06/04/2025 | Press release | Distributed by Public on 06/04/2025 04:01
Item 1.01 | Entry into a Material Definitive Agreement. |
Securities Purchase Agreements
On May 29, 2025 (the "Execution Date"), Mullen Automotive Inc. (the "Company") entered into two securities purchase agreements (each, a "Securities Purchase Agreement" and together, the "Securities Purchase Agreements"), with certain investors, pursuant to which upon the terms and subject to the conditions contained therein, the investors agreed to purchase upon execution 5% Original Issue Discount Secured Notes (the "Notes") convertible into shares of common stock, par value $0.001 per share (the "Common Stock"), and five-year warrants exercisable for shares of Common Stock (the "Warrants"). Pursuant to the first securities purchase agreement, the Company issued Notes in the aggregate principal amount of approximately $11.6 million and Warrants exercisable on a cash basis for 1,654,135 shares of Common Stock (the "$11M SPA"). Pursuant to the second securities purchase agreement, the Company issued Notes in the aggregate principal amount of approximately $2.8 million and Warrants exercisable on a cash basis for 387,969 shares of Common Stock (the "$2.8M SPA"). Unless stated otherwise, share amounts and prices are adjusted to reflect the 1:100 reverse stock split effected on June 2, 2025, and the terms summarized below apply to each Securities Purchase Agreement.
For a period beginning on the Execution Date and ending on the one year anniversary from the later of (i) the date a registration statement covering all registrable securities is declared effective or (ii) the date the Company has obtained Stockholder Approval (as defined below), the investors have investment rights to purchase from time to time additional Notes in the aggregate principal amount equal to their respective original investment and related Warrants on the same terms and conditions as the Notes and Warrants.
During the period commencing on the Execution Date and ending on the date immediately following the 90th day after the latest of: (i) the Execution Date, (ii) the date on which a registration statement (or registration statements) registering for resale all registrable securities has been declared effective by the Securities and Exchange Commission (the "SEC") and (iii) the date on which Stockholder Approval (as defined below) is obtained (the "Restricted Period"), the Company has agreed, with certain exceptions, not to directly or indirectly issue, offer, sell, or otherwise dispose of (or make any announcement) any equity security or any equity-linked or related security, any convertible securities, debt (with or related to equity), any preferred stock or any purchase rights. The Company also agreed not to enter into any fundamental, transaction, such as a merger, sale of more than 50% of the outstanding voting shares, sale of substantially all assets, or business combination, unless the successor entity assumes all of the obligations of the Company under the Notes and Warrants and the other transaction documents.
The Notes and Warrants are not convertible to the extent that the holder or any of its affiliates would beneficially own in excess of 9.9% of the Common Stock. Plus, the Notes and Warrants are not convertible to the extent the aggregate number of shares of Common Stock issued in connection with the conversion of all Notes and Warrants at any time exceeds 19.9% of the total number of shares of Common Stock outstanding or of the voting power of the Common Stock outstanding as of the Execution Date (the "Exchange Cap"), unless the Company obtains Stockholder Approval (as defined below) in compliance with Nasdaq Listing Rule 5635(d). The Company agreed to hold a meeting of its stockholders within 40 days of the Execution Date for the purpose of obtaining stockholder approval (the "Stockholder Approval") for the issuance of all of the shares issuable upon conversion of the Notes or exercise of the Warrants in excess of the Exchange Cap.
Description of the Notes
The Notes accrue interest at a rate of 15% per annum, have an original issue discount of 5% and mature four months from the date of issuance. As security for payment of the amounts due and payable under the Notes, the Company granted a continuing security interest in all of its right, title and interest in, its assets, whether owned, existing, acquired or arising and wherever located.
The outstanding principal and accrued but unpaid interest on the Notes may be converted by the holder into shares of Common Stock (the "Note Shares") at the lower of (i) $14.00, (ii) 95% of the closing sale price of the Common Stock on the date that the initial registration statement is declared effective, or (iii) 95% of the lowest daily volume weighted average price in the five trading days prior to such conversion date, provided, that the conversion price will not be less than $0.03 per share, not subject to adjustment.