Document:

Exhibit 4.1

 

THIS
WARRANT CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED
UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.

 

FLUX
POWER HOLDINGS, INC.

 

FORM
OF WARRANT CERTIFICATE

 

	Original Date of Issuance: 	No.: 

 

THIS
WARRANT CERTIFICATE is given in connection with the Credit Facility Agreement dated May 11, 2022 (“Agreement”)
by and among Flux Power Holdings, Inc., a Nevada corporation (the “Issuer”), Cleveland Capital, L.P., and certain
other lenders under the Agreement.

 

This
Warrant Certificate (“Warrant Certificate”) certifies that for value received, _____________, an individual,
or its registered assigns (the “Holder”) is entitled to subscribe for and purchase, during the Term (as hereinafter
defined), the number of Warrants equal to _______(“Warrants”) as determined based on the formula below, each
of which entitles the Holder thereof to purchase during the term, one fully paid and non-assessable share of common stock, $0.001 par
value per share, of the Issuer, at an exercise price per share equal to $2.53 (the “Warrant Price”), as may
be adjusted, subject, however, to the provisions and upon the terms and conditions hereinafter set forth. Capitalized terms used in this
Warrant Certificate and not otherwise defined herein shall have the respective meanings specified in Section 6 hereof.

 

The
number of Warrants that Holder will be entitled to will be based on the following formula:

 

Number
of Warrants = 160,000 x (A/$5,000,000)

 

		A
                                            =	Holder’s
                                            Commitment Amount (as that term is defined in the Agreement).

 

1.
Term. The term of this Warrant Certificate shall commence on the Original Issue Date and shall expire at 6:00 p.m., Eastern
Time, on May 11, 2027 (such period being the “Term”).

 

2. Method
of Exercise; Payment; Issuance of New Warrant Certificate; Transfer and Exchange.

 

(a) Time
of Exercise. The purchase rights represented by this Warrant Certificate may be exercised at any time during the
Term.

 

    	1

     

    

 

(b) Method
of Exercise. Each Warrant shall entitle the Holder to purchase one share of common stock of the Issuer at the Warrant Price. The
Holder hereof may exercise the Warrants, in whole or in part, by the surrender of the Warrant Certificate (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the payment to the Issuer of an amount of consideration
therefor equal to the Warrant Price in effect on the date of such exercise multiplied by the number of shares of Warrant Stock with
respect to which the Warrant Certificate is then being exercised, payable at such Holder’s election by certified or official
bank check or by wire transfer to an account designated by the Issuer.

 

(c)
The Holder may, at its election exercised in its sole discretion, exercise this Warrant and, in lieu of making the cash payment
otherwise contemplated to be made to the Company upon such exercise in payment of the Warrant Price for the Warrant Stock specified
in this Warrant, 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 Certificate is then being exercised.

 

B=
the Closing Price of the Common Stock on the trading day immediately preceding the date of the notification by the Holder to the Company
of a Cashless Exercise.

 

C=
the Warrant Price then in effect at the time of such exercise.

 

(d) Issuance
of Stock Certificates. In the event of any exercise of the Warrants in accordance with and subject to the terms and conditions
hereof, certificates for the shares of Warrant Stock so purchased shall be dated the date of such exercise and delivered to the
Holder hereof within a reasonable time.

 

(e) Transferability
of Warrant. Subject to Section 2(f) hereof, the Warrants may be transferred by a Holder, in whole or in part, without the
consent of the Issuer. If transferred pursuant to this paragraph, the Warrants may be transferred on the books of the Issuer by the
Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant Certificate at the principal office of the
Issuer, properly endorsed (by the Holder executing an assignment in the form attached here to) and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer. This Warrant Certificate is exchangeable at the principal
office of the Issuer for Warrants to purchase the same aggregate number of shares of Warrant Stock, each new Warrant to represent
the right to purchase such number of shares of Warrant Stock as the Holder hereof shall designate at the time of such exchange. All
Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with this Warrant
Certificate except as to the number of shares of Warrant Stock issuable pursuant thereto.

 

    	2

     

    

 

(f)
Compliance with Securities Laws.

 

(i)
The Holder of this Warrant Certificate, by acceptance hereof, acknowledges that the Warrants and the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder’s own account and not as a nominee for any other party,
and for investment, and agrees that the Holder will not acquire the Warrant Stock, offer, sell or otherwise dispose of this Warrant
Certificate or any shares of Warrant Stock to be issued upon exercise hereof except pursuant to an effective registration statement,
or an exemption from registration, under the Securities Act and any applicable state securities laws.

 

(ii)
This Warrant Certificate and all certificates representing shares of Warrant Stock issued upon exercise hereof shall be stamped or
imprinted with a legend in substantially the following form:

 

THIS
WARRANT CERTIFICATE, THE WARRANTS, AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE ISSUER SHALL HAVE RECEIVED AN OPINION
OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS
OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

 

(g) Loss,
Theft, Destruction of Warrants. Upon receipt of evidence satisfactory to the Issuer of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon receipt of indemnity or
security satisfactory to the Issuer or, in the case of any such mutilation, upon surrender and cancellation of such Warrant, the
Issuer will make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same number of shares of Warrant Stock.

 

(h)
Beneficial Ownership Restrictions. In no event shall the Holder be entitled to exercise any portion of this Warrant if the number of
shares of Common Stock to be issued pursuant to such conversion or exercise, when aggregated with all other shares of Common Stock
owned by the Holder at such time, would result in the Holder beneficially owning (as determined in accordance with Section 13(d) of
the Securities and Exchange Act of 1934, and the rules thereunder) in excess of 9.99% of the then issued and outstanding shares of
Common Stock outstanding at such time; provided, however, that upon the Holder providing the Company with sixty-one (61) days’
notice (the “Waiver Notice”) that the Holder would like to waive this Section 2(h) with regard to any or
all shares of Common Stock issuable upon conversion or exercise of this Warrant, this Section 2(h) shall be of no force or effect
with regard to those shares of Common Stock referenced in the Waiver Notice.

 

3.
Adjustment of Warrant Price and Number of Shares Issuable Upon Exercise. The Warrant Price and the Warrant Share Number shall be
subject to adjustment from time to time as set forth in this Section 3. The Issuer shall give the Holder notice of any event
described below that requires an adjustment pursuant to this Section 3 in accordance with the notice provisions set forth in Section
4.

 

    	3

     

    

 

(a) Recapitalization,
Reorganization, Reclassification, Consolidation, Merger or Sale. In case the Issuer after the Original Issue Date shall do any
of the following (each, a “Triggering Event”): (A) consolidate or merge with or into any other Person and
the Issuer shall not be the continuing or surviving corporation of such consolidation or merger, or (B) permit any other Person to
consolidate with or merge into the Issuer and the Issuer shall be the continuing or surviving Person but, in connection with such
consolidation or merger, any Capital Stock of the Issuer shall be changed into or exchanged for Securities of any other Person or
cash or any other property, or (C) transfer all or substantially all of its properties or assets to any other Person, or (D) effect
a capital reorganization or reclassification of its Capital Stock, then, and in the case of each such Triggering Event, proper
provision shall be made to the Warrant Price and the number of shares of Warrant Stock that may be purchased upon exercise of this
Warrant Certificate so that, upon the basis and the terms and in the manner provided in this Warrant Certificate the Holder of this
Warrant Certificate shall be entitled upon the exercise hereof at any time after the consummation of such Triggering Event, to the
extent the Warrants are not exercised prior to such Triggering Event, to receive at the Warrant Price as adjusted to take into
account the consummation of such Triggering Event, in lieu of the Warrant Stock issuable upon such exercise of the Warrants prior to
such Triggering Event, the Securities, cash and property to which such Holder would have been entitled upon the consummation of such
Triggering Event if such Holder had exercised the rights represented by this Warrant Certificate immediately prior thereto subject
to adjustments (subsequent to such corporate action) as nearly equivalent as possible to the adjustments provided for elsewhere in
this Section 3. Upon the occurrence of a Triggering Event, the Issuer shall notify the Holder in writing of such Triggering
Event and provide the calculations in determining the amount of issuable Securities, cash or property issuable upon exercise of the
new warrant and the adjusted Warrant Price. Upon the Holder’s request, the continuing or surviving corporation as a result of
such Triggering Event shall issue to the Holder a new warrant of like tenor evidencing the right to purchase the adjusted amount of
Securities, cash or property and the adjusted Warrant Price pursuant to the terms and provisions of this Section
3(a)(i).

 

(b) 
Stock Dividends, Subdivisions and Combinations. If at any time the Issuer shall:

 

(i)
make or issue or set a record date for the holders of the Common Stock for the purpose of entitling them to receive a dividend
payable in, or other distribution of, shares of Common Stock,

 

(ii)
subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

 

(iii)
combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

 

then
(A) the number of shares of Warrant Stock for which this Warrant Certificate is exercisable immediately after the occurrence of any such
event shall be adjusted to equal the number of shares of Warrant Stock which a record holder of the same number of shares of Warrant
Stock for which this Warrant Certificate is exercisable immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (B) the Warrant Price then in effect shall be adjusted to equal (1) the Warrant Price
then in effect multiplied by the number of shares of Warrant Stock for which this Warrant is exercisable immediately prior to the adjustment
divided by (2) the number of shares of Warrant Stock for which this Warrant is exercisable immediately after such adjustment.

 

4. Notice
of Adjustments. Whenever the Warrant Price or Warrant Share Number is adjusted pursuant to Section 3 hereof (for purposes
of this Section 4, each an “Adjustment”), the Issuer shall cause its Chief Financial Officer to
prepare and execute a certificate setting forth, in reasonable detail, the event requiring the Adjustment, the amount of the
Adjustment, the method by which such Adjustment was calculated (including a description of the basis on which the Board made any
determination hereunder), and the Warrant Price and Warrant Share Number after giving effect to such Adjustment, and shall cause
copies of such certificate to be delivered to the Holder of this Warrant Certificate promptly after each Adjustment.

 

5.
Fractional Shares. No fractional shares of Warrant Stock will be issued in connection with any exercise hereof, but in lieu of such
fractional shares, the Issuer shall round the number of shares to be issued upon exercise up to the nearest whole number of
shares.

 

    	4

     

    

 

6. Definitions. For
the purposes of this Warrant Certificate, the following terms have the following meanings:

 

“Board”
shall mean the Board of Directors of the Issuer.

 

“Capital
Stock” means and includes (i) any and all shares, interests, participations or other equivalents of or interests in (however
designated) corporate stock, including, without limitation, shares of preferred or preference stock, (ii) all partnership interests (whether
general or limited) in any Person which is a partnership, (iii) all membership interests or limited liability company interests in any
limited liability company, and (iv) all equity or ownership interests in any Person of any other type.

 

“Closing
Price” means, on any particular date, (a) the last reported closing bid price per share of Common Stock on such date on
the Trading Market, or (b) if there is no such price on such date, the closing bid price on the Trading Market on the date nearest preceding
such date, or (c) if the Common Stock is not then listed or quoted for the Trading Market and if prices for the Common Stock are then
reported in the “pink sheets” published by Pink Sheets LLC (or a similar organization or agency succeeding to its functions
of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) if the shares of Common Stock are not
publicly traded, the fair market value of a share of Common Stock as determined by a qualified, independent appraiser selected in good
faith by the Company and reasonably acceptable to the Holder.

 

“Commitment
Amount” shall have the meaning ascribed to it in the Agreement.

 

“Common
Stock” means the common stock, $0.001 par value per share, of the Issuer and any other Capital Stock into which such stock
may hereafter be changed.

 

“Issuer”
means Flux Power Holdings, Inc., a Nevada corporation, and its successors.

 

“Original
Issue Date” means date set forth on face of this Warrant Certificate.

 

“Person”
means an individual, corporation, limited liability company, partnership, joint stock company, trust, unincorporated organization, joint
venture, Governmental Authority or other entity of whatever nature.

 

“Securities”
means any debt or equity securities of any Person, whether now or hereafter authorized, any instrument convertible into or exchangeable
for Securities or a Security, and any option, warrant or other right to purchase or acquire any Security. “Security”
means one of the Securities.

 

“Securities
Act” means the Securities Act of 1933, as amended, or any similar federal statute then in effect.

 

“Term”
has the meaning specified in Section 1 hereof.

 

“Trading
Market” means any nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market on
which the Common Stock is listed or quoted for trading on the date in question.

 

“Warrant
Share Number” means at any time the aggregate number of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant Certificate, after giving effect to all prior adjustments and increases to such number made or required to be
made under the terms hereof.

 

    	5

     

    

 

“Warrant
Stock” means Common Stock issued or issuable upon exercise of any Warrant or Warrants or otherwise issuable pursuant to
any Warrant or Warrants.

 

7.
Amendment and Waiver. Any term, covenant, agreement or condition in this Warrant Certificate may be amended or waived (either
generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Issuer and the
Holder.

 

8.
Governing Law. This Warrant Certificate shall be construed and enforced in accordance with the laws of the State of California without
reference to principles of conflict of law and, in the event of any litigation or other dispute in connection with this Warrant Certificate
or any of the exhibits attached hereto, the venue and jurisdiction of which shall be in Los Angeles County, California.

 

9.
Notices. All notices and other communications given or made pursuant to this Warrant Certificate shall be in writing and shall
be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified, (ii) when sent,
if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours,
then on the recipient’s next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid,
specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties
at the address indicated for such party in the Agreement, or at such other address as such party may designate by ten (10) days advance
written notice to the other party given in the foregoing manner.

 

10.
Successors and Assigns. This Warrant Certificate and the rights evidenced hereby shall inure to the benefit of and be binding
upon the successors and assigns of the Issuer, the Holder hereof and (to the extent provided herein) the holders of Warrant Stock issued
pursuant hereto, and shall be enforceable by any such Holder or holder of Warrant Stock.

 

11.
Modification and Severability. If, in any action before any court or agency legally empowered to enforce any provision contained
herein, any provision hereof is found to be unenforceable, then such provision shall be deemed modified to the extent necessary to make
it enforceable by such court or agency. If any such provision is not enforceable as set forth in the preceding sentence, the unenforceability
of such provision shall not affect the other provisions of this Warrant Certificate, but this Warrant Certificate shall be construed
as if such unenforceable provision had never been contained herein.

 

12.
Titles and Subtitles. The titles and subtitles used in this Warrant Certificate are used for convenience only and are not to be considered
in construing or interpreting this Warrant Certificate.

 

13. Force
Majeure. Neither party shall be liable for any delays or failures in performance resulting from acts beyond its reasonable
control including, without limitation, acts of God, terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or
malfunction of computer facilities, or loss of data due to power failures or mechanical difficulties with information storage or
retrieval systems, labor difficulties, war, or civil unrest.

 

    	6

     

    

 

IN
WITNESS WHEREOF, the Issuer has executed this Warrant Certificate as of the day and year first above written.

 

	 	FLUX
    POWER HOLDINGS, INC.
	 	 	 
	 	By:	 
	 	Name:
    	Ronald
    Dutt
	 	Title:
    	Chief
    Executive Officer

 

	Acknowledged
    and Agreed Upon By:	 
	 	 
	HOLDER	 

 

	 	 
	Name:		 
	Title:		 

 

 

    	7Exhibit
10.1

 

CREDIT
FACILITY AGREEMENT

 

CREDIT
FACILITY AGREEMENT (this “Agreement”), dated as of May 11, 2022 (“Effective Date”), by and
among Flux Power Holdings, Inc., a Nevada corporation (the “Borrower”), Cleveland Capital, L.P., a Delaware limited
partnership (“Cleveland”), Herndon Plant Oakley, Ltd.(“HPO”), and additional parties who may subsequently
become a party to this Agreement as a lender pursuant to Section 15 hereof (“Additional Lenders,” and together with
Cleveland and HPO, the “Lenders”).

 

WHEREAS,
the Borrower has requested that the Lenders make available to the Borrower a short-term line of credit (the “LOC”)
in a principal amount not less than $3,000,000 and not more than $5,000,0000 from time to time, the proceeds of which shall be used by
the Borrower for working capital purpose; and

 

WHEREAS,
the Lenders are willing to advance funds to the Borrower upon the terms and subject to the conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Borrower and the Lenders hereby amend and restate the Original Agreement in its entirety and agree as follows:

 

1.
Credit Facility.

 

(a)
Subject to the terms and conditions set forth herein, each Lender severally agrees to make loans (each such loan, an “Advance”)
up to such Lender’s commitment amount as set forth in Exhibit A (“Commitment Amount”), such aggregate
Commitment Amount shall not be less than $3,000,000, to the Borrower from time to time from the Effective Date until the maturity date
of the Note (as defined below); provided, however, that after given effect to any Advances, (i) the aggregate outstanding principal amount
of all Lenders shall not exceed $5,000,000 and (ii) the outstanding principal amount of any Lender shall not exceed such Lender’s
Commitment Amount. The Advances shall be made pro rata in accordance with each Lender’s Pro Rata Percentages (as defined below).
For the purpose of this Agreement, the Lender’s Pro Rata Percentage shall mean (i) such Lender’s Commitment Amount divided
by (ii) the aggregate Commitment Amounts of all Lenders.

 

(b)
The Advances shall be evidenced by separate subordinated unsecured promissory notes of the Borrower in substantially the form of Exhibit
B attached hereto dated of even date with this Agreement (each a “Note” and collectively, the “Notes”),
and completed with appropriate insertions of Lender’s Commitment Amount. The Note shall be payable to the order of each Lender
in the principal amount equal to such Lender’s Commitment Amount or, if less, the outstanding amount of all Advances made by such
Lender, plus interest accrued thereon, as set forth below. All Advances shall be made pursuant the terms and obligations set forth in
the Note.

 

(c)
For the purposes of the Advances, subject to the limitations, terms and conditions set forth in the Notes, the Borrower may, from time
to time, prior to the Due Date (as defined in the Note), draw down, repay, and re-borrow on the Note, by giving notice to the Lenders
of the amount to be requested to be drawn down.

 

(d)
All Advances shall be used by the Borrower for general working capital purposes.

 

(e)
The Agreement, Notes and Warrants (as defined below), together with all of the other agreements, documents, and instruments heretofore
or hereafter executed in connection therewith or with the Advances to be made under this Agreement, as the same may be amended, supplemented
or modified from time to time, shall collectively be referred to herein as the “Loan Documents.”

 

    	1

    	 

    

 

2.
Interest Rate. Interest shall accrue and be payable on the Loan as set forth in the Note.

 

3.
Commitment Fees. The Borrower shall pay to each Lender a one-time commitment fee in cash (the “Commitment Fee”)
equal to the 3.5% times such Lender’s Commitment Amount. The Commitment Fee shall be paid within five (5) business days of the
Effective Date.

 

4.
Warrants. In consideration of the Lenders’ commitment to provide the Advances to the Borrower, the Borrower shall issue
a warrant to each Lender in the form attached hereto as Exhibit C (the “Warrant”).

 

5.
Representations and Warranties of the Borrower. As a material inducement to the Lenders to enter into and execute this Agreement
and to perform its covenants, agreements, duties and obligations hereunder, and in consideration therefore, the Borrower hereby makes
the following representations and warranties, each of which (a) is material and is being relied upon by the Lenders as a material inducement
to enter into this Agreement, and (b) is true at and as of the date hereof.

 

5.1
Authorization. All corporate action on the part of the Borrower, its officers, directors and shareholders necessary for the authorization,
execution and delivery of this Agreement, the Note and the Warrant, the sale and issuance of the Note, the Warrant and the shares issuable
upon conversion of the Note and exercise of the Warrant and the performance of the Borrower’s obligations hereunder and under the
Note and the Warrant has been taken. The Borrower has the requisite corporate power to enter into the Loan Documents and carry out and
perform its obligations under the terms of the Loan Documents. The Borrower will have the requisite corporate power to issue and sell
the Note and the Warrant, and shares of Common Stock issued upon partial conversion or exercise of the Note and the Warrant (collectively,
the “Securities”). The Loan Documents have been duly executed and delivered by the Borrower and constitute the valid
and binding obligation of the Borrower, enforceable against it in accordance with its terms, except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement
of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief
or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

5.2
Organization and Good Standing. The Borrower is a corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power and authority to carry on its business as now conducted.

 

5.3
Delivery of SEC Documents; Business. The Borrower has made available to the Lender through the Securities and Exchange Commission’s
(“SEC”) EDGAR system, true and complete copies of the Borrower’s most recent Annual Report on Form 10-K for
the fiscal year ended June 30, 2021 and Form 10-Q for the quarter ended December 31, 2021, and all other reports filed by the Borrower
pursuant to the Exchange Act since the filing of the Form 10-Q for the quarter ended December 31, 2021, and prior to the date hereof
(collectively, the “SEC Documents”). The Borrower is engaged in all material respects only in the business described
in the SEC Documents and the SEC Documents contain a complete and accurate description of the business of the Borrower in all material
respects.

 

    	2

    	 

    

 

5.4
No Conflict with Other Instruments. The execution, delivery and performance of this Agreement, the issuance and sale of the Securities
to be sold by the Borrower under this Agreement and the consummation of the actions contemplated by this Agreement will not (a) result
in any violation of, be in conflict with, or constitute a material default under, with or without the passage of time or the giving of
notice (i) any provision of the Borrower’s Articles of Incorporation, as amended, or Bylaws, as amended (or similar governing documents),
(ii) any provision of any judgment, arbitration ruling, decree or order to which the Borrower is a party or by which the Borrower is
bound, or (iii) any bond, debenture, note or other evidence of indebtedness, or any material lease, contract, mortgage, indenture, deed
of trust, loan agreement, joint venture or other agreement, instrument or commitment to which the Borrower is a party or by which the
Borrower or its properties is bound, or (b) result in the creation or imposition of any lien, encumbrance, claim, security interest or
restriction whatsoever upon any of the properties or assets of the Borrower or any acceleration of indebtedness pursuant to any obligation,
agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or any indenture, mortgage, deed
of trust or any other agreement or instrument to which the Borrower is a party or by which the Borrower is bound or to which any of the
property or assets of the Borrower is subject.

 

5.5
Capitalization. As of May 4, 2022, the authorized capital stock of the Borrower consists of (a) 30,000,000 shares of Common Stock,
$0.001 par value per share, of which 15,992,658 shares are issued and outstanding, (b) 2,133,698 shares reserved for issuance upon the
vesting, exercise or conversion, as the case may be, of outstanding restricted stock units, options, warrants or other convertible securities
(excluding the Notes and Warrants), and (c) 500,000 shares of preferred stock, $0.001 par value per share, none of which are outstanding
or reserved for issuance upon the exercise or conversion, as the case may be, of outstanding options, warrants or other convertible securities.
Except as disclosed in the Borrower’s SEC Documents and set forth in the Borrower’s Articles of Incorporation, as amended
and contemplated in the Transaction Documents, there are no anti-dilution or price adjustment provisions, co-sale rights, registration
rights, rights of first refusal or other similar rights contained in the terms governing any outstanding security of the Borrower that
will be triggered by the issuance of the Securities.

 

5.6
Valid Issuance of Securities. The Note and the Warrant, and shares of Common Stock issued upon partial conversion or exercise
of the Note and the Warrant, when issued in compliance with the provisions of this Agreement, the Note and the Warrant will be validly
issued and will be free of any liens or encumbrances provided, however, that the Securities may be subject to restrictions on transfer
under state and/or federal securities laws as set forth herein, and as may be required by future changes in such laws. The Borrower has
reserved a sufficient number of shares of Common Stock for issuance upon conversion or exercise of the Note and the Warrant.

 

5.7
Litigation. Except as set forth in the Borrower’s SEC Documents, there is no action, suit, proceeding or investigation pending
or, to the Borrower’s knowledge, currently threatened against the Borrower that (a) if adversely determined would reasonably be
expected to have a Material Adverse Effect, or (b) would be required to be disclosed in the Borrower’s Annual Report on Form 10-K
under the requirements of Item 103 of Regulation S-K. The foregoing includes, without limitation, any action, suit, proceeding or investigation,
pending or threatened, that questions the validity of this Agreement or the right of the Borrower to enter into such Agreement and perform
its obligations hereunder. The Borrower is not subject to any injunction, judgment, decree or order of any court, regulatory body, arbitral
panel, administrative agency or other governmental body. For the purpose of this Agreement “Material Adverse Effect”
means (i) a material adverse effect on the results of operations, assets, business, prospects or financial condition of the Borrower,
or (ii) material and adverse impairment of the Borrower’s ability to perform its obligations under any of the Loan Documents.

 

5.8
Governmental Consents. No consent, approval, order or authorization of, or registration, qualification, designation, declaration
or filing with any federal, state, local or provincial governmental authority on the part of the Borrower is required in connection with
the consummation of the transactions contemplated by this Agreement, except for notices required or permitted to be filed with certain
state and federal securities commissions, which notices will be filed on a timely basis.

 

    	3

    	 

    

 

5.9
No Material Changes. Except as disclosed in the Borrower’s SEC Documents, since December 31, 2021, there has not been any
material change that has had a Material Adverse Effect.

 

5.10
Investment Company. The Borrower is not an “investment company” or an “affiliated person” of, or “promoter”
or “principal underwriter” for an investment company, within the meaning of the Investment Company Act of 1940 and will not
be deemed an “investment company” as a result of the transactions contemplated by this Agreement.

 

5.11
No General Solicitation. Neither the Borrower, nor any of its affiliates, nor any person acting on its own or their behalf, has
engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D promulgated under
the Securities Act of 1933, as amended (“Securities Act”)) in connection with the offer or sale of the Securities.

 

5.12
Placement Agent. The Borrower has retained HERNDON PLANT OAKLEY, LTD. (“HPO”), on a best-efforts basis, as its placement
agent for the placement of debt. The Borrower will pay to HPO for services rendered in conjunction with this debt financing the amount
equal to three percent (3%) of the Commitment Amount from such Lender placed by HPO (“Finder Fees”).

 

6.
Representations and Warranties of the Lender. Each of the Lenders severally represents and warrants to Borrower that:

 

6.1
Organization, Authority If the Lender is an entity, such Lender is a corporation, limited liability company or partnership, association,
joint stock company, trust, unincorporated organization or other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization with the requisite corporate, partnership or other power and authority to enter into and
to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.
The purchase by such Lender of the Securities hereunder has been, to the extent such Lender is an entity, duly authorized by all necessary
corporate, partnership or other action on the part of such Lender. This Agreement has been duly executed and delivered by such Lender
and constitutes the valid and binding obligation of such Lender, enforceable against it in accordance with its terms, except (i) as limited
by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law.

 

6.2
Investment Representations. In connection with the sale and issuance of the Securities, the Lender makes the following representations:

 

(a)
Investment for Own Account. The Lender is acquiring the Securities for its own account, not as nominee or agent, and not with
a view to, or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act. The
Lender has no present intention of selling, granting any participation in, or otherwise distributing the Securities. The Lender does
not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation in any of the Securities
to such person or to any third person.

 

(b)
SEC Documents; Disclosure Materials. The Lender has received, read and fully understands the SEC Documents and Loan Documents.
The Lender acknowledges that the Lender is basing its decision to invest in the Securities Documents on the SEC Documents and has relied
only on the information contained in said material and has not relied upon any representations made by any other person. The Lender recognizes
that an investment in the Securities involves substantial risks and is fully cognizant of and understands all of the risk factors related
to the purchase of the Securities, including but not limited to, those risks set forth in the section of the SEC Documents entitled “RISK
FACTORS.”

 

    	4

    	 

    

 

(c)
Lender Status. At the time such Lender was offered the Securities, it was, at the date hereof it is, and on the date which it
exercises any Warrants, it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Lender is not a registered broker dealer registered
under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”)
or an entity engaged in the business of being a broker dealer. Such Lender is not affiliated with any broker dealer registered under
Section 15(a) of the Exchange Act or a member of FINRA, or an entity engaged in the business of being a broker dealer.

 

(d)
Representations and Reliance. The Lender understands that the Securities are being offered and sold to it in reliance on specific
exemptions from the registration requirements of the United States federal and state securities laws and that the Borrower is relying
upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Lender set forth
herein, and in the Investor Suitability Questionnaire to determine the applicability of such exemptions and the suitability of the Lender
to acquire the Securities. All information which the Lender has provided to the Borrower, including but not limited to, all information
given herein and in the Investor Suitability Questionnaire or otherwise, concerning itself, investor status, address, residence, financial
position and knowledge and experience of financial and business matters are correct and complete, and that if there should be any material
change in such information, the Lender will immediately provide the Borrower with such information. The Lender will promptly notify the
Borrower of any material fact or circumstance that would cause any of the foregoing representations to be untrue, incomplete, or misleading.

 

(e)
Restricted Securities. The Lender understands that the Securities the Lender is purchasing are characterized as “restricted
securities” under the federal securities laws inasmuch as they are being acquired from the Borrower in a transaction not involving
a public offering and that under such laws and regulations such securities may be resold without registration under the Securities Act
only in certain limited circumstances. The Lender is familiar with Rule 144, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act. The Lender also acknowledges that the Borrower was a former “shell company” (as
defined in Rule 12b-2 under the Exchange Act) and as such the Lender understands that Rule 144 is not currently available for the sale
of the Securities and may never be so available.

 

(f)
Transfer Restrictions, Legends. The Lender understands that (i) the Securities have not been registered under the Securities Act,
(ii) the Securities are being offered and sold pursuant to an exemption from registration, based in part upon the Borrower’s reliance
upon the statements and representations made by the Lender, and that the Securities must be held by the Lender indefinitely and that
the Lender must, therefore, bear the economic risk of such investment indefinitely, unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from such registration, and (iii) each Certificate representing the Securities will be endorsed
with a legend substantially in the following form until the earlier of (1) such date as the Securities have been registered for resale
by the Lender, or (2) the date the Securities are eligible for sale under Rule 144.

 

    	5

    	 

    

 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR UNDER THE SECURITIES LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. UNLESS SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, THE ISSUER OF THESE SECURITIES
MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE
IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

(g)
No Transfer. The Lender covenants not to dispose of any of the Securities other than in conjunction with an effective registration
statement under the Securities Act, or in compliance with Rule 144 or pursuant to another exemption from registration, or to an entity
affiliated with the Lender, other than in compliance with the applicable securities regulations laws of any state.

 

(h)
Investment Experience. The Lender acknowledges that the Lender is able to bear the economic risk of the Lender’s investment,
including the complete loss thereof. The Lender has a preexisting personal or business relationship with the Borrower or one or more
of its officers, directors or other persons in control of the Borrower, and the Lender has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of the investment in the Securities.

 

(i)
Financial Sophistication; Due Diligence. The Lender has such knowledge and experience in financial or business matters that it
is capable of evaluating the merits and risks of the investment in connection with the transactions contemplated in this Agreement. Such
Lender has, in connection with its decision to purchase the Securities, relied only upon the representations and warranties contained
herein and the information contained in the Borrower’s SEC Documents. Further, the Lender has had such opportunity to obtain additional
information and to ask questions of, and receive answers from, the Borrower concerning the terms and conditions of the investment and
the business and affairs of the Borrower as the Lender considers necessary in order to form an investment decision.

 

(j)
General Solicitation. The Lender is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over the television or radio or presented
at any seminar or any other general solicitation or general advertisement. Prior to the time that the Lender was first contacted by the
Borrower or either of the Agents, such Lender had a preexisting and substantial relationship with the Borrower or one of the Agents.
The Lender will not issue any press release or other public statement with respect to the transactions contemplated by this Agreement
without the prior written consent of the Borrower. Other than to other parties to this Agreement, the Lender has maintained and will
continue to maintain the confidentiality of all disclosures made to Lender in connection with this transaction, including the existence
and terms of this transaction.

 

6.3
No Investment, Tax or Legal Advice. The Lender understands that nothing in the Borrower’s SEC Documents, this Agreement,
or any other materials presented to the Lender in connection with the purchase and sale of the Securities constitutes legal, tax or investment
advice. The Lender has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate
in connection with its purchase of Securities.

 

6.4
Disclosure of Information. The Lender understands that no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the Securities. The Lender has reviewed the documents publicly filed
by the Borrower with the SEC and has read and understands the risk factors disclosed therein. The Lender has received all the information
it considers necessary or appropriate for deciding whether to purchase the Securities. The Lender is solely responsible for conducting
its own due diligence investigation of the Borrower.

 

    	6

    	 

    

 

6.5
Additional Acknowledgement. The Lender acknowledges that it has independently evaluated the merits of the transactions contemplated
by this Agreement, that it has independently determined to enter into the transactions contemplated hereby, that it is not relying on
any advice from or evaluation by any other person. The Lender acknowledges that, if it is a client of an investment advisor registered
with the SEC, the Lender has relied on such investment advisor in making its decision to purchase Securities pursuant hereto.

 

6.6
No Short Position. As of the date hereof, and from the date hereof through the date of the closing, the Lender acknowledges and
agrees that it does not and will not (between the date hereof and the date of the closing) engage in any short sale of the Borrower’s
voting stock or any other type of hedging transaction involving the Borrower’s securities (including, without limitation, depositing
shares of the Borrower’s securities with a brokerage firm where such securities are made available by the broker to other customers
of the firm for purposes of hedging or short selling the Borrower’s securities).

 

7.
Notices. Any notice, request, instruction, or other document to be given hereunder by any party hereto to any other party will
be in writing and will be given by delivery in person, by facsimile transmission, by email or other electronic communication, by overnight
courier or by registered or certified mail, postage prepaid (and will be deemed given when delivered if delivered by hand, when transmission
confirmation is received if delivered by facsimile, three (3) days after mailing if mailed by United States mail, and one (1) business
day after deposited with an overnight courier service if delivered by overnight courier), as follows:

 

	 	If
    to Borrower:	 	Flux
    Power Holdings, Inc.
	 	 	 	Attn:
    President
	 	 	 	2685
    S. Melrose Drive 
	 	 	 	Vista,
    CA 92081
	 	 	 	rdutt@fluxpwr.com
	 	 	 	 
	 	If
    to Lender:	 	to
    the address specified in Exhibit A

 

or
at such other address of which any party may, from time to time, advise the other party by notice in writing given in accordance with
the foregoing. The date of receipt of any such notice shall be deemed to be the date of delivery or facsimile (with confirmation) thereof.

 

8.
Entire Agreement. This Agreement, the Loan Documents, and the other agreements entered into in connection herewith supersede all
prior negotiations and agreements (whether written or oral) and constitute the entire understanding among the parties hereto.

 

9.
Successors. This Agreement shall inure to the benefit of and be binding upon the parties named herein and their respective successors
and assigns.

 

10.
Headings. The section headings contained in this Agreement are for convenience only and shall not control or affect the meaning
or construction of any of the provisions of this Agreement.

 

11.
Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California without reference
to principles of conflict of law and, in the event of any litigation or other dispute in connection with this Agreement or any of the
exhibits attached hereto, the venue and jurisdiction of which shall be in Los Angeles County, California.

 

    	7

    	 

    

 

12.
Delay, Etc. No delay or omission to exercise any right, power or remedy accruing to any party hereto shall impair any such right,
power or remedy of such party nor be construed to be a waiver of any such right, power or remedy, nor constitute any course of dealing
or performance hereunder.

 

13.
Costs and Attorneys’ Fees. If any action, suit, arbitration proceeding or other proceeding is instituted arising out of
this Agreement, the prevailing party shall recover all of such party’s costs, including, without limitation, the court costs and
reasonable attorneys’ fees incurred therein, including any and all appeals or petitions therefrom.

 

14.
Waiver and Amendment. Any of the terms and provisions of this Agreement may be waived at any time by the party that is entitled
to the benefit thereof, but only by a written instrument executed by such party. This Agreement may be amended only by an agreement in
writing executed by the parties hereto, provided however, the admission of an “Additional Lender” shall not require any consent
or approval from the Lenders, and Exhibit A may be amended by the Borrower from time to time to provide for Additional Lenders
who join as a party to this Agreement with no consent or approval required from the Lenders. Upon the admission of a new Additional Lender,
the Borrower shall provide the existing Lenders with notice of new Additional Lender and updated Exhibit A with the new adjusted
Pro Rata Percentage for the Lenders.

 

15.
Additional Lenders. Notwithstanding anything to the contrary contained herein, a party may become a Lender under this Agreement
by executing and delivering an additional counterpart signature page to this Agreement and thereafter shall be deemed a “Lender”
for all purposes hereunder.

 

16.
Fees and Expenses. All fees and expenses incurred in connection with this Agreement and the LOC shall be paid by the party incurring
such fees or expenses, provided, however, the Borrower will pay the legal fees of Cleveland’s counsel (the “Legal Fees”)
in the amount up to $10,000.

 

17.
Counterparts; Electronic Transmission. This Agreement may be executed in one or more counterparts (any of which may be delivered
by fax or electronic mail transmission), each of which will for all purposes be deemed to be an original and all of which will constitute
the same instrument.

 

[SIGNATURE
PAGE TO FOLLOW]

 

    	8

    	 

    

 

IN
WITNESS WHEREOF, the undersigned parties hereto have duly executed this Agreement effective as of the date first above written.

 

	 	BORROWER:
	 	 	 
	 	Flux
    Power Holdings, Inc.,
	 	a
    Nevada corporation 
	 	 	 
	 	By:
    	 
	 	 	Ronald
F. Dutt, Chief Executive Officer
	 	 	 
	 	Cleveland
    Capital, L.P.
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:	 
	 	 	 
	 	ADDITIONAL
    LENDERS*
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:
    	 
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:
    	 
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:
    	 
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:
    	 
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:
    	 
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:
    	 
	 	 	 
	 	By:
    	 
	 	Name:
    	 
	 	Title:
    	 
	 	Date:
    	 

 

*Pursuant
to Section 15 of the Credit Facility Agreement dated May 11, 2022.

 

    	9

    	 

    

 

EXHIBIT
A

COMMITMENT
AMOUNTS

 

	Lenders	 	Commitment
    Amount(1)	 	Pro
    Rata Percentage
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

	(1)	Not
    to exceed $5,000,000

 

    	 

    	 

    

 

EXHIBIT
B

 

FORM
OF SUBORDINATED UNSECURED PROMISSORY NOTE

 

    	 

    	 

    

 

EXHIBIT
C

 

FORM
OF WARRANTS

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