Mullen Automotive (NASDAQ:MULN) announced this morning that Qiantu Motors had granted it the right to distribute and assemble the DragonFLY K50 in North and South America for five years. Mullen will also acquire the intellectual property (IP) for the vehicle in the Americas and rebrand it under its Mullen GT and GRS brands. The K50 will have a targeted speed of over 200 mph and a 0-60 mph acceleration time of 1.95 seconds.

In exchange, Mullen will pay Qiantu and its affiliated companies $6 million to settle the prior legal proceedings between the two. Mullen also agreed to “purchase a certain number of vehicle kits every year” from Qiantu and will issue the company warrants to purchase up to 75 million shares of MULN stock. On top of that, Mullen will also pay Qiantu $2 million for deliverable items and a royalty fee of $1,200 for each homologated vehicle sold in the Americas during the five year period.

The two companies have a long and winding history. Let’s get into the details.

MULN Stock: Mullen Settles Litigation With Qiantu Motors

Back in May of 2019, the two parties signed an agreement in which Qiantu would sell to Mullen K50 vehicle kits. In July of that year, the two parties amended their agreement related to a change in Mullen’s payment schedule. Following the amendment, “a dispute arose regarding Mullen’s Payment Obligations.” This resulted in Mullen filing a lawsuit against the company for alleged breach of contract, fraud and other violations. Mullen also alleged that Qiantu unilaterally added exhibits to the agreement that were not previously agreed upon.

In response, Qiantu filed a motion to take the matter to arbitration through the Singapore International Arbitration Centre (SIAC). Mullen did not dispute that the matter should be taken to arbitration, although the company noted that it would be “inconvenient and cause substantial hardship.”

With Mullen’s payment of $6 million, the litigation has now been settled, which includes Mullen’s lawsuit against Qiantu and the arbitration through SIAC. Mullen has agreed to file a motion to dismiss the lawsuit against Qiantu, while both parties will “file a joint stipulation of dismissal of the arbitration proceeding.”

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.