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Item 1.01 |
Entry into a Material Definitive Agreement |
Amended and Restated Secured
Convertible Note and Security Agreement
On June 17, 2022, Mullen Automotive
Inc. (the “Company”) entered into an Amended and Restated Secured Convertible Note and Security Agreement (the “A&R
Note”) with Esousa Holdings LLC, a New York limited liability company (“Esousa”). The A&R Note amends
and restates that certain promissory note dated July 23, 2020, entered into between the Mullen Technologies, Inc. (“Original
Borrower”) and DBI Lease Buyback Servicing LLC, a Delaware limited liability company (“DBI”) for a principal
amount of $23,831,553.98 (the “Original Note”). The Company had previously assumed all of the obligations of the Original
Borrower under the Original Note upon the completion of its business combination with Mullen Automotive, Inc. (“Mullen Automotive”),
in accordance with the terms of the Second Amended and Restated Agreement and Plan of Merger, dated as of July 20, 2021, as amended, by
and among the Company, Mullen Acquisition, Inc., Mullen Automotive, and the Original Borrower. Esousa purchased rights under the Original
Note from DBI immediately prior to entering into the A&R Note.
The A&R Note extends the maturity
date of the Original Note by two years, from July 23, 2022 to July
23, 2024. In addition, the A&R Note provides that Esousa may elect to convert all or any portion of the then-outstanding principal
balance of the A&R Note into that number of shares
of the common stock of the Company, as applicable, equal to the number obtained by dividing the outstanding principal balance of the
A&R Note to be so converted at a 5% discount to the lowest
daily volume-weighted average price in the 10 trading days prior to conversion based on the prevailing market value of shares of the common
stock of the Company as reported on Nasdaq at close on the date on which a written notice of conversion is delivered to the Company.
The
foregoing description of the A&R Note is qualified,
in its entirety, by reference to the A&R Note, a copy
of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference in response to this Item 1.01.
Letter Agreement
In connection with entering into
the A&R Note, the Company also entered into a letter agreement (the “Letter Agreement”), dated June 17, 2022, DBI
and Drawbridge Investments LLC (“Drawbridge”), pursuant to which, upon the terms and subject to the conditions contained
therein, (1) DBI and Drawbridge released the Company from its obligations under the A&R Note and related documents, except for such
obligations under the Original Note that were assigned by DBI for the benefit of Esousa, and (2) the Company shall grant Drawbridge (or
its designee) an option to purchase up to $25 million worth of shares of a yet to be created Series E Preferred Stock from the Company
(the “Series E Purchase Option”).
Pursuant to the terms of the Series
E Purchase Option, which shall be evidenced by way of a definitive option agreement, Drawbridge (or its designee) shall be entitled, at
its option, to purchase up to $25 million worth of shares of a yet to be created Series E Preferred Stock from the Company. The purchase
price per share of Series E Preferred Stock will be the lower of (x) the closing market price of the Company’s common stock on the
effective date of the Option Agreement for the Series E Preferred Stock and (y) the closing market price of the Company’s common
stock on the date shares of Series E Preferred Stock are issued by the Company in accordance with the terms of the Option Agreement. Shares
of Series E Preferred Stock will be convertible into shares of the Company’s common stock on a 1-to-1 basis, subject to adjustment
for stock splits and other events. Shares of Series E Preferred Stock may be purchased in one or more transactions with a minimum of $5,
000,000 per purchase, until December 31, 2024, at which point the Series E Purchase Option shall expire. The Company is obligated to file
a registration statement for the resale of the Company’s common stock issuable upon conversion of shares of Series E Preferred Stock
and shall use reasonable best efforts to obtain and maintain the effectiveness of such registration statement during the term of the Option
Agreement.
In connection with the exercise
of the Series E Purchase Option, Drawbridge (or its designee) will receive warrants to purchase three shares of common stock for every
share of Series E Preferred Stock purchased by Drawbridge (or its designee), which warrants will have terms and conditions, such as registration
rights, convertibility, dividends, anti-dilution protection, similar to those included in the purchase of the Company’s Series D
Preferred Stock. The warrants will have a term of five years from the date of grant and an exercise price equal to the applicable purchase
price for the shares of Series E Preferred Stock. The warrants will also permit cashless exercise to be calculated as a function of the
warrant’s Black-Scholes value plus an additional $1.25 per warrant exercised.
The
foregoing description of the Letter Agreement is qualified,
in its entirety, by reference to the Letter Agreement,
a copy of which is attached as Exhibit 10.2 to this Current Report on Form 8-K and is incorporated by reference in response to this Item
1.01.