Item
1.01 Entry into a Material Definitive
Agreement.
On July
3, 2019, Flux Power Holdings, Inc. (the “Registrant”)
and Flux Power, Inc., a wholly-owned subsidiary of the Registrant
(the “Company”), entered into a certain loan agreement
with Cleveland Capital, L.P., a Delaware limited partnership and a
minority stockholder of the Registrant (“Cleveland”),
pursuant to which Cleveland agreed to loan the Company $1,000,000
(the “Loan”).
In
connection with the Loan, on July 3, 2019, the Company issued
Cleveland an unsecured short-term promissory in the amount of
$1,000,000 (the “Unsecured Promissory Note”). The
promissory note bears an interest rate of 15.0% per annum and is
due on September 1, 2019, unless repaid earlier from a percentage
of proceeds from certain identified accounts receivable. In
connection with the Loan, the Registrant issued Cleveland a
three-year warrant (the “Cleveland Warrant”) to
purchase the Registrant’s common stock in a number equal to
one-half percent (0.5%) of the number of shares of common stock
outstanding after giving effect to the total number of shares of
common stock sold in a public offering. The Cleveland Warrant has
an exercise price equal to the per share public offering
price.
Cleveland is a
minority stockholder of the Registrant. Cleveland is also a lender
pursuant to a certain amended and restated credit facility
agreement dated March 28, 2019 by and among Cleveland, the Company,
Esenjay Investments, LLC, (“Esenjay”), and additional
lenders to such agreement (“Additional Lenders”). In
connection therewith, Cleveland was also issued a secured
promissory note. To secure the obligations under such note,
Cleveland entered into a certain amended and restated credit
facility agreement dated March 28, 2019, with the Company, Esenjay
and the Additional Lenders.
The
foregoing description of the terms of the Loan Agreement, the
Unsecured Promissory Note, and the Cleveland Warrant, does not
purport to be complete and is qualified in its entirety by
reference to the full text of the respective agreements, copies of
which are filed hereto as Exhibits 10.1, 10.2, and 10.3, and are
incorporated herein by reference.