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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a Party other than the Registrant
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under § 240.14a-12
ELECTRAMECCANICA VEHICLES CORP.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):

No fee required

Fee paid previously with preliminary materials

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

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PRELIMINARY JOINT PROXY STATEMENT/MANAGEMENT INFORMATION CIRCULAR
— SUBJECT TO COMPLETION
Information contained in this preliminary form of joint proxy statement/management information circular
is not complete and may be changed.


VOTE FOR THE BUSINESS COMBINATION OF ELECTRAMECCANICA AND XOS
[•], 2024
Dear ElectraMeccanica Shareholders and Xos Stockholders:
We are excited to invite you to attend the special meeting of shareholders (the “ElectraMeccanica Meeting”) of ElectraMeccanica Vehicles Corp (“ElectraMeccanica”) and the special meeting of the stockholders (the “Xos Meeting”) of Xos, Inc. (“Xos”), both to be held on [•] to approve the proposed business combination between the two companies.
On January 11, 2024, ElectraMeccanica and Xos entered into an Arrangement Agreement (the “Arrangement Agreement”), pursuant to which Xos (or its permitted assign) will acquire all of the issued and outstanding common shares of ElectraMeccanica (the “ElectraMeccanica Shares”) pursuant to a plan of arrangement as amended as of January 31, 2024 (the “Plan of Arrangement”) under the Business Corporations Act (British Columbia) (the “Arrangement”). Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, each ElectraMeccanica Share outstanding immediately prior to the effective time of the Arrangement (other than the shares held by the ElectraMeccanica shareholders who have exercised rights of dissent in respect of the Arrangement) will be transferred to Xos in exchange for such number of shares of Xos common stock, $0.0001 par value per share (the “Consideration”), as is provided for in the Arrangement Agreement. Upon completion of the Arrangement, Xos stockholders and ElectraMeccanica shareholders are expected to own approximately 79% and 21% of the combined company, respectively, assuming the net cash of ElectraMeccanica as of the Anticipated Effective Time (as defined in the Arrangement Agreement) is greater than $46,500,000 and less than $50,500,000, subject to certain adjustments set forth in the Arrangement Agreement, as more fully described in the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”.
The ElectraMeccanica Meeting will take place via live audio webcast at www.virtualshareholdermeeting.com/SOLO2024SM on [•], 2024 at [•] (Pacific time) and the Xos Meeting will take place via live audio webcast at www.virtualshareholdermeeting.com/XOS2024SM, on [•], 2024 at [•] (Pacific time).
This accompanying joint proxy statement/management information circular is first being mailed to ElectraMeccanica shareholders and Xos stockholders on or about [•] 2024.
YOUR VOTE IS IMPORTANT. Whether or not you expect to attend the ElectraMeccanica Meeting or the Xos Meeting virtually, please submit your vote as soon as possible. We urge you to read the enclosed materials carefully and to promptly vote by following the instructions in the enclosed materials.
We thank you for your consideration and continued support.
Sincerely,
Steven Sanders
Chairman of the Board of Directors of ElectraMeccanica Vehicles Corp.
Dakota Semler
Chair of the Board of Directors and Chief Executive Officer of Xos, Inc.

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PRELIMINARY JOINT PROXY STATEMENT/MANAGEMENT INFORMATION CIRCULAR
— SUBJECT TO COMPLETION
Information contained in this preliminary form of joint proxy statement/management information circular
is not complete and may be changed.

6060 Silver Drive
Third Floor
Burnaby, British Columbia, Canada V5H 0H5
NOTICE OF SPECIAL MEETING OF ELECTRAMECCANICA VEHICLES CORP. SHAREHOLDERS
to be held [], 2024
NOTICE IS HEREBY GIVEN that, pursuant to an order of the Supreme Court of British Columbia (the “Court”) dated [] (the “Interim Order”), a special meeting (the “ElectraMeccanica Meeting”) of holders (“ElectraMeccanica Shareholders”) of common shares (“ElectraMeccanica Shares”) of ElectraMeccanica Vehicles Corp. (“ElectraMeccanica”) will be held online on [], 2024 at [] (Pacific time) via live audio webcast at www.virtualshareholdermeeting.com/SOLO2024SM. There will be no physical location for ElectraMeccanica Shareholders to attend. Online check-in will begin at [] a.m. (Pacific time), and we encourage you to allow ample time for the online check-in procedures. To participate in the ElectraMeccanica Meeting, ElectraMeccanica Shareholders will need their unique 16-digit control number included on the ElectraMeccanica form of proxy or the voting instruction form.
On January 11, 2024, ElectraMeccanica and Xos, Inc. (“Xos”) entered into an Arrangement Agreement (the “Arrangement Agreement”), pursuant to which Xos (or its permitted assign) will acquire all of the issued and outstanding ElectraMeccanica Shares pursuant to a plan of arrangement as amended as of January 31, 2024 (the “Plan of Arrangement”) under the Business Corporations Act (British Columbia). Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, each ElectraMeccanica Share outstanding immediately prior to the effective time of the Arrangement (as defined below) (other than the shares held by ElectraMeccanica Shareholders who have exercised rights of dissent in respect of the Arrangement) will be transferred to Xos in exchange for such number of shares of Xos common stock, $0.0001 par value per share (the “Consideration”), as is provided for in the Arrangement Agreement. Upon completion of the Arrangement, holders of common stock of Xos and ElectraMeccanica Shareholders are expected to own approximately 79% and 21% of the combined company, respectively, assuming the net cash of ElectraMeccanica as of the Anticipated Effective Time (as defined in the Arrangement Agreement) is greater than $46,500,000 and less than $50,500,000, subject to certain adjustments set forth in the Arrangement Agreement, as more fully described in the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”.
The ElectraMeccanica Meeting is being called for the following purposes:
1.
to consider and, if thought advisable, to pass, with or without variation, a special resolution (the “ElectraMeccanica Arrangement Resolution”), the full text of which is set forth in Appendix “C” to the accompanying joint proxy statement/management information circular (the “Joint Proxy Statement/Circular”), approving an arrangement (the “Arrangement”) under Division 5 of Part 9 of the Business Corporations Act (British Columbia) (the “BCBCA”) involving, among other things, the acquisition by Xos of all of the outstanding ElectraMeccanica Shares, all as more particularly described in the Joint Proxy Statement/Circular, including in the section titled “The Arrangement Agreement and Related Agreements” beginning on page 103 of the Joint Proxy Statement/Circular, which resolution, to be effective, requires an affirmative vote of at least two-thirds of the votes cast at the ElectraMeccanica Meeting by ElectraMeccanica Shareholders present in person or represented by proxy at the ElectraMeccanica Meeting (the “ElectraMeccanica Arrangement Proposal”);

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2.
to consider and vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that will or may become payable to ElectraMeccanica’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Arrangement Agreement (the “ElectraMeccanica Advisory Compensation Proposal”);
3.
to consider and vote on a proposal to approve an ordinary resolution (the “ElectraMeccanica Name Change Resolution”) to change the name of ElectraMeccanica from “ElectraMeccanica Vehicles Corp.” to “ElectraMeccanica North America Corp.” (the “ElectraMeccanica Name Change Proposal”); and
4.
to consider and vote on a proposal to approve any adjournment of the ElectraMeccanica Meeting, if necessary or appropriate, including to solicit additional votes in favour of the ElectraMeccanica Arrangement Proposal if there are not sufficient votes at the time of the ElectraMeccanica Meeting to approve the ElectraMeccanica Arrangement Proposal (the “ElectraMeccanica Adjournment Proposal”).
The ElectraMeccanica Arrangement Proposal, the ElectraMeccanica Advisory Compensation Proposal, the ElectraMeccanica Name Change Proposal and the ElectraMeccanica Adjournment Proposal are together referred to as the “ElectraMeccanica Proposals”.
Specific details of the matters proposed to be put before the ElectraMeccanica Meeting are set forth in the Joint Proxy Statement/Circular which accompanies this Notice of Special Meeting of ElectraMeccanica Shareholders. A copy of the Arrangement Agreement is attached as Appendix “A” to the Joint Proxy Statement/Circular and is available for inspection by ElectraMeccanica Shareholders on EDGAR at www.sec.gov under ElectraMeccanica’s EDGAR profile, on SEDAR+ at www.sedarplus.ca under ElectraMeccanica’s SEDAR+ profile and at ElectraMeccanica’s records office at 2400-745 Thurlow St, Vancouver, British Columbia, Canada V6E 0C5 during statutory business hours until the date of the ElectraMeccanica Meeting.
The record date for determining the ElectraMeccanica Shareholders entitled to receive notice of and vote at the ElectraMeccanica Meeting is the close of business on January 22, 2024 (the “ElectraMeccanica Record Date”). Only ElectraMeccanica Shareholders whose names have been entered in the register of ElectraMeccanica Shareholders as of the close of business on the ElectraMeccanica Record Date are entitled to receive notice of and to vote at the ElectraMeccanica Meeting or any postponement or adjournment thereof.
Whether or not you are able to virtually attend the ElectraMeccanica Meeting, you are encouraged to provide voting instructions in accordance with the instructions on the enclosed form of proxy or voting instruction form provided to you by your broker, investment dealer or other intermediary as soon as possible by (1) visiting the internet site listed on the ElectraMeccanica form of proxy or voting instruction form, (2) calling the toll-free number listed on the ElectraMeccanica form of proxy or voting instruction form or (3) submitting your enclosed ElectraMeccanica form of proxy or voting instruction form by mail by using the provided self-addressed, stamped envelope. To be counted at the ElectraMeccanica Meeting, an ElectraMeccanica Shareholder’s voting instructions must be received by [•] (Pacific time) on [•], 2024 or, if the ElectraMeccanica Meeting is postponed or adjourned, at least 48 hours (excluding non-business days) prior to the date of the postponed or adjourned ElectraMeccanica Meeting. Please note, if you received a voting instruction form and you hold your ElectraMeccanica Shares through a broker, investment dealer or other intermediary, you must provide your instructions to your broker, investment dealer or other intermediary as specified in the voting instruction form and by the deadline set out therein (which may be an earlier time than set out above). ElectraMeccanica reserves the right to accept late proxies and to waive the proxy cut-off, with or without notice, but is under no obligation to accept or reject any particular late proxy.
The Board of Directors of ElectraMeccanica unanimously recommends that ElectraMeccanica Shareholders vote FOR each of the ElectraMeccanica Proposals.
ElectraMeccanica Shareholders who are planning to provide voting instructions in accordance with the enclosed form of proxy or voting instruction form are encouraged to review the Joint Proxy Statement/Circular carefully before submitting such form.
Registered ElectraMeccanica Shareholders have the right to dissent with respect to the ElectraMeccanica Arrangement Proposal and, if the Arrangement becomes effective, to be paid the fair value of their ElectraMeccanica Shares in accordance with the provisions of Sections 237 to 247 of the BCBCA, as modified by the Interim Order and the Plan of Arrangement. In accordance with the Interim Order, 100% of any such payment of fair value is currently expected to be satisfied in shares of Xos common stock, $0.0001 par value per share (the “Xos Shares”) with the value of such Xos Shares being based on the volume weighted average price of the Xos Shares on the Nasdaq

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Capital Market for the five trading days preceding the day the ElectraMeccanica Arrangement Proposal is approved. A registered ElectraMeccanica Shareholder’s right to dissent is more particularly described in the Joint Proxy Statement/Circular under the heading “ElectraMeccanica Dissenting Shareholders’ Rights”. Copies of the Plan of Arrangement, the Interim Order and the text of Sections 237 to 247 of the BCBCA are set forth in Appendix “B”, Appendix “D” and Appendix “H”, respectively, to the Joint Proxy Statement/Circular.
It is strongly suggested that any ElectraMeccanica Shareholder wishing to dissent seek independent legal advice, as the failure to comply strictly with the provisions of the BCBCA, as modified by the Interim Order and the Plan of Arrangement, may result in the loss of such ElectraMeccanica Shareholder’s right to dissent.
If you are an ElectraMeccanica Shareholder and have any questions, please contact your intermediary or ElectraMeccanica’s strategic shareholder advisors and proxy solicitation agents: Mackenzie Partners (for the United States) or Laurel Hill Advisory Group (for Canada), or reach out to John Franklin, Investor Relations Counsel to ElectraMeccanica at: IR@emvauto.com.
United States
Canada
Mackenzie Partners
1-800-322-2885 (toll-free in North America)
1-212-929-5500 (outside of North America)
proxy@mackenziepartners.com
Laurel Hill Advisory Group
1-877-452-7184 (toll-free in North America)
1-416-304-0211 (outside of North America)
assistance@laurelhill.com
DATED [•], 2024.
 
BY ORDER OF THE BOARD OF DIRECTORS
 
 
 
 
 
Steven Sanders
 
Chairman of the Board of Directors

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NOTICE TO ELECTRAMECCANICA SHAREHOLDERS IN THE UNITED STATES
THE XOS SHARES TO BE ISSUED IN CONNECTION WITH THE ARRANGEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR THE SECURITIES REGULATORY AUTHORITY IN ANY STATE IN THE UNITED STATES, NOR HAVE THE SEC OR THE SECURITIES REGULATORY AUTHORITY OF ANY STATE IN THE UNITED STATES PASSED ON THE ADEQUACY OR ACCURACY OF THIS JOINT PROXY STATEMENT/CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
The Xos shares to be issued under the Arrangement will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state of the United States. Such securities will be issued in reliance upon the exemption from registration provided by section 3(a)(10) of the U.S. Securities Act on the basis of the approval of the Court, which will consider, among other things, the fairness of the Arrangement to the persons affected. See the section titled “Description of the Arrangement — Court Approval”. The Xos shares to be issued under the Arrangement will not be subject to resale restrictions under the U.S. Securities Act, except for restrictions imposed by the U.S. Securities Act on the resale of Xos shares received pursuant to the Arrangement by persons who are, or within three months before the resale were, “affiliates” of Xos. See the section titled “Description of the Arrangement — Regulatory Matters — U.S. Securities Law Matters”.
ElectraMeccanica Shareholders who are citizens or residents of the United States should be aware that the Arrangement described herein may have both U.S. and Canadian tax consequences to them which may not be fully described in this Joint Proxy Statement/Circular. For a general discussion of the Canadian and U.S. federal income tax consequences to investors who are resident in the United States, see “Certain Canadian Federal Income Tax Considerations” and “Certain U.S. Federal Income Tax Considerations”. U.S. holders are urged to consult their own tax advisors with respect to such U.S. and Canadian income tax consequences and the applicability of any federal, state, local, foreign and other tax laws.
The enforcement by investors of civil liabilities under U.S. securities laws may be affected adversely by the fact that ElectraMeccanica is organized under the laws of a jurisdiction outside the United States, that its officers and directors include residents of countries other than the United States, that some or all of the experts named in this Joint Proxy Statement/Circular may be residents of countries other than the United States, or that all or a substantial portion of the assets of ElectraMeccanica, and such persons are located outside the United States. As a result, it may be difficult or impossible for shareholders in the United States to effect service of process within the United States on ElectraMeccanica, or such persons, or to realize against them upon judgments of courts of the United States predicated upon civil liabilities under the securities laws of the United States. In addition, the shareholders in the United States should not assume that the courts of Canada: (a) would enforce judgments of U.S. courts obtained in actions against such persons predicated upon civil liabilities under the securities laws of the United States; or (b) would enforce, in original actions, liabilities against such persons predicated upon civil liabilities under the securities laws of the United States.

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PRELIMINARY JOINT PROXY STATEMENT/MANAGEMENT INFORMATION CIRCULAR
— SUBJECT TO COMPLETION
Information contained in this preliminary form of joint proxy statement/management information circular
is not complete and may be changed.

3550 Tyburn Street
Los Angeles, California 90065
NOTICE OF SPECIAL MEETING OF XOS STOCKHOLDERS

to be held [•], 2024
NOTICE IS HEREBY GIVEN that a special meeting (the “Xos Meeting”) of the holders (“Xos Stockholders”) of shares of common stock of Xos, Inc., a Delaware corporation (“Xos”) will be held online on [], 2024 at [] a.m. (Pacific time) via live webcast at www.virtualshareholdermeeting.com/XOS2024SM. There will be no physical location for Xos Stockholders to attend. Online check-in will begin at [] a.m. (Pacific time), and we encourage you to allow ample time for the online check-in procedures. To participate in the Xos Meeting, Xos Stockholders will need their unique 16-digit control number included on their Xos proxy card (printed in the box and marked by the arrow) or the instructions that accompanied the proxy materials.
On January 11, 2024, ElectraMeccanica Vehicles Corp. (“ElectraMeccanica”) and Xos entered into an Arrangement Agreement (the “Arrangement Agreement”), pursuant to which Xos (or its permitted assign) will acquire all of the issued and outstanding common shares of ElectraMeccanica (the “ElectraMeccanica Shares”) pursuant to a plan of arrangement as amended as of January 31, 2024 (the “Plan of Arrangement”) under the Business Corporations Act (British Columbia) (the “Arrangement”). Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, each ElectraMeccanica Share outstanding immediately prior to the effective time of the Arrangement (other than the shares held by the holders of ElectraMeccanica Shares (“ElectraMeccanica Shareholders”) who have exercised rights of dissent in respect of the Arrangement) will be transferred to Xos in exchange for such number of shares of Xos common stock, $0.0001 par value per share (the “Consideration”), as is provided for in the Arrangement Agreement. Upon completion of the Arrangement, Xos Stockholders and ElectraMeccanica Shareholders are expected to own approximately 79% and 21% of the combined company, respectively, assuming the net cash of ElectraMeccanica as of the Anticipated Effective Time (as defined in the Arrangement Agreement) is greater than $46,500,000 and less than $50,500,000, subject to certain adjustments set forth in the Arrangement Agreement, as more fully described in the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”.
The Xos Meeting is being called for the following purposes:
1.
To consider and vote on a proposal to issue Xos common stock to ElectraMeccanica Shareholders pursuant to the Arrangement Agreement, which is further described in the accompanying joint proxy statement/management information circular (the “Joint Proxy Statement/Circular”), including in the section titled “The Arrangement Agreement and Related Agreements” beginning on page 103 of the Joint Proxy Statement/Circular, and a copy of the Arrangement Agreement is attached as Appendix “A” (the “Xos Share Issuance Proposal”); and
2.
To approve the adjournment of the Xos Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Xos Meeting to approve the Xos Share Issuance Proposal (the “Xos Adjournment Proposal”).
The Xos Share Issuance Proposal and the Xos Adjournment Proposal are together referred to as the “Xos Proposals”. Specific details of the matters proposed to be put before the Xos Meeting are set forth in this Joint Proxy Statement/Circular, which accompanies this Notice of Special Meeting of Xos Stockholders (“Notice of Xos Meeting”). A copy of the Arrangement Agreement is attached as Appendix “A” to the Joint Proxy Statement/Circular and is available for inspection by Xos Stockholders on the U.S. Securities and Exchange Commission (“SEC”) website at www.sec.gov under Xos’ SEC profile.

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The record date for determining the Xos Stockholders entitled to receive notice of and vote at the Xos Meeting is the close of business on [•], 2024 (the “Xos Record Date”). Only Xos Stockholders of record at the close of business on the Xos Record Date are entitled to vote at the Xos Meeting or any adjournment thereof. Whether or not you are able to virtually attend the Xos Meeting, you are encouraged to provide voting instructions in accordance with the instructions on the enclosed form of proxy or voting instruction form provided to you by your broker, investment dealer or other intermediary as soon as possible by (1) visiting the internet site listed on the enclosed Xos proxy card, (2) calling the toll-free number listed on the enclosed Xos proxy card, or (3) submitting your enclosed Xos proxy card by mail by using the provided self-addressed, stamped envelope. To be counted at the Xos Meeting, a Xos Stockholder’s voting instructions must be received by [•] p.m. (Pacific time) on [•]. Please note, if you received a voting instruction form and you hold your shares through a broker, investment dealer or other intermediary, you must provide your instructions to your broker, investment dealer or other intermediary as specified in the voting instruction form and by the deadline set out therein (which may be an earlier time than set out above).
The board of directors of Xos unanimously recommends that Xos Stockholders vote FOR each of the Xos Proposals.
Please note that the approval of Xos Stockholders to the Xos Share Issuance Proposal is required in order to complete the Arrangement.
Xos Stockholders should carefully read this Joint Proxy Statement/Circular, including any documents incorporated by reference, and the appendices in their entirety for more detailed information concerning the Arrangement and the other transactions contemplated by the Arrangement Agreement.
Xos Stockholders who are planning to provide voting instructions in accordance with the enclosed form of proxy or voting instruction form are encouraged to review the Joint Proxy Statement/Circular carefully before submitting such form.
If you are an Xos Stockholder and have any questions about this Joint Proxy Statement/Circular or the matters described in this Joint Proxy Statement/Circular, please contact Broadridge Financial Solutions at 1-866-540-7095, or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or Xos’ Investor Relations Department at investors@xostrucks.com.
DATED [•], 2024.
 
BY ORDER OF THE BOARD OF DIRECTORS
 
 
 
 
 
Dakota Semler
 
Chair of the Board of Directors and Chief Executive Officer

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JOINT PROXY STATEMENT/MANAGEMENT INFORMATION CIRCULAR
This joint proxy statement/management information circular (this “Joint Proxy Statement/Circular”) is being furnished in connection with the solicitation of proxies by management of ElectraMeccanica Vehicles Corp. (“ElectraMeccanica”), a British Columbia corporation, for use at the special meeting (the “ElectraMeccanica Meeting”) of holders (“ElectraMeccanica Shareholders”) of common shares (“ElectraMeccanica Shares”) of ElectraMeccanica to be held at the date, time and place and for the purposes set forth in the attached Notice of ElectraMeccanica Meeting.
This Joint Proxy Statement/Circular is also being furnished to holders (“Xos Stockholders”) of common stock of Xos, Inc. (“Xos”), a Delaware corporation, in connection with the solicitation of proxies by management of Xos for use at the special meeting (the “Xos Meeting”) of Xos Stockholders to be held at the date, time and place and for the purposes set forth in the attached Notice of Xos Meeting.
This Joint Proxy Statement/Circular is first being mailed to ElectraMeccanica Shareholders and Xos Stockholders on or about [•], 2024.
QUESTIONS AND ANSWERS ABOUT THE ARRANGEMENT AND THE MEETINGS
General Questions and Answers
Q:
What is the proposed transaction?
A:
On January 11, 2024, ElectraMeccanica and Xos entered into an Arrangement Agreement (the “Arrangement Agreement”), pursuant to which Xos (or its permitted assign) will acquire all of the issued and outstanding ElectraMeccanica Shares pursuant to a plan of arrangement as amended as of January 31, 2024 (the “Plan of Arrangement”) under the Business Corporations Act (British Columbia) (the “Arrangement”). Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, each ElectraMeccanica Share outstanding immediately prior to the effective time of the Arrangement (the “Effective Time”) (other than the ElectraMeccanica Shares held by ElectraMeccanica Shareholders who have exercised rights of dissent in respect of the Arrangement) will be transferred to Xos in exchange for such number of shares of Xos common stock, $0.0001 par value per share (the “Consideration”), as is provided for in the Arrangement Agreement. On completion of the Arrangement, Xos Stockholders and ElectraMeccanica Shareholders are expected to own approximately 79% and 21% of Xos (the “Combined Company”), respectively, assuming Net Cash (as defined below) as of the Anticipated Effective Time (as defined below) is greater than $46,500,000 and less than $50,500,000, subject to certain adjustments set forth in the Arrangement Agreement, as more fully described in the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”. Assuming Net Cash is within this range as of the Anticipated Effective Time and assuming the numbers of ElectraMeccanica Outstanding Shares and Xos Outstanding Shares as of the Anticipated Effective Time (as described in more detail in the Arrangement Agreement) are the numbers outstanding, respectively, as of January 24, 2024, the consideration is expected to be 0.0142 of an Xos Share in exchange for each ElectraMeccanica Share upon completion of the Arrangement.
Q:
Why am I receiving this Joint Proxy Statement/Circular?
A:
In order to complete the Arrangement, among other things:
Xos Stockholders must vote to approve the issuance of Xos Shares to be issued as the Consideration (the “Consideration Shares”) to ElectraMeccanica in connection with the Arrangement, or the Xos Stock Issuance Proposal (as defined below); and
ElectraMeccanica Shareholders must vote to approve the Arrangement by adopting the ElectraMeccanica Arrangement Proposal (as defined below).
Xos is holding a special meeting of stockholders in order to obtain the stockholder approval necessary to approve the Xos Stock Issuance Proposal. Xos Stockholders will also be asked to approve the adjournment from time to time of the Xos virtual special meeting if necessary to solicit additional proxies if there are not sufficient votes at the time of the Xos virtual special meeting, or any postponement or adjournment thereof, to approve the stock issuance, or the Xos Adjournment Proposal (as defined below). It is important that Xos Stockholders vote on each of these matters, regardless of the number of shares owned.
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ElectraMeccanica is holding a virtual special meeting of ElectraMeccanica Shareholders to obtain the shareholder approval necessary to approve the ElectraMeccanica Arrangement Proposal. In addition, the ElectraMeccanica Shareholders will be asked to approve on an advisory (non-binding) basis, the compensation that will or may become payable to ElectraMeccanica’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Arrangement Agreement or the ElectraMeccanica Advisory Compensation Proposal (as defined below). ElectraMeccanica Shareholders will also be asked to approve the ElectraMeccanica Name Change Proposal (as defined below), to change the name of ElectraMeccanica from “ElectraMeccanica Vehicles Corp.” to “ElectraMeccanica North America Corp.”. Lastly, ElectraMeccanica Shareholders will be asked to approve the adjournment from time to time of the ElectraMeccanica virtual special meeting if necessary to solicit additional proxies if there are not sufficient votes to approve the ElectraMeccanica Arrangement Proposal at the time of the ElectraMeccanica virtual special meeting or any adjournment thereof, or the ElectraMeccanica Adjournment Proposal (as defined below). It is important that ElectraMeccanica Shareholders vote on each of these matters, regardless of the number of ElectraMeccanica Shares owned.
Q:
What will I receive for my ElectraMeccanica Shares under the Arrangement?
A:
ElectraMeccanica Shareholders. Under the Arrangement and subject to the terms of the Plan of Arrangement, each ElectraMeccanica Shareholder will receive such number of Consideration Shares calculated in accordance with the Arrangement Agreement, as more fully described in the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”. Following the consummation of the Arrangement, you will no longer own any ElectraMeccanica Shares, but instead will own shares of Xos common stock, $0.0001 par value per share (the “Xos Shares”). Assuming Net Cash as of the Anticipated Effective Time is greater than $46,500,000 and less than $50,500,000 and assuming the numbers of ElectraMeccanica Outstanding Shares and Xos Outstanding Shares as of the Anticipated Effective Time (as described in more detail in the Arrangement Agreement) are the numbers outstanding, respectively, as of January 24, 2024, the Consideration is expected to be 0.0142 of an Xos Share, subject to certain adjustments set forth in the Arrangement Agreement, and is calculated by multiplying:
(a)
the quotient obtained by dividing (i) one by (ii) the number of ElectraMeccanica Outstanding Shares (as defined below); by
(b)
the product obtained by multiplying (i) the Net Cash Percentage (as defined below) by (ii) 0.21; by
(c)
the quotient obtained by dividing (i) the number of Xos Outstanding Shares (as defined below) by (ii) the difference between (A) one and (B) the product obtained by multiplying the Net Cash Percentage by 0.21.
Xos Stockholders. Under the Arrangement, Xos Stockholders will not receive any shares under the Arrangement and will retain their Xos Shares.
See the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”.
Q:
Will ElectraMeccanica Shareholders receive fractional Xos Shares?
A:
No. If the total number of Xos Shares that ElectraMeccanica Shareholders will be entitled to receive would otherwise result in a fraction of a Xos Share being issuable, the number of Xos Shares ElectraMeccanica Shareholders receive will be rounded down to the nearest whole Xos Share. Computershare Investor Services Inc., acting as the depositary (the “Depositary”), will cause Consideration Shares delivered to it by Xos that represent fractional share entitlements to be sold on the Nasdaq Stock Market LLC (“Nasdaq”) and will distribute the net proceeds thereof on a proportional basis to registered ElectraMeccanica Shareholders in lieu of any fractional Xos Shares that would otherwise have been required to be distributed. Each registered ElectraMeccanica Shareholder who would otherwise have been entitled to receive a fraction of an Xos Share will be entitled to receive cash from the net proceeds of such sale. ElectraMeccanica Shareholders who beneficially hold their ElectraMeccanica Shares will have such cash amounts distributed to them in accordance with the practices and policies of the intermediaries through whom they hold their ElectraMeccanica Shares.
Q:
How will ElectraMeccanica’s outstanding equity plans and options be treated in the Arrangement?
A:
At the Effective Time, (i) each ElectraMeccanica deferred share unit (an “ElectraMeccanica DSU”), performance share unit (an “ElectraMeccanica PSU”) and restricted share unit (an “ElectraMeccanica
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RSU”), in each case issued pursuant to ElectraMeccanica’s 2020 Stock Incentive Plan (as amended, the ElectraMeccanica 2020 Plan”), that is outstanding immediately prior to the Effective Time will vest and be settled by ElectraMeccanica in exchange for one ElectraMeccanica Share, subject to applicable withholdings; (ii) each ElectraMeccanica option to purchase ElectraMeccanica Shares (an “ElectraMeccanica Option”) issued under the ElectraMeccanica 2020 Plan or ElectraMeccanica’s 2015 Stock Option Plan (the ElectraMeccanica 2015 Plan”) that is in-the-money and outstanding immediately prior to the Effective Time, will be cancelled in exchange for a number of ElectraMeccanica Shares with a value equal to the in-the-money value of such option, as calculated in accordance with the Plan of Arrangement, subject to applicable withholdings; and (iii) each ElectraMeccanica Option that is out-of-the-money and outstanding immediately prior to the Effective Time will be cancelled without any payment therefor.
Q:
How will ElectraMeccanica’s outstanding warrants be treated in the Arrangement?
A:
Each outstanding purchase warrant to acquire ElectraMeccanica Shares will remain outstanding following the Effective Time and will remain exercisable pursuant to, and to the extent required by, the terms and conditions of the warrant certificates representing such warrants.
Q:
What approvals are required for the Arrangement to be implemented?
A:
The completion of the Arrangement requires approval from the ElectraMeccanica Shareholders, the Xos Stockholders and receipt of a final order (the “Final Order”) from the Supreme Court of British Columbia (the “Court”) approving the Arrangement.
Q:
When will the Arrangement become effective?
A:
Subject to obtaining the approvals described above, as well as the satisfaction or waiver of all other conditions precedent set out in the Arrangement Agreement, it is anticipated that the Arrangement will be completed in the first half of 2024.
Q:
What will happen to ElectraMeccanica if the Arrangement is completed?
A:
If the Arrangement is completed, Xos (or its permitted assign) will acquire all outstanding ElectraMeccanica Shares and ElectraMeccanica will become a wholly-owned subsidiary of Xos. Xos intends to have the ElectraMeccanica Shares delisted from the Nasdaq Capital Market and deregistered under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”), and to cause ElectraMeccanica to apply to cease to be a reporting issuer under the securities legislation of the Province of British Columbia.
Q:
Are the Xos Shares listed on a stock exchange?
A:
Xos Shares are currently listed on the Nasdaq Capital Market under the symbol “XOS” and trade in U.S. dollars. Consequently, following the Effective Time, ElectraMeccanica Shareholders are expected to be able to trade their Xos Shares on the Nasdaq Capital Market in U.S. dollars. See the section titled “The Arrangement Agreement and Related Agreements — Covenants”.
Q:
What are the Canadian federal income tax consequences of the Arrangement?
A:
ElectraMeccanica Shareholders who are residents of Canada for purposes of the Income Tax Act (Canada) (the “Tax Act”) should be aware that the exchange of ElectraMeccanica Shares for Xos Shares under the Arrangement will generally be a taxable transaction for Canadian federal income tax purposes. ElectraMeccanica Shareholders who are non-residents of Canada for purposes of the Tax Act and that do not hold their ElectraMeccanica Shares as “taxable Canadian property” will generally not be subject to tax under the Tax Act on the exchange of their ElectraMeccanica Shares for Xos Shares under the Arrangement.
For a summary of certain of the principal Canadian federal income tax consequences of the Arrangement applicable to ElectraMeccanica Shareholders, see below under the heading “Certain Canadian Federal Income Tax Considerations”. Such summary is not intended to be legal, business or tax advice. ElectraMeccanica Shareholders should consult their own tax advisors as to the tax consequences of the Arrangement to them with respect to their particular circumstances.
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Q:
What are the expected U.S. federal income tax consequences of the Arrangement?
A:
ElectraMeccanica Shareholders should generally recognize gain or loss as a result of the Arrangement for U.S. federal income tax purposes in an amount equal to the fair market value as of the date upon which the Arrangement becomes effective as set forth in the Arrangement Agreement (the “Effective Date”) of the Xos Shares received by such holders in the Arrangement over the adjusted tax basis of the ElectraMeccanica Shares surrendered in the Arrangement. For U.S. federal income tax purposes, (i) each holder’s aggregate tax basis in the Xos Shares received in the Arrangement should equal the aggregate fair market value of the Xos Shares received, and (ii) each holder’s holding period for the Xos Shares received in the Arrangement should begin on the day following the date of the Arrangement and will not include the holding period of the ElectraMeccanica Shares exchanged therefor.
Holders who acquired different blocks of ElectraMeccanica Shares with different holding periods and tax bases must generally apply the foregoing rules separately to each identifiable block of ElectraMeccanica Shares. Regardless of the holding period and basis for any blocks of ElectraMeccanica Shares, as discussed above, (i) for the Xos Shares received in the Arrangement, the holding period should begin on the day following the date of the Arrangement and will not include the holding period of the ElectraMeccanica Shares exchanged therefor, and (ii) each holder’s aggregate tax basis in the Xos Shares received in the Arrangement should equal the aggregate fair market value of the Xos Shares received.
ElectraMeccanica Shareholders should be aware that, although no assurances can be made, ElectraMeccanica believes that it likely was a “passive foreign investment company” (a “PFIC”) in 2023 and may have been a PFIC in a prior taxable year or in ElectraMeccanica’s current taxable year. ElectraMeccanica Shareholders who are U.S. Holders (as defined below) and dispose of shares of a PFIC may, subject to whether certain elections have been made (including elections made by Xos), be subject to adverse U.S. federal income tax consequences, including the taxation of gain recognized pursuant to the Arrangement as ordinary income, plus an interest charge. In addition, should Xos conclude to make the election described in Section 338(g) of the United States Internal Revenue Code of 1986, as amended (the “Code”) in connection with the Arrangement, ElectraMeccanica Shareholders who have made “qualified electing fund elections” (or who make such elections with respect to the prior or the current taxable year) under Section 1295 of the Code may be required to include in income their pro rata shares of ElectraMeccanica’s net ordinary income and net capital gain for the taxable year of the Arrangement, determined with regard to the consequences of the election made under Section 338(g) of the Code. Separate tax consequences apply if an ElectraMeccanica Shareholder has made a “mark-to-market election” in connection with such ElectraMeccanica Shareholder’s ownership of the ElectraMeccanica Shares.
Since your tax circumstances may be unique, and the PFIC tax rules may have adverse tax consequences to you, you should consult your personal tax advisor to determine the tax consequences of the Arrangement.
See the section titled “Certain U.S. Federal Income Tax Considerations” for a more detailed discussion of the U.S. federal income tax treatment of the Arrangement.
Q:
What happens if the Arrangement does not close?
A:
If the Arrangement does not close for any reason, the ElectraMeccanica Shareholders will not receive the Consideration Shares issuable under the Arrangement Agreement. Instead, Xos and ElectraMeccanica will remain separate public companies, and ElectraMeccanica expects that the ElectraMeccanica Shares will continue to be registered under the U.S. Exchange Act and traded on the Nasdaq Capital Market unless Nasdaq Capital Market delists the ElectraMeccanica Shares, in which case its securities could be quoted on an over-the-counter market. In specified circumstances, either ElectraMeccanica or Xos may be required to pay to the other party a termination amount, as described below.
Q:
Does ElectraMeccanica have to pay anything to Xos if the Arrangement is not completed?
A:
In certain circumstances, depending on the reasons for termination of the Arrangement Agreement, ElectraMeccanica may have to pay Xos a termination amount of $6 million. For a discussion of the circumstances under which a termination amount is payable by ElectraMeccanica applies, see “The Arrangement Agreement — Termination”.
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Q:
Does Xos have to pay anything to ElectraMeccanica if the Arrangement is not completed?
A:
In certain circumstances, depending on the reasons for termination of the Arrangement Agreement, Xos may have to pay ElectraMeccanica a termination amount of $6 million. For a discussion of the circumstances under which a termination amount is payable by Xos applies, see “The Arrangement Agreement — Termination”.
Q:
Are there risks I should consider in deciding whether to vote for the proposed Arrangement?
A:
Yes. You should read and carefully consider the risk factors set forth in the section titled “Risk Factors — Risks Related to the Arrangement” and other information included in this Joint Proxy Statement/Circular. You also should read and carefully consider the risk factors of Xos and ElectraMeccanica contained in the documents that are incorporated by reference into this Joint Proxy Statement/Circular.
ElectraMeccanica Shareholder Questions and Answers
Q:
When and where is the ElectraMeccanica Meeting?
A:
The ElectraMeccanica Meeting will be held on [•], 2024 at [•] (Pacific time) in a virtual format. ElectraMeccanica Shareholders may participate by logging in online at www.virtualshareholdermeeting.com/SOLO2024SM, where they will be able to virtually attend the ElectraMeccanica Meeting via live audio webcast. Online check-in will begin at [•] a.m. (Pacific time), and we encourage you to allow ample time for the online check-in procedures. To participate in the ElectraMeccanica Meeting, ElectraMeccanica Shareholders will need their unique 16-digit control number included on the form of proxy or voting instruction form, as applicable.
Q:
What am I voting on?
A:
You are being asked to consider and vote on the following proposals:
1.
to consider and, if thought advisable, to pass, with or without variation, a special resolution (the “ElectraMeccanica Arrangement Resolution”), the full text of which is set forth in Appendix “C” approving the Arrangement under Division 5 of Part 9 of the Business Corporations Act (British Columbia) (the “BCBCA”), involving, among other things, the acquisition by Xos, of all of the outstanding ElectraMeccanica Shares, all as more particularly described in this Joint Proxy Statement/Circular, including in the section titled “The Arrangement Agreement and Related Agreements” (the “ElectraMeccanica Arrangement Proposal”);
2.
to consider and vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that will or may become payable to ElectraMeccanica’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Arrangement Agreement (the “ElectraMeccanica Advisory Compensation Proposal”);
3.
to consider and vote on a proposal to approve an ordinary resolution (the “ElectraMeccanica Name Change Resolution”) to change the name of ElectraMeccanica from “ElectraMeccanica Vehicles Corp.” to “ElectraMeccanica North America Corp.” (the “ElectraMeccanica Name Change Proposal”); and
4.
to consider and vote on a proposal to approve any adjournment of the ElectraMeccanica Meeting, if necessary or appropriate, including to solicit additional votes in favour of the ElectraMeccanica Arrangement Proposal if there are not sufficient votes at the time of the ElectraMeccanica Meeting to approve the ElectraMeccanica Arrangement Proposal (the “ElectraMeccanica Adjournment Proposal”).
The ElectraMeccanica Arrangement Proposal, the ElectraMeccanica Advisory Compensation Proposal, the ElectraMeccanica Name Change Proposal and the ElectraMeccanica Adjournment Proposal are together referred to as the “ElectraMeccanica Proposals”.
Please note that the approval of ElectraMeccanica Shareholders to the ElectraMeccanica Arrangement Proposal is required in order to complete the Arrangement.
Q:
Does the ElectraMeccanica Board support the Arrangement?
A:
Yes. The board of directors of ElectraMeccanica (the “ElectraMeccanica Board”) has unanimously determined that the Arrangement is in the best interests of ElectraMeccanica and the ElectraMeccanica Shareholders and recommends that ElectraMeccanica Shareholders vote FOR the ElectraMeccanica Arrangement Proposal.
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In making its recommendation, the ElectraMeccanica Board considered a number of factors as described in this Joint Proxy Statement/Circular under “Description of the Arrangement — Recommendation of the ElectraMeccanica Board”, and “Description of the Arrangement — Reasons Considered by the ElectraMeccanica Board”, including the opinion (the “Opinion”) from Greenhill & Co. Canada Ltd. (“Greenhill”) to the effect that, as of the date of such Opinion, based upon and subject to the limitations and assumptions set out therein and such other matters as Greenhill considered relevant, the consideration to be received by ElectraMeccanica Shareholders is fair, from a financial point of view, to ElectraMeccanica Shareholders. See the section titled “Description of the Arrangement — Opinion of Greenhill & Co. Canada Ltd.”.
Simultaneously with the execution of the Arrangement Agreement, Xos and the members of the ElectraMeccanica Board (solely in their respective capacities as ElectraMeccanica Shareholders) who collectively beneficially owned or controlled approximately 0.098% of the voting power of the outstanding ElectraMeccanica Shares as of January 9, 2024 (the “ElectraMeccanica Locked-Up Parties”), entered into certain voting support and lock-up agreements (the “ElectraMeccanica Voting Support and Lock-Up Agreements”) pursuant to which the ElectraMeccanica Locked-Up Parties agreed, among other things, to vote their ElectraMeccanica Shares in favor of the ElectraMeccanica Arrangement Proposal and any other matter necessary for the consummation of the transactions contemplated by the Arrangement Agreement, and against any alternative proposal. See the section titled “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Voting Support and Lock-Up Agreements”.
See the sections titled “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Proposal 1: ElectraMeccanica Arrangement Proposal”, “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Proposal 2: ElectraMeccanica Advisory Compensation Proposal”, “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Proposal 3: ElectraMeccanica Name Change Proposal” and “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Proposal 4: ElectraMeccanica Adjournment Proposal” for additional information.
Q:
What approvals are required by ElectraMeccanica Shareholders at the ElectraMeccanica Meeting?
A:
Except for the ElectraMeccanica Adjournment Proposal, the vote required to approve all of the ElectraMeccanica Proposals listed herein assumes the presence of a quorum at the ElectraMeccanica Meeting:
No.
Proposal
Votes Necessary
1.
ElectraMeccanica Arrangement Proposal
Approval requires the affirmative vote of at least two-thirds of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Arrangement Proposal.

Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
 
 
 
2.
ElectraMeccanica Advisory Compensation Proposal
Approval requires the affirmative vote of a majority of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Advisory Compensation Proposal.

Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
 
 
 
3.
ElectraMeccanica Name Change Proposal
Approval requires the affirmative vote of a majority of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Name Change Proposal.

Abstentions and broker non-votes (none of which are expected) will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
 
 
 
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No.
Proposal
Votes Necessary
4.
ElectraMeccanica Adjournment Proposal
Approval requires the affirmative vote of a majority of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Adjournment Proposal.

Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
Q:
Are ElectraMeccanica Shareholders entitled to dissent rights?
A:
Yes. Registered holders of ElectraMeccanica Shares have the rights to dissent (the “Dissent Rights”) with respect to the ElectraMeccanica Arrangement Proposal and, if the Arrangement becomes effective and such Dissent Rights are validly exercised, are entitled to be paid the fair value of their ElectraMeccanica Shares in accordance with the provisions of Sections 237 to 247 of the BCBCA, as modified by an interim order from the Court relating to the Arrangement (the “Interim Order”) and the Plan of Arrangement. In accordance with the Interim Order, 100% of any such payment of fair value will be satisfied in Xos Shares with the value of such Xos Shares being based on the volume weighted average price of the Xos Shares on the Nasdaq Capital Market for the five trading days preceding the day the ElectraMeccanica Arrangement Proposal is approved. Persons who are beneficial owners of ElectraMeccanica Shares registered in the name of an intermediary and who wish to dissent should be aware that only registered ElectraMeccanica Shareholders are entitled to Dissent Rights.
If you wish to exercise Dissent Rights, you should review the requirements summarized in this Joint Proxy Statement/Circular carefully and consult with your legal advisor. See the section titled “Description of the Arrangement — ElectraMeccanica Dissenting Shareholders’ Rights”, “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Dissenting Shareholders’ Rights”, and Appendix “H” of this Joint Proxy Statement/Circular.
Q:
What is the difference between holding ElectraMeccanica Shares as a registered ElectraMeccanica Shareholder and as a beneficial owner?
A:
Registered ElectraMeccanica Shareholders. If your ElectraMeccanica Shares are registered directly in your name with ElectraMeccanica’s transfer agent, VStock Transfer, LLC, then you are considered the registered ElectraMeccanica Shareholder of those ElectraMeccanica Shares, and ElectraMeccanica sent the proxy materials, including this Joint Proxy Statement/Circular, directly to you.
Beneficial Owners of ElectraMeccanica Shares. If ElectraMeccanica Shares are held in an account at a broker, bank or other nominee, then you are the beneficial owner of such ElectraMeccanica Shares held in “street name”, and the proxy materials, including this Joint Proxy Statement/Circular, were forwarded to you by that organization. The broker, bank or other nominee holding your account is considered the registered ElectraMeccanica Shareholder for purposes of voting at the ElectraMeccanica Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the ElectraMeccanica Shares held in your account.
Q:
How can I vote at the ElectraMeccanica Meeting?
A:
The ElectraMeccanica Meeting will be held virtually to allow for greater participation. Even if you plan to attend the ElectraMeccanica Meeting virtually, ElectraMeccanica recommends that you also submit your proxy or voting instructions as described below, so that your vote will be counted if you later decide not to attend.
ElectraMeccanica Shareholders may participate virtually in the ElectraMeccanica Meeting by visiting the following website: www.virtualshareholdermeeting.com/SOLO2024SM. To participate in the ElectraMeccanica Meeting virtually, you will need the 16-digit control number included on your proxy card or voting instruction form and the instructions that accompanied your proxy materials. Registered ElectraMeccanica Shareholders as of the ElectraMeccanica Record Date can access and vote at the ElectraMeccanica Meeting during the live webcast. ElectraMeccanica Shares for which you are the beneficial owner may be voted electronically during the ElectraMeccanica Meeting if you hold a valid proxy to vote at the ElectraMeccanica Meeting.
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If you are an ElectraMeccanica Shareholder and have any questions, please contact ElectraMeccanica’s proxy solicitation agents:
United States
Canada
Mackenzie Partners
1-800-322-2885 (toll-free in North America)
1-212-929-5500 (outside of North America)
proxy@mackenziepartners.com
Laurel Hill Advisory Group
1-877-452-7184 (toll-free in North America)
1-416-304-0211 (outside of North America)
assistance@laurelhill.com
Q:
How do I vote my ElectraMeccanica Shares without attending the ElectraMeccanica Meeting virtually?
A:
You may vote without attending the ElectraMeccanica Meeting by granting a proxy for ElectraMeccanica Shares of which you are the registered ElectraMeccanica Shareholder, or by submitting voting instructions to your broker, bank or other nominee for ElectraMeccanica Shares that you hold beneficially in street name. In most cases, you will be able to do this by internet or telephone, or by mail if you received a printed set of proxy materials. However, if your ElectraMeccanica Shares are held in street name, the availability of telephone and Internet voting will depend on your institution’s voting procedures. A proxy can be submitted by registered ElectraMeccanica Shareholders in the following ways:
By Internet — Go to www.proxyvote.com and enter the 16-digit control number printed on the form of proxy or scan the QR Code on the ElectraMeccanica form of proxy to access and follow the instructions on the screen. Internet voting facilities for ElectraMeccanica Shareholders of record will be accessible 24 hours a day until [•] (Pacific time) on [•], 2024 (or if the ElectraMeccanica Meeting is postponed or adjourned, at least 48 hours (excluding non-business days) prior to the date of the postponed or adjourned ElectraMeccanica Meeting).
By Phone — Call the toll-free telephone number provided on the form of proxy and follow the promoted instructions. You will need to enter the 16-digit control number. Telephone voting facilities for ElectraMeccanica Shareholders of record will be accessible 24 hours a day at 1-800-690-6903 until [•] (Pacific time) on [•], 2024 (or if the ElectraMeccanica Meeting is postponed or adjourned, at least 48 hours (excluding non-business days) prior to the date of the postponed or adjourned ElectraMeccanica Meeting).
By Mail — Enter your voting instructions, sign and date the form of proxy and return your completed form of proxy in the enclosed postage paid envelope provided to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. To be effective, forms of proxy sent by mail must be received by [•] (Pacific time) on [•], 2024 (or if the ElectraMeccanica Meeting is postponed or adjourned, at least 48 hours (excluding non-business days) prior to the date of the postponed or adjourned ElectraMeccanica Meeting).
The individuals named in the accompanying ElectraMeccanica proxy card are officers and/or directors of or counsel for ElectraMeccanica. If you are a ElectraMeccanica Shareholder entitled to vote at the ElectraMeccanica Meeting, you have the right to appoint a person or company other than the person(s) designated in the proxy card, who need not be an ElectraMeccanica Shareholder, to attend and act for you and on your behalf at the ElectraMeccanica Meeting. You may do so either by inserting the name of that other person in the blank space provided in the proxy card or by completing and delivering another suitable form of proxy.
ElectraMeccanica Shares represented by the proxy card will be voted or withheld from voting in accordance with the instructions of the ElectraMeccanica Shareholder on any ballot that may be called for and that, if the ElectraMeccanica Shareholder specifies a choice with respect to any matter to be acted upon, such ElectraMeccanica Shares will be voted accordingly.
Q:
Should I send in my proxy now?
A:
Yes. To ensure your vote is counted, you should immediately complete and submit the enclosed form of proxy or voting instruction form. You are encouraged to vote well in advance of the proxy cut-off at [•] (Pacific time) on [•], 2024 (or if the ElectraMeccanica Meeting is postponed or adjourned, at least 48 hours (excluding non-business days) prior to the date of the postponed or adjourned ElectraMeccanica Meeting). See the section titled “General Information about the ElectraMeccanica Meeting and Voting — Voting Instructions”.
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Q:
Should I send in my letter of transmittal and ElectraMeccanica share certificates now?
A:
Yes. It is recommended that all registered ElectraMeccanica Shareholders complete, sign and return the letter of transmittal with accompanying ElectraMeccanica share certificate(s) to the Depositary as soon as possible. Please be sure to use the letter of transmittal. See the section titled “Description of the Arrangement — Exchange Procedure”.
Q:
What if I submit my proxy or voting instructions, but do not specify how I want my ElectraMeccanica Shares to be voted?
A:
If you are a registered ElectraMeccanica Shareholder and you indicate when voting on the internet or by telephone that you wish to vote as recommended by the ElectraMeccanica Board, or if you sign and return a proxy card without giving specific voting instructions, then the proxy holders will vote your ElectraMeccanica Shares in the manner recommended by the ElectraMeccanica Board on the ElectraMeccanica Proposals and as the proxy holders determine in their discretion on any other matters properly presented at the ElectraMeccanica Meeting.
If you are a beneficial owner of ElectraMeccanica Shares held in street name and do not provide your broker, bank or other nominee that holds your ElectraMeccanica Shares with specific voting instructions, such institution may generally vote on “routine” matters but cannot vote on non-routine matters. The ElectraMeccanica Name Change Proposal is the only proposal at the ElectraMeccanica Meeting that ElectraMeccanica believes is a routine matter. Therefore, if your broker, bank or other nominee does not receive instructions from you on how to vote your ElectraMeccanica Shares on the ElectraMeccanica Arrangement Proposal, the ElectraMeccanica Advisory Compensation Proposal or the ElectraMeccanica Adjournment Proposal, such institution will not have authority to vote your ElectraMeccanica Shares on any of those matters. This result is generally referred to as a “broker non-vote”.
See the section titled “General Information about the ElectraMeccanica Meeting and Voting — Voting Instructions — Registered ElectraMeccanica Shareholders” and “General Information about the ElectraMeccanica Meeting and Voting — Voting Instructions — Beneficial ElectraMeccanica Shareholders”.
Q:
When will I receive the Xos Shares in exchange for my ElectraMeccanica Shares under the Arrangement?
A:
You will receive the Xos Shares due to you under the Arrangement as soon as practicable after the Arrangement becomes effective and, if you are a registered ElectraMeccanica Shareholder, your letter of transmittal, ElectraMeccanica share certificate(s), and all other required documents are properly completed and received by the Depositary. It is anticipated that the Arrangement will be completed in the first half of 2024 assuming each of the ElectraMeccanica Arrangement Proposal and the Xos Share Issuance Proposal is approved, the Final Order has been obtained and all other conditions of closing have been satisfied or waived.
Q:
What happens if I send in my ElectraMeccanica share certificate(s) and the ElectraMeccanica Arrangement Proposal is not approved or the Arrangement is not completed?
A:
If the ElectraMeccanica Arrangement Proposal is not approved or if the Arrangement is not otherwise completed, your ElectraMeccanica share certificate(s) will be returned promptly to you by the Depositary.
Q:
Can I revoke my vote after I have voted by proxy?
A:
You may revoke your proxy and change your vote at any time before your vote is due, which deadline includes the final vote at the ElectraMeccanica Meeting (or any postponement or adjournment thereof) if you have the right to vote at the ElectraMeccanica Meeting.
If you are a registered ElectraMeccanica Shareholder, you may revoke your proxy in any one of the following ways:
by submitting written notice of revocation to ElectraMeccanica at 6060 Silver Drive, Third Floor, Burnaby, British Columbia, Canada, V5H 0H5, Attention: Corporate Secretary, with a copy to McCarthy Tétrault LLP at 2400 – 745 Thurlow Street, Vancouver, British Columbia, V6E 0C5, Attention: David Frost, provided that such notice is received by [•], 2024 at [•] (or at least 48 hours (excluding non-business days) prior to the date of any postponement or adjournment, if the ElectraMeccanica Meeting is postponed or adjourned);
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by submitting another proxy via the internet, telephone, or mail that is dated as of a later date and properly signed;
by voting at the ElectraMeccanica Meeting; or
in any other manner provided by law.
Mere attendance at the ElectraMeccanica Meeting will not automatically revoke your proxy unless you vote at the ElectraMeccanica Meeting.
If you are a beneficial owner of ElectraMeccanica Shares held in street name, you must contact your broker, bank or other nominee that holds your ElectraMeccanica Shares to revoke your voting instructions or change your vote. See the section titled “General Information about the ElectraMeccanica Meeting and Voting — Revocation of Proxies”.
Q:
Who can help answer my questions?
A:
If you have any questions about this Joint Proxy Statement/Circular or the matters described in this Joint Proxy Statement/Circular, please contact your professional advisor. ElectraMeccanica Shareholders who would like additional copies, without charge, of this Joint Proxy Statement/Circular or have additional questions about the procedures for voting ElectraMeccanica Shares or making an election, should contact their intermediary or ElectraMeccanica’s strategic shareholder advisors and proxy solicitation agents: Mackenzie Partners (for the United States) or Laurel Hill Advisory Group (for Canada), or reach out to John Franklin, Investor Relations Counsel to ElectraMeccanica at: IR@emvauto.com.
United States
Canada
Mackenzie Partners
1-800-322-2885 (toll-free in North America)
1-212-929-5500 (outside of North America)
proxy@mackenziepartners.com
Laurel Hill Advisory Group
1-877-452-7184 (toll-free in North America)
1-416-304-0211 (outside of North America)
assistance@laurelhill.com
Xos Stockholder Questions and Answers
Q:
When and where is the Xos Meeting?
A:
The Xos Meeting will be held on [•] 2024 at [•] (Pacific time) and will be held in a virtual format. Xos Stockholders may participate by logging in online at www.virtualshareholdermeeting.com/XOS2024SM, where they will be able to virtually attend the Xos Meeting via live audio webcast. Online check-in will begin at [•] a.m. (Pacific time), and we encourage you to allow ample time for the online check-in procedures. To participate in the Xos Meeting, Xos Stockholders will need their unique 16-digit control number included on their Xos proxy card (printed in the box and marked by the arrow) or the instructions that accompanied the proxy materials.
Q:
What am I voting on?
You are being asked to consider and vote on the following proposals:
1.
To consider and vote on a proposal to issue Xos Shares to ElectraMeccanica Shareholders pursuant to the Arrangement Agreement which is further described in this Joint Proxy Statement/Circular, including in the section titled “The Arrangement Agreement and Related Agreements” beginning on page 103 of this Joint Proxy Statement/Circular, and a copy of the Arrangement Agreement is attached as Appendix “A” (the “Xos Share Issuance Proposal”); and
2.
To approve the adjournment of the Xos Meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Xos Meeting to approve the Xos Share Issuance Proposal (the “Xos Adjournment Proposal”).
The Xos Share Issuance Proposal and the Xos Adjournment Proposals are together referred to as the “Xos Proposals”.
Please note that the approval of Xos Stockholders to the Xos Share Issuance Proposal is required in order to complete the Arrangement.
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Q:
Does the Xos Board support the Xos Proposals?
A:
Yes. The board of directors of Xos (the “Xos Board”) has unanimously determined that the Xos Proposals are in the best interests of Xos and recommends that the Xos Stockholders vote FOR each of the Xos Proposals.
In making its recommendation regarding the Xos Proposals, the Xos Board considered a number of factors as described in this Joint Proxy Statement/Circular under “Description of the Arrangement — Recommendation of the Xos Board”, and “Description of the Arrangement — Reasons Considered by the Xos Board; Recommendation of the Stock Issuance by the Xos Board”.
Simultaneously with the execution of the Arrangement Agreement, ElectraMeccanica and the members of the Xos Board (solely in their respective capacities as Xos Stockholders) who collectively beneficially owned or controlled approximately 49.21% of the voting power of Xo’s outstanding capital stock as of January 9, 2024 (the “Xos Locked-Up Parties”), entered into certain voting support and lock-up agreements (the “Xos Voting Support and Lock-Up Agreements” and together with the ElectraMeccanica Voting Support and Lock-Up Agreements, the “Voting Support and Lock-Up Agreements”) pursuant to which the Xos Locked-Up Parties agreed, among other things, to vote their Xos Shares in favor of the Xos Share Issuance Proposal and any other matter necessary for the consummation of the transactions contemplated by the Arrangement Agreement, and against any alternative proposal. See the section titled “General Information about the Xos Meeting and Voting — Xos Voting Support and Lock-Up Agreements”.
The Xos Proposals are further described in this Joint Proxy Statement/Circular, including the section titled “Purpose of the Xos Meeting” beginning on page 54.
Q:
What approvals are required by Xos Stockholders at the Xos Meeting?
A:
Except for the Xos Adjournment Proposal, the vote required to approve all of the Xos Proposals listed herein assumes the presence of a quorum at the Xos Meeting:
No.
Proposal
Votes Necessary
1.
Xos Share Issuance Proposal
Approval requires the affirmative vote of a majority of votes cast at the Xos Meeting on the Xos Share Issuance Proposal.

An abstention, a broker non-vote or other failure to vote will have no effect on the outcome of the Xos Share Issuance Proposal, so long as a quorum is present.
 
 
 
2.
Xos Adjournment Proposal
Approval requires the affirmative vote of the holders of a majority of the voting power of the Xos Shares present or represented by proxy at the Xos Meeting and entitled to vote on such proposal.

An abstention will have the same effect as a vote AGAINST the Xos Adjournment Proposal, while a broker non-vote or other failure to vote will have no effect on the outcome of the Xos Adjournment Proposal.
Q:
Are Xos Stockholders entitled to appraisal rights?
A:
No. Xos Stockholders are not entitled to appraisal rights under the Delaware General Corporation Law (the “Delaware Law”).
Q:
How do I vote on the Xos Proposals?
A:
You should carefully read and consider the information contained in this Joint Proxy Statement/Circular. Registered Xos Stockholders should then vote by (1) visiting the internet site listed on the enclosed Xos proxy card, (2) calling the toll-free number listed on the enclosed Xos proxy card or (3) submitting your enclosed Xos proxy card by mail by using the provided self-addressed, pre-paid envelope. If you submit a proxy to vote your
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Xos Shares via the internet or by telephone, you must do so no later than 11:59 p.m. on [•] (Pacific time). If you submit a proxy to vote your shares by mail, your completed Xos proxy card must be received no later than 11:59 p.m. on [•] (Pacific time) (or if the Xos Meeting is postponed or adjourned prior to the date of the postponed or adjourned Xos Meeting). See the section titled “General Information about the Xos Meeting and Voting — Registered Xos Stockholders”.
If you hold your Xos Shares through a broker, please follow the instructions on the voting instruction form provided by such broker to ensure that your vote is counted at the Xos Meeting. See the section titled “General Information about the Xos Meeting and Voting — Beneficial Xos Stockholders”.
Q:
Should I send in my proxy now?
A:
Yes. To ensure your vote is counted, you should immediately complete and submit the enclosed form of proxy or voting instruction form. You are encouraged to vote well in advance of the proxy cut-off at 11:59 p.m. (Pacific time) on [•] 2024 (or if the Xos Meeting is postponed or adjourned, prior to the date of the postponed or adjourned Xos Meeting).
Q:
If my Xos Shares are held by a broker, will they vote my Xos Shares for me?
A:
A broker will vote the Xos Shares held by you only if you provide instructions to such broker on how to vote or which election to make. If you fail to give proper instructions, those Xos Shares will not be voted on your behalf. Xos Stockholders should instruct their brokers to vote their Xos Shares on their behalf by following the directions on the voting instruction form provided to them by their intermediaries. Unless your intermediary gives you its proxy to vote the Xos Shares at the Xos Meeting, you cannot vote those Xos Shares owned by you at the Xos Meeting. See the section titled “General Information about the Xos Meeting and Voting — Beneficial Xos Stockholders”.
Q:
Can I revoke my vote after I have voted by proxy?
A:
Yes. An Xos Stockholder executing the enclosed form of proxy has the right to revoke it by either attending the Xos Meeting and voting at the Xos Meeting or providing a new proxy dated as at a later date, provided that the new proxy is received by Broadridge Financial Solutions, Inc. (“Broadridge”) before 11:59 p.m. (Pacific time) on [•], 2024 (or if the Xos Meeting is postponed or adjourned, prior the date of the postponed or adjourned Xos Meeting). A registered Xos Stockholder may also revoke any prior proxy without providing new voting instructions by clearly indicating in writing that such Xos Stockholder wants to revoke his, her or its proxy and delivering this written document to (i) the registered office of Xos at Xos, Inc., c/o Corporate Secretary, 3550 Tyburn Street, Los Angeles, California 90065, at any time up to and including the last business day preceding the day of the Xos Meeting, or any adjournment of the Xos Meeting, or (ii) the Chair of the Xos Meeting at the Xos Meeting or any postponement or adjournment thereof and prior to the vote in respect of the Xos Share Issuance Proposal or in any other way permitted by law.
If you hold your shares through a broker, the methods to revoke your proxy may be different and you should carefully follow the instructions provided to you by your intermediary. See the section titled “General Information about the Xos Meeting and Voting — Revocation of Proxies”.
Q:
Who can help answer my questions?
A:
If you have any questions about this Joint Proxy Statement/Circular or the matters described in this Joint Proxy Statement/Circular, please contact your professional advisor. Xos Stockholders who would like additional copies, without charge, of this Joint Proxy Statement/Circular or have additional questions about the procedures for voting Xos Shares or making an election, should contact their broker or Broadridge Financial Solutions at 1-866-540-7095, or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
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ACCOUNTING PRINCIPLES
All financial statements and financial data derived therefrom included or incorporated by reference in this Joint Proxy Statement/Circular pertaining to Xos, including the unaudited pro forma condensed combined financial statements of Xos, have been prepared and presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). For further details, see the notes to the unaudited pro forma condensed combined financial statements of Xos set out in Appendix “I” to this Joint Proxy Statement/Circular.
Pro forma financial information included in this Joint Proxy Statement/Circular is for informational purposes only and is unaudited. All unaudited pro forma financial information contained in this Joint Proxy Statement/Circular has been prepared in accordance with Article 11 of Regulation S-X to illustrate the effect of the Arrangement. The pro forma financial information set forth in this Joint Proxy Statement/Circular should not be considered to be what the actual financial position or other results of operations would have necessarily been had ElectraMeccanica and Xos operated as a single combined company as, at, or for the periods stated.
All financial statements and financial data derived therefrom included or incorporated by reference in this Joint Proxy Statement/Circular pertaining to ElectraMeccanica have been prepared and presented in accordance with U.S. GAAP, other than ElectraMeccanica’s financial statements as of December 31, 2021 and 2020 and for the fiscal years then ended and financial data derived therefrom contained in ElectraMeccanica’s Annual Report on Form 20-F for the year ended December 31, 2021, filed by ElectraMeccanica with the U.S. Securities and Exchange Commission (the “SEC”) on March 22, 2022 (the “ElectraMeccanica 20-F”), which have been prepared and presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The ElectraMeccanica 20-F is being incorporated by reference in this Joint Proxy Statement/Circular in order to satisfy certain disclosure obligations of ElectraMeccanica in accordance with Canadian securities laws. Prior to June 30, 2022, ElectraMeccanica was a “foreign private issuer” for purposes of applicable U.S. securities laws, and as such, was entitled under U.S. securities laws to prepare its audited annual financial statements in accordance with IFRS, as issued by IASB.
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NOTICE REGARDING INFORMATION
NO CANADIAN OR U.S. SECURITIES REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE.
Neither ElectraMeccanica nor Xos has authorized any person to give any information or to make any representation in connection with the Arrangement or any other matters to be considered at the ElectraMeccanica Meeting or the Xos Meeting other than those contained in this Joint Proxy Statement/Circular. If any such information or representation is given or made, such information or representation should not be relied upon as having been authorized or as being accurate. For greater certainty, to the extent that any information provided on either ElectraMeccanica’s or Xos’ website or by the proxy solicitation agent is inconsistent with this Joint Proxy Statement/Circular, the information provided in this Joint Proxy Statement/Circular should be relied upon.
This Joint Proxy Statement/Circular does not constitute an offer to buy, or a solicitation of an offer to sell, any securities, or the solicitation of a proxy, by any person in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such an offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or solicitation.
ElectraMeccanica Shareholders and Xos Stockholders should not construe the contents of this Joint Proxy Statement/Circular as legal, tax or financial advice and should consult with their own legal, tax, financial or other professional advisors.
All summaries of, and references to, the Arrangement Agreement, the Plan of Arrangement, the ElectraMeccanica Voting Support and Lock-Up Agreements and the Xos Voting Support and Lock-Up Agreements in this Joint Proxy Statement/Circular are qualified in their entirety by, in the case of the Arrangement Agreement, the complete text of the Arrangement Agreement, a copy of which is attached as Appendix “A” to this Joint Proxy Statement/Circular and is available on ElectraMeccanica’s Current Report on Form 8-K filed with the SEC on January 12, 2024, on ElectraMeccanica’s SEDAR+ profile at www.sedarplus.ca and on Xos’ Current Report on Form 8-K filed with the SEC on January 12, 2024, and in the case of the Plan of Arrangement, the complete text of the Plan of Arrangement, a copy of which is attached as Appendix “B” to this Joint Proxy Statement/Circular, in the case of the ElectraMeccanica Voting Support and Lock-Up Agreements, the complete text of the ElectraMeccanica Voting Support and Lock-Up Agreements available on ElectraMeccanica’s EDGAR profile at www.sec.gov, on ElectraMeccanica’s SEDAR+ profile at www.sedarplus.ca and on Xos’ EDGAR profile at www.sec.gov, and in the case of the Xos Voting Support and Lock-Up Agreements, the complete text of the Xos Voting Support and Lock-Up Agreements available on ElectraMeccanica’s EDGAR profile at www.sec.gov, on ElectraMeccanica’s SEDAR+ profile at www.sedarplus.ca and on Xos’ EDGAR profile at www.sec.gov. ElectraMeccanica Shareholders and Xos Stockholders are urged to carefully read the full text of the Plan of Arrangement and the Arrangement Agreement.
This Joint Proxy Statement/Circular contains industry, market and competitive position data from ElectraMeccanica’s and Xos’ own internal estimates and research as well as industry and general publications and research surveys and studies conducted by third parties. Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. ElectraMeccanica’s and Xos’ internal data and estimates are based upon information obtained from trade and business organizations and other contacts in the markets in which ElectraMeccanica and Xos, as applicable, operate and their respective management’s understanding of industry conditions. While ElectraMeccanica and Xos believe that each of these studies and publications is reliable, ElectraMeccanica and Xos have not independently verified market and industry data from third party sources. While ElectraMeccanica and Xos believe their respective internal company research is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source.
This Joint Proxy Statement/Circular is dated [•], 2024. Information contained in this Joint Proxy Statement/Circular is given as of [•], 2024, unless otherwise specifically stated and except for information contained in documents incorporated by reference herein, which is given as at the respective dates stated in such documents.
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INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this Joint Proxy Statement/Circular, including the documents incorporated by reference herein, include “forward-looking statements” within the meaning of U.S. federal securities laws and applicable Canadian securities laws. These forward-looking statements are subject to the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words or expressions such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,” “will,” “projects,” “could,” “should,” “would,” “seek,” “forecast,” or other similar expressions. Forward-looking statements represent current judgments about possible future events, including, but not limited to statements regarding expectations or forecasts of business, operations, financial performance, prospects, and other plans, intentions, expectations, estimates, and beliefs relating to the proposed transaction between ElectraMeccanica and Xos, such as statements regarding the combined operations and prospects of ElectraMeccanica and Xos, estimates of pro forma financial information of the Combined Company (as defined below), estimates relating to ElectraMeccanica’s Forecasts (as defined below), the current and projected market, growth opportunities and synergies for the Combined Company, federal and state regulatory tailwinds, expectations and intentions provided by ElectraMeccanica to Xos, the expected cash balance of ElectraMeccanica at the time of the closing of the proposed Arrangement, expectations regarding Xos’ ability to leverage ElectraMeccanica’s assets, the expected composition of the management and the board of directors of the Combined Company, gross margin and future profitability expectations, and the timing and completion of the Arrangement, including the satisfaction or waiver of all the required conditions thereto. These forward-looking statements are based upon the current beliefs and expectations of the management of ElectraMeccanica and Xos and are subject to known and unknown risks and uncertainties. Factors that could cause actual events to differ include, but are not limited to:
the inherent uncertainty associated with financial or other projections or outlooks, including due to the unpredictability of the underlying assumptions, adjustments and estimates;
the ability of the Combined Company to further penetrate the U.S. market;
the total addressable market of Xos’ business;
general economic conditions in the markets where Xos operates;
the expected timing of any regulatory approvals relating to the Arrangement, the businesses of ElectraMeccanica and Xos and of the Combined Company and product launches of such businesses and companies;
non-performance of third-party vendors and contractors;
risks related to the Combined Company’s ability to successfully sell its products and the market reception to and performance of its products;
ElectraMeccanica’s, Xos’, and the Combined Company’s compliance with, and changes to, applicable laws and regulations;
ElectraMeccanica’s, Xos’, and the Combined Company’s limited operating history;
the Combined Company’s ability to manage growth;
the Combined Company’s ability to obtain additional financing;
the Combined Company’s ability to expand product offerings;
the Combined Company’s ability to compete with others in its industry;
the Combined Company’s ability to protect its intellectual property;
ElectraMeccanica’s, Xos’, and the Combined Company’s ability to defend against legal proceedings;
the Combined Company’s success in retaining or recruiting, or changes required in, its officers, key employees or directors;
the Combined Company’s ability to achieve the expected benefits from the Arrangement within the expected time frames or at all;
the incurrence of unexpected costs, liabilities or delays relating to the proposed Arrangement;
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the satisfaction (or waiver) of closing conditions to the consummation of the proposed Arrangement, including with respect to the approval of Xos Stockholders and ElectraMeccanica Shareholders;
the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Arrangement Agreement;
the effect of the announcement or pendency of the transaction on the Combined Company’s business relationships, operating results and business generally; and
other economic, business, competitive, and regulatory factors affecting the businesses of the companies generally, including but not limited to those set forth in ElectraMeccanica’s filings with the SEC and the Canadian Securities Administrators, including in the “Risk Factors” section of ElectraMeccanica’s Annual Report on Form 10-K filed with the SEC on April 17, 2023, ElectraMeccanica’s Quarterly Report on Form 10-Q filed with the SEC on November 3, 2023 and any subsequent SEC filings, and those set forth in Xos’ filings with the SEC, including in the “Risk Factors” section of Xos’ Annual Report on Form 10-K filed with the SEC on March 31, 2023, Quarterly Report on Form 10-Q filed with the SEC on November 9, 2023 and any subsequent SEC filings. These documents with respect to ElectraMeccanica can be accessed on ElectraMeccanica’s website at https://ir.emvauto.com/filings/sec-filings/default.aspx and these documents with respect to Xos can be accessed on Xos’ website at https://www.xostrucks.com/investor-overview/ by clicking on the link “SEC Filings”.
Readers are cautioned not to place undue reliance on forward-looking statements. It is uncertain whether any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do, what impact they will have on the results of operations and financial condition of ElectraMeccanica, Xos or the Combined Company. Forward-looking statements speak only as of the date they are made, and ElectraMeccanica, Xos and the Combined Company undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events, or other factors that affect the subject of these statements, except where they are expressly required to do so by law.
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SUMMARY
This summary highlights the key aspects of the matters to be considered at the ElectraMeccanica Meeting and the Xos Meeting, but does not contain all of the information that is important to you. You should carefully read this entire document and the other documents we refer you to for a more complete understanding of the matters being considered at the meetings. This summary is qualified in its entirely by the more detailed information appearing elsewhere in this Joint Proxy Statement/Circular, including the Appendices (which are incorporated into and form part of this Joint Proxy Statement/Circular).
The Companies
ElectraMeccanica
ElectraMeccanica Vehicles Corp. is a designer and manufacturer of environmentally efficient electric vehicles (“EVs”). Headquartered in British Columbia, Canada, ElectraMeccanica has historically designed and manufactured smaller, simpler and purposeful EVs primarily targeted for the U.S. market through direct marketing and sales to consumers and small businesses. ElectraMeccanica’s initial product was the three-wheel, single-seat, SOLO. However, given the significant challenges experienced by customers in purchasing, financing, insuring and after-sale servicing of a three-wheel autocycle, such as the SOLO, at the end of 2022, ElectraMeccanica made the strategic decision to cease production of the SOLO. In the first half of 2023, because of economic and quality issues, ElectraMeccanica made the further decision to exit the SOLO business altogether and to seek to buy back all previously sold SOLO vehicles.
ElectraMeccanica Vehicles Corp. was incorporated on February 16, 2015, under the laws of the Province of British Columbia, Canada, and ElectraMeccanica Shares are listed under the symbol “SOLO” on the Nasdaq Capital Market. ElectraMeccanica Shares began trading on the Nasdaq Capital Market on August 9, 2018.
For additional information about ElectraMeccanica, see “Information Concerning ElectraMeccanica”.
Xos
Xos, Inc. is a leading fleet electrification solutions provider committed to the decarbonization of commercial transportation. Xos designs and manufactures Class 5-8 battery-electric commercial vehicles that travel on last-mile, back-to-base routes of up to 200 miles per day. Xos also offers charging infrastructure products and services through Xos Energy Solutions™ to support electric vehicle fleets. Xos’ proprietary fleet management software, Xosphere™, integrates vehicle operation and vehicle charging to provide commercial fleet operators a more seamless and cost-efficient vehicle ownership experience than traditional internal combustion engine counterparts. Xos developed the X-Platform (its proprietary, purpose-built vehicle chassis platform) and the X-Pack (its proprietary battery system) specifically for the medium- and heavy-duty commercial vehicle segment with a focus on last-mile commercial fleet operations. Xos’ “Fleet-as-a-Service” package offers customers a comprehensive suite of commercial products and services to facilitate electric fleet operations and seamlessly transition their traditional combustion-engine fleets to battery-electric vehicles. Xos is headquartered in Los Angeles, California.
Xos, Inc. was initially incorporated on July 29, 2020 as a Cayman Islands exempted company under the name “NextGen Acquisition Corporation” (“NextGen”). On August 20, 2021, the transactions contemplated by the Agreement and Plan of Merger, as amended on May 14, 2021, by and among NextGen, Sky Merger Sub I, Inc., a Delaware corporation and a direct wholly owned subsidiary of NextGen (“Merger Sub”), and Xos, Inc., a Delaware corporation (now known as Xos Fleet, Inc., “Legacy Xos”), were consummated, whereby Merger Sub merged with and into Legacy Xos, the separate corporate existence of Merger Sub ceased and Legacy Xos became the surviving corporation and a wholly owned subsidiary of NextGen. As a result, Xos became the publicly traded entity listed on the Nasdaq Global Market under the symbol “XOS”. On June 29, 2023, Xos transferred the listing of its common stock and warrants from the Nasdaq Global Market to the Nasdaq Capital Market.
For additional information about Xos, see “Information Concerning Xos”.
Background to the Arrangement
On January 11, 2024, ElectraMeccanica and Xos entered into the Arrangement Agreement, which sets out the terms and conditions for implementing the Arrangement. The Arrangement Agreement is the result of extensive arm’s length negotiations conducted since November 6, 2023 among representatives of ElectraMeccanica and Xos.
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A summary of the material events leading to the negotiation of the Arrangement and the material meetings, negotiations and discussions between ElectraMeccanica and Xos and their respective advisors that preceded the execution of the Arrangement Agreement and public announcement of the Arrangement is included in this Joint Proxy Statement/Circular under “Description of the Arrangement — Background to the Arrangement”.
Reasons Considered by the ElectraMeccanica Board
In reaching its decision to approve the Arrangement Agreement and the transactions contemplated thereby, the ElectraMeccanica Board considered the following factors, all of which the ElectraMeccanica Board viewed as supporting its decision to approve the Arrangement Agreement and the transactions contemplated thereby:
Strategic Factors. The ElectraMeccanica Board evaluated the following key strategic factors supporting its approval of and entry into the Arrangement Agreement:
the Arrangement provides ElectraMeccanica Shareholders with an equity position in Xos, which the ElectraMeccanica Board believes to be well-positioned in the mid-size electric commercial vehicle market segment that is poised for high growth;
Xos has been selling electric vehicle step vans to commercial fleet customers since 2018 and is in its third order cycle with certain customers for hundreds of vans;
Xos currently manufactures and sells its electric vans at positive gross margins, which distinguishes it from many other electric vehicle companies;
Xos has an established customer base comprised of large fleet operators, including FedEx Ground, UPS, Penske, Cintas and Loomis, and deep relationships with industry leading stepvan body builders;
Xos has experienced recent high-growth while maintaining a substantial commercial backlog;
government financial incentives relating to purchasing and operating electric vehicle vans;
Xos’ product and service offering includes an industry leading mid-size step van, several battery size choices, an electric powertrain for other OEMs, mobile charging hubs, fleet management software solutions, single point charging infrastructure support, highly responsive aftermarket support and support in obtaining government incentives;
the Arrangement will significantly improve Xos’ capital position, enabling Xos to fund the next phase in its growth as an EV Truck OEM and continue to develop adjacencies, including Xos Energy Solutions and Xos Powertrain Sales;
ElectraMeccanica will add three automotive/commercial vehicle-experienced members to the Xos Board, strengthening the Combined Company overall; and
the terms of the proposed Arrangement were considered to be superior when compared to other strategic alternatives available to ElectraMeccanica, based on the comprehensive strategic process the ElectraMeccanica Board completed in which it broadly reviewed and evaluated a range of potential transaction partners and evaluated the prospects for liquidating and dissolving ElectraMeccanica and distributing its remaining cash.
Other Factors Considered by the ElectraMeccanica Board. In addition to considering the strategic factors described above, the ElectraMeccanica Board considered the following additional factors, all of which it viewed as supporting its decision to approve the Arrangement:
the ElectraMeccanica Board’s knowledge of ElectraMeccanica’s business, operations, financial condition, earnings and limited prospects for generating revenue on a standalone basis and of Xos’ business, operations, financial condition, earnings and prospects, taking into account the results of ElectraMeccanica’s due diligence review of Xos;
the Consideration to be received by ElectraMeccanica Shareholders;
the terms and conditions of the Arrangement Agreement, including the completion of the Arrangement, are subject to a limited number of customary conditions that the ElectraMeccanica Board considers to be reasonable in the circumstances and the Arrangement is not subject to antitrust or foreign investment approval conditions;
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the terms and conditions of the Arrangement Agreement are the result of a rigorous arm’s length negotiation process;
the terms and conditions of the Xos Voting Support and Lock-Up Agreements;
the reasonableness of the potential termination amount of $6,000,000, which could become payable by Xos if the Arrangement Agreement is terminated in certain circumstances;
the Arrangement Agreement permits the ElectraMeccanica Board, in the exercise of its fiduciary duties, to respond, prior to approval by ElectraMeccanica Shareholders of the ElectraMeccanica Arrangement Proposal, to certain unsolicited acquisition proposals that are more favorable, from a financial point of view, to ElectraMeccanica Shareholders than the Arrangement;
the ElectraMeccanica Arrangement Proposal must be approved by at least two-thirds of the votes cast by ElectraMeccanica Shareholders; and the Arrangement requires approval by the Court after its consideration of the procedural and substantive fairness of the terms and conditions of the Arrangement;
the fact that the estimated return to ElectraMeccanica Shareholders in a potential liquidation of ElectraMeccanica would result in aggregate distributions of approximately $49.3 million to ElectraMeccanica Shareholders (based on assumptions for the resolution of certain ElectraMeccanica liabilities and the receipt of certain vehicle duty drawback refunds, which, if they are unable to be resolved or received, could materially reduce the potential payment in a liquidation), which ElectraMeccanica believes is significantly below the estimated future value of the Consideration to be received by ElectraMeccanica Shareholders;
the recommendation of the strategic committee of ElectraMeccanica (the “ElectraMeccanica Strategic Committee”);
the ElectraMeccanica Board considered Greenhill’s Opinion which provided that as of January 10, 2024, based upon and subject to the assumptions, limitations and qualifications set forth therein, the Consideration to be received by ElectraMeccanica Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the ElectraMeccanica Shareholders; and
the possibility of and prospects for (including associated costs and potential timelines) liquidating ElectraMeccanica, distributing its remaining assets to ElectraMeccanica Shareholders and dissolving the company, including the possibility that ElectraMeccanica will be unable to mitigate liabilities such as its long-term lease of its Mesa, Arizona facility, the uncertainties of continuing cash burn while ElectraMeccanica works to discharge or reduce its liabilities and existing commitments and the uncertainty of timing of release of cash until such liabilities and commitments are resolved.
The ElectraMeccanica Board weighed the advantages and opportunities listed above against a number of other factors identified in its deliberations as weighing negatively against the proposed Arrangement, including:
the transaction costs;
the potential termination amount of $6,000,000, which could become payable by ElectraMeccanica if the Arrangement Agreement is terminated in certain circumstances, including the failure to obtain the approval of ElectraMeccanica Shareholders for the ElectraMeccanica Arrangement Proposal following an ElectraMeccanica Change in Recommendation (as defined below);
the risk that the transaction might not be consummated in a timely manner or at all and the detrimental effect on ElectraMeccanica’s cash position in a non-consummation scenario;
ElectraMeccanica Shareholders will have reduced ownership and voting interests in Xos after the completion of the Arrangement (as compared to their current ownership and voting interests in ElectraMeccanica) and will exercise less influence over the Xos Board and management and policies of Xos (as compared to their current influence over the ElectraMeccanica Board and management and policies of ElectraMeccanica);
the risk that the benefits of the Arrangement might not be realized, including that Xos may not achieve the future financial results that the ElectraMeccanica Strategic Committee and ElectraMeccanica’s management projected and that Xos’ stock price may be volatile;
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the relative percentage ownership of ElectraMeccanica Shareholders and Xos Stockholders immediately following the completion of the Arrangement is subject to change if the Net Cash is less than $46,500,000 or greater than $50,500,000;
the possibility that Xos Shares following the Effective Time may be relatively illiquid given the average daily trading volume of Xos;
the possibility that it may be commercially necessary or desirable for Xos to complete a dilutive equity financing prior to the Effective Time;
the interests of ElectraMeccanica’s executive officers and directors and the fact that ElectraMeccanica’s executive officers and directors may be deemed to have interests in the transactions contemplated by the Arrangement Agreement that may be different from or in addition to those of ElectraMeccanica Shareholders, generally, as described in the section above titled “Description of the Arrangement — Interests of ElectraMeccanica’s Directors and Management in the Arrangement”; and
various other risks associated with Xos and the Arrangement, including the risks described in the section entitled “Risk Factors,” and the matters described under “Information Concerning Forward-Looking Statements”.
After considering these factors and through discussions with ElectraMeccanica’s management and outside legal and financial advisors, the ElectraMeccanica Board concluded that the potential benefits of entering into the Arrangement Agreement outweighed the uncertainties and risks. In view of the factors considered in connection with its evaluation of the Arrangement and the complexity of these matters, the ElectraMeccanica Board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the Arrangement and the Arrangement Agreement and to make its recommendation to ElectraMeccanica Shareholders. In addition, individual members of the ElectraMeccanica Board may have given differing weights to different factors and applied his or her own personal business judgment to the process. The ElectraMeccanica Board unanimously determined that the Arrangement, the negotiation of and entry into the Arrangement Agreement and the other transactions and matters contemplated in the Arrangement Agreement or in connection therewith, were in the best interests of, and were advisable to, ElectraMeccanica and the ElectraMeccanica Shareholders and approved the Arrangement Agreement and the transactions contemplated by the Arrangement Agreement.
Reasons Considered by the Xos Board; Recommendation of the Stock Issuance by the Xos Board
In reaching its decision to approve the Arrangement Agreement and the transactions contemplated thereby, including the issuance of Xos Shares to ElectraMeccanica Shareholders in connection with the transaction, the Xos Board considered the following factors, all of which they viewed as supporting their decisions to approve the Arrangement Agreement and the transactions contemplated thereby:
Strategic Factors. The Xos Board evaluated the following key strategic factors supporting its approval of and entry into the Arrangement Agreement:
that the Arrangement strengthens Xos’ cash position and balance sheet, improves financial flexibility and provides significant growth funding and runway to execute Xos’ business plan;
that the Arrangement would be accretive to current Xos share price;
that the transaction would diversify the Xos stockholder base and enhance trading liquidity; and
that the terms of the Arrangement were considered to be more favorable compared to the alternatives (including financings) that may have been available to Xos given market conditions.
Other Factors Considered by the Xos Board. In addition to considering the strategic factors described above, the Xos Board considered the following additional factors, all of which it viewed as supporting its decision to approve the proposed combination:
its knowledge of Xos’ business, operations, financial condition, earnings and prospects on a standalone basis and of ElectraMeccanica’s business, operations, financial condition, earnings and prospects, taking into account the results of Xos’ due diligence review of ElectraMeccanica;
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the proportional adjustment to the Consideration based on ElectraMeccanica’s Net Cash (to the extent outside of certain range of the target amount) provides greater certainty as to the value being paid for the cash to be delivered on the Effective Date;
the terms and conditions of the Arrangement Agreement, including the completion of the Arrangement, are subject to a limited number of customary conditions the Xos Board consider to be reasonable in the circumstances and the Arrangement is not subject to antitrust or foreign investment approval conditions;
the terms and conditions of the Arrangement Agreement are the result of a rigorous arm’s length negotiation process;
the terms and conditions of the ElectraMeccanica Voting Support and Lock-Up Agreements; and
the reasonableness of the potential termination amount of $6,000,000, which could become payable by ElectraMeccanica if the Arrangement Agreement is terminated in certain circumstances.
The Xos Board weighed the advantages and opportunities listed above against a number of other factors identified in its deliberations as weighing negatively against the proposed combination, including:
the risk that the transaction and integration costs may be greater than anticipated;
the cost of the transaction, including dilution to Xos Stockholders, as compared to other alternatives (including a financing);
the cost, including the time spent by Xos’ management, associated with a decision to pursue a strategic transaction to divest or otherwise monetize ElectraMeccanica’s legacy assets as a financing alternative, as well as the potential ongoing liabilities of ElectraMeccanica;
the impact that the announced transaction may have on Xos’ stock price and on Xos’ ability to raise additional capital or engage in certain business development discussions during the pre-closing period;
the potential termination amount of $6,000,000, which could become payable by Xos if the Arrangement Agreement is terminated in certain circumstances, including the failure to obtain the stockholder vote to approve the Xos Share Issuance Proposal following an Xos Change in Recommendation (as defined below);
the risk that the transaction might not be consummated in a timely manner or at all and its likely detrimental effect on Xos’ cash position and stock price;
the risk that strategic benefits and other anticipated benefits might not be realized or may take longer than expected to achieve;
the fact that ElectraMeccanica has the ability to terminate the Arrangement Agreement under certain circumstances in connection with a superior proposal but that Xos does not have this ability;
the restrictions imposed pursuant to the Arrangement Agreement on the conduct of Xos’ business and operations during the period between the execution of the Arrangement Agreement and the consummation of the Arrangement or the termination of the Arrangement Agreement;
the possibility of disruptive stockholder litigation following announcement of the Arrangement; and
various other risks associated with ElectraMeccanica and the Arrangement, including the risks described in the section titled “Risk Factors,” and the matters described under “Information Concerning Forward — Looking Statements”.
After considering these factors and through discussions with Xos’ management and outside legal and financial advisors, the Xos Board concluded that the potential benefits of entering into the Arrangement Agreement outweighed the uncertainties and risks. In view of the factors considered in connection with its evaluation of the Arrangement and the complexity of these matters, the Xos Board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors that it considered in reaching its determination to approve the Arrangement and the Arrangement Agreement and to make its recommendation to Xos Stockholders. In addition, individual members of the Xos Board may have given differing weights to different factors and applied his or her own personal business judgment to the process. The Xos Board unanimously determined that the Arrangement, the negotiation of and entry into the Arrangement Agreement and the other transactions and matters contemplated in
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the Arrangement Agreement or in connection therewith, including the issuance of Xos Shares to ElectraMeccanica Shareholders in connection with the transaction, were in the best interests of, and were advisable to, Xos and the Xos Stockholders and approved the Arrangement Agreement and the transactions contemplated by the Arrangement Agreement.
Recommendations of the Boards of Directors
ElectraMeccanica Board Recommendation
After consultation with its financial and legal advisors and the recommendation of the ElectraMeccanica Strategic Committee, the ElectraMeccanica Board has unanimously determined that the Arrangement is in the best interests of ElectraMeccanica and ElectraMeccanica Shareholders and that the consideration to be received by the ElectraMeccanica Shareholders pursuant to the Arrangement is fair to such holders. In addition, Greenhill, ElectraMeccanica’s independent financial advisor, has rendered its Opinion that as of the date of its Opinion, based upon and subject to the assumptions, limitations and qualifications set forth therein, the consideration to be received by ElectraMeccanica Shareholders pursuant to the Arrangement is fair, from a financial point of view, to ElectraMeccanica Shareholders. See “Description of the Arrangement — Opinion of Greenhill & Co. Canada Ltd.”.
Accordingly, the ElectraMeccanica Board unanimously recommends that ElectraMeccanica Shareholders vote FOR each of the ElectraMeccanica Proposals.
Xos Board Recommendation
On January 10, 2024, after careful consideration and consultation with its financial and legal advisors, the Xos Board unanimously determined that the Arrangement, the negotiation of and entry into the Arrangement Agreement and the other transactions and matters contemplated in the Arrangement Agreement or in connection therewith are in the best interests of, and are advisable to, Xos and the Xos Stockholders.
Accordingly, the Xos Board unanimously recommends that Xos Stockholders vote FOR each of the Xos Proposals.
Opinion of Greenhill & Co. Canada Ltd.
ElectraMeccanica retained Greenhill to render an Opinion to the ElectraMeccanica Board as to the fairness, from a financial point of view, to ElectraMeccanica Shareholders of the Consideration Shares. On January 10, 2024, Greenhill delivered its Opinion, subsequently confirmed in writing, to the ElectraMeccanica Board to the effect that as at the date thereof, based upon the scope of review and subject to the assumptions, limitations, qualifications, procedures and other factors set out therein, the Consideration is fair, from a financial point of view, to the ElectraMeccanica Shareholders. See “Description of the Arrangement — Opinion of Greenhill & Co. Canada Ltd.”.
The full text of Greenhill’s Opinion, setting out the scope of review, assumptions made, matters considered and limitations and qualifications on the review undertaken in connection with the Opinion is attached as Appendix “F” to this Joint Proxy Statement/Circular. This summary of the Opinion is qualified in its entirety by reference to the full text of the Opinion. ElectraMeccanica Shareholders are urged to read the Opinion in its entirety for the assumptions made, procedures followed, and other matters considered and limits of the review by Greenhill.
Interests of ElectraMeccanica’s Directors and Management in the Arrangement
In considering the respective recommendations of the ElectraMeccanica Board with respect to the Arrangement, ElectraMeccanica Shareholders should be aware that certain members of the ElectraMeccanica Board and the management have interests in connection with the transactions contemplated by the Arrangement that may be different from, or in addition to, the interests of ElectraMeccanica Shareholders. The ElectraMeccanica Board is aware of these interests and considered them along with the other matters described under “Description of the Arrangement — Reasons Considered by the ElectraMeccanica Board”. For more information, see “Description of the Arrangement — Interests of ElectraMeccanica’s Directors and Management in the Arrangement”.
Court Approval
An arrangement under the BCBCA requires Court approval. Subject to the terms of the Arrangement Agreement, and upon obtaining approval of the ElectraMeccanica Arrangement Proposal in the manner required by the Interim Order, ElectraMeccanica will apply to the Court for the Final Order. The application for the Final Order approving the
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Arrangement is scheduled for [•], 2024 at 10:00 a.m. (Vancouver time), or as soon after that date as is practicable. At the Final Order hearing, any holders of ElectraMeccanica Shares, ElectraMeccanica Options, ElectraMeccanica RSUs, ElectraMeccanica DSUs or ElectraMeccanica PSUs (collectively, the “ElectraMeccanica Securityholders”) entitled to receive Consideration pursuant to the Arrangement may participate or be represented or present evidence or argument, subject to filing with the Court and serving upon ElectraMeccanica and Xos a Response to Petition in accordance with the terms of the Interim Order. In the event that the hearing is postponed, adjourned or rescheduled then, subject to further order of the Court, only those persons having previously served a Response to Petition in compliance with the Interim Order will be given notice of the postponement, adjournment or rescheduled date. Such persons should consult their legal advisors as to the necessary requirements. See the section titled “Appendix “E” — Notice of Hearing of Petition”.
The Court has broad discretion under the BCBCA when making orders with respect to the Arrangement and the Court, in hearing the application for the Final Order, will consider, among other things, the fairness and reasonableness of the Arrangement to the parties affected, including ElectraMeccanica Securityholders, both from a substantive and a procedural point of view. The Court may approve the Arrangement as proposed or as amended, in any manner the Court may direct, subject to compliance with such terms and conditions, if any, as the Court thinks fit. Depending on the nature of any required amendments, ElectraMeccanica and Xos may determine not to proceed with the Arrangement.
See the section titled “Description of the Arrangement — Court Approval”.
Letter of Transmittal
A letter of transmittal has been mailed, together with this Joint Proxy Statement/Circular, to each person who was a registered ElectraMeccanica Shareholder on the ElectraMeccanica Record Date. Each registered ElectraMeccanica Shareholder must forward a properly completed and signed letter of transmittal, with accompanying ElectraMeccanica share certificate(s) and all other required documents, as applicable as set out in the letter of transmittal, in order to receive the Consideration to which such ElectraMeccanica Shareholder is entitled under the Arrangement. It is recommended that ElectraMeccanica Shareholders complete, sign and return the letter of transmittal with accompanying ElectraMeccanica share certificate(s) to the Depositary as soon as possible.
Any letter of transmittal, once deposited with the Depositary, shall be irrevocable and may not be withdrawn by an ElectraMeccanica Shareholder except that all letters of transmittal will be automatically revoked if the Depositary is notified in writing by ElectraMeccanica and Xos that the Arrangement Agreement has been terminated or that the Arrangement is not completed. If a letter of transmittal is automatically revoked, the share certificate(s) for the ElectraMeccanica Shares received with the letter of transmittal will be promptly returned to the ElectraMeccanica Shareholder submitting the same at the address specified in the letter of transmittal.
See the section titled “Description of the Arrangement — Letter of Transmittal”.
Issue and Resale of Xos Shares Received in the Arrangement
The issuance of Xos Shares pursuant to the Arrangement will constitute distributions of securities which are exempt from the prospectus requirements of Canadian securities laws and, subject to certain disclosure and regulatory requirements and to customary restrictions applicable to distributions of shares that constitute “control distributions” may be resold in each province and territory in Canada, subject in certain circumstances, to the usual conditions that no unusual effort has been made to prepare the market or create demand. Recipients of Xos Shares are urged to obtain legal advice to ensure that their resale of such securities complies with laws applicable to them, including Canadian securities laws. See the section titled “Description of the Arrangement — Regulatory Matters — Canadian Securities Law Matters — Qualification — Resale of Xos Shares”.
The Xos Shares to be issued pursuant to the Arrangement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) and will be issued in reliance on the exemption afforded by Section 3(a)(10) of the U.S. Securities Act and corresponding exemptions from the registration or qualification requirements of state securities laws. Section 3(a)(10) of the U.S. Securities Act exempts from registration the offer and sale of a security which is issued in specified exchange transactions where, among other things, the fairness of the terms and conditions of such exchange are approved after a hearing on the fairness of such terms and conditions, at which all persons to whom it is proposed to issue securities in such exchange have the right to appear, by a court or governmental authority expressly authorized by law to grant such approval and to hold such
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a hearing. Accordingly, the Final Order, if granted by the Court, constitutes a basis for the exemption from the registration requirements of the U.S. Securities Act with respect to the Xos Shares issued in connection with the Arrangement. See the section titled “Description of the Arrangement — Regulatory Matters — U.S. Securities Law Matters — Exemption Relied Upon from the Registration Requirements of the U.S. Securities Act”.
The Xos Shares to be issued pursuant to the Arrangement will not be subject to resale restrictions under the U.S. Securities Act, except that the U.S. Securities Act imposes restrictions on the resale of Xos Shares received pursuant to the Arrangement by persons who are at the time of a resale, or who were within three months before the resale, “affiliates” of Xos. An “affiliate” of an issuer is a person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, the issuer. Typically, persons who are executive officers, directors or 10% or greater shareholders of an issuer may be considered to be its “affiliates”. See the section titled “Description of the Arrangement — Regulatory Matters — U.S. Securities Law Matters — Resale of Xos Shares Within the United States”.
Pro Forma Economic Ownership of the Combined Company
Upon completion of the transactions contemplated by the Arrangement Agreement, it is estimated that the issuance of the Consideration Shares in exchange for ElectraMeccanica Shares will result in ElectraMeccanica Shareholders and Xos Stockholders owning approximately 21% and 79%, respectively, of the outstanding economic interest in the Combined Company, assuming Net Cash as of the Anticipated Effective Time is greater than $46,500,000 and less than $50,500,000, subject to certain adjustments set forth in the Arrangement Agreement. See the section titled “Description of the Arrangement — Pro Forma Economic Ownership of the Combined Company”.
Stock Exchange Listing and Reporting Issuer Status
The Xos Shares currently trade on the Nasdaq Capital Market under the symbol “XOS”. Xos will apply to list the Xos Shares issuable under the Arrangement on the Nasdaq Capital Market and it is a condition of closing that the Xos Shares to be issued under the Arrangement are listed on the Nasdaq Capital Market.
If the Arrangement is completed, Xos intends to have the ElectraMeccanica Shares delisted from the Nasdaq Capital Market and deregistered under the U.S. Exchange Act and to cause ElectraMeccanica to apply to cease to be a reporting issuer under the securities legislation of the Province of British Columbia.
Xos is currently not a reporting issuer in any province or territory of Canada and, if the Arrangement is completed, Xos will, as a result of the Arrangement, become a reporting issuer in the Province of British Columbia upon the completion of the Arrangement. Xos may be exempted from certain Canadian statutory financial and certain other continuous and timely reporting requirements. See the section titled “Description of the Arrangement — Regulatory Matters — U.S. Securities Law Matters” and “Description of the Arrangement — Regulatory Matters — Canadian Securities Law Matters”.
Treatment of Outstanding ElectraMeccanica Equity Awards and Warrants
At the Effective Time, (i) each ElectraMeccanica DSU, ElectraMeccanica PSU and ElectraMeccanica RSU that is outstanding immediately prior to the Effective Time will vest (if not already vested) and be settled by ElectraMeccanica in exchange for one ElectraMeccanica Share, subject to applicable withholdings; (ii) each ElectraMeccanica Option that is in-the-money and outstanding immediately prior to the Effective Time will be cancelled in exchange for a number of ElectraMeccanica Shares with a value equal to the in-the-money value of such option, as calculated in accordance with the Plan of Arrangement, subject to applicable withholdings; (iii) each ElectraMeccanica Option that is out-of-the-money and outstanding immediately prior to the Effective Time will be cancelled without any payment therefor; and (iv) each outstanding purchase warrant to acquire ElectraMeccanica Shares will remain outstanding following the Effective Time and will remain exercisable pursuant to, and to the extent required by, the terms and conditions of the warrant certificates representing such ElectraMeccanica warrants.
The Arrangement Agreement
The Arrangement Agreement provides for, among other things, the conditions that need to be satisfied or waived prior to the implementation of the Plan of Arrangement. The following is a summary of certain terms of the Arrangement Agreement and is qualified in its entirety by the full text of the Arrangement Agreement, a copy of which is attached to this Joint Proxy Statement/Circular as Appendix “A” and is available on EDGAR at www.sec.gov under Xos’ and ElectraMeccanica’s EDGAR profiles, and is also available on SEDAR+ at www.sedarplus.ca under ElectraMeccanica’s SEDAR+ profile.
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See the section titled “The Arrangement Agreement”.
Consideration and Consideration Shares
Under the Arrangement and subject to the terms of the Plan of Arrangement, each ElectraMeccanica Shareholder will receive such number of Consideration Shares calculated in accordance with the Arrangement Agreement. Assuming Net Cash as of the Anticipated Effective Time is greater than $46,500,000 and less than $50,500,000 and assuming the number of ElectraMeccanica Outstanding Shares and the number of Xos Outstanding Shares as of the Anticipated Effective Time are the numbers outstanding, respectively, as of January 24, 2024, the Consideration is expected to be 0.0142 of an Xos Share in exchange for each ElectraMeccanica Share, subject to certain adjustments set forth in the Arrangement Agreement, and is calculated by multiplying:
(a)
the quotient obtained by dividing (i) one by (ii) the number of ElectraMeccanica Outstanding Shares; by
(b)
the product obtained by multiplying (i) the Net Cash Percentage by (ii) 0.21; by
(c)
the quotient obtained by dividing (i) the number of Xos Outstanding Shares by (ii) the difference between (A) one and (B) the product obtained by multiplying the Net Cash Percentage by 0.21.
See the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”.
Covenants, Representations and Warranties
The Arrangement Agreement contains certain customary and negotiated covenants and representations and warranties for an agreement of this type, which are summarized in this Joint Proxy Statement/Circular.
See the section titled “The Arrangement Agreement and Related Agreements — Covenants” and “The Arrangement Agreement and Related Agreements — Representations and Warranties”.
Conditions to the Arrangement
The obligations of ElectraMeccanica and Xos to complete the Arrangement are subject to the satisfaction or waiver of certain conditions set out in the Arrangement Agreement, which are summarized in this Joint Proxy Statement/Circular. These conditions include, among other things, (i) obtaining the required approvals of Xos Stockholders and ElectraMeccanica Shareholders, (ii) obtaining an Interim Order and the Final Order from the Court on terms consistent with the Arrangement Agreement, (iii) the issuance of the Consideration Shares being exempt from the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10) thereof and the prospectus requirements of applicable securities laws in Canada, (iv) the Consideration Shares being listed on the Nasdaq, (v) the absence of any law or order prohibiting or making illegal the consummation of the Arrangement or any of the other transactions contemplated by the Arrangement Agreement, (vi) the absence of any pending or threatened legal proceeding that would reasonably likely to prevent or materially delay the consummation of the Arrangement, (vii) the determination of the amount of Net Cash of ElectraMeccanica pursuant to the Arrangement Agreement, (viii) subject to certain materiality exceptions, the accuracy of the representations and warranties of each party, (ix) the performance in all material respects by each party of its obligations under the Arrangement Agreement, (x) no material adverse effect having occurred that is continuing, (xi) the number of ElectraMeccanica Shares in respect of which ElectraMeccanica Shareholders have validly exercised Dissent Rights not exceeding 7.5% of the ElectraMeccanica Shares issued and outstanding and (xii) certain consents being obtained.
See the section titled “The Arrangement Agreement and Related Agreements — Conditions to Completion of the Arrangement”.
Non-Solicitation Provisions
The Arrangement Agreement provides for certain non-solicitation covenants in connection with alternative acquisition proposals. However, under certain circumstances, ElectraMeccanica Board or Xos Board may change its recommendation to its stockholders or shareholders, as applicable, in response to a superior proposal, and under certain circumstances, ElectraMeccanica Board may terminate the Arrangement Agreement and accept such a superior proposal. See the section titled “The Arrangement Agreement and Related Agreements — Covenants — Covenants Regarding Non-Solicitation”.
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Termination
Termination of the Arrangement Agreement
The Arrangement Agreement contains certain termination rights for each of Xos and ElectraMeccanica, including in the event that (i) the approval of (A) the ElectraMeccanica Arrangement Proposal or (B) the Xos Share Issuance Proposal is not obtained at the respective stockholder meetings; (ii) any law makes the completion of the Arrangement or the transactions contemplated by the Arrangement Agreement illegal or otherwise prohibited, and such law has become final and non-appealable; or (iii) the Arrangement has not occurred on or before June 30, 2024, or such later date as may be agreed to in writing by Xos and ElectraMeccanica (the “Outside Date”), which Outside Date may be extended as agreed to in writing by the parties. Each of the termination rights in clauses (i) through (iii) above cannot be exercised by a party whose failure to fulfill any of its obligations or breach of any of its representations and warranties under the Arrangement Agreement has been the cause of, or resulted in, the occurrence of the applicable termination event therein.
In addition, ElectraMeccanica may terminate the Arrangement Agreement in certain circumstances if (a) there is a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Xos under the Arrangement Agreement that would cause certain representations and warranties and covenants of Xos not to be true or complied with, as applicable, and such breach or failure is incapable of being cured or is not cured on or prior to the Outside Date provided that ElectraMeccanica is not then in breach of the Arrangement Agreement; (b) prior to the approval by the ElectraMeccanica Shareholders of the Arrangement, the ElectraMeccanica Board authorizes ElectraMeccanica to enter into a definitive agreement providing for the implementation of an ElectraMeccanica Superior Proposal (as defined below) provided that ElectraMeccanica is in compliance with the Arrangement Agreement and that prior to or concurrent with such termination ElectraMeccanica pays the termination amount in accordance with the Arrangement Agreement; (c) Xos fails to perform, in any material respect, any covenant or agreement in respect of its non-solicitation obligations under the Arrangement Agreement; (d) a Material Adverse Change (as defined below) has occurred in respect of Xos; or (e) if there is a change in the recommendation of the Xos Board that the Xos Stockholders approve the Arrangement.
In addition, Xos may terminate the Arrangement Agreement in certain circumstances if (a) there is a breach of any representation or warranty or failure to perform any covenant or agreement on the part of ElectraMeccanica under the Arrangement Agreement that would cause certain representations and warranties and covenants of ElectraMeccanica not to be true or complied with, as applicable, and such breach or failure is incapable of being cured or is not cured on or prior to the Outside Date provided that Xos is not then in breach of the Arrangement Agreement; (b) ElectraMeccanica fails to perform, in any material respect, any covenant or agreement in respect of its non-solicitation obligations under the Arrangement Agreement; (c) a Material Adverse Change has occurred in respect of ElectraMeccanica; or (d) if there is a change in the recommendation of the ElectraMeccanica Board that the ElectraMeccanica Shareholders approve the Arrangement. The Arrangement Agreement may also be terminated by the mutual written agreement of ElectraMeccanica and Xos and in other customary circumstances. See the section titled “The Arrangement Agreement and Related Agreements — Termination”.
Termination Amounts
The Arrangement Agreement provides that a termination amount will be payable by ElectraMeccanica upon termination of the Arrangement Agreement under specified circumstances, including: (i) a termination of the Arrangement Agreement by Xos because of a change in the recommendation of the ElectraMeccanica Board or a material breach by ElectraMeccanica of its non-solicitation covenants; (ii) a termination of the Arrangement Agreement by ElectraMeccanica because of ElectraMeccanica’s pursuit of a superior proposal; (iii) a termination of the Arrangement Agreement by Xos or ElectraMeccanica, as applicable, because of (a) ElectraMeccanica Shareholders’ failure to adopt the ElectraMeccanica Arrangement Proposal at the ElectraMeccanica Meeting, (b) the Effective Time does not occur on or prior to the Outside Date, or (c) breach of any representation or warranty or failure to perform any covenant or agreement by ElectraMeccanica due to a willful breach or fraud that would cause the corresponding closing conditions not to be satisfied, in each case set forth in the Arrangement Agreement, if prior to such termination there was a publicly announced or publicly disclosed offer or proposal for an alternative transaction with respect to ElectraMeccanica and ElectraMeccanica enters into or consummates an alternative transaction within 12 months following the date of termination; or (iv) in the event of a change in the recommendation of the ElectraMeccanica Board and the ElectraMeccanica Arrangement Proposal is not approved by the ElectraMeccanica Shareholders.
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The Arrangement Agreement also provides that a termination amount will be payable by Xos upon termination of the Arrangement Agreement under specified circumstances, including: (i) a termination of the Arrangement Agreement by ElectraMeccanica because of a change in the recommendation of the Xos Board or a material breach by Xos of its non-solicitation covenants; (ii) a termination of the Arrangement Agreement by Xos or ElectraMeccanica, as applicable, because of (a) Xos Stockholders’ failure to adopt the Xos Share Issuance Proposal at the Xos Meeting, (b) the Effective Time does not occur on or prior to the Outside Date, or (c) breach of any representation or warranty or failure to perform any covenant or agreement by Xos due to a willful breach or fraud that would cause the corresponding closing conditions not to be satisfied, in each case set forth in the Arrangement Agreement, if prior to such termination there was a publicly announced or publicly disclosed offer or proposal for an alternative transaction with respect to Xos and Xos enters into or consummates an alternative transaction within 12 months following the date of termination; or (iii) in the event of a change in the recommendation of the Xos Board and the Xos Share Issuance Proposal is not approved by the Xos Stockholders.
In the event such termination amount is payable by Xos or ElectraMeccanica, Xos will be required to pay ElectraMeccanica or ElectraMeccanica will be required to pay Xos, respectively, a termination amount of $6,000,000 (such amount payable by Xos, the “Xos Termination Amount” and such amount payable by ElectraMeccanica, the “ElectraMeccanica Termination Amount”).
See the section titled “The Arrangement Agreement and Related Agreements — Termination — Termination Amounts”.
Procedure for the Arrangement to Become Effective
The Arrangement will be implemented by way of a Court approved Plan of Arrangement under the BCBCA pursuant to the terms of the Arrangement Agreement. The following procedural steps must be taken in order for the Arrangement to become effective:
the Arrangement must be approved by the ElectraMeccanica Shareholders in the manner set forth in the Interim Order;
the Court must grant the Final Order approving the Arrangement; and
if all other conditions precedent to the Arrangement set out in the Arrangement Agreement, including the approval of the Xos Share Issuance Proposal, have been satisfied or waived by the appropriate party, the Arrangement will go into effect at the Effective Time. For a description of the other conditions precedent see “The Arrangement Agreement and Related Agreements — Conditions to Completion of the Arrangement”.
Effect of the Arrangement
If the ElectraMeccanica Arrangement Proposal is approved, the Xos Share Issuance Proposal is approved and all other conditions to closing of the Arrangement are satisfied or waived and the Arrangement is completed, among other things, Xos (or its permitted assign) will acquire all of the issued and outstanding ElectraMeccanica Shares and ElectraMeccanica will become a wholly owned subsidiary of Xos.
Pursuant to the Arrangement, each ElectraMeccanica Shareholder (other than ElectraMeccanica Dissenting Shareholders (as defined below)) will receive, for each ElectraMeccanica Share a certain number of Consideration Shares.
See the section titled “Description of the Arrangement — Recommendation of the ElectraMeccanica Board” and “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”.
The ElectraMeccanica Board has determined that the Arrangement is in the best interest of ElectraMeccanica. The ElectraMeccanica Board unanimously recommends that ElectraMeccanica Shareholders vote FOR each of the ElectraMeccanica Proposals.
Corporate Governance and Rights of ElectraMeccanica Shareholders
ElectraMeccanica and Xos have agreed that, after completion of the transactions contemplated by the Arrangement Agreement, the Xos Board will consist of nine members: three of the existing ElectraMeccanica Board members, being Luisa Ingargiola, Dietmar Ostermann and Michael Richardson and six of the seven existing Xos Board members, being Dakota Semler, Giordano Sordoni, Ed Rapp, George Mattson, Stuart Bernstein, Burt Jordan and Alice Jackson. See the section titled “Governance and Management of the Combined Company — Board of Directors of the Combined Company”.
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Dakota Semler will be the chairman of the Xos Board. All members of the Xos’ management team will continue as the management of Xos as of immediately after the consummation of the Arrangement.
Following the completion of the transactions contemplated by the Arrangement Agreement, Xos will have principal offices in the United States.
Xos is a Delaware corporation. ElectraMeccanica is a company incorporated under the BCBCA. Upon completion of the Arrangement, ElectraMeccanica Shareholders will become Xos Stockholders and their rights as stockholders will be governed by the Certificate of Incorporation of Xos filed on August 19, 2021 (as amended from time to time, the “Current Xos Charter”) and the Bylaws of Xos dated as of August 20, 2021 (as amended from time to time, the “Current Xos Bylaws”, and together with the Current Xos Charter, the “Xos Organizational Documents”) and the Delaware Law. Certain of the rights associated with Xos Shares under the Delaware Law are different from the rights associated with ElectraMeccanica Shares under the BCBCA. For a discussion of the different rights associated with Xos Shares, see “Comparison of Rights of ElectraMeccanica Shareholders and Xos Stockholders” in Appendix “G” to this Joint Proxy Statement/Circular.
The Meetings
ElectraMeccanica Meeting
The purpose of the ElectraMeccanica Meeting is for ElectraMeccanica Shareholders to consider and vote on the ElectraMeccanica Arrangement Proposal, the ElectraMeccanica Advisory Compensation Proposal, the ElectraMeccanica Name Change Proposal and the ElectraMeccanica Adjournment Proposal.
The ElectraMeccanica Board unanimously recommends that ElectraMeccanica Shareholders vote FOR each of the ElectraMeccanica Proposals.
See the sections titled “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Proposal 1: ElectraMeccanica Arrangement Proposal”, “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Proposal 2: ElectraMeccanica Advisory Compensation Proposal”, “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Proposal 3: ElectraMeccanica Name Change Proposal” and “General Information about the ElectraMeccanica Meeting and Voting - ElectraMeccanica Proposal 4: ElectraMeccanica Adjournment Proposal” for additional information.
Xos Meeting
The purpose of the Xos Meeting is for Xos Stockholders to consider and vote on the Xos Share Issuance Proposal and the Xos Adjournment Proposal.
The Xos Board recommends that Xos Stockholders vote FOR each of the Xos Proposals.
See the sections titled “General Information about the Xos Meeting and Voting — Xos Proposal 1: Xos Share Issuance Proposal” and “General Information about the Xos Meeting and Voting — Xos Proposal 2: Xos Adjournment Proposal” for additional information.
Approval for ElectraMeccanica Proposals
Except for the ElectraMeccanica Adjournment Proposal, the vote required to approve all of the ElectraMeccanica Proposals listed herein assumes the presence of a quorum at the ElectraMeccanica Meeting:
No.
Proposal
Votes Necessary
1.
ElectraMeccanica Arrangement Proposal
Approval requires the affirmative vote of at least two-thirds of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Arrangement Proposal.

Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
 
 
 
2.
ElectraMeccanica Advisory Compensation Proposal
Approval requires the affirmative vote of a majority of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Advisory
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No.
Proposal
Votes Necessary
 
 
Compensation Proposal.

Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
 
 
 
3.
ElectraMeccanica Name Change Proposal
Approval requires the affirmative vote of a majority of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Name Change Proposal.

Abstentions and broker non-votes (none of which are expected) will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
 
 
 
4.
ElectraMeccanica Adjournment Proposal
Approval requires the affirmative vote of a majority of the votes cast at the ElectraMeccanica Meeting on the ElectraMeccanica Adjournment Proposal.

Abstentions and broker non-votes will not be treated as votes cast, and therefore will have no effect on the outcome of the vote.
Approval for Xos Proposals
Except for the Xos Adjournment Proposal, the vote required to approve all of the Xos Proposals listed herein assumes the presence of a quorum at the Xos Meeting.
No.
Proposal
Votes Necessary
1.
Xos Share Issuance Proposal
Approval requires the affirmative vote of a majority of votes cast at the Xos Meeting on the Xos Share Issuance Proposal.

An abstention, a broker non-vote or other failure to vote will have no effect on the outcome of the Xos Share Issuance Proposal, so long as a quorum is present.
 
 
 
2.
Xos Adjournment Proposal
Approval requires the affirmative vote of the holders of a majority of the voting power of the Xos Shares present or represented by proxy at the Xos Meeting and entitled to vote on such proposal.

An abstention will have the same effect as a vote AGAINST the Xos Adjournment Proposal, while a broker non-vote or other failure to vote will have no effect on the outcome of the Xos Adjournment Proposal.
ElectraMeccanica Shareholder Dissent Rights
The Interim Order expressly provides registered ElectraMeccanica Shareholders with the right to dissent from the ElectraMeccanica Arrangement Proposal. Any registered ElectraMeccanica Shareholder who dissents from the ElectraMeccanica Arrangement Proposal in accordance with Sections 237 to 247 of the BCBCA, as modified by the Interim Order and the Plan of Arrangement (an “ElectraMeccanica Dissenting Shareholder”), will be entitled to be paid the fair value of the ElectraMeccanica Shares held by such ElectraMeccanica Dissenting Shareholder determined as of the close of business on the day before the ElectraMeccanica Arrangement Resolution was adopted at the ElectraMeccanica Meeting. In accordance with the Interim Order, 100% of any such payment of fair value will be satisfied in Xos Shares with the value of such Xos Shares being based on the volume weighted average price of the Xos Shares on the Nasdaq Capital Market for the five trading days preceding the day the ElectraMeccanica Arrangement Proposal is approved.
Failure to strictly comply with the requirements set forth in Sections 237 to 247 of the BCBCA, as modified by the
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Interim Order and the Plan of Arrangement, may result in the loss of any right of dissent.
If you wish to exercise Dissent Rights, you should review the requirements summarized in this Joint Proxy Statement/Circular carefully and consult with your legal advisor. See the section titled “Description of the Arrangement — ElectraMeccanica Dissenting Shareholders’ Rights”, “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Dissenting Shareholders’ Rights”, and Appendix “H” of this Joint Proxy Statement/Circular.
Accounting Treatment
The acquisition of ElectraMeccanica by Xos is expected to be accounted for as an asset acquisition in accordance with Accounting Standards Codification Topic 805-50, Acquisition of Assets Rather than a Business, because the acquired set of assets and activities does not include a substantive process. Accordingly, the cost of the net assets are expected to be allocated to the acquired assets and assumed liabilities based upon their relative fair values at the Effective Time. The excess fair value of net assets acquired over the fair value of the stock consideration provided by Xos is expected to be recognized in additional paid in capital in Xos’ consolidated balance sheets.
Certain Canadian Federal Income Tax Considerations
ElectraMeccanica Shareholders should carefully read the information in this Joint Proxy Statement/Circular under “Certain Canadian Federal Income Tax Considerations”, which qualifies the information set out below, and should consult their own tax advisors as to the particular consequences that may apply to them as a result of the Arrangement.
ElectraMeccanica Shareholders who are residents of Canada for purposes of the Tax Act should be aware that the exchange of ElectraMeccanica Shares for Xos Shares under the Arrangement will generally be a taxable transaction for Canadian federal income tax purposes.
ElectraMeccanica Shareholders who are not residents of Canada for purposes of the Tax Act and that do not hold their ElectraMeccanica Shares as “taxable Canadian property” (as defined in the Tax Act) will generally not be subject to tax under the Tax Act on the disposition of their ElectraMeccanica Shares under the Arrangement.
Certain U.S. Federal Income Tax Considerations
ElectraMeccanica Shareholders should carefully read the information in this Joint Proxy Statement/Circular under “Certain U.S. Federal Income Tax Considerations”, which qualifies the information set out below, and should consult their own tax advisors as to the particular consequences that may apply to them as a result of the Arrangement. In particular, ElectraMeccanica Shareholders should consult their tax advisors regarding the treatment of ElectraMeccanica as a “passive foreign investment company” for purposes of the Code.
In general, ElectraMeccanica Shareholders who are “U.S. Holders” as defined in this Joint Proxy Statement/Circular will generally recognize a gain or a loss on the taxable disposition of their ElectraMeccanica Shares pursuant to the Arrangement. The character of such gain or loss should, subject to the discussion of the PFIC rules under the section of this Joint Proxy Statement/Circular titled “Certain U.S. Federal Income Tax Considerations” below, be capital gain or loss.
Voting Support and Lock-Up Agreements
ElectraMeccanica Voting Support and Lock-Up Agreements
Simultaneously with the execution of the Arrangement Agreement, Xos and the ElectraMeccanica Locked-Up Parties (solely in their respective capacities as ElectraMeccanica Shareholders) who collectively beneficially owned or controlled approximately 0.098% of the voting power of ElectraMeccanica’s outstanding capital stock as of January 9, 2024, entered into the ElectraMeccanica Voting Support and Lock-Up Agreements pursuant to which the ElectraMeccanica Locked-Up Parties agreed, among other things, to vote their ElectraMeccanica Shares in favor of the ElectraMeccanica Arrangement Proposal and any other matter necessary for the consummation of the transactions contemplated by the Arrangement Agreement, and against any alternative proposal and, except in limited circumstances, not to dispose of their Consideration Shares for a period of 120 days following the Effective Date. The ElectraMeccanica Voting Support and Lock-Up Agreements terminate upon the occurrence of certain events, including the termination of the Arrangement Agreement in accordance with its terms. See the section titled “General Information about the ElectraMeccanica Meeting and Voting — ElectraMeccanica Voting Support and Lock-Up Agreements”.
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Xos Voting Support and Lock-Up Agreements
Simultaneously with the execution of the Arrangement Agreement, ElectraMeccanica and the Xos Locked-Up Parties (solely in their respective capacities as Xos Stockholders) who collectively beneficially owned or controlled approximately 49.21% of the voting power of Xo’s outstanding capital stock as of January 9, 2024, entered into the Xos Voting Support and Lock-Up Agreements pursuant to which the Xos Locked-Up Parties agreed, among other things, to vote their Xos Shares in favor of the Xos Share Issuance Proposal and any other matter necessary for the consummation of the transactions contemplated by the Arrangement Agreement, and against any alternative proposal and, except in limited circumstances, not to dispose of their Xos Shares for period of 120 days following the Effective Date. The Xos Voting Support and Lock-Up Agreements terminate upon the occurrence of certain events, including the termination of the Arrangement Agreement in accordance with its terms. See the section titled “General Information about the Xos Meeting and Voting — Xos Voting Support and Lock-Up Agreements”.
No Fractional Shares
In no event will any ElectraMeccanica Shareholder be entitled to a fractional Xos Share. Where the aggregate number of Xos Shares to be issued to an ElectraMeccanica Shareholder as Consideration under the Arrangement would otherwise result in a fraction of an Xos Share being issuable, the number of Xos Shares to be received by such ElectraMeccanica Shareholder will be rounded down to the nearest whole Xos Share. The Depositary will cause Consideration Shares delivered to it by Xos that represent fractional share entitlements to be sold on the Nasdaq and will distribute the net proceeds thereof on a proportional basis to registered ElectraMeccanica Shareholders in lieu of any fractional Xos Shares that would otherwise have been required to be distributed. Each registered ElectraMeccanica Shareholder who would otherwise have been entitled to receive a fraction of an Xos Share will be entitled to receive cash from the net proceeds of such sale. ElectraMeccanica Shareholders who beneficially hold their ElectraMeccanica Shares will have such cash amounts distributed to them in accordance with the practices and policies of the intermediaries through whom they hold their ElectraMeccanica Shares.
See the section titled “Description of the Arrangement — Exchange Procedure — No Fractional Shares”.
Risk Factors
There are a number of risk factors relating to the Arrangement, the business of ElectraMeccanica, the business of Xos and the business of the Combined Company, all of which should be carefully considered by ElectraMeccanica Shareholders and Xos Stockholders.
See the section titled “Risk Factors — Risks Related to the Arrangement”, “Information Concerning Xos — Risks and Uncertainties” and “Risk Factors — Risks Related to the Combined Company”.
ElectraMeccanica Selected Historical Financial Information
The following tables set forth selected historical consolidated financial information of ElectraMeccanica for the periods presented. The consolidated statement of operations information for the years ended December 31, 2022 and 2021 and the other financial information as of December 31, 2022 have been derived from ElectraMeccanica’s audited consolidated financial statements and related notes included in ElectraMeccanica’s Annual Report on Form 10-K for the year ended December 31, 2022, which are incorporated by reference into this Joint Proxy Statement/Circular. The condensed consolidated statements of operations information for the nine months ended September 30, 2023 and 2022 and the other financial information as of September 30, 2023 have been derived from ElectraMeccanica’s unaudited condensed consolidated financial statements and related notes included in ElectraMeccanica’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, which are incorporated by reference into this Joint Proxy Statement/Circular. The unaudited condensed consolidated financial statements of ElectraMeccanica have been prepared on the same basis as the audited consolidated financial statements of ElectraMeccanica. In the opinion of ElectraMeccanica’s management, the unaudited condensed consolidated interim financial information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial information in those statements.
The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should read carefully the following selected information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in ElectraMeccanica’s Annual Report on Form 10-K for the year ended December 31, 2022 and ElectraMeccanica’s Quarterly Report on Form 10-Q for the quarter ended
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September 30, 2023 and ElectraMeccanica’s historical consolidated financial statements and the related notes related thereto, each of which are incorporated by reference into this Joint Proxy Statement/Circular.
 
Nine Months Ended
September 30,
Year Ended
December 31,
(in thousands, except per share data)
2023
2022
2022
2021
 
(unaudited)
 
 
Consolidated Statements of Operations Data
 
 
 
 
Revenue
$608
$4,026
$6,812
$2,101
Cost of revenue
1,192
8,768
33,068
4,335
Gross loss
(584)
(4,742)
(26,256)
(2,234)
 
 
 
 
 
Operating expenses
 
 
 
 
General and administrative expenses
22,358
27,982
39,755
28,188
Acquisition related expenses
6,750
Research and development expenses
8,581
16,827
22,031
17,090
Sales and marketing expenses
2,958
9,376
14,664
10,774
Impairment
7,593
Total operating expenses
40,647
54,185
84,043
56,052
Operating loss
(41,231)
(58,927)
(110,299)
(58,286)
 
 
 
 
 
Interest income
3,952
1,092
2,301
421
Impairment of loan receivable
(6,000)
Changes in fair value of derivative liabilities
191
191
18,920
Contract termination loss
(15,700)
Other income (expense), net
(1,423)
32
(45)
175
Gain on settlement of legal liabilities
858
Foreign exchange (loss) gain
(131)
(25)
(124)
(10)
Loss before taxes
(43,975)
(57,637)
(123,676)
(38,780)
Current income tax expense
1
1
24
1
Net loss
$(43,976)
$(57,638)
$(123,700)
$(38,781)
 
 
 
 
 
Foreign currency translation adjustments
26
41
64
1
Comprehensive loss
$(43,950)
$(57,597)
$(123,636)
$(38,780)
 
 
 
 
 
Loss per share – basic and diluted
$(0.37)
$(0.49)
$(1.04)
$(0.35)
Weighted average number of shares outstanding – basic and diluted
119,288
118,639
118,739
111,721
(in thousands)
As of
September 30,
2023
As of
December 31,
2022
 
(unaudited)
 
Consolidated Balance Sheet Data
 
 
Cash and cash equivalents
$73,473
$ 134,256
Total current assets
$80,039
$150,153
Total assets
$106,994
$181,246
Total current liabilities
$5,072
$36,197
Total liabilities
$21,123
$53,921
Accumulated deficit
$(316,782)
$(272,805)
Total shareholders’ equity
$85,871
$127,326
Xos Selected Historical Financial Information
The following tables set forth selected historical consolidated financial information of Xos for the periods presented. The consolidated statement of operations information for the years ended December 31, 2022 and 2021 and the other financial information as of December 31, 2022 have been derived from Xos’ audited consolidated financial
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statements and related notes included in Xos’ Annual Report on Form 10-K for the year ended December 31, 2022, which are incorporated by reference into this Joint Proxy Statement/Circular. The condensed consolidated statements of operations information for the nine months ended September 30, 2023 and 2022 and the other financial information as of September 30, 2023 have been derived from Xos’ unaudited condensed consolidated financial statements and related notes included in Xos’ Quarterly Report on Form 10-Q for the nine months ended September 30, 2023, which are incorporated by reference into this Joint Proxy Statement/Circular. The unaudited condensed consolidated financial statements of Xos have been prepared on the same basis as the audited consolidated financial statements of Xos. In the opinion of Xos’ management, the unaudited condensed consolidated interim financial information reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial information in those statements.
The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should read carefully the following selected information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Xos’ Annual Report on Form 10-K for the year ended December 31, 2022 and Xos’ Quarterly Report on Form 10-Q for the nine months ended September 30, 2023, and Xos’ historical consolidated financial statements and the related notes related thereto, each of which are incorporated by reference into this Joint Proxy Statement/Circular.
 
Nine Months Ended
September 30,
Year Ended
December 31,
(in thousands, except per share data)
2023
2022
2022
2021
 
(unaudited)
 
 
Consolidated Statements of Operations Data
 
 
 
 
Revenues
$26,147
$27,805
$36,376
$5,048
Cost of goods sold
28,764
49,859
66,405
7,410
Gross profit (loss)
(2,617)
(22,054)
(30,029)
(2,362)
 
 
 
 
 
Operating expenses
 
 
 
 
General and administrative
29,961
30,991
41,093
27,197
Research and development
15,446
24,493
30,679
20,077
Sales and marketing
5,113
7,891
9,547
3,519
Total operating expenses
50,520
63,375
81,319
50,793
Loss from operations
(53,137)
(85,429)
(111,348)
(53,155)
 
 
 
 
 
Other (expense) income, net
(9,840)
(1,479)
(4,835)
38
Change in fair value of derivative instruments
525
9,125
14,184
18,498
Change in fair value of earn-out shares liability
443
24,148
28,682
72,505
Write off of subscription receivable
(379)
Realized loss on debt extinguishment
(14,104)
(Loss) income before provision for income taxes
(62,009)
(53,635)
(73,317)
23,403
Provision for income taxes
7
3
8
2
Net (loss) income
$(62,016)
$(53,638)
$(73,325)
$23,401
 
 
 
 
 
Other comprehensive (loss) income
 
 
 
 
Marketable debt securities, available-for-sale
 
 
 
 
Change in net unrealized losses, net of tax of $0, for the nine months ended September 30, 2023 and 2022 and the years ended December 31, 2022 and 2021, respectively
739
(835)
(358)
(381)
Total comprehensive (loss) income
$(61,277)
$(54,473)
$(73,683)
$23,020
 
 
 
 
 
Per Share Data
 
 
 
 
Net income (loss) per share, basic and diluted (historical)
 
 
 
 
Basic
$(0.36)
$(0.33)
$(0.44)
$0.22
Diluted
$(0.36)
$(0.34)
$(0.44)
$0.22
Net income (loss) per share, basic and diluted(1)
 
 
 
 
Basic
$(10.80)
$(9.78)
$(13.31)
$6.65
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Nine Months Ended
September 30,
Year Ended
December 31,
(in thousands, except per share data)
2023
2022
2022
2021
 
(unaudited)
 
 
Diluted
$(10.80)
$(9.62)
$(13.31)
$6.51
Weighted average shares outstanding (historical)
 
 
 
 
Basic
172,129
164,379
165,253
105,568
Diluted
172,129
167,148
174,382
107,786
Weighted average shares outstanding(1)
 
 
 
 
Basic
5,737
5,479
5,508
3,518
Diluted
5,737
5,571
5,812
3,592
(1)
Retrospectively adjusted for the 1-for-30 reverse stock split that occurred on December 6, 2023.
(in thousands)
As of
September 30,
2023
As of
December 31,
2022
 
(unaudited)
 
Consolidated Balance Sheet Data
 
 
Cash and cash equivalents
$22,570
$35,631
Working capital(1)
$64,306
$117,435
Total assets
$114,185
$189,936
Total liabilities
$56,625
$77,861
Accumulated deficit
$(139,434)
$(77,418)
Total stockholders’ equity
$57,560
$112,075
(1)
Xos defines working capital as total current assets minus total current liabilities.
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Summary Unaudited Pro Forma Combined Financial Information
(in thousands)
As of September 30,
2023
 
(unaudited)
Consolidated Balance Sheet Data
 
Cash and cash equivalents
$91,793
Total current assets
$163,222
Total assets
$213,719
Total current liabilities
$41,317
Total liabilities
$86,676
Accumulated deficit
$(139,434)
Total stockholders’ equity
$127,043
 
Nine Months Ended
September 30,
Year Ended
December 31,
(in thousands, except per share data)
2023
2022
 
(unaudited)
(unaudited)
Consolidated Statements of Operations Data
 
 
Revenues
$26,755
$43,188
Cost of goods sold
29,956
99,473
Gross loss
(3,201)
(56,285)
 
 
 
Operating expenses
 
 
General and administrative
51,634
77,179
Research and development
24,027
52,710
Sales and marketing
8,071
24,211
Acquisition related expenses
6,750
Impairment
7,593
Total operating expenses
90,482
161,693
Loss from operations
(93,683)
(217,978)
 
 
 
Other (expense) income, net
(7,442)
(2,703)
Change in fair value of derivative instruments
525
14,375
Change in fair value of earn-out shares liability
443
28,682
Gain on settlement of legal liabilities
858
Contract termination loss
(15,700)
Impairment of loan receivable
(6,000)
Loss before provision for income taxes
(105,299)
(193,324)
Provision for income taxes
8
32
Net loss
$(105,307)
$(193,356)
Per Share Data
 
 
Net loss per share
 
 
Basic and diluted
$(12.63)
$(23.19)
Weighted average shares outstanding
 
 
Basic and diluted
8,337
8,337
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RISK FACTORS
The following risk factors should be considered by ElectraMeccanica Shareholders and Xos Stockholders in evaluating whether to approve the ElectraMeccanica Proposals and the Xos Proposals, respectively. These risk factors should be considered in conjunction with the other information contained in or incorporated by reference into this Joint Proxy Statement/Circular. These risk factors relate to the Arrangement and related matters. For information on risks and uncertainties relating to the business of ElectraMeccanica, see “Additional Information Concerning ElectraMeccanica and Documents Incorporated by Reference by ElectraMeccanica” and for information on risks and uncertainties relating to the business of Xos, see “Additional Information Concerning Xos and Documents Incorporated by Reference by Xos”.
Risks Related to the Arrangement
Conditions precedent to closing of the Arrangement
The completion of the Arrangement is subject to a number of conditions precedent, some of which are outside ElectraMeccanica’s and Xos’ control, including receipt of the Final Order and the approval of the ElectraMeccanica Arrangement Proposal and the Xos Share Issuance Proposal.
In addition, the completion of the Arrangement by ElectraMeccanica and Xos is conditional on, among other things, no Material Adverse Change having occurred in respect of either ElectraMeccanica or Xos that is continuing.
There can be no certainty, nor can ElectraMeccanica or Xos provide any assurance, that all conditions precedent to the Arrangement will be satisfied or waived, or, if satisfied or waived, when they will be satisfied or waived and, accordingly, the Arrangement may not be completed. If the Arrangement is not completed, the market price of ElectraMeccanica Shares and Xos Shares may be adversely affected.
Market price of the ElectraMeccanica Shares and Xos Shares
If, for any reason, the Arrangement is not completed or its completion is materially delayed or the Arrangement Agreement is terminated, the market price of ElectraMeccanica Shares and Xos Shares may be materially adversely affected. Depending on the reasons for terminating the Arrangement Agreement, ElectraMeccanica’s or Xos’ business, financial condition or results of operations could also be subject to various material adverse consequences, including as a result of paying the ElectraMeccanica Termination Amount or Xos Termination Amount, as applicable.
Termination in certain circumstances
Each of ElectraMeccanica and Xos has the right, in certain circumstances, in addition to termination rights relating to the failure to satisfy the conditions of closing, to terminate the Arrangement. Accordingly, there can be no certainty, nor can ElectraMeccanica or Xos provide any assurance, that the Arrangement will not be terminated by either of ElectraMeccanica or Xos prior to the completion of the Arrangement. In addition, if the Arrangement is not completed by June 30, 2024, either ElectraMeccanica or Xos may choose to terminate the Arrangement Agreement. The Arrangement Agreement also includes termination amounts payable if the Arrangement Agreement is terminated in certain circumstances. Additionally, any termination will result in the failure to realize the expected benefits of the Arrangement in respect of the business of ElectraMeccanica and Xos.
The termination amounts provided under the Arrangement Agreement may discourage other parties from attempting to acquire ElectraMeccanica or Xos
Under the Arrangement Agreement, each of ElectraMeccanica and Xos is required to pay to the other party a termination amount of $6 million in the event the Arrangement Agreement is terminated in connection with entry into a superior proposal. This termination amount may discourage other parties from attempting to acquire ElectraMeccanica Shares or Xos Shares or otherwise make an Acquisition Proposal (as defined below) to ElectraMeccanica or Xos, even if those parties, in the case of ElectraMeccanica, would otherwise be willing to offer greater value to ElectraMeccanica Shareholders than that offered by Xos under the Arrangement, or in the case of Xos, would be willing to offer Xos Stockholders a benefit greater than what the transactions contemplated by the Arrangement Agreement offer.
Uncertainty surrounding the Arrangement
As the Arrangement is dependent upon receipt, among other things, of satisfaction of certain conditions, its completion is uncertain. If the Arrangement is not completed for any reason, there are risks that the announcement of the Arrangement and the dedication of ElectraMeccanica’s and Xos’ resources to the completion thereof could
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have a negative impact on their respective relationships with their stakeholders and could have a material adverse effect on the current and future operations, financial condition and prospects of each of ElectraMeccanica and Xos. Further, the ElectraMeccanica Board may determine to liquidate or dissolve ElectraMeccanica if the Arrangement is not completed. In such an event, the amount of cash available for distribution to ElectraMeccanica Shareholders will depend heavily on the timing of such liquidation or dissolution, as well as the amount of cash that will need to be reserved for commitments and contingent liabilities.
In addition, each of ElectraMeccanica and Xos will incur significant transaction expenses in connection with the Arrangement, regardless of whether the Arrangement is completed.
Restrictions from pursuing business opportunities
Each of ElectraMeccanica and Xos is subject to customary non-solicitation provisions under the Arrangement Agreement, pursuant to which, the parties are restricted from soliciting, initiating, encouraging or otherwise facilitating any Acquisition Proposal, among other things. The Arrangement Agreement also restricts them from taking specified actions until the Arrangement is completed without the consent of the other party. These restrictions may prevent each party from pursuing attractive business opportunities that may arise prior to the completion of the Arrangement.
Xos Stockholders and ElectraMeccanica Shareholders will have a reduced ownership and voting interest in, and will exercise less influence over the management of, the Combined Company following the completion of the Arrangement as compared to their current ownership and voting interest in the respective companies.
After the completion of the Arrangement, the current Xos Stockholders and ElectraMeccanica Shareholders will own a smaller percentage of the Combined Company than their ownership in their respective companies prior to the Arrangement. Upon completion of the transactions contemplated by the Arrangement Agreement, it is estimated that the issuance of the Consideration Shares in exchange for ElectraMeccanica Shares will result in ElectraMeccanica Shareholders and Xos Stockholders owning approximately 21% and 79%, respectively, of the outstanding economic interest in the Combined Company (assuming Net Cash as of the Anticipated Effective Time is greater than $46,500,000 and less than $50,500,000), subject to certain adjustments set forth in the Arrangement Agreement. For a more complete description of the Arrangement Agreement and the potential adjustments in the Consideration Shares, please see the section titled “The Arrangement Agreement and Related Agreements — Consideration and Consideration Shares”.
Another attractive take-over, merger or business combination may not be available if the Arrangement is not completed
If the Arrangement is not completed and is terminated, there can be no assurance that ElectraMeccanica will be able to find a party willing to pay equivalent or more attractive consideration than the consideration to be provided under the Arrangement or be willing to proceed at all with a similar transaction or any alternative transaction.
The pending Arrangement may divert the attention of management of ElectraMeccanica and Xos
The pendency of the Arrangement could cause the attention of management of ElectraMeccanica and Xos to be diverted from their day-to-day operations, and suppliers, customers or distributors may seek to modify or terminate their business relationships with ElectraMeccanica or Xos, as applicable. These disruptions could be exacerbated by a delay in the completion of the Arrangement and could have an adverse effect on the business, operating results or prospects of ElectraMeccanica and Xos regardless of whether the Arrangement is ultimately completed, or of the Combined Company if the Arrangement is completed.
ElectraMeccanica directors and officers may have interests in the Arrangement different from the interests of ElectraMeccanica Shareholders
Directors and executive officers of ElectraMeccanica negotiated the terms of the Arrangement Agreement, and the ElectraMeccanica Board has unanimously recommended that ElectraMeccanica Shareholders vote in favor of the Arrangement. These directors and executive officers may have interests in the Arrangement that are different from, or in addition to, those of ElectraMeccanica Shareholders generally. See “Description of the Arrangement — Interests of ElectraMeccanica’s Directors and Management in the Arrangement”. ElectraMeccanica Shareholders
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should be aware of these interests. The ElectraMeccanica Board was aware of, and considered, these interests when it declared the advisability of the Arrangement Agreement and unanimously recommended that ElectraMeccanica Shareholders approve the ElectraMeccanica Arrangement Proposal.
Risks associated with securities litigation related to the Arrangement
Securities litigation or shareholder derivative litigation frequently follows the announcement of certain significant business transactions. ElectraMeccanica or Xos may become involved in this type of litigation in connection with the Arrangement, and the Combined Company may become involved in this type of litigation in the future. Litigation often is expensive and diverts management’s attention and resources, which could have a material adverse effect on the business and the results of operations of ElectraMeccanica, Xos or the Combined Company.
Risks Related to the Combined Company
The business and operations of the Combined Company will be subject to the risks described in the documents of ElectraMeccanica and Xos incorporated by reference in this Joint Proxy Statement/Circular, including, without limitation, the risks described in ElectraMeccanica’s Annual Report filed on Form 10-K for the year ended December 31, 2022, ElectraMeccanica’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, Xos’ Annual Report filed on Form 10-K for the year ended December 31, 2022, Xos’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 and any subsequent SEC filings of ElectraMeccanica or Xos, and certain unexpected, unforeseen or unknown risks. The Combined Company’s business, financial condition, results of operations and cash flows could be materially adversely affected by any of these risks. The market or trading price of ElectraMeccanica’s and Xos’ securities could decline due to any of these risks. Additional risks not presently known to ElectraMeccanica and Xos or that ElectraMeccanica and Xos currently considers immaterial may also prove to be material and may impair the Combined Company’s business and operations. In addition to risks associated with ElectraMeccanica’s and Xos’ business and operations, the following additional risks are associated with the Combined Company.
The pro forma financial statements are presented for illustrative purposes only and may not be an indication of the Combined Company’s financial condition or results of operations following the Arrangement
The pro forma financial statements contained in this Joint Proxy Statement/Circular are presented for illustrative purposes only and may not be an indication of the Combined Company’s financial condition or results of operations following the Arrangement for a number of reasons. For example, the pro forma financial statements have been derived from the historical financial statements of ElectraMeccanica and Xos and certain adjustments and assumptions have been made regarding the Combined Company after giving effect to the Arrangement. The information upon which these adjustments and assumptions have been made is preliminary, and these types of adjustments and assumptions are difficult to make with complete accuracy. Moreover, the pro forma financial statements do not reflect all costs that are expected to be incurred by the Combined Company in connection with the Arrangement. As a result, the actual financial condition and results of operations of the Combined Company following the Arrangement may not be consistent with, or evident from, these pro forma financial statements. In addition, the assumptions used in preparing the pro forma financial information may not prove to be accurate, and other factors may affect the Combined Company's financial condition or results of operations following the Arrangement. Any potential decline in the Combined Company’s financial condition or results of operations may cause a significant decrease in the stock price of Xos.
Each of ElectraMeccanica and Xos have a history of losses, and the Combined Company may never achieve profitability or generate positive cash flow
ElectraMeccanica had operating losses for the year ended December 31, 2022 of $110.3 million (including an impairment loss of $7.6 million) and an operating loss of $58.3 million for the year ended December 31, 2021. Xos had an operating loss for the year ended December 31, 2022 of $111.3 million and an operating loss of $53.2 million for the year ended December 31, 2021. The Combined Company may never achieve profitability or generate positive cash flow, which could cause the Combined Company to curtail its operations and could adversely affect your investment.
The Combined Company, following the Arrangement, may not realize the anticipated benefits of the Arrangement
ElectraMeccanica and Xos are proposing to complete the Arrangement to strengthen the position of each entity and to create the opportunity to realize certain benefits including, among other things, those set forth in this Joint Proxy Statement/Circular under “Description of the Arrangement — Reasons Considered by the ElectraMeccanica Board”,
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“Description of the Arrangement — Recommendation of the Xos Board”, and “Description of the Arrangement — Reasons Considered by the Xos Board; Recommendation of the Stock Issuance by the Xos Board”. Achieving the benefits of the Arrangement depends in part on the ability of the Combined Company to effectively capitalize on its scale, scope and leadership, to realize the anticipated operating synergies, and to maximize the potential of its growth opportunities. A variety of factors, including those risk factors set forth in this Joint Proxy Statement/Circular and the documents incorporated by reference herein, may adversely affect the ability to achieve the anticipated benefits of the Arrangement.
The trading prices of the ElectraMeccanica Shares and the Xos Shares prior to the Effective Time and the trading price of the Xos Shares following the Effective Time may be volatile
The trading prices of the ElectraMeccanica Shares and the Xos Shares have been and may continue to be subject to, and following completion of the Arrangement the Xos Shares may be subject to, material fluctuations and may increase or decrease in response to a number of events and factors, including:
sales or potential sales of substantial amounts of ElectraMeccanica Shares or Xos Shares;
announcements about ElectraMeccanica, Xos or, following completion of the Arrangement, the Combined Company, or about ElectraMeccanica’s, Xos’ or the Combined Company’s competitors, as applicable;
conditions in the industry in which ElectraMeccanica, Xos or the Combined Company operates;
governmental regulation and legislation;
variations in anticipated or actual operating results;
changes in securities analysts’ estimates of performance, or failure to meet analysts’ expectations;
changes in general economic trends, including current events affecting the economic situation in the United States and internationally;
investor perception of ElectraMeccanica’s, Xos’ or, following completion of the Arrangement, the Combined Company’s industry or ElectraMeccanica’s, Xos’ or the Combined Company’s prospects, as applicable; and
the issuance of additional equity securities by ElectraMeccanica, Xos or, following completion of the Arrangement, the Combined Company, as applicable, or the perception that such issuance may occur.
The issuance and future sale of Xos Shares could affect the market price
Based on number of outstanding ElectraMeccanica Shares as of January 24, 2024, Xos currently expects to issue at the Effective Time an aggregate of 0.0142 Xos Shares. The issuance of these shares, and the sale of Xos Shares in the public market from time to time, could depress the market price for Xos Shares.
Additional Indebtedness
The Combined Company may be required to draw down or incur additional indebtedness under its credit facilities or other sources of debt financing. The additional indebtedness will increase the interest payable by the Combined Company from time to time until such amounts are repaid, which will represent an increase in the Combined Company’s cost and a potential reduction in its income. In addition, the Combined Company may need to find additional sources of financing to repay this amount when it becomes due.
The Xos Shares to be received by ElectraMeccanica Shareholders as a result of the Arrangement will have different rights from the ElectraMeccanica Shares
Xos is a Delaware corporation. ElectraMeccanica is a company incorporated under the BCBCA. Upon completion of the Arrangement, ElectraMeccanica Shareholders will become Xos Stockholders and their rights as Xos Stockholders will be governed by the Xos Organizational Documents and the Delaware Law. Certain of the rights associated with Xos Shares under the Delaware Law are different from the rights associated with ElectraMeccanica Shares under the BCBCA. For a discussion of the different rights associated with Xos Shares, see Appendix “G” to this Joint Proxy Statement/Circular.
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Enforcement of rights against the Combined Company in Canada
Xos is located outside Canada and, following the Effective Time, certain of its directors and officers are expected to reside outside of Canada. Accordingly, it may not be possible for Xos Stockholders to effect service of process within Canada upon the Combined Company or the majority of its directors or officers, or to enforce judgments obtained in Canadian courts against the Combined Company or the majority of its directors or officers.
Risks Related to Taxes
U.S. Federal Income Taxation of the Arrangement
The Arrangement may give rise to taxable income in the United States for ElectraMeccanica Shareholders who are U.S. citizens or residents and there can be no assurances that material adverse tax consequences will not result from the Arrangement.
The Arrangement is not expected to qualify as a “reorganization” under section 368(a) of the Code. However, there can be no assurance that the Internal Revenue Service (“IRS”) will agree with or not otherwise challenge this position on the tax treatment of the Arrangement, which could result in the Arrangement being treated as a non-taxable exchange. Neither ElectraMeccanica nor Xos has applied for a ruling or received a tax opinion of counsel related to the Arrangement and neither intends to do so.
The Arrangement is anticipated to be a taxable transaction for ElectraMeccanica Shareholders who are resident in Canada.
The Arrangement is generally expected to be a taxable transaction for ElectraMeccanica Shareholders who are resident in Canada for purposes of the Tax Act. ElectraMeccanica Shareholders are urged to carefully review the section titled “Certain Canadian Federal Income Tax Considerations” for a summary of certain material Canadian federal income tax considerations in connection with the Arrangement. ElectraMeccanica Shareholders should consult with their own tax advisors as to the particular consequences that may apply to them as a result of the Arrangement.
The Arrangement may limit Xos’ ability to use tax attributes and tax credit carryforwards.
In addition, under Section 382 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage point change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be limited. Xos may have experienced ownership changes in the past. Xos may also experience ownership changes in the future as a result of subsequent shifts in Xos’ stock ownership, some of which may be outside of Xos’ control. In addition, the Arrangement, if consummated, may also constitute an ownership change (within the meaning of Section 382 of the Code) which could eliminate or otherwise substantially limit Xos’ ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes.
If an ownership change occurred or occurs and Xos’ ability to use Xos’ historical net operating loss and tax credit carryforwards is materially limited (or entirely eliminated), or if Xos’ research and development carryforwards are adjusted, it would harm Xos’ future operating results by effectively increasing Xos’ future tax obligations. For taxable years beginning after December 31, 2020, deductions for federal net operating losses arising in taxable years beginning after December 31, 2017 may only offset 80% of taxable income.
The effective income tax rate of income of ElectraMeccanica and its subsidiaries could increase after completion of the Arrangement
Since ElectraMeccanica and its non-U.S. subsidiaries will become wholly owned subsidiaries of Xos after completion of the Arrangement, the profits of ElectraMeccanica and its subsidiaries may be subject to U.S. taxation prior to distribution to shareholders, which could increase the effective tax rate on such income. For example, ElectraMeccanica and its non-U.S. subsidiaries will become “controlled foreign corporations” under U.S. federal income tax law, which will subject certain types of income to anti-deferral rules. In addition, distributions from ElectraMeccanica to Xos may be subject to U.S. federal income tax or Canadian or U.S. withholding tax prior to or at the time of distribution to shareholders. This could have the effect of increasing the effective income tax rate applicable to such income in comparison to the current effective income tax rate on ElectraMeccanica’s income. Post-Arrangement restructuring may help to mitigate this risk, but there can be no guarantee that any such restructuring transactions will not themselves be taxable.
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Changes in tax law could have a material impact on the Combined Company
Changes to the U.S. and Canadian federal income tax laws are proposed regularly and there can be no assurance that, if enacted, any such changes would not have an adverse impact on the Combined Company. For example, President Biden has suggested the reversal or modification of some portions of 2017 U.S. tax legislation and certain of these proposals, if enacted, could result in a higher U.S. corporate income tax rate than is currently in effect and thereby increase the effective tax rate of the Combined Company following the Arrangement compared to current expectations. There can be no assurance that any such proposed changes will be introduced as legislation, or if they are introduced that they would be enacted, or if enacted what form they would take.
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GENERAL INFORMATION ABOUT THE ELECTRAMECCANICA MEETING AND VOTING
Date, Time and Place
The ElectraMeccanica Meeting will be held online on [•], 2024 at [•] (Pacific time) via live audio webcast at www.virtualshareholdermeeting.com/SOLO2024SM. Online check-in will begin at [•] a.m. (Pacific time), and we encourage you to allow ample time for the online check-in procedures. To participate in the ElectraMeccanica Meeting, ElectraMeccanica Shareholders will need their unique 16-digit control number included on their ElectraMeccanica form of proxy or voting instruction form, as applicable.
Purpose of the ElectraMeccanica Meeting
At the ElectraMeccanica Meeting, ElectraMeccanica Shareholders will be asked:
1.
to consider and, if thought advisable, to pass, with or without variation, the ElectraMeccanica Arrangement Resolution, the full text of which is set forth in Appendix “C” to this Joint Proxy Statement/Circular, approving the Arrangement under Division 5 of Part 9 of the BCBCA involving, among other things, the acquisition by Xos of all of the outstanding ElectraMeccanica Shares, all as more particularly described in this Joint Proxy Statement/Circular (the “ElectraMeccanica Arrangement Proposal”);
2.
consider and vote on a proposal to approve, on an advisory (non-binding) basis, the compensation that will or may become payable to ElectraMeccanica’s named executive officers that is based on or otherwise relates to the transactions contemplated by the Arrangement Agreement (the “ElectraMeccanica Advisory Compensation Proposal”);
3.
to consider and vote on a proposal to approve an ordinary resolution (the “ElectraMeccanica Name Change Resolution”) to change the name of ElectraMeccanica from “ElectraMeccanica Vehicles Corp.” to “ElectraMeccanica North America Corp.” (the “ElectraMeccanica Name Change Proposal”); and
4.
to consider and vote on a proposal to approve any adjournment of the ElectraMeccanica Meeting, if necessary or appropriate, including to solicit additional votes in favor of the ElectraMeccanica Arrangement Proposal if there are not sufficient votes at the time of the ElectraMeccanica Meeting to approve the ElectraMeccanica Arrangement Proposal (the “ElectraMeccanica Adjournment Proposal”).
The ElectraMeccanica Arrangement Proposal, the ElectraMeccanica Advisory Compensation Proposal, the ElectraMeccanica Name Change Proposal and the ElectraMeccanica Adjournment Proposal are together referred to as the “ElectraMeccanica Proposals”.
Recommendation of the ElectraMeccanica Board