NETE Net Element Inc

Settlement Agreement

On March 14, 2023, Mullen Automotive Inc. (the “Company”) entered into a Settlement Agreement (the “Settlement Agreement”) with Qiantu Motor (Suzhou) Ltd. (“Qiantu Suzhou”), and Qiantu Motor USA, Inc. (“Qiantu USA” and together with the Company and Qiantu Suzhou, the “Parties” and each a “Party”). The Settlement Agreement was entered into in full settlement of all pending litigation brought by the Company against Qiantu Suzhou and the following arbitration proceedings among the Parties (collectively the “Legal Proceedings”). The Settlement Agreement obligates the Company to promptly file a motion to dismiss with prejudice the pending lawsuit filed against Qiantu Suzhou, and the Parties to promptly file a joint stipulation of dismissal of the arbitration proceeding. The Parties shall also release all claims against each other arising from or in connection with the matters and claims that were subject to the Legal Proceedings.

Pursuant to the Settlement Agreement, (1) the Parties should enter into an IP Agreement (as defined and described below) and (2) in connection with the settlement of the Legal Proceedings and for the privilege of entering into the IP Agreement, the Company paid $6,000,000 to Qiantu Suzhou and Qiantu USA.

Intellectual Property and Distribution Agreement

In connection with the execution of the Settlement Agreement, on March 14, 2023, the Company entered into an Intellectual Property and Distribution Agreement (the “IP Agreement”) with Qiantu Suzhou, and two of Qiantu Suzhou’s affiliates (herein “Qiantu”). Pursuant to the IP Agreement, Qiantu granted the Company the exclusive license to use certain of Qiantu’s trademarks and the exclusive right to assemble, manufacture, and sell the homologated vehicles based on the Qiantu K-50 model throughout North America (including Canada, Mexico, and the United States of America) and South America for a period of five (5) years, which period does not start until the Company has successfully homologated vehicles based on terms of the IP Agreement (the “Five Year Period”). During the Five Year Period, the Company is also obligated to purchase a certain number of vehicle kits every year from Qiantu. As consideration for the Company’s entry into the IP Agreement, (1) the Company issued to Qiantu USA warrants to purchase up to 75,000,000 shares of the Company’s common stock (the “Qiantu Warrants”) as described below; (2) the Company will pay Qiantu $2,000,000 for deliverable items under the IP Agreement; and (3) the Company shall pay Qiantu a royalty fee of $1,200 for each homologated vehicle sold in North America and South America during the term of the IP Agreement.

Qiantu Warrants

The Qiantu Warrants were issued upon execution of the IP Agreement and are exercisable at Qiantu USA’s discretion commencing at any time from September 30, 2023 up to and including September 30, 2024 at 110% of the market price of the Company’s common shares at the close of trading on the earlier of (a) when the Company completes its obligations to its Series D investors; or (b) June 15, 2023.

The foregoing descriptions of the Settlement Agreement, the IP Agreement and the Qiantu Warrants contained herein do not purport to be complete and are subject to, and qualified in their entirety by reference to the Settlement Agreement, the IP Agreement and the Qiantu Warrants, copies of which will be filed as exhibits to the Company’s next quarterly report on Form 10-Q.