aggregate,
acquire, either (x) at least 50% of the outstanding shares of
Common Stock, (y) at least 50% of the outstanding shares of Common
Stock calculated as if any shares of Common Stock held by all the
Subject Entities making or party to, or Affiliated with any Subject
Entity making or party to, such stock purchase agreement or other
business combination were not outstanding; or (z) such number of
shares of Common Stock such that the Subject Entities become
collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common
Stock, or (v) reorganize, recapitalize or reclassify its shares of
Common Stock, (B) that the Company shall, directly or indirectly,
including through subsidiaries, Affiliates or otherwise, in one or
more related transactions, allow any Subject Entity individually or
the Subject Entities in the aggregate to be or become the
“beneficial owner” (as defined in Rule 13d-3 under the
1934 Act), directly or indirectly, whether through acquisition,
purchase, assignment, conveyance, tender, tender offer, exchange,
reduction in outstanding shares of Common Stock, merger,
consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization,
recapitalization or reclassification or otherwise in any manner
whatsoever, of either (x) at least 50% of the aggregate ordinary
voting power represented by issued and outstanding shares of Common
Stock, (y) at least 50% of the aggregate ordinary voting power
represented by issued and outstanding shares of Common Stock not
held by all such Subject Entities as of the Subscription Date
calculated as if any shares of Common Stock held by all such
Subject Entities were not outstanding, or (z) a percentage of the
aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock or other equity securities of
the Company sufficient to allow such Subject Entities to effect a
statutory short form merger or other transaction requiring other
stockholders of the Company to surrender their Common Stock without
approval of the stockholders of the Company or (C) directly or
indirectly, including through subsidiaries, Affiliates or
otherwise, in one or more related transactions, the issuance of or
the entering into any other instrument or transaction structured in
a manner to circumvent, or that circumvents, the intent of this
definition in which case this definition shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this definition to the extent necessary to correct
this definition or any portion of this definition which may be
defective or inconsistent with the intended treatment of such
instrument or transaction.

 

 

14

 

 

(m) “Group” means a “group”
as that term is used in Section 13(d) of the 1934 Act and as
defined in Rule 13d-5 thereunder.

 

(n) “Options” means any rights,
warrants or options to subscribe for or purchase shares of Common
Stock or Convertible Securities.

 

(o) “Parent Entity” of a Person means
an entity that, directly or indirectly, controls the applicable
Person, including such entity whose common stock or equivalent
equity security is quoted or listed on an Eligible Market (or, if
so elected by the Holder, any other market, exchange or quotation
system), or, if there is more than one such Person or such entity,
the Person or such entity designated by the Holder or in the
absence of such designation, such Person or entity with the largest
public market capitalization as of the date of consummation of the
Fundamental Transaction.

 

(p) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency
thereof.

 

(q) “Principal Market” means The Nasdaq
Capital Market.

 

(r) “Standard Settlement Period”
means the standard settlement period, expressed in a number of
Trading Days, for the Company’s primary trading market or
quotation system with respect to the Common Stock that is in effect
on the date of delivery of an applicable Exercise
Notice.

 

(s) “Subject Entity” means any Person,
Persons or Group or any Affiliate or associate of any such Person,
Persons or Group.

 

(t) “Successor Entity” means one or
more Person or Persons (or, if so elected by the Holder, the
Company or Parent Entity) formed by, resulting from or surviving
any Fundamental Transaction or one or more Person or Persons (or,
if so elected by the Holder, the Company or the Parent Entity) with
which such Fundamental Transaction shall have been entered
into.

 

(u) “Trading Day” means any day on
which the Common Stock is traded on the Principal Market, or, if
the Principal Market is not the principal trading market for the
Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then
traded.

 

(v) “Weighted Average Price” means, for
any security as of any date, the dollar volume-weighted average
price for such security on the Principal Market during the period
beginning at 9:30:01 a.m., New York time (or such other time as the
Principal Market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York time (or such other
time as the Principal Market publicly announces is the official
close of trading), as reported by Bloomberg through its
“Volume at Price” function or, if the foregoing does
not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30:01
a.m., New York time (or such other time as such market publicly
announces is the official open of trading), and ending at 4:00:00
p.m., New York time (or such other time as such market publicly
announces is the official close of trading), as reported by
Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average
of the highest Closing Bid Price and the lowest closing ask price
of any of the market makers for such security as reported in the
OTC Link or “pink sheets” by OTC Markets Group Inc.
(formerly Pink OTC Markets Inc.). If the Weighted Average Price
cannot be calculated for a security on a particular date on any of
the foregoing bases, the Weighted Average Price of such security on
such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 11 but with the
term “Weighted Average Price” being substituted for the
term “Exercise Price.” All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or other similar transaction during
the applicable calculation period.

 

[Signature Page Follows]

 

 

15

 

 

IN WITNESS WHEREOF, the Company has
caused this Warrant to Purchase Common Stock to be duly executed as
of the Issuance Date set out above.

 

 

FLUX
POWER HOLDINGS, INC.

 

 

By:___________________________

Name:

Title:

 

 

 

16

 

  EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS

WARRANT TO PURCHASE COMMON STOCK

 

FLUX POWER HOLDINGS, INC.

The
undersigned holder hereby exercises the right to purchase
_________________ shares of Common Stock (“Warrant Shares”) of Flux Power
Holdings, Inc., a Nevada
corporation (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used
herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

 

1. Form
of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:

 

____________ 

a
“Cash
Exercise” with respect to _________________ Warrant
Shares; and/or

 

____________ 

a
“Cashless
Exercise” with respect to _______________ Warrant
Shares.

 

2.
Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.

 

3.
Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the
Warrant.

 

 

 

Date:
_______________ __, ______

 

 

 

   Name
of Registered Holder

 

 

By:           

Name:

Title:

 

 

 

17

 

 

ACKNOWLEDGMENT

 

 

The
Company hereby acknowledges this Exercise Notice and hereby directs
Issuer Direct Corporation to issue the above indicated number of
shares of Common Stock on or prior to the applicable Share Delivery
Date.

 

FLUX
POWER HOLDINGS, INC.

 

 

 

By:________________________________

Name:

Title:

 

 

 

 

 

18

 

EXHIBIT B

 

ASSIGNMENT FORM

 

FLUX POWER HOLDINGS, INC.

 

(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)

 

            

FOR VALUE RECEIVED,
the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

 

Name:                                                                                     

                                                                            

(Please
Print)

 

Address:                                                                           

                                                                            

(Please
Print)

 

 

Dated:
_______________ __, ______

 

 

Holder’s
Signature:     

 

 

Holder’s
Address:        

 

 

NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing
Warrant.

   

 

 

19

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