Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 1 of 64
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`MAGNANIMO DEAN LAW, APC
`Lauren A. Dean, Esq. (SBN 174722)
`5850 Canoga Avenue, Suite 400
`Woodland Hills, CA 91367
`Tel: (818) 305-3450
`Email: lauren@magdeanlaw.com
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`Attorneys for Plaintiff
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
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`ROBERT MANNING II, Derivatively on
`Behalf of EMBARK TECHNOLOGY,
`INC. (f/k/a NORTHERN GENESIS
`ACQUISITION CORP. II.),
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`Plaintiff,
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`v.
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`IAN ROBERTSON, KEN MANGET,
`CHRIS JARRATT, PAUL DALGLISH,
`ROBERT SCHAEFER, BRAD
`SPARKES, ALEX RODRIGUES,
`RICHARD HAWWA, ELAINE CHAO,
`PAT GRADY, and BRANDON MOAK,
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`Defendants,
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`Case No:
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`VERIFIED SHAREHOLDER
`DERIVATIVE COMPLAINT
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`JURY TRIAL DEMANDED
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` and,
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`EMBARK TECHNOLOGY, INC. (f/k/a
`NORTHERN GENESIS ACQUISITION
`CORP. II),
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`Nominal Defendant.
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 2 of 64
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`Plaintiff Robert Manning II (“Plaintiff”), by and through his undersigned
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`counsel, brings this action derivatively on behalf of Nominal Defendant Embark
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`Technology, Inc. (“Embark” or the “Company”). Embark was f/k/a Northern Genesis
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`Acquisition Corp. II (“NGA”). Plaintiff’s allegations are based upon his personal
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`knowledge as to himself and his own acts, and upon information and belief, developed
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`from the investigation and analysis by Plaintiff’s counsel, including a review of
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`publicly available information, including filings by Embark with the U.S. Securities
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`and Exchange Commission (“SEC”), press releases, news reports, analyst reports,
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`investor conference transcripts, publicly available filings in lawsuits, and matters of
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`public record.
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`NATURE OF THE ACTION
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`1.
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`This is a shareholder derivative action brought in the right, and for the
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`benefit, of Embark against certain of its former and current officers and directors
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`seeking to remedy Defendants’ (defined below) violations of state and federal law
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`that began on or about January 1, 2021 and continued through the present (the
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`“Relevant Period”), and which have caused substantial harm to the Company.
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`JURISDICTION AND VENUE
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`2.
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`This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331
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`because Plaintiff’s claims raise a federal question under Section 14(a) of the Exchange
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`Act (15 U.S.C. § 78n(a)(1)), Rule 14a-9 of the Exchange Act (17 C.F.R. § 240.14a-
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`9), and Section 21D of the Exchange Act (15 U.S.C. § 78u-4(f)).
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`3.
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`This Court has supplemental jurisdiction over Plaintiff’s state law claims
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`pursuant to 28 U.S.C. § 1367(a).
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`4.
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`This derivative action is not a collusive action to confer jurisdiction on a
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`court of the United States that it would not otherwise have.
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`5.
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`The Court has personal jurisdiction over each of the Defendants because
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`each Defendant is either a corporation with principal executive offices in this District
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`and conducting business and maintaining operations in this District, or he or she is an
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 3 of 64
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`individual who is a citizen of California or who has minimum contacts with this
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`District to justify the exercise of jurisdiction over them.
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`6.
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`Venue is proper in this District pursuant to 28 U.S.C. §§ 1391 and 1401
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`because a substantial portion of the transactions and wrongs complained of herein
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`occurred in this District, Defendants have conducted business in this District,
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`Defendants’ actions have had an effect in this District, and Embark is headquartered
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`in this District.
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`BRIEF BACKGROUND
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`7.
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`NGA, a Special Acquisition Company (a “SPAC company”), had its
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`initial public offering on January 15, 2021. It sold the units at a price of $10 per unit
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`generating $414 million in gross proceeds received by the Company.
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`8.
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`The original corporate version of Embark (hereinafter, “Legacy
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`Embark”) was founded as a startup company in 2016, designed to function as an
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`autonomous vehicle company that builds software for autonomous trucks.
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`9.
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`NGA filed a merger agreement with Legacy Embark on June 22, 2021.
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`10. On November 10, 2021, NGA officially merged (the “Merger”) with
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`Legacy Embark, and changed its name to Embark Technology, Inc. The shares of
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`common stock are listed on the stock market under the symbol “EMBK.”
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`Plaintiff
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`THE PARTIES
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`11. Plaintiff Robert Manning II is, and was at relevant times, a shareholder
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`of Embark. Plaintiff will fairly and adequately represent the interests of the
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`shareholders in enforcing the rights of the corporation.
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`Nominal Defendant
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`12. Nominal Defendant Embark is a Delaware corporation, headquartered
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`at 424 Townsend Street, San Francisco, California. The Company’s shares trade on
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`the New York Stock Exchange (“NYSE”) under the ticker symbol “EMBK.
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`NGA Defendants
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 4 of 64
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`13. Defendant Ian Robertson (“Robertson”) has served on the Company’s
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`Board since November 2021. Defendant Robertson is a member of the Company’s
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`Audit and Nominating and Corporate Governance Committees. Defendant Robertson
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`served as NGA’s Chief Executive Officer (“CEO”) and a member of its Board until
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`the Merger.
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`14. Defendant Ken Manget (“Manget”) served as NGA’s Chief Financial
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`Officer (“CFO”) from before the Merger until the Merger. Manget also served on
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`NGA’s Board from June 2020 to November 2021. Defendant Manget had a non-
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`controlling interest and owned 10,350,000 founder shares of common stock.
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`15. Defendant Christopher Jarratt (“Jarratt”) served on NGA’s Board and
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`was Chair of the Board from November 2020 to November 2021. According to the
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`Initial Statement of Beneficial Ownership of Securities, Defendant Jarratt had a non-
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`controlling interest and owned 10,350,000 founder shares of common stock.
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`16. Defendant Paul Dalglish (“Dalglish”) served on the NGA’s Board from
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`June 2020 to November 2021. Defendant Dalglish had a non-controlling interest and
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`owned 10,350,000 founder shares of common stock
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`17. Defendant Robert Schaefer (“Schaefer”) served on NGA’s Board from
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`July 2020 to November 2021. Defendant Schaefer had a non-controlling interest and
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`owned 10,350,000 founder shares of common stock.
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`18. Defendant Brad Sparkes (“Sparkes”) served on NGA’s Board from June
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`2020 to November 2021. Defendant Sparkes had a non-controlling interest and
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`owned 10,350,000 founder shares of common stock
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`19. Defendants Robertson, Manget, Dalgish, Jarrett, Schaefer and Sparkes
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`are hereinafter referred to as the “NGA Defendants.”
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`Embark Defendants
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`20.
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` Defendant Alex Rodrigues (“Rodrigues”) is the CEO of Embark and
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`has served on Embark’s Board since November 2021. Defendant Rodrigues was also
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`the Co-founder and the CEO of Legacy Embark. According to the Company’s proxy
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 5 of 64
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`statement, dated April 26, 2022 (the “2022 Proxy Statement”), Defendant Rodrigues
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`beneficially owns 50,034,332 shares of the Company’s class B common stock,
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`approximately $255 million worth of Company stock. For the fiscal year ended
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`December 31, 2021 (the “2021 Fiscal Year”), Defendant Rodrigues received
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`$57,391,582 in total compensation from the Company. This included $180,000 in
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`salary and $57,211,582 in stock awards.
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`21. Defendant Richard Hawwa (“Hawwa”) has been the Company’s CFO
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`since November 2021. Defendant Hawwa served as the Legacy Embark’s CFO from
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`May 2021 until November 2021. According to the 2022 Proxy statement, Defendant
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`Hawwa owns 1,211,846 shares of the Company’s class A common stock,
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`approximately $6.2 million worth of Company stock. For the 2021 Fiscal Year,
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`Defendant Hawwa received $37,726,346 in total compensation from Embark. This
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`included $228,846 in salary, $87,500 in bonus, and $37,410,000 in stock awards.
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`22. Defendant Elaine Chao (“Chao”) has served on the Company’s Board
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`since November 2021. Defendant Chao is also a member of the Company’s Audit
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`Committee. Defendant Chao also served on the Legacy Embark’s board. According
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`to the 2022 Proxy statement, Defendant Chao owns 419,485 shares of the Company’s
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`class A common stock, approximately $2.1 million worth of Company stock. For the
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`2021 Fiscal Year, Defendant Chao received $2,427,953 in total compensation from
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`the Company. This included $100,698 in fees earned or paid in cash and $2,327,254
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`in stock awards.
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`23. Defendant Pat Grady (“Grady”) has served as a Company director since
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`November 2021. Defendant Grady was also the chair of the Board’s Compensation
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`Committee and is a member of the Board’s Corporate Governance Committee.
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`According to the 2022 Proxy statement, Defendant Grady beneficially owned
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`53,886,635 shares of the Company’s class A common stock which accounts for 14.9%
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`of Embark’s total Common A stock, approximately $275 million worth of Company
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`stock.
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 6 of 64
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`24. Defendant Brandon Moak (“Moak”)
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`is
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`the Company’s Chief
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`Technology Officer and has served as a Company director since November 2021.
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`Defendant Moak is also co-founder of Legacy Embark and served as its Chief
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`Technology Officer. According to the 2022 Proxy statement, Defendant Moak owns
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`37,044,649 shares of the Company’s class B common stock, approximately $189
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`million worth of Company’s stock. For the 2022 Fiscal Year, Defendant Moak
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`received $30,985,652 in total compensation from Embark. This included $180,000 in
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`salary and $30,805,652 in stock awards.
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`25. Defendants Rodrigues, Hawwa, Chao, Grady, Moak are collectively
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`referred to as the “Embark Defendants”.
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`26. The NGA Defendants and the Embark Defendants are collectively
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`referred to as “the Individual Defendants” and with Nominal Defendant Embark,
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`collectively “the Defendants.”
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`FACTS
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`Background of NGA and the Merger
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`27. A SPAC is a public shell company that is created to acquire private
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`operating companies with the intention to bring those private operating companies
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`public. SPACs are also referred to as a “blank check company” because it has cash,
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`but no business operations other than the intention to acquire another operating
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`company.
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`28. A SPAC IPO is often structured to offer investors a unit of securities
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`consisting of (i) shares of common stock and (ii) warrants. A warrant is a contract
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`that gives the holder the right to purchase from the company a certain number of
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`additional shares of common stock in the future at a certain price, often a premium to
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`the current stock price at the time the warrant is issued.
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`29.
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`In a SPAC IPO, investors put their capital into a listed company that does
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`not actually conduct any commercial activities. Because the business the SPAC will
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`be acquiring is unknown at the time of the IPO, the investors in the IPO are essentially
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 7 of 64
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`placing trust in the incorporators and management of the SPAC. A SPAC does not
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`have operations or assets other than cash and limited investments. It offers securities
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`for cash and places substantially all the offering proceeds into a trust or escrow
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`account for future use in the acquisition of one or more private operating companies.
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`30. The SPAC will identify target companies and attempt to complete one
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`or more business combination transactions, after which, the SPAC will continue the
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`operations of the acquired company or companies as a public company. A SPAC
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`typically provides an 18-to-24-month period to identify and complete an initial
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`business combination transaction.
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`31. The incorporation documents or the equity agreements of a SPAC
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`requires the public shareholders of the SPAC to vote on a transaction. That triggers
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`pre-merger regulatory filings with financial reporting and disclosures. SPACs are
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`regulated by the SEC and are required to follow Generally Accepted Accounting
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`Principles (“GAAP”).
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`32. According to the GAAP guidelines, for an entity to determine whether
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`to classify shares issued in the legal form of equity as liability instruments, it needs to
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`consider if it represents (i) mandatorily redeemable financial instruments under ASC
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`480-10-25-14 or (ii) unconditional obligations to deliver a variable number of equity
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`shares that are liabilities under ASC 480-10-25-14. As SPACs are regulated by the
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`SEC and need to register with the SEC, they need to consider the possibility that
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`shares issued in the legal form of equity may require classification as temporary equity
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`instruments under ASC 480- S99-3A if they are redeemable: (a) at a fixed or
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`determinable price on a fixed or determinable date, (b) at the option of the holder, or
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`(c) upon the occurrence of an event that is not solely within the control of the issuer
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`33. NGA, a SPAC company, had its initial public offering on January 15,
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`2021. It sold the units at a price of $10 per unit generating $414 million in gross
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`proceeds received by the Company.
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 8 of 64
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`34. NGA filed a prospectus with the SEC in connection with the Company’s
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`IPO, which the prospectus stated that its management team has significant experience
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`in identifying and acquiring a business. It further stated that for evaluating
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`prospective businesses, NGA will conduct a thorough due diligence review to
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`determine if the business is worth acquiring or not. NGA’s purpose was to acquire a
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`business that had an ability to succeed if it were managed by NGA’s team, network,
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`and expertise.
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`35. Legacy Embark was founded as a startup company in 2016, designed to
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`function as an autonomous vehicle company that builds software for autonomous
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`trucks.
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`36. NGA filed a merger agreement with Legacy Embark on June 22, 2021.
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`NGA and Legacy Embark issued a joint press release on June 23, 2021, in which the
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`Company assured the market that it will work with Legacy Embark and make sure it
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`transitions to a “great public company.”
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`37. On November 10, 2021, NGA officially merged (the “Merger”) with
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`Legacy Embark, and changed its name to Embark Technology, Inc. The shares of
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`common stock were listed on the stock market under the symbol “EMBK.” On
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`November 18, 2021, the closing sale price of shares of the Class A common stock
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`was $7.17. Company’s warrants were listed on the stock market under the symbol
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`“EMBKW.” On November 18, 2021, the closing sale price of the warrants was $1.34.
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`NGA Misclassified Material Information in its Financial Reports
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`Leading up to the IPO (the Misclassification Misconduct)
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`38. A SPAC charter often has a provision that provides the SPAC cannot
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`redeem public shares that would cause its net tangible assets to be less than US
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`$5,000,001 following such redemptions. NGA had the same provision in its charter.
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`NGA’s Registration Statement, stated that under the NGA Existing Charter, public
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`holders of NGA public shares may elect to have their NGA public shares redeemed
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`for cash at the applicable redemption price per share equal to the quotient obtained by
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 9 of 64
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`dividing (i) the aggregate amount on deposit in the Trust Account as of two business
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`days prior to the consummation of the Business Combination (including interest net
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`of taxes payable), by (ii) the total number of NGA public shares (the “Redemption
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`Payment”); provided that NGA will not redeem any shares of NGA Common Stock
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`to the extent that such redemption would result in NGA having net tangible assets (as
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`determined in accordance with Rule 3a51-1(g) (1) of the Exchange Act) of less than
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`$5,000,001. As of 2021, the Redemption Payment would have amounted to
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`approximately $10.00 per share.
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`39. The Company, however, later admitted that the redeemable shares
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`described in its financial statements that were issued as of January 15, 2021 and March
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`31, 2021 were not correctly classified. NGA incorrectly classified the portion of its
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`public shares as permanent equity so it could maintain stockholders’ equity greater
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`than $5,000,000. It was necessary for NGA to maintain its stockholders’ equity above
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`$5,000,000 because NGA could only complete its Merger with Legacy Embark if
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`NGA had net tangible assets if at least $5,000,001 under its charter. Thus, in order to
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`continue to exist as a SPAC company, NGA incorrectly classified some of its public
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`shares as “shares not subject to redemption.” This misconduct is referred to herein as
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`the “Misclassification Misconduct.”
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`40. An entity can classify its securities in one of the following three
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`categories: liability, permanent equity, and temporary equity. The classification on
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`the balance sheet is important because it affects a company’s financial statements. If
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`a company classifies its securities as a liability, then the return on investment is
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`reflected in the net income category, whereas if a company classifies its securities as
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`equity, then the returns on investment are generally reflected in the equity category,
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`without having any impact on the net income.
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`41.
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`In addition, when the securities are classified as temporary equity, it may
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`affect an entity’s reported earnings per shares (“EPS”) because adjustments to the
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 10 of 64
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`redemption amount are often treated as dividends which can change the proper
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`method and outcome in calculating the EPS.
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`42. EPS is a fundamental measure of the health and profitability of any
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`corporation. EPS is a financial ratio that calculates how much earnings a company is
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`generating per share. In other words, it is a measurement used to inform shareholders
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`how much money they would likely receive if the company were to be liquidated.
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`However, the NGA Defendants’ Misclassification Misconduct directly affected
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`NGA’s EPS.
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`The Overpayment Misconduct
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`43. As noted above, NGA had no operations of its own, but instead sought
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`to combine with an operating company and take on that company’s operations as its
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`own. In such a transaction, the operating company, here Legacy Embark, benefits
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`from the business combination by getting access to the investment funds raised by the
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`SPAC, here NGA, without being subjected to the more formal requirements imposed
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`in bringing a private company public via the initial public offering process (“IPO”).
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`The SPAC, here NGA, benefits if the combination with the target company is prudent
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`and enhances the value of the SPAC’s shares.
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`44. According to the Merger agreement filed on June 22, 2021, NGA agreed
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`to acquire Legacy Embark for a base purchase price of $4.25 billion. Pursuant to the
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`Preliminary Proxy Statement, the terms of the merger agreement between NGA and
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`Legacy Embark provided, inter alia, as follows:
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`[E]ach share of Embark common stock that is issued and
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`outstanding immediately prior to the Effective Time (other than (i) any
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`shares of Embark common stock subject to Embark Awards or warrants,
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`(ii) any share of Embark common stock held in the treasury of Embark
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`immediately prior to the Effective Time (“Treasury Shares”), which shall
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`be canceled as part of the Business Combination, and (iii) any shares of
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`Embark common stock electing to demand statutory appraisal rights due
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 11 of 64
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`to the Business Combination (“Dissenting Shares”)) (collectively, the
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`“Exchange Shares”), will be canceled and converted into the right to
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`receive the applicable portion of the number of shares of Embark
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`Technology Common Stock equal to an exchange ratio equal to the
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`quotient of (i) (a) the base purchase price of $4,250,000,000 (as adjusted
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`pursuant to the terms of the Merger Agreement) divided by (b) $10.00
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`(the “Aggregate Merger Consideration”) and the Aggregate Fully
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`Diluted Company Common Shares (as defined in the Merger
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`Agreement) (the “Exchange Ratio”). Each holder of Exchange Shares
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`shall have its Exchange Shares converted into either (i) Embark
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`Technology Class A Common Stock, or (ii) Embark Technology Class
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`B Common Stock.
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`45. The Merger closed on November 10, 2021, on the terms set forth in the
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`Merger agreement. NGA acquired all of the outstanding equity interests of Legacy
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`Embark for approximately $4.25 billion in aggregate consideration.
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`46. These terms were unfavorable and unreasonable to NGA’s shareholders,
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`given that Legacy Embark suffered from numerous financial and operational
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`deficiencies. A report issued by The Bear Cave (the “Bear Cave Report”)) published
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`on January 6, 2022 stated that “Embark appears to lack true economic substance,” and
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`that the “company holds no patents, has only a dozen or so test trucks, and may be
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`more bark than bite.” The Bear Cave Report further stated that Embark’s technology
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`underlying its business operations was based on puffery rather than actual substance.
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`47. All those issues made Legacy Embark a less valuable acquisition than
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`NGA’s shareholders were led to believe.
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`48. Legacy Embark relied heavily on its trade secrets and technological
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`methods to run its business, but it held no patents. Legacy Embark relied on the fact
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`that it could keep its competitors from reverse engineering its products. If Legacy
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`Embark’s trade secrets were to be disclosed in the future or a third-party reverse
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 12 of 64
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`engineered the technology Legacy Embark heavily relied on, Legacy Embark had no
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`right to prevent a third party from using it.
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`49. Furthermore, the autonomous driving technology is highly complex and
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`new. The industry faces significant regulatory and technological challenges. Legacy
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`Embark’s autonomous driving technology and related hardware and software could
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`have undetected defects, errors or bugs in hardware or software. If any of these
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`potential defects materialized, Embark would incur significant development, repair,
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`and replacement costs. Not only that, but also it exposed Embark to tremendous
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`future litigation costs including breach of contract, product liability, and tort liability.
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`The Merger Prospectus stated that:
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`Additionally, there may be undetected errors or defects especially
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`as it introduces new systems or as new versions are released. These risks
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`are particularly significant in the freight transport market given the high
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`potential value of each load, as any such errors or defects could result in
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`costly delays or losses, leading to the delay or prevention of the adoption
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`of autonomous driving technology in trucks. There can be no assurance
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`that Embark will be able to detect and fix any defects in its products prior
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`to their sale to or installation for customers. Errors or defects could result
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`in costly delays or losses, leading to the delay or prevention of the of the
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`adoption of autonomous driving technology in trucks. There can be no
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`assurance that Embark will be able to detect and fix any defects in its
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`products prior to their sale to or installation for customers. Errors or
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`defects in Embark’s product may only be discovered after they have been
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`tested, commercialized, and deployed.
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`50. NGA Defendants knew or should have known that Legacy Embark’s
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`management team and existing Board had limited experience managing a public
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`company. Defendant Robertson was the only NGA member that served on the Board
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`of Embark. The Merger Prospectus stated that:
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 13 of 64
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`Legacy Embark may be subject to risks associated with potential
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`future strategic alliances, partnerships, investments or acquisitions, all of
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`which could divert management’s attention, result in Embark incurring
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`significant or acquisitions, all of which could divert management’s
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`attention, result in Embark incurring significant costs or operating
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`difficulties and dilution to its stockholders, disrupt its operations and
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`adversely affect its business, results of operations or financial condition.
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`51.
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`In light of these issues, the NGA Defendants breached their fiduciary
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`duties to NGA by causing NGA to merge with Legacy Embark on terms that were
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`unfavorable to the Company and its pre-Merger shareholders.
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`52. Furthermore, it was highly likely that if Legacy Embark’s autonomous
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`vehicle technologies fail to perform as expected, were inferior to those of its
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`competitors, or were perceived as less safe or more expensive than those of its
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`competitors or non-autonomous vehicles, Embark’s financial performance and
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`prospects would be adversely impacted in the future.
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`53. The NGA Defendants were required to know the true state of Legacy
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`Embark’s operation and financial prospects prior to the Merger in the course of
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`conducting due diligence. However, despite knowing the poor state of affairs at
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`Legacy Embark and the heightened risk of future problems, NGA Defendants agreed
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`to the Merger.
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`54.
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`In breach of their fiduciary duties to the Company, the NGA Defendants
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`engaged in the Overpayment Misconduct by causing NGA to acquire Legacy Embark
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`on unfavorable terms despite the fact that, inter alia: (i) Legacy Embark had no
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`patents or significant testing trucks; (ii) Legacy Embark was working with
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`autonomous driving technology that is highly complex and faced significant
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`regulatory and technological challenges; and (iii) Legacy Embark had an unproven
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`business model and limited operating experience.
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`FALSE AND MISLEADING STATEMENTS
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 14 of 64
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`July 2, 2021 Registration Statement, Proxy Statement and Prospectus
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`55. On July 2, 2021, NGA filed its Registration Statement. The Registration
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`Statement was signed by Defendants Robertson, Manget, Jarratt, Dalglish, Schaefer,
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`and Sparkes.
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`56. The Registration Statement included a Preliminary Proxy Statement and
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`a prospectus. Defendants Robertson, Manget, Jarratt, Dalglish, Schaefer and Sparkes
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`solicited the preliminary Proxy Statement filed pursuant to Section 14(a) of the
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`Exchange Act, which contained material misstatements and omissions.
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`57. On August 31, 2021, September 23, 2021 and October 10, 2021, NGA
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`filed amendments to its Registration Statement (the “Amendments to the Form S-4”).
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`58. The Preliminary Proxy Statement stated the following with regards to
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`the Code of Ethics:
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`NGA has adopted a code of ethics that applies to all of its
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`executive officers, directors, and employees. The code of ethics codifies
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`the business and ethical principles that govern all aspects of its business.
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`59. The Preliminary Proxy Statement further stated:
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`Embark Technology will have a code of ethics that applies to all
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`of its executive officers, directors and employees, including its principal
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`executive officer, principal financial officer, principal accounting officer
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`or controller or persons performing similar functions. The code of ethics
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`will
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`be
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`available
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`on
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`Embark
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`Technology’s website,
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`http://Embark.com/investors. Embark Technology intends to make any
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`legally required disclosures regarding amendments to, or waivers of,
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`provisions of its code of ethics on its website rather than by filing a
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`Current Report on Form 8-K.
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`60. With regards to NGA’s Merger with Legacy Embark, the Preliminary
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`Proxy Statement presented the proposal for the Merger stating that:
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 15 of 64
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`Proposal No. 1 — The Business Combination Proposal — to
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`consider and vote upon a proposal to approve and adopt the Agreement
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`and Plan of Merger, dated as of June 22, 2021 (the “Merger
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`Agreement”), by and among NGA, NGAB Merger Sub Inc. (“Merger
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`Sub”), a Delaware corporation and wholly owned subsidiary of NGA
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`and Embark Trucks Inc. (“Embark”), a Delaware corporation, a copy of
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`which is attached to this proxy statement/prospectus statement as Annex
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`A. The Merger Agreement provides for, among other things, the merger
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`of Merger Sub with and into Embark (the “Merger”), with Embark
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`surviving the Merger as a wholly owned subsidiary of NGA (following
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`such date, Embark Technology), in accordance with the terms and
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`subject to the conditions of the Merger Agreement as more fully
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`described elsewhere in this proxy statement/prospectus (the “Business
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`Combination Proposal”)
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`61. The Preliminary Proxy Statement further stated that:
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`After careful consideration, the board of directors of NGA has
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`unanimously approved the Business Combination and unanimously
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`recommends that stockholders vote “FOR” adoption of the Merger
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`Agreement, and approval of the transactions contemplated thereby,
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`including the Business Combination, and “FOR” all other proposals
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`presented to NGA’s stockholders in this proxy statement/prospectus.
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`When you consider the recommendation of these proposals by the board
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`of directors of NGA, you should keep in mind that NGA’s directors and
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`officers have interests in the Business Combination that may conflict
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`with your interests as a stockholder. See the section entitled “Proposal
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`No. 1—The Business Combination Proposal — Interests of Certain
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`Persons in the Business Combination” in this proxy statement/prospectus
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`for a further discussion of these considerations.
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`Case 4:22-cv-07526-KAW Document 1 Filed 11/30/22 Page 16 of 64
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`62. Regarding the redeemable public shares, the Preliminary Proxy
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`Statement stated: “In addition, pursuant to the NGA Organizational Documents, in
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`no event will NGA redeem public shares in an amount that would cause NGA’s net
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`tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange
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`Act) to be less than $5,000,001.”
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`63. Defendants Robertson, Manget, Dalglish, Jarratt, Schaefer and Sparkes
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`caused the Preliminary Proxy Statement to be materially false and misleading, and
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`failed to disclose material facts necessary to make the statements made not false and
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`misleading.
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`64. Defendants Robertson, Manget, Dalglish, Jarratt, Schaefer, and Sparkes
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`caused the Preliminary Proxy Statement to be fal