Item 1.01. Entry into a Material Definitive Agreement
On February 24, 2021,
LMP Automotive Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (as amended, the “Purchase
Agreement”) with the purchasers identified on the signature pages thereto (the “Purchasers”) pursuant to which
the Company agreed to sell to the Purchasers an aggregate of 20,100 shares (the “Shares”) of the Series A Convertible
Preferred Stock, par value $0.0001 per share, of the Company (“Series A Preferred Stock”), and warrants (the “Warrants”)
to purchase up to an aggregate of 861,429 shares of the common stock, par value $0.00001 per share, of the Company (“Common
Stock”), at a combined purchase price of $1,000 per Share and accompanying Warrants (the “Offering”). On February
25, 2021, the Company filed a Certificate of Designation of Preferences, Rights and Limitations (the “Certificate of Designation”),
setting forth the preferences, rights and limitations of the Series A Preferred Stock. Aggregate gross proceeds from the Offering
were approximately $20.1 million, prior to deducting placement agent fees and estimated offering expenses payable by the Company.
Net proceeds to the Company from the Offering, after deducting the placement agent fees and estimated offering expenses payable
by the Company, are expected to be approximately $18.6 million. The Offering closed on February 26, 2021.
The Series A Preferred
Stock is convertible into shares of the Company’s common stock at an initial conversion price of $17.50 per share, subject
to adjustment as set forth in the Certificate of Designation.
The terms of the Warrants
are as set forth in the form of Warrant attached as Exhibit 4.1 to this Current Report on Form 8-K. The Warrants have an exercise
price equal to $21.00, are immediately exercisable and are subject to customary anti-dilution adjustments for stock splits or dividends
or other similar transactions or as a result of subsequent equity issuances at effective prices lower than the then-current exercise
price. The Warrants will be exercisable for 5 years following the closing date. The Warrants are subject to a provision prohibiting
the exercise of such Warrants to the extent that, after giving effect to such exercise, the holder of such Warrant (together with
the holder’s affiliates, and any other persons acting as a group together with the holder or any of the holder’s affiliates),
would beneficially own in excess of 4.99% of the outstanding Common Stock (which may be increased to 9.99% on a holder by holder
basis).
The Company agreed
in the Purchase Agreement among other restrictions that, from the six month anniversary of the closing until ninety (90) days
after such date that the Shares may be sold without limitation pursuant to Rule 144 under the Securities Act of 1933, as amended
(the “Securities Act”), neither the Company nor any subsidiary thereof would (i) issue, enter into any agreement to
issue or announce the issuance or proposed issuance of any shares of Common Stock (or Common Stock equivalents) or (ii) file any
registration statement or any amendment or supplement thereto, except a registration statement on Form S-8. Further, until such
time as no Purchaser holds any of the Warrants, the Company is prohibited from effecting or entering into a variable rate transaction,
as set forth in the Purchase Agreement.
The chief executive
officer and lead independent director of the Company have entered into a lock-up agreement with the Company in connection with
the Offering covering the period from the date of the lock-up agreements until ninety (90) days after such date.
ThinkEquity, a division
of Fordham Financial Management, Inc. (the “Placement Agent”) acted as exclusive placement agent in connection with
the Offering pursuant to a Placement Agency Agreement between the Company and the Placement Agent dated February 24, 2021 (the
“Placement Agent Agreement”). The Placement Agent Agreement provides, among other things, that the Placement Agent
will receive a commission equal to seven percent (7%) of the aggregate purchase price paid by the Purchasers in the Offering.
The Placement Agent
Agreement and the Purchase Agreement contain customary representations and warranties, agreements and obligations, conditions to
closing and termination provisions. The representations, warranties and covenants contained in the Placement Agent Agreement Letter
and 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 the Placement Agent Agreement and the Purchase Agreement, and may be subject to limitations agreed upon by the
contracting parties.
The foregoing summaries
of the material terms of the Purchase Agreement, the Placement Agent Agreement, the form of Lock-Up Agreement, the Certificate
of Designation and the form of Warrant are not complete and are qualified in their entirety by reference to the full text thereof,
copies of which are filed herewith as Exhibits 10.1, 10.2, 10.3, 10.4, 3.1 and 4.1, respectively, and incorporated by reference
herein.