POLA Polar Power Inc

On May 20, 2019, Polar Power, Inc. (the “ Company ”) executed a Supplier Agreement with Citibank, N.A., which Supplier Agreement was executed by Citibank N.A., and became effective with respect to all parties, on June 4, 2019. Under the terms of the Supplier Agreement, the Company may from time to time offer to sell to Citibank certain of the Company’s accounts receivable relating to invoiced sales made by the Company to its customer, AT&T and its affiliates. Once AT&T approves the invoice issued by the Company, AT&T sends payment instructions to Citibank. The sale price is equal to the face amount of the receivable less the applicable discount charge calculated by multiplying the face amount of the receivable by (i) the annual discount rate (which is equal to the 90-day London Inter-bank Offered Rate (“ LIBOR ”) plus 1.00%) and (ii) the discount acceptance period (which is equal the number of days in the payment terms (e.g., net 90) less the number of days necessary to approve the invoice (e.g., 10 days)) divided by 360. By way of example, based upon the current pricing terms contained in the Supplier Agreement, on a $100 invoice payable in 90 days, and assuming a LIBOR rate of 2.80% and invoice approval period of 10 days, the Company would be eligible to receive $99.16 approximately 11 days after the issuance of the invoice to AT&T. This is equivalent to discounted terms of 0.84% 10 net 90.

Citibank may change the pricing terms at any time in its sole discretion upon at least thirty (30) days prior written notice to the Company. In addition, either party may terminate the Supplier Agreement upon thirty (30) business days prior written notice to the other party, provided that either party may terminate the agreement upon five (5) business days prior written notice if the other party is in breach of, or fails to perform any of its material obligations under the agreement.