UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 8, 2023, ElectraMeccanica Vehicles Corp. (the “Company”) entered into a settlement deed (the “Settlement Agreement”) with Chongqing Zongshen Automobile Industry Co., Ltd. (“Zongshen”), effective as of May 4, 2023. The Settlement Agreement resolves all outstanding issues relating to the Company’s manufacturing agreement with Zongshen, dated September 29, 2017 (as amended to date, the “Manufacturing Agreement”), including the notice provided by the Company to Zongshen on December 20, 2022 to cease all production of SOLO vehicles (the “Cancellation Notice”) and the notice provided by the Company to Zongshen on February 16, 2023 of potential claims against Zongshen for supplying defective products (the “Defective Notice,” and collectively with the Manufacturing Agreement and the Cancellation Notice, the “Agreement and Notices”). Pursuant to the Manufacturing Agreement, Zongshen had agreed to manufacture the Company’s SOLO vehicles, and the Company agreed to certain target purchase volumes for the period from June 1, 2021 to November 30, 2023.
Pursuant to the Settlement Agreement, the Company has agreed, among other things, to (i) pay Zongshen $8.0 million in cash, (ii) forfeit $7.1 million in previously paid deposits to Zongshen, and (iii) provide Zongshen $1.0 million in the form of claims to certain agreed upon vendor owned vehicle parts, in full and final settlement, satisfaction, discharge and release of all claims that were or could have been brought relating to the Agreement and Notices. The Company is required to pay the cash portion of the settlement amount within 10 business days of the effective date of the Settlement Agreement. The parties have also agreed to provide mutual releases of all claims relating to the Agreement and Notices. Additionally, the parties have agreed to certain winding down obligations, including with respect to completed SOLO vehicles and SOLO parts in Zongshen’s possession, and to certain undertakings regarding non-disparagement.
The foregoing description of the Settlement Agreement is a summary only and is qualified in its entirety by reference to the complete text of the Settlement Agreement, a copy of which is attached as Exhibit 10.1 hereto and incorporated herein by reference.
| Item 1.02 | Termination of a Material Definitive Agreement. |
In connection with entering into the Settlement Agreement, the parties terminated the Manufacturing Agreement. The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.02.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit | |
| Number | Description |
| 10.1 | Settlement Deed, dated May 8, 2023, between ElectraMeccanica Vehicles Corp. and Chongqing Zongshen Automobile Industry Co., Ltd. |
| 104 | Cover Page Interactive Data File (cover page XBRL tags are embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: May 12, 2023 | ELECTRAMECCANICA VEHICLES CORP. | |
| By: | /s/ Michael Bridge | |
| Michael Bridge | ||
| General Counsel and Corporate Secretary | ||