TO ALL: look at David's Milestone Compensation Plan in Freely trading shares of common stock.
Form DEF 14A (June 24, 2022)
Description of Performance Stock Award Agreement
On April 29, 2022, the Compensation Committee unanimously approved the recommendation to the
board of directors, and on May 5, 2022, the board of directors approved, the grant of performance equity
awards to David Michery, the Company’s Chief Executive Officer, pursuant to a Performance Stock Award
Agreement (the “Award Agreement”). The Company believes that the grant of the equity pursuant to the
terms of the Award Agreement is in the best interests of the stockholders as it provides incentive for
Mr. Michery to achieve the Company’s business plans. Pursuant to the Award Agreement, Mr. Michery is
eligible to receive shares of Common Stock based on the achievement of milestones as described below
(“Milestones”), and within each Milestone the achievement of certain performance tranches (each, a
“Tranche”), with each Tranche representing a portion of shares of Common Stock that may be issued to
Mr. Michery upon achievement of such Tranche. Upon the achievement of each Tranche of one of the
Milestones and subject to Mr. Michery continuing as the Chief Executive Officer, the Company will issue
shares of Common Stock as specified in the Tranche. The Award Agreement and the issuance of the shares
of Common Stock pursuant to its terms are subject to stockholder approval.
Description of Milestones
Vehicle Delivery Milestones: For each vehicle delivery milestone that is satisfied within the
performance period specified, the Company will issue to Mr. Michery a number of shares of
Common Stock equal to 2% of Mullen’s then-current total issued and outstanding shares of Common
Stock: (i) Delivery of Mullen’s Class One Van to customers for a pilot program under the captured
fleet exemption by the end of December 2022; (ii) Procuring full USA certification and
homologation for the sale and delivery of its Class One Van by end of August 2023; (iii) Full USA
certification and homologation of the Dragonfly RS sports car by August 2024; (iv) Producing a
drivable prototype of its Mullen 5 vehicle for consumers to test by end of October 2023; and
(v) Producing a drivable prototype of its Mullen 5 RS High Performance vehicle for consumers to
test by end of January 2023.
Capital Benchmark Milestones: For each $100 million raised (a “Capital Tranche”), and subject to
an aggregate maximum of raised of $1.0 Billion in equity or debt financing between the date of the
Award Agreement and the end of July 2024, the Company will issue at number of shares of Common
Stock equal to 1% of Mullen’s then-current total issued and outstanding shares of Common Stock; as
of the date a Capital Tranche is achieved.
Additionally, if Mullen is included in the Russel Index, the
Company will issue to Mr. Michery a number of shares of Common Stock equal to 2% of Mullen’s
then-current total issued and outstanding shares as of the date Mullen is approved to be included on
the Russel Index.
Feature Milestone: If Mullen enters into an agreement with a manufacturer or provider of
equipment, accessory, feature or other product (collectively, “Feature”) by the end of 2023 that sets
Mullen or its vehicle apart from its competitors or that provides Mullen a first mover or first
disclosure advantage over its competitors for the Feature, the Company will issue to Mr. Michery a
number of shares of Common Stock equal to 5% of Mullen’s then-current total issued and
outstanding shares of Common Stock as of date the Feature milestone is achieved.
Distribution Milestone: If Mullen meets the vehicle distribution milestones set forth below by
entering into a joint venture or other distribution agreement by the end of 2024, the Company will
issue to Mr. Michery a number of shares of Common Stock equal to 2% of Mullen’s then-current
total issued and outstanding shares of Common Stock for each vehicle delivery milestone achieved:
(i) agreement with an established local, USA dealer or franchise network; and (ii) agreement with an
established Latin American or other non-USA based dealer or franchise network.
Effect of Issuance of Additional Shares of Common Stock
If this Proposal No. 4 set forth above in this proxy statement is approved by stockholders and if
Mr. Michery achieves any of the Milestones, the Company will be issuing additional shares of Common
Stock, increasing the number of shares of Common Stock outstanding. As a result, our stockholders will
incur dilution of their percentage ownership upon any issuance of shares of Common Stock pursuant to the
terms of the Award Agreement.
Since the number of shares to be issued will depend on the number of shares of common stock
outstanding at the time that a Milestone or Tranche is achieved and whether and to what extent a Milestone
or Tranche is achieved, we cannot predict the number of shares that will actually be issued. By way of
example only, however, 1%, 2% and 5% of 477,510,822 shares of Common Stock outstanding on June 2,
2022, would result in the issuance of 4,775,108 shares, 9,550,216 shares and 23,875,541 shares of Common
Stock, respectively. Plus, those amounts may be aggregate resulting in a larger amount of shares that may be
issued overall depending on how many of the Milestones and Tranches Mr. Michery accomplishes.
Issuance of shares of Common Stock pursuant to the terms of the Award Agreement will result in an
increase in the number of shares of our Common Stock outstanding, and, as a result, our current
stockholders will own a smaller percentage of outstanding shares of our Common Stock and will experience
a significant reduction in the percentage interests in voting power. Further, the issuance or resale of our
Common Stock could cause the market price of our Common Stock to decline.
Proposal to Approve Issuance of Additional Shares of Common Stock
Nasdaq Listing Rule 5635(c) requires us to obtain stockholder approval with respect to certain non-
public offerings involving the sale, issuance or potential issuance by Mullen of equity compensation.
Accordingly, we are seeking stockholder approval for the issuance of Common Stock to our Chief Executive
Officer pursuant to the terms of the Performance Award Agreement as set forth in this Proposal No. 4.
Consequences of Not Approving This Proposal
If we do not obtain stockholder approval at the Meeting, the Board may seek stockholder approval at a
