Spruce Power Announces Notice of Pendency and Proposed Settlement of Stockholder Derivative Matters - Seite 2

Summary

On March 1, 2024, Spruce Power, in its capacity as a nominal defendant, entered into the Stipulation to resolve the Derivative Matters, which Stipulation was filed in the United States District Court for the District of Massachusetts (the “Court”). The Derivative Matters were prosecuted derivatively on behalf of the Company against certain current and former directors and officers of the Company and against the Company as a nominal defendant. The Stipulation and the Settlement contemplated therein, subject to the approval of the Court, are intended by the Parties to fully, finally, and forever compromise, resolve, discharge, and settle Plaintiffs’ and Defendants’ Released Claims and to result in the complete dismissal of the Derivative Matters with prejudice, upon the terms and subject to the conditions set forth in the Stipulation. The proposed Settlement requires the Company to maintain and/or adopt certain corporate governance reforms and procedures, as outlined in Exhibit A to the Stipulation (“Reforms”).

After negotiating the material substantive terms of the Settlement, Plaintiffs’ Counsel and Defendants’ Counsel, with the assistance of the Mediator, separately negotiated with regard to the amount in attorneys’ fees and expenses to be paid by the Company to Plaintiffs’ Counsel commensurate with the value of the substantial benefits conferred upon the Company and Current Stockholders through the Reforms and the risks assumed by Plaintiffs’ Counsel in pursuing the Derivative Matters on a wholly contingent basis. The Parties were unable to reach agreement on the amount of such fees and expenses and the Court will determine such amount (the “Fee and Expense Amount”). Defendants reserve the right to contest any such application. Plaintiffs’ Counsel shall also apply to the Court for service awards to be paid to four Plaintiffs in an amount up to $2,000 each (the “Service Awards”), to be paid out of the Fee and Expense Amount.

This notice is a summary only and does not describe all of the details of the Stipulation. For full details of the matters discussed in this summary, please see the full Stipulation and its exhibits posted on the Company’s website, www.sprucepower.com, contact Plaintiffs’ Counsel at the addresses listed below, or inspect the full Stipulation filed with the Clerk of the Court.

What Are the Derivative Matters About?

The Derivative Matters assert claims for breach of fiduciary duty and related causes of action in connection with the merger of special purpose acquisition company (“SPAC”) Pivotal Investment Corporation II (“Pivotal”) with XL Fleet, and related post-merger conduct. Plaintiffs contend that, motivated by strong financial incentives, namely avoiding having to cease operations except for the purpose of winding up, redeeming 100% of the outstanding public shares for cash and, subject to the approval of its remaining stockholders and its board of directors, dissolving and liquidating, thereby rendering the 5,750,000 shares held by the Individual Defendants worthless, the Individual Defendants induced shareholders to approve a de-SPAC merger with XL Fleet through a series of misrepresentations about XL Fleet’s then current operations, finances, and prospects. Plaintiffs contend similar misrepresentations continued to be published following the merger.