UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Item 8.01 Other Events.
As previously reported in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Form 10-K”) for Workhorse Group, Inc. (the “Company”), a total of eight substantively similar shareholder derivative actions were originally filed for breach of fiduciary duty and unjust enrichment against Duane Hughes, Steve Schrader, Stephen Fleming, Robert Willison, Anthony Furey, Gregory Ackerson, H. Benjamin Samuels, Raymond J. Chess, Harry DeMott, Gerald B. Budde, Pamela S. Mader, Michael L. Clark and Jacqueline A. Dedo (the “individual defendants”) in state court in Nevada, state court in Ohio, and federal courts in Nevada, Ohio, and California (collectively, the “Shareholder Derivative Litigation”). The Shareholder Derivative Litigation has been consolidated into five separate actions entitled: (i) Workhorse Grp., Inc. S’holder Derivative Litig, Lead Case No. A-21-83688-B (Nev. Dist. Ct.-Clark Cnty.); (ii) Cohen, et. al., v. Hughes, et al., Case No. 2:21-cv-08734-CJC-PVC (C.D. Cal.); (iii) Lomont, et al., v. Hughes, et al., Case No. 2:22-cv-00980-CDS-VCF (D. Nev.); (iv) In re Workhorse Grp. Inc. Derivative Litig., Lead Case No. 2: 21-cv-04202-CJC-PVC (C.D. Cal.); and (v) Abughazaleh, et al., v. Hughes, et al., Case No. A-2203019 (Ohio Ct. Common Pleas – Hamilton Cnty.).
On April 10, 2023, the parties to the Shareholder Derivative Litigation entered into a Stipulation of Settlement (the “Stipulation”) for the proposed settlement of the Shareholder Derivative Litigation. The proposed settlement of the Shareholder Derivative Litigation was filed in the Eighth Judicial District Court of the State of Nevada in and for Clark County (the “Court”) and is subject to final approval by the Court.
Subject to final approval of the settlement by the Court, and in exchange for a release of all derivative claims and dismissal with prejudice of the Shareholder Derivative Litigation, the Company has agreed to implement certain corporate governance reforms as set forth in Exhibit A to the Stipulation and the individual defendants have agreed to cause a cash payment to the Company of $12.5 million funded from the Company’s D&O liability insurance policies.
On April 21, 2023, the Court entered a Scheduling Order with Respect to Notice and Settlement Hearing (the “Scheduling Order”), and set a final settlement approval hearing for June 21, 2023, at 10:00 a.m. PDT.
The foregoing summary description of the Stipulation is qualified in its entirety by the full text of the Stipulation, including all exhibits thereto, a copy of which is filed herewith as Exhibit 99.1. A copy of the Notice of Pendency of Settlement of Derivative Litigation (“Notice”) is attached to this Current Report on Form 8-K as Exhibit 99.2. The Stipulation and Notice are also available on the Company’s Investor Relations page of the Company’s website at https://ir.workhorse.com/. Other information contained in or accessible through the Company’s website does not constitute part of, and is not incorporated into, this Current Report on Form 8-K.
Use of Forward-Looking Statements
Except for the historical information contained herein, this Current Report on Form 8-K contains forward-looking statements made pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such statements, include, without limitation, those regarding: (i) the Stipulation resolving the Shareholder Derivative Litigation; (ii) the ability to secure approval of the proposed settlement from the Court and to satisfy all conditions of the proposed settlement; and (iii) other statements that are not historical facts, constitute forward looking statements. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. These risks and uncertainties, include, without limitation, risks and uncertainties related to: (a) the Stipulation not having the expected impact, including resolving the Shareholder Derivative Litigation; (b) the proposed settlement requiring more activity or expense than expected; (c) the defendants’ ability to overcome any objections or appeals regarding the proposed settlement; and (d) satisfactory resolution of any future litigation or other disagreements with others. Additional information on the above risks and uncertainties and additional risks, uncertainties and factors that could cause actual results to differ materially from those in the forward-looking statements are contained in the Company’s filings and periodic reports filed with the Securities and Exchange Commission under the heading “Risk Factors” and elsewhere in such filings and reports, including the Company’s annual report on Form 10-K for the year ended December 31, 2022 and future filings and reports by the Company. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made, and the facts and assumptions underlying the forward-looking statements may change. Except as required by law, the Company disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Exhibit No. | Description | |
| 99.1 | Stipulation of Settlement, dated April 10, 2023 | |
| 99.2 | Notice of Pendency of Settlement of Derivative Litigation | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WORKHORSE GROUP INC. | ||
| Date: May 1, 2023 | By: | /s/ James D. Harrington |
| Name: | James D. Harrington | |
| Title: | General Counsel, Chief Compliance Officer and Secretary | |
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