Item
1.01 Entry into a Material Definitive Agreement
On
November 20, 2020, Kandi Technologies Group, Inc., a Delaware corporation (the “Company”) entered into a
Securities Purchase Agreement (the “Purchase Agreement”) with certain purchasers (the “Buyers”)
pursuant to which the Company will sell to the Buyers, in a registered direct offering, an aggregate of 8,849,560 units (the
“Units”), each consisting of one share (the “Shares”) of our common stock, par value $0.001 per share
(“Common Stock”) and a warrant to purchase 0.4 share of our Common Stock (the “Warrants”), at a
purchase price of $11.30 per share, for aggregate gross proceeds to the Company of $100,000,028.00, before deducting fees to
the placement agent and other estimated offering expenses payable by the Company. At the closing, the Company shall issue
Units consisting of an aggregate of 8,849,560 shares of our Common Stock and Warrants initially exercisable into an aggregate
of up to 3,539,825 shares of our Common Stock.
The
Warrants have a term of 30 months and are exercisable by the holders at any time after the date of issuance at an exercise price
of $14.50 per share. The exercise price and the number of shares issuable upon exercise of the Warrants are subject to an adjustment
upon the occurrence of certain events, including, but not limited to, stock splits or dividends, business combinations, sale of
assets, similar recapitalization transactions, or other similar transactions. The exercise price of the Warrants is subject to
adjustment in the event that the Company issues or is deemed to issue shares of our Common Stock for less $10.08, or the average closing price of the five trading days
prior to the date of the Purchase Agreement (the “Minimum Price”). The exercisability of the Warrants may be limited if, upon exercise, the holder or any of its
affiliates would beneficially own more than 4.99% or 9.99% of our Common Stock, which percentage shall be elected by the holder
on or prior to the issuance date.
Pursuant
to the terms of the Purchase Agreement, the Company and the Buyers have agreed that: (i) subject to certain exceptions, the Company
will not, within the sixty (60) calendar days following the closing of this offering enter into any agreement to issue or announce
the issuance or disposition or proposed issuance or disposition of any securities (each, a “Subsequent Placement”);
(ii) for a period of 12 months, the Company will not enter into an agreement to effect a “Variable Rate Transaction,”
as that term is defined in the Purchase Agreement; and (iii) within the six (6) months following the closing of this offering,
the Company shall not effect any Subsequent Placement unless the Buyers are offered a participation right, subject to certain
terms and conditions as set forth in the Purchase Agreement, to subscribe, on a pro rata basis, up to 20% of the securities offered
in the Subsequent Placement. Furtheremore, without the shareholders’ approval, the exercise price of the Warrants shall
not be adjusted to be lower than the Minimum Price, or $10.08 and the Company is prohibited
from issuing any shares at a price lower than $10.08 except for the Excluded Securities, as such term is defined in the Warrants,
during the term of the Warrants.
FT
Global Capital, Inc. (“FT Global Capital”) acted as the exclusive placement agent in connection with this offering
pursuant to the terms of a placement agent agreement, dated November 19, 2020, between the Company and FT Global Capital (the
“Placement Agent Agreement”). Pursuant to the Placement Agent Agreement, the Company agreed to pay FT Global Capital
a cash fee equal to four point eight percent (4.8%) of the aggregate proceeds received by the Company from the sale of its securities
to the investors introduced to the Company by FT Global Capital. FT Global Capital is also entitled to additional tail compensation
for any financings consummated within the 18-month period following the termination of the Placement Agent Agreement to the extent
that such financing is provided to the Company by investors that FT Global Capita had introduced to the Company. In addition to
the cash fees, the Company agreed to issue to the Placement Agent warrants to purchase an aggregate of up to three percent (3%)
of the aggregate number of shares of our Common Stock sold in the offering (the “Placement Agent Warrants”). The Placement
Agent Warrants shall generally be on the same terms and conditions as the Warrants, exercisable at a price of $14.50 per share,
provided that Placement Agent Warrants will not provide for certain anti-dilution protections included in the Warrants.
The
Shares, the Warrants, the Placement Agent Warrants and our Common Stock issuable upon exercise of the Warrants and the Placement
Agent Warrants are being offered by the Company pursuant to an effective shelf registration statement on Form S-3, which was filed
with the Securities and Exchange Commission on October 21, 2020 and was declared effective on October 29, 2020 (File No. 333-249585).
The
foregoing description of the Purchase Agreement, the Placement Agent Agreement, the form of Warrant and form of the Placement
Agent Warrant do not purport to be complete and are qualified in their entirety by reference to the full text of such agreements,
copies of which are attached hereto as Exhibits 10.1, 10.2, 4.1 and 4.2, respectively, and are incorporated herein by reference.
Readers should review such agreements for a complete understanding of the terms and conditions associated with these transactions.