Document:

Exhibit 10.1

 

 

 

BUSINESS LOAN AGREEMENT

 

	Borrower:	Polar Power, Inc.	Lender:	Citibank, N.A.
	 	249 E. Gardena Boulevard	 	6801 Colwell Boulevard
	 	Gardena, CA 90248	 	Irving, TX 75039

 

THIS BUSINESS LOAN
AGREEMENT dated March 21, 2017, is made and executed between Polar Power, Inc. ("Borrower") and Citibank, N.A. ("Lender")
on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a
commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule
attached to this Agreement. Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is
relying upon Borrower's representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing,
or extending of any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such
Loans shall be and remain subject to the terms and conditions of this Agreement.

 

TERM.
This Agreement shall be effective as of March 21, 2017 and shall continue in full force and effect until such time as all of Borrower's
Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys' fees, and other fees
and charges, or until such time as the parties may agree in writing to terminate this Agreement.

 

CONDITIONS
PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial Advance and each subsequent Advance under this Agreement
shall be subject to the fulfillment to Lender's satisfaction of all of the conditions set forth in this Agreement and in the Related
Documents.

 

Loan
Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements granting
to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender's Security Interests;
(4) evidence of insurance as required below; (5) together with all such Related Documents as Lender may require for the Loan; all
in form and substance satisfactory to Lender and Lender's counsel.

 

Borrower's
Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have
provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

 

Payment
of Fees and Expenses. Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable
as specified in this Agreement or any Related Document.

 

Representations
and Warranties. The representations and warranties set forth in this Agreement, in the Related Documents, and in any document
or certificate delivered to Lender under this Agreement are true and correct.

 

No
Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under
this Agreement or under any Related Document.

 

REPRESENTATIONS AND
WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement
of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists:

 

Organization.
Borrower is a corporation for profit which is, and at all times shall be duly organized, validly existing, and in good
standing under and by virtue of the laws of the Slate of Delaware. Borrower is duly authorized to transact business in all
other states in which Borrower is doing business, having obtained all necessary filings, governmental licenses and approvals
for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would have a material adverse effect on its business or
financial condition. Borrower has the full power and authority to own its properties and to transact the business in which
it is presently engaged or presently proposes to engage. Borrower maintains an office at 249 E. Gardena Boulevard,
Gardena. CA 90248. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower
keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change
in the location of Borrower’s state of organization or any change in Borrower’s name. Borrower shall do all
things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with
all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court
applicable to Borrower and Borrower's business activities.

 

Assumed
Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names
used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower
does business: None.

 

Authorization.
Borrower's execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by
all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision
of (a) Borrower's articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower
or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.

 

Financial
Information. Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial
condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent
to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as
disclosed in such financial statements.

 

Legal
Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when
delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Burrower in accordance with their
respective terms.

 

Properties.
Except as contemplated by this Agreement or as previously disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good
title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or
financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower
has not used or filed a financing statement under any other name for at least the last five (5) years.

 

     

     

    

 

	BUSINESS LOAN AGREEMENT	 
	(Continued)	Page 2
	 	 

 

Hazardous
Substances. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (1) During
the period of Borrower's ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal,
release or threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral, (2) Borrower
has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any use,
generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about
or from the Collateral by any prior owners or occupants of any of the Collateral: or (c) any actual or threatened litigation or
claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other
authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release any Hazardous Substance
on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal,
state and local laws, regulations, and ordinances, including without limitation all Environmental Laws. Borrower authorizes Lender
and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's
expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties contained herein are based on Borrower’s due diligence
in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future
claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such
laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties,
and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement
or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste
or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend,
shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be
affected by Lender's acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise.

 

Litigation
and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes)
against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's
financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged
by Lender in writing.

 

Taxes.
To the best of Borrower's knowledge, all of Borrower's tax returns and reports that are or were required to be filed, have
been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to
be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided.

 

Lien
Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly
or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.

 

Binding
Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers
thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective
terms.

 

AFFIRMATIVE COVENANTS.
Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

 

Notices of
Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition.
and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting
Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

 

Financial
Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine
and audit Borrower's books and records at all reasonable times.

 

Financial
Statements. Furnish Lender with the following:

 

Additional
Requirements.

 

Such
other financial statements and related information in such form and detail as may be satisfactory to Lender within thirty (30)
days of Lender's request. For the avoidance of doubt, Borrower agrees that all financial statements and other information required
to be delivered to Lender under this Agreement or any Related Document will be delivered for the most recent fiscal or calendar
period (as applicable) ended immediately prior to the date hereof and each fiscal or calendar period thereafter as required herein
or in any Related Document.

 

All
financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent
basis, and certified by Borrower as being true and correct.

 

Additional
Information. Furnish such additional information and statements, as Lender may request from time to time.

 

Insurance.
Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower,
upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory
to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days prior written
notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be
impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets
in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such lender's loss payable
or other endorsements as Lender may require.

 

Insurance
Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as
Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured;
(3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request
of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine,
as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower.

 

Other
Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower
and any other party and notify Lender immediately in writing or any default in connection with any other such agreements.

 

Loan
Proceeds. Use all Loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by
Lender in writing.

 

Taxes,
Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation on assessments,
taxes, governmental charges, levies and liens. of every kind and nature, imposed upon Borrower or its properties, income, or profits,
prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any
of Borrower's properties, income, or profits, Provided however. Borrower will not be required to pay and discharge any such
assessment, tax, charge, levy, lien or claim so long as (1) the legality of the same shall be contested in good faith by appropriate
proceedings, and (2) Borrower shall have established on Borrower's books adequate reserves with respect to such contested assessment,
tax, charge, levy, lien, or claim in accordance with GAAP.

 

Performance.
Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower and Lender. Borrower shall notify Lender immediately in
writing of any default in connection with any agreement.

 

Operations.
Maintain executive and management personnel with substantially the same qualifications and experience as the present executive
and management personnel; provide written notice to Lender of any change in executive and management personnel: conduct its business
affairs in a reasonable and prudent manner.

 

     

     

    

 

	BUSINESS LOAN AGREEMENT	 
	(Continued)	Page 3
	 	 

 

Environmental
Studies. Promptly conduct and complete, at Borrower's expense, all such investigation, studies, samplings and testings as
may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance
defined as toxic or a hazardous substance under applicable federal, state, or local law, rule, regulation, order or directive,
at or affecting any property or any facility owned, leased or used by Borrower.

 

Compliance
with Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental
authorities applicable to the conduct of Borrower's properties, businesses and operations, and to the use or occupancy of the Collateral,
including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance.
or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender
in writing prior to doing so and so long as, in Lender's sole opinion. Lender's interests in the Collateral are not jeopardized.
Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender's
interest.

 

Inspection.
Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans
and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda
of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation
computer generated records and computer software programs for the generation of such records) in the possession of a third party,
Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times
and to provide Lender with copies of any records it may request, all at Borrower's expense.

 

Environmental
Compliance and Reports. Borrower shall comply in all respects with any and all Environmental Laws: not cause or permit to exist,
as a result of an intentional or unintentional action or omission on Borrower's part or on the part of any third party, on property
owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental
activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental
authorities: shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning
any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or
not there is damage to the environment and/or other natural resources.

 

Additional
Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence
and secure the Loans and to perfect all Security Interests.

 

LENDER'S EXPENDITURES.
If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Borrower fails
to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower's failure to discharge
or pay when due any amounts Borrower is required to discharge or pay under this Agreement or any Related Documents.
Lender on Borrower's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not
limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed
on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred
or paid by Lender for such purposes, with the exception of insurance premiums paid by Lender with respect to motor vehicles, but
including the payment of attorneys' fees and expenses, will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and,
at Lender's option, will (A) be payable on demand: (B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any applicable insurance policy: or (2) the remaining
term of the Note: or (C) be treated as a balloon payment which will be due and payable at the Note's maturity.

 

NEGATIVE COVENANTS.
Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written
consent of Lender:

 

Additional
Financial Restrictions.

 

Liens
and Encumbrances. Create or permit to exist any liens, security interests or other encumbrances on any of Borrower's
assets.

 

Continuity
of Operations. (1) Engage in any business activities substantially different than those in which Borrower is presently engaged.
(2) cease operation, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer
or sell Collateral out of the ordinary course of business, or (3) pay any dividends on Borrower's stock (other than dividends payable
in its stock), provided. however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is
continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in
the Internal Revenue Code of 1986. as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time
in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities
under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their
ownership of shares of Borrower's stock, or purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's
capital structure.

 

CESSATION
OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement
or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related
Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes Insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there
occurs a material adverse change in Borrower's financial condition. in the financial condition of any Guarantor, or in the
value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or
revoke such Guarantor's guaranty of the Loan or any other loan with Lender: or (E) Lender in good faith deems itself
insecure, even though no Event of Default shall have occurred.

 

RIGHT
OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender
and its subsidiaries and affiliates (whether checking. savings, or some other account and whether evidenced by a certificate of
deposit). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower
authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any
and all such accounts, and, at Lender's option to administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

 

DEFAULT. Each of
the following shall constitute an Event of Default under this Agreement:

 

Payment Default.
Borrower fails to make any payment when due under the Loan.

 

Other
Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement
or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any
other agreement between Lender and Borrower.

 

     

     

    

 

 

	BUSINESS LOAN AGREEMENT	 
	(Continued)	Page 4
	 	 

 

Default
in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase
or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's
or any Grantor's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under
this Agreement or any of the Related Documents.

 

False
Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under
this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.

 

Insolvency.
The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement
of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

 

Defective
Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure
of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.

 

Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the
Loan. This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is
the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding
and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender,
in its sole discretion, as being an adequate reserve or bond for the dispute.

 

Events
Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

Change in
Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse
Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance
of the Loan is impaired.

 

Insecurity.
Lender in good faith believes itself Insecure.

 

EFFECT OF AN EVENT OF
DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all
commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will
terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default
of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In
addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly
or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare
a default and to exercise its rights and remedies.

 

JURY WAIVER. BORROWER
HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING HEREUNDER OR IN CONNECTION HEREWITH
TO THE EXTENT PERMITTED BY APPLICABLE LAW.

 

MISCELLANEOUS PROVISIONS.
The following miscellaneous provisions are a part of this Agreement:

 

Amendments.
This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing
and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys'
Fees; Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable
attorneys· fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may
hire or pay someone else  to help enforce this Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender's reasonable attorneys· fees and legal expenses whether or not there is
a lawsuit, including reasonable attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall
pay all court costs and such additional fees as may be directed by the court.

 

Caption
Headings. Caption headings in this Agreement are tor convenience purposes only and are not to be used to interpret or define
the provisions of this Agreement.

 

Consent
to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide. without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower
or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect
to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of
any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will
be considered as the absolute owners of such interests in the Loan and will have all the rights granted under the participation
agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim
that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees
that either Lender or such purchaser may enforce Borrower's obligation under the Loan irrespective of the failure or
insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender.

 

Governing
Law. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the
laws of the State of New York without regard to its conflicts of law provisions.

 

Choice
of Venue. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of New York
County, State of New York. Nothing herein shall affect the right of the Lender to bring any action or proceeding against the Borrower
or its property in the courts of any other jurisdiction.

 

     

     

    

 

	BUSINESS LOAN AGREEMENT	 
	(Continued)	Page 5
	 	 

 

No Waiver
by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing
and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right
or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's
right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender,
nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's
rights or of any of Borrower's or any Grantor's obligations as to any future transactions. Whenever the consent of Lender is required
under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.

 

Notices.
Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered,
when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid,
directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement
by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s
address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower's current address. Unless otherwise
provided or required by law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice
given to all Borrowers.

 

Severability.
If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance,
that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible,
the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision
cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity,
or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision
of this Agreement.

 

Subsidiaries
and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word ''Borrower" as used in this Agreement shall include all of Borrower's
subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to
require Lender to make any Loan or other financial accommodation to any of Borrower's subsidiaries or affiliates.

 

Successors
and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents
shall bind Borrower's successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower
shall not, however, have the right to assign Borrower's rights under this Agreement or any interest therein, without the prior
written consent of Lender.

 

Survival
of Representations and Warranties. Borrower understands and agrees that in extending Loan Advances. Lender is relying on all
representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered
by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any investigation
made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to
Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan
Advance is made, and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or
until this Agreement shall be terminated in the manner provided above, whichever is the last to occur.

 

Time Is of
the Essence. Time is of the essence in the performance of this Agreement.

 

DEFINITIONS. The
following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated
to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and
terms used in the singular shall include the plural, and the plural shall include the singular, as the context may require. Words
and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code.
Accounting words and terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with
generally accepted accounting principles as in effect on the date of this Agreement:

 

Advance.
The word "Advance" means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower's behalf on
a line of credit or multiple advance basis under the terms and conditions of this Agreement.

 

Agreement
The word "Agreement" means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified
from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time.

 

Borrower.
The word "Borrower'' means Polar Power. Inc. and includes all co-signers and co-makers signing the Note and all their
successors and assigns.

 

Collateral.
The word "Collateral'' means all property and assets granted as collateral security for a Loan, whether real or personal
property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security
interest. mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, Hen, charge, lien or title retention contract,
lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law,
contract, or otherwise.

 

Environmental
Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and ordinances
relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended. 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund Amendments
and Reauthorization Act of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable
state or federal laws, rules, or regulations adopted pursuant thereto.

 

Event
of Default. The words "Event of Default" mean any of the events of default set forth in this Agreement in the default
section of this Agreement.

 

GAAP. The
word "GAAP" means generally accepted accounting principles.

 

Grantor.
The word "Grantor" means each and all of the persons or entities granting a Security Interest in any Collateral for the
Loan, including without limitation all Borrowers granting such a Security Interest.

 

Guarantor.
The word "Guarantor" means any guarantor, surety, or accommodation party of any or all of the Loan.

 

Guaranty.
The word "Guaranty" means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part
of the Note.

 

Hazardous
Substances. The words "Hazardous Substances" mean materials that, because of their quantity, concentration or physical,
chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when
improperly used, treated, stored, disposed of, generated, manufactured, transported or otherwise handled. The words "Hazardous
Substances" are used in their very broadest sense and include without limitation any and all hazardous or toxic substances,
materials or waste as defined by or listed under the Environmental Laws. The term "Hazardous Substances" also includes,
without limitation, petroleum and petroleum by products or any fraction thereof and asbestos.

 

     

     

    

 

	BUSINESS LOAN AGREEMENT	 
	(Continued)	Page 6
	 	 

 

Indebtedness.
The word "Indebtedness" means all present and future loans, advances, overdrafts, liabilities, obligation, guaranties,
covenants, duties and other debts at any time owing by Borrower to Lender, whether evidenced by this Agreement, a promissory note
or other instrument, any Related Documents. or any other document or agreement, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, overdraft, guaranty, indemnification or otherwise, whether direct or
indirect (including, without limitation. those acquired by assignment and any participation by Lender in Borrower's debts owing
to others), absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses. fees,
attorneys· fees (including attorneys· fees and expenses incurred In bankruptcy), expert witness fees and expenses,
fees and expenses of consultants, audit fees, letter of credit fees, closing fees, facility fees, termination fees, and any other
sums chargeable to Borrower under this Agreement, the Note, any Related Documents, or under any other present or future instrument,
document or agreement between Borrower and Lender.

 

Lender.
The word "Lender" means Citibank, N.A., its successors and assigns.

 

Loan.
The word "Loan" means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described
on any exhibit or schedule attached to this Agreement from time to time.

 

Note.
The word "Note" means and includes without limitation Borrower's promissory note or notes, if any, or any credit
agreement or loan agreement, evidencing Borrower's Indebtedness, as well as any substitute, replacement or refinancing note or
notes or credit agreement or loan agreement therefore.

 

Related
Documents. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental
agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments,
agreements and documents, whether now or hereafter existing, executed in connection with the Loan.

 

Security
Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants,
arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing,
or creating a Security Interest.

 

Security
Interest. The words "Security Interest" mean, without limitation, any and all types of collateral security, present
and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop
pledge, chattel, mortgage, collateral chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or
lien interest whatsoever whether created by law, contract, or otherwise.

 

BORROWER ACKNOWLEDGES HAVING READ ALL THE
PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED MARCH 21, 2017.

 

BORROWER:

 

	POLAR POWER, INC.

 

	By:	/s/
    Luis Zavala 	 	By: 	/s/
    Arthur Sams 
	 	Luis Zavala, Chief Financial Officer of
    Polar Power, Inc.	 	 	Arthur Sams, Chief Executive Officer &
President of Polar Power, Inc.

 

LENDER:

 

CITIBANK, N.A.

 

	By:	 	 	 	 
	 	Authorized Signer	 	 	 

 

LaserPro Ver. 15.4.10.D54 Copr D+H USA
Corporation 1997 2017 All Rights Reserved. - NY D: LASERPROGLOCFNPLESO FC TR 21500 PA-SExhibit 10.2

 

 

 

RELATIONSHIP READY CREDIT
AGREEMENT

 

	Borrower:	Polar Power, Inc.	Lender:	Citibank, N.A.
	 	249 E Gardena Boulevard 	 	6801 Colwell Boulevard
	 	Gardena, CA 90248	 	Irving, TX 75039

 

	Principal Amount: $1,000,000.00	Date of Agreement: March 21, 2017

 

PROMISE TO PAY. To repay
Borrower's loan, Polar Power, Inc. ("Borrower") promises to pay to Citibank, N.A. ("Lender"), or order, in
lawful money of the United States of America, the principal amount of One Million & 00/100 Dollars ($1,000,000.00) or so much
as may be outstanding, together with interest on the unpaid outstanding principal balance calculated from the date of the first
Advance until repayment of all Advances.

 

PAYMENT.
Borrower will pay all Advances in accordance with the following payment schedule:

 

Until Lender cancels Borrower's
right to obtain Advances under this Agreement, Borrower will pay accrued interest and charges each month. Lender may at any time,
in the exercise of its sole discretion, cancel such right of Borrower to obtain Advances. The date upon which Lender cancels such
right shall be referred to herein as the "Cancellation Date." The aggregate amount of all Advances outstanding on the
Cancellation Date shall be payable in forty-eight (48) equal consecutive monthly installments of principal, together with accrued
monthly interest and any other charges beginning the first calendar month after the Cancellation Date.

 

Unless Lender cancels Borrower's
right to obtain Advances hereunder, each month Borrower will pay (a) the greater of (i) two percent (2%) of the outstanding principal
balance hereunder on the last day of the billing period or (ii) $100, plus (b) accrued interest and all charges since the date
of the last payment. Monthly billing statements that show all transactions hereunder that occurred during such billing cycle, the
outstanding principal balance, and the amount of the next due payment (including the principal, interest, and fee components of
such payment) and its due date will be sent by Lender.

 

Borrower agrees to maintain Its
primary business checking account in a satisfactory manner with Lender and irrevocably authorizes Lender to debit its account for
all payments due under this Agreement.

 

INTEREST CALCULATION METHOD.
Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.
All interest payable under this Note is computed using this method.

 

Unless otherwise agreed or
required by applicable law, payments will be applied in the following order: (1) interest; (2) principal; and (3) charges, fees
and penalties. Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate In writing.

 

CREDIT LINE. This Agreement
covers a revolving line of credit for the principal amount displayed at the beginning of this Agreement which will be the "Credit
Line." The Credit Line Is the maximum amount which Borrower may have outstanding at any one time. Borrower may borrow, repay
and re-borrow up to the amount of the Credit Line. Borrower agrees not to attempt, request, or obtain an Advance that will make
Borrower’s outstanding balance exceed the Credit Line. The Credit Line will not be increased should Borrower exceed the Credit
Line. Borrower agrees to repay immediately any amount by which Borrower's outstanding balance exceeds the Credit Line. Any amount
greater than the Credit Line will be secured by the Collateral. By providing Borrower with written notice, Lender may increase
or decrease the Credit Line at any time.

 

ADVANCES. Advances may
be obtained by using checks furnished by Lender, transfers made on Lender's on-line banking system and any other method acceptable
to Lender from time to time. Lender may not honor a request for an Advance if: the Credit Line has or would be exceeded by making
the Advance; check is post-dated; Borrower's checks have been reported lost or stolen; check is not signed by an Authorized Signer;
Borrower is In default; Lender has cancelled Borrower's right to obtain Advances; or any other reasonable circumstance.

 

ANNUAL FEE. Borrower
agrees to pay an annual fee of $2,500.00; provided, that no annual fee is due for the first year of this Agreement. Payment of
the annual fee is due upon each anniversary of the date of this Agreement. The annual fee may be billed, may be automatically debited
from Borrower's primary business checking account or may be added to the principal balance. The annual fee is non-refundable unless
Borrower notifies Lender of Borrower's cancellation of this Agreement within thirty (30) days of the mailing of the billing statement
on which the fee is billed.

 

OTHER FEES. Borrower
agrees to pay all other fees and charges related to the Credit Line or this Agreement and the Credit Line may be charged as follows:
(1) Stop Payment Fee: $35.00 when Borrower requests a stop payment on Borrower's check; (2) Over-Limit Fee: $35.00 for each billing
period that the outstanding principal balance exceeds the Credit Line; (3) Transaction Fee: $5.00 for each check or other Advance
posted above 20 checks or other Advances per billing period; (4) Check/Other Advance Fee: $35.00 when Lender declines to honor
a check or other request for an Advance: and (5) for businesses located in Florida, the Florida Documentary Stamp Tax.

 

AUTHORIZED SIGNERS.
All persons whose signatures appear below are authorized to request an Advance or a repayment under the Credit Line.

 

CONDITIONS PRECEDENT TO
EACH ADVANCE. Lender's consideration of Borrower's request to make the initial Advance and each subsequent Advance under this
Agreement shall be subject to the fulfillment to Lender's satisfaction of all of the covenants and conditions set forth in this
Agreement and in the Related Documents. Borrower shall have provided to Lender all documents that Lender may require in form and
substance satisfactory to Lender. Borrower shall have paid all fees, charges and other expenses due and payable. All representations
and warranties set forth in this Agreement, in the Related Documents and in any document delivered to Lender are true and correct.
There shall not exist at the time of any Advance a condition which would constitute an Even! of Default and Lender shall not have
cancelled the Credit Line. Lender shall have a first priority lien on Borrower's Collateral.

 

INTEREST AFTER DEFAULT -
RELATED DOCUMENTS. Upon the failure by Borrower to repay all amounts due under this Note upon Lender's demand or observe or
comply with any of the terms or conditions herein or in any Related Documents, Lender, at its option, may, if permitted under applicable
law, increase the interest rate on this Note by 4.00%. The interest rate will not exceed the maximum rate permitted by applicable
law. The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements
and documents, whether now or hereafter existing, executed in connection with any and all loans and financial accommodations from
Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time. This section
replaces and supersedes the section below entitled "Interest After Default," which shall be disregarded and have no force
or effect.

 

     

     

    

 

	RELATIONSHIP READY CREDIT AGREEMENT	 
	(Continued)	Page 2
	 	 

 

INSURANCE REQUIREMENTS.
For the avoidance of doubt regarding the requirement in the Affirmative Covenants section of this Agreement that Borrower maintain
such insurance as Lender shall require, and except to the extent specific insurance types, coverages or insurers are specified
in this Agreement or the Related Documents, Lender requires and Borrower agrees to maintain at all times with financially sound
and reputable insurance companies such public liability insurance, property damage insurance and casualty insurance with respect
to liabilities, losses or damage in respect of the assets and businesses of Borrower as may customarily be carried or maintained
under similar circumstances by businesses engaged in the same or similar enterprises, in each case in such amounts, with such deductibles,
covering such risks and otherwise on terms and conditions as shall be customary for such businesses.

 

PRIME RATE. "Prime
Rate" shall mean the prime rate of interest announced by Lender from time to time at its principal office as its prime commercial
lending rate.

 

MINIMUM INTEREST RATE.
"Minimum Interest Rate" shall mean two hundred (200) basis points in excess of the rate of interest determined by Lender
in accordance with its customary procedures and utilizing such electronic or other quotation sources as it considers appropriate
to be the prevailing rate per annum in effect each banking day at which deposits in United States dollars for a one month period,
determined by Lender in its sole discretion, are offered to Lender by first class banks in the London Interbank Market shortly
after 11:00 a.m. (London time) two banking days prior to the date such rate of interest shall be effective and applied to existing
and future advances with respect to this Note.

 

VARIABLE INTEREST RATE.
The interest rate on this Agreement is subject to change from time to time based on changes in an independent index which is the
greater of the Prime Rate or the Minimum Interest Rate, each as hereinabove defined (the "Index"). The Index is not necessarily
the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this Agreement, Lender may
designate a substitute index after notice to Borrower. Lender will tell Borrower the current Index rate upon Borrower's request.
The interest rate change will not occur more often than each day the Index changes. Borrower understands that Lender may make loans
based on other rates as well. The interest rate to be applied to the unpaid principal balance of this Agreement will be at a rate
of 0.500 percentage points over the Index. NOTICE: Under no circumstances will the interest rate on this Agreement be more than
the maximum rate allowed by applicable law.

 

PREPAYMENT. Borrower agrees
that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund
upon early payment (whether voluntary or as a result of default). except as otherwise required by law. Except for the foregoing,
Borrower may pay without fee all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed
to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest. Rather,
early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full",
"without recourse", or similar language. If Borrower sends such a payment. Lender may accept it without losing any of
Lender's rights under this Agreement, and Borrower will remain obligated to pay any further amount owed to Lender. All written
communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes
"payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction
of a disputed amount must be mailed or delivered to: Citibank, N.A.; 6801 Colwell Boulevard; Irving, TX 75039.

 

LATE CHARGE. If a payment
is 15 days or more late, Borrower will be charged 4.000% of the unpaid portion of the regularly scheduled payment.

 

INTEREST AFTER DEFAULT.
If any Event of Default shall occur, including failure to pay upon final maturity. Lender, at its option, may, if permitted
under applicable law, increase the variable interest rate on this Agreement to 3.500 percentage points over the Index. The interest
rate will not exceed the maximum rate permitted by applicable law.

 

COLLATERAL. This Agreement
is secured by an property and assets of the Borrower and any grantor, whether real or personal, described in (a) any security agreement,
assignment, pledge, mortgage, deed of trust or other agreement intended as a security device (each, a ''Collateral Document")
which by its terms is intended to secure an existing and future obligations and indebtedness of the Borrower to the Lender and
(b) any Collateral Document executed by the Borrower and any grantor in connection with this Agreement.

 

REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each Advance, and at all times
any indebtedness exists hereunder:

 

Organization. Borrower
is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good standing under and
by virtue of the laws of the State of Delaware. Borrower is duly authorized to transact business in all other states in which Borrower
is doing business, having obtained all necessary filings, governmental licenses and approvals for each state in which Borrower
is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states
in which the failure to so qualify would have a material adverse effect on its business or financial condition. Borrower has the
full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes
to engage. Borrower maintains an office at 249 E. Gardena Boulevard, Gardena, CA 90248. Borrower will notify Lender prior to any
change in the location of Borrower's state of organization or any change in Borrower's name.

 

Authorization. Borrower’s
execution, delivery, and performance of this Agreement and all the Related Documents have been duly authorized by all necessary
action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower's
articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any
law, governmental regulation, court decree, or order applicable to Borrower or to Borrower's properties.

 

Financial Information.
Each of Borrower's financial statements supplied to Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date
of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed
in such financial statements.

 

Litigation and Claims.
No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition
or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in
writing.

 

Lien Priority. Unless
otherwise previously disclosed to Lender in writing. Borrower has not entered into or granted any security agreements, or permitted
the filing or attachment of any security interests on or affecting any of the Collateral directly or indirectly securing repayment
of the indebtedness evidenced by this Agreement, that would be prior or that may in any way be superior to Lender's security interests
and rights in and to such Collateral.

 

AFFIRMATIVE COVENANTS. Borrower
covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will:

 

Notices of Claims and Litigation.
Promptly inform Lender in writing of (1) all material adverse changes in Borrower's financial condition, and (2) all existing and
all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor
which could materially affect the financial condition of Borrower or the financial condition of any Guarantor.

 

Right to Audit. Permit
Lender to examine and audit Borrower's books and records at any time and from time to time.

 

     

     

    

 

	RELATIONSHIP READY CREDIT AGREEMENT	 
	(Continued)	Page 3
	 	 

 

Financial Statements. Furnish
Lender with the following;

 

Additional Requirements.

 

Such other financial statements
and related information in such form and detail as may be satisfactory to Lender within thirty (30) days of Lender's request. For
the avoidance of doubt, Borrower agrees that all financial statements and other information required to be delivered to Lender
under this Agreement or any Related Document will be delivered for the most recent fiscal or calendar period (as applicable) ended
immediately prior to the date hereof and each fiscal or calendar period thereafter as required herein or in any Related Document.

 

All financial reports required
to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by
Borrower as being true and correct.

 

Insurance. Maintain fire
and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's
properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. In connection with all
policies covering the Collateral, Borrower will provide Lender with policies or certificates of insurance with such lender’s
loss payable or other endorsements as Lender may require.

 

Business Purpose. Use
all Advances solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing.

 

Operations. Maintain executive
and management personnel with substantially the same qualifications and experience as the present executive and management personnel;
provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable
and prudent manner.

 

Compliance with Governmental
Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities
applicable to the conduct of Borrower's properties, businesses and operations.

 

NEGATIVE COVENANTS.
Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written
consent of Lender:

 

Additional Financial Restrictions.

 

Liens and Encumbrances.
Create or permit to exist any liens, security interests or other encumbrances on any of Borrower's assets,

 

Continuity of Operations.
(1) Engage in any business activities substantially different than those in which Borrower is presently engaged, or (2) cease operations,
liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral
out of the ordinary course of business.

 

DEFAULT. Each of the
following shall constitute an event of default ("Event of Default") under this Agreement:

 

Payment Default. Borrower
fails to make any payment when due under this Agreement.

 

Other Defaults. Borrower
fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the
Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement
between Lender and Borrower.

 

Default in Favor of
Third Parties. Borrower defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any
other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability
to repay this Agreement or perform Borrower's obligations under this Agreement or any of the Related Documents.

 

False Statements. Any
warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Agreement or the
Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false
or misleading at any time thereafter.

 

Insolvency. The dissolution
or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower.

 

Creditor or Forfeiture Proceedings.
Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method,
by any creditor of Borrower or by any governmental agency against any collateral.

 

Events Affecting Guarantor.
Any of the preceding events occurs with respect to any Guarantor or any Guarantor dies or becomes incompetent, or revokes or disputes
the validity of, or liability under, any Guaranty of the indebtedness evidenced by this Agreement. In the event of a death, Lender,
at its option, may, but shall not be required to, permit the Guarantor's estate to assume unconditionally the obligations arising
under the guaranty in a manner satisfactory to Lender, and, in doing so, cure any Event of Default.

 

Change In Ownership. Any
change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

 

Adverse Change. A material
adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Agreement
is impaired.

 

Insecurity. Lender in
good faith believes itself insecure.

 

LENDER'S RIGHTS. If
any Event of Default shall occur, Lender may declare the entire unpaid principal balance on this Credit Line and all accrued unpaid
interest and all other amounts payable under this Agreement immediately due and payable. Except as may be prohibited by applicable
law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently.

  

JURY WAIVER. BORROWER HEREBY
WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING HEREUNDER OR IN CONNECTION HEREWITH TO THE
EXTENT PERMITTED BY APPLICABLE LAW.

 

MISCELLANEOUS PROVISIONS.
The following miscellaneous provisions are a part of this Agreement:

 

Amendments. This Agreement,
together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth
in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’ Fees;
Expenses. Borrower agrees to pay upon demand all of Lender's costs and expenses, including Lender's reasonable attorneys'
fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone
else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include
Lender's reasonable attorneys' fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys' fees
and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals,
and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may
be directed by the court.

 

     

     

    

 

	RELATIONSHIP READY CREDIT AGREEMENT	 
	(Continued)	Page 4
	 	 

 

General Provisions. Lender
may delay or forgo enforcing any of its rights or remedies under this Agreement without losing them. Borrower and any other person
who signs, guarantees or endorses this Agreement, to the extent allowed by law, waive presentment, demand for payment, and notice
of dishonor. Upon any change in the terms of this Agreement, and unless otherwise expressly stated in writing, no party who signs
this Agreement, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. The obligations
under this Agreement are joint and several.

 

Governing Law. This Agreement
will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of
New York without regard to its conflicts of law provisions.

 

Choice of Venue. If there
is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of New York County, State of New
York. Nothing herein shall affect the right of the Lender to bring any action or proceeding against the Borrower or its property
in the courts of any other jurisdiction.

 

Right of Setoff. To the
extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender and its subsidiaries
and affiliates (whether checking, savings, or some other account and whether evidenced by a certificate of deposit). This includes
all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not
include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender,
to the extent permitted by applicable law, to charge or setoff all sums owing under this Agreement against any and all such accounts,
and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights
provided in this paragraph.

 

Successors and Assigns.
All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower's
successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have
the right to assign Borrower's rights under this Agreement or any interest therein, without the prior written consent of Lender.

 

DEFINITIONS. The following
capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary,
all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the
singular shall include the plural, and the plural shall include the singular, as the context may require. Words and terms not otherwise
defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and
terms not otherwise defined in this Agreement shall have the meanings assigned to them in accordance with generally accepted accounting
principles as in effect on the date of this Agreement:

 

Advance. The word "Advance"
means a disbursement of funds made, or to be made, to Borrower or on Borrower's behalf under the terms and conditions of this Agreement.

 

GAAP. The word "GAAP"
means generally accepted accounting principles.

 

Guarantor. The word "Guarantor"
means any guarantor, surety, or accommodation party of any or all of the indebtedness evidenced by this Agreement.

 

Related Documents. The
words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties,
security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with this Agreement.

 

BORROWER:

 

	POLAR
                                         POWER, INC.	 	 	 
	 	 	 	 
	By:	/s/ Luis
    Zavala	 	By:	/s/ Arthur
    Sams
	 	Luis Zavala, Chief Financial Officer of Polar
    Power, Inc.	 	 	Arthur Sams, Chief Executive Officer & President
    of Polar Power, Inc.

  

 

LaserPro Ver. 15.4.10.D54 Copr D+H USA
Corporation 1997 2017 All Rights Reserved. - NY D: LASERPROGLOCFNPLESO FC TR 21500 PA-S

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