Document:

Flux
Power, Inc. 2010 Stock Plan

 

Notice
of Stock Option Grant

 

The Optionee has been granted the following
option to purchase shares of the Common Stock of Flux Power, Inc.:

 

	Name of Optionee:	«Name»
	 	 
	Total Number of Shares:	«TotalShares»
	 	 
	Type of Option:	«ISO»   Incentive Stock Option (ISO)
	 	 
	 	«NSO»  Nonstatutory Stock Option (NSO)
	 	 
	Exercise Price per Share:	$«PricePerShare»
	 	 
	Date of Grant:	«DateGrant»
	 	 
	Date Exercisable:	This option may be exercised with respect to the first 25% of the Shares subject to this option when the Optionee completes 12 months of continuous Service after the Vesting Commencement Date set forth below. This option may be exercised with respect to 1/36th of the remaining 75% of the Shares subject to this option when the Optionee completes each month of continuous Service thereafter. 
	 	 
	Vesting Commencement Date:	«Fraction»
	 	 
	Expiration Date:	«ExpDate».  This option expires earlier if the Optionee’s Service terminates earlier, as provided in Section 6 of the Stock Option Agreement.

 

By signing below, the Optionee and the
Company agree that this option is granted under, and governed by the terms and conditions of, the 2010 Stock Plan and the Stock
Option Agreement. Both of these documents are attached to, and made a part of, this Notice of Stock Option Grant. Section 13
of the Stock Option Agreement includes important acknowledgements of the Optionee.

 

	Optionee:	 	Flux Power, Inc.
	 	 	 
	 	 	By:	 
	 	 	Name:	 
	 	 	Title:	 

 

    	 

    	 

    

 

THE OPTION GRANTED PURSUANT TO THIS
AGREEMENT AND THE SHARES ISSUABLE UPON THE EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

Flux
Power, Inc. 2010 Stock Plan:

Stock
Option Agreement

 

SECTION
1.      Grant Of Option.

 

(a)          Option.
On the terms and conditions set forth in the Notice of Stock Option Grant and this Agreement, the Company grants to the Optionee
on the Date of Grant the option to purchase at the Exercise Price the number of Shares set forth in the Notice of Stock Option
Grant. The Exercise Price is agreed to be at least 100% of the Fair Market Value per Share on the Date of Grant (110% of Fair Market
Value if this option is designated as an ISO in the Notice of Stock Option Grant and Section 3(b) of the Plan applies). This
option is intended to be an ISO or an NSO, as provided in the Notice of Stock Option Grant.

 

(b)          $100,000
Limitation. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it shall be deemed to be an NSO
to the extent (and only to the extent) required by the $100,000 annual limitation under Section 422(d) of the Code.

 

(c)          Stock
Plan and Defined Terms. This option is granted pursuant to the Plan, a copy of which the Optionee acknowledges having received.
The provisions of the Plan are incorporated into this Agreement by this reference. Capitalized terms are defined in Section 14
of this Agreement.

 

SECTION
2.      Right To Exercise.

 

(a)          Exercisability.
Subject to Subsection (b) below and the other conditions set forth in this Agreement, all or part of this option may be exercised
prior to its expiration at the time or times set forth in the Notice of Stock Option Grant.

 

(b)          Stockholder
Approval. Any other provision of this Agreement notwithstanding, no portion of this option shall be exercisable at any time
prior to the approval of the Plan by the Company’s stockholders.

 

    	 

    	 

    

 

SECTION
3.      No Transfer Or Assignment Of Option.

 

Except as otherwise provided
in this Agreement, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred
(whether by operation of law or otherwise) and shall not be subject to sale under execution, attachment, levy or similar process.

 

SECTION
4.      Exercise Procedures.

 

(a)          Notice
of Exercise. The Optionee or the Optionee’s representative may exercise this option by giving written notice to the Company
pursuant to Section 12(c). The notice shall specify the election to exercise this option, the number of Shares for which it
is being exercised and the form of payment. The person exercising this option shall sign the notice. In the event that this option
is being exercised by the representative of the Optionee, the notice shall be accompanied by proof (satisfactory to the Company)
of the representative’s right to exercise this option. The Optionee or the Optionee’s representative shall deliver
to the Company, at the time of giving the notice, payment in a form permissible under Section 5 for the full amount of the
Purchase Price.

 

(b)          Issuance
of Shares. After receiving a proper notice of exercise, the Company shall cause to be issued one or more certificates evidencing
the Shares for which this option has been exercised. Such Shares shall be registered (i) in the name of the person exercising
this option, (ii) in the names of such person and his or her spouse as community property or as joint tenants with the right
of survivorship or (iii) with the Company’s consent, in the name of a revocable trust. The Company shall cause such
certificates to be delivered to or upon the order of the person exercising this option.

 

(c)          Withholding
Taxes. In the event that the Company determines that it is required to withhold any tax as a result of the exercise of this
option, the Optionee, as a condition to the exercise of this option, shall make arrangements satisfactory to the Company to enable
it to satisfy all withholding requirements. The Optionee shall also make arrangements satisfactory to the Company to enable it
to satisfy any withholding requirements that may arise in connection with the disposition of Shares purchased by exercising this
option.

 

SECTION
5.      Payment For Stock.

 

(a)          Cash.
All or part of the Purchase Price may be paid in cash or cash equivalents.

 

(b)          Surrender
of Stock. At the discretion of the Board of Directors, all or any part of the Purchase Price may be paid by surrendering, or
attesting to the ownership of, Shares that are already owned by the Optionee. Such Shares shall be surrendered to the Company in
good form for transfer and shall be valued at their Fair Market Value as of the date when this option is exercised.

 

(c)          Exercise/Sale.
All or part of the Purchase Price and any withholding taxes may be paid by the delivery (on a form prescribed by the Company) of
an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company. However, payment pursuant to this Subsection (c) shall be permitted only if (i) Stock then is
publicly traded and (ii) such payment does not violate applicable law.

 

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SECTION
6.      Term And Expiration.

 

(a)          Basic
Term. This option shall in any event expire on the expiration date set forth in the Notice of Stock Option Grant, which date
is 10 years after the Date of Grant (five years after the Date of Grant if this option is designated as an ISO in the Notice of
Stock Option Grant and Section 3(b) of the Plan applies).

 

(b)          Termination
of Service (Except by Death). If the Optionee’s Service terminates for any reason other than death, then this option
shall expire on the earliest of the following occasions:

 

(i)          The
expiration date determined pursuant to Subsection (a) above; or

 

(ii)         The
date 12 months after the termination of the Optionee’s Service.

 

The Optionee may exercise all or part of
this option at any time before its expiration under the preceding sentence, but only to the extent that this option had become
exercisable before the Optionee’s Service terminated. When the Optionee’s Service terminates, this option shall expire
immediately with respect to the number of Shares for which this option is not yet exercisable. In the event that the Optionee dies
after termination of Service but before the expiration of this option, all or part of this option may be exercised (prior to expiration)
by the executors or administrators of the Optionee’s estate or by any person who has acquired this option directly from the
Optionee by beneficiary designation, bequest or inheritance, but only to the extent that this option had become exercisable before
the Optionee’s Service terminated.

 

(c)          Death
of the Optionee. If the Optionee dies while in Service, then this option shall expire on the earlier of the following dates:

 

(i)          The
expiration date determined pursuant to Subsection (a) above; or

 

(ii)         The
date 12 months after the Optionee’s death.

 

All or part of this option may be exercised
at any time before its expiration under the preceding sentence by the executors or administrators of the Optionee’s estate
or by any person who has acquired this option directly from the Optionee by beneficiary designation, bequest or inheritance, but
only to the extent that this option had become exercisable before the Optionee’s death. When the Optionee dies, this option
shall expire immediately with respect to the number of Shares for which this option is not yet exercisable.

 

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(d)          Part-Time
Employment and Leaves of Absence. If the Optionee commences working on a part-time basis, then the Company may adjust the vesting
schedule set forth in the Notice of Stock Option Grant in accordance with the Company’s part-time work policy or the terms
of an agreement between the Optionee and the Company pertaining to his or her part-time schedule. If the Optionee goes on a leave
of absence, then the Company may adjust the vesting schedule set forth in the Notice of Stock Option Grant in accordance with the
Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, Service shall
be deemed to continue for any purpose under this Agreement while the Optionee is on a bona fide leave of absence, if (i) such
leave was approved by the Company in writing and (ii) continued crediting of Service for such purpose is expressly required
by the terms of such leave or by applicable law (as determined by the Company). Service shall be deemed to terminate when such
leave ends, unless the Optionee immediately returns to active work.

 

(e)          Notice
Concerning ISO Treatment. Even if this option is designated as an ISO in the Notice of Stock Option Grant, it ceases to qualify
for favorable tax treatment as an ISO to the extent that it is exercised:

 

(i)          More
than three months after the date when the Optionee ceases to be an Employee for any reason other than death or permanent and total
disability (as defined in Section 22(e)(3) of the Code);

 

(ii)         More
than 12 months after the date when the Optionee ceases to be an Employee by reason of permanent and total disability (as defined
in Section 22(e)(3) of the Code); or

 

(iii)        More
than three months after the date when the Optionee has been on a leave of absence for 90 days, unless the Optionee’s reemployment
rights following such leave were guaranteed by statute or by contract.

 

SECTION
7.      Right Of First Refusal.

 

(a)          Right
of First Refusal. In the event that the Optionee proposes to sell, pledge or otherwise transfer to a third party any Shares
acquired under this Agreement, or any interest in such Shares, the Company shall have the Right of First Refusal with respect to
all (and not less than all) of such Shares. If the Optionee desires to transfer Shares acquired under this Agreement, the Optionee
shall give a written Transfer Notice to the Company describing fully the proposed transfer, including the number of Shares proposed
to be transferred, the proposed transfer price, the name and address of the proposed Transferee and proof satisfactory to the Company
that the proposed sale or transfer will not violate any applicable federal, State or foreign securities laws. The Transfer Notice
shall be signed both by the Optionee and by the proposed Transferee and must constitute a binding commitment of both parties to
the transfer of the Shares. The Company shall have the right to purchase all, and not less than all, of the Shares on the terms
of the proposal described in the Transfer Notice (subject, however, to any change in such terms permitted under Subsection (b)
below) by delivery of a notice of exercise of the Right of First Refusal within 30 days after the date when the Transfer Notice
was received by the Company.

 

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(b)          Transfer
of Shares. If the Company fails to exercise its Right of First Refusal within 30 days after the date when it received
the Transfer Notice, the Optionee may, not later than 90 days following receipt of the Transfer Notice by the Company, conclude
a transfer of the Shares subject to the Transfer Notice on the terms and conditions described in the Transfer Notice, provided
that any such sale is made in compliance with applicable federal, State and foreign securities laws and not in violation of any
other contractual restrictions to which the Optionee is bound. Any proposed transfer on terms and conditions different from those
described in the Transfer Notice, as well as any subsequent proposed transfer by the Optionee, shall again be subject to the Right
of First Refusal and shall require compliance with the procedure described in Subsection (a) above. If the Company exercises
its Right of First Refusal, the parties shall consummate the sale of the Shares on the terms set forth in the Transfer Notice within
60 days after the date when the Company received the Transfer Notice (or within such longer period as may have been specified
in the Transfer Notice); provided, however, that in the event the Transfer Notice provided that payment for the Shares was to be
made in a form other than cash or cash equivalents paid at the time of transfer, the Company shall have the option of paying for
the Shares with cash or cash equivalents equal to the present value of the consideration described in the Transfer Notice.

 

(c)          Additional
or Exchanged Securities and Property. In the event of a merger or consolidation of the Company with or into another entity,
any other corporate reorganization, a stock split, the declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, an adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company’s outstanding securities, any securities or other property (including cash or cash equivalents) that
are by reason of such transaction exchanged for, or distributed with respect to, any Shares subject to this Section 7 shall
immediately be subject to the Right of First Refusal. Appropriate adjustments to reflect the exchange or distribution of such securities
or property shall be made to the number and/or class of the Shares subject to this Section 7.

 

(d)          Termination
of Right of First Refusal. Any other provision of this Section 7 notwithstanding, in the event that the Stock is readily
tradable on an established securities market when the Optionee desires to transfer Shares, the Company shall have no Right of First
Refusal, and the Optionee shall have no obligation to comply with the procedures prescribed by Subsections (a) and (b) above.

 

(e)          Permitted
Transfers. This Section 7 shall not apply to (i) a transfer by beneficiary designation, will or intestate succession
or (ii) a transfer to one or more members of the Optionee’s Immediate Family or to a trust established by the Optionee
for the benefit of the Optionee and/or one or more members of the Optionee’s Immediate Family, provided in either case that
the Transferee agrees in writing on a form prescribed by the Company to be bound by all provisions of this Agreement. If the Optionee
transfers any Shares acquired under this Agreement, either under this Subsection (e) or after the Company has failed to exercise
the Right of First Refusal, then this Agreement shall apply to the Transferee to the same extent as to the Optionee.

 

(f)          Termination
of Rights as Stockholder. If the Company makes available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be purchased in accordance with this Section 7, then after such time the person
from whom such Shares are to be purchased shall no longer have any rights as a holder of such Shares (other than the right to receive
payment of such consideration in accordance with this Agreement). Such Shares shall be deemed to have been purchased in accordance
with the applicable provisions hereof, whether or not the certificate(s) therefor have been delivered as required by this Agreement.

 

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(g)          Assignment
of Right of First Refusal. The Board of Directors may freely assign the Company’s Right of First Refusal, in whole or
in part. Any person who accepts an assignment of the Right of First Refusal from the Company shall assume all of the Company’s
rights and obligations under this Section 7.

 

SECTION
8.      Legality Of Initial Issuance.

 

No Shares shall be issued
upon the exercise of this option unless and until the Company has determined that:

 

(a)          It
and the Optionee have taken any actions required to register the Shares under the Securities Act or to perfect an exemption from
the registration requirements thereof;

 

(b)          Any
applicable listing requirement of any stock exchange or other securities market on which Stock is listed has been satisfied; and

 

(c)          Any
other applicable provision of federal, State or foreign law has been satisfied.

 

SECTION
9.      No Registration Rights.

 

The Company may, but
shall not be obligated to, register or qualify the sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale of Shares under this Agreement to comply with
any law.

 

SECTION
10.     Restrictions On Transfer of shares.

 

(a)          Securities
Law Restrictions. Regardless of whether the offering and sale of Shares under the Plan have been registered under the Securities
Act or have been registered or qualified under the securities laws of any State, the Company at its discretion may impose restrictions
upon the sale, pledge or other transfer of such Shares (including the placement of appropriate legends on stock certificates or
the imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are necessary or desirable
in order to achieve compliance with the Securities Act, the securities laws of any State or any other law.

 

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(b)          Market
Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act, including the Company’s initial public offering, the Optionee or a
Transferee shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option
or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose of or transfer,
or agree to engage in any of the foregoing transactions with respect to, any Shares acquired under this Agreement without the prior
written consent of the Company or its managing underwriter. Such restriction (the “Market Stand-Off”) shall be in effect
for such period of time following the date of the final prospectus for the offering as may be requested by the Company or such
underwriter. In no event, however, shall such period exceed 180 days plus such additional period as may reasonably be requested
by the Company or such underwriter to accommodate regulatory restrictions on (i) the publication or other distribution of
research reports or (ii) analyst recommendations and opinions, including (without limitation) the restrictions set forth in
Rule 2711(f)(4) of the National Association of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange,
as amended, or any similar successor rules. The Market Stand-Off shall in any event terminate two years after the date of the Company’s
initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion
ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration,
any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject
to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to the Market Stand-Off.
In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired
under this Agreement until the end of the applicable stand-off period. The Company’s underwriters shall be beneficiaries
of the agreement set forth in this Subsection (b). This Subsection (b) shall not apply to Shares registered in the public
offering under the Securities Act.

 

(c)          Investment
Intent at Grant. The Optionee represents and agrees that the Shares to be acquired upon exercising this option will be acquired
for investment, and not with a view to the sale or distribution thereof.

 

(d)          Investment
Intent at Exercise. In the event that the sale of Shares under the Plan is not registered under the Securities Act but an exemption
is available that requires an investment representation or other representation, the Optionee shall represent and agree at the
time of exercise that the Shares being acquired upon exercising this option are being acquired for investment, and not with a view
to the sale or distribution thereof, and shall make such other representations as are deemed necessary or appropriate by the Company
and its counsel.

 

(e)          Legends.
All certificates evidencing Shares purchased under this Agreement shall bear the following legend:

 

“THE SHARES REPRESENTED
HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF
A WRITTEN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES).
SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE SECRETARY OF
THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

 

All certificates evidencing Shares purchased
under this Agreement in an unregistered transaction shall bear the following legend (and such other restrictive legends as are
required or deemed advisable under the provisions of any applicable law):

 

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“THE SHARES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

(f)          Removal
of Legends. If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Shares
sold under this Agreement is no longer required, the holder of such certificate shall be entitled to exchange such certificate
for a certificate representing the same number of Shares but without such legend.

 

(g)          Administration.
Any determination by the Company and its counsel in connection with any of the matters set forth in this Section 10 shall
be conclusive and binding on the Optionee and all other persons.

 

SECTION
11.     Adjustment Of Shares.

 

In the event of any transaction
described in Section 8(a) of the Plan, the terms of this option (including, without limitation, the number and kind of Shares
subject to this option and the Exercise Price) shall be adjusted as set forth in Section 8(a) of the Plan. In the event that
the Company is a party to a merger or consolidation or in the event of a sale of all or substantially all of the Company’s
stock or assets or if the Company is subject to any other transaction described in Section 8(b) of the Plan, this option shall
be subject to the definitive transaction agreement, as provided in Section 8(b) of the Plan.

 

SECTION
12.     Miscellaneous Provisions.

 

(a)          Rights
as a Stockholder. Neither the Optionee nor the Optionee’s representative shall have any rights as a stockholder with
respect to any Shares subject to this option until the Optionee or the Optionee’s representative becomes entitled to receive
such Shares by filing a notice of exercise and paying the Purchase Price pursuant to Sections 4 and 5.

 

(b)          No
Retention Rights. Nothing in this option or in the Plan shall confer upon the Optionee any right to continue in Service for
any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or
Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without cause.

 

(c)          Notice.
Any notice required by the terms of this Agreement shall be given in writing. It shall be deemed effective upon (i) personal
delivery, (ii) deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid
or (iii) deposit with Federal Express Corporation, with shipping charges prepaid. Notice shall be addressed to the Company
at its principal executive office and to the Optionee at the address that he or she most recently provided to the Company in accordance
with this Subsection (c).

 

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(d)          Modifications
and Waivers. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge
is agreed to in writing and signed by the Optionee and by an authorized officer of the Company (other than the Optionee). No waiver
by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall
be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

(d)          Entire
Agreement. The Notice of Stock Option Grant, this Agreement and the Plan constitute the entire contract between the parties
hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether
oral or written and whether express or implied) that relate to the subject matter hereof.

 

(e)          Choice
of Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, as such
laws are applied to contracts entered into and performed in such State.

 

SECTION
13.     acknowledgements of the optionee.

 

(a)          Tax
Consequences. The Optionee agrees that the Company does not have a duty to design or administer the Plan or its other compensation
programs in a manner that minimizes the Optionee’s tax liabilities. The Optionee shall not make any claim against the Company
or its Board of Directors, officers or employees related to tax liabilities arising from this option or the Optionee’s other
compensation. In particular, the Optionee acknowledges that this option is exempt from Section 409A of the Code only if the
Exercise Price is at least equal to the Fair Market Value per Share on the Date of Grant. Since Shares are not traded on an established
securities market, the determination of their Fair Market Value is made by the Board of Directors or by an independent valuation
firm retained by the Company. The Optionee acknowledges that there is no guarantee in either case that the Internal Revenue Service
will agree with the valuation, and the Optionee shall not make any claim against the Company or its Board of Directors, officers
or employees in the event that the Internal Revenue Service asserts that the valuation was too low.

 

(b)          Electronic
Delivery of Documents. The Optionee agrees that the Company may deliver by email all documents relating to the Company, the
Plan or this option (including, without limitation, a copy of the Plan) and all other documents that the Company is required to
deliver to its security holders (including, without limitation, disclosures that may be required by the Securities and Exchange
Commission). The Optionee also agrees that the Company may deliver these documents by posting them on a website maintained by the
Company or by a third party under contract with the Company. If the Company posts these documents on a website, it shall notify
the Optionee by email of their availability. The Optionee acknowledges that he or she may incur costs in connection with electronic
delivery, including the cost of accessing the internet and printing fees, and that an interruption of internet access may interfere
with his or her ability to access the documents. This consent shall remain in effect until this option expires or until the Optionee
gives the Company written notice that it should deliver paper documents.

 

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(c)          No
Notice of Expiration Date. The Optionee agrees that the Company and its officers, employees, attorneys and agents do not have
any obligation to notify him or her prior to the expiration of this option pursuant to Section 6, regardless of whether this option
will expire at the end of its full term or on an earlier date related to the termination of the Optionee’s Service. The Optionee
further agrees that he or she has the sole responsibility for monitoring the expiration of this option and for exercising this
option, if at all, before it expires. This Subsection (c) shall supersede any contrary representation that may have been made,
orally or in writing, by the Company or by an officer, employee, attorney or agent of the Company.

 

SECTION
14.     Definitions.

 

(a)          “Agreement”
shall mean this Stock Option Agreement.

 

(b)          “Board
of Directors” shall mean the Board of Directors of the Company, as constituted from time to time or, if a Committee has
been appointed, such Committee.

 

(c)          “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

(d)          “Committee”
shall mean a committee of the Board of Directors, as described in Section 2 of the Plan.

 

(e)          “Company”
shall mean Flux Power, Inc., a California corporation.

 

(f)          “Consultant”
shall mean a person who performs bona fide services for the Company, a Parent or a Subsidiary as a consultant or advisor, excluding
Employees and Outside Directors.

 

(g)          “Date
of Grant” shall mean the date of grant specified in the Notice of Stock Option Grant, which date shall be the later of
(i) the date on which the Board of Directors resolved to grant this option or (ii) the first day of the Optionee’s
Service.

 

(h)          “Disability”
shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical
or mental impairment.

 

(i)          “Employee”
shall mean any individual who is a common-law employee of the Company, a Parent or a Subsidiary.

 

(j)          “Exercise
Price” shall mean the amount for which one Share may be purchased upon exercise of this option, as specified in the Notice
of Stock Option Grant.

 

(k)          “Fair
Market Value” shall mean the fair market value of a Share, as determined by the Board of Directors in good faith. Such
determination shall be conclusive and binding on all persons.

 

(l)          “Immediate
Family” shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include adoptive relationships.

 

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(m)          “ISO”
shall mean an employee incentive stock option described in Section 422(b) of the Code.

 

(n)          “Notice
of Stock Option Grant” shall mean the document so entitled to which this Agreement is attached.

 

(o)          “NSO”
shall mean a stock option not described in Sections 422(b) or 423(b) of the Code.

 

(p)          “Optionee”
shall mean the person named in the Notice of Stock Option Grant.

 

(q)          “Outside
Director” shall mean a member of the Board of Directors who is not an Employee.

 

(r)          “Parent”
shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

 

(s)          “Plan”
shall mean the Flux Power, Inc. 2010 Stock Plan, as in effect on the Date of Grant.

 

(t)          “Purchase
Price” shall mean the Exercise Price multiplied by the number of Shares with respect to which this option is being exercised.

 

(u)          “Right
of First Refusal” shall mean the Company’s right of first refusal described in Section 7.

 

(v)         “Securities
Act” shall mean the Securities Act of 1933, as amended.

 

(w)          “Service”
shall mean service as an Employee, Outside Director or Consultant.

 

(x)          “Share”
shall mean one share of Stock, as adjusted in accordance with Section 8 of the Plan (if applicable).

 

(y)          “Stock”
shall mean the Common Stock of the Company.

 

(z)          “Subsidiary”
shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of
the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain.

 

(aa)         “Transferee”
shall mean any person to whom the Optionee has directly or indirectly transferred any Share acquired under this Agreement.

 

(bb)         “Transfer
Notice” shall mean the notice of a proposed transfer of Shares described in Section 7.

 

    	11LHV Power Corporation

 

& 

 

Flux Propulsion

 

Term Sheet

 

RECITALS

 

WHEREAS, LHV develops, manufactures and sells battery
chargers for the electric vehicle market.

 

WHEREAS, Flux develops, manufactures and sells a complete
electric vehicle drive system for the electric vehicle market.

 

WHEREAS, Flux desires to sell LHV’s battery
chargers either with Flux’s electric vehicle drive system or separately.

 

WHEREAS, LHV wishes to grant to Flux the right to
sell LHV’s battery chargers.

 

Definitions

 

		·	“OEM” shall mean a party that is licensed to only
distribute LHV’s battery charger together with its own product.

 

		·	“Distributor” shall mean a party that has been
given a license by LHV to distribute LHV’s Products under their own name or under the LHV defined brand together with its
own products or separately. 

 

		·	"Confidential Information" means information which
if disclosed (i) in tangible form, is clearly marked as "confidential" or "proprietary" at the time of disclosure,
or (ii) in intangible form (such as orally or visually), the disclosing party identifies as "confidential" or "proprietary"
at the time of disclosure. Notwithstanding the foregoing marking requirements, the parties agree that each respective party’s
customer lists and customer data are considered Confidential Information.

 

		·	“Customer Support” means the Support Services to
be provided by Flux to the user of LHV Products described herein.

 

    	Page 1

    	 

    

 

		·	"Statement of Work" or (“SOW”) means
the development plan, including deliverables and associated milestones and development schedule, as mutually agreed and as set
forth and attached hereto.

 

		·	“LHV Product(s)” means LHV’s battery charger.

 

TERMS

Flux Appointment.

 

		·	LHV hereby appoints Flux as a Distributor of LHV’s Products
and grants flux a license to distribute the LHV product as a Distributor. 

 

		·	In the event LHV sells or distributes LHV Products to another Distributor
LHV shall pay Flux a fee of which will equal twenty percent (20%) of the LHV’s gross profits sold to the other Distributor
{the “Distribution Fee”}. Distribution Fee shall not apply to sales to an OEM and/or sales to Flux. Distribution Fee
shall also be subject to the Maximum Royalty defined below.

 

		·	Parties agree that the electric vehicle market is a new market and
will work together to identify and further define distributors, retailers and OEM’s.

 

Statement of Work

 

		·	In consideration for LHV granting Flux a Distributor license Flux
agrees to perform the work under the attached Statement of Work. 

 

		·	Statement of Work will include designing a microprocessor control
board and developing the associated software together named {the “MCB”} that enables the LHV Product to intuitively
charge batters.

 

		·	Statement of Work will also include any updates for error corrections
in the design and code, upgrades with additional functionality as requested by LHV in the design and code, and Customer Support.

 

		·	LHV agrees to pay Flux a twenty dollar ($20) fee {“Royalty Fee”}
per MCB that only LHV sells subject to the terms defined herein. The Royalty Fee does not apply to for sales made to Flux.

 

    	Page 2

    	 

    

 

Maximum Royalties 

 

		·	LHV and Flux agrees that LHV’s obligation to pay the Distribution
Fee and the Royalty Fee terminate once the total payments made of the Distribution Fee and the Royalty Fee equal two hundred thousand
dollars ($200,000) in total the {“Maximum Royalty”}. By nature this royalty provision shall survive and will remain
effect post termination or expiration of the Agreement. Once the Maximum Royalty has been reached, Flux is no longer required to
provide any support for the MCB and both parties agree to negotiate a new support fee upon LHV’s request. 

 

		·	LHV may during the term of this Agreement request that Flux accept
fee adjustments for the Royalty Fee and the Distribution Fee in conjunction with significant customer bids. 

 

Flux Obligations:

 

		·	Flux accepts the appointment as a Distributor
of LHV Products and agrees to use best efforts to maximize distribution of the LHV Products. 

 

		·	Flux agrees to submit purchase orders
at a quantity of no less than 25 and maintain an inventory of LHV Products of sufficient quantity, at LHV’s Distribution
pricing, to enable Flux to fully discharge all of its responsibilities under this Agreement. 

 

		·	Flux, its officers and agents agree to
refrain from promoting, selling, or offering for sale, either directly or indirectly any goods or articles that compete with the
LHV’s Product without offering LHV’s prior right of first refusal to provide like product and price. 

 

Marketing Plans & Reports:

 

		·	Each calendar quarter, Flux shall furnish
LHV a point of sales and operation report as it relates to LHV Product. 

 

		·	Parties agree to use reasonable efforts
to cooperatively market and advertize LHV Product.

 

No Agency:

 

		·	Flux is an independent purchaser and seller
of LHV Products and shall represent itself only as an “Authorized Distributor” of the LHV Products. 

 

Payment:

 

		·	All orders placed to LHV by Flux shall
be at the price as set forth on LHV’s then current LHV’s Distributor Price List for the LHV Products, and freight and
transportation costs for the LHV Products shall be the responsibility of Flux. 

 

		·	Unless otherwise agreed to by LHV, all
payments shall be made within thirty (30) days as of the delivery of the LHV’s invoice, except that in the event Flux fails
to pay LHV as provided herein, LHV may, in its sole discretion, require Flux to issue a standby irrevocable letter of credit in
favor of LHV or LHV’s designated subsidiary prior to the fulfillment or delivery of any further orders. 

 

    	Page 3

    	 

    

 

		·	Flux agrees to pay all taxes, duties,
deposits, tariffs, and bonds of any kind imposed upon LHV, Flux, or upon the LHV Products by any government or taxing authority
relating to the sale of LHV Products by Flux.

 

Orders:

 

		·	Upon LHV Product availability, Flux agrees
to place a purchase order.

 

		·	All purchase orders must be in writing
and are subject to acceptance by LHV and LHV will issue a proforma invoice acknowledging the purchase order. 

 

		·	On the first day of the term, and every
thirty (30) days thereafter (the “Forecast Period”) throughout the term, Flux shall deliver to LHV a written forecast
of its needs for the LHV Products during the twelve month period immediately following. 

 

		·	LHV may, from time to time, advise Flux
that Flux may not sell to certain customers (the “Disapproved Customers”) for any or no reason whatsoever, including
the Disapproved Customer’s infringement of LHV’s intellectual property rights. Flux agrees not to take orders from
Disapproved Customers.

 

		·	LHV Products shall be shipped to Flux
pursuant to the instructions issued by Flux within a reasonable period of time after acceptance by LHV of any order 

 

		·	LHV will use its reasonable best efforts
to fill Flux’s orders promptly upon acceptance by LHV. 

 

		·	Flux shall not return the LHV Products
without prior written authorization and instructions from LHV, nor shall LHV accept returned LHV Products except in accordance
with such authorization and instructions.

 

Goodwill:

 

		·	All use of the trademarks and all goodwill and benefits arising from such use shall inure to the
sole and exclusive benefit of the Trademark Owner. Neither party shall not do anything that, could in any way damage, injure or
impair the validity and subsistence of the other parties’ trademarks.

 

		·	Both parties agree to recognize that the Confidential Information constitutes valuable trade secrets
of the discloser and is the exclusive property of discloser. Consequently, the recipient agrees to use the Confidential Information
only in connection with the purpose contemplated under this Agreement and, during its term and extending for a period of two (2)
years thereafter, recipient specifically agrees not to use, communicate, disclose, reverse engineer, publish or make available
to any person or entity discloser’s Confidential Information.

 

    	Page 4

    	 

    

 

Intellectual Property:

 

		·	LHV shall retain all rights title and interests to the LHV Product
and any work performed in a Statement of Work and Intellectual Property created while working together including but not limited
to perfecting the Intellectual Property and nothing herein shall be construed as a license or an assignment of rights those rights
in any way. 

 

Term & Effective Date:

 

		·	This Agreement shall take effect as of
March 25, 2009 and expire on April 1, 2010 unless sooner terminated as provided herein (the “Initial Term”), which
will be automatically extended to an additional year, if neither party has given a notice not less than ninety (90) days before
the Initial Term (the “Further Term”).

 

		·	Notwithstanding anything to the contrary
in this Agreement, either party may terminate this Agreement at any time during the Initial Term or any Further Term without cause
with ninety (90) days prior written notice. Any order accepted by LHV prior to the date of receipt of a notice of termination shall
be shipped according to the announced shipping date.

 

Entire Agreement: This Agreement expresses
fully the understanding between the parties and all prior agreements, representations, understandings, appointments or licenses,
oral or written, are hereby expressly canceled. This Agreement may be modified only in writing signed by both Flux and LHV. The
date of the execution by LHV shall be deemed to be the date of the Agreement and the Agreement shall not be effective until its
execution by LHV and the Flux.

IN WITNESS WHEREOF the parties have caused
this Amendment to be signed by their duly authorized representatives.

 

	LHV Power Corporation	 	Flux Propulsion
	 	 	 	 	 
	Signature:	/s/Craig Miller	 	Signature:	/s/Jason Touhy
	Name:	Craig Miller	 	Name:	Jason Tough
	Title:	VP, Director of Legal Affairs	 	Title:	COO
	Date:	June 19, 2009	 	Date:	June 19, 2009

 

    	Page 5

    	 

    

 

Attachment A

Statement of Work

Battery Charger

 

SCOPE:  

This document is a Statement of Work for the design and development
of the microprocessor module portion of the 3kW battery charger system known as the LBC-3K45P from LHV Power Corp.  The statements
following “GENERAL:” below contain the working requirements for the entire charger device of which the microprocessor
module is part; individual signals and operational modes are described therein.  The immediately following statements reflect
the physical and operational specifics for the microprocessor module itself.

 

Microprocessor Module (MM) Design Details:

The MM contains a power regulating circuit which takes +12V
from the isolated housekeeping power supply output that is common with the DC/DC output circuits.  This +12V will be stepped
down by means of a three terminal regulator and support components that will provide +5V for the operation of the microprocessor
and associated support circuits, including digital and analog communication interfaces to the DC/DC controller, and to the CAN
bus I/O system.

 

The microprocessor itself will be an appropriate device with
appropriate supporting hardware to handle the I/O and computational requirements of the battery charger system’s DC/DC control
board, including receiving two channels of 3 by 8 multiplexed single ended digital signals and one channel of 3 by 8 multiplexed
differential analog signals, and transmitting one singled ended digital signal and one channel of 3 by 8 multiplexed differential
analog signals.

 

The MM will contain hardware and software systems to support,
through a properly isolated hardware interface, two simultaneously connected external CAN bus devices, and provide proper data
operation to and from devices such as the Battery Management System (BMS), the vehicle Powertrain Control Module (PCM), and other
such external devices.

 

The MM will contain hardware and software appropriate to the
task of properly updating the internal software, so that the software enabled operational characteristics of the battery charger
can be repaired, revised, or updated from time to time.  The physical interface to this updating system may be via the CAN
bus and/or a communication interface agreed upon by both parties.

 

The MM will contain hardware and software appropriate to receive
and send information from and to an “SAE J1772” accessory communications connector, so that communications can be made
to an off board AC or DC charging pedestal.  The actual hardware and software requirements are TBD, pending finalization by
SAE of the exact standards to be implemented.  It is desired that at least three digital ports be assigned and reserved on
the MM board for this purpose.

 

The MM will contain hardware and software appropriate to properly
control the normal mode(s) and faulted mode(s) of operation of the battery charger system.  It will properly communicate with
other vehicular devices and provide those external devices with normal and customary data and information as to the status of the
battery charger’s operation as described in the functional description following this SOW.

 

    	Page 6

    	 

    

 

The MM will contain hardware and software appropriate to control
several battery charger systems connected in parallel; with the primary charger serving as “master”, and additional
attached battery chargers (through the CAN bus interface) will serve as “slave(s)”, thus providing for a multiplication
of battery charging power.  Thus each battery charger produced must have an internally assigned address number coded in software,
so that the master charger can be established by means of interrogation by each and all CAN bus connected battery chargers, and
a determination made of which charger will be declared master, and which charger(s) will be declared slave(s).  An example
might be that all chargers connected to a common CAN bus find that three chargers exist connected, and that the one with the lowest
address number is declared the master, and the other two are thus declared slave 1 and slave 2.  Operational characteristics
of master and slave connected chargers will be identical, so that all parallel output (or series output) connected chargers produce
similar outputs, unless the BMS system directs otherwise. 

 

As a note, the series connection of battery chargers will be
limited to two in number by design.  The number of parallel connected battery chargers can be twenty or more.  Combinations
of parallel connected sets of two seriesed output battery chargers are possible for higher power and higher voltage battery systems.

 

The MM will have Real Time Clock (RTC) capabilities so that
a user controlled time of day use function for the battery charger can be implemented.

 

The MM will have hardware and software appropriate to operate
an onboard multicolor LED, which will be used to indicate charging operation and status and/or fault modes to an observer of the
charger(s) in service.  The exact details of the multicolor LED will be on a forthcoming revision of this document.

 

The MM will be designed to fit upon a Printed Circuit Board
(PCB) of dimensions of approximately 2” x 5”.  Details of the exact size, component height limitations, mounting
holes, connector details and locations, etc. will be forthcoming on a subsequent revision of this document.  The layout of
the MM PCB will be done in such manner as to guarantee 1000V of isolation to the supporting metal tray and mounting system; further
details of the requirements for this will be forthcoming on a future revision of this document (it is expected that reinforcing
insulation sheets such as Mylar sheet will be required and provided for outside the scope of this SOW to meet this requirement).

 

	LHV Power Corporation	 	Flux Propulsion
	 	 	 	 	 
	Signature:	/s/Craig Miller	 	Signature:	/s/Jason Touhy
	Name:	Craig Miller	 	Name:	Jason Tough
	Title:	VP, Director of Legal Affairs	 	Title:	COO
	Date:	June 19, 2009	 	Date:	June 19, 2009

 

    	Page 7

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