Six related
putative securities class action lawsuits were filed against the Company and certain of its current and former officers and directors
and former DiamondPeak directors between March 18, 2021 and May 14, 2021 in the U.S. District Court for the Northern District of Ohio
(Rico v. Lordstown Motors Corp., et al. (Case No. 21-cv-616); Palumbo
v. Lordstown Motors Corp., et al. (Case No. 21-cv-633); Zuod v. Lordstown Motors Corp., et al. (Case
No. 21-cv-720); Brury, et al. v. Lordstown Motors Corp., et al. (Case No. 21-cv-760)); Romano
et al. v. Lordstown Motors Corp., et al., (Case No. 21-cv-994); and FNY
Managed Accounts LLC, et al. v. Lordstown Motors Corp. et al., (Case No. 21-cv-1021)), asserting violations of federal securities
laws under Section 10(b), Section 14(a), Section 20(a), and Section 20A of the Exchange Act. The complaints generally allege that
the Company and individual defendants made materially false and misleading statements relating to vehicle pre-orders and production timeline. The
matters have been consolidated and the Court appointed George Troicky as lead plaintiff and Labaton Sucharow LLP as lead plaintiffs’
counsel. We intend to vigorously defend against the claims. The proceedings are subject to uncertainties inherent in the litigation
process. We cannot predict the outcome of these matters or estimate the possible loss or range of possible loss, if any.
Four
related stockholder derivative lawsuits were filed against certain of the Company’s officers and directors, former DiamondPeak directors,
and against the Company as a nominal defendant between April 28, 2021 and July 9, 2021 in the U.S. District Court for the District of
Delaware (Cohen, et al. v. Burns, et al.
(Case No. 21-cv-604); Kelley, et al. v. Burns, et al.
(Case No. 12-cv-724); Patterson, et al. v. Burns, et al.
(Case No. 21-cv-910); Sarabia v. Burns, et al.
(Case No. 21-cv-1010)), asserting violations of Sections 14(a) and 20(a) the Exchange Act, breach of fiduciary duty under Brophy,
breach of fiduciary duty, insider selling, unjust enrichment, and waste and in two of those cases (Cohen
and Kelley), violations of Sections 10(b)
and 20 of the Exchange Act, and Rule 10b-5, all relating to vehicle pre-orders, production timeline, and the merger between DiamondPeak
and Legacy Lordstown. Another related stockholder derivative lawsuit was filed in U.S. District Court for the Northern District of
Ohio on June 30, 2021 (Thai et al. v. Burns, et al.
(Case No. 21-cv-1267)), asserting violations under the Sections 10(b), 14(a), 20, 21D of the Exchange Act and Rule 10b-5, breach of fiduciary
duties, unjust enrichment, abuse of control, gross mismanagement, and waste, based largely on the same alleged facts as the other derivative
lawsuits. The first two filed derivative actions, Cohen and
Kelley, were consolidated on June 10, 2021 and Johnson Fistel, LLP and Glancy Prongay & Murray
LLP were appointed as co-lead counsel for plaintiffs in the consolidated derivative action. The consolidation and appointment of lead
counsel both occurred prior to the filing of Patterson and
Sarabia. It is unclear whether or to what extent the filing of Patterson
and Sarabia
will affect the consolidated matter or the status of the lead counsel. In addition, between approximately March 26, 2021 and June 24,
2021, LMC received five demands for books and records pursuant to Section 220 of the Delaware General Corporation Law from stockholders
who state they are investigating whether to file similar derivative lawsuits, among other purposes.
On or around July 26, 2021, the Company received a stockholder litigation demand that the Company’s board of directors investigate
and commence legal proceedings against certain current and former officers and directors based on alleged breaches of fiduciary duties,
corporate waste, and unjust enrichment. We intend to vigorously defend against the claims. The
proceedings are subject to uncertainties inherent in the litigation process. We cannot predict the outcome of these matters or estimate
the possible loss or range of possible loss, if any.
The
Company has also received two subpoenas from the SEC for the production of documents and information, including relating to the merger
between DiamondPeak and Legacy Lordstown and pre-orders of vehicles, and the Company
has been informed by the U.S. Attorney’s Office for the Southern District of New York that it is investigating these matters. The
Company has cooperated, and will continue to cooperate, with these and any other regulatory or governmental investigations and inquiries.
Except
as described above, the Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims.
From time to time however, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its
business activities.