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Item 1.01
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Entry into a Material Definitive Agreement.
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Securities Purchase Agreement
On July 2, 2020, Polar
Power, Inc. (the “Company”) entered into a securities purchase agreement (the “Purchase Agreement”) with
certain institutional investors (the “Investors”) for the sale by the Company in a private placement of 1,250,000 shares
(the “Shares”) of the Company’s common stock, $0.0001 par value per share (“Common Stock”), at a
purchase price of $2.25 per share. Additionally, at Closing (as defined below) each Investor received a common stock purchase warrant
(collectively, the “Warrants”) to purchase up to a number of shares of Common Stock equal to, for each Share purchased
by the Investor, 0.5 shares of Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”).
The Purchase Agreement
contains customary representations, warranties and covenants by the Company, customary conditions to closing, indemnification obligations
of the Company and the Investors, including for liabilities under the Securities Act, other obligations of the parties and termination
provisions. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of such
agreement and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations
agreed upon by the contracting parties.
The Warrants have an
exercise price of $3.13 per share, are exercisable beginning on July 7, 2020 and have a term of five years.
The closing (the “Closing”)
of the private placement took place on July 7, 2020. The aggregate gross proceeds from the sale of the Shares and Warrants was
approximately $2.8 million. The Company intends to use the net proceeds from the private placement for working capital purposes.
Registration Rights Agreement
On July 2, 2020, in
connection with the private placement, the Company entered into a registration rights agreement (the “Registration Rights
Agreement”), pursuant to which, among other things, the Company will prepare and file with the Securities and Exchange Commission
(the “SEC”) a registration statement to register for resale the Shares and the Warrant Shares.
The securities issued
in the private placement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”),
and until so registered the securities may not be offered or sold absent registration or availability of an applicable exemption
from registration.
Lock-Up Agreements
On July 2, 2020, the
Company and the Company’s officers and directors agreed to a “lock-up” with respect to shares of Common Stock
and other securities beneficially owned, including securities that are convertible into, or exchangeable or exercisable for, shares
of Common Stock, commencing on July 2, 2020 and lasting until 30 days after the earliest of the date that: (i) the initial registration
statement is declared effective by the SEC, (ii) all of the Shares and Warrant Shares have been sold pursuant to Rule 144 or may
be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information requirement
under Rule 144 and without volume or manner-of-sale restrictions, (iii) following the one year anniversary of the closing date,
subject to certain conditions, or (iv) all of the Shares and Warrant Shares may be sold pursuant to an exemption from registration
under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions, subject to certain conditions. Subject
to certain exceptions, during the lock-up period, the Company and its executive officers and directors may not offer, sell, pledge
or otherwise dispose of the foregoing securities.
The foregoing descriptions
of the material terms of the Purchase Agreement, Warrant and Registration Rights Agreement are not complete and are qualified in
their entirety by reference to the Purchase Agreement, Warrant and Registration Rights Agreement filed as Exhibits 10.1, 4.1 and
10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by this reference.