Form 4: USA Rare Earth Director Paul J. Kern Reports Acquisition of Shares and Potential Earnout Rights Following Business Combination

Director Paul J. Kern reports acquisition of USA Rare Earth shares and potential earnout rights following the business combination with Inflection Point Acquisition Corp. II.

Summary

• On March 13, 2025, Paul J. Kern, a director of USA Rare Earth, Inc. (USAR), acquired 163,125 shares of common stock as a result of the business combination between Inflection Point Acquisition Corp. II and USA Rare Earth, LLC.
• Kern also has the potential to receive up to 22,423 additional shares of common stock based on earnout conditions related to the stock price reaching $15.00 and $20.00 within a specified timeframe.
• These earnout shares are subject to vesting conditions based on the closing sale price of USAR shares on NASDAQ.
• 50% of the earnout shares vest if the closing price is greater than or equal to $15.00 for at least 20 out of 30 consecutive trading days during the period between March 13, 2026, and March 13, 2031.
• The remaining 50% vest if the closing price is greater than or equal to $20.00 for at least 20 out of 30 consecutive trading days during the same period.
• In the event of a Change of Control, the earnout shares will vest if the consideration is equal to or above the aforementioned price targets, or will be forfeited if such targets are not met.

Sentiment

Score: 7

Explanation: The sentiment is neutral to positive as it reflects a standard transaction following a business combination with incentives for future performance.

Positives

• The acquisition of shares by a director signals confidence in the company following the business combination.
• The earnout structure incentivizes the director to work towards increasing the company's stock price.

Risks

• The earnout shares may not vest if the stock price does not reach the specified targets within the given timeframe.
• The value of the acquired shares is subject to market fluctuations.

Future Outlook

The potential vesting of earnout shares is contingent on the company's stock performance over the next six years.

Industry Context

This announcement reflects standard practice in business combinations where key personnel are incentivized through equity-based compensation and earnout provisions to ensure alignment with shareholder value creation.

Stakeholder Impact

• Shareholders may view the director's acquisition of shares and potential earnout as a positive sign of alignment with their interests.
• The earnout structure could incentivize management to focus on increasing shareholder value.

Key Dates