PRER14A 1 tm2317969-2_def14a.htm PRER14A tm2317969-2_def14a - block - 12.4062816s
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. 1)
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12
MULLEN AUTOMOTIVE INC.
(Name of registrant as specified in its charter)
N/A
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee paid previously with preliminary materials.

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a6(i)(1) and 0-11.

 
EXPLANATORY NOTE
This revised preliminary proxy statement (the “Revised Preliminary Proxy Statement”) amends the preliminary proxy statement and preliminary proxy card of Mullen Automotive Inc. filed with the Securities and Exchange Commission on June 13, 2023. The Revised Preliminary Proxy Statement is being filed to amend the reverse stock split ratio under Proposal 3.
 

 
MULLEN AUTOMOTIVE INC.
1405 Pioneer Street
Brea, California 92821
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on August [3], 2023
9:30 A.M. (Pacific Daylight Time)
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders (the “Meeting”) of MULLEN AUTOMOTIVE INC. (“Mullen,” “we,” “our,” “us,” or the “Company”), a Delaware corporation, to be held on August [3], 2023 at 9:30 a.m. Pacific Standard Time, in a virtual meeting format. You will be able to attend the meeting and vote online during the Meeting by accessing www.virtualshareholdermeeting.com/MULN2023 and follow the instructions provided to you with these proxy materials.
The annual meeting of stockholders is being held for the following purposes:
(1)
Proposal 1 — To elect two Class II Directors to serve for a three-year term ending as of the annual meeting in 2026;
(2)
Proposal 2 — To approve amendments to the Company’s 2022 Equity Incentive Stock Plan (the “2022 Plan”) to increase the number of shares of Common Stock authorized for issuance under the 2022 Plan by 52,000,000 shares;
(3)
Proposal 3 — To approve the amendment of the Company’s Second Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s outstanding common stock at an exchange ratio between 1-for-2 to 1-for-100, as determined by the Company’s Board of Directors;
(4)
Proposal 4 — To approve the conversion of Mullen Automotive Inc. from a Delaware Corporation to a Maryland Corporation;
(5)
Proposal 5 — To approve, on a non-binding advisory basis, the compensation of our named executive officers;
(6)
Proposal 6 — To select, on a non-binding advisory basis, whether future advisory votes on the compensation of our named executive officers should be every one, two or three years;
(7)
Proposal 7 — To approve, for purposes of complying with Nasdaq Listing Rule 5635(c), of the issuance of shares of Common Stock to our Chief Executive Officer pursuant to a Performance Stock Award Agreement;
(8)
Proposal 8 — To approve, for purposes of complying with Nasdaq Listing Rule 5635(d), amendments to a securities purchase agreement to provide for the issuance of $30 million in additional shares of Common Stock and warrants exercisable into shares of Common Stock, and any future adjustments of the exercise price of the warrants;
(9)
Proposal 9 — To ratify the appointment of RBSM LLP as the independent registered public accounting firm of the Company for the fiscal year ending September 30, 2023;
(10)
Proposal 10 — To approve the adjournment of the Meeting from time to time, to a later date or dates, if necessary or appropriate, under certain circumstances, including for the purpose of soliciting additional proxies in favor one or more of the foregoing proposals, in the event the Company does not receive the requisite stockholder vote to approve such proposal(s) or establish a quorum; and
(11)
Proposal 11 — To transact such other business as may properly come before the Meeting or any adjournments or postponements thereof.
 

 
The Board of Directors has fixed the close of business on June 22, 2023 as the record date for the Meeting and only holders of shares of record at that time will be entitled to vote and participate at the Meeting and any postponements, adjournments or continuations thereof. A list of stockholders will be available at our offices at 1405 Pioneer Street, Brea, CA 92821 for a period of at least 10 days prior to the Meeting.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on August [3], 2023: The 2023 Proxy Statement and the Annual Report to Stockholders for the fiscal year ended September 30, 2022 are available at www.proxyvote.com
You are cordially invited to attend the Meeting. However, if you do not expect to attend or if you plan to attend but desire the proxy holders to vote your shares, please promptly date and sign your proxy card and return it in the enclosed postage paid envelope or you may also instruct the voting of your shares over the Internet or by telephone by following the instructions on your proxy card. Voting by written proxy, over the Internet, or by telephone will not affect your right to vote in person in the event you find it convenient to attend.
If you have any questions or need assistance voting your shares, please contact our proxy solicitor:
Okapi Partners LLC
1212 Avenue of the Americas, 17th Floor
New York, NY 10036
Toll-Free Phone Number: (855) 305-0855
Email: info@okapipartners.com
By order of the Board of Directors
David Michery
Date:            , 2023 Chief Executive Officer
 

 
MULLEN AUTOMOTIVE INC.
1405 PIONEER STREET
BREA, CALIFORNIA 92821
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
AUGUST [3], 2023 AT 9:30 A.M. (PACIFIC DAYLIGHT TIME)
This proxy statement is being furnished by Mullen Automotive Inc., a Delaware corporation (the “Company”), in connection with the annual meeting of stockholders to be held on August [3], 2023, at 9:30 a.m. (Pacific Daylight Time) in a virtual meeting format at www.virtualshareholdermeeting.com/MULN2023.
We anticipate that this proxy statement and a full set of proxy materials relating to our Meeting be mailed to our stockholders commencing on or about June 30, 2023.
The purpose of the Meeting is to seek stockholder approval of the following proposals:
(1)
Proposal 1 — To elect two Class II Directors to serve for a three-year term ending as of the annual meeting in 2026 ;
(2)
Proposal 2 — To approve amendments to the Company’s 2022 Equity Incentive Stock Plan (the “2022 Plan”) to increase the number of shares of Common Stock authorized for issuance under the 2022 Plan by 52,000,000 shares;
(3)
Proposal 3 — To approve the amendment of the Company’s Second Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s outstanding common stock at an exchange ratio between 1-for-2 to 1-for-100, as determined by the Company’s Board of Directors;
(4)
Proposal 4 — To approve the conversion of Mullen Automotive Inc. from a Delaware Corporation to a Maryland Corporation;
(5)
Proposal 5 — To approve, on a non-binding advisory basis, the compensation of our named executive officers;
(6)
Proposal 6 — To select, on a non-binding advisory basis, whether future advisory votes on the compensation of our named executive officers should be every one, two or three years;
(7)
Proposal 7 — To approve, for purposes of complying with Nasdaq Listing Rule 5635(c), of the issuance of shares of Common Stock to our Chief Executive Officer pursuant to a Performance Stock Award Agreement;
(8)
Proposal 8 — To approve, for purposes of complying with Nasdaq Listing Rule 5635(d), amendments to a securities purchase agreement to provide for the issuance of $30 million in additional shares of Common Stock and warrants exercisable into shares of Common Stock, and any future adjustments of the exercise price of the warrants;
(9)
Proposal 9 — To ratify the appointment of RBSM LLP as the independent registered public accounting firm of the Company for the fiscal year ending September 30, 2023;
(10)
Proposal 10 — To approve the adjournment of the Meeting from time to time, to a later date or dates, if necessary or appropriate, under certain circumstances, including for the purpose of soliciting additional proxies in favor one or more of the foregoing proposals, in the event the Company does not receive the requisite stockholder vote to approve such proposal(s) or establish a quorum; and
(11)
Proposal 11 — To transact such other business as may properly come before the Meeting or any adjournments or postponements thereof.
 
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Internet Availability of Proxy Materials
Pursuant to rules adopted by the Securities and Exchange Commission (“SEC”), we are providing access to our proxy materials over the Internet. The proxy statement and the Annual Report to Stockholders for the fiscal year ended September 30, 2022 are available at www.proxyvote.com.
Solicitation of Proxies
Our board of directors (“Board”) is soliciting the enclosed proxy. We will bear the cost of this solicitation of proxies. Solicitations will be made by mail. We have retained Okapi Partners LLC to assist in the solicitation of proxies for a fee of approximately $15,000, plus reimbursement of related expenses. In addition to solicitation by mail and by Okapi Partners LLC, our directors, officers and employees may solicit proxies on behalf of the Company, without additional compensation, by telephone, facsimile, mail, on the Internet or in person. We may reimburse banks, brokerage firms, other custodians, nominees and fiduciaries for reasonable expenses incurred in sending proxy materials to beneficial owners of our stock.
Annual Report
Our annual report to stockholders for the fiscal year ended September 30, 2022, will be concurrently provided to each stockholder at the time we send this proxy statement and the enclosed annual report is not to be considered a part of the proxy-soliciting material.
Stockholders may also request a free copy of our Form 10-K for the fiscal year ended September 30, 2022 by writing to Secretary, Mullen Automotive Inc., 1405 Pioneer Street, Brea, California 92821.
Alternatively, stockholders may access our 2022 Form 10-K on the Company’s website located at https://investors.mullenusa.com/financials#sec. We will also furnish any exhibit to our 2022 Form 10-K, if specifically requested.
Voting Requirements & Procedures
Your vote is important. If you hold your shares as a record holder, your shares can be voted at the Meeting only if you are present in person at the Meeting or your shares are represented by proxy. Even if you plan to attend the Meeting, we urge you to vote by proxy in advance. You may vote your shares by using one of the following methods:
(1)
you may vote by mail by marking your proxy card, and then date, sign and return it in the postage-paid envelope provided; or
(2)
you may vote electronically by accessing the website located at www.proxyvote.com and following the on-screen instructions; or
(3)
you may vote by using a telephone at 1 (800) 690-6903 and following the voting instructions.
Please have your proxy card in hand when going online. If you instruct the voting of your shares electronically or by telephone, you do not need to return your proxy card.
If you hold your shares beneficially in “street name” through a nominee (such as a bank or stock broker), then the proxy materials are being forwarded to you by the nominee and you may be able to vote by the Internet as well as by mail based on the instructions you receive from your nominee. You should follow the instructions you receive from your nominee to vote these shares in accordance with the voting instructions you receive from your nominee. If you are a stockholder who owns shares through a broker and you intend to vote at the Meeting, you must obtain a legal proxy from the bank, broker or other holder of record of your shares to be entitled to vote those shares in person at the Meeting.
Record Date; Voting
Only holders of record of our common stock, par value $0.001 per share (“Common Stock”), our Series A Preferred Stock, par value $0.001 per share (“Series A Preferred Stock”), Series B Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”), Series C Preferred Stock, par value $0.001 per
 
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share (“Series C Preferred Stock”), and Series D Preferred Stock, par value $0.001 per share (“Series D Preferred Stock and collectively, the “Preferred Stock”), at the close of business on June 22, 2023 (the “Record Date”) are entitled to notice of and to vote at the Meeting and any adjournments or postponements thereof. Stockholders may not cumulate their votes.
As of the Record Date, the following shares were issued and outstanding with the number of votes indicated:
Class
Number of Shares
Votes/Share
Number of Votes
Common Stock
[263,279,263] One/share [263,279,263]
Series A Preferred Stock
[1,037] 1,000/share [1,037,000]
Series B Preferred Stock
0 One/share voting on an as-converted basis 0
Series C Preferred Stock
[1,210,056] One/share voting on an as-converted basis [48,403]
Series D Preferred Stock
[363,097] One/share only on the Conversion Proposal [363,097] votes only on the Conversion Proposal
Common Stock.   Holders of our Common Stock are entitled to one vote for each share of Common Stock held of record at the close of business on the Record Date.
Series A Preferred Stock.   Holders of our Series A preferred stock (“Series A Preferred”) are entitled to one thousand (1,000) votes for each share of Series A Preferred held of record on the Record Date.
Series B Preferred Stock and C Preferred Stock.   Holders of our Series B preferred stock (the “Series B Preferred”) and our Series C preferred stock (the “Series C Preferred”) are entitled to one vote for each share of Common Stock into which such Series B Preferred and/or Series C Preferred, as applicable, may be converted on the Record Date, and each holder thereof is entitled to vote with the Common Stock on such as-converted-to-common-stock basis. There are no shares of Series B Preferred outstanding as of the Record Date.
Series D Preferred Stock.   Holders of our Series D Preferred Stock par value $0.001 per share (the “Series D Preferred Stock”) have no voting rights except in a liquidation event, issuance of equity security having a preference over the Series D Preferred Stock, amendment of the Company’s Certificate of Incorporation or bylaws that adversely affect the rights of the Series D Preferred Stock, corporate dissolution or bankruptcy, as set forth in Section 8 of the Certificate of Designation for Series D Preferred Stock. To the extent the holder of a share of Series D Preferred Stock is entitled to vote on a matter pursuant to Section 8, then the holder of each share of Series D Preferred Stock has the right to one vote for each share.
Voting Power of Chief Executive Officer.   As of the Record Date, David Michery, our Chief Executive Officer, directly owned [4,342,265] shares of the Company’s Common Stock and had no economic interest in unvested restricted stock unit awards or other convertible securities. Based on [263,279,263] shares of the Company’s Common Stock outstanding on June 22, 2023, Mr. Michery has an economic interest in approximately [1.65%] of the outstanding shares of the Company’s Common Stock.
In addition, in connection with the business combination with Net Element, Inc., Mr. Michery entered into voting agreements with certain holders of the Company’s securities (the “Voting Agreements”) pursuant to which such holders agreed to vote as directed by Mr. Michery, and also granted Mr. Michery an irrevocable proxy, at any annual or special meeting of stockholders or through the solicitation of a written consent of stockholders (but in some cases, at meetings at which an election of directors of the Company or any proposal to approve a change of control of the Company, which includes a merger, sale or other disposition of the securities of the Company or all or substantially all of its assets, is presented). The Voting Agreements have a term of three years or longer.
As of the Record Date, Mr. Michery has the following shares over which he has voting power pursuant to Voting Agreements: (a) [4,342,265] shares of Common Stock, (b) [4,148] shares of Common Stock issuable upon conversion of [1,037] shares of Series A Preferred Stock, (c) [48,403] shares of Common Stock issuable upon conversion of Series C Preferred Stock, and (d) [14,524] shares of Common Stock issuable
 
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upon conversion of Series D Preferred Stock, and pursuant to the terms of the Voting Agreements, Mr. Michery has voting power over approximately [2.06%] of the outstanding shares of the Company’s stock with regard to the matters covered by the Voting Agreements.
Mr. Michery will not exercise his proxies pursuant to the Voting Agreements on any of the proposals described herein. Furthermore, Mr. Michery will abstain from voting on Proposal 4 — the Conversion Proposal and Proposal 7 — the proposal as required by Nasdaq listing rule regarding the issuance of common stock pursuant a performance stock award agreement.
Quorum
Pursuant to our bylaws, the presence, in person or by proxy, of holders of at least 33 1/3% of our outstanding capital stock entitled to vote at the Meeting will constitute a quorum for the transaction of business. In addition, because Proposal 4 requires separate class votes of each of the Series A Preferred Stock, Series C Preferred Stock and Series D Preferred stock, the presence, in person or by proxy, of the holders of a majority of the outstanding shares of each such series will constitute a quorum entitled to take action with respect to such votes on Proposal 4. Abstentions and broker non-votes will be considered present and entitled to vote for the purpose of determining the presence of a quorum. If a quorum is not present at the Meeting, we expect that the meeting will be adjourned to solicit additional proxies. If you are a stockholder of record, your shares will be counted towards the quorum only if you submit a valid proxy or vote in person at the Meeting.
Counting of Votes
If a proxy in the accompanying form is duly executed and returned, the shares represented by the proxy will be voted as directed. All properly executed proxies delivered pursuant to this solicitation, and not revoked, will be voted at the Meeting in accordance with the directions given. If you sign and return your proxy card without giving specific voting instructions, your shares will be voted as follows:
(1)
FOR the Class II nominees to our Board of Directors;
(2)
FOR approval of amendment of the Company’s 2022 Equity Incentive Stock Plan (the “2022 Plan”) to increase the number of shares of Common Stock authorized for issuance under the 2022 Plan by 52,000,000 shares;
(3)
FOR approval of amendment of the Company’s Second Amended and Restated Certificate of Incorporation to effect a reverse stock split of the Company’s outstanding common stock at an exchange ratio between 1-for-2 to 1-for-100, inclusive, as determined by the Company’s Board of Directors;
(4)
FOR approval of the conversion of Mullen Automotive Inc. from a Delaware Corporation to a Maryland Corporation;
(5)
FOR approval, on a non-binding advisory basis, of the compensation of our named executive officers;
(6)
FOR approval, on a non-binding advisory basis, that the future advisory votes on the compensation of our named executive officers be every three years;
(7)
FOR approval, for purposes of complying with Nasdaq Listing Rule 5635(c), of the issuance of shares of Common Stock to our Chief Executive Officer pursuant to a Performance Stock Award Agreement;
(8)
FOR approval, for purposes of complying with Nasdaq Listing Rule 5635(d), amendments to a securities purchase agreement to provide for the issuance of $30 million in additional shares of Common Stock and warrants exercisable into shares of Common Stock, and any future adjustments of the exercise price of the warrants;
(9)
FOR ratification of RBSM LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2023; and
 
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(10)
FOR approval of the adjournment of the Meeting from time to time, to a later date or dates, if necessary or appropriate, under certain circumstances, including for the purpose of soliciting additional proxies in favor one or more of the foregoing proposals, in the event the Company does not receive the requisite stockholder vote to approve such proposal(s) or establish a quorum.
With respect to any other item of business that may properly come before the Meeting, the proxy holders may vote the proxy in their discretion.
Representatives of Broadridge Financial Solutions will assist us in the tabulation of the votes.
Abstentions and Broker Non-Votes
An abstention is (i) the voluntary act of not voting by a stockholder who is present at a meeting and entitled to vote, or (ii) selecting, or authorizing a proxy holder to select, “abstain” with respect to a proposal on a ballot submitted at the Meeting. A broker “non-vote” occurs when a proxy submitted by a broker that does not indicate a vote for some or all of the proposals because the broker does not have discretionary voting authority on certain types of proposals that are non-routine matters and has not received instructions from its customer regarding how to vote on a particular proposal. Brokers that hold shares of common stock in “street name” for customers that are the beneficial owners of those shares may generally vote on routine matters. However, brokers generally do not have discretionary voting power (i.e., they cannot vote) on non-routine matters without specific instructions from their customers. Proposals are determined to be routine or non-routine matters based on the rules of the various regional and national exchanges of which the brokerage firm is a member.
Refer to each proposal for a discussion of the effect of abstentions and broker non-votes.
Revocability of Proxy
Any proxy given may be revoked at any time prior to its exercise by notifying the Secretary of Mullen Automotive Inc. in writing of such revocation, by duly executing and delivering another proxy bearing a later date (including an Internet or telephone vote), or by attending the Meeting and voting in person.
Interest of Executive Officers and Directors
None of the Company’s executive officers or directors has any interest in any of the matters to be acted upon at the Meeting, except (i) to the extent that the executive officers and directors are eligible to receive awards under the 2022 Equity Incentive Plan, (ii) to the extent that the executive officers are receiving compensation from the Company; (iii) with respect to each director, to the extent that a director is named as a nominee for election as a Class II director to the Board, (iv) with respect to David Michery, to the extent that he will receive the approved equity awards; and (v) the directors’ and officers’ ownership of shares of our Common Stock or securities exercisable or convertible into share of Common Stock, in any of the matters to be acted upon at the Meeting.
Householding
“Householding” is a program, approved by the SEC, which allows companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports by delivering only one package of stockholder proxy materials to any household at which two or more stockholders reside. If you and other residents at your mailing address own shares of our common stock in street name, your broker or bank may have notified you that your household will receive only one copy of our proxy materials. Once you have received notice from your broker that they will be “householding” materials to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account. If you hold shares of our common stock in your own name as a holder of record, “householding” will not apply to your shares.
 
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Adjournment of Meeting
If a quorum is not present or represented, our bylaws permit the stockholders present in person or represented by proxy to adjourn the meeting, without notice other than announcement at the meeting, until a quorum shall be present or represented. We may also adjourn to another time or place (whether or not a quorum is present). Notice need not be given of the adjourned meeting if the time, place, if any, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, are announced at the Meeting at which the adjournment is taken or are displayed, during the time scheduled for the Meeting, on the Meeting website (that is, the same electronic network used to enable stockholders and proxy holders to participate in the meeting by means of remote communication). At the adjourned meeting, the Company may transact any business which might have been transacted at the Meeting. If the adjournment is for more than 30 days, or after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting.
 
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PROPOSAL 1
ELECTION OF CLASS II DIRECTORS
Board Size and Structure
Our authorized board of directors consists of seven (7) members. In accordance with the terms of our second amended and restated certificate of incorporation and amended and restated bylaws, our board of directors is divided into three classes, Classes I, II and III, each to serve a three-year term, except for the directors’ initial terms. The Class I directors, David Michery, Mary Winter and Ignacio Novoa, will be up for reelection at the 2025 annual meeting of stockholders, and the Class III directors, William Miltner and John Andersen, will be up for reelection at the 2024 annual meeting of stockholders. The Class II directors are Kent Puckett and Mark Betor, and are up for reelection at this 2023 annual meeting of stockholders.
At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following the election. We are nominating two (2) Class II directors listed below for re-election.
Nominees for Election
At the Meeting, two nominees are to be elected as the Class II directors. If re-elected, each of these two nominees will serve on our Board until the 2026 annual meeting, or until his or her successor is duly elected and qualified in accordance with our Certificate of Incorporation and amended and restated bylaws, or his or her earlier death, resignation or removal. All of the nominees are currently serving as directors. No proxy may vote for more than the two nominees for Class II director.
The following table sets forth the names and ages of our Class II director nominees:
Name
Age
Title
Kent Puckett
59
Director
Mark Betor
67
Director
Each nominee has consented to being named as a nominee in this proxy statement and has indicated his availability and willingness to serve if elected. In the event that any nominee becomes unavailable or unable to serve as a director, prior to the voting, the proxy holders will refrain from voting for the unavailable nominee and will vote for a substitute nominee in the exercise of their best judgment, or the Board may determine to reduce the size of the Board to the number of nominees available.
Directors are nominated by our Board based on the recommendations of the Nominating and Governance Committee. As discussed elsewhere in this proxy statement, in evaluating director nominees, the Nominating and Governance Committee considers characteristics that include, among others, integrity, business experience, financial acumen, leadership abilities, familiarity with our businesses and businesses similar or analogous to ours, and the extent to which a candidate’s knowledge, skills, background and experience are already represented by other members of our Board. You can find information about director nominees below under the section “Board of Directors and Executive Officers.”
Assuming the nominees are elected, we will have seven directors serving as follows:
Class I Directors: David Michery, Ignacio Novoa and Mary Winter Term expires at our 2025 annual meeting of stockholders.
Class II Directors : Kent Puckett and Mark Betor Term expires at our 2026 annual meeting of stockholders.
Class III Directors: William Miltner and John Andersen Term expires at our 2024 annual meeting of stockholders.
Vote Required; Board of Directors Recommendation
You may vote in favor of any or all of the nominees or you may also withhold your vote as to any or all of the nominees. The affirmative vote of a plurality of all of the votes present in person or represented by
 
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proxy and entitled to vote at the Meeting is necessary for the election of the Class II directors, assuming a quorum is present. “Plurality” means that the nominees receiving the largest number of votes cast are elected as directors up to the maximum number of directors to be elected at the meeting. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the nominees. If you hold your shares in “street name” and you do not instruct your broker how to vote in the election of directors, a broker non-vote will occur and, no votes will be cast on your behalf. It is therefore critical that you cast your vote if you want it to count in the election of directors. Withheld votes will be excluded entirely from the vote and will have no effect on the outcome. Broker non-votes will not be counted as votes cast and will have no effect on the result of the vote although they will be considered present for the purpose of determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES FOR CLASS II DIRECTORS.
 
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PROPOSAL 2
APPROVAL OF AMENDMENT TO THE 2022 EQUITY INCENTIVE PLAN
OF MULLEN AUTOMOTIVE INC.
General
We are asking stockholders to approve an amendment (the “Amendment”) to the Mullen Automotive Inc. 2022 Equity Incentive Plan (the “2022 Plan”), which Amendment was adopted by our Board of Directors (the “Board” on June 8, 2023, subject to such stockholder approval. The Amendment increases the maximum aggregate number of shares of common stock and stock equivalents available for the grant of awards under the 2022 Plan by an additional 52,000,000 shares of Common Stock (not subject to adjustment for any decrease or increase in the number shares of common stock resulting from a stock spilt, reverse stock split, recapitalization, combination, reclassification, the payment of a stock dividend on the Common Stock or any other decrease in the number of such shares of Common Stock effected without receipt of consideration by the Company). Except for this increase in the number of shares available for awards, the 2022 Plan otherwise remains materially unchanged by the Amendment. A copy of the 2022 Plan, with the proposed to be amendment, is attached to this proxy statement in Appendix A.
Prior to the Amendment, following an 1:25 reverse stock split of the Company’s Common Stock that was effected in May 2023,only [373,482] shares remained available for awards under the 2022 Plan as of June 22, 2023. The Amendment was adopted by our Board (i) in order to recognize and provide equity incentives to continue our strong growth and performance, and (ii) to continue to have awards available for grant to our employees, directors, and third party service providers consistent with the factors described in the Executive Compensation section in this Proxy Statement. Those factors include: the individual’s position and scope of responsibility; the vesting period (and thus, retention value) remaining on the grantee’s existing options; the grantee’s ability to affect profitability and stockholder value; the grantee’s historic and recent job performance; equity compensation for similar positions at comparable companies; and the value of stock options in relation to other elements of total compensation.
We believe that a cost-effective and competitive equity compensation program that includes awards that have not yet vested is essential for recruiting, motivating, and retaining talented employees, including our executive managers and named executive officers. For this reason, combined with the other factors listed above, our Board approved the Amendment on June 8, 2023.
As required by the applicable Nasdaq rules, the Amendment will not become effective unless it is approved by our stockholders.
Key Considerations
The following paragraphs include additional information to help assess the potential dilutive impact of awards under the 2022 Plan.
The 52,000,000 shares of Common Stock requested to be provided under the Amendment in this Proposal 2 represent [19.75]% of the [263,279,263] issued and outstanding shares as of the Record Date, June 22, 2023.
Our Board believes the additional 52,000,000 shares of Common Stock to be made available for grants of awards under the Amendment represents reasonable potential equity dilution and provides management with an appropriate equity plan with which to satisfactorily align the incentives of our employees, directors and other eligible participants to increase the value of our company for all stockholders.
The inclusion of this information in this Proxy Statement should not be regarded as an indication that the assumptions used to determine the number of shares will be predictive of actual future equity grants. These assumptions are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve risks and uncertainties that could cause actual outcomes to differ materially from those in the forward-looking statements, including our ability to attract and retain talent, achievement of
 
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performance metrics with respect to certain equity-based awards, the extent of option exercise activity, and others, including those described in our Form 10-K for the year ended September 30, 2022.
Highlights of the Amendment
The Amendment increases the maximum aggregate number of shares of stock and stock equivalents authorized for issuance under the 2022 Plan by 52,000,000 shares of Common Stock, subject to stockholder approval of the Amendment to the 2022 Plan.
As of June 22, 2023, following an 1:25 reverse stock split of the Company’s Common Stock that was implemented in May 2023 and excluding the effects of the Amendment, approximately [373,482] shares of stock remain available for future grants of awards under the 2022 Plan, calculated as follows:
Shares authorized for issuance under the 2022 Plan following an 1:25 reverse stock split of the
Company’s Common Stock that was implemented in May 2023, as of June 22, 2023
7,000,000
Shares issued and/or subject to awards granted under the 2022 Plan, as of June 22, 2023
[6,626,518]
If stockholders approve the Amendment, [52,373,482] shares of stock will be available for new grants under the 2022 Plan, as amended.
Summary of the 2022 Equity Incentive Plan
The 2022 Plan, as amended by the Amendment, contains the following important features:

Repricing of stock options and stock appreciation rights is prohibited unless stockholder approval is obtained.

Stock options and stock appreciation rights must be granted with an exercise price that is not less than 100% of the fair market value on the date of grant.

The 2022 Plan has a ten-year term.

If an award expires unexercised, or is forfeited, canceled, reacquired by us at cost, satisfied without issuance of stock or payment of cash or is otherwise terminated without being exercised, the unvested or cancelled shares will be returned to the available pool of shares for future awards.
Administration.   The 2022 Plan is administered by the Compensation Committee of our Board. Subject to the provisions of the 2022 Plan, the Compensation Committee has full power and authority to select the participants to whom awards will be granted, to determine (and modify) the specific terms and conditions of each award, including the conditions for the vesting, performance goals and exercisability of the award, and to interpret the 2022 Plan and adopt, amend, or rescind rules, procedures, agreements, and forms relating to the 2022 Plan.
Eligibility.   Employees, directors, and third party service providers are eligible to receive awards, although third party service providers and outside directors are not eligible for incentive stock options. The Compensation Committee has the discretion to select the employees, directors, and third party service providers to whom awards will be granted. As of June 9, 2023, we had approximately 200 employees, 4 non-employee directors and 10 consultants (including Ignacio Novoa and William Miltner) who were eligible to participate in the 2022 Plan. The actual number of individuals or entities who will receive awards cannot be determined in advance because the Compensation Committee has the discretion to select the award recipients.
Types of Awards.   The following is a brief summary of the types of awards that may be granted:
Stock Options.   A stock option (either an incentive stock option or a non-statutory stock option) entitles the participant to purchase shares of our common stock at specified times at an exercise price set on the grant date. A participant has no rights as a stockholder with respect to any shares covered by the option until the option is exercised by the participant and shares are issued by us. At the time of grant, the Compensation Committee will determine such matters as: (a) whether the award will be an incentive stock option or a non-statutory stock option; (b) the number of underlying shares; (c) the exercise price, which
 
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may not be less than 100% of the fair market value of a share on the grant date; (d) the vesting schedule; and (e) the term of the option, which may not exceed 10 years from the grant date.
Stock Appreciation Right (“SAR”).   An SAR is an award entitling the participant to receive cash or shares, or a combination thereof, with a value equal to any increase in the value of our shares from the date of grant to the date of exercise. The amount of the award to be paid on an exercise date is determined by multiplying the number of shares for which the SAR is exercised by the excess of the fair market value of a share on the date of exercise over the per share exercise price. For cash-settled SARs, the participant will have no rights as a stockholder. For stock-settled SARs, the participant will have no rights as a stockholder with respect to any shares covered by the SAR until the award is exercised by the participant and we issue the shares. At the time of grant, the Compensation Committee will determine such matters as: (a) the number of shares subject to the award; (b) whether the award will be settled in cash, shares, or a combination of both; (c) the exercise price, which may not be less than 100% of the fair market value of a share on the grant date; (d) the vesting schedule; and (e) the term of the SAR. A SAR may be granted independently or in combination with a related stock option. The term of an SAR may not exceed 10 years from the grant date.
Restricted Stock and Restricted Stock Units.   A restricted stock award is an award to the participant of shares of our stock, which may be subject to restrictions on sale or transfer and/or recoverable by us if specified conditions are not met. A restricted stock unit is an award entitling the participant to receive shares or the cash equivalent of shares at a future date, subject to restrictions. In either case, the lapse of these restrictions may be based on continuing employment (or other business relationship) with us and our subsidiaries and/or achievement of performance goals. At the time of grant, the Compensation Committee will determine such matters as: (a) the number of shares subject to the award; (b) the purchase price or consideration (if any) for the shares; (c) the restrictions placed on the shares; (d) the date(s) when the restrictions placed on the shares will lapse or the performance period during which the achievement of the performance goals will be measured; and (e) in the case of restricted stock units, whether the award will be paid in shares or the cash equivalent of the value of shares. During the period that the restrictions are in place, a participant granted restricted stock will have the rights of a stockholder, including voting and dividend rights, but not the right to sell or transfer the shares, and subject to the obligation to return the share under specified circumstances. A participant granted restricted stock units does not have stockholder rights until shares are issued, if at all.
Performance-Based Awards.   Any of the awards under the 2022 Plan may be granted as performance-based awards. As determined by the Compensation Committee, the performance goals applicable to an award may be based upon one or more of the following performance criteria: revenue; gross profit or margin; operating profit or margin; earnings before or after interest, taxes, depreciation, and/or amortization; net earnings or net income (before or after taxes); earnings per share; share price (including, but not limited to, growth measures and total stockholder return); cost reduction or savings; return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales or revenue); cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment); productivity ratios or other metrics; performance against budget; market share; working capital targets; economic value added (net operating profit after tax minus the sum of capital multiplied by the cost of capital); financial ratio metrics; and organizational/transformation metrics. These measures may be measured against our performance or other benchmarks. The Compensation Committee may provide in any such award that any evaluation of performance may include or exclude certain specified events that occur during a performance period.
Limited Transferability of Awards.   Awards generally may not be sold or transferred, other than by will or by the applicable laws of descent and distribution or pursuant to a domestic relations order entered by a court of competent jurisdiction.
Effect of Change in Control and other Corporate Transactions.   In the event of (i) a Change in Control with respect to us as defined in the 2022 Plan, including certain changes in ownership or Board composition, specified mergers, or sale of all or substantially all of our assets or (ii) and other merger, consolidation, sale of substantially all of our assets or other reorganization (collectively, (i) and (ii) are referred to as “Covered Transactions” in the 2022 Plan), any outstanding awards that are not assumed by the successor or substituted with an equivalent award (or if we are the surviving company in the transaction, any awards for which the transaction does not result in a continuation of such award) will be fully vested and exercisable,
 
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including shares that would not otherwise have been vested and exercisable, and shall remain exercisable for a period of fifteen (15) days from the date of notice from the Compensation Committee to the participant of such acceleration of vesting, and the award shall terminate at the end of such period.
The 2022 Plan grants the Compensation Committee authority to provide that any award shall become fully vested and exercisable in any Covered Transaction, including in the event of a participant’s termination of service without “Cause” or for “Good Reason” ​(as such terms are defined in the 2022 Plan) within a designated period (not to exceed 18 months) following the effective date of any Covered Transaction. All unvested options currently outstanding under the 2022 Plan vest on involuntary termination of employment within 18 months following a Covered Transaction.
Liquidation.   In the event liquidation or dissolution of our company is proposed, each participant will be notified as soon as practicable before the effective date of the proposed transaction. The Compensation Committee may provide for a participant to have the right to exercise any outstanding awards until 10 days prior to the transaction (including by accelerating the exercise of awards that would not otherwise be exercisable) and may provide that repurchase options or forfeiture rights on awards can lapse if the proposed transaction takes place as contemplated. To the extent not exercised prior to the transaction, an award will terminate.
U.S. Federal Income Tax Consequences.   The following is a summary of the general federal income tax consequences to participants who are U.S. taxpayers and to us relating to awards granted under the 2022 Plan. This summary is not intended to be exhaustive and does not address all matters that may be relevant to a particular participant based upon his or her specific circumstances.
Incentive Stock Options.   No taxable income is recognized when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax). If the participant exercises an incentive stock option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the incentive stock option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. Any additional gain or loss will be capital gain or loss.
Non-statutory Stock Options and Stock Appreciation Rights.   No taxable income is recognized when a non-statutory stock option or a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the shares on the exercise date over the exercise price. Any additional gain or loss recognized upon later disposition of any shares received on exercise is capital gain or loss.
Restricted Stock.   The federal income tax consequences of restricted stock depend on the facts and circumstances of each award, including, in particular, the nature of any restrictions imposed with respect to the awards. In general, unless the participant makes a valid election under Section 83(b) of the Code to be taxed at the time of grant of restricted stock, if an award is subject to a “substantial risk of forfeiture” ​(e.g., conditioned upon the future performance of substantial services by the participant) and is nontransferable, the participant will not have taxable income upon the grant of restricted stock. Instead, at the time the participant holds stock or other property free of any substantial risk of forfeiture or transferability restrictions, the participant will recognize ordinary income equal to the fair market value (on that date) of the shares or other property less any amount paid. Alternatively, the participant may elect under Section 83(b) of the Code to include as ordinary income in the year of grant of restricted stock, an amount equal to the fair market value (on the grant date) of the restricted stock less any amount paid.
Restricted Stock Units.   In general, the participant will not have taxable income upon the grant of restricted stock units. Instead, when the restricted stock units vest and the participant receives stock or other property pursuant to the restricted stock units, the participant will recognize ordinary income equal to the fair market value (on the date of receipt) of the shares or other property less any amount paid.
Tax Withholding.   Ordinary income recognized on exercise of non-statutory stock options and stock appreciation rights, on vesting of restricted stock and on delivery of stock or other property under restricted
 
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stock units is subject to income tax and employment tax withholding, unless the participant is a non-employee director or consultant. The Compensation Committee may allow a participant to satisfy his or her tax withholding requirements under federal and state tax laws in connection with the exercise or receipt of an award by electing to have shares withheld, and/or by delivering to us already-owned shares of our common stock.
Tax Effect for Us.   We generally will be entitled to a tax deduction for an award under the 2022 Plan in an amount equal to the ordinary income realized by a participant at the time the participant recognizes the income (for example, the exercise of a non-statutory stock option). However, Section 162(m) of the Code limits our ability to deduct the annual compensation to the principal executive officer, principal financial officer and the next three most highly compensated officers to $1,000,000 per individual, subject to an exception for qualified performance-based compensation granted on or before November 2, 2017.
This summary does not contain all information about the 2022 Plan. The complete text of the 2022 Plan as amended to date can be found by reading the original 2022 Plan, which can be found in Appendix A to this proxy statement and is also available in our definitive proxy statement — Appendix B for our 2022 Annual Meeting of Stockholders filed with the SEC on June 24, 2022. A copy of the Amendment to the 2022 Plan is included as Appendix A to this Proxy Statement. The foregoing description of the 2022 Plan is qualified in its entirety by reference to the full text of the 2022 Plan, which is incorporated herein by reference.
Other Information
Because all awards made under the 2022 Plan, as amended, will be made at the Compensation Committee’s discretion, the benefits and amounts that will be received or allocated under the 2022 Plan, including the Amendment are not determinable at this time. The closing price of the common stock, as reported on Nasdaq on June 8, 2023, was $0.468 per share.
Vote Required; Board of Directors Recommendation
You may vote in favor of or against this proposal or you may abstain from voting. Approval of Amendment to the 2022 Equity Incentive Plan requires the affirmative vote of a majority of the voting power of the outstanding shares of our Common Stock, our Series A Preferred and our Series C Preferred (voting on an as-converted to Common Stock basis), present in person or represented by proxy at the Meeting and entitled to vote thereon, all voting together as single class, assuming the presence of a quorum. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the approval of amendment to the 2022 Plan.
Proposal 2 is a non-routine matter. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote on Proposal 2 in order for them to vote your shares so that your vote can be counted. Abstentions will have the same effect as votes “against” the proposal. Broker non-votes will have no effect on the result of the vote, although broker non-votes will be considered present for the purpose of determining the presence of a quorum. If the stockholders do not approve this proposal, the Company may not be able to grant additional equity awards under the 2022 Plan. If the stockholders do not approve this proposal, the 2022 Plan will not be amended but the Company reserves the right to adopt such other compensation plans and programs as it deems appropriate and in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT TO THE MULLEN AUTOMOTIVE INC. 2022 EQUITY INCENTIVE PLAN
 
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PROPOSAL 3
APPROVAL OF AN AMENDMENT OF THE COMPANY’S SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY’S OUTSTANDING COMMON STOCK AT AN EXCHANGE RATIO BETWEEN 1 FOR 2 TO 1 FOR 100, AS DETERMINED BY THE COMPANY’S BOARD OF DIRECTORS
General
Our Board of Directors (the “Board”) has adopted, approved and declared advisable, an amendment to our certificate of incorporation, which would effect a reverse stock split, of all issued and outstanding shares of our Common Stock, at a ratio ranging from 1-for-2 to 1-for-100 (the “Reverse Stock Split”). Our Board has recommended that this proposed amendment be presented to our stockholders for approval. Our stockholders are being asked to approve the proposed amendment pursuant to Proposal 3 to effect a Reverse Stock Split of the issued and outstanding shares of Common Stock. Accordingly, effecting a Reverse Stock Split would reduce the number of outstanding shares of Common Stock.
The text of the proposed form of Certificate of Amendment to our Second Amended and Restated Certificate of Incorporation, which we refer to as the “Certificate of Amendment”, is attached hereto as Appendix B.
We are proposing that our Board have the discretion to select the Reverse Stock Split ratio from within a range between and including 1-for-2 to 1-for-100, rather than proposing that stockholders approve a specific ratio at this time, in order to give our Board the flexibility to implement a Reverse Stock Split at a ratio that reflects the Board’s then-current assessment of the factors described below under “Criteria to be Used for Determining the Reverse Stock Split Ratio to Implement.” If Proposal 3 is approved, the Company, at its discretion, will file the Certificate of Amendment, setting forth the Reverse Stock Split ratio determined by the Board, with the Secretary of State of the State of Delaware and the Reverse Stock Split will be effective at 4:30 p.m., Eastern time, on the date of filing of the Certificate of Amendment with the office of the Secretary of State of the State of Delaware, or such later time and/or date as is set forth in the Certificate of Amendment. Except for adjustments that may result from the treatment of fractional shares as described below, each of our stockholders will hold the same percentage of our outstanding Common Stock immediately following the Reverse Stock Split as such stockholder holds immediately prior to the Reverse Stock Split.
Reasons for Effecting the Reverse Stock Split
To maintain our listing on The Nasdaq Capital Market.   On September 7, 2022, the Company received a letter (the “Deficiency Notice”) from the Nasdaq Listing Qualifications staff (“Staff”) notifying the Company that the bid price of the Company’s common stock, par value $0.001 per share (the “Common Stock”), had closed below $1.00 per share for 30 consecutive business days and, as a result, the Company is not in compliance with Nasdaq Listing Rule 5550(a)(2), which sets forth the minimum bid price requirement for continued listing on the Nasdaq Capital Market (the “Bid Price Rule”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days, until March 6, 2023, to regain compliance with the Bid Price Rule.
On May 4, 2023, the Company effected a one-for-twenty-five (1-for-25) reverse stock split of its Common Stock. As of May 22, 2023, the Company’s Common Stock had closed below $1.00 per share for [16] consecutive business days. In the event the Company continues to fail to meet the $1.00 minimum bid price threshold, it stands the risk of being delisted by Nasdaq. As such, the Board believes that it is prudent to seek stockholder approval for the Reverse Stock Split, which the Company may or may not implement depending on the closing bid price for its Common Stock.
The Board of Directors has considered the potential harm to us and our stockholders if Nasdaq delists our Common Stock from Nasdaq. Delisting could adversely affect the liquidity of our Common Stock since alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less efficient markets. An investor likely would find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our Common Stock on an over-the-counter market. Many investors likely would not buy
 
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or sell our Common Stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or for other reasons.
To potentially improve the marketability and liquidity of our Common Stock.   Our Board of Directors believes that the increased market price of our Common Stock expected as a result of implementing a Reverse Stock Split could improve the marketability and liquidity of our Common Stock and encourage interest and trading in our Common Stock.

Stock Price Requirements:   We understand that many brokerage houses, institutional investors and funds have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers or by restricting or limiting the ability to purchase such stocks on margin. Additionally, a Reverse Stock Split could help increase analyst and broker interest in our Common Stock as their internal policies might discourage them from following or recommending companies with low stock prices.

Stock Price Volatility:   Because of the trading volatility often associated with low-priced stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those policies and practices may make the processing of trades in low-priced stocks economically unattractive to brokers.

Transaction Costs:   Investors may be dissuaded from purchasing stocks below certain prices because brokers’ commissions, as a percentage of the total transaction value, can be higher for low-priced stocks.
For Potential Future Inclusion in the Russell 2000.   To be included in the Russell 2000, a company must first be in the Russell 3000, which includes about 98 percent of the U.S. stock market. FTSE Russell then ranks those companies by their market cap, and the bottom 2,000 make up the Russell 2000 Index. Shares must be priced at or above $1.00 on the date market capitalization is calculated for ranking. We believe that the Reverse Stock Split will help the Company to maintain the inclusion in the Russell 2000. However, there can be no assurance that the closing share price after implementation of the Reverse Stock Split will keep the Company included in the Russell 2000.
Improve the Perception of Our Common Stock as an Investment Security.   The Board believes that effecting the Reverse Stock Split is one potential means of increasing the share price of our Common Stock to improve the perception of our common stock as a viable investment security. Lower-priced stocks have a perception in the investment community as being risky and speculative, which may negatively impact not only the price of our common stock, but also our market liquidity.
Certain Risks Associated with the Reverse Stock Split
Even if a reverse stock split is effected, some or all of the expected benefits discussed above may not be realized or maintained. The market price of our Common Stock will continue to be based, in part, on our performance and other factors unrelated to the number of shares outstanding. The Reverse Stock Split will reduce the number of outstanding shares of our Common Stock without reducing the number of shares of available but unissued Common Stock, which will also have the effect of increasing the number of shares of Common Stock available for issuance. The issuance of additional shares of our Common Stock may have a dilutive effect on the ownership of existing stockholders. The current economic environment in which we operate, the debt we carry, along with otherwise volatile equity market conditions, could limit our ability to raise new equity capital in the future.
Criteria to be Used for Determining the Reverse Stock Split Ratio to Implement
In determining which Reverse Stock Split ratio to implement, if any, following receipt of stockholder approval of Proposal 3, our Board may consider, among other things, various factors, such as:

The historical trading price and trading volume of our Common Stock;
 
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The then-prevailing trading price and trading volume of our Common Stock tock and the expected impact of the Reverse Stock Split on the trading market for our Common Stock in the short- and long-term;

Our ability to maintain our listing on The Nasdaq Capital Market;

Which Reverse Stock Split ratio would result in the least administrative cost to us;

Prevailing general market and economic conditions; and

Whether and when our Board of Directors desires to have the additional authorized but unissued shares of Common Stock that will result from the implementation of a Reverse Stock Split available to provide the flexibility to use our Common Stock for business and/or financial purposes, as well as to accommodate the shares of our Common Stock to be authorized and reserved for future equity awards.
Effects of Reverse Stock Split
After the effective date of the Reverse Stock Split, each stockholder will own a reduced number of shares of Common Stock. However, the Reverse Stock Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in the Company, except to the extent that the Reverse Stock Split results in any of our stockholders owning a fractional share as described below. Voting rights and other rights and preferences of the holders of our Common Stock will not be affected by a Reverse Stock Split (other than as a result of the rounding up in lieu of issuing fractional shares). For example, a holder of 2% of the voting power of the outstanding shares of our Common Stock immediately prior to a Reverse Stock Split would continue to hold 2% (assuming there is no impact as a result of the rounding up in lieu of issuing fractional shares) of the voting power of the outstanding shares of our Common Stock immediately after such Reverse Stock Split. The number of stockholders of record will not be affected by a Reverse Stock Split.
The principal effects of a Reverse Stock Split will be that:

Depending on the Reverse Stock Split ratio selected by the Board, each 2 to 100 shares of our Common Stock owned by a stockholder will be combined into one new share of our Common Stock;

By effectively condensing a number of pre-split shares into one share of Common Stock, the per share price of a post-split share is generally greater than the per share price of a pre-split share. The amount of the initial increase in per share price and the duration of such increase, however, is uncertain. The Board may utilize the Reverse Stock Split as part of its plan to maintain the required minimum per share price of the Common Stock under the Nasdaq listing standards;

By reducing the number of shares outstanding without reducing the number of shares of Common Stock authorized for issuance, the Reverse Stock Split will increase the number of shares of Common Stock available for issuance. The Board believes the increase is appropriate for use to fund the future operations of the Company. Although the Company does not have any pending acquisitions for which shares are expected to be used, the Company may also use authorized shares in connection with the financing of future acquisitions;

No fractional shares of common stock will be issued in connection with the Reverse Stock Split; instead, stockholders who would be entitled to receive fractional shares of common stock because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will be issued an additional fraction of a share of common stock to round up to the next whole post-Reverse Stock Split share of common stock;

The total number of authorized shares of our common stock will remain at 5,000,000,000;

The total number of authorized shares of our preferred stock will remain at 500,000,000;

Based upon the Reverse Stock Split ratio selected by the Board, proportionate adjustments will be made to the per share exercise price and the number of shares issuable upon the exercise or vesting of all then outstanding stock options, restricted stock units and warrants, which will
 
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result in a proportional decrease in the number of shares of Common Stock reserved for issuance upon exercise or vesting of such stock options, restricted stock units and warrants, and, in the case of stock options and warrants, a proportional increase in the exercise price of all such stock options and warrants;

Based upon the Reverse Stock Split ratio selected by the Board, proportionate adjustments will be made to the per share conversion price of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock (together “the Preferred Stocks”) and the number of shares of Common Stock issuable upon the conversion of then outstanding shares of the Preferred Stocks, which will result in a proportional decrease in the number of shares of Common Stock reserved for issuance upon exercise of such Preferred Stocks and a proportional increase in the conversion price of all such Preferred Stocks; and

The number of shares then reserved for issuance under our equity compensation plans will be reduced proportionately based upon the Reverse Stock Split ratio selected by the Board.
After the effective date of the Reverse Stock Split, our Common Stock would have a new committee on uniform securities identification procedures number, or CUSIP number, a number used to identify our Common Stock.
Our Common Stock is currently registered under Section 12(b) of the Securities Exchange Act, and we are subject to the periodic reporting and other requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The implementation of any proposed Reverse Stock Split will not affect the registration of our Common Stock under the Exchange Act. Our Common Stock would continue to be listed on The Nasdaq Capital Market under the symbol “MULN” immediately following the Reverse Stock Split, although it is likely that Nasdaq would add the letter “D” to the end of the trading symbol for a period of twenty trading days after the effective date of the Reverse Stock Split to indicate that the Reverse Stock Split had occurred.
Effective Date
The proposed Reverse Stock Split would become effective at 4:30 p.m., Eastern Time, on the date of filing of a Certificate of Amendment with the office of the Secretary of State of the State of Delaware, or such later date as is set forth in the Certificate of Amendment, which date we refer to in this Proposal 3 as the Reverse Split Effective Date. A the effective time on the Reverse Split Effective Date, shares of Common Stock issued and outstanding immediately prior thereto will be combined, automatically and without any action on the part of us or our stockholders, into a reduced number of shares of our Common Stock in accordance with the Reverse Stock Split ratio determined by our Board within the limits set forth in this Proposal 3 and stockholders who otherwise would be entitled to receive fractional shares because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will be issued an additional fraction of a share of common stock to round up to the next whole share.
Effect on Beneficial Holders (i.e., Stockholders Who Hold in “Street Name”)
If the proposed Reverse Stock Split is approved and effected, we intend to treat Common Stock held by stockholders in “street name,” through a bank, broker or other nominee, in the same manner as stockholders whose shares are registered in their own names. Banks, brokers or other nominees will be instructed to effect the Reverse Stock Split for their customers holding common stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered stockholders for processing the Reverse Stock Split. If you hold shares of Common Stock with a bank, broker or other nominee and have any questions in this regard, you are encouraged to contact your bank, broker or other nominee.
Effect on Registered “Book-Entry” Holders (i.e., Stockholders That are Registered on the Transfer Agent’s Books and Records but do not Hold Certificates)
Some of our registered holders of Common Stock may hold some or all of their shares electronically in book-entry form with our transfer agent, Continental Stock Transfer. These stockholders do not have stock certificates evidencing their ownership of Common Stock. They are, however, provided with a statement
 
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reflecting the number of shares registered in their names. If a stockholder holds registered shares in book-entry form with our transfer agent, no action needs to be taken to receive post-reverse stock split shares. If a stockholder is entitled to post-reverse stock split shares, a statement will automatically be sent to the stockholder’s address of record indicating the number of shares of Common Stock held following the Reverse Stock Split.
STOCKHOLDERS SHOULD NOT DESTROY ANY PRE-SPLIT STOCK CERTIFICATE AND SHOULD NOT SUBMIT ANY CERTIFICATES UNTIL THEY ARE REQUESTED TO DO SO.
Accounting Consequences
The par value of our Common Stock would remain unchanged at $0.001 per share, if the Reverse Stock Split is effected.
The Company’s stockholders’ equity in its consolidated balance sheet would not change in total. However, the Company’s stated capital (i.e., $0.001 par value times the number of shares issued and outstanding), would be proportionately reduced based on the reduction in shares of common stock outstanding. Additional paid in capital would be increased by an equal amount, which would result in no overall change to the balance of stockholders’ equity.
Additionally, net income or loss per share for all periods would increase proportionately as a result of the Reverse Stock Split since there would be a lower number of shares outstanding. We do not anticipate that any other material accounting consequences would arise as a result of the Reverse Stock Split.
Potential Anti-Takeover Effect
Even though the proposed Reverse Stock Split would result in an increased proportion of unissued authorized shares to issued shares, which could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board or contemplating a tender offer or other transaction for the combination of us with another company), the Reverse Stock Split is not being proposed in response to any effort of which we are aware to accumulate shares of our common stock or obtain control of us, nor is it part of a plan by management to recommend a series of similar amendments to the Board and our stockholders.
No Appraisal Rights
Our stockholders are not entitled to dissenters’ or appraisal rights under the General Corporation Law of the State of Delaware with respect to the proposed amendment to our Second Amended and Restated Certificate of Incorporation to effect a Reverse Stock Split.
Material U.S. Federal Income Tax Considerations of the Reverse Stock Split
The following discussion summarizes certain material U.S. federal income tax considerations of the Reverse Stock Split that would be expected to apply generally to U.S. Holders (as defined below) of our Common Stock. This summary is based upon current provisions of the Internal Revenue Code of 1986, as amended, or the Code, existing Treasury Regulations under the Code and current administrative rulings and court decisions, all of which are subject to change or different interpretation. Any change, which may or may not be retroactive, could alter the tax consequences to us or our stockholders as described in this summary. No ruling from the U.S. Internal Revenue Service, or the IRS, has been or will be requested in connection with the Reverse Stock Split and there can be no assurance that the IRS will not challenge the statements and conclusions set forth below or a court would not sustain any such challenge.
No attempt has been made to comment on all U.S. federal income tax consequences of the Reverse Stock Split that may be relevant to particular U.S. Holders, including holders: (i) who are subject to special tax rules such as dealers, brokers and traders in securities, mutual funds, regulated investment companies, real estate investment trusts, insurance companies, banks or other financial institutions or tax-exempt entities; (ii) who acquired their shares in connection with stock options, stock purchase plans or other compensatory transactions; (iii) who hold their shares as a hedge or as part of a hedging, straddle, “conversion
 
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transaction”, “synthetic security”, integrated investment or any risk reduction strategy; (iv) who are partnerships, limited liability companies that are not treated as corporations for U.S. federal income tax purposes, S corporations, or other pass-through entities or investors in such pass-through entities; (v) who do not hold their shares as capital assets for U.S. federal income tax purposes (generally, property held for investment within the meaning of Section 1221 of the Code); (vi) who hold their shares through individual retirement or other tax-deferred accounts; or (vii) who have a functional currency for United States federal income tax purposes other than the U.S. dollar.
In addition, the following discussion does not address state, local or foreign tax consequences of the Reverse Stock Split, the Medicare tax on net investment income, U.S. federal estate and gift tax, the alternative minimum tax, the rules regarding qualified small business stock within the meaning of Section 1202 of the Code, or any other aspect of any U.S. federal tax other than the income tax. The discussion assumes that for U.S. federal income tax purposes the Reverse Stock Split will not be integrated or otherwise treated as part of a unified transaction with any other transaction. Furthermore, the following discussion does not address the tax consequences of transactions effectuated before, after or at the same time as the Reverse Stock Split, whether or not they are in connection with the Reverse Stock Split.
For purposes of this discussion, a U.S. Holder means a beneficial owner of our Common Stock who is: (i) an individual who is a citizen or resident of the United States; (ii) a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States or under the laws of the United States or any subdivision thereof; (iii) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or (iv) a trust (other than a grantor trust) if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
HOLDERS OF OUR COMMON STOCK ARE ADVISED AND EXPECTED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT IN LIGHT OF THEIR PERSONAL CIRCUMSTANCES AND THE CONSEQUENCES OF THE REVERSE STOCK SPLIT UNDER STATE, LOCAL AND FOREIGN TAX LAWS.
Tax Consequences of the Reverse Stock Split

The Reverse Stock Split is intended to be treated as a tax deferred “recapitalization” for U.S. federal income tax purposes. The remainder of the discussion assumes the Reverse Stock Split will qualify as a recapitalization.

No gain or loss will be recognized by us as a result of the Reverse Stock Split.

A U.S. Holder who receives solely a reduced number of shares of Common Stock pursuant to the Reverse Stock Split will generally recognize no gain or loss. A U.S. Holder who receives cash in lieu of a fractional share interest will generally recognize gain or loss equal to the difference between (i) the portion of the tax basis of the pre-Reverse Stock Split shares allocated to the fractional share interest and (ii) the cash received.

A U.S. Holder’s basis in the U.S. Holder’s post-Reverse Stock Split shares will be equal to the aggregate tax basis of such U.S. Holder’s pre-Reverse Stock Split shares decreased by the amount of any basis allocated to any fractional share interest for which cash is received.

The holding period of our stock received in the Reverse Stock Split will include the holding period of the pre-Reverse Stock Split shares exchanged.

For purposes of the above discussion of the basis and holding periods for shares of the stock received in the Reverse Stock Split, U.S. Holders who acquired different blocks of our stock at different times for different prices must calculate their basis, gains and losses, and holding periods separately for each identifiable block of such stock exchanged, converted, canceled or received in the Reverse Stock Split. U.S. Holders who acquired different blocks of our stock at different times for
 
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different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.

Any gain or loss recognized by a U.S. Holder as a result of the Reverse Stock Split will generally be a capital gain or loss and will be long term capital gain or loss if the U.S. Holder’s holding period for the shares of our stock exchanged is more than one year.

Certain U.S. Holders may be required to attach a statement to their tax returns for the year in which the Reverse Stock Split is consummated that contains the information listed in applicable Treasury Regulations. U.S. Holders are urged to consult their own tax advisors with respect to the applicable reporting requirements.

Any cash payments for fractional shares made to U.S. Holders in connection with the Reverse Stock Split may be subject to backup withholding on a U.S. Holder’s receipt of cash, unless such U.S. Holder furnishes a correct taxpayer identification number and certifies that such U.S. Holder is not subject to backup withholding or such U.S. Holder is otherwise exempt from backup withholding. In the event any amount is withheld under the backup withholding rules, the U.S. Holder should consult with its own tax advisors as to whether the U.S. Holder is entitled to any credit, refund or other benefit with respect to such backup withholding and the procedures for obtaining such credit, refund or other benefit.
Reservation of Right to Abandon Reverse Stock Split
The Board of Directors reserves the right to abandon the Reverse Stock Split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of State of the State of Delaware of the Certificate of Amendment to the Charter, even if the authority to effect the Reverse Stock Split has been approved by our stockholders at the Meeting.
Vote Required; Board of Directors Recommendation
You may vote in favor of or against this proposal or you may abstain from voting.
As of the filing of this proxy statement, approval of Proposal 3 will require the affirmative vote of a majority of the voting power of the outstanding shares of our Common Stock, Series A Preferred Stock and Series C Preferred Stock (voting on an as-converted to Common Stock basis), entitled to vote thereon, all voting together as a single class. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the approval of the Reverse Stock Split Proposal. Proposal 3 is a routine matter. If you own shares through a bank, broker or other holder of record, those shares may be voted on Proposal 3 by such bank, broker or other holder of record. Abstentions and broker non-votes (if any) will have the same effect as votes “against” the proposal.
The Delaware state legislature has proposed amendments to the Delaware General Corporation Law (the “DGCL”) that would change the required stockholder vote applicable to the adoption of amendments to effect a reverse stock split of a class of stock that is listed on a national securities exchange, provided that such shares meet the listing requirement of such national securities exchange relating to the minimum number of holders immediately after such amendment becomes effective. The Delaware Senate passed the proposed DGCL amendments on May 16, 2023 and, if adopted by the Delaware House of Representatives at a hearing expected to be held in June and signed into law by Delaware’s governor, they would become effective on August 1, 2023. If such DGCL amendments are enacted prior to our Meeting on August [3], 2023, the Board of Directors reserves the right to cause the amendment providing for the Reverse Stock Split to be filed with the Delaware Secretary of State if the votes cast for such amendment exceed the votes cast against such amendment, assuming the presence of a quorum and if the shares of Common Stock meet the listing requirement of the national securities exchange on which they are listed relating to the minimum number of holders immediately after such amendment becomes effective. Under this standard, abstentions and broker non-votes (if any) will have no effect on the approval of the proposal. Holders of shares of Common Stock, Series A Preferred Stock and Series C Preferred Stock (voting on an as-converted to Common Stock basis) are entitled to cast votes on the Reverse Stock Split amendment, as noted above. If the Reverse Stock Split amendment is approved by the affirmative vote of a majority of the voting power of
 
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the outstanding shares of our Common Stock, Series A Preferred Stock and Series C Preferred Stock (voting on an as-converted to Common Stock basis), entitled to vote thereon, all voting together as a single class, there will be no need to rely on the proposed amendment to the DGCL (if enacted into law).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF AN AMENDMENT OF THE COMPANY’S SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF THE COMPANY’S OUTSTANDING COMMON STOCK AT AN EXCHANGE RATIO BETWEEN 1-FOR-2 TO 1-FOR-100, AS DETERMINED BY THE COMPANY’S BOARD OF DIRECTORS
 
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PROPOSAL 4
APPROVAL OF THE CONVERSION OF MULLEN AUTOMOTIVE INC.
FROM A DELAWARE CORPORATION TO A MARYLAND CORPORATION
General
The Board has approved and recommends that the stockholders of the Company approve a proposal to change our state of incorporation from the State of Delaware to the State of Maryland (the “Conversion Proposal”), to be effected by a statutory conversion into a Maryland corporation as provided in the Delaware General Corporation Law (the “DGCL”) and the Maryland General Corporation Law (the “MGCL”) on the terms and conditions described in this Proposal 4 (the “Conversion”).
Principal Features of the Conversion and the Plan of Conversion
The Board adopted a resolution approving the Conversion pursuant to the MGCL and the DGCL and as further contemplated by the Plan of Conversion, which is included as Appendix C to this Proxy Statement. Approval of this proposal will constitute approval of the Conversion, including the Plan of Conversion. The Plan of Conversion provides that we will move our state of incorporation from Delaware to Maryland by converting into a Maryland corporation pursuant to Section 266 of the DGCL and Subtitle 9 of the MGCL. Under the MGCL and the DGCL, the Company, as a Maryland corporation, for all purposes of the laws of the States of Maryland and Delaware, will be the same entity and the Company, as a Delaware corporation. There will be no change in the business, properties, assets, obligations, or management of the Company as a result of the Conversion. The Plan of Conversion provides that the directors and officers of the Company immediately prior to the Conversion will serve as the directors and officers of the Company following the Conversion. We will continue to maintain our headquarters in California.
The Plan of Conversion also provides that each outstanding share of Common Stock and Preferred Stock will be converted into one share of the corresponding class and series of stock of the Company as a Maryland corporation, and will remain issued and outstanding after the Conversion, having the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of such class and series of stock as set forth in the Maryland Charter (as defined below). Any accrued and unpaid dividends on the Company’s Series D Convertible Preferred Stock at the time of the Conversion, whether or not declared, will automatically become accrued and unpaid dividends on the Series D Convertible Preferred Stock of the Company after the Conversion. You will not have to exchange your existing stock certificates for new stock certificates. At the same time, each outstanding warrant, option or right to acquire shares of Common Stock will continue to be a warrant, option or right to acquire an equal number of shares of Common Stock under the same terms and conditions.
At the effective time of the Conversion, the Common Stock will continue to be traded on the Nasdaq Stock Market under the symbol “MULN”. There will be no interruption in the trading of the Common Stock as a result of the Conversion.
Following the Conversion, the Company will be governed by the MGCL instead of the DGCL, and we will be governed by the Maryland Articles of Incorporation, as it may be amended and supplemented from time to time (the “Maryland Charter”), and the Maryland Bylaws, as they may be amended from time to time (the “Maryland Bylaws”), included as Appendix D and Appendix E, respectively, to this Proxy Statement. Approval of this proposal will constitute approval of the forms of Maryland Charter and Maryland Bylaws. Our current Second Amended and Restated Certificate of Incorporation, as amended (the “Delaware Charter”), and Amended and Restated Bylaws, as amended (the “Delaware Bylaws”), will no longer be applicable following completion of the Conversion. Copies of the Delaware Charter can be found via our current reports on Form 8-Ks filed with the SEC on November 12, 2021, November 19, 2021, March 10, 2022, July 27, 2022, September 23, 2022, October 21, 2022, November 14, 2022, January 31, 2023 and May 5, 2023. Copies of the Delaware Bylaws can be found via our current reports on Form 8-Ks filed with the SEC on, October 5, 2012, June 16, 2015 and November 14, 2022.
 
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A description of the Company’s securities following the Conversion is included as Appendix F to this Proxy Statement.
Reasons for the Conversion
The Board believes that the Conversion will enable our Company and stockholders to take advantage of the following benefits of incorporation in Maryland:

The charter of a Maryland corporation may provide the board of directors of a Maryland corporation the power to amend the charter of the corporation, without a stockholder vote, to increase or decrease the aggregate number of authorized shares of stock or the number of shares of any class or series of stock that we are authorized to issue. Such a provision provides the Board and the Company increased flexibility in accessing the capital markets promptly because the time necessary to obtain stockholder approval of such an increase in authorized stock is eliminated. The costs of seeking such approval are also eliminated. In the year of 2022, the Company spent more than $927,000 in expenses (including legal fees, printing fees, fees to service parties including proxy solicitor, meeting host and transfer agent) to seek stockholder approval to effect a reverse stock split and to increase the number of authorized shares of its common stock. The Company can potentially save such expenses by converting to a Maryland corporation. The Maryland Charter will contain such a provision, authorizing our Board to approve such amendments, subject to the voting rights of holders of our preferred stock outstanding from time to time and described under the heading “Preferred Stock” in Appendix F. No such power may be provided in the charter of a Delaware corporation.

The MGCL provides that, unless its charter provides otherwise, the board of directors of a Maryland corporation with a class of equity securities registered under the Exchange Act may amend the charter of the Maryland corporation to effect reverse stock splits without a stockholder vote so long as the combination of shares of stock is at a ratio of not more than 10 shares of stock into one share of stock, in the aggregate, over any 12-month period. Such a provision provides the Board and the Company increased flexibility to reduce in a proportional manner its outstanding shares of stock, potentially providing financing and capital markets benefits. The Maryland Charter will not deny this power and, therefore, the Board will have this power. Although there is proposed legislation in Delaware that would reduce the vote threshold to approve charter amendments to effect a reverse stock split or change the number of shares authorized for issuance when such shares are listed on a national securities exchange, even if such legislation is adopted, Delaware will still require a stockholder vote for such amendments.

Maryland has no franchise tax for corporations. Delaware imposes franchise taxes on Delaware corporations based on alternative formulas involving either (i) the corporation’s aggregate number of shares of authorized stock, or (ii) the corporation’s capital structure as compared to its assets. The Company has always elected to be considered under the formula that results in the lower franchise tax burden. For the fiscal year ended September 30, 2022, the Company paid around $130,000 in Delaware franchise taxes. The Company anticipates that if it were to remain incorporated in Delaware, it would continue to pay approximately $150,000 in Delaware franchise taxes each year for the foreseeable future. During the current fiscal year, some of the savings anticipated by the reincorporation will initially be offset by expenses associated with the reincorporation, such as filing, legal, printing and similar expenses.

Maryland law offers additional protections in the event of an unsolicited takeover attempt that the Company believes should better protect stockholder interests.

Maryland offers a simpler and more flexible standard for the Company’s ability to make distributions, as discussed below under the section entitled “Comparison of Delaware Organizational Documents and DGCL to Maryland Organizational Documents and MGCL.”

Maryland law permits the charter of a Maryland corporation to eliminate appraisal rights. Such a provision provides a Maryland corporation increased flexibility in the future to implement potential restructuring or strategic transactions if determined advisable, without triggering appraisal rights which can be an expensive, time consuming process and result in the corporation having to effectively redeem for cash dissenting stockholders even in a transaction that otherwise would not have cash
 
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being paid to the stockholders and that has been approved by a majority of the stockholders. The Maryland Charter will contain a provision eliminating appraisal rights. Such a provision is not permissible in Delaware.
Although there are other differences between the DGCL and the MGCL, the Board of the Company does not believe that any of these differences will have a significant impact on the Company’s operations. See the section entitled “Comparison of Delaware Organizational Documents and DGCL to Maryland Organizational Documents and MGCL.”
Comparison of Delaware Organizational Documents and DGCL to Maryland Organizational Documents and MGCL
As a result of the Conversion, the rights of our stockholders will be governed by the laws of the State of Maryland, including the MGCL and the Maryland Charter and Maryland Bylaws, upon the completion of the Conversion. Thus, following the Conversion, the rights of our stockholders will no longer be governed by Delaware law and the Delaware Charter and the Delaware Bylaws, but will instead be governed by Maryland law, including the MGCL, the Maryland Charter and Maryland Bylaws.
Set forth below is a summary comparison of material differences between the rights of our stockholders under the Delaware Charter, the Delaware Bylaws and certain aspects of Delaware law (left column) and the rights of our stockholders under the Maryland Charter, the Maryland Bylaws, and certain aspects of Maryland law (right column). The summary set forth below is not intended to be complete or to provide a comprehensive discussion of the respective rights of our stockholders before and after the Conversion and is qualified in its entirety by reference to the full text of the Delaware Charter, Delaware Bylaws, Maryland Charter, and Maryland Bylaws, as well as the relevant provisions of the DGCL and MGCL. Except as described below, the terms of the Series A Preferred Stock, Series C Preferred Stock and Series D Convertible Preferred Stock as set forth in the Maryland Charter are intended to have the same rights, preferences and privileges as each corresponding class of preferred stock under the Delaware Charter, but certain textual changes have been made to the terms of each series to conform to statutory terms, customary usage or interpretative principles under Maryland law. You are urged to read carefully the relevant provisions of the DGCL and the MGCL, as well as the foregoing corporate instruments. Furthermore, the identification of some of the differences as material is not intended to indicate that other differences that may be equally important do not exist.
RIGHT
DELAWARE
MARYLAND
CORPORATE GOVERNANCE
The Company is a Delaware corporation. The rights of our stockholders are governed by the DGCL, the Delaware Charter and the Delaware Bylaws. The Company will be a Maryland corporation. The rights of our stockholders will be governed by the MGCL, the Maryland Charter and Maryland Bylaws.
AUTHORIZED CAPITAL STOCK
The Delaware Charter authorizes 5,500,000,000 shares, of which 5,000,000,000 shares are designated as a class of common stock, par value $0.001 per share, and 500,000,000 shares are designated as a class of preferred stock, par value $0.001 per share.
200,000 shares of the preferred stock are designated as Series A Preferred Stock, 12,000,000 shares of the preferred stock are designated as Series B Preferred Stock, 40,000,000 of the preferred stock are designated as
The Maryland Charter will authorize 5,500,000,000 shares, of which 5,000,000,000 shares will be designated as a class of common stock, par value $0.001 per share, and 500,000,000 shares will be designated as a class of preferred stock, par value $0.001 per share.
A number of shares of preferred stock will be designated as shares of Series A Preferred Stock, Series C Preferred Stock and Series D Convertible Preferred Stock, and as shares of any other
 
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Series C Preferred Stock, and 437,500,001 of the preferred stock are designated as Series D Preferred Stock. series of preferred stock designated under the Delaware Charter immediately before the Conversion, equal to the number of shares of each such class or series outstanding immediately before the completion of the Conversion.
BLANK CHECK PREFERRED STOCK
The Delaware Charter authorizes the Company’s Board to establish one or more series of preferred stock and to fix, with respect to any series of preferred stock, the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereon.
The Maryland Charter will authorize the Board to, subject to the rights of holders of any class or series of our stock, classify and reclassify unissued shares of common or preferred stock into other classes or series of stock, including additional classes or series of common stock or classes or series of preferred stock, and to establish the designation and number of shares of each such class or series and to set the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of each such class or series.
The approval of holders of shares of our preferred stock may be required in connection with the creation of new classes or series of stock. See “Preferred Stock” in Appendix F for a description of the voting rights of holders of our preferred stock after the Conversion. The provisions relating to dividends and distributions payable on the shares of each series of preferred stock, including in connection with a Liquidation Event (as defined in the Maryland Charter), will provide the Company with the flexibility to, subject to the requisite vote of holders of outstanding shares of preferred stock, if any, create new senior or parity series of preferred stock without requiring amendments to the terms of the existing preferred stock.
 
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REACQUIRED SHARES
Shares of preferred stock that are converted to common stock are cancelled and may not be reissued by the Company. Pursuant to the Maryland Charter, unless the terms of a class or series of preferred stock provide otherwise (and the terms of the Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock will not), shares of preferred stock that are redeemed, converted, repurchased or otherwise acquired in any other manner by the Company will revert to the status of authorized but unissued shares of preferred stock without further designation as to class or series, until such shares are once more classified by the Board in accordance with the Maryland Charter.
VOTING
The Delaware Charter provides that: (i) each holder of record of the Company’s common stock is entitled to one vote per share on all matters submitted to a vote of stockholders; (ii) the holders of shares of the Series C Preferred Stock are entitled to one vote for each share held of record by such holder on all matters submitted to a vote of the common stock holders, and as set forth in the Delaware Charter, holders of shares Series C Preferred Stock are entitled to vote separately and have protective voting rights relating to certain matters that are submitted to a vote of the stockholders; (iii) the holders of shares of the Series A Preferred Stock have the right to one thousand (1,000) votes for each share of Series A Preferred Stock per share held of record by such holder, on all matters submitted to a vote of the common stock holders, and as set forth in the Delaware Charter, holders of shares Series A Preferred Stock are entitled to vote separately and have protective voting rights relating to certain matters that are submitted to a vote of the stockholders; and (iv) holders of No change
 
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MARYLAND
shares of Series D Preferred Stock are not entitled to any voting powers (including with respect to any class votes taken in accordance with the terms of the Delaware Charter), except for certain protective voting rights set forth in the Company’s Certificate of Designation for Series D Preferred Stock or otherwise as required by Delaware law.
CUMULATIVE VOTING
The Delaware Charter specifically provides that there shall be no cumulative voting in the election of directors. No change
NUMBER AND QUALIFICATION OF DIRECTORS
The Delaware Charter provides that the number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted a majority of the total number of authorized directors, and the Delaware Bylaws provide that the number of directors fixed by the Board of Directors will be not less than three and not more than eleven. The Maryland Charter and Maryland Bylaws will provide that the number of directors of the Company may be established, increased or decreased only by a majority of the entire Board, but may not be fewer than the minimum number required under the MGCL (which is one) nor, unless the Maryland Bylaws are amended, more than 15.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Under the Delaware Charter, the Company’s Board is classified into three classes of directors with staggered terms of office, other than with respect to directors who may be elected by holders of any then-outstanding preferred stock (of which there are none). No change.
REMOVAL OF DIRECTORS
The Delaware Charter provides that, subject to the rights of the holders of any series of preferred stock, directors may be removed from office only for cause, and then only upon the affirmative vote of the holders of a majority of the total voting power of the then outstanding shares of capital of the Company entitled to vote generally in the election of directors, voting together as a single class. The term “cause” is not defined in the Delaware Charter and is interpreted in The Maryland Charter will provide that, except as may be provided in the terms of any future class or series of our stock entitled to elect or remove one or more directors, any director, or the entire board of directors, may be removed at any time, but only for cause, and then only by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast generally in the election of directors. “Cause” will be defined to mean, with respect to any particular
 
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accordance with Delaware common law. director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Company through bad faith or active and deliberate dishonesty.
ELECTION OF DIRECTORS
The Delaware Bylaws provide that, subject to the rights of the holders of any series of preferred stock, at any meeting duly called and held for the election of directors at which a quorum is present, directors shall be elected by a plurality of the votes of the shares of capital stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote on the election of directors. The Maryland Bylaws will provide that, except as may be provided in the terms of any future class or series of our stock entitled to elect one or more directors, a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director.
VACANCIES ON THE BOARD OF DIRECTORS
The Delaware Charter and Delaware Bylaws provide that, subject to the rights of the holders of any series of preferred stock, vacancies on our Board resulting from death, resignation, removal, disqualification or other cause, and newly created directorships resulting from any increase in the number of directors on the Board, will be filled only by the affirmative vote of a majority of the remaining directors then in office (even though less than a quorum) or by the sole remaining director. Each director so elected shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected. No change.
STOCKHOLDER ACTION BY WRITTEN CONSENT
The DGCL provides that, unless prohibited by the certificate of incorporation, the stockholders may take action by consent without a meeting. The Delaware Charter does not prohibit stockholder action by consent. The Maryland Charter will provide that any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting if: (i) a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the
 
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minutes of proceedings of the stockholders; or (ii) the action is advised and submitted to the stockholders for approval by the Board and a consent in writing or by electronic transmission of holders of shares entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a meeting of stockholders at which all stockholders entitled to vote on the matter are present and voted is delivered to the Company in accordance with the MGCL.
AMENDMENT OF THE CHARTER
The DGCL provides that amendments to the certificate of incorporation must be approved and declared advisable by the board of directors and, except in certain limited circumstances, adopted by the holders of a majority of the voting power of the outstanding shares of stock of the corporation entitled to vote thereon. Pursuant to the DGCL, holders of a class of outstanding shares have the right to vote separately as a class on an amendment to the certificate of incorporation if such amendment (i) increases or decreases the number of authorized shares of such class (subject to an exception as may be included in the certificate of incorporation), (ii) increases or decreases the par value of the shares of such class, or (iii) alters or changes the powers, preferences, or special rights of the shares of such class so as to affect them adversely. If any proposed amendment would alter or change the powers, preferences, or special rights of one or more series of any class so as to affect them adversely, but shall not so affect the entire class, then only the shares of the series so affected by the amendment shall be considered a separate class for purposes of this right to Under the MGCL and the Maryland Charter, we generally cannot amend the Maryland Charter unless declared advisable by our Board and approved by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast on the matter, provided that certain amendments to the Maryland Charter may, in addition, require the approval of holders of a majority of the then outstanding shares of one or more series of our preferred stock, each voting as a separate class. Further, unless the terms of any future class or series of our preferred stock provide otherwise, the holders of one or more classes or series of our preferred stock will have the exclusive right to vote (voting as separate classes or voting together as a single class, as may be set forth in the terms of such classes or series of preferred stock) on any amendment to the Maryland Charter on which the holders of such specified classes or series of preferred stock are entitled to vote and that would alter only the contract rights, as expressly set forth in the Maryland Charter, of preferred stock of such specified classes or series; and the holders of any other classes and series of our
 
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vote. The DGCL provides that the number of authorized shares of any such class or classes of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote if so provided in the original certificate of incorporation, in any amendment thereto which created such class or classes of stock or which was adopted prior to the issuance of any shares of such class or classes of stock, or in any amendment thereto which was authorized by a resolution or resolutions adopted by the affirmative vote of the holders of a majority of such class or classes of stock (the “Class Vote Exception”).
The Delaware Charter provides that, subject to the rights of the holders of any series of preferred stock, the Delaware Charter may be amended if approved by the affirmative vote of the holders a majority of the total voting power of the then outstanding capital stock of the Company entitled to vote generally in the election of directors, voting together as a single class, except that the affirmative vote of the holders of at least 66-2∕3% of the total voting power of the then outstanding capital stock of the Company entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal ARTICLE XI or ARTICLE VII of the Delaware Charter.
stock, including our common stock, will not be entitled to vote on such an amendment. Our Board, with the approval of a majority of the entire Board, and, except as set forth in the terms of any class or series of our stock, including our Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, without any action by our stockholders, may also amend the Maryland Charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we are authorized to issue. Our Board, without stockholder approval, may also amend the Maryland Charter to change our name or change the name or other designation or par value of any class or series of our stock or the aggregate par value of our stock. See “Preferred Stock” in Appendix F for a description of the voting rights of holders of our preferred stock after the Conversion.
The MGCL does not contain separate class voting rights. As a result, holders of preferred stock will no longer be entitled to the benefit of the provisions of Section 242(b)(2) of the DGCL, which would require the approval of a majority of the outstanding shares of any class or series of stock to increase or decrease the par value of the shares of such class or series.
Further, under the Maryland Charter, holders of Series A Preferred Stock will no longer be entitled to the benefit of the provisions of Section 242(b)(2) of the DGCL, which requires the approval of a majority of the outstanding shares of Series A Preferred Stock to approve amendments to the certificate of incorporation that would alter or
 
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change the powers, preferences, or special rights of the shares of such class so as to affect them adversely. As set forth in the terms of the Series A Preferred Stock, however, any amendment to the Maryland Charter or the Maryland Bylaws to materially and adversely affect the rights, preferences and privileges of the shares of Series A Preferred Stock, including any increase in the number of authorized shares of Series A Preferred Stock, will require the approval of the holders of a majority of the outstanding shares of Series A Preferred Stock, voting as a separate class.
AMENDMENT OF THE BYLAWS
The Delaware Charter provides that the Delaware Bylaws may be amended, altered or repealed, either by: (A) an affirmative vote of the holders of at least 66-2∕3% of the total voting power of the then outstanding capital stock of the Company entitled to vote generally in the election of directors, voting together as a single class, in order for the stockholders to adopt, amend, or repeal any provision of the Delaware Bylaws, or (B) by a majority of the Board. The Maryland Charter and Maryland Bylaws will provide that subject to the rights of holders of any class or series of our stock, including the Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, described under the caption “Preferred Stock” in Appendix F, the Board has the exclusive power to adopt, alter or repeal any provision of the Maryland Bylaws and to make new bylaws. Other than limited voting rights of holders of the preferred stock, stockholders do not have the power to amend the Maryland Bylaws..
QUORUM
Board of Directors.   A majority of the total number of members of the Board of Directors as constituted from time to time constitutes a quorum for the transaction of business with respect to the Board.
Stockholders.   Subject to the rights of the holders of any series of preferred stock and except as otherwise provided by law or in the Delaware Charter or Delaware Bylaws, at any meeting of stockholders, the holders of at least 33-1/3% in total voting
No change.
 
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power of the outstanding shares of stock entitled to vote at the meeting shall be present or represented by proxy in order to constitute a quorum for the transaction of any business.
SPECIAL MEETINGS OF STOCKHOLDERS
The Delaware Charter provides that, except as otherwise provided by the terms of any series of preferred stock or unless otherwise prescribed by law or any other provision of the Delaware Charter, special meetings of stockholders will only be called by the Company’s Board, the Chairman of the Board, the Chief Executive Officer or the President (in the absence of the Chief Executive Officer). The Maryland Bylaws will provide that special meetings of stockholders may be called by the Board, the chair of the Board, the chief executive officer or the president. Additionally, special meetings of stockholders to act on any matter must be called by the secretary upon the written request of stockholders entitled to cast a majority of all the votes entitled to be cast on such matter at such meeting who have requested the special meeting in accordance with the procedures set forth in, and provided the information and certifications required by, the Maryland Bylaws. Only matters set forth in the notice of the special meeting may be considered and acted upon at such a meeting.
ADJOURNMENT
Under the DGCL and Delaware Bylaws, if a meeting of stockholders is adjourned and the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting must be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting the Company may transact any business that might have been transacted at the original meeting. Under the MGCL and the Maryland Bylaws, if a quorum is not established at any meeting of stockholders, the chair of the meeting may adjourn to a date which is not more than 120 days after the original record date for the meeting without notice other than announcement at the meeting. At the adjourned meeting, the Company may transact any business that might have been transacted at the original meeting.
NOTICE OF STOCKHOLDER MEETINGS
In accordance with the DGCL, the Delaware Bylaws provide that, unless otherwise provided by the DGCL or the Delaware Charter, notice of any stockholders meeting shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder In accordance with the MGCL, the Maryland Bylaws will provide that. notice of any stockholders meeting shall be given not less than 10 nor more than 90 days before the date of the meeting to each stockholder entitled to notice of such meeting as of the record date for determining the
 
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entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting. stockholders entitled to notice of the meeting.
ANNUAL MEETINGS OF THE STOCKHOLDERS
An annual meeting of the Company stockholders must be held at the date, time and place, or may instead be held solely by means of remote communication, as may be designated by our Board. Pursuant to Section 211 of the DGCL, if a corporation does not hold an annual meeting of stockholders within 13 months of the date of the previous year’s annual meeting of stockholders, the Delaware Court of Chancery may summarily order a meeting to be held upon application of any stockholder or director. The MGCL requires a meeting of stockholders to be held each year but does not contain a 13-month requirement similar to Section 211 of the DGCL.
ACTIONS REQUIRING SUPERMAJORITY STOCKHOLDER VOTE
Except as set forth in the Delaware Charter with respect to certain amendments to the Delaware Charter, the Delaware Charter and Delaware Bylaws do not contain any additional enhanced voting thresholds with respect to such extraordinary corporate actions. No matters will require a supermajority vote of stockholders under the MGCL, the Maryland Charter or the Maryland Bylaws.
STOCKHOLDER PROPOSALS
The DGCL does not have a statutory requirement with regard to advance notice procedures required of stockholders in order to properly bring business or director nominations before a meeting of stockholders, but a corporation is permitted to include such requirements in its bylaws. The Delaware Bylaws provide that, at an annual meeting of the stockholders, to be properly brought before the meeting, nominations for persons for election to our Board and the proposal of business to be considered by the stockholders must be either (i) properly brought before the meeting by or at the direction of the Board of Directors, or (ii) otherwise properly requested to be brought before the meeting by a
The Maryland Bylaws will provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to the Board and the proposal of business to be considered by stockholders at the meeting may be made only:

pursuant to the Company’s notice of the meeting;

by or at the direction of the Board; or

by a stockholder who was a stockholder of record at the record date set by the board of directors for the meeting, at the time of giving of the notice required by the Maryland Bylaws and at the time of the meeting (and any postponement or adjustment thereof), who is entitled to vote
 
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stockholder of the Company who was a stockholder of record on the date that notice was provided in accordance with the Delaware Bylaws, who is entitled to vote and who complied with the advance notice procedures set forth in the Delaware Bylaws.
The Delaware Bylaws provide requirements for both substance and timeliness. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Company (a) in the case of an annual meeting that is called for a date that is within 30 days before or after the anniversary date of the immediately preceding annual meeting of stockholders, not less than 60 days nor more than 90 days prior to the anniversary date of the immediately preceding annual meeting, and (b) in the case of an annual meeting that is called for a date that is not within 30 days before or 60 days after the anniversary date of the immediately preceding annual meeting, not later than the later of 70 days prior to the date of the meeting or the 10th day following the day on which public announcement of the date of the meeting was made. To satisfy the substantive advance notice requirements, the stockholder’s notice must contain specific information concerning the person to be nominated or matters to be brought before the meeting, as well as specific information concerning the stockholder submitting the proposal or making the nomination, as more particularly described in the Delaware Bylaws.
at the meeting in the election of each individual so nominated or on such other business and who has complied with the advance notice procedures set forth in, and provided the information and certifications required by, the Maryland Bylaws.
The Maryland Bylaws require the stockholder giving such notice to provide notice to the secretary containing the information required by the Maryland Bylaws not earlier than the 150th day nor later than 5:00 p.m., Eastern Time, on the 120th day prior to the first anniversary of the date of the proxy statement (as defined in the Maryland Bylaws) for the preceding year’s annual meeting (which, in the case of the annual meeting held in 2024, means the date of the annual meeting of stockholders held in 2023 by the Company before the completion of the Conversion), unless the date of the annual meeting is advanced or delayed by more than 30 days from the first anniversary of the date of the preceding year’s annual meeting, in which case, in order for notice by the stockholder to be timely, the notice must be so delivered not earlier than the 150th day before the date of the annual meeting and not later than 5:00 p.m., Eastern Time, on the later of the 120th day before the date of the annual meeting, as originally convened, or the tenth day following the day on which public announcement of the date of the meeting is first made.
With respect to special meetings of stockholders, the Maryland Bylaws will provide that only the business specified in the Company’s notice of meeting may be brought before the special meeting of stockholders, and
 
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nominations of individuals for election to Board may be made only:

by or at the direction of the Board or

provided that the meeting has been called in accordance with the Maryland Bylaws for the purpose of electing directors, by a stockholder who is a stockholder of record at the record date set by the board of directors for the meeting, at the time of giving of the notice required by the Maryland Bylaws and at the time of the meeting (and any postponement or adjustment thereof), who is entitled to vote at the meeting in the election of each individual so nominated and who has complied with the advance notice provisions set forth in, and provided the information and certifications required by, the Maryland Bylaws.
Any stockholder may nominate one or more individuals for election as a director if the stockholder’s notice containing the information required by the Maryland Bylaws is delivered to the secretary not earlier than the 120th day prior to such special meeting and not later than 5:00 p.m., Eastern Time, on the later of the 90th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting.
LIMITATION OF LIABILITY OF DIRECTORS AND OFFICERS
The DGCL permits limiting or eliminating the monetary liability of directors and certain officers to a corporation or its stockholders, except with regard to breaches of the duty of loyalty; acts or omissions not in good faith or which involve intentional misconduct or a knowing Maryland law permits a Maryland corporation to include in its charter a provision eliminating the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or
 
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violation of law; in the case of directors, unlawful repurchases, redemptions or dividends; transactions from which the director or officer derived an improper personal benefit; or, in the case of such officers, in actions by or in the right of the corporation.
The Delaware Charter provides that, to the fullest extent permitted by the DGCL, the Company’s directors are not liable to the Company or any of its stockholders for monetary damages for breaches of fiduciary duties as a director.
profit in money, property or services or active and deliberate dishonesty that is established by a final judgment and is material to the cause of action. The Maryland Charter will contain such a provision that eliminates such liability to the maximum extent permitted by Maryland law.
INDEMNIFICATION OF DIRECTORS, OFFICERS
The DGCL generally permits a corporation to indemnify any current or former director, officer, employee or agent of the corporation (or any person who is or was serving, at the request of the corporation, in one or more of such capacities with respect to another entity, trust or enterprise) against expenses, judgments, fines and amounts paid in settlement in connection with civil, criminal, administrative or investigative actions or proceedings, other than an action by or in the right of the corporation (in which case such persons may only be indemnified against expenses, and only with court approval if such indemnitee has been adjudged liable to the corporation), if the indemnitee acted in good faith and in a manner such indemnitee reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to a criminal action or proceeding, if such indemnitee had no reasonable cause to believe his/her conduct was unlawful. In addition if a current or former director or “officer” ​(as defined in Section 145(c)(1) of the DGCL) is successful on the merits or otherwise in defense of
The MGCL requires a Maryland corporation (unless its charter provides otherwise, which the Maryland Charter will not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made or threatened to be made a party by reason of his or her service in that capacity. The MGCL permits a Maryland corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that:

the act or omission of the director or officer was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty;

the director or officer actually received an improper personal benefit in money, property or
 
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any claim, issue or matter therein, the corporation shall indemnify such indemnitee against expenses actually and reasonably incurred by such indemnitee in connection therewith.
The Delaware Charter provides that the Company will indemnify any person who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding by reason of the fact that he, or a person for whom he is the legal representative, is or was a director or officer of the Company or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or other enterprise, against all liability and loss suffered and expenses incurred by such person, to the fullest extent permitted by the laws of the State of Delaware and the Delaware Charter. The Delaware Charter also provides that the Company is required to pay the expenses incurred by such persons in defending any proceeding in advance of its final disposition.
services; or

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.
Under the MGCL, a Maryland corporation may not indemnify a director or officer for an adverse judgment in a suit by or on behalf of the corporation or if the director or officer was adjudged liable on the basis that personal benefit was improperly received unless, in either case, a court orders indemnification, and then only for expenses. A court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. In addition, the MGCL permits a Maryland corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of:

a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and

a written undertaking, which may be unsecured, by the director or officer or on the director’s or officer’s behalf to repay the amount paid if it shall ultimately be determined that the standard of conduct has not been met.
The Maryland Charter will obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and to pay or
 
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reimburse reasonable expenses in advance of final disposition of a proceeding without requiring a preliminary determination of the director’s or officer’s ultimate entitlement to indemnification to:

any present or former director or officer (including former directors or officers of the Company before the completion of the Conversion (“Mullen Delaware”)) who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity; or

any individual who, while a director or officer of our company or Mullen Delaware and, at our request, serves or has served as a director, officer, partner, member, manager, trustee, employee or agent of another corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity.
DIVIDENDS / DISTRIBUTIONS
Unless further restricted in the certificate of incorporation, the DGCL permits a corporation to declare and pay dividends out of either (i) surplus, or (ii) if no surplus exists, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year (provided that the amount of capital of the corporation following the declaration and payment of dividend is not less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets). The DGCL defines surplus as the Pursuant to Section 2-311 of the MGCL and the Maryland Charter, and subject to the preferential rights of any outstanding shares of preferred stock, the Company will be permitted make distributions, which include dividends (other than dividends payable in shares of the Company’s stock), redemptions, repurchases, the incurrence or forgiveness of indebtedness to or for the benefit of the Company’s stockholders or any other direct or indirect transfers of money or other property of the Company in respect of any of its shares, when, as and if authorized by the
 
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excess, at any time, of the net assets of a corporation over its stated capital. In addition, the DGCL provides that a corporation may redeem or repurchase its shares only when the capital of the corporation is not impaired and only if such redemption or repurchase would not cause any impairment of the capital of the corporation.
As described in further detail below, subject to the preferential rights of the Company’s preferred stock, holders of the Company’s common stock and Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock, are entitled to dividends if, as and when declared by our Board out of the assets legally available for such distribution.
Board, unless, after the distribution, the Company would not be able to pay its debts as they become due in the usual course of business or the Company’s total assets would be less than the sum of its total liabilities, plus, if required by the terms of any future class or series of our stock senior to the shares receiving such distribution (but the terms of the Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock do not so provide), the aggregate liquidation preference of such class or series of stock.
Alternatively, the Company may make distributions out of (i) the net earnings of the Company for the fiscal year in which the distribution is made; (ii) its net earnings for the preceding fiscal year; or (iii) the sum of its net earnings for the preceding eight fiscal quarters, so long as, after giving effect to the distribution, the Company will be able to pay its debts as they become due in the ordinary course of its business.
In determining whether a distribution is permitted, the board of directors may rely either on (i) financial statements prepared on the basis of accounting practices and principles that are reasonable under the circumstances; or (ii) a fair valuation or other method that is reasonable under the circumstances.
BUSINESS COMBINATION STATUTE
Section 203 of the DGCL generally prohibits “business combinations,” including certain mergers, sales and leases of assets, issuances of securities and certain other transactions, by a corporation or certain of its subsidiaries with an “interested stockholder” ​(as defined under Under the MGCL, certain “business combinations” (including a merger, consolidation, statutory share exchange or, in certain circumstances specified under the statute, an asset transfer or issuance or reclassification of equity securities) between a
 
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Section 203 of the DGCL), for a period of three years after the person or entity becomes an interested stockholder unless: (i) the Board of Directors of the corporation has approved, before such person or entity became an interested stockholder, either the business combination or the transaction that resulted in the person becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owns at least 85% of the “voting stock” of the corporation outstanding at the time the transaction commenced (excluding for purposes of determining the voting stock outstanding, but not the outstanding voting stock owned by the interested stockholder, shares owned by directors who are officers and shares owned by employee stock plans in which participants do not have the right to determine confidentially whether shares will be tendered in a tender or exchange offer), or (iii) at or subsequent to the person or entity becoming an interested stockholder, the business combination is approved by the Board of Directors and authorized at a meeting of stockholders by the affirmative vote of at least 66-2∕3% of the outstanding voting stock not owned by the interested stockholder.
The Company has not opted out of the protections of Section 203 of the DGCL. As a result, the statute applies to the Company; however, the Board previously approved each of Gregory B. Maffei and certain of his related persons as an “interested stockholder” and the acquisition by such persons of shares of the
Maryland corporation and any interested stockholder, or an affiliate of such an interested stockholder, are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Maryland law defines an interested stockholder as:

any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or

an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.
A person is not an interested stockholder under the MGCL if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. In approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of the approval, with any terms and conditions determined by it.
After such five-year period, any such business combination must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:

80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation, voting together as a single voting group; and

two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other
 
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company’s common stock, in each case, for purposes of Section 203 of the DGCL.
than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, voting together as a single voting group.
These supermajority approval requirements do not apply if, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares.
These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by a corporation’s board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, the board of directors will adopt a resolution exempting any business combination with any other person, provided that such business combination is first approved by the board of directors, including a majority of our directors who are not affiliates or associates of such person.
CONTROL SHARE ACQUISITION ACT
There is no equivalent statutory provision to Control Share Acquisition Act under Delaware law. The MGCL provides that a holder of “control shares” of a Maryland corporation acquired in a “control share acquisition” has no voting rights with respect to those shares except to the extent approved by the affirmative vote of at least two-thirds of the votes entitled to be cast by stockholders entitled to exercise or direct the exercise of voting power in the election of directors generally, but excluding:
 
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(1) the person who has made or proposes to make the control share acquisition; (2) any officer of the corporation; or (3) any employee of the corporation who is also a director of the corporation. “Control shares” are voting shares of stock that, if aggregated with all other such shares of stock previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges:

one-tenth or more but less than one-third;

one-third or more but less than a majority; or

a majority or more of all voting power.
Control shares do not include shares that the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition, directly or indirectly, of ownership of, or the power to direct the exercise of voting power with respect to, issued and outstanding control shares, subject to certain exceptions.
A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses and making an “acquiring person statement” as described in the MGCL), may compel the board of directors of the Maryland corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the control shares. If no request for a
 
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special meeting is made, the corporation may itself present the question at any stockholders meeting.
If voting rights of control shares are not approved at the meeting or if the acquiring person does not deliver an “acquiring person statement” as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or, if a meeting of stockholders is held at which the voting rights of such shares are considered and not approved, as of the date of such meeting. If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition statute does not apply (1) to shares acquired in a merger, consolidation or statutory share exchange if the corporation is a party to the transaction or (2) to acquisitions approved or exempted by the charter or bylaws of the corporation.
The Maryland Bylaws will contain a provision exempting from the control share acquisition statute any and all control share acquisitions by any person of shares of our stock. There can be no assurance that this provision
 
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will not be amended or eliminated at any time in the future.
DUTIES OF DIRECTORS
Under Delaware law, the standards of conduct for directors have developed through Delaware case law. Generally, directors must exercise a duty of care and duty of loyalty to the company and its stockholders. Members of the Board of Directors or any committee thereof designated by the Board of Directors are fully protected in relying in good faith upon the records of the corporation and upon such information, opinions, reports and statements presented to the corporation by corporate officers, employees, committees of the Board of Directors or other persons as to matters such member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation. Under Maryland law, the standard of conduct for directors is governed by statute. The MGCL requires that a director of a Maryland corporation perform his or her duties: (i) in good faith; (ii) in a manner the director reasonably believes to be in the interests of the corporation; and (iii) with the care that an ordinarily prudent person in a like position would use under similar circumstances.
SUBTITLE 8
There is no equivalent statutory provision to Subtitle 8 under Delaware law
Subtitle 8 of Title 3 of the MGCL (“Subtitle 8”) permits a Maryland corporation with a class of equity securities registered under the Exchange Act, and at least three independent directors to elect, by provision in its charter or bylaws or a resolution of its board of directors and notwithstanding any contrary provision in the charter or bylaws, to be subject to any or all of five provisions which provide for:

a classified board;

a two-thirds vote requirement for removing a director;

a requirement that the number of directors be fixed only by vote of the directors;

a requirement that a vacancy on the board of directors be filled only by a vote of the
 
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remaining directors (whether or not they constitute a quorum) and for the remainder of the full term of the class of directors in which the vacancy occurred and until a successor is elected and qualifies; or

a majority requirement for the calling of a special meeting of stockholders.
The Company will elect in the Maryland Charter to be subject to the Subtitle 8 provision which provides that vacancies on our Board may be filled only by the remaining directors (whether or not they constitute a quorum) and that a director elected by the Board to fill a vacancy will serve for the remainder of the full term of the directorship and until his or her successor is duly elected and qualifies.
APPRAISAL RIGHTS / DISSENTER’S RIGHTS
Under the DGCL, a stockholder who has neither voted in favor of certain mergers, consolidations or conversions of a corporation to another entity, nor consented thereto in writing, who has properly demanded appraisal of their shares, and who otherwise complies with the requirements for perfecting and preserving their appraisal rights under Section 262 of the DGCL may be entitled to receive payment in cash for the fair value of their shares (exclusive of any element of value arising from the accomplishment or expectation of such merger, consolidation or conversion) as determined by the Delaware Court of Chancery in an appraisal proceeding, together with interest (if any) thereon. Section 262 also permits beneficial owners of stock to demand appraisal in their own names, subject to the requirements of Section 262. However, unless the corporation’s certificate of incorporation Pursuant to the MGCL, a Maryland corporation may eliminate appraisal rights in all situations (subject to a limited carve out regarding appraisal rights in connection with the Control Share Acquisitions Act) in its charter. The Maryland Charter will provide that stockholders generally have no appraisal rights unless the Board determines that appraisal rights will apply to one or more transactions in which stockholders would otherwise be entitled to exercise such rights.
 
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provides otherwise, appraisal rights are not available for shares of capital stock that, at the record date for determination of stockholders entitled to receive notice of the meeting of stockholders (or at the record date for determination of stockholders entitled to consent pursuant to Section 228 of the DGCL) to act upon the merger, consolidation or conversion, are either (i) listed on a national securities exchange or (ii) held of record by more than 2,000 holders. Further, unless the corporation’s certificate of incorporation provides otherwise, no appraisal rights are available to stockholders of the surviving corporation if the merger did not require the vote of the stockholders of the surviving corporation as provided in Section 251(f) of the DGCL. Notwithstanding the foregoing, appraisal rights are available if stockholders are required to accept for their shares anything other than (i) shares of capital stock of the surviving or resulting corporation (or of the converted entity if such entity is a corporation), (ii) shares of capital stock of another corporation (or depository receipts in respect thereof) that, at the effective date of the merger, consolidation or conversion, will either be listed on a national securities exchange or held of record by more than 2,000 holders, (iii) cash in lieu of fractional shares, or (iv) any combination of clauses (i) – (iii). Appraisal rights are also available under the DGCL in certain other circumstances, including in certain parent-subsidiary mergers and in certain circumstances where the certificate of incorporation so provides. Neither the Delaware Charter nor the Delaware Bylaws provide for
 
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RIGHT
DELAWARE
MARYLAND
appraisal rights in any additional circumstance other than as required by applicable law. See Section 262 of the DGCL.
EXCLUSIVE FORUM
The Delaware Charter contains an exclusive forum provision, which provides that the Court of Chancery of the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (1) derivative action or proceeding brought on behalf of the Company, (2) action asserting a claim of breach of a fiduciary duty owed by any director or officer or stockholder of the Company to the Company or our stockholders, (3) action asserting a claim against the Company arising pursuant to any provision of the DGCL, Delaware Charter or Delaware Bylaws, or (4) action asserting a claim against the Company governed by the internal affairs doctrine. The Maryland Bylaws will provide that, unless the Company consents in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, will be the sole and exclusive forum for (a) any Internal Corporate Claim, as such term is defined in the MGCL, and any action or proceeding asserting any Internal Corporate Claim, including without limitation: (i) any derivative action or proceeding brought on the Company’s behalf (other than any action arising under federal securities laws), (ii) any claim, or any action or proceeding asserting a claim, based on an alleged breach of any duty owed by any of the Company’s directors or officers or other employees to the Company or to its stockholders; or (iii) any claim, or any action or proceeding asserting a claim, against the Company or any of the Company’s directors or officers or other employees arising under or pursuant to any provision of the MGCL, the Maryland Charter or the Maryland Bylaws; or (b) any action or proceeding asserting a claim against the Company or any of the Company’s directors, officers or other employees that is governed by the internal affairs doctrine. These choice of forum provisions will not apply to any action or proceeding under federal securities laws or claims arising under the Securities Act, or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
 
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RIGHT
DELAWARE
MARYLAND
Further, these choice of forum provisions will not apply to any claim or cause of action, or any action or proceeding asserting a claim or cause of action, that arose solely as a result of actions and events that occurred before the completion of the Conversion.
Furthermore, the Maryland Bylaws will provide that, unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be, to the fullest extent permitted by law, the sole and exclusive forum for the resolution of any claim arising under the Securities Act.
Certain Anti-Takeover Effects and Provisions
The Delaware Certificate of Incorporation and the Delaware Bylaws contain various provisions that may be viewed as having anti-takeover effects. These include, but are not limited to, the following:

authorization of the board of directors to issue shares of preferred stock generally without stockholder approval;

a board of directors divided into three classes;

directors are removable by stockholders only for cause;

advance notice requirements for stockholder proposals and director nominations;

requirements that special meetings of stockholders may only be called by the board of directors or certain officers; and

not permitting cumulative voting in the election of directors.
The provisions of the type described in the bullet points in the immediately preceding paragraph are similar to those contained in the Maryland Charter and the Maryland Bylaws. See the section entitled “Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws” under Appendix F for further details on certain anti-takeover effects under Maryland law.
Appraisal Rights
If the Conversion consummated, shares of Mullen’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock held by Mullen stockholders who do not vote in favor of the Conversion, make the demand described below with respect to shares of Mullen’s Series A Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, who continuously is the record holder of such shares through the effective time of the Conversion (the “Effective Time”) and who otherwise complies with the statutory requirements of Section 262 will be entitled to an appraisal by the Delaware Court of Chancery of the fair value of his or her shares of Mullen’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. Because the shares of Mullen’s common stock are currently listed on a national securities exchange, and the holders thereof will receive shares of common stock of the converted corporation in the Conversion, holders of Mullen’s common stock are not entitled to exercise appraisal rights.
 
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The following summarizes Delaware law pertaining to appraisal rights in connection with the Conversion. The following discussion is not a complete statement of the law pertaining to appraisal rights under Delaware law and is qualified in its entirety by the full text of Section 262, which is attached to this Proxy Statement as Appendix G and incorporated herein by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that you exercise your appraisal rights under Section 262.
Any person contemplating the exercise of such appraisal rights should carefully review the provisions of Section 262, which are attached hereto as Appendix G, particularly the procedural steps required to properly demand and perfect such rights. Failure to follow the steps required by Section 262 for demanding and perfecting appraisal rights may result in the loss of such rights. All references in this summary to (i) a “stockholder” are to the record holder of shares of Mullen’s Series A Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, (ii) a “beneficial owner” are to a person who is the beneficial owner of shares of Mullen’s Series A Preferred Stock, Series C Preferred Stock or Series D Preferred Stock held either in voting trust or by a nominee on behalf of such person, (iii) a “person” are to an individual, corporation, partnership, unincorporated association or other entity. Unless otherwise noted herein, all references to shares of Mullen’s preferred stock refer collectively to shares of Mullen’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock. Under Section 262, stockholders desiring to exercise their right to appraisal must (1) properly submit a written demand for an appraisal of their shares of Mullen’s preferred stock to Mullen prior to the stockholder vote on the Conversion; (2) not submit a proxy or otherwise vote in favor of the Conversion; (3) hold shares of Mullen’s preferred stock upon the making of a demand under clause (1) and continue to hold their shares of preferred stock through the effective date of the Conversion; (4) not thereafter withdraw their demand for appraisal of their shares or otherwise lose their appraisal rights, in each case in accordance with the DGCL; and (5) otherwise meet the criteria and follow the procedures set forth in Section 262. A beneficial owner may, in such person’s name, demand in writing an appraisal of such beneficial owner’s shares in accordance with the procedures of subsection (d)(1) of Section 262 summarized above, provided that (i) such beneficial owner continuously owns such shares through the effective date of the Conversion and otherwise satisfies the requirements applicable to a stockholder under the first sentence of subsection (a) of Section 262, and (ii) the demand made by such beneficial owner reasonably identifies the holder of record of the shares for which the demand is made, is accompanied by documentary evidence of such beneficial owner’s beneficial ownership of stock and a statement that such documentary evidence is a true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by Mullen under Section 262 and to be set forth on the Verified List (defined below).
Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest from the effective date of the Conversion through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the Conversion and the date of payment of the judgment; provided, however, that at any time before the Delaware Court of Chancery enters judgment in the appraisal proceeding, the converted corporation may pay to each person entitled to appraisal an amount in cash, in which case any such interest will accrue after the time of such payment only on the amount that equals the sum of (1) the difference, if any, between the amount so paid and the “fair value” of the shares as determined by the Delaware Court of Chancery and (2) any interest accrued prior to the time of such voluntary payment, unless paid at such time. The converted corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.
Under Section 262, where a conversion is to be submitted for approval and adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of the corporation’s stockholders who was such on the record date for notice of such meeting with respect to shares for which appraisal rights are available that appraisal rights are available and include in the notice a copy of Section 262 or information directing the stockholders to a publicly available electronic resource at which Section 262 may be accessed without subscription or cost. This Proxy Statement constitutes such notice that appraisal rights are available in connection with the Conversion, and the full text of Section 262 is attached to this Proxy Statement as Appendix G. In connection with the Conversion, any person who wishes to exercise appraisal rights or who wishes to preserve such person’s right to do so should review Annex C carefully. Failure to comply with the requirements of Section 262 in a timely and proper manner may result in the loss of
 
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appraisal rights under the DGCL. A person who loses his, her or its appraisal rights will be deemed to have accepted the terms offered upon the Conversion. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal, we believe that if a person considers exercising such rights, that person should seek the advice of legal counsel.
Stockholders and beneficial owners wishing to exercise the right to seek an appraisal of their shares of Mullen’s preferred stock must strictly comply with Section 262. In addition, a stockholder of record, a beneficial owner or the converted corporation must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares within 120 days after the effective date of the Conversion. The converted corporation is under no obligation to file any petition and has no intention of doing so.
Because receipt of a signed proxy that does not contain voting instructions will, unless timely revoked, be voted in favor of the Conversion, a stockholder who votes by proxy and who wishes to exercise appraisal rights should not return a blank proxy, but rather must vote against the Conversion, abstain or not vote his, her or its shares. Beneficial owners should consult with their bank, broker or other nominee regarding methods of voting.
Filing Written Demand
Any stockholder or beneficial owner wishing to exercise appraisal rights must deliver to Mullen, before the vote on the Conversion at the Meeting, a written demand for the appraisal of such person’s shares. Neither voting against the Conversion nor abstaining from voting or failing to vote on the Conversion will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the Conversion. A stockholder’s or beneficial owner’s failure to make the written demand prior to the taking of the vote on the Conversion at the Meeting will constitute a waiver of appraisal rights.
Record Holders
A demand for appraisal by a holder of record must be executed by or on behalf of the holder of record and must reasonably inform us of the identity of the stockholder and state that the person intends thereby to demand appraisal of the stockholder’s shares in connection with the Conversion. If a holder of record is submitting a demand with respect to shares owned of record in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner in such capacity, and if the shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners. A holder of record, such as a brokerage firm, bank, trust or other nominee, who holds shares of Mullen’s preferred stock as nominee or intermediary for one or more beneficial owners may exercise appraisal rights with respect to shares of Mullen’s preferred stock held for one or more beneficial owners while not exercising appraisal rights for other beneficial owners. In that case, the written demand should state the number of shares of Mullen’s preferred stock as to which appraisal is sought. Where no number of shares of Mullen’s preferred stock is expressly mentioned, the demand will be presumed to cover all shares of Mullen’s preferred stock held in the name of the holder of record.
Beneficial Owners
A beneficial owner may, in such person’s name, demand in writing an appraisal of such beneficial owner’s shares in accordance with the procedures of subsection (d)(1) of Section 262 summarized above, provided that (i) such beneficial owner continuously owns such shares through the effective date of the Conversion and otherwise satisfies the requirements applicable to a stockholder under the first sentence of subsection (a) of Section 262, and (ii) the demand made by such beneficial owner reasonably identifies the holder of record of the shares for which the demand is made, is accompanied by documentary evidence of such beneficial owner’s beneficial ownership of stock and a statement that such documentary evidence is a
 
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true and correct copy of what it purports to be, and provides an address at which such beneficial owner consents to receive notices given by Mullen under Section 262 and to be set forth on the Verified List (defined below).
Although not expressly required by Section 262, Mullen reserves the right to take the position that it may require the submission of all information required of a beneficial owner under subsection (d)(3) of Section 262 with respect to any person sharing beneficial ownership of the shares for which such demand is submitted.
All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:
Attn: Secretary
Mullen Automotive Inc.,
1405 Pioneer Street, Brea, California 92821
Demands for appraisal may not be submitted by electronic transmission.
Actions After Completion of the Conversion
If the Conversion is completed, within 10 days after the effective date of the Conversion, the converted corporation will notify each holder of Mullen’s preferred stock who has made a written demand for appraisal pursuant to Section 262 and who has not voted in favor of the Conversion, and any beneficial owner who has properly demanded appraisal, of the effective date of the Conversion. At any time within 60 days after the effective date of the Conversion, any person entitled to appraisal rights who has not commenced an appraisal proceeding or joined that proceeding as a named party may withdraw such person’s demand for appraisal and accept the terms offered pursuant to the Conversion by delivering to Mullen a written withdrawal of the demand for appraisal. Within 120 days after the effective date of the Conversion, the converted corporation or any person who has complied with Section 262 and is entitled to appraisal rights under Section 262, may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the converted corporation in the case of a petition filed by a stockholder of record or beneficial owner, demanding a determination of the fair value of Mullen’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock (as applicable) of all dissenting holders. The converted corporation is under no obligation, and has no present intention, to file a petition, and no person should assume that the converted corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of Mullen’s preferred stock. Accordingly, any stockholders or beneficial owners who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of Mullen’s preferred stock within the time and in the manner prescribed in Section 262. The failure of a record holder or beneficial owner of shares of Mullen’s preferred stock to file such a petition within the period specified in Section 262 could result in the loss of appraisal rights.
Within 120 days after the effective date of the Conversion, any person who has complied with the requirements for exercise of appraisal rights will be entitled, upon written request, to receive from the converted corporation a statement setting forth the aggregate number of shares not voted in favor of the Conversion and with respect to which we have received demands for appraisal, and the aggregate number of stockholders or beneficial owners holding or owning such shares (provided that, where a beneficial owner makes a demand on his, her or its own behalf, the record holder of such shares shall not be considered a separate stockholder holding such shares for purposes of such aggregate number). The converted corporation must give this statement to the requesting stockholder or beneficial owner within 10 days after receipt of the written request for such a statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later.
If a petition for an appraisal is duly filed by a record holder of shares of Mullen’s preferred stock or a beneficial owner and a copy thereof is served upon the converted corporation, the converted corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list (which we refer to as the “Verified List”) containing the names and addresses of all persons who have demanded appraisal for their shares and with whom agreements as to the value of their shares have not been reached. Upon the filing of any such petition, the Delaware Court of Chancery may order that notice of the time and place fixed for the hearing on the petition be mailed to the converted corporation and
 
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all of the stockholders shown on the Verified List at the addresses stated therein. The forms of the notices by mail and by publication shall be approved by the Delaware Court of Chancery, and the costs of these notices shall be borne by the converted corporation.
After notice to the stockholders as required by the court, the Delaware Court of Chancery is empowered to conduct a hearing on the petition to determine those persons who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the persons who demanded appraisal of their shares to submit their stock certificates to the Delaware Register in Chancery for notation thereon of the pendency of the appraisal proceedings, and if any person fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to such person.
Determination of Fair Value
After determining the persons entitled to appraisal, the Delaware Court of Chancery will determine the “fair value” of the shares of Mullen’s Series A Preferred Stock, Series C Preferred Stock and Series D Preferred stock, as applicable, subject to appraisal, exclusive of any element of value arising from the accomplishment or expectation of the Conversion, together with interest, if any, to be paid upon the amount determined to be the fair value (subject, in the case of interest payments, to any voluntary cash payments made by the converted corporation pursuant to subsection (h) of Section 262 that have the effect of limiting the sum on which interest accrues as described above). In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. In Weinberger v. UOP, Inc., the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the transaction in which appraisal rights are available that throw any light on future prospects of the surviving, resulting or converted entity. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the . . . conversion.” In Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger, the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the [transaction in which appraisal rights are available] and not the product of speculation, may be considered.”
Neither Mullen nor the converted corporation anticipates offering more than the value offered pursuant to the Conversion to any holder of shares of Mullen’s preferred stock exercising appraisal rights. If a demand for appraisal is duly withdrawn, a petition for appraisal is not timely filed, or other requirements imposed by Section 262 to perfect and seek appraisal are not satisfied, then the right to an appraisal will cease.
Upon application by the converted corporation or by any person entitled to participate in the appraisal proceeding, the Delaware Court of Chancery may, in its discretion, proceed to trial upon the appraisal prior to the final determination of the persons entitled to an appraisal. Any person whose name appears on the Verified List may participate fully in all proceedings until it is finally determined that such person is not entitled to appraisal rights under Section 262.
The Delaware Court of Chancery will direct the payment of the fair value of the shares, together with interest, if any, by the converted corporation to the persons entitled thereto. Payment will be made to each such person upon such terms and conditions as the Delaware Court of Chancery may order. The Delaware Court of Chancery’s decree may be enforced as other decrees in such court may be enforced.
The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a person whose name
 
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appears on the Verified List who participated in the proceeding and incurred expenses in connection therewith, the Delaware Court of Chancery may also order that all or a portion of such expenses, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to appraisal not dismissed pursuant to subsection (k) of Section 262 or subject to such an award pursuant to a reservation of jurisdiction under Subsection (k) of Section 262. In the absence of such an order, each party bears its own expenses.
If any person who demands appraisal of his, her or its shares of Mullen’s preferred stock under Section 262 fails to perfect, or loses or successfully withdraws, such person’s right to appraisal, such person will be deemed to accept the terms offered upon the Conversion, without interest. A person will fail to perfect, or effectively lose or withdraw, such person’s right to appraisal if no petition for appraisal is filed within 120 days after the effective date of the Conversion or if the person delivers to the converted corporation a written withdrawal of the person’s demand for appraisal in accordance with Section 262.
From and after the Effective Time, no person who has demanded appraisal rights with respect to some or all of such person’s shares of Mullen’s preferred stock will be entitled to vote such shares for any purpose or to receive payment of dividends or other distributions on such shares, except dividends or other distributions payable to stockholders of record as of a time prior to the Effective Time. If no petition for an appraisal is filed, if the person who has made a demand for appraisal delivers to the Surviving Corporation a written withdrawal of the demand for an appraisal in respect of some or all of such person’s shares within 60 days after the Effective Time in accordance with Section 262 or, with respect to holders of Mullen’s preferred stock, then the right of such person to an appraisal of such shares shall cease. Once a petition for appraisal is filed with the Delaware Court of Chancery, no appraisal proceeding shall be dismissed as to any person without the approval of the Delaware Court of Chancery and such approval may be conditioned upon such terms as the Delaware Court of Chancery deems just, including without limitation, a reservation of jurisdiction for any application to the Delaware Court of Chancery made under subsection (j) of Section 262; provided that this sentence does not affect the right of any person who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such person’s demand for appraisal and to accept the terms offered upon the Conversion within 60 days after the effective date of the Conversion.
Failure to comply with all of the procedures set forth in Section 262 may result in the loss of a stockholder’s or beneficial owner’s statutory appraisal rights. Consequently, any stockholder or beneficial owner wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.
Effective Time
If approved by the requisite vote of the holders of shares of Common Stock and Preferred Stock, we expect the Conversion to become effective upon the filing of a certificate of conversion with the Delaware Secretary of State in accordance with the DGCL and the filing of the Maryland Charter and an Articles of Conversion with SDAT in accordance with the MGCL, or if later, the time specified in such documents that is not more than 30 days after the date on which the Maryland Charter and Articles of Conversion are filed with the SDAT.
Consequences If the Conversion Proposal Is Not Approved
If the Conversion Proposal is not approved by the stockholders, (1) the Company will continue to operate and pay Delaware franchise taxes; (2) the Board will not be able to approve, without a stockholder vote, an amendment to the charter Company to increase the number of authorized shares or effect a reverse stock split without stockholders’ approval, which will therefore require the additional time and expense of seeking a stockholder vote for such matters; (3) the stockholders will not have the additional protections offered by Maryland law in the event of an unsolicited takeover attempt; (4) the Company will not have the flexibility offered by Maryland law to make distributions and (5) the Company cannot have increased flexibility in the future to implement potential restructuring or strategic transactions if determined advisable, without triggering appraisal rights.
 
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In the future, the Company’s Board of Directors may seek certain amendments to the Delaware Charter or re-submit a proposal to the stockholders asking them to approve the reincorporation of the Company in the State of Maryland.
Securities Law Consequences
After the Reincorporation, we will continue to be a publicly held company, shares of Common Stock will continue to be traded on the Nasdaq Capital Market under the symbol “MULN,” and we will continue to file periodic reports and other documents with the SEC and provide to stockholders the same types of information that we have previously filed and provided. We and our stockholders will be in the same respective positions under the federal securities laws after the Reincorporation as we and our stockholders were prior to the Reincorporation.
Effect of Not Obtaining the Required Vote for Approval
If the Conversion Proposal fails to obtain the requisite vote for approval, the Conversion will not be consummated and we will continue to be incorporated in Delaware.
Abandonment, Deferral, and Amendment
Notwithstanding a favorable vote of the stockholders, the Board of Directors may decide to abandon or defer the Conversion prior to its effectiveness. The Plan of Conversion, however, may not be amended after stockholder approval if the amendment would have a material adverse effect on the rights of stockholders or violate applicable law.
Vote Required; Board of Directors Recommendation
You may vote in favor of or against this proposal or you may abstain from voting. Approval of the Conversion Proposal will require the affirmative vote of (i) a majority of the voting power of the outstanding shares of our Common Stock, Series A Preferred Stock and Series C Preferred Stock (voting on an as-converted to Common Stock basis), entitled to vote thereon, all voting together as a single class and (ii) a majority of the outstanding shares of each of the Series A Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, entitled to vote thereon, each voting as a separate class. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the approval of the Conversion Proposal.
Proposal 4 is a non-routine matter. If you own shares through a bank, broker or other holder of record, those shares may not be voted on Proposal 4 by such bank, broker or other holder of record without your instructions. Abstentions and broker non-votes will have the effect of a vote against the proposal.
Our Chief Executive Officer, David Michery will abstain from voting on this Proposal 4. Meanwhile, as stated above, Mr. Michery will not exercise his proxies pursuant to the Voting Agreements on any of the proposals described in this proxy statement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE CONVERSION OF THE COMPANY FROM A DELAWARE CORPORATION TO A MARYLAND CORPORATION.
 
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PROPOSAL 5
APPROVAL, ON A NON-BINDING ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In accordance with the rules of the SEC, we are providing stockholders with an opportunity to make a non-binding, advisory vote on the compensation of our named executive officers. This non-binding advisory vote is commonly referred to as a “say on pay” vote and gives our stockholders the opportunity to express their views on our named executive officers’ compensation as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the philosophy, policies, and practices described in this Proxy Statement.
Stockholders are urged to read the section titled “Executive Compensation,” which discusses how our executive compensation policies and procedures implement our compensation philosophy and contains tabular information and narrative discussion about the compensation of our named executive officers. Our compensation committee and Board believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving our goals. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Meeting:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and any related material disclosed in this proxy statement, is hereby approved.”
As an advisory vote, this proposal is not binding. Neither the outcome of this advisory vote nor of the advisory vote included in this proposal overrules any decision by the company or our board of directors (or any committee thereof), creates or implies any change to the fiduciary duties of the company or our board of directors (or any committee thereof), or creates or implies any additional fiduciary duties for the company or our board of directors (or any committee thereof). However, our Board and compensation committee, which is responsible for designing and administering our executive compensation program, value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
Vote Required; Board of Directors Recommendation
You may vote in favor of or against this proposal or you may abstain from voting. Approval of this Proposal 5 requires the affirmative vote of a majority of the voting power of the outstanding shares of our Common Stock, our Series A Preferred Stock and our Series C Preferred Stock (voting on an as-converted to Common Stock basis), present in person or represented by proxy at the Meeting and entitled to vote thereon, all voting together as a single class, assuming the presence of a quorum. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the approval of this proposal.
Proposal 5 is a non-routine matter. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote on Proposal 5 in order for them to vote your shares so that your vote can be counted. Abstentions will have the same effect as votes “against” the proposal. Broker non-votes will have no effect on the result of the vote, although broker non-votes will be considered present for the purpose of determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
 
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PROPOSAL 6
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTE ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
In accordance with the rules of the SEC, we are providing our stockholders with an opportunity to make a non-binding, advisory vote on the frequency of future non-binding advisory votes on the compensation of our named executive officers. This non-binding advisory vote is commonly referred to as a “say on frequency” vote and must be submitted to stockholders at least once every six years.
You have four choices for voting on this proposal. You can choose whether future non-binding advisory votes on the compensation of our named executive officers should be conducted every “1 YEAR,” “2 YEARS,” or “3 YEARS.” You may also “ABSTAIN” from voting.
After careful consideration, the Board recommends that future non-binding advisory votes on the compensation of our named executive officers be held every three years. The Board believes this period is most consistent with the Company’s compensation objectives since our executive compensation program is intended to encourage long-term performance and a three-year voting cycle will provide shareholders with sufficient time to evaluate the effectiveness of our executive compensation program.
Stockholders are not voting to approve or disapprove our Board’s recommendation. Instead, stockholders may indicate their preference regarding the frequency of future non-binding advisory votes on the compensation of our named executive officers by selecting one year, two years, or three years. Stockholders that do not have a preference regarding the frequency of future advisory votes may abstain from voting on the proposal.
As an advisory vote, this proposal is not binding. However, our Board and compensation committee value the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future decisions regarding the frequency of holding future non-binding advisory votes on the compensation of our named executive officers. However, because this is an advisory vote and therefore not binding on our Board or the Company, our Board may decide that it is in the best interests of our stockholders that we hold an advisory vote on the compensation of our named executive officers more or less frequently than the option preferred by our stockholders. The results of the vote will not be construed to create or imply any change or addition to the fiduciary duties of our Board.
Vote Required; Board of Directors Recommendation
You may vote in favor of or against this proposal or you may abstain from voting. Approval of this Proposal 6 requires the affirmative vote of a majority of the voting power of the outstanding shares of our Common Stock, our Series A Preferred Stock and our Series C Preferred Stock (voting on an as-converted to Common Stock basis), present in person or represented by proxy at the Meeting and entitled to vote thereon, all voting together as a single class, assuming the presence of a quorum. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the approval of this proposal.
Proposal 6 is a non-routine matter. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote on Proposal 6 in order for them to vote your shares so that your vote can be counted. Abstentions will have the same effect as votes “against” the proposal. Broker non-votes will have no effect on the result of the vote, although broker non-votes will be considered present for the purpose of determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO HOLD FUTURE STOCKHOLDER ADVISORY VOTES ON THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS EVERY “3 YEAR.”
 
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PROPOSAL 7
APPROVAL, FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635(C),
OF THE ISSUANCE OF SHARES OF COMMON STOCK TO OUR CHIEF EXECUTIVE OFFICER PURSUANT TO A PERFORMANCE STOCK AWARD AGREEMENT
General
We are asking the stockholders to approve the 2023 CEO Performance Award to our Chief Executive Officer and founder, David Michery. On June 8, 2023, to the Board of Directors (the “Board”) of the Company determined that (1) the grant of performance equity awards to the Chief Executive Officer (“CEO Performance Award”) pursuant to a Performance Stock Award Agreement (the “2023 PSA Agreement”) was advisable and in the best interests of the Company and its stockholders and (2) approved entering into the 2023 PSA Agreement and the grant of the CEO Performance Award. The full text of the 2023 PSA Agreement is attached to this proxy statement as Appendix H. The CEO Performance Award represents the right of Mr. Michery to receive shares of Common Stock of the Company based on the achievement of milestones, subject to the terms and conditions set forth in the 2023 PSA Agreement. Mr. Michery abstained from the vote to approve the entry into the 2023 PSA Agreement and the grant of the CEO Performance Award. References to “Mr. Michery” in this section mean David Michery unless the context requires otherwise.
The Compensation Committee, consisting of independent directors, designed the 2023 PSA Agreement. The Compensation Committee discussed the 2023 PSA Agreement several times since the beginning of March 2023 and considered the Company’s current ongoing projects and its long-term vision. The Compensation Committee also considered the need to incentivize our CEO and to drive the next decade of our shareholder returns, and recognized that Mr. Michery currently only holds a minimum ownership interest in the Company at around 1.67%. The Compensation Committee believes that the grant of the equity pursuant to the terms of the 2023 PSA Agreement is in the best interests of the stockholders as it provides incentives for Mr. Michery to achieve the Company’s business plans. Furthermore, the 2023 PSA Agreement recognizes the Company’s growth potential and is designed to motivate Mr. Michery whose inspirational creativity and leadership can uniquely unlock this potential and continue to deliver exceptional value to the Company. As the Company’s founder, a thought leader and a person who developed the Company’s brand and vision from the beginning, the Compensation Committee believes that Mr. Michery inspires employees and customers alike with his creativity, dynamic market-creating innovation and enduring dedication to Mullen’s mission.
Pursuant to the 2023 PSA 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.
In 2022, the Board approved a performance stock award for Mr. Michery (the “2022 PSA Agreement”) that required the Company to achieve specified market capitalization and operational goals. Mr. Michery has achieved most of the milestones and tranches under the 2022 PSA Agreement. Only a few milestone opportunities remain under the 2022 PSA Agreement and certain of them have lapsed. The Compensation Committee therefore saw the need to continue incentivizing Mr. Michery to lead the Company through the next phase of its development. The awards already granted to Mr. Michery under the 2022 PSA Agreement are described under the section “Executive Compensation — CEO Performance Award” below and were reported in the Company’s Annual Report on Form 10-K for the year ended September 30, 2022.
As noted below, Nasdaq Listing Rule 5635I of the Nasdaq Stock Market LLC (“Nasdaq”) requires approval by a listed company’s stockholders with respect to the establishment of any equity compensation arrangement pursuant to which stock may be acquired by officers, directors, employees, or consultants, regardless of whether or not such authorization is required by law or by the listed company’s charter. The 2023 PSA Agreement provides that the Company is not obligated to issue shares underlying the CEO Performance Award until the Company’s stockholders have voted to approve the 2023 PSA Agreement.
 
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Further, the 2023 PSA Agreement provides that if the Company’s stockholders do not approve the CEO Performance Award on or before June 8, 2024, the date that is twelve (12) months after the date the CEO Performance Award was granted, then the CEO Performance Award shall be forfeited. We are therefore seeking stockholder approval to comply with the rules and regulations of Nasdaq and the terms of the 2023 PSA Agreement.
Value to Stockholders
The Board of Directors determined it in the best interests of stockholders to retain Mr. Michery with a long-term compensation agreement that is highly aligned with continued stockholder returns. The Board believes that the 2023 PSA Agreement is designed to both incentivize Mr. Michery and to provide benefit to the stockholders of the Company. Specifically, the Company believes the 2023 PSA Agreement benefits stockholders in the following ways:
1.
Pay for Performance
The 2023 PSA Agreement embodies a 100% at-risk performance award consisting exclusively of shares of Common Stock of the Company with tranches that vest only if significant milestones are achieved. Individual tranches can vest regardless of whether any or all of the other tranches vest. Thus, compensation under the 2023 PSA Agreement is incremental and linked to Company performance and therefore aligned with the interests of stockholders.
2.
Incentive for Mr. Michery’s Continued, Long-term Service and High Level of Performance
The Board believes that Mr. Michery’s ongoing active and engaged service is critical to the continued development and long-term interests of the Company. While the Board recognizes that the Company has many valuable employees who have contributed to the Company, the Board believes Mr. Michery’s leadership has been crucial in the Company’s formative years and phases of its early development. The structure of this compensation agreement provides significant motivation for Mr. Michery to deliver stockholder returns and to manage the business with a long-term perspective.
3.
Compensation is Non-Cash
Mr. Michery’s compensation under the 2023 PSA Agreement requires no cash to be expended by the Company. As a result, the Company will be able to allocate its cash resources to further strategic initiatives that improve the underlying value of the Company’s business operations and financial performance.
4.
Compensation is Performance-Based
The Board believes this award is a “pay-for-performance” compensation program that directly aligns Mr. Michery’s interests with the Company’s long-term plans and the interests generally of both the Company and its stockholders.
5.
Incentive for Mr. Michery to Finish Projects in the Pipeline
Certain milestones in the 2023 PSA Agreement are tied to current projects that are in the pipeline, i.e., the certification and homologation of the Class Three Van, the Bollinger B1 sports car and the Bollinger B2 sports car and battery development. The Board believes that the 2023 PSA Agreement will incentivize Mr. Michery to finish these current projects.
Methodology
In consideration of the achievements the Company has made under Mr. Michery’s leadership and considering (1) the potential for the Company’s future growth, (2) that Mr. Michery has accomplished most of the milestones under the 2022 PSA Agreement with a certain of remaining milestones lapsed, and (3) that Mr. Michery’s current ownership interest in the Company is minimum, the Compensation Committee of the Board of Directors saw the need to develop an incentive compensation program to encourage Mr. Michery’s continued leadership, and to motivate him to finish projects in the pipeline and to create
 
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significant stockholder value. The Compensation Committee considered Mr. Michery’s current compensation package, which includes an annual salary of $750,000 plus incentive compensation and an annual grant of one million shares of Common Stock. In addition, the Compensation Committee considered Mr. Michery’s ownership of the Company’s Common Stock and the fact that even with the shares of Common Stock that Mr. Michery earned under the 2022 PSA Agreement, his ownership interest in the Company is still minimum at around 1.67%, the significant dilution to his interests since the business combination with Net Element, Inc. and the strong belief that the best outcome for the Company’s stockholders is for Mr. Michery to accomplish the Company’s current projects in the pipeline and to continue leading the Company over the long-term.
Throughout the entire process, which began in the beginning of March 2023, the Compensation Committee met both formally and informally to discuss Mr. Michery’s compensation plan. They maintained a dialogue with Mr. Michery to share their ideas, to discuss his views and to negotiate the terms of the award with him. The Compensation Committee provided the Board of Directors with frequent updates on their progress and discussions, and the independent, non-interested members of the Board of Directors periodically met with Mr. Michery to express their opinions on the award and to gain an understanding of his commitment and goals for the Company. The Board also used the services of Manatt, Phelps & Phillips, LLP, which serves as outside counsel to the Company, to assist in drafting the 2023 PSA Agreement. The Compensation Committee did not calculate an estimate of the grant date “fair value” of the CEO Performance Award. The Compensation Committee did not retain a financial advisor or a compensation consultant in connection with the discussion of the 2023 PSA Agreement.
During this process, the Compensation Committee reviewed several draft agreements and incorporated best practices recommended by counsel. After the process was completed, the Compensation Committee presented terms for a performance award to Mr. Michery. Mr. Michery agreed that the 2023 PSA Agreement, substantially as presented, would motivate and incentivize him in leading the Company.
The Compensation Committee designed the 2023 PSA Agreement to incentivize and motivate Mr. Michery to continue to lead the Company over the long-term while continuing his current and past standard of involvement and leadership. In the Compensation Committee’s discussions with Mr. Michery, he indicated that the 2023 PSA Agreement would accomplish that.
When developing this program, the Compensation Committee considered:

What structure would best align the interests of Mr. Michery and the Company’s other stockholders;

What milestones should be used to promote stockholder value;

The size of each award based on the relative impact of the milestone achieved;

The balance of risks and benefits associated with any award;

That the CEO Performance Award is linked to performance;

Mr. Michery’s ownership interest in company;

Motivations for Mr. Michery to finish current vehicle manufacturing and battery development projects in the pipeline; and

Milestones that can incentivize Mr. Michery’s long term devotion to and leadership of the company.
The Compensation Committee presented the final 2023 PSA Agreement to the Board of Directors with a recommendation that the 2023 PSA Agreement be approved. The independent, non-interested members of the Board of Directors reviewed the agreement and considered the recommendation. The Board of Directors concluded that the 2023 PSA Agreement would motivate and incentivize Mr. Michery in his continued leadership of the Company on a long-term basis while aligning his interests with those of the Company’s other stockholders and providing significant stockholder value. The Board approved the 2023 PSA Agreement, with Mr. Michery abstaining and all other members of the Board of Directors approving the 2023 PSA Agreement. Stockholder approval is required for shares of the Company’s common stock to be issued to Mr. Michery in accordance with the 2023 PSA Agreement.
 
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Summary of the 2023 PSA Agreement
Below is an overview of the material terms of the 2023 PSA Agreement. See Appendix H for the full 2023 PSA Agreement.
As described in the 2023 PSA Agreement, Mr. Michery is eligible to receive shares of Common Stock of the Company based on the achievement of Milestones as described below, and within each Milestone the achievement of certain performance Tranches, 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 as of the date of satisfaction of such Tranche and through the date the Compensation Committee determines, approves and certifies that the requisite conditions for the applicable Tranche have been satisfied, the Company will issue shares of its Common Stock as specified in the Tranche. Each Milestone must be achieved within the performance period specified for such Milestone, and the latest a Milestone may be achieved is by December 31, 2025.
Description of Milestones

Vehicle Completion Milestones:   For each vehicle completion Milestone set forth below that is satisfied within the performance period specified, the Company will issue to Mr. Michery a number of shares of Common Stock equal to 3% of Mullen’s then-current total issued and outstanding shares of Common Stock : (i) Procuring full USA certification and homologation of its Class Three Van by end of December 2023; (ii) Full USA certification and homologation of the Bollinger B1 sports car by end of June 2025; and (iii) Full USA certification and homologation of the Bollinger B2 sports car by end of June 2025.

Revenue Benchmark Milestones:   For each $25 Million of revenue recognized by the Company (each a “Revenue Tranche”), and subject to an aggregate maximum of recognized revenue of $250 Million between the date of grant and the end of December 2025, the Company will issue to Mr. Michery a 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 Revenue Tranche is achieved.

Battery Development Milestones:   For each Battery Development Milestone set forth below 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) the Company either directly or in collaboration with a joint venture partner develops or produces new and more advanced battery cells by the end of December 2024; (ii) the Company either directly or in collaboration with a joint venture partner scales its battery cells in the USA to the vehicle pack level for the Mullen Class 1 vehicle by the end of December 2024; (iii) the Company either directly or in collaboration with a joint venture partner scales its battery cells in the USA to the vehicle pack level for the Mullen Class 3 vehicle by the end of December 2024;

JV-Acquisition Milestones:   If Mullen enters into a partnership, joint venture, purchase and sale agreement or similar transaction by the end of 2025 where the Company acquires a majority interest in an enterprise that manufacturers or provides vehicles, vehicle equipment, battery cells, accessories or other products beneficial to the Company, the Company will issue to Mr. Michery a number of shares of Common Stock equal to 3% of Mullen’s then-current total issued and outstanding shares of Common Stock as of date the JV-Acquisition Milestone is achieved.

ACCELERATED Development Milestone:   If Mullen acquires a facility with existing equipment that allows the Company to expedite scaling of battery pack production in the USA, 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 as of date the Accelerated Development Milestone is achieved
Potential Ownership of Securities and Potential Value that Could be Realized under the 2023 PSA Agreement
As of June 22, 2023, the Record Date, Mr. Michery directly owned [4,342,265] shares of the Company’s Common Stock and had no economic interest in unvested restricted stock unit awards or other convertible
 
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securities. Mr. Michery can still earn awards under the 2022 PSA Agreement that have not yet lapsed and he has until the end of 2024 to earn such awards. As of the Record Date, June 22, 2023, Mr. Michery can still earn the following awards under the 2022 PSA Agreement: (1) 2% of Mullen's then-current total issued and outstanding shares of Common Stock if he procures full USA certification and homologation for the sale and delivery of its Class One Van by end of August 2023; (2) 2% of Mullen's then-current total issued and outstanding shares of Common Stock if he procures a drivable prototype of its Mullen 5 vehicle for consumers to test by end of October 2023; (3) 2% of Mullen's then-current total issued and outstanding shares of Common Stock if he obtains full USA certification and homologation of the Dragonfly RS sports car by August 2024; and (4) for each $100 million raised, and subject to an aggregate maximum of $1.0 billion raise in equity or debt financing by the end of July 2024, he can get 1% of Mullen's then-current total issued and outstanding shares of Common Stock.
Based on [263,279,263] shares of the Company’s Common Stock outstanding on June 22, 2023, Mr. Michery has an economic interest in [1.65%] of the outstanding shares of the Company’s Common Stock not including the shares of Preferred Stocks owned by Mr. Michery that are convertible into shares of Common Stock.
In addition, in connection with the business combination with Net Element, Inc., Mr. Michery entered into voting agreements with certain holders of the Company’s securities (the “Voting Agreements”) pursuant to which such holders agreed to vote as directed by Mr. Michery, and also granted Mr. Michery an irrevocable proxy, at an annual or special meeting of stockholders or through the solicitation of a written consent of stockholders on any election of directors of the Company or any proposal to approve a change of control of the Company, which includes a merger, sale or other disposition of the securities of the Company or all or substantially all of its assets. The Voting Agreements have a term of three years or longer.
Pursuant to the Voting Agreements, as of the Record Date, Mr. Michery has the following shares over which he has voting power pursuant to Voting Agreements: (a) [4,342,265] shares of Common Stock, (b) [4,148] shares of Common Stock issuable upon conversion of [1,037] shares of Series A Preferred Stock, (c) [48,403] shares of Common Stock issuable upon conversion of Series C Preferred Stock, and (d) [14,524] shares of Common Stock issuable upon conversion of Series D Preferred Stock, and pursuant to the terms of the Voting Agreements. Based on [263,279,263] shares of the Company’s common stock outstanding on June 22, 2023, Mr. Michery has voting power over [2.06] % of the outstanding shares of the Company’s common stock with regard to the matters covered by the Voting Agreements.
For illustration purposes only, if (i) all shares of common stock subject to the 2023 PSA Agreement were to become fully vested, outstanding and held by Mr. Michery as of the Record Date; and (ii) there were no other dilutive events of any kind, we estimate that Mr. Michery would have an economic interest in approximately [31.65%] of the outstanding shares of the Company’s common stock, an increase of [30%], and voting power over [32.09%] of the outstanding shares of the Company’s common stock with regard to the matters covered by the Voting Agreements, an increase of [30.03%].
To help convey the potential value of the award, and for illustration purposes only, if the maximum number of shares of Common Stock subject to the 2023 PSA Agreement have become fully vested, outstanding and held by Mr. Michery on June 22, 2023, assuming that this would result in the issuance of maximum approximately [78,983,779] shares, and based upon a closing price of $[•] on June 22, 2023, the value of the shares granted would be worth approximately $[•] million. Should the value of the closing price of the Company’s Common Stock increase, the value of the shares granted to Mr. Michery could also be substantially higher.
This calculation does not account for any future dilutive events, such as the issuance of additional equity as compensation to employees, as consideration for mergers and acquisitions, or for capital-raising activities, which would have the effect of diluting Mr. Michery’s ownership of the Company’s common stock and the calculation does not include the awards available for granting to Mr. Michery under the 2022 PSA Agreement. Nor does it account for any sales of the Company stock that Mr. Michery will likely have to make in order to pay required taxes or sales of stock by the parties to the Voting Agreements, who are not restricted in selling the shares covered thereby. Any of these events may result in Mr. Michery beneficially owning a smaller percentage of the outstanding shares of the Company’s common stock. In addition, this calculation does not account for the aggregation of successive achievements of the Milestones, such that the
 
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number of outstanding shares of the Company’s common stock will increase upon each achievement and thus successive achievements will be entitled to a greater number of shares of Common Stock. This may result in a larger amount of shares being issued overall depending on how many of the Milestones and Tranches Mr. Michery accomplishes. Therefore, it is impossible to provide the exact or true percentage of Mr. Michery’s future total ownership of the Company’s Common Stock upon the vesting of one or more Tranches of the 2023 PSA Agreement.
Further, it is not possible to reliably estimate the value that could be realized under the 2023 PSA Agreement because that value also depends on the price of shares of the Company’s Common Stock, which may be affected by a number of factors including the amount of dilution that the Company’s experiences over the course of time for Mr. Michery to achieve the Milestones.
Accounting and Tax Considerations
Accounting Consequences.   We follow FASB Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“ASC Topic 718) for our stock-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all stock-based compensation awards made to employees and directors based on the grant date “fair value” of these awards. ASC Topic 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award. However, pursuant to ASC Topic 718, stock-based compensation awards that are subject to the approval of stockholders are not deemed granted, solely for accounting purposes, until such approval is obtained. Therefore, the actual aggregate fair value of such awards cannot be computed for accounting purposes prior to the date of such approval. Accordingly, the 2023 PSA Agreement is expected to result in the recognition of additional stock-based compensation expense after the date of shareholder approval and over the term of the award.
Federal Income Tax Consequences.   The following discussion is a brief summary of the principal United States federal income tax consequences of the 2023 PSA Agreement under the U.S. Internal Revenue Code (the “Code”) as in effect on the date of this proxy statement. The following summary assumes that Mr. Michery remains a U.S. taxpayer. The Code and its regulations are subject to change. This summary is not intended to be exhaustive and does not describe, among other things, state, local or non-U.S. income and other tax consequences. The specific tax consequences to Mr. Michery will depend upon his future individual circumstances.
Tax Effect for Mr. Michery.   Mr. Michery did not have taxable income from the grant of the 2023 PSA Agreement nor will he have taxable income from stockholder approval of the potential issuance of the additional shares for the CEO Performance Award, if such approval occurs. If, and when, Mr. Michery vests in any portion of the 2023 PSA Agreement, he will recognize ordinary income calculated as of the market value of the Common Stock on the date of vesting. Any taxable income recognized in connection with the vesting of the 2023 PSA Agreement by Mr. Michery will be subject to tax withholding by the Company. Any additional gain or loss recognized upon any later disposition of the shares will be capital gain or loss.
Tax Effect for the Company.   The Company may be entitled to a material tax deduction in connection with the 2023 PSA Agreement. In most cases, companies are entitled to a tax deduction in an amount equal to the ordinary income realized by a participant when the common stock vests and the participant recognizes such income. However, Section 162(m) of the Code limits the deductibility of compensation paid to the Company’s CEO and other “covered employees” as defined in Section 162(m) of the Code. No tax deduction is allowed for compensation paid to any covered employee to the extent that the total compensation for that executive exceeds $1 million in any taxable year. Under Section 162(m) of the Code, as most recently amended in March 2021, the Company expects that Mr. Michery will be a covered employee for purposes of Section 162(m) of the Code throughout the duration of the 2023 PSA Agreement. Therefore, in any given year in which Mr. Michery vests all or part of the 2023 PSA Agreement, the Company will be able to take a tax deduction of $1 million or less, regardless of the amount of compensation recognized by Mr. Michery from the 2023 PSA Agreement or with any other type of compensation for the year.
 
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Registration with the Securities and Exchange Commission
If the shares authorized under the 2023 PSA Agreement are approved by stockholders, the Company expects to file as soon as practicable after the Annual Meeting a registration statement on Form S-8 with the Securities and Exchange Commission to register the maximum additional number of shares of Common Stock that may be issuable pursuant to the award.
Effect of Issuance of Additional Shares of Common Stock
If this Proposal 7 set forth 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 2023 PSA 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 3% of [263,279,263] shares of Common Stock outstanding on June 22, 2023, would result in the issuance of [2,632,793] shares, [5,265,586] shares and [7,898,378] shares of Common Stock, respectively. Plus, those amounts may be aggregated 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 2023 PSA 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.
Supporting Statement of the Board
The Company is asking stockholders to vote their shares “FOR” the approval of shares of Common Stock to be issued for the proposed CEO Performance Award.
The independent, non-interested members of the Board of Directors, led by the members of the Compensation Committee, spent several months designing a compensation award that they believe will incentivize Mr. Michery while maximizing value for the Company stockholders. As part of this process, the Compensation Committee and the Board of Directors sought to balance a variety of important objectives, including:

Aligning Mr. Michery’s interests with those of the Company stockholders by motivating him to achieve growth in the Company through the achievement of certain commercialization and product development efforts. This, in turn, should generate stockholder value;

Motivating Mr. Michery to achieve the revenue benchmark Milestones outlined in the 2023 PSA Agreement, which would generate significant stockholder value;

Encouraging Mr. Michery’s continued leadership and direction of the Company; and

Linking Mr. Michery’s compensation to the Company’s performance so that he benefits when the Company stockholders benefit.
The Board believes that it is imperative to retain Mr. Michery, to incentivize him to continue his efforts to guide the Company during this critical point in the Company’s trajectory, and to motivate Mr. Michery to achieve his vision of making the Company a world leader in electric vehicle manufacturing and distribution.
Proposal to Approve Issuance of 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 the Company of equity
 
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compensation. Accordingly, we are seeking stockholder approval for the issuance of Common Stock to our Chief Executive Officer pursuant to the terms of the 2023 PSA Agreement as set forth in this Proposal 7.
Consequences of Not Approving This Proposal
If we do not obtain stockholder approval at the Meeting, the Board may seek stockholder approval at a future meeting.
Vote Required; Board of Directors Recommendation
Approval of the CEO Performance Award requires the affirmative vote of a majority of the voting power of the outstanding shares of the Company’s Common Stock, the Company’s Series A Preferred Stock and the Company’s Series C Preferred Stock (voting on an as-converted to Common Stock basis), present in person or represented by proxy at the Meeting and entitled to vote thereon, all voting together as a single class, assuming the presence of a quorum. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the approval of this proposal.
Proposal 7 is a non-routine matter. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote on Proposal 7 in order for them to vote your shares so that your vote can be counted. Abstentions will have the same effect as votes “against” the proposal. Broker non-votes will have no effect on the result of the vote, although broker non-votes will be considered present for the purpose of determining the presence of a quorum.
Mr. Michery will abstain from voting on this Proposal 7. Meanwhile, as stated above, Mr. Michery will not exercise his proxies pursuant to the Voting Agreements on any of the proposals described in this proxy statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635(C), OF THE ISSUANCE OF SHARES OF COMMON STOCK TO OUR CHIEF EXECUTIVE OFFICER PURSUANT TO A PERFORMANCE STOCK AWARD AGREEMENT
 
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PROPOSAL 8
APPROVAL, FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635(D), OF THE ISSUANCE OF $30 MILLION IN SHARES OF COMMON STOCK AND WARRANTS EXERCISABLE INTO SHARES OF COMMON STOCK AND ANY FUTURE ADJUSTMENTS OF THE EXERCISE PRICE OF THE WARRANTS
The information set forth in this Proposal 8 is qualified in its entirety by reference to the full text of (i) the Settlement Agreement and Release, dated January 13, 2023, between the Acuitas Capital LLC (“Acuitas”) and the Company (as amended, the “Settlement Agreement”); (ii) the Settlement Agreement and Release, dated January 13, 2023, between the Company and the investors to the Securities Purchase Agreement (as defined below) (the “Second Settlement Agreement” and, with the Settlement Agreement, collectively, the “Settlement Agreements”); (iii) the Securities Purchase Agreement, dated June 7, 2022, and amended on June 23, 2022, September 19, 2022, November 15, 2022, and April 3, 2023 (the “Securities Purchase Agreement”), and (iv) the forms of Warrant attached as Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on June 10, 2022. Stockholders are urged to carefully read these documents.
General
On January 13, 2023, the Company entered into the Settlement Agreement pursuant to which Acuitas agreed to remit to the Company an aggregate of approximately $17.8 million for the erroneous issuance by the Company of an aggregate of 1,660,988 shares of common stock in connection with the exercise of warrants. In consideration of the settlement, Acuitas received the right to purchase (the “Settlement Additional Purchase Right”) an amount equal to $20 million in shares of Series D Convertible Preferred Stock, par value $0.001 per share (the “Series D Preferred Stock”), and warrants exercisable for Common Stock equal to 185% the amount of the shares of the Series D Preferred Stock issued. Such Settlement Additional Purchase Right was exercisable on the same terms and conditions as provided under the Securities Purchase Agreement.
On June 1, 2023, the Settlement Additional Purchase Right was exercised by Acuitas and on June 5, 2023, Acuitas agreed that in lieu of the issuance and delivery by the Company of shares of Series D Convertible Preferred Stock, par value $0.001 per share, to Acuitas upon receipt of $20,000,000 paid by Acuitas on June 1, 2023, the Company issued 19,493,071 shares of the Common Stock and pre-funded warrants exercisable for 8,074,124 shares of Common Stock (the “Pre-Funded Warrants”). The Pre-Funded Warrants have an exercise price of $0.001 per share and are immediately exercisable and can be exercised at any time after their original issuance until such Pre-Funded Warrants are exercised in full. Acuitas (together with its affiliates) may not exercise the Pre-funded Warrants to the extent that Acuitas would own more than 9.99% of the outstanding shares of Common Stock immediately after exercise. The Company also issued to Acuitas warrants exercisable for 50,999,310 shares of Common Stock (the “Warrants”). The Warrants have an exercise price of $0.7255 per share.
On January 13, 2023, the Company entered into the Second Settlement Agreement with the investors that entered into the Series D Securities Purchase Agreement pursuant to which such investors waived the default and all damages that were incurred as a result of the default prior to February 1, 2023 under the Securities Purchase Agreement. In exchange, the Company agreed to grant the investors the right to purchase from the Company additional shares of Series D Preferred Stock and warrants in an amount equal to such investor’s pro rata portion of $10 million on the same terms and conditions as applicable to the purchase and sale of shares of Series D Preferred Stock as provided under the Securities Purchase Agreement (the “Second Additional Purchase Right”). The Second Additional Purchase Right may be exercised by each investor from time to time, in its sole and absolute discretion in accordance with the same terms that apply to additional purchases as described in the Securities Purchase Agreement; provided, however, that any investor that exercises its Second Additional Purchase Right will receive additional five-year warrants exercisable for 185% of shares of common stock at an exercise price equal to the closing price of the common stock as of the date of the trading day immediately prior to the exercise of the Second Additional Purchase Right.
The Settlement Agreements provide that from April 1, 2023 until June 30, 2023, the investors shall have the right, but not the obligation, at any time from time to time, in each investors sole and absolute discretion to exercise the Settlement Additional Purchase Right and the Second Additional Purchase Right.
 
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Description of the Warrants
The Company must reserve out of authorized and unissued shares a number of shares of Common Stock equal to 250% of the maximum number of shares of Common Stock that are issuable upon exercise of the Warrants from time to time. If the Company fails to timely deliver shares upon exercise of the Warrant, the Company will be required to either (A) pay the holder for each trading day on which shares are not delivered 1% of the product of the number of shares not so issued multiplied by the closing sale price of the Common Stock on the trading day immediately preceding the required delivery date, or (B) if the holder purchases shares of Common Stock in anticipation of delivery of shares upon exercise of the Warrant, cash in an amount equal to holder’s total purchase price of such shares.
The Warrants will provide for cashless exercise pursuant to which the holder will receive upon exercise a “net number” of shares of Common Stock determined according to the following formula (the “Cashless Exercise”):
Net Number = (A x B) / C
For purposes of the foregoing formula:
A= The total number of shares with respect to which the Warrant is then being exercised.
B= The Black Scholes Value (as described below).
C= The lower of the two Closing Bid Prices of the Common Stock in the two days prior the time of such exercise (as such Closing Bid Price is defined in Section 16 herein), but in any event not less than $0.10.
For purposes of the cashless exercise, “Black Scholes Value” means the Black Scholes value of an option for one share of Common Stock at the date of the applicable Cashless Exercise, as such Black Scholes value is determined, calculated using the Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to the Exercise Price, as adjusted, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate, (iii) a strike price equal to the Exercise Price in effect at the time of the applicable Cashless Exercise, (iv) an expected volatility equal to 135%, and (v) a deemed remaining term of the Warrant of 5 years (regardless of the actual remaining term of the Warrant).
The exercise price and number of shares issuable upon exercise of the Warrants will further be adjusted upon the occurrence of certain events and holders will be allowed to participate in certain issuances and distributions (subject to certain limitations and restrictions), including certain stock dividends and splits, dilutive issuances of additional common stock, and dilutive issuances of, or changes in option price or rate of conversion of, options or convertible securities, as well as the issuance of purchase rights or distributions of assets. If, during restricted period, the Company effects a subsequent financing, including the issuance of options and convertible securities, any Common Stock, issued or sold or deemed to have been issued or sold) for a consideration per share less than a price equal to the current exercise price of the Warrant (a “Dilutive Issuance”), then immediately after such issuance, the exercise price will be reduced (and in no event increased) to the price per share as determined in accordance with the following formula:
EP2 = EP1 x (A + B) / (A + C)
For purposes of the foregoing formula:
A= The total number of Warrant Shares with respect to which this Warrant may be exercised.
B= The total number of shares of Common Stock that would be issued or issuable under the Dilutive Issuance if issued at a per share equal to EP1.
C= The total number of shares of Common Stock actually issued or issuable under the Dilutive Issuance.
EP1= The Exercise Price in effect immediately prior to a Dilutive Issuance.
 
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EP2= The Exercise Price immediately after such Dilutive Issuance; provided, however, that such price shall in no event be less than $0.10 per share of Common Stock.
“Restricted period” means the period commencing on the Purchase Date and ending on the earlier of (i) the date immediately following the 90th day after a registration statement registering for the securities has been declared effective by the SEC and (ii) the 90th day after the securities purchased are saleable under Rule 144 without the requirement for current public information and without volume or manner of sale limitations.
The Warrants will provide for certain purchase rights whereby if the Company grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock, then the holder will be entitled to acquire such purchase rights which the holder could have acquired if the holder had held the number of shares of Common Stock acquirable upon complete exercise of the Warrant.
The exercisability of the Warrants may also be limited if, upon exercise, the holder and its affiliates would in aggregate beneficially own more than 9.99% of the Common Stock.
The Company would also agree 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 Warrants and the other transaction documents related to the Warrants.
Reasons for Requesting Stockholder Approval
Nasdaq Listing Rule 5635(d) requires stockholder approval in connection with a transaction other than a public offering involving the sale or issuance by the issuer of common stock (or securities convertible into or exchangeable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for a price that is less than the lower of: (i) the closing price of the common stock immediately preceding the signing of the binding agreement for the issuance of such securities; or (ii) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement for the issuance of such securities (the “Minimum Price”).
The potential issuance of the shares of Common Stock, including Common Stock underlying the Warrants, does not constitute a public offering under the Nasdaq Listing Rules.
The Board has determined that the sale of the Common Stock and the Warrants and the issuance of shares of Common Stock pursuant to the Warrants, is in the best interests of the Company and its stockholders because of the Company’s potential need to obtain additional financing.
The issuance of the Common Stock and the Warrants pursuant to the Settlement Agreements, will not affect the rights of the holders of outstanding shares of Common Stock, but such issuances will have a dilutive effect on the existing stockholders, including the voting power and economic rights of the existing stockholders. On June 5, 2023, pursuant to exercise of the Settlement Additional Purchase Right, the Company issued 19,493,071 shares of Common Stock, Pre-Funded Warrants exercisable for 8,074,124 shares of Common Stock and Warrants exercisable for 50,999,310 shares of Common Stock.
Further, if the Company issues $10 million in Common Stock at $0.4680 per share, the closing price of the Common Stock on Nasdaq on June 8, 2023, then it would issue approximately 21,367,521 shares of Common Stock (without giving effect to the Reverse Stock Split). Under such a scenario the Company would issue Warrants for an additional 39,529,914 shares of Common Stock (without giving effect to the Reverse Stock Split). As described above, the Warrants contain anti-dilution provisions that may materially increase the number of shares of Common Stock that are issued by the Company in connection with the exercise of the Warrants. No assurance can be given that any shares of Common Stock will be issued upon exercise of the Warrants, or that additional shares of Common Stock will not be issued in the event that the number of shares of Common Stock issuable upon the exercise of the Warrants does not increase pursuant to the terms of such Warrants.
Unlike Nasdaq Rule 5635, which limits the aggregate number of shares of Common Stock the Company may issue to the investors, the Warrants provide a beneficial ownership limitation (as described
 
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above) that limits the number of shares each investor may beneficially own at any one time. Consequently, the number of shares of Common Stock an investor may beneficially own in compliance with the beneficial ownership limitation may increase over time as the number of outstanding shares of Common Stock increases over time. In addition, the investors may sell some or all of the shares they receive upon exercise of the Warrants, permitting them to acquire additional shares in compliance with the beneficial ownership limitation.
Possible Effects of Disapproval of this Proposal
Our Board is seeking the approval of our stockholders to authorize our issuance of additional shares pursuant to the Settlement Agreements. Unless the Company obtains the approval of its stockholders as required by Nasdaq, the Company will be prohibited from issuing the Common Stock, the Warrants and any shares of Common Stock upon exercise of such pursuant to the investors rights to purchase in the aggregate an additional $30 million of Common Stock, if the issuance of such shares of Common Stock would exceed 19.99% of the Company’s outstanding shares of Common Stock or otherwise exceed the aggregate number of shares of Common Stock which the Company may issue without breaching our obligations under the rules and regulations of Nasdaq.
If this Proposal 8 is not approved by our stockholders, we will not be able to issue and sell these securities pursuant to the Settlement Agreements, thereby preventing us from raising additional funds. Our ability to successfully implement our business plans and ultimately generate value for our stockholders is dependent on our ability to maximize capital raising opportunities. If we were unsuccessful in raising additional capital, we would be required to curtail our plans to expand our manufacturing and sales capabilities and instead reduce operating expenses, dispose of assets, as well as seek extended terms on our obligations, the effect of which would adversely impact future operating results.
Vote Required; Board of Directors Recommendation
You may vote in favor of or against this proposal or you may abstain from voting. Approval of this Proposal 8 requires the affirmative vote of a majority of the voting power of the outstanding shares of the Company’s Common Stock, the Company’s Series A Preferred Stock and the Company’s Series C Preferred Stock (voting on an as-converted to Common Stock basis), present in person or represented by proxy at the Meeting and entitled to vote thereon, all voting together as a single class, assuming the presence of a quorum. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the approval of this proposal.
Proposal 8 is a non-routine matter. If you own shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote on Proposal 8 in order for them to vote your shares so that your vote can be counted. Abstentions will have the same effect as votes “against” the proposal. Broker non-votes will have no effect on the result of the vote, although broker non-votes will be considered present for the purpose of determining the presence of a quorum.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL, FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635(D), OF THE ISSUANCE OF $30 MILLION IN SHARES OF COMMON STOCK AND WARRANTS EXERCISABLE INTO SHARES OF COMMON STOCK AND ANY FUTURE ADJUSTMENTS OF THE EXERCISE PRICE OF THE WARRANTS
 
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PROPOSAL 9
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed RBSM LLP (“RBSM”) as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2023. Our former auditor Daszkal Bolton LLP resigned on March 1, 2023 upon the consummation of its merger with CohnReznick LLP. In connection to Daszkal Bolton LLP’s resignation, the Company engaged RBSM on March 1, 2023. RBSM has served as the auditor for the Company since March 1, 2023. The stockholders are being requested to ratify the appointment of RBSM at the Meeting. If the selection is not ratified, it is contemplated that the appointment of RBSM for 2023 may be permitted to stand in view of the difficulty and the expense involved in changing independent auditors on short notice, unless the Audit Committee finds other compelling reasons for making a change. Even if the selection is ratified, the Audit Committee and the Board of Directors may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders. The Company anticipates that a representative of RBSM will attend the Meeting. If the RBSM representative attends the Meeting, he/she will have an opportunity to make a statement and to respond to appropriate stockholder questions.
Vote Required
You may vote in favor of or against this proposal or you may abstain from voting. The affirmative vote of a majority of the voting power of the outstanding shares of the Company’s Common Stock, the Company’s Series A Preferred Stock and the Company’s Series C Preferred Stock (voting on an as-converted to Common Stock basis), present in person or represented by proxy at the Meeting and entitled to vote thereon, all voting together as a single class, assuming the presence of a quorum, is required to ratify the appointment of RBSM as the Company’s independent registered public accounting firm. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board are to be voted on this proposal, such shares will be voted in favor of the appointment of RBSM as the Company’s independent registered public accounting firm. Abstentions will have the same effect as a vote “against” the proposal. Brokers and other nominees that do not receive instructions are generally entitled to vote on the ratification of the appointment of our independent registered public accounting firm.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY
THE APPOINTMENT OF RBSM LLP
Principal Accountant Fees and Services
Audit Fees.   The aggregate fees, including expenses, billed by our principal accountant for the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q and other services that are normally provided in connection with statutory and regulatory filings or engagements during each of the fiscal years ended September 30, 2022 and 2021 were $165,733 and $170,000, respectively.
Audit-Related Fees.   The aggregate fees, including expenses, billed by our principal accountant for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements not reported under “Audit Fees” above during the fiscal years ended September 30, 2022 and 2021 were $198,239 and $50,000, respectively.
Tax Fees.   The aggregate fees, including expenses, billed by our principal accountant for services rendered for tax compliance, tax advice and tax planning during the fiscal years ended September 30, 2022 and 2021 were $0 and $0, respectively.
All Other Fees.   The aggregate fees, including expenses, billed for all other products and services provided by our principal accountant during the fiscal years ended September 30, 2022 and 2021 were $0 and $0, respectively.
 
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Audit Committee Pre-Approval Policy
Our audit committee is responsible for approving in advance the engagement of our principal accountant for all audit services and non-audit services, based on independence, qualifications and, if applicable, performance, and approving the fees and other terms of any such engagement. The audit committee may in the future establish pre-approval policies and procedures pursuant to which our principal accountant may provide certain audit and non-audit services to us without first obtaining the audit committee’s approval, provided that such policies and procedures (i) are detailed as to particular services, (ii) do not involve delegation to management of the audit committee’s responsibilities described in this paragraph and (iii) provide that, at its next scheduled meeting, the audit committee is informed as to each such service for which the principal accountant is engaged pursuant to such policies and procedures. In addition, the audit committee may in the future delegate to one or more members of the audit committee the authority to grant pre-approvals for such services, provided that the decisions of such member(s) to grant any such pre-approval must be presented to the audit committee at its next scheduled meeting.
All audit and audit-related services performed by our principal accountant during the fiscal years ended September 30, 2022 and 2021 were pre-approved by our Board of Directors, then acting in the capacity of an audit committee.
 
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REPORT OF THE AUDIT COMMITTEE
Management is responsible for the Company’s internal controls over financial reporting, disclosure controls and procedures and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with Public Company Accounting Oversight Board (PCAOB) standards and to issue reports thereon. The Audit Committee’s responsibility is to monitor and oversee these processes. The Audit Committee has established a mechanism to receive, retain and process complaints on auditing, accounting and internal control issues, including the confidential, anonymous submission by employees, vendors, customers and others of concerns on questionable accounting and auditing matters.
In connection with these responsibilities, the Audit Committee met with management and the independent registered public accounting firm to review and discuss the September 30, 2022 audited consolidated financial statements. The Audit Committee also discussed with the independent registered public accounting firm the matters required by Statement on Auditing Standards Update No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the PCAOB in Rule 3200T. In addition, the Audit Committee received the written disclosures from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee has discussed the independent registered public accounting firm’s independence from the Company and its management.
Based upon the Audit Committee’s discussions with management and the independent registered public accounting firm, and the Audit Committee’s review of the representations of management and the independent registered public accounting firm, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for fiscal 2022 filed with the SEC.
The Audit Committee also has appointed, subject to stockholder ratification, RBSM LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2023.
June   , 2023 Respectfully submitted,
Audit Committee
Kent Puckett, Chair
Mark Betor
John Andersen
The Report of the Audit Committee should not be deemed filed or incorporated by reference into any other filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically incorporates the Report of the Audit Committee therein by reference.
 
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PROPOSAL 10
ADJOURNMENT PROPOSAL
The Adjournment Proposal, if adopted, will allow us to adjourn the Meeting from time to time, to a later date or dates to permit further solicitation of proxies. The Adjournment Proposal will only be presented to our stockholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of one or more of the foregoing proposals.
In this proposal, we are asking our stockholders to authorize the holder of any proxy solicited by our board of directors to vote in favor of adjourning the Meeting and any later adjournments. If our stockholders approve the Adjournment Proposal, we could adjourn the Meeting, and any adjourned session of the Meeting, to use the additional time to solicit additional proxies in favor of one or more of the foregoing proposals, including the solicitation of proxies from stockholders that have previously voted against the proposals. Among other things, approval of the Adjournment Proposal could mean that, even if proxies representing a sufficient number of votes against any of the proposals have been received, we could adjourn the Meeting without a vote on such proposal and seek to convince the holders of those shares to change their votes to votes in favor of the approval of such proposal.
Vote Required
The affirmative vote of the majority of the voting power of the outstanding shares of the Company’s Common Stock, the Company’s Series A Preferred Stock and the Company’s Series C Preferred Stock (voting on an as-converted to Common Stock basis), present in person or represented by proxy at the Meeting and entitled to vote thereon, all voting together as a single class, is required to approve the adjournment of the Meeting as described in this proposal. Abstentions will have the same effect as votes “against” this proposal and broker non-votes will not have an effect on the outcome of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE ADJOURNMENT PROPOSAL
 
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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Board Leadership Structure and Risk Oversight
Our Board does not have a policy on whether or not the role of the Chief Executive Officer and Chairman should be separate or, if it is to be separate, whether the Chairman should be selected from the non-employee directors or be an employee. The Board believes it is in the best interests of the Company to make that determination based on the membership of the Board and the position and direction of the Company. The Board currently has determined that having David Michery serve as our Chairman and our Chief Executive Officer makes the best use of his experience, expertise and extensive knowledge of the Company and its industry, as well as fostering greater communication between the Company’s management and the Board.
The Board as a whole is responsible for consideration and oversight of the risks we face and is responsible for ensuring that material risks are identified and managed appropriately. Certain risks are overseen by committees of the Board and these committees make reports to the full Board, including reports on noteworthy risk-management issues. Members of the Company’s senior management team regularly report to the full Board about their areas of responsibility and a component of these reports is the risks within their areas of responsibility and the steps management has taken to monitor and control such exposures. Additional review or reporting on risks is conducted as needed or as requested by the Board or one of its committees.
Directors
The following table sets forth certain information regarding our current directors and director nominees:
Name
Age
Position
Director Class
David Michery
56
Chief Executive Officer, President, and Chairman of the Board
Class I
Mary Winter(3)
32
Secretary and Director
Class I
Ignacio Novoa
40
Director
Class I
Kent Puckett(2)
59
Director
Class II
Mark Betor(1)
67
Director
Class II
William Miltner
61
Director
Class III
John Andersen(1)
69
Director
Class III
(1)
Member of the Audit Committee, Compensation Committee and Nominating and Governance Committee
(2)
Member of the Audit Committee and Compensation Committee
(3)
Member of the Nominating and Governance Committee
Each of our directors, including our current nominees, was nominated based on the assessment of our Nominating Committee and our Board that he or she has demonstrated relevant business experience, excellent decision-making ability, good judgment, and personal integrity and reputation. Our Board consists of, and seeks to continue to include, persons whose diversity of skills, experience and background are complementary to those of our other directors.
Nominees for Class II Director for Term Ending at the Annual Meeting of Stockholders in 2026
The persons listed below have been nominated for election as the Class II directors of the Company’s Board. Unless otherwise directed by stockholders within the limits set forth in the bylaws, the proxy holders will vote all shares represented by proxies held by them for the election of the nominees.
Kent Puckett has served on Mullen Technologies’ Board of Directors since 2018, serving as the Audit Committee Chair during that time. Previously, he served as the Chief Financial Officer of Mullen Technologies from 2012 to 2018. Mr. Puckett has many years of experience as a CFO with a proven track record of
 
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establishing cross-functional partnerships to deliver stellar results. He has led many companies in their audit and disclosure requirements, creating operations, marketing, and sales division budgets of multi-million dollars, and being accountable for the allocation of resources to exceed profit and sales goals. Mr. Puckett has a B.S. in Business Administration from Pensacola Christian College, and Advanced Studies in Management, Finance, Compliance, Insurance, Financial Consulting, Taxation and Financial Reporting, with an emphasis on Public Companies reporting and audit requirements. We believe that Mr. Puckett is qualified to serve as a director because of his finance and accounting background and experience.
Mark Betor has served as a director of the Company since the closing of the Merger and a director of Mullen Technologies since 2018, serving on the Compensation Committee. Mr. Betor is a retired businessman and law enforcement officer. Since retirement, he has been involved with real estate investments and private business. We believe that Mr. Betor is qualified to serve as a director because of his vast experience within investments and private businesses.
Continuing Class I Directors Whose Term Expires at the Annual Meeting of Stockholders in 2025
David Michery has served as the Chairman of the Board, President and Chief Executive Officer of the Company since the closing of the Merger in November 2021 and held those same positions at Mullen Technologies since its inception in 2018. His automotive experience began with the acquisition of Mullen Motor Company in 2012. Mr. Michery brings over 25 years within executive management, marketing, distressed assets, and business restructuring. He acquired the assets of Coda Automotive, formerly an independent EV manufacturer, through bankruptcy as an entryway into the EV business. We believe that Mr. Michery is qualified to serve as a director because of his operational and historical expertise gained from serving as our Chief Executive Officer, and his experience within various businesses, including automotive.
Mary Winter has served as director of the Company since the closing of the Merger and has been a director of Mullen Technologies since 2018. Ms. Winter has been an integral part of Mullen since inception. She currently serves as the Secretary of the Company and Board of Directors. Formerly, she was the Vice President of Operations for Mullen Technologies since 2014. We believe that Ms. Winter is qualified to serve as a director because of her business and operational knowledge of Mullen Technologies.
Ignacio Novoa has served as a director of the Company since July 2022.Mr. Novoa has been a realtor at Las Lomas Realty since January 2015. Prior to that, from August 2008 to March 2021, Mr. Nova served as police officer with the Federal Reserve Police and, from September 2008 to March 2013, as program security at Northrup Grumman. We believe that Mr. Novoa is qualified to serve as a director because of his experience in managing real estate.
Continuing Class III Directors Whose Term Expires at the Annual Meeting of Stockholders in 2024
William Miltner has served as a director of the Company since the closing of the merger with Net Element, Inc. on November 5, 2021. He has served as a litigation attorney for over 30 years. He is the co-founder of Miltner & Menck, APC, a full-service law firm, in San Diego, CA. Mr. Miltner successfully co-founded and co-managed the law firm of Perkins & Miltner, LLP, a respected San Diego litigation firm for 13 years. In 2006, when co-founder David Perkins left the practice of law, Miltner Law Group, APC, was founded. Mr. Miltner has represented many publicly traded and private companies including residential developers, construction contractors, title insurance companies and banking and lending institutions. His substantial experience includes representing and defending clients in complex real property, general business, construction, title insurance and lender litigation and transactional matters. Mr. Miltner is member of the American and San Diego County Bar Associations and American Business Trial Lawyers Association. He was admitted to The State Bar of California in 1988. We believe that Mr. Miltner is qualified to serve as a director because of his knowledge and experience within law practice areas and litigation matters.
John Andersen has served as director of the Company since September 2022. Mr. Andersen owned and operated various businesses since 1972, concentrating on real estate investment and management, primarily of multi-family residential units along with commercial sales and leases, in California, Utah and Wyoming, since 1980. From 1986 to 1996, Mr. Anderson was a partner in a large real estate company with over 300 sales agents and an escrow company, loan company and other real estate services. Since 2013, he has been a
 
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director and officer of Eminence Escrow, Inc. and, since 2015, he has owned and operated DNJ Investments, Inc., both of which provide escrow services. We believe that Mr. Anderson is qualified to serve as a director because of his extensive and in-depth experience in operating and growing businesses.
Executive Officers
The following table provides certain information regarding the executive officers of the Company:
NAME
AGE
POSITION
Jonathan New
63
Chief Financial Officer
Calin Popa
61
President — Mullen Automotive
Information about David Michery, our Chief Executive Officer and President, and Mary Winter, our Secretary, is set forth above under “Continuing Class I Directors Whose Term Expires at the Annual Meeting of Stockholders in 2025.”
Jonathan New was appointed by the Board as Chief Financial Officer of the Company, effective September 19, 2022. He served as a director of the Company from November 2021 until September 19, 2022. From January 2020 until September 2022, Mr. New served as the Chief Financial Officer of Motorsport Games, Inc. (NASDAQ: MSGM), a racing game developer, publisher and esports ecosystem provider. Previously, from July 2018 to January 2020, Mr. New was Chief Financial Officer of Blink Charging Co (NASDAQ: BLNK), an owner, operator and provider of electric vehicle charging equipment and networked electric vehicle charging services, and, from 2008 to July 2018, he was Chief Financial Officer of Net Element, Inc., (NASDAQ: NETE) a global technology and value-added solutions group that supports electronic payments acceptance in a multi-channel environment. Mr. New is a Florida Certified Public Accountant and a member of the American Institute of Certified Public Accountants.
Calin Popa has served as President of the Automotive Electric Vehicles Division of Mullen Technologies since 2017. He has 34 years of experience within the automotive industry. Previously, Mr. Popa was Vice President of Manufacturing Engineering at Karma Automotive, LLC, f/k/a Fisker Automotive, from 2010 to 2017. Mr. Popa has held senior positions within product development, vehicle launch and manufacturing at well-known companies, including MAN, Ford, and Chrysler.
Family Relationships
There are no family relationships between any of the directors or executive officers of the Company.
Corporate Governance and Board Matters
Vacancies
The Board of Directors is a classified board, which means that our directors hold office for staggered or overlapping terms, so that the terms of all directors do not expire in the same year. Each class consists, as nearly as possible, of one-third of the total number of directors. Directors in each class are elected for terms of three years and hold office until their successors are elected and qualify. Any vacancy on the Board for any cause, including an increase in the number of directors, may be filled by a majority of the directors then in office, although such majority is less than a quorum, or by a sole remaining director. If there are no directors in office, then an election of directors may be held in accordance with Delaware Law. If one or more directors resigns from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, have the power to fill such vacancy or vacancies with the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in the filling of the other vacancies.
Director Independence
We are listed on the NASDAQ Capital Market (“Nasdaq”) and accordingly, we have applied Nasdaq listing standards in determining the “independence” of the members of our Board. Based on Nasdaq listing standards and SEC rules, and after reviewing the relationships with members of our Board, our Board has
 
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determined, with the assistance of the Nominating and Governance Committee, that Mary Winter, Kent Puckett, Mark Betor and John Andersen qualify as independent directors and therefore the Board consists of a majority of “independent directors”. In addition, we are subject to the rules of the SEC and Nasdaq relating to the membership, qualifications, and operations of the audit, as discussed below. The Nominating and Governance Committee reviews with the Board at least annually the qualifications of new and existing members of the Board, considering the level of independence of individual members, together with such other factors as the Board may deem appropriate, including overall skills and experience. The Nominating and Governance Committee also evaluates the composition of the Board as a whole and each of its committees to ensure the Company’s on-going compliance with Nasdaq independence standards.
Attendance at Board and Committee Meetings
During the fiscal year of 2022, our Board held eight (8) meetings, the audit committee held five (5) meetings, the compensation committee held three (3) meetings and the nominating and corporate governance committee held two (2) meetings. During that time, no member of our Board attended fewer than 75% of the aggregate of (i) the total number of meetings of our Board (held during the period for which he was a director) and (ii) the total number of meetings held by all committees of our Board on which he or she served (held during the period that such director served). The Company’s policy is to encourage, but not require, Board members to attend annual stockholder meetings.
Committees and Corporate Governance
The current standing committees of our Board of Directors are the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee. Each committee is comprised entirely of directors who are “independent” within the meaning of Nasdaq Rule 5605(a)(2) and all applicable SEC rules and regulations. The members of the committees and a description of the principal responsibilities of each committee are described below.
Our Board has adopted Corporate Governance Guidelines. The Corporate Governance Guidelines include items such as criteria for director qualifications, director responsibilities, committees of the Board, director access to officers and employees, director compensation, evaluation of the Chief Executive Officer, annual performance evaluation and management succession. The Board has chosen not to impose term limits or mandatory retirement age with regard to service on the Board in the belief that continuity of service and the past contributions of the members of the Board who have developed an in-depth understanding of the Company and its business over time bring a seasoned approach to the Company’s governance. Each director is to act on a good faith basis and informed business judgment in a manner such director reasonably believes to be in the best interest of the Company.
A copy of each committee charter and our Corporate Governance Guidelines can be found on our website at https://investors.mullenusa.com/ by clicking “Investor Relations — Investor Resources —  Governance” and is available in print upon request to the Secretary of Mullen Automotive Inc., 1405 Pioneer Street, Brea, California 92821.
The Audit Committee
The Audit Committee of the Board of Directors consists of three directors, who are independent pursuant to the Director Independence Standards of NASDAQ and other SEC rules and regulations applicable to audit committees. The following directors are currently members of the Audit Committee: Kent Puckett, who is serving as the Chair, Mark Betor, and John Andersen. The Board has determined that Kent Puckett qualifies as an audit committee financial expert, as such term is defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended.
The purpose of the Audit Committee is to assist the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and financial reporting process and its system of internal accounting and financial controls, including the following functions:

reviewing and approving the engagement of the independent registered public accounting firm to perform audit services and any permissible non-audit services for the Company;
 
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evaluating the performance of our independent registered public accounting firm and deciding whether to retain their services;

monitoring the rotation of partners on the engagement team of our independent registered public accounting firm;

reviewing our annual and quarterly financial statements and reports and discussing the statements and reports with our independent registered public accounting firm and management, including a review of disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;

considering and approving or disapproving all related party transactions for the Company;

reviewing, with our independent registered public accounting firm and management, significant issues that may arise regarding accounting principles and financial statement presentation, as well as matters concerning the scope, adequacy and effectiveness of our financial controls;

conducting an annual assessment of the performance of the Audit Committee and its members, and the adequacy of its charter; and

establishing procedures for the receipt, retention and treatment of complaints received by us regarding financial controls, accounting or auditing matters.
The Board has determined that each current member of the Audit Committee satisfies the independence requirements under Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act and is a person whom the Board has determined has the requisite financial expertise required under the applicable requirements of Nasdaq. In arriving at this determination, the Board examined each Audit Committee member’s scope of experience and the nature of their employment in the corporate finance sector. The Board has also determined that Jonathan New qualifies as an “audit committee financial expert,” as defined in applicable SEC rules.
The Compensation Committee
The Compensation Committee’s responsibilities include:

determining the compensation and other terms of employment of our chief executive officer and our other executive officers and reviewing and approving corporate performance goals and objectives relevant to such compensation;

reviewing and recommending to the full Board the compensation of the our directors;

evaluating and administering the equity incentive plans, compensation plans and similar programs, as well as reviewing and recommending to the Board the adoption, modification or termination of any such plans and programs;

establishing policies with respect to equity compensation arrangements;

if required, reviewing with management our disclosures under the caption “Compensation Discussion and Analysis” and recommending to the full Board its inclusion in our periodic reports to be filed with the SEC; and

reviewing and evaluating, at least annually, the performance of the Compensation Committee and the adequacy of its charter.
The Compensation Committee is authorized to retain or to obtain the advice of independent counsel or other advisors.
The Compensation Committee consists of Kent Puckett who is serving as the Chair, John Andersen, and Mark Betor. Our Board has determined that each current member of the Compensation Committee is independent under Nasdaq listing standards, a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act and an “outside director” as that term is defined in Section 162(m) of the Code.
 
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Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee were officers or employees of the Company during 2022 nor did they have any relationship with us requiring disclosure under Item 404 of Regulation S-K. None of our current executive officers served as a member of the board of directors or the compensation committee of any other entity that has or has had one or more executive officers serving as a member of our Board or Compensation Committee.
The Nominating and Governance Committee
The Nominating and Governance Committee assists the Board with the following functions:

reviewing periodically and evaluating director performance on the Board of Directors and its applicable committees, and recommending to the Board of Directors and management areas for improvement;

interviewing, evaluating, nominating and recommending individuals for membership on the Board of Directors;

reviewing and recommending to our board of directors any amendments to the Company corporate governance policies; and

reviewing and assessing, at least annually, the performance of the Nominating and Corporate Governance committee and the adequacy of its charter.
The Committee has the authority to retain any search firm engaged to assist in identifying director candidates, and to retain outside counsel and any other advisors. The Governance and Nomination Committee consists of Mark Betor who is serving as the Chair, Mary Winter and John Andersen. The Board has determined that each member of the Nominating and Governance Committee is independent under Nasdaq listing standards.
The Director Nomination Process
The Nominating and Governance Committee considers nominees from all sources, including stockholders. The Nominating and Governance Committee has the authority to lead the search for individuals qualified to become members of the Company’s Board and to select or recommend nominees to the Board to be presented for stockholder approval. The committee may use its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm.
The Board consists of a majority of directors who (i) qualify as “independent” directors within the meaning of Nasdaq listing standards, as the same may be amended from time to time; and (ii) are affirmatively determined by the Board to have no material relationship with the Company, its parents or its subsidiaries (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company, its parents or its subsidiaries). The Nominating and Governance Committee reviews with the Board at least annually the qualifications of new and existing Board members, considering the level of independence of individual members, together with such other factors as the Board may deem appropriate, including overall skills and experience. Our Board has determined not to establish term limits with regard to service as a director in the belief that continuity of service and the past contributions of directors who have developed an in-depth understanding of the Company and its business over time bring a seasoned approach to the Company’s governance. The committee will select individuals who have high personal and professional integrity, have demonstrated ability and sound judgment, and are effective, in conjunction with other director nominees, in collectively serving the long-term interests of our stockholders, together with such other factors as the board may deem appropriate, including overall skills and experience.
Although the Company does not have a policy regarding diversity, the value of diversity on the Board is considered and the particular or unique needs of the Company shall be taken into account at the time a nominee is being considered. The Nominating and Governance Committee seeks a broad range of perspectives and considers both the personal characteristics (gender, ethnicity, age) and experience (industry,
 
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professional, public service) of directors and prospective nominees to the Board. The Nominating and Governance Committee will recommend to the Board nominees as appropriate based on these principles.
Director Nominations.   Director nominees provided by stockholders to the Nominating and Governance Committee are evaluated by the same criteria used to evaluate potential nominees from other sources. Section 2.10 of our Bylaws provides specific procedures for shareholders to nominate directors. The procedures are as follows:
Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders (a) by or at the direction of the Board of Directors or (b) by any stockholder of the corporation who is a stockholder of record at the time of giving of notice provided for in this Section 2.10, who shall be entitled to vote for the election of directors at the meeting, and who complies with the notice procedures set forth in this Section 2.10. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the secretary of the corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the corporation not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year’s annual meeting of stockholders; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date then to be timely such notice must be received by the corporation no later than the later of 70 days prior to the date of the meeting or the 10th day following the day on which public announcement of the date of the meeting was made. Such stockholder’s notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934 (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the corporation’s books, of such stockholder and (ii) the class and number of shares of the corporation which are beneficially owned by such stockholder and a description of any agreement, arrangement or understanding (including, regardless of the form of settlement, any derivative, long or short positions, profit interests, forwards, futures, swaps, options, warrants, convertible securities, stock appreciation or similar rights, hedging transactions and borrowed or loaned shares) that has been entered into by or on behalf of, or any other agreement, arrangement or understanding that has been made, the effect or intent of which is to create or mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of, such stockholder with respect to the corporation’s securities. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the secretary of the Corporation that information required to be set forth in a stockholder’s notice of nomination which pertains to the nominee. No person shall be eligible to serve as a director of the corporation unless nominated in accordance with the procedures set forth in this bylaw. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by the bylaws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
Notwithstanding the foregoing provisions of Section 2.10, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, and the rules and regulations thereunder with respect to the matters set forth in Section 2.10.
Should you have any questions regarding these procedures or would like to receive a full copy of our Bylaws, you may do so by contacting the Company’s Secretary, Mary Winter at 1405 Pioneer Street, Brea, CA 92821.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics. This code of ethics applies to our directors, executive officers and employees. This code of ethics is publicly available in the corporate governance section of the Investor Relations page of our website located at https://investors.mullenusa.com/governance#governancedocuments and in print upon request to the Secretary at Mullen Automotive Inc., 1405 Pioneer Street, Brea, California, 92821. If we make amendments
 
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to the code of ethics or grant any waiver that the SEC requires us to disclose, we will disclose the nature of such amendment or waiver on our website.
Stockholder Communication with Our Board of Directors
Stockholders who wish to contact any of our directors either individually or as a group may do so by writing to them c/o Stockholder Relations, Mullen Automotive Inc., 1405 Pioneer Street, Brea, California 92821, or by telephone at (714) 613-1900 specifying whether the communication is directed to the entire Board or to a particular director. Your letter should indicate that you are a Mullen Automotive Inc. stockholder. Letters from stockholders are screened, which includes filtering out improper or irrelevant topics, and depending on subject matter, will be forwarded to (i) the director(s) to whom addressed or appropriate management personnel, or (ii) not forwarded.
Non-Employee Director Compensation
Our non-employee directors receive compensation for service on our board of directors and committees of our board of directors as follows:

Each non-employee director is entitled to receive $25,000 annually as a cash retainer for he/she board service, with additional annual cash retainers of (i) $2,000 for each member of our compensation committee or nominating and governance committee; (ii) $5,000 for the chairman of our compensation committee or nominating and governance committee; (iii) $8,000 for each member of our audit committee; and (iv) $45,000 for the chairman of our audit committee. All cash retainers are paid quarterly in arrears.

Additionally, each non-employee director receives an annual stock option award under the Company’s equity plan to purchase such number of shares of our Common Stock that will equal $75,000 divided by the closing trading price of our Common Stock on the date of each such grant, which will vest one year from the date of grant. Upon the occurrence of certain corporate events, including a change of control of the Company, all such stock option awards will immediately vest. The initial annual stock option award will be awarded to each of our non-employee directors in connection with this offering.
Our non-employee directors are entitled to reimbursement of ordinary, necessary and reasonable out-of-pocket travel expenses incurred in connection with attending in-person meetings of our board of directors or committees thereof. In the event our non-employee directors are required to attend greater than four in-person meetings or 12 telephonic meetings during any fiscal year, such non-employee directors will be entitled to additional compensation in the amount of $500 for each additional telephonic meeting beyond the 12 telephonic meeting threshold, and $1,000 for each additional in-person meeting beyond the four in-person meeting threshold.
The following table sets forth information regarding compensation earned by or paid to each person who served as a non-employee member of our board of directors during 2022.
Name of Director
Fees earned
or paid in cash ($)
Stock
Awards ($)(1)
Total ($)
John Andersen(2)
Mark Betor
$ 35,870 $ 137,002 $ 172,872
William Miltner
$ 24,212 $ 137,002 $ 161,214
Jonathan New(3)
$ 62,413 $ 75,002 $ 137,415
Ignacio Novoa(4)
$ 6,250 $ 62,000 $ 68,250
Kent Puckett
$ 35,870 $ 137,002 $ 172,872
(1)
Represents share-based compensation based on the grant date fair value estimated value of Common Stock at issuance in accordance with FASB ASC Topic 718. For the year ended September 30, 2022 and following the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share,
 
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stock awards were granted as follows: Jonathan New received 745 shares; Mark Betor, William Miltner and Kent Puckett each received an aggregate of 4,745 shares; and Ignacio Novoa received 4,000 shares.
(2)
Mr. Andersen was appointed effective September 19, 2022.
(3)
Mr. New resigned as a director and was appointed as Chief Financial Officer effective September 19, 2022.
(4)
Mr. Novoa was appointed as a director effective September 30, 2022. Pursuant to a one year Consulting Agreement, dated January 12, 2022, Mr. Novoa was issued an aggregate of 10,220 shares of Common Stock, after reflecting the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share.
 
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EXECUTIVE COMPENSATION
Our policies with respect to the compensation of our executive officers is administered by the Compensation Committee. The compensation policies are intended to provide for compensation that is sufficient to attract, motivate, and retain executives and potentially other individuals and to establish an appropriate relationship between executive compensation and the creation of stockholder value.
Summary Compensation Table
The following table sets forth certain information about the compensation paid or accrued during the years ended September 30, 2022 and 2021 to our Chief Executive Officer and each of our two most highly compensated executive officers other than our Chief Executive Officer who were serving as executive officers at September 30, 2022, and whose annual compensation exceeded $100,000 during such year or would have exceeded $100,000 during such year if the executive officer were employed by the Company for the entire fiscal year (collectively the “named executive officers”).
Name and Principal Position
Year
Salary
($)
Bonus
($)
Stock Award ($)
Common
Shares(1)
All Other
Compensation
Total ($)
David Michery
Chief Executive Officer
2022 $ 721,154 $ 750,000 $ 4,643,583 $ $ 6,114,737
2021 $ 409,485 $ $ 1,972,603 $ $ 2,382,088
Kerri Sadler
Former Chief Financial Officer(2)
2022 $ 348,539 $ $ 198,000 $ $ 546,539
Jerry Alban
Former Chief Operating Officer(3)
2022 $ 202,340 $ $ 280,500 $ 53,846 $ 536,686
2021 $ 283,835 $ $ 25,000 $ $ 308,835
Calin Popa
President – Mullen Automotive
2022 $ 295,815 $ $ 171,555 $ $ 467,370
2021 $ 296,969 $ $ 87,500 $ $ 384,469
(1)
Represents share-based compensation based on the grant date fair value estimated value of Common Stock at issuance in accordance with FASB ASC Topic 718. For the year ended September 30, 2022 and 2021, following the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share, Mr. Michery received 562,859 shares (of which 49,973 shares were awarded but are due to be issued) and 31,562 shares of Common Stock, respectively, Ms. Sadler received 24,000 shares and 0 shares of Common Stock, respectively, Mr. Alban received an aggregate of 34,000 shares (of which 22,000 shares were awarded but are due to be issued and 10,000 shares were granted in connection with his departure from the Company, as further described below) and 0 shares of Common Stock, respectively, and Mr. Popa received 20,795 shares (of which 14,795 shares were awarded but are due to be issued) and 1,400 shares of Common Stock, respectively.
(2)
Ms. Sadler served as Chief Financial Officer until September 19, 2022.
(3)
Mr. Alban retired from the Company as Chief Operating Officer and a director effective June 30, 2022. On June 27, 2022, the Company and Mr. Alban entered into a Separation Agreement pursuant to which the Company agreed to pay Mr. Alban a single lump sum of $53,846.15 and issue to Mr. Alban 10,000 shares of common stock after reflecting the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share.
Narrative Disclosure to Summary Compensation Table
The primary elements of compensation for the Company’s named executive officers are base salary, bonus and equity-based compensation awards. The named executive officers also participate in employee benefit plans and programs that we offer to our other full-time employees on the same basis.
 
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Base Salary
The base salary payable to our named executive officers is intended to provide a fixed component of compensation that reflects the executive’s skill set, experience, role, and responsibilities.
Bonus
Although we do not have a written bonus plan, the Board may, in its discretion, award bonuses to our executive officers on a case-by-case basis. These awards are structured to reward named executive officers for the successful performance of Mullen as a whole and of each participating named executive officer as an individual. The bonus amounts awarded in 2021 were on an entirely discretionary basis. In addition, as described under the heading “Employment and Severance Agreements,” each of the named executive officers is eligible under the terms of their respective employment agreements to receive set bonus amounts based on Mullen’s achievement of certain financial milestones..
Share-based Compensation
We do not have a formal policy with respect to the grant of equity incentive awards to our executive officers or any formal equity ownership guidelines applicable to them. On July 26, 2022, at the 2022 Annual Meeting of Stockholders (“2022 Annual Meeting”) of the Company, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”). Additional details about the 2022 Plan are set forth in the Company’s Definitive Proxy Statement on Schedule 14A, as filed with the SEC on June 24, 2022 and the Supplement to the Proxy Statement filed with the SEC on July 13, 2022.
The 2022 Plan provides for grants of stock options, stock appreciation rights, stock awards and restricted stock units, all of which are sometimes referred to individually, to employees, consultants, non-employee directors of the Company and its subsidiaries. Stock options may be either incentive stock options, as defined in Section 422 of the Internal Revenue Code, or non-qualified stock options. The 2022 Plan authorizes the grant of awards relating to up to 7,000,000 shares of the Company’s common stock..
Outstanding Equity Awards at Fiscal Year End 2022
There were no outstanding equity awards that have not vested held by the named executive officers as of September 30, 2022.
CEO Performance Award
On May 5, 2022, the Company entered into to the Performance Stock Award Agreement (the “PSA Agreement”) pursuant to which the Company agreed to grant performance equity awards to the Chief Executive Officer (“CEO Performance Award”). On July 26, 2022, at the 2022 Annual Meeting, the Company’s stockholders approved, for purposes of complying with Nasdaq Listing Rule 5635(c), of the issuance of shares of common stock to the Company’s Chief Executive Officer, David Michery, pursuant to the PSA Agreement.
Pursuant to the PSA Agreement, Mr. Michery is eligible to receive shares of common stock of the Company based on the achievement of milestones as described below, and within each milestone the achievement of certain performance tranches, 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 as of the date of satisfaction of such tranche and through the date the Compensation Committee determines, approves and certifies that the requisite conditions for the applicable tranche have been satisfied, the Company will issue shares of its common stock as specified in the tranche. Each milestone must be achieved within the performance period specified for such milestone, and the latest milestone may be achieved
Vehicle Delivery Milestones: For each of the following five 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 the Company’s then-current total issued and outstanding shares of Common Stock: (i) Delivery of the Company’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 (or
 
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vehicle approval process) 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 a number of shares of Common Stock equal to 1%, of the Company’s then-current total issued and outstanding shares of Common Stock; as of the date a Capital Tranche is achieved.
Additionally, if the Company 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 the Company is approved to be included on the Russel Index.
On June 27, 2022, the Company joined the Russell 2000 and 3000 Indexes. In addition, on June 7, 2022, the Company entered into a securities purchase agreement, as amended by Amendment No. 1 dated June 23, 2022, Amendment No. 2 dated September 19, 2022 and Amendment No. 3 dated November 15, 2022, whereby, the Company shall secure additional funding of $275 million in the form of a put option pursuant to which, upon the terms and subject to the conditions contained in the purchase agreement and solely upon the request of the Company, the investors party to the agreement will be required to purchase an aggregate of $275 million of the Company’s Series D Preferred Stock and five-year warrants exercisable for shares of the Company’s common stock. As amended, the investors agreed that upon payment of $150 million and in lieu of receiving shares of Series D Preferred Stock and Warrants, the investors shall receive notes convertible into shares of the Company’s Common Stock. To the extent that the Company exercises in full its rights under the purchase agreement, this will result in an achievement of two of the Capital Tranches., Mr. Michery will be entitled to such number of shares of Common Stock equal to 1% of the Company’s then-current total issued and outstanding shares of Common Stock upon the achievement of each tranche (i.e., upon each $100 million raised, a new tranche will be achieved and an additional 1% will be issued), subject to the final amount that is raised.
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 the Company or its vehicle apart from its competitors or that provides the Company 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 the Company’s then-current total issued and outstanding shares of Common Stock as of the date the Feature milestone is achieved.
On September 1, 2022, the Company announced that it a signed partnership with Watergen Inc. to develop and equip Mullen’s portfolio of electric vehicles with technology that will produce fresh drinking water from the air for in-vehicle consumer and commercial application.
Distribution Milestone: For each vehicle distribution milestone set forth below that is satisfied by entering into a joint venture or other distribution agreement by December 31, 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 distribution milestone achieved: (i) agreement with an established local, US dealer or franchise network; and (ii) agreement with an established Latin American or other non-US based dealer or franchise network.
On November 8, 2022, the Company entered into an agreement into an agreement to appoint Newgate Motor Group as the marketing, sales, distribution and servicing agent for the Mullen I-GO in Ireland and the United Kingdom.
To date the following shares of common stock have been issued based on the achievement of the milestones and tranches listed in the table below. The shares of common stock has reflected the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share.
 
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CEO Performance Award Table
Date
Tranche
% of
O/S Shares
Shares O/S
Shares Issued
Stock
Price
Stock
Compensation
($)
9/21/2022
Russell Index Tranche
2% 19,247,780 384,956 $ 0.41 $ 3,945,795
10/12/2022
Features Milestone
5% 35,907,476 1,795,374 $ 0.25 $ 11,221,087
11/9/2022
Non-USA Distribution
2% 49,246,006 984,921 $ 0.27 $ 6,648,211
11/30/2022
Capital Benchmark
2% 57,530,852 1,150,618 $ 0.19 $ 5,465,431
Total Shares Awarded
4,315,869 $ 27,280,524
Employment and Severance Agreements
We have entered into employment agreements with each of our named executive officers described below.
Chairman of the Board, President and Chief Executive Officer
Effective July 1, 2021, the Compensation Committee approved a new employment contract for David Michery. He will receive an annual salary of $750,000 plus incentive compensation and 40,000 shares of Common Stock each year. He is entitled to reimbursement compensation for all reasonable expenses up to $500,000 per year.
The agreement contains non-competition and non-solicitation covenants. For one year after voluntary separation from the Company, Mr. Michery cannot engage in competitive business activity within the Company territory; prevents him from participating in any transaction that occurred within 24-month period preceding from incident in questions; and prevents him from contacting employees for any business and employment opportunities.
No other employees have severance agreements with the Company. Employment agreements with other executive officers and key employees are standard terms (“employment at will”) offered to all employees.
Chief Financial Officer
On September 19, 2022, the Company entered into an employment agreement with Jonathan New. He will receive an annual salary of $425,000 and 12,000 restricted shares of Common Stock. Stock compensation is payable quarterly. A prorated tranche of 3,363 of the share compensation will be vested and due on January 1, 2023, for the period September 19, 2022, through December 31, 2022, and quarterly tranches of 3,000 shares shall be vested and due at the end of December, March, June, and September of each calendar year, beginning January 1, 2023. Mr. New also received $25,000 in relocation allowance from Florida to California. Additionally, the Company will reimburse up to $2,000 per month for temporary accommodation costs. The reimbursement will terminate on the first to occur: date of permanent housing or February 1, 2023.
If Mr. New is terminated for any reason other than due to negligence, failure to deliver services or perform at the level hired or for any other just cause, he is entitled to a payment of $200,000, paid in the Company’s usual payroll cycle.
President — Mullen Automotive
Effective July 7, 2021, the Compensation Committee approved the employment contract for Calin Popa. He will receive an annual salary of $304,000 plus incentive compensation and 4,000 restricted shares of Common Stock per year. Employment agreement contains standard terms (“employment at will”) and vacation. There is no severance agreement.
Consulting Agreement
On October 26, 2021, the Company and Mary Winter entered into a Consulting Agreement whereby the Company agreed to pay Ms. Winter $60,000 for the period from October 1, 2021, to September 30, 2022, for her services as corporate secretary.
 
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Separation Agreement
On June 27, 2022, in connection with the retirement by Jerry Alban from the Company as Chief Operating Officer and a director effective June 30, 2022, the Company and Mr. Alban entered into a Separation Agreement pursuant to which the Company agreed to pay Mr. Alban a single lump sum payment of $53,846 and issue 10,000 shares of common stock. Mr. Alban continues to engage the Company as a consultant on special projects for approximately $60,000 a year.
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of September 30, 2022 , which has reflected the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share. Information is included for equity compensation plans approved by our stockholders and equity compensation plans not approved by our stockholders.
Plan Category
(a)
Number of securities
to be issued upon
exercise of outstanding options,
warrants and rights
(b)
Weighted-average
exercise price per
share of outstanding options,
warrants and rights
(c)
Number of securities
remaining available
for future issuance
under equity compensation
plans (excluding securities)
Equity compensation plans approved by stockholders
 — $  — 6,779,092
Equity compensation plans not approved by stockholders
$
Total
$ 6,779,092(1)
(1)
Consists of shares of Common Stock reserved for future issuance under the Company 2022 Equity Incentive Plan. The Company may also issue shares of Common Stock (based on a certain percentage of then-current total issued and outstanding shares) to David Michery as performance equity awards as a result of the achievement of certain milestones pursuant to the Performance Stock Award Agreement dated May 5, 2022, as further described under the subsection “CEO Performance Award” in the above sections.
 
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as disclosed herein, no director, executive officer, shareholder holding at least 5% of shares of our common stock, or any immediate family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the beginning of our last fiscal year, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or 1% of the average of the Company’s total assets at year-end for the last two completed fiscal years.
Director Independence
The Board determined that Mary Winter, Kent Puckett, Mark Betor and John Andersen, qualify as independent directors, as defined under the listing rules of the Nasdaq, and the Board consists of a majority of “independent directors” as defined under the rules of the SEC and Nasdaq listing requirements. In addition, we are subject to the rules of the SEC and Nasdaq relating to the membership, qualifications, and operations of the audit, as discussed below.
Certain Relationships and Related Transactions
The Company and Mr. Novoa entered into a one year Consulting Agreement, dated January 12, 2022, whereby Mr. Novoa provides electric vehicle market research, analysis of market trends in the electric vehicle industry and other research and services. Mr. Novoa was issued an aggregate of 10,220 shares of Common Stock with a value of $400,000 pursuant to the terms of the Consulting Agreement pursuant to the terms of the Consulting Agreement.
Prior to its corporate reorganization on November 5, 2021, the Company operated as a division of Mullen Technologies, Inc. (“MTI”). Subsequent to the corporate reorganization, the Company has provided management and accounting services to MTI at cost pursuant to a transition services agreement dated May 12, 2021. At September 30, 2022, the Company has incurred approximately $1.2 million of costs on behalf of MTI, which is reflected in Other Current Assets on the consolidated balance sheet at September 30, 2022.
William Miltner is a litigation attorney who provides legal services to Mullen Automotive and its subsidiaries. Mr. Miltner also is an elected Director for the Company, beginning his term in August 2021. For the fiscal year ending September 30, 2022, Mr. Miltner received $881,248 for services rendered to us. Mr. Miltner has been providing legal services to us since 2020.
 
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below contains information regarding the beneficial ownership of our Common Stock by (i) each person who is known to us to beneficially own more than 5% of our Common Stock, (ii) each of our directors and director-nominees, (iii) each of our named executive officers and (iv) all of our directors and executive officers as a group. The table below has reflected the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share.
Each stockholder’s percentage of ownership in the following table is based upon, as applicable, the following shares outstanding as of the Record Date:
Class
Number of Shares
Common Stock
[263,279,263]
Series A Preferred Stock
[1,037]
Series B Preferred Stock
0
Series C Preferred Stock
[1,210,056]
Series D Preferred Stock
[363,097]
Following the 1:25 reverse stock split that was effected on May 4, 2023 where each fractional share resulting from such reverse stock split held by a stockholder was rounded up to the next whole share, each share of Series A Preferred Stock converts into 4 shares of Common Stock; the Series C Preferred are convertible at any time by the holder into shares of Common Stock on a share-for-0.04 share basis; the Series D Preferred Stock converts into the number of shares of Common Stock determined by dividing the Series D Original Issue Price (plus all unpaid accrued and accumulated dividends thereon, as applicable, whether or not declared), by the conversion price, in effect on the date the certificate is surrendered for conversion.
Under the terms of the Preferred Stock, Notes and warrants, a holder may not convert or exercise, as applicable, the Preferred Stock, Notes or Warrants into Common Stock to the extent such exercise would cause such holder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 9.99%, as applicable, of our then outstanding Common Stock following such conversion or exercise, excluding for purposes of such determination Common Stock issuable upon conversion of other convertible securities which have not been converted or exercised. The number of shares in the table does not reflect this limitation.
To our knowledge, except as otherwise noted below and subject to applicable community property laws, each person or entity named in the following table has the sole voting and investment power with respect to all shares that he, she or it beneficially owns. Unless otherwise indicated, the address of each beneficial owner listed below is c/o Mullen Automotive Inc. 1405 Pioneer Street, Brea, CA 92821.
 
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Name of Beneficial Owners
Common Stock(1)
Total Voting
Power(2)
Shares
%
%
Named Executive Officers and Directors
David Michery(3)
[4,409,340] [1.67]% [2.06]%
Jonathan New
345 * *
Calin Popa
12,390 * *
Mary Winter
3,499 * *
Jonathan K. Andersen
20,000 * *
Mark Betor
6,395 * *
William Miltner
745 * *
Ignacio Novoa
16,320 * *
Kent Puckett
0 * *
Directors and Executive Officers as a Group (9 Persons)(3)
[4,469,034] [1.7]% [2.1]%
5% Beneficial Owners:**
Acuitas Capital LLC(4)
[26,142,829]
Michael Wachs 2022 Dynasty Trust(5)
[13,016,019]
Esousa Holdings LLC(5)
[13,016,037]
Ault Lending, LLC f/k/a Digital Power Lending, LLC(6)
[5,744,726]
Jess Mogul(7)
[1,895,541]
Davis-Rice Pty Limited(8)
[18,939,392]
*
Less than 1%.
**
Based on the Prospectus Supplement No.6 (Registration No. 333-269766) filed by the Company on June 12, 2023.
(1)
In computing the number of shares of Common Stock beneficially owned by a person and the percentage of beneficial ownership of that person, shares of Common Stock underlying notes, options, warrants or shares of Preferred Stock held by that person that are convertible or exercisable, as the case may be, within 60 days of the Record Date are included. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.
(2)
Percentage total voting power represents voting power with respect to all outstanding shares of Common Stock, Series A Preferred, Series B Preferred and Series C Preferred. The Common Stock, Series A Preferred, Series B Preferred and Series C Preferred vote together as a single class on all matters submitted to a vote of stockholders, except as may otherwise be required by the terms of the Amended and Restated Certificate of Incorporation of the Company or as may be required by law. Each holder of Series A Preferred is entitled to 1,000 votes per share and each share of the Series B Preferred Stock and the Series C Preferred Stock is entitled to one vote per share.
(3)
With regards to David Michery, consists of (i) [4,342,265] shares of Common Stock held directly by Mr. Michery, and (ii) the following shares over which Mr. Michery has voting power pursuant to Voting Agreements (as described below): (a) [4,148] shares of Common Stock issuable upon conversion of [1,037] shares of Series A Preferred Stock, (b) [48,403] shares of Common Stock issuable upon conversion of Series C Preferred Stock, and (c) [14,524] shares of Common Stock issuable upon conversion of Series D Preferred Stock. Excludes shares of Common Stock underlying notes, which were issued on November 15, 2022 pursuant to Amendment No. 3 to the Securities Purchase Agreement dated June 7, 2022 (the “Notes”) and have an aggregate remaining balance including accrued interest as of November 11, 2022 of approximately $92.6 million, and an aggregate of 16,341,312 warrants, the issuance of which, as well as an increase in the authorized shares of Common Stock, is subject to stockholder approval as described in the Company’s proxy statement filed with the SEC on November 25, 2022 and excludes shares of Common Stock under certain Voting Agreements as discussed herein. Effective as of November 4, 2021, Mr. Michery entered into voting agreements with certain holders of
 
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the Company’s securities (the “Voting Agreements”) pursuant to which such holders agreed to vote as directed by Mr. Michery, and also granted Mr. Michery an irrevocable proxy, at any annual or special meeting of stockholders or through the solicitation of a written consent of stockholders, and in some cases only with respect to any meeting at which an election of directors of the Company or any proposal to approve a change of control of the Company, which includes a merger, sale or other disposition of the securities of the Company or all or substantially all of its assets, is presented. The Voting Agreements have a term of three years or longer. Mr. Michery will not exercise his proxies pursuant to the Voting Agreements on any of the proposals described herein.
(4)
Terren Peizer serves as the Chief Executive Officer of Acuitas Capital LLC. The amount beneficially owned excludes (a) 40,303,154 shares of Common stock issuable upon exercise of Pre-Funded Warrants and (b) 121,075,067 shares of Common Stock issuable upon exercise of warrants Also consists of 200,757,574 shares of Common Stock that may be acquired within 60 days, based on a closing price of $0.432 on June 9, 2023, pursuant to the terms of the Securities Purchase Agreement and the Series D Settlement Agreement. All shares may be deemed to be beneficially owned by Terren Peizer, who serves as the Chief Executive Officer of Acuitas Capital LLC. The address for Acuitas Capital, LLC is 200 Dorado Beach Drive #3831, Dorado, Puerto Rico 00646.
(5)
The amount beneficially owned excludes (i) (a) 11,934,953 shares of Common stock issuable upon exercise of certain Pre-Funded Warrants and (b) 35,738,634 shares of Common Stock issuable upon exercise of warrants held by Michael Wachs 2022 Dynasty Trust, and (ii) (a) 6,302,162 shares of Common stock issuable upon exercise of certain Pre-Funded Warrants, and (b) 41,371,425 shares of Common Stock issuable upon exercise of warrants held by Esousa Holdings, LLC. Also excludes 204,772,726 shares of Common Stock that may be acquired within 60 days, based on a closing price of $0.432 on June 9, 2023, pursuant to the terms of the Securities Purchase Agreement and the Series D Settlement Agreement. All shares may be deemed to be beneficially owned by Michael Wachs, who serves as the sole Managing Member of Esousa Holdings, LLC and the manager of Michael Wachs 2022 Dynasty Trust. The address for Michael Wachs 2022 Dynasty Trust, Esousa Holdings, LLC and Michael Wachs is 211 E 43rd St, 4th Fl, New York, NY 10017.
(6)
The amount beneficially owned excludes (a) 10,511,363 shares of Common Stock issuable upon exercise of warrants; and (b) 30,113,634 shares of Common Stock that may be acquired within 60 days, based on a closing price of $0.432 on June 9, 2023, pursuant to the terms of the Securities Purchase Agreement and the Series D Settlement Agreement. Shares may be deemed to be beneficially owned by David Katzoff, who serves as the Manager of Ault Lending, LLC f/k/a Digital Power Lending, LLC. Ault Lending, LLC f/k/a Digital Power Lending, LLC is a wholly owned subsidiary of Ault Global Holdings, Inc. The address for Ault Lending, LLC f/k/a Digital Power Lending, LLC is 940 South Coast Drive, Ste 200, Costa Mesa, CA 92626.
(7)
The amount beneficially owned excludes (a) 4,109,244 shares of Common Stock issuable upon exercise of warrants; and (b)10,037,888 shares of Common Stock that may be acquired within 60 days, based on a closing price of $0.432 on June 9, 2023, pursuant to the terms of the Securities Purchase Agreement and the Series D Settlement Agreement. The address for Jess Mogul is 347 W 87 St, Apt 2R, New York, NY 10024.
(8)
The amount beneficially owned excludes (a) 37,476,057 shares of Common Stock issuable upon exercise of warrants and (b) 100,378,776 shares of Common Stock that may be acquired within 60 days, based on a closing price of $0.432 on June 9, 2023, pursuant to the terms of the Securities Purchase Agreement and the Series D Settlement Agreement. Shares held by Davis-Rice Pty Limited may be deemed to be beneficially owned by Timothy Davis-Rice, who serves as the Director of Davis-Rice Pty Limited. The address for Davis-Rice Pty Limited is 4 Murchison Street, Mittagong, NSW 2575, Australia.
 
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires our directors, executive officers, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership of such securities with the SEC. Directors, executive officers and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely on the reports received by us and on the representations of the reporting persons, we believe each greater than ten percent holder complied with all applicable filing requirements during the fiscal year ended September 30, 2022, except for the following: David Michery did not timely file two Form 4s reporting 5 transactions; Calin Popa did not timely file a Form 3 and three Form 4s reporting five transactions; Kent Puckett did not timely file one Form 4 reporting two transactions; Mark Betor did not timely file two Form 4s reporting two transactions; and Ignacio Novoa did not timely file two Form 4s reporting 11 transactions.
 
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STOCKHOLDER PROPOSALS
Proposals to Be Included in Proxy Statement
If a stockholder would like us to consider including a proposal in our proxy statement and form of proxy relating to our 2024 annual meeting of stockholders pursuant Rule 14a-8 under the Exchange Act, a written copy of the proposal must be delivered no later than [March 2], 2024 (the date that is 120 calendar days before the one year anniversary of the date of the proxy statement released to stockholders for this year’s annual meeting of stockholders). If the date of next year’s annual meeting is changed by more than 30 days from the anniversary date of this year’s meeting, then the deadline is a reasonable time before we begin to print and mail proxy materials. Proposals must comply with the proxy rules relating to stockholder proposals, in particular Rule 14a-8 under Exchange Act, in order to be included in our proxy materials.
Proposals to Be Submitted for Annual Meeting
Stockholders who wish to submit a proposal or nomination for consideration at our 2024 annual meeting of stockholders, but, in the case of a proposal who do not wish to submit the proposal for inclusion in our proxy statement pursuant to Rule 14a-8 under the Exchange Act, must, in accordance with our bylaws, have given timely notice thereof in writing to the secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Company not less than 60 days ([June 4], 2024) nor more than 90 days ([May 5], 2024) prior to the first anniversary of the preceding year’s annual meeting of stockholders. The proposal or nomination must comply with the notice procedures and information requirements set forth in our bylaws, and the stockholder submitting the proposal or nomination must be a stockholder of record at the time of giving the notice and is entitled to vote at the meeting. Any stockholder proposal or nomination that is not submitted pursuant to the procedures set forth in our bylaws will not be eligible for presentation or consideration at the next annual meeting.
In the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from the first anniversary of the preceding year’s annual meeting, then notice must be delivered no later than 70 days prior to the date of such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Public announcement means disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed by the company with the SEC pursuant to Section 13, 14 or 15(d) of the Exchange Act.
Universal Proxy
In addition to satisfying the foregoing requirements under the Company’s bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than June 4, 2024.
Mailing Instructions
In each case, proposals should be delivered to 1405 Pioneer Street, Brea, California 92821, Attention: Secretary. To avoid controversy and establish timely receipt by us, it is suggested that stockholders send their proposals by certified mail return receipt requested.
 
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OTHER BUSINESS
The Board of Directors does not know of any other matter to be acted upon at the Meeting. However, if any other matter shall properly come before the Meeting, the proxy holders named in the proxy accompanying this proxy statement will have authority to vote all proxies in accordance with their discretion.
By order of the Board of Directors
David Michery
Chief Executive Officer
Dated:            , 2023
Brea, California
 
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Appendix A
Mullen Automotive Inc.
2022 Equity Incentive Plan and Proposed Amendment
 
A-1

 
MULLEN AUTOMOTIVE INC.
2022 EQUITY INCENTIVE PLAN
 
A-2

 
PROPOSED AMENDMENT TO THE MULLEN AUTOMOTIVE INC.
2022 EQUITY INCENTIVE PLAN
THIS AMENDMENT to the Mullen Automotive Inc. 2022 Equity Incentive Plan (this “Amendment”) is entered into as of [           ], 2023, by Mullen Automotive Inc., a Delaware corporation (the “Company”).
RECITALS
A.   The Company adopted the Mullen Automotive Inc. 2022 Equity Incentive Plan effective as of July 26, 2022 (the “Plan”).
B.   Section 10 of the Plan provides that the Board may at any time amend the Plan.
C.   On June 8, 2023, the Board of Directors of the Company approved an amendment to the Plan increasing the maximum number of shares of the Company’s common stock issuable under the Plan by an additional 52,000,000 shares.
D.   Pursuant to the authority contained in Section 10 of the Plan, the Company now desires to amend the Plan as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants set forth in the Plan, the Company agrees as follows:
1.   Section 4.1 of the Plan is deleted in its entirety and the following is substituted in lieu thereof:
“As provided in Section 4.3, the total number of Shares available for grant under the Plan shall be Fifty Nine Million (59,000,000) shares, not subject to adjustment for any decrease or increase in the number shares of common stock resulting from a stock spilt, reverse stock split, recapitalization, combination, reclassification, the payment of a stock dividend on the Common Stock or any other decrease in the number of such shares of Common Stock effected without receipt of consideration by the Company. Shares granted under the Plan may be authorized but unissued Shares or reacquired Shares bought on the market or otherwise.”
2.   Except to the extent expressly amended or modified in this Amendment, the Plan shall remain in full force and effect as originally executed.
IN WITNESS WHEREOF, the undersigned has executed this Amendment as of the day and year first above written.
MULLEN AUTOMOTIVE INC.
By:
[Title]
 
A-3

 
Appendix B
[PROPOSED]
CERTIFICATE OF AMENDMENT
OF
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MULLEN AUTOMOTIVE INC.
(a Delaware corporation)
MULLEN AUTOMOTIVE INC., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:
FIRST: The name of the Corporation is Mullen Automotive Inc. The original Certificate of Incorporation of the Corporation was filed on October 2, 2012. The Second Amended and Restated Certificate of Incorporation of the Corporation was filed on November 5, 2021 and amended on March 8, 2022, July 26, 2022, September 19, 2022, October 17, 2022, November 14, 2022, January 30, 2023 and May 3, 2023 (collectively, the “Current Certificate”).
SECOND: Pursuant to Section 242(b) of the Delaware General Corporation Law (the “DGCL”) the Board of Directors of the Corporation has duly adopted, and the outstanding stock entitled to vote thereon, have approved the amendments to the Current Certificate set forth in this Certificate of Amendment.
THIRD: Pursuant to Section 242 of the DGCL, Section A of Article III of the Current Certificate is hereby amended and restated as follows:
A.   (I) Classes of Stock.   This corporation is authorized to issue two classes of stock to be designated, respectively, common stock and preferred stock. The total number of shares that this corporation is authorized to issue is Five Billion Five Hundred Million (5,500,000,000). The total number of shares of common stock authorized to be issued is Five Billion (5,000,000,000), par value $0.001 per share (the “Common Stock”). The total number of shares of preferred stock authorized to be issued is Five Hundred Million (500,000,000), par value $0.001 per share (the “Preferred Stock”), of which Two Hundred Thousand (200,000) shares are designated as “Series A Preferred Stock”, Twelve Million (12,000,000) shares are designated as “Series B Preferred Stock”, Forty Million (40,000,000) shares are designated as “Series C Preferred Stock”, and Four Hundred Thirty-Seven Million Five Hundred Thousand One (437,500,001) shares are designated as “Series D Preferred Stock.”
(II)   Reverse Stock Split.   Upon the effectiveness of the certificate of amendment first inserting this paragraph (II) (the “Effective Time”), each two (2) to one hundred (100) shares of Common Stock outstanding immediately prior to the Effective Time shall be automatically combined into (1) outstanding share of Common Stock of the corporation, without any further action by the corporation or the holder thereof, the exact ratio within the two to one-hundred range to be determined by the Board of Directors of the corporation prior to the Effective Time and publicly announced by the corporation. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificates”) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, subject to any elimination of fractional share interests.
FOURTH: On [•], 2023, the Board of Directors of the Corporation determined that each [•] shares of the Corporation’s Common Stock, par value $0.001 per share, outstanding immediately prior to the Effective Time shall automatically be combined into one (1) validly issued, fully paid and non-assessable share of Common Stock, par value $0.001 per share. The Corporation publicly announced this ratio on [•], 2023.
FIFTH: This certificate of amendment shall become effective at 4:30 p.m. (local time in Wilmington, Delaware) on [•], 2023.
[Remainder of Page Intentionally Left Blank]
 
B-1

 
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by its duly authorized officer this             day of            , 202[•], and the foregoing facts stated herein are true and correct.
By:
Name: David Michery
Title:   Chief Executive Officer, President and        Chairman of the Board
 
B-2

 
Appendix C
PLAN OF CONVERSION
OF
MULLEN AUTOMOTIVE INC.
Pursuant to Section 266 of the Delaware General Corporation Law (the “DGCL”), this Plan of Conversion (the “Plan of Conversion”) has been adopted by Mullen Automotive, Inc., a Delaware corporation (the “Company”), as of [June] [•], 2023, for the purpose of effecting a conversion of Mullen Automotive Inc., a Delaware Corporation into Mullen Automotive Inc., a Maryland Corporation.
WHEREAS, the Company desires to convert into a Maryland Corporation on the terms set forth herein (the “Conversion”); and
WHEREAS, the Board of Directors of the Company (the “Board”) has adopted a resolution approving this Plan of Conversion;
NOW, THEREFORE, the Company agrees as follows:
1.
Conversion.   The Company shall reincorporate from Delaware to Maryland by converting to a Maryland Corporation pursuant to Sections 3-901 and 3-902 of the Maryland General Corporation Law (the “MGCL”) and Section 266 of the DGCL. Following the conversion, the Company shall be governed by the laws of the State of Maryland. The conversion of the Company to a corporation governed by the laws of the State of Maryland on the terms and conditions set forth herein is referred to as the “Conversion.”
2.
Stockholder Approval.   The Company shall submit this Plan of Conversion to its stockholders for approval at the Company’s annual meeting of stockholders in 2023.
3.
Effective Date.   The Conversion shall be effective upon the later of (i) the filing of Articles of Conversion (the “Articles of Conversion”) and Articles of Incorporation with the State Department of Assessments and Taxation of Maryland (“SDAT”), and (ii) the filing of a Certificate of Conversion from a Delaware Corporation to a foreign Corporation, which filings shall be made as soon as practicable after all required stockholder approvals have been obtained, or if later, the time specified in such documents that is not more than 30 days after the date on which such documents are filed with the SDAT and the Secretary of State of the State of Delaware, as applicable. The time of such effectiveness is referred to as the “Effective Date.”
4.
Stock.   On the Effective Date, by virtue of the Conversion and without any action on the part of the holders thereof, each share of Common Stock and each share of preferred stock of each series will be converted into one share of the corresponding class and series of stock of the Company as a Maryland Corporation, and will remain issued and outstanding after the Conversion, having the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of such class and series of stock as set forth in the Maryland Charter (as defined below).
5.
Options and Restricted Equity.   On the Effective Date, by virtue of the Conversion and without any action on the part of the holders thereof, all stock options, stock appreciation rights, restricted stock units and other restricted equity outstanding and unexercised as of the Effective Date and awarded under the Company’s equity plans in effect on the Effective Date shall continue and remain in effect upon the same terms and conditions as were in effect immediately prior to the Conversion, and the Company shall continue to reserve that number of shares of Common Stock with respect to each such equity plan as was reserved by the Company prior to the Effective Date with no other changes in the terms and conditions thereof.
6.
Stock Certificates.   On and after the Effective Date, all of the outstanding certificates that, prior to that time, represented shares of the Common Stock, Series A Preferred Stock, Series C Preferred Stock, and Series D Convertible Preferred Stock of the Company shall be deemed for all purposes to continue to evidence ownership of and to represent the shares of the Company into which
 
C-1

 
the shares represented by such certificates have been converted as herein provided. The registered owner on the books and records of the Company or its transfer agent of any such outstanding stock certificate shall, until such certificate shall have been surrendered for transfer or conversion or otherwise accounted for to the Company or its transfer agent, have and be entitled to exercise any voting and other rights with respect to and to receive any dividend and other distributions upon the shares of the Company evidenced by such outstanding certificate as above provided.
7.
Succession.   On the Effective Date, all of the rights, privileges, debts, liabilities, powers and property of the Company as a Delaware corporation shall continue to be the rights, privileges, debts, liabilities, powers and property of the Company as a Maryland corporation in the manner and as more fully set forth in Section 3-904 of the MGCL. Without limiting the foregoing, upon the Effective Date, all property, rights, privileges, franchises, patents, trademarks, licenses, registrations, agreements, contracts and other assets of every kind and description of the Company shall continue to be vested in and devolved upon the Company without further act or deed. All rights of creditors of the Company and all liens upon any property of the Company shall be preserved unimpaired, and all debts, liabilities and duties of the Company shall continue to be obligations of the Company.
8.
Charter and Bylaws.   Immediately prior to or simultaneously with the filing of the Articles of Conversion, the Company shall file the Articles of Incorporation in the form of Exhibit A hereto (the “Maryland Charter”) with SDAT, which shall become the charter of the Company as of the Effective Date. The Bylaws set forth as Exhibit B hereto (the “Maryland Bylaws”) shall become the Bylaws of the Company as of the Effective Date.
9.
Directors and Officers.   The members of the Board and the officers of the Company immediately prior to the Effective Date shall continue in office following the Effective Date until the expiration of their respective terms of office and until their successors have been elected and qualified.
10.
Amendment.   This Plan of Conversion may be amended by the Board at any time prior to the Effective Date, provided that an amendment made subsequent to the approval of this plan by the stockholders of the Company shall not alter or change (a) the amount or kind of shares or other securities, obligations, rights to acquire shares or other securities, cash, or other property to be received by the stockholders hereunder, (b) any term of the Maryland Charter or the Maryland Bylaws, or (c) any of the terms and conditions of this Plan of Conversion if such alteration or change would adversely affect the holders of any class or series of stock of the Company in any material respect.
11.
Abandonment or Deferral.   At any time before the Effective Date, this Plan of Conversion may be terminated and the Conversion may be abandoned by the Board, notwithstanding the approval of this Plan of Conversion by the stockholders of the Company or the consummation of the Conversion may be deferred for a reasonable period of time if, in the opinion of the Board, such action would be in the best interests of the Company. In the event of termination of this Plan of Conversion, this Plan of Conversion shall become void and of no effect and there shall be no liability on the part of the Company, the Board or the Company’s stockholders with respect thereto, except that the Company shall pay all expenses incurred in connection with the Conversion or in respect of this Plan of Conversion or relating thereto.
 
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This Plan of Conversion has been adopted by the Board as of [June]   , 2023.
In Witness Whereof, the undersigned has caused this Plan of Conversion to be signed as of            , 2023.
Mullen Automotive, Inc.
By:
Chief Executive Officer,
President and Chairman of the Board
 
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Exhibit A
Maryland Charter
 
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Exhibit B
Maryland Bylaws
 
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Appendix D
ARTICLES OF INCORPORATION
OF MULLEN AUTOMOTIVE INC.
a Maryland corporation
ARTICLE I
The undersigned,                 , whose address is                 , being at least 18 years of age, by these Articles of Incorporation and by Articles of Conversion effective at      :      [a.m./p.m.], Eastern Time, on                 , 2023, does hereby convert Mullen Automotive Inc., a Delaware corporation, which was incorporated in the State of Delaware on October 2, 2012, having been originally formed as a Cayman Islands exempted company with limited liability on April 20, 2010, under the name Cazador Acquisition Corporation Ltd., into a corporation formed under the general laws of the State of Maryland.
ARTICLE II
The name of the corporation (the “Corporation”) is:
Mullen Automotive Inc.
ARTICLE III
The purpose for which the Corporation is formed is to engage in any lawful act or activity for which a corporation may be organized under the general laws of the State of Maryland as now or hereafter in force.
ARTICLE IV
The street address of the principal office of the Corporation in the State of Maryland is c/o Telos Legal Corp., 245 West Chase Street, Baltimore, Maryland 21201.
ARTICLE V
The name of the resident agent of the Corporation in the State of Maryland is Telos Legal Corp. The address of the resident agent is 245 West Chase Street, Baltimore, Maryland 21201.
ARTICLE VI
A.   Authorized Stock.   The total number of shares that the Corporation is authorized to issue is Five Billion Five Hundred Million (5,500,000,000), consisting of:
1.   Five Billion (5,000,000,000) shares of common stock, par value $0.001 per share (the “Common Stock”); and
2.   Five Hundred Million (500,000,000) shares of preferred stock, par value $0.001 per share (the “Preferred Stock”), of which:
(a)   (   )1 shares are designated as “Series A Preferred Stock”, having the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth in Exhibit I hereto;
1
To constitute the number of shares of Series A Preferred Stock outstanding at the time of the Conversion.
 
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(b)   (   )2 shares are designated as “Series C Preferred Stock”, having the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth in Exhibit II hereto; [and]
(c)   (   )3 shares are designated as “Series D Convertible Preferred Stock”, having the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth in Exhibit III hereto[; and][.]
(d)   [(   )4 shares are designated as “Series      Preferred Stock”, having the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth in Exhibit      hereto.]5
The aggregate par value of all the authorized shares of capital stock is Five Million Five Hundred Thousand dollars ($5,500,000.00). The board of directors of the Corporation (the “Board of Directors”), pursuant to a resolution approved by a majority of the entire Board of Directors and, except as may be provided in the terms of any class or series of stock of the Corporation, without any action by the stockholders of the Corporation, may amend the Charter (as defined below) from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue.
B.   Preferred Stock.
1.   Except as may otherwise be specified in the charter of the Corporation (as the same may be amended and in effect from time to time, the “Charter”), the Board of Directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any class or series from time to time into one or more classes or series of stock.
2.   Except as may otherwise be provided in the terms of any class or series of Preferred Stock, any share of Preferred Stock that is redeemed or converted pursuant to its terms, or repurchased or otherwise acquired in any other manner by the Corporation, shall return to the status of, and constitute, authorized but unissued shares of Preferred Stock, without further designation as to series or class until such shares are once more classified as a particular class or series by the Board of Directors pursuant to the Charter.
3.   Except as may otherwise be provided in the terms of any class or series of Preferred Stock, the holders of one or more classes or series of Preferred Stock shall have the exclusive right to vote (voting as separate classes or voting together as a single class, as may be set forth in the terms of such classes or series of Preferred Stock) on any amendment to the Charter on which the holders of such specified classes or series of Preferred Stock are entitled to vote as expressly set forth in the Charter and that would alter only the contract rights, as expressly set forth in the Charter, of Preferred Stock of such specified classes or series of Preferred Stock; and the holders of any other classes and series of stock of the Corporation, including the Common Stock, will not be entitled to vote on such an amendment.
2
To constitute the number of shares of Series C Preferred Stock outstanding at the time of the Conversion.
3
To constitute the number of shares of Series D Preferred Stock outstanding at the time of the Conversion.
4
To constitute the number of shares of Series [   ] Preferred Stock outstanding at the time of the Conversion, which will not exceed the total number of shares of Preferred Stock not otherwise designated as shares of Series A Preferred Stock, Series C Preferred Stock, or Series D Preferred Stock.
5
A paragraph and corresponding exhibit reflecting the number, designation and terms of each series of preferred stock that may be authorized pursuant to the charter of the Company before the Conversion to be included if and to the extent that shares of any such series of preferred stock are classified before the completion of the Conversion.
 
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C.   Common Stock.   Except as may otherwise be specified in the Charter, the Board of Directors may reclassify any unissued shares of Common Stock from time to time into one or more classes or series of stock. The preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of the Common Stock are as set forth below in this Section C.
1.   Dividend Rights.   Subject to the rights of the holders of any class or series of stock outstanding, the holders of the Common Stock shall be entitled to receive, when, as and if authorized by the Board of Directors and declared by the Corporation, out of any assets of the Corporation legally available therefor, such dividends as may be declared from time to time by the Corporation.
2.   Liquidation Rights.   Subject to the rights of the holders of any class or series of stock outstanding, upon the dissolution of the Corporation, the assets of the Corporation shall be distributed to the holders of Common Stock in accordance with the Maryland General Corporation Law (the “MGCL”).
3.   Redemption.   The Common Stock is not redeemable at the option of the holder.
4.   Voting Rights.   Except as may otherwise be provided in the Charter, each share of Common Stock shall entitle the holder thereof to one vote.
D.   Classification and Reclassification of Stock.   The Board of Directors may classify any unissued shares of Common Stock or Preferred Stock and reclassify any previously classified but unissued shares of stock of any class or series from time to time into one or more classes or series of stock. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to this Article VI, the number of authorized shares of the former class shall be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of Section A of this Article VI. Prior to the issuance of classified or reclassified shares of any class or series of stock, the Board of Directors by resolution shall (1) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (2) specify the number of shares to be included in the class or series; (3) set or change, subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption for each class or series; and (4) cause the Corporation to file articles supplementary with the Maryland State Department of Assessments and Taxation. Any of the terms of any class or series of stock set or changed pursuant to clause (3) of this Section D may be made dependent upon facts or events ascertainable outside the Charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary or other Charter document.
E.   Authorization by Board of Directors of Stock Issuance.   Except to the extent required by governing law, rule or regulation, the Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in the Charter or the bylaws of the Corporation (as the same may be amended and in effect from time to time, the “Bylaws”).
F.   Extraordinary Actions.   Except as specifically provided in Article X (relating to certain amendments to the Charter), or in the terms of any class or series of stock of the Corporation, notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of stockholders entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board of Directors and taken or approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter.
 
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G.   Action by Stockholders.   Any action required or permitted to be taken at any meeting of stockholders may be taken without a meeting (1) if a unanimous consent setting forth the action is given in writing or by electronic transmission by each stockholder entitled to vote on the matter and filed with the minutes of proceedings of the stockholders or (2) if the action is advised, and submitted to the holders of any class or series of stock for approval, by the Board of Directors and a consent in writing or by electronic transmission of the holders of such class or series of stock entitled to cast not less than the minimum number of votes that would be necessary to authorize or take the action at a stockholders meeting at which all stockholders entitled to vote on the action were present and voted is delivered to the Corporation in accordance with the MGCL. The Corporation shall give notice of any action taken by less than unanimous consent to each holder of shares of each class or series of stock entitled to vote on such action not later than ten days after the effective time of such action.
H.   Distributions.   Except as may otherwise be provided in the terms of any class or series of Preferred Stock, in determining whether a distribution (other than upon liquidation, dissolution or winding up) is permitted under Maryland law, amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights upon dissolution are superior to those receiving the distribution, shall not be added to the Corporation’s total liabilities.
I.   Preemptive and Appraisal Rights.   Except as may be provided by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to the Charter or as may otherwise be provided by contract approved by the Board of Directors, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or any other security of the Corporation which it may issue or sell. Holders of shares of stock shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors shall determine that such rights apply, with respect to all or any classes or series of stock, to one or more transactions occurring after the date of such determination in connection with which holders of such shares would otherwise be entitled to exercise such rights.
J.   Charter and Bylaws.   The rights of all stockholders and the terms of all stock of the Corporation are subject to the provisions of the Charter and the Bylaws. The Board of Directors shall have the exclusive power to make, alter, amend or repeal the Bylaws.
ARTICLE VII
The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
A.   Management of the Corporation.   The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by the Charter or the Bylaws, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.
B.   Number, Class and Terms of Directors.   The number of directors is seven (7), which number may be increased or decreased only by the Board of Directors pursuant to the Bylaws but shall never be less than the minimum number required by the MGCL now or hereafter in force. On the date of the effectiveness of the conversion of the Corporation from a Delaware corporation to a Maryland corporation, subject to the terms of any class or series of stock, the directors shall be classified, with respect to the terms for which they severally hold office, into three classes, which classes shall be designated as Class I, Class II and Class III, respectively, one class to hold office initially for a term expiring at the next succeeding annual meeting of stockholders, another class to hold office initially for a term expiring at the second succeeding annual meeting of stockholders and another class to hold office initially for a term expiring at the third succeeding annual meeting of stockholders, with the members of each class to hold office until their successors are duly elected and qualify. Subject to the provisions hereof, the number of directors in each class shall from time to time be designated by the Board of Directors of the Corporation pursuant to the Bylaws. At each annual meeting of the stockholders, the successors to the class of directors whose term expires at such meeting shall be
 
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elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify. The names of the individuals who will serve as the initial directors of the Corporation until their successors are elected and qualify, and the classes of such directors, are as follows:6
Class I Directors (Term to Expire in 2025)
Class II Directors (Term to Expire in 2026)
Class III Directors (Term to Expire in 2024)
C.   Cumulative Voting.   There shall be no cumulative voting in the election of directors.
D.   Vacancies.   The Corporation elects, effective at such time as it becomes eligible under Section 3-802 of the MGCL to make the election provided for under Section 3-804(c) of the MGCL, that, except as may be provided by the Board of Directors in setting the terms of any class or series of stock, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the directors remaining in office, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred and until a successor is elected and qualifies.
E.   Removal.   Subject to the rights of holders of shares of one or more classes or series of stock to elect or remove one or more directors, any director, or the entire Board of Directors, may be removed from office at any time, but only for cause and then only by the affirmative vote of stockholders entitled to cast a majority of the votes entitled to be cast generally in the election of directors. For the purpose of this paragraph, “cause” shall mean, with respect to any particular director, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty.
F.   Determinations by Board of Directors.   The determination as to any of the following matters, made by or pursuant to the direction of the Board of Directors, shall be final and conclusive and shall be binding upon the Corporation and every holder of shares of its stock: the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, acquisition of its stock or the payment of other distributions on its stock; the amount of paid-in surplus, net assets, other surplus, cash flow, EBITDA, adjusted EBITDA, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been set aside, paid or discharged); any interpretation or resolution of any ambiguity with respect to any provision of the Charter (including any of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption of any shares of any class or series of stock of the Corporation) or of the Bylaws; the number of shares of stock of any class or series of the Corporation; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation
6
To reflect the names and classes of the directors of the Corporation serving at the time of the filing of these Articles of Incorporation.
 
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or of any shares of stock of the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; any interpretation of the terms and conditions of one or more agreements with any person, corporation, association, company, trust, partnership (limited or general) or other entity; the compensation of directors, officers, employees or agents of the Corporation; or any other matter relating to the business and affairs of the Corporation or required or permitted by applicable law, the Charter or the Bylaws or otherwise to be determined by the Board of Directors.
G.   Corporate Opportunities.   The Corporation shall have the power, by resolution of the Board of Directors, to renounce any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities or classes or categories of business opportunities that are presented to the Corporation or developed by or presented to one or more directors or officers of the Corporation.