Document:

Separation Agreement

 

EXHIBIT 10.1

DUOS TECHNOLOGIES GROUP INC

EXECUTIVE SEPARATION AGREEMENT

This EXECUTIVE SEPARATION AGREEMENT (this “Agreement”) is entered into as of the date indicated on the signature page hereto by and between Duos Technologies Group, Inc., a Florida corporation (the “Company”), and Gianni Arcaini, an individual (“Executive” and together with the Company, the “Parties” and each, a “Party”). 

WHEREAS, Executive is employed by the Company as its Chief Executive Officer and President pursuant to the terms of that certain Employment Agreement by and between the Company and Executive, dated April 1, 2018 (the “Employment Agreement”); and

WHEREAS, Executive and the Company have come to a mutual agreement regarding the Executive’s and the Company’s desire for the Executive to retire from his position as Chief Executive Officer and President of the Company (the “Separation”); and

WHEREAS, the Executive shall remain with the Company as Chief Executive Officer and President until September 1, 2020.

NOW THEREFORE, the Parties, who have had the opportunity to receive independent legal advice in this matter, in consideration of the mutual covenants and agreements set forth hereinafter, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

1.

Executive's Separation.

a)

Executive’s employment with the Company and any subsidiaries and affiliated entities will be irrevocably terminated on September 1, 2020 (the “Separation Date”).  As of the Separation Date, Executive shall no longer be an officer or employee of the Company, or an officer, employee, or member of the board of directors of any subsidiary or affiliated entity of the Company, and Executive agrees he shall execute any and all documents necessary or advisable, as reasonably requested by the Company, to effect Executive’s Separation as an officer or employee of the Company, or an officer, employee, or member of the board of directors of any subsidiary or affiliated entity of the Company.  The Executive shall remain Chairman of the Board of Directors of the Company until the next regularly scheduled annual Shareholders Meeting.  The Company shall pay to the Executive his current salary in accordance with the Employment Agreement, and in accordance with the Company’s current payroll practices and standards, including the selected deductions and withholdings, including all W-2 tax withholdings, until September 1, 2020. 

1

 

b)

Executive shall take any and all actions as reasonably requested by the Company in order to immediately and efficiently effect the Separation contemplated hereby, including, but not limited to, returning to the Company any and all files, records, credit cards, keys, equipment, and any and all other Company property or documents maintained by Executive, by no later than the Separation Date (subject to Section 4 hereof).

2.

Consideration.     In consideration of Executive's execution of this Agreement, the Company agrees that it shall:

a)

Pay to the Executive the total sum of Eight Hundred Twenty-Two Thousand Seven Hundred Eighty Dollars ($822,780), said sum to be paid by the Company in biweekly installments over the thirty-six (36) month period beginning on the first regular Company pay period after September 1, 2020.  Notwithstanding the foregoing, the status of the Executive as a “Specified Employee” as defined in Internal Revenue Code Section 409A has the effect of delaying any payments to Executive hereunder for six (6) months after the Separation Date.  Therefore, the Company shall pay to the Executive on March 1, 2021, a lump sum amount equal to the first six (6) months of payments owed to the Executive under this paragraph, and shall then continue to pay Executive in bi-weekly installments for thirty (30) months thereafter, as contemplated in the Employment Agreement.  Payments under this paragraph shall be made in accordance with the Company’s standard payroll practices, and all previously selected deductions will be made, and the Company shall withhold all applicable and proper local, state, and federal taxes and provide Executive with all applicable W-2s.  In the event the Executive should die during the term of payment, and subject to Section 13 hereof, any remaining amounts due shall be paid to the Executive’s last named beneficiary as filed with the Company for this purpose, or, in the absence of any named beneficiary, to the Executive’s estate in the same manner and amounts that would be paid the Executive, provided, however, said amounts shall be reported to them on Form 1099-R as required by the Code.  

b)

Pay one-half of the Executive’s current life insurance premiums for thirty-six (36) months following the Separation Date, beginning on September 1, 2020;

c)

Provide and pay for the Executive’s health insurance for eighteen (18) months following the Separation Date via COBRA and an additional eighteen (18) months via a direct cash payment to the Executive in an amount equal to the same payments made for COBRA (ii through vi collectively the “Separation Payment”), at the level of Executive’s current healthcare selections as of the Separation Date; and 

d)

All outstanding stock and warrant options held by the Executive and/or Robex International, Inc. (“Robex”) and/or offered to Executive and/or Robex by the Company which are or were not then exercisable or vested, shall become exercisable and vested in their entirety on the Separation Date. Executive and/or Robex shall retain all stocks and warrants currently held as of the Separation Date that previously vested.

2

 

e)

The Company and Executive will cooperate in the preparation of any public disclosure by the Company related to the existence or the terms and conditions of the Employment Agreement, or the termination of the Employment Agreement in connection with the Separation, the content of which shall be subject to the review and comment of Executive, which shall not be unreasonably withheld, conditioned or delayed. In no event shall Executive’s rights under this subsection prevent the Company from fulfilling its obligations under applicable securities laws and regulations. In addition to the public disclosures required by applicable securities laws and regulations, the Company and the Executive shall cooperate and agree upon a mutual statement to be issued as a press release. This statement shall indicate that Executive is retiring as an executive and officer of the Company, but not the Board of Directors of the Company. Prior to the release of this press release, the Company and Executive shall meet to agree on an internal communication to be delivered to the Company’s executives, directors, officers, and employees announcing Executive’s retirement from the Company, except the Board of Directors.

f)

Upon receipt of the final bill from Executive, the Company shall provide to Executive payment of his actual reasonable attorneys’ fees for legal work associated with the negotiation and drafting of this Agreement and other documents and matters relating hereto, which is currently estimated to be Five Thousand Dollars ($5,000.00).

g)

It is expressly acknowledged and agreed that the consideration provided in this Section shall constitute the full consideration to be paid in connection with this Agreement, the Employment Agreement or any other agreement, document, written or verbal understanding or otherwise.  It is further understood that the amounts being paid are solely for Executive’s performance of his roles as Chief Executive Officer and President and in no way relate to his service as a member of the Board of Directors.  No additional consideration (including, but not limited to, cash, common or preferred stock or and equity-linked securities for consideration), unless otherwise required by the Employment Agreement, whatsoever shall be owing  by the Company or any subsidiaries or affiliated entities of the Company to the Executive  by virtue of severance, salary, credit earned for vacation, or any other reason. In addition, Executive shall have the right to payment of any compensation or other benefits provided or offered to the members of the Company’s Board of Directors while Executive is on the Board of Directors of the Company. This Agreement is a full and complete settlement of any and all amounts claimed to be due and owing by the Company and any subsidiaries or affiliated entities of the Company to the Executive.  The Company shall promptly provide Executive, via U.S. mail to 7889 Hunters Grove Rd. Jacksonville, Florida 32256 and via email to gba@arcaini.com, with all payroll and tax documents related to the consideration set forth in this Section, including, but not limited to, W-2s, 1099s and payroll slips for the applicable time periods.

3.

Representations.     Executive and the Company make the following representations, each of which is an important consideration to the other party's willingness to enter into this Agreement:

3

 

a)

Executive understands and agrees that he has been advised to consult with an attorney of his choice concerning the legal consequences of this Agreement. Executive hereby acknowledges that prior to signing this Agreement, he had the opportunity to consult, and did consult, with an attorney of his choosing regarding the effect of each and every provision of this Agreement.

b)

Executive acknowledges and agrees that he knowingly and voluntarily entered into this Agreement with complete understanding of all relevant facts, and that he was neither fraudulently induced nor coerced to enter into this Agreement.

c)

Each of the Parties represent and warrant to the other that they have the capacity and authority to enter into this Agreement and be bound by its terms and that, when executed, this Agreement will constitute a valid and binding agreement of such Party enforceable against such Party in accordance with its terms.

d)

The Company has sufficient reserves for the payment of its obligations under this Agreement, and the Company shall make such payments as agreed herein.

4.

Covenants of

Confidentiality, Nondisclosure, Non-solicitation and Non-competition.

a)

Executive acknowledges that, as a result of Executive’s past association with the Company, Executive has confidential or proprietary information of special value to the Company.  Subject to Section 4(d), Executive covenants and agrees that he shall not, directly or indirectly, disclose, reveal, divulge or communicate to any person other than authorized officers, directors, employees, and professional advisors of the Company, or use or otherwise exploit for Executive’s own benefit or for the benefit of anyone other than the Company, any Confidential Information. Executive shall not have any obligation to keep confidential any Confidential Information if and to the extent disclosure thereof is specifically required by applicable law; provided, however, that in the event disclosure is required by applicable law, Executive shall, to the extent reasonably possible and legally permissible, provide the Company with prompt notice of such requirement prior to making any disclosure so that the Company may seek an appropriate protective order, at the Company’s sole cost and expense. “Confidential Information” means any confidential information with respect to the Company, including, without limitation, methods of operation, customer lists, products, prices, fees, costs, technology, formulas, inventions, trade secrets, know-how, proprietary software, marketing methods, plans, suppliers, competitors, markets or other specialized information or proprietary matters that is not otherwise in the public domain or available to the public upon request or through publicly available research and discovery.  

b)

The negotiations in connection with this Agreement were and are intended by the Executive and the Company to be confidential.  Neither the Company nor the Executive shall disclose or make any statements regarding such negotiations or the circumstances surrounding this Agreement, or the terms and conditions hereof; 

4

 

provided, however, that the Parties agree and acknowledge that the Company may, in its sole discretion, file this Agreement with the U.S. Securities and Exchange Commission and that any legally required disclosure with respect to information contained in this Agreement shall be permissible.

c)

Executive agrees that he will use his best efforts to do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the Company may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement, including with respect to agreements, certificates, instruments and documents that Executive was required to deliver prior to, or in connection with, the closing of the Transaction in his capacity as an officer or director of the Company or any of its subsidiaries as of such date. However, the Company agrees that Executive shall have the opportunity to consult with counsel prior to signing any instrument or document or other deliverable contemplated in this paragraph.

d)

As a separate and independent covenant, Executive further agrees that, for a period of one (1) year after the Separation Date, Executive shall not (i) cause, solicit, induce or encourage any employees of the Company (or former employees who had been employed by the Company within a six (6) month period prior to any such solicitation or hiring) to leave such employment or hire, employ or otherwise engage any such individual; (ii) cause, induce or encourage any customer, supplier, or licensor of the Company that was a current customer, supplier, or licensor of the Company at the time of the Separation Date to terminate or modify any such relationship as it relates to the Company’s business; or (iii) cause, induce or encourage any Prospective Customer of the Company not to do business with the Company. “Prospective Customer” means any person or entity which has evidenced an intention to order products or services from the Company or with whom the Company has had material contact and discussions regarding the ordering of products or services from the Company, in each case on or before the Separation Date.

e)

Executive agrees to comply with the one (1) year 750-mile post-separation non-competition provision set forth in Executive’s current Employment Agreement.  In addition, for thirty-six (36) months after the Separation Date, Executive agrees not to compete directly with the Company relating to any products or systems that are offered by the Company as of his Separation Date.  

5.

Release of Claims.     

a)

Executive agrees that the foregoing consideration represents settlement in full of all outstanding obligations, unless otherwise provided for herein, owed to Executive by the Company and its current and former officers, directors, executives,  agents, investors, attorneys, shareholders, administrators, affiliates, and subsidiaries, and predecessor and successor corporations and assigns (collectively, the “Releasees”). Executive, on his own behalf and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and  agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any 

5

 

claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Release Effective Date of this Agreement, including, without limitation:

i.

any and all claims relating to or arising from Executive’s employment relationship with the Company and the termination of that relationship, except the obligations provided for in this Agreement;

ii.

any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law, except Executive shall not waive any and all claims relating to Executive’s possession, ownership, control, or purchase of shares of stock or warrants of the Company that Executive has as of the Release Effective Date, or that arise after the Release Effective Date of this Agreement as Executive will continue to possess, control, and have ownership in this stock or warrants after the Release Effective Date of this Agreement;

iii.

any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;   

iv.

any and all claims for violation of any federal, state, or municipal statute; the federal or any state constitution; and/or arising out of any other laws and regulations relating to employment or employment discrimination, including, but not limited to, claims or other legal forms of action arising from any employment of the Executive, any claims of harassment or discrimination (for example, on the basis of gender, race, age, national origin, handicap or disability or other protected category) under any federal, state or local law, rule or regulation, including, but not limited to, the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq., Title VII of the Civil Rights Act of 1964, the Americans with Disabilities  Act, the Civil Rights Act of 1866, Section 1983 of the Civil Rights Act of 1871, the Age Discrimination In Employment Act, the Equal Pay Act, the Public Employees Relations Act, the Fair Labor Standards Act, the Family and Medical Leave Act of 1993 (FMLA); the Florida 2 Whistleblowers Act, the Americans With Disabilities Act, Veterans' Reemployment Rights Act, as amended (USERRA), the 

6

 

Florida Civil Rights Act, any claim arising under the Employment Retirement Income Security (“ERISA”) and any other federal or state statutory or common law theory of liability or damages (except for claims for vested benefits under ERISA), Section 806 of the Sarbanes-Oxley Act of 2002, breach of contract, express or implied, or from any other conduct, act, omission or failure to act, whether negligent, intentional, with or without malice, that the Executive ever had, now has, may have, may claim to have, or may hereafter have or claim to have, against the Company, from the beginning of time up to and including the Separation Date, unless otherwise provided herein; 

v.

any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement, including, but not limited to any claims for violations of Section 409A of the Internal Revenue Code of 1986 (the “Code”), as amended;

vi.

any and all claims for attorneys’ fees and costs that arose up to and including the Release Effective Date of this Agreement, except for the attorneys’ fees to be paid by the Company as set forth in Section 2 (vii) of this Agreement; and 

vii.

any and all claims based upon discovered facts in addition to or different from those that any of them now knows or believes to be true, or the claims or other legal forms of action released herein, and the Executive fully, finally, and forever settles and releases any and all claims set forth above, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, that now exist, or heretofore have existed upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct that is negligent, reckless, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts.  Executive does not waive any claims as a shareholder of the Company. 

b)

The Executive acknowledges that the inclusion of “unknown claims” in this Agreement was separately bargained for and was a key element of the Agreement, and that the Executive assumes the risk of any mistake of fact or law on his own behalf.  If the Executive should subsequently discover that his understanding of the facts or of the law was or is incorrect, the Executive shall not be entitled to relief in connection therewith, including without limitation of the generality of the foregoing, any alleged right or claim to set aside or rescind this Agreement.  This Agreement is intended to be, and is, final and binding upon the Executive according to the terms hereof regardless of any claims of mistake of fact or law.

The Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement.  This 

7

 

release does not release claims that cannot be released as a matter of law.  The Executive represents that he has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or other matter waived or released by this Section. The Parties agree that that this release set forth in this section shall not apply to claims, causes of actions, or demands that arise after the Release Effective Date of this Agreement. 

c)

The Company agrees to defend, hold harmless, and indemnify, at its cost, any lawsuit, action, cause of action, claim, or demand for damages (equitable or legal) made by a shareholder of the Company or any other third party against Executive for any action or inaction taken by Executive while he was a Chief Executive Officer or President of the Company, including on an interim basis. Except, the Company shall be relieved of such defense, hold harmless, or indemnification if the Executive committed gross misconduct or fraud.

6.

Acknowledgement of Waiver of Claims.     

a)

Executive acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary.  Executive acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Executive was already entitled. Executive further acknowledges that he has been advised by this writing that: (a) he should consult with an attorney prior to executing this Agreement; (b) he has twenty-one (21) days to consider this Agreement, but may choose to voluntarily sign it sooner (c) he has seven (7) days following his execution of this Agreement to revoke this Agreement (the expiration day of the seven (7) day period, the “Release Effective Date”); (d) this Agreement shall not be effective until after the revocation period has expired; and (e) the waiver does not apply to any claims or rights which may arise after the final execution of this Agreement.

b)

Notwithstanding the foregoing, nothing in this Agreement shall be construed to prevent Executive from filing a charge with or participating in an investigation conducted by any governmental agency, including, without limitation, the United States Equal Employment Opportunity Commission (“EEOC”) or applicable state or city fair employment practices agency, to the extent required or permitted by law. Nevertheless, Executive understands and agrees that he is waiving any relief available (including, for example, monetary damages or reinstatement), under any of the claims and/or causes of action waived in paragraph 5 above, including but not limited to financial benefit or monetary recovery from any lawsuit filed or settlement reached by the EEOC or anyone else with respect to any claims released and waived in this Agreement. 

7.

Non-Disparagement.     Executive and the officers, directors and executives of the Company hereby agree that they will not make any remarks or adverse statements in any and all media (e.g., in writing, orally or on the internet via, among other things, blogs and 

8

 

social networks) about the other Party or the Company’s current officers, directors, and executives that could reasonably be construed as disparaging or defamatory, or to cast the other Party or any of the Company’s current officers, directors, and executives in a negative light, or harm a Party’s or any of the Company’s current officers, directors, and executives current or prospective business plans.  Executive and the Company hereby agree and acknowledge that each of the Company’s current officers, directors, and executives  are a third party beneficiary of this Section 7 and hereby consents to any such standing with respect to a claim arising out of Executive' s non-disparagement obligations to such Releasee contained in this Section 7.

8.

No Admission of Liability.     Executive understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by the Executive. No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to the Executive or to any third party.

9.

Consulting Services.     The Executive agrees that, in light of his knowledge regarding the Company and its operations gained from more than ten years as the Company’s Chief Executive Officer the Company may, from time to time, and in the Company’s reasonable discretion, consult with Executive following the Separation Date.  Such consulting services shall not exceed twenty percent (20%) of the time Executive previously dedicated to Company during the previous period.  These consulting services shall be provided through Executive’s services to the Company only if Executive is on the Company’s Board of Directors. The consulting services responsibilities of Executive shall terminate at the time when the Executive is no longer on the Company’s Board of Directors.  These consulting services shall be provided by Executive free of charge, with the Company to reimburse Executive for any reasonable out-of-pocket expenses.

10.

No Action.     The Executive affirms as of the date hereof and will reaffirm as of the Separation Date, by executing this Agreement again on the Separation Date, that he has not filed and will not file any actions or charges, against the Company or the Releasees with any federal, state or local agency and that he is otherwise in compliance with all terms and conditions of this Agreement.. The Executive further agrees that, upon payment of the consideration provided in this Agreement, he will not personally recover or attempt to recover monies from the Company or the Releasees regarding his employment or the separation of his employment in the future.

9

 

11.

Notices.     All notices and other communications hereunder shall be in writing and shall be deemed given when delivered by an internationally recognized overnight courier to the respective Party at the following addresses (or at such other address for a Party as shall be specified by like notice, provided that a notice of change of address(es) shall be effective only from the date of its receipt by the other Party):

If to Executive, then to:

With a copy to: 

and to: 

c/o Brennan Manna Diamond

800 West Monroe Street

Jacksonville, FL 32202

Attention: Babette L. Ashley 

E-mail: 

Fax: 

If to the Company: 

6622 Southpoint Dr. South

Suite 310

Jacksonville, FL 32216

Attention: Adrian Goldfarb

E-mail: 

then to:

c/o Lucosky Brookman LLP

101 Wood Avenue South

Woodbridge, NJ 08830

Attention: Joseph M. Lucosky

E-mail: 

Fax: 

12.

Internal Revenue Code Section 409A.     It is the intent of the Parties that any compensation and benefits payable or provided to Executive under this Agreement are paid solely for his services as Chief Executive Officer and President of the Company, and are paid and provided in compliance with Section 409A of the Code and all regulations, guidance, and other interpretative authority issued thereunder (collectively, “Section 409A”) or in accordance with any applicable exemption from Section 409A. Unless 

10

 

otherwise provided herein, the Parties acknowledge and agree that all compensation and benefits payable or provided to Executive under Agreement are paid and provided in compliance with Section 409A, and therefore, the Company shall not report any of such compensation or benefits in Box 12 of Executive’s Form W-2 using code “Z.” Notwithstanding anything to the contrary in this Agreement, the Executive has been determined to be a "specified employee" within the meaning of Section 409A at the time of Executive's separation from service (other than due to death), therefore,  the payments of "nonqualified deferred compensation" subject to Section 409A, that are payable within the first six months following Executive's separation from service, will be paid on the first date of the seventh (7th) month following the date of Executive's separation from service. Notwithstanding anything herein to the contrary, in the event of Executive's death following Executive's separation from service, but before the six month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive's death and all other deferred compensation payments will be payable in accordance with the payment schedule applicable to each payment or benefit.  For purposes of Section 409A, Executive's right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.  Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “within sixty (60) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company, but shall not exceed the maximum days allotted (e.g. “within sixty (60) days”).

13.

Governing Law.     The laws of the State of Florida govern the interpretation, validity and effect of this Agreement without regard to principles of conflicts of law, the place of execution or the place for performance thereof. The parties hereto hereby irrevocably and unconditionally each submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the State of Florida and its courts and the courts of the United States of America for the Middle District of Florida; consents that any such action or proceeding shall be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; and agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law.

14.

Interpretation.     This Agreement shall be construed as if the Parties jointly prepared this Agreement and any uncertainty or ambiguity shall not be interpreted against any Party.

15.

Entire Agreement.     This Agreement contains the entire understanding by and between the Parties and supersedes any and all prior agreements and understandings between the Parties and the Company, including the Employment Agreement, except where otherwise set forth herein, whether such agreements or understandings were oral or written, and all of which prior agreements and understandings are hereby definitively terminated and of 

11

 

no further force or effect, unless otherwise provided herein.   The Parties acknowledge and represent that they have not relied on any statements, agreements, representations, promises, warranties, or other assurances, oral or written, other than those contained herein.   Each Party agrees that this Agreement is intended to cover any and all matters and claims (including possible and contingent claims) arising out of or related to any and all prior agreements or understandings, and this Agreement shall cover any and all prior matters, whether any such matters are known, unknown or hereafter discovered or ascertained. Executive covenants and agrees that he will not, at any time hereafter, either directly or indirectly, initiate, assign, maintain or prosecute, or in any way knowingly aid or assist in the initiation, maintenance or prosecution of any claim, demand or cause of action of the Executive, at law or otherwise against the Releasees or any of them, as applicable, for damages, loss or injury of any kind arising from, related to, or in any way connected to any activity with respect to which a release has been given pursuant to this Agreement, except to enforce this Agreement or unless otherwise provided for herein.

16.

Modification.     This Agreement shall not and cannot be modified by any Party by any oral promise or representation made before or after the execution of this Agreement and may only be modified by a writing signed by all Parties.  This Agreement shall be binding upon and inure to the benefit of the Releasees.

17.

Construction.     The headings of paragraphs are used for convenience only and shall not affect the meaning or construction of the contents of this Agreement. Should any portion (e.g., word, clause, phrase, sentence, paragraph or section) of this Agreement be declared void or unenforceable, such portion shall be considered independent and severable from the remainder, the validity of which shall remain unaffected.  This Agreement shall survive indefinitely, except as otherwise provided for herein.   The terms and conditions of this Agreement have been, or will deemed to be, jointly negotiated by the Parties, and in the event of any ambiguity or controversy it shall not be construed against either Party as the draftsperson.  For purposes of this Agreement, “Company” shall include any of the Company’s parents, subsidiaries, affiliates, or any other entity in which it holds a 50% or greater equity interest.

18.

Counterparts.     This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall be deemed one and the same instrument.  This Agreement may be executed in counterparts and may be delivered via fax or scan which shall have the same full force and effect as an original.

19.

Advice of Counsel.     Each Party has had ample opportunity to consult with counsel and has independently determined to proceed with this Agreement with or without such counsel.  Executive has not relied upon Company counsel with respect to any advice of any nature or kind regarding this Agreement, and Executive acknowledges and agrees that Company counsel does not represent Executive individually or as an officer or director of the Company.  Executive further acknowledges that the only consideration for signing this Agreement is the terms stated in this Agreement, and that no other promise or agreements of any kind have been made to him or with him by any person or entity whatsoever to cause him to sign this Agreement; that he is competent to execute this 

12

 

Agreement; that he has been afforded sufficient and reasonable time to consider the Agreement and has been advised in writing and given the opportunity to consult advisors, legal and otherwise, of his own choosing; that the consideration received for executing this Agreement is greater than that ordinarily provided by the Company under any severance plan, policy or practice; and that he fully understands the meaning and intent of this Agreement.  

20.

Effectiveness.     It is understood and agreed that the Release Effective Date shall be the date that is seven (7) days following the signing of the Agreement by the Executive and that the Executive may revoke the Agreement for any reason during the seven (7) day period between signing and the Release Effective Date, by written notice actually received during that time by Joseph M. Lucosky, Esq. It is further understood that no payment shall be made in accordance with Section 2 of this Agreement until after the Release Effective Date.

21.

Successors and Assigns.     This Agreement shall be assigned to the Company’s successors and assigns, including, without limitation, successors and assigns through merger, name change, consolidation, liquidation, or sale of a majority of the Company’s stock or assets, and shall be binding upon such successors and/or assigns. In addition, the Parties agree that the benefits provided to Executive shall survive his death and inure to the benefit of Executive’s estate, heirs, and assigns. 

22.

Testimony.     Notwithstanding anything to the contrary in this Agreement, including, but not limited to, Sections 4 and 7, this Agreement shall not be interpreted to preclude the Parties from making truthful statements to any court or government agency pursuant to an official request by such government agency, court order, or legally enforceable subpoena.

[Signature Page Follows]

13

 

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the month, day and year set forth below.

		
	DUOS TECHNOLOGIES, INC.

	By: 

	 

	Name:

	 

	Title:

	 

	 
	 

	Date: 

	_______________, 2020

	 
	 

	 
	 

	 
	 

	 
	 

	 

	Gianni Arcaini

	Date: 

	_______________, 2020

THIS IS A LEGAL AGREEMENT, RELEASE AND COVENANT 

NOT TO SUE. READ CAREFULLY BEFORE SIGNING.

Signature page to Executive Separation Agreement]

14Exhibit
10.1

 

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) THE REPRESENTATIVE (AS DEFINED BELOW) AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING,
OR (II) A BONA FIDE OFFICER OR PARTNER OF THE REPRESENTATIVE OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.

 

THIS
PURCHASE WARRANT IS NOT EXERCISABLE PRIOR TO FEBRUARY 8, 2021. VOID AFTER 5:00 P.M., EASTERN TIME, AUGUST 12, 2025.

 

FLUX
POWER HOLDINGS, INC.

 

Warrant
To Purchase Common Stock

 

Warrant
No.: RW-___

Number
of Shares of Common Stock: [●]

Date
of Issuance: August 18, 2020 (“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 February 8, 2021 (the “Initial Exercisability Date”), but not after 5:00 p.m., Eastern time, on the
Expiration Date (as defined below), up to [●]([●]) 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 August 14, 2020 (the “Subscription Date”) by and between the Company and
Roth Capital Partners, LLC (the “Representative”), as 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 August 14, 2020 (the “Prospectus”)
relating to the offering (the “Offering”) of the securities referenced therein (the “Securities”).

 

    	 	-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 $4.80 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.

 

    	 	-3-	 

     

    

 

(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”):

 

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.

 

    	 	-4-	 

     

    

 

(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.

 

    	 	-5-	 

     

    

 

(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.

 

    	 	-6-	 

     

    

 

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.

 

(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.

 

    	 	-7-	 

     

    

 

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.

 

(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.

 

    	 	-8-	 

     

    

 

(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

(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.

 

    	 	-9-	 

     

    

 

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.

 

    	 	-10-	 

     

    

 

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.

 

    	 	-11-	 

     

    

 

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.

 

    	 	-12-	 

     

    

 

(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 or executive order to remain closed; provided, however, for clarification, commercial
banks shall not be deemed to be authorized or required by law or executive order to close due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations
at the direction of any governmental entity so long as the electronic funds transfer systems (including for wire transfers) of
commercial banks in such location generally are open for use by customers on such day.

 

    	 	-13-	 

     

    

 

(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 August 12, 2025.

 

    	 	-14-	 

     

    

 

(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.

 

(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.

 

    	 	-15-	 

     

    

 

(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]

 

    	 	-16-	 

     

    

 

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:	Ronald
    F. Dutt
	 	Title:	Chief
    Executive Officer and President

 

[Signature
Page to Warrant]

 

    	 	 	 

     

    

 

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:		 

 

    	 	 	 

     

    

 

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:	 

 

    	 	 	 

     

    

 

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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00316-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00316-of-00352.parquet"}]]