The shareholder derivative action brought on behalf of XL Fleet against certain officers and members of the Company’s Board for breaches of their fiduciary duties between at least September 18, 2020, and March 31, 2021, inclusive (the “Relevant Period”) and violation of the federal securities laws by causing the issuance of materially false and misleading statements in the Company’s December 8, 2020 proxy statement filed with the SEC on Form 424B3 (the “Proxy”) and in other public statements that have exposed the Company to massive class-wide liability, as well as the expenditure substantial defense costs in connection with the Securities Class Action, as set forth below.

Prior to the Relevant Period, XL Fleet was known as Pivotal Investment Corporation II (“Pivotal”) and was operated as a special purpose acquisition company (“SPAC”), which is a development-stage corporation listed on a stock exchange with no particular business plan or purpose other than to acquire an unidentified private company, thus making it public without going through the traditional public offering process. Pivotal Investment Holdings II LLC (the “Sponsor”) was Pivotal’s sponsor and appointed Pivotal’s directors and management. Defendants Jonathan J. Ledecky and Kevin Griffin controlled the Sponsor and, in exchange for $6.35 million in warrants to cover underwriting costs and working capital, the Sponsor received 20% of Pivotal’s post-initial public offering (“IPO”) equity.

SPAC founders cannot identify a target company for a merger or acquisition until the SPAC’s IPO is completed. Proceeds raised in the SPAC initial public offering are deposited into a trust account while the SPAC’s management team identifies an appropriate target to complete the merger within a specified time period. Once the management team identifies a target, shareholders of the SPAC vote to approve or reject the merger. In order to make an informed decision, the SPAC’s shareholders rely on a merger proxy statement which includes the target company’s financial information and the terms of the proposed merger.

Pivotal completed its IPO on July 16, 2019. Pursuant to Pivotal’s Registration Statement filed on June 7, 2019, Pivotal had to complete a merger with an aggregate fair market value of at least 80% of the value of the proceeds held in trust within eighteen months of the closing date of the IPO (the “80% Test”). This established a deadline of January 16, 2021 to effectuate a merger.

On September 18, 2020, with Pivotal’s January 16, 2021 deadline quickly approaching, Pivotal issued a press release announcing that it had entered into a Merger Agreement (the “Merger Agreement”) with XL Hybrids, Inc. (commercially known as XL Fleet and herein referred to as “XL Hybrids” or “XL”), a provider of fleet electrification solutions for Class 2-6 commercial vehicles in North America. That press release stated that “XL has strong demand momentum with a $22 million 12-month sales pipeline and forecasted revenue of over $21 million in 2020 and $75 million in 2021.”  Defendant Ledecky and defendant Thomas J. Hynes, III, the founder and chief strategy officer of XL Hybrids, had been business acquaintances for 10 years based on Ledecky’s decades-long relationship with defendant Hynes’ family.

In an effort to solicit the requisite shareholder approval, Pivotal and its management team, including Jonathan J. Ledecky, Kevin Griffin, and Sarah Sclarsic, aggressively promoted the proposed merger, touting XL Hybrids’ technology, supply chain production capacity, customer base, and overall business prospects. For example, the Proxy stated that Pivotal’s Board determined that the 80% Test was satisfied by “a number of qualitative factors, such as management strength and depth, competitive positioning, customer relationships and technical skills, as well as quantitative factors, such as the anticipated implied enterprise value of the combined company being approximately $1 billion with no material debt expected to be outstanding . . . .” The Proxy further stated that XL’s valuation “was attractive compared to its competitive peers” based on “the historical performance of XL and the potential for future growth in revenues and profits of XL and a $220 million 12-month sales pipeline.”

In reality, as detailed below, XL’s sales and marketing team had been systematically manipulating the information in the Company’s database to inflate its sales pipeline and many of the Company’s purported customers were inactive, largely due to the poor performance of XL’s products. Further, XL had been experiencing serious supply chain disruptions which impeded its ability to fill new or existing orders.

On December 22, 2020, the Company issued a press release announcing the completion of the merger of XL Hybrids and Pivotal (the “Merger”). Pursuant to the Merger, XL Hybrids merged with a wholly owned subsidiary of Pivotal, and Pivotal changed its name to XL Fleet Corp. The press release stated:

“Today is a significant milestone for XL Fleet and our employees and an important step forward for the commercial vehicle industry as we transform commercial fleets to build a more sustainable world,” said Dimitri Kazarinoff, XL Fleet’s Chief Executive Officer. “The closing of our merger with Pivotal will empower us to accelerate our growth strategy and bolster the industry’s most comprehensive fully integrated fleet electrification platform, encompassing real- time data monitoring and analytics, propriety powertrain technology, power management, charging and storage. Our tested products, strong presence in the U.S. and Canada, firmly-established supply chain, and deep OEM relationships position XL Fleet as the partner-of-choice for our blue-chip customer base who recognize us as a key partner in helping them to meet their sustainability goals efficiently and at a lower cost.”


 “We appreciate the overwhelming support received from shareholders of Pivotal, including 99.88% votes cast in favor of the merger between Pivotal and XL Fleet,” said Mr. Ledecky. “We are exceptionally proud of XL Fleet’s success to date and are excited to continue to support the Company and its talented team as it transitions to the public markets. With thousands of proven systems on the road today, millions of miles driven by hundreds of customers in mission-critical applications, and an asset light, highly scalable business model, I believe that XL Fleet is poised to realize its vision of becoming a world leader in fleet electrification.”

After the Merger, Defendants continued to issue statements touting the Company’s misleading sales pipeline and revenue projections and overstating the benefits of XL’s technology and the strength of its customer base and production capacity.

The Company filed a Registration Statement on Form S-1 with the SEC on January 14, 2021 and a related Prospectus on January 22, 2021. Both the January 14, 2021 Registration Statement and the January 22, 2021 Prospectus continued to tout XL Fleet’s technology, sales pipeline, customer base, and production capacity as indicators of strong future performance.

The truth began to come to light on March 3, 2021 when Muddy Waters Research (“Muddy Waters”) published a report (the “Muddy Waters Report”) titled “XL Fleet Corp. (NYSE: XL): More SPAC Trash.” The Muddy Waters Report alleged, among other things, that members of XL’s sales and marketing team “were pressured to inflate their sales pipelines materially in order to mislead XL’s board and investors” and that “customer reorder rates are in reality quite low” as a result of “poor performance and regulatory issues.” Muddy Waters further revealed that XL had lost its California Air Resources Board certification in 2019 and that as a result, the Company was prohibited from selling its products in California. The Muddy Waters Report also detailed XL’s poor product performance, reporting that the mileage gains achieved by the Company’s products were far less substantial than advertised.

On March 8, 2021, XL issued a press release responding to the Muddy Waters Report. While generally promoting XL’s business, that press release failed to deny many of the core allegations in the Muddy Waters Report, including the Company’s serious supply chain disruptions and the scheme to inflate XL’s sales pipeline.

Following the Company’s weak response to the Muddy Waters Report, XL’s stock price declined to close at $10.48 per share on March 8, 2021, down more than 34% as compared to the price on March 2, 2021 prior to the issuance of the Muddy Waters Report.

On March 31, 2021, during an earnings call, XL announced its full year and fourth quarter 2020 financial results. During that earnings call, Dimitri Kazarinoff (“Kazarinoff”), XL Fleet’s then Chief Executive Officer (“CEO”), announced projected revenues for the first quarter of 2021 of approximately $1 million, substantially below analysts’ expectations of $7.9 million. Further, while the Company had previously forecasted $75 million revenue for 2021, Kazarinoff announced that the Company would no longer provide guidance for the full year of 2021.

On this news, the Company’s stock price declined again, to close at $7.89 per share on April 1, 2021, down more than 50% as compared to the price on March 2, 2021 prior to the issuance of the Muddy Waters Report.

Throughout the Relevant Period, Defendants issued materially false and misleading statements and omitted to state material facts necessary to make the statements not misleading because they failed to disclose that: (i) XL’s sales pipeline of $220 was materially inflated; (ii) XL had been experiencing supply chain issues which hindered its ability to fill existing orders; (iii) XL’s customer base was overstated and its actual customers had low reorder rates; (iv) the benefits of XL’s technology were widely exaggerated; and (v) XL’s revenue forecasts were materially overstated.

As a result of the foregoing, a securities class action was filed against the Company, Defendants Ledecky, Defendant Hynes, Defendant Griffin, and others, captioned In re XL Fleet Corp. Securities Litigation, Case No. 1:21-cv-02002-JLR (S.D.N.Y.) (the “Securities Class Action”).  The Securities Class Action has exposed the Company to massive class-wide liability.   

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