IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
`
`)
`
`
`)
`
`IN RE MOMENTUS, INC.
`)
`CONSOLIDATED
`STOCKHOLDERS LITIGATION
`)
`C.A. No. 2022-1023-PAF
`)
`)
`SRAC DEFENDANTS’ ANSWER TO
`VERIFIED CLASS ACTION COMPLAINT
`Defendants Brian Kabot, James Hofmockel, Ann Kono, Marc Lehmann,
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`James Norris, Juan Manuel Quiroga, SRC-NI Holdings, and Eward K. Freedman
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`(collectively, “SRAC Defendants”), by and through their undersigned counsel,
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`hereby answer the operative Verified Class Action Complaint in the above-captioned
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`action as set forth below. All allegations not expressly admitted are denied, including
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`any section headings and footnotes of the Complaint. SRAC Defendants’ use of
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`allegations and phrases set forth in the Complaint is not a concession of the veracity
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`of any allegation or inference in the Complaint. SRAC Defendants reserve the right
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`to amend this pleading at any time up to the beginning of trial.
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`- 1 -
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`EFiled: Oct 11 2024 04:58PM EDT
`Transaction ID 74741856
`Case No. 2022-1023-PAF
`
`

`

`NATURE OF THE ACTION
`Too many of the public companies created by the 2019-2021 vintage of
`1.
`the Special Purpose Acquisition Company (“SPAC”) structure have objectively
`destroyed massive amount of investor value. What was previously a reasonable way
`for startup companies with real business prospects to become publicly traded outside
`of the traditional IPO process devolved into a frenzy of hucksters, celebrities and
`professional athletes chasing windfall returns by becoming SPAC sponsors and
`paying no heed to their fiduciary obligations.1
`ANSWER: SRAC Defendants are without knowledge or information
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`sufficient to form a belief as to the truth of the allegations in this paragraph and thus
`
`deny them on that basis.
`
`Unfortunately, the grab for fast money at the core of the 2019-2021
`2.
`frenzy in the SPAC market all too often left public investors stuck with dead
`investments in companies that should never be public, but achieved that status based
`on financial engineering and false projections about hypothetical business models.2
`ANSWER: SRAC Defendants are without knowledge or information
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`sufficient to form a belief as to the truth of the allegations in this paragraph and thus
`
`deny them on that basis.
`
`Although poor to non-existent governance prevailed at so many
`3.
`SPACs, this case may well represent the single most extreme instance of fiduciaries
`recommending a patently unfair de-SPAC merger to their common stockholders
`when any hint of diligence and loyalty would compel the board to affirmatively
`
`
`1 See Amrith Ramkumar, The Celebrities from Serena Williams to A-Rod Fueling the SPAC
`Boom, WALL ST. J. (Mar. 17, 2021), https://www.wsj.com/articles/the-celebrities-from-
`serena-williams-to-a-rod-fueling-the-spac-boom-11615973578.
`2 See Complaint, Newbold v. McCaw (Del. Ch. 2022) (No. 2022-0439) (challenging a
`SPAC merger with an “untested and unproven” space rocket company); Complaint,
`Herbert v. Hamamoto (Del. Ch. 2021) (No. 2021-1066) (challenging a SPAC merger with
`a company purportedly developing a fleet of electric pick-up trucks).
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`- 2 -
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`recommend redemption (or simply allow the orderly and imminent liquidation of the
`SPAC trust account). The facts known to the fiduciary-defendants in this case make
`their recommendation that stockholders approve the merger rather than take back
`their money so absurd that it could be the plot for a Saturday Night Live skit mocking
`the 2019-2021 SPAC industry.
`ANSWER: Denied.
`
`The SPAC at issue here is Stable Road Acquisition Corp. (“SRAC”). It
`4.
`was founded (and sponsored) by self-described experts in the cannabis field, Brian
`Kabot (“Kabot”) and Juan Manuel Quiroga (“Quiroga”). SRAC was controlled by a
`sponsor, SRC-NI Holdings, LLC (the “Sponsor”), which, in turn, was controlled by
`its three managing members: Kabot, Quiroga, and Edward K. Freedman
`(“Freedman”) (collectively, the “Controller Defendants”). In addition to controlling
`SRAC’s Sponsor, Kabot and Quiroga also installed themselves as officers of SRAC,
`with Kabot serving as CEO and Chairman of the Board, and Quiroga serving as CIO
`and Secretary. Freedman also founded and leads Stable Road Capital, the investment
`vehicle that created and appears to operate SRAC’s Sponsor, SRC-NI Holdings,
`which, in turn, controls SRAC.
`ANSWER: SRAC Defendants admit that the Sponsor is the sponsor of
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`SRAC and that in or around June 2019 the Sponsor purchased 4,312,500 shares of
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`SRAC’s Class B common stock and/or otherwise contributed working capital to
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`fund SRAC from inception through a business combination. SRAC Defendants
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`further admit that (i) Kabot, Freedman, and Quiroga were managing members of the
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`Sponsor, (ii) Kabot served as CEO and Chairman of the Board and Qurioga served
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`as CIO and Secretary of SRAC, and (iii) Freedman was the sole member of Stable
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`Road Capital, LLC. SRAC Defendants otherwise deny any and all allegations in this
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`paragraph.
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`On November 13, 2019, SRAC completed its initial public offering
`5.
`(“IPO”), selling 17.25 million units to public investors at $10 per unit (consisting of
`one share of Class A common stock and one half of one warrant, exercisable at
`$11.50 per share), raising gross proceeds of $172.5 million.
`ANSWER: Admitted.
`
`Prior to the IPO, SRAC issued “Founder Shares” to the Sponsor
`6.
`convertible into 20% of SRAC’s post-IPO equity in exchange for nominal
`consideration of $25,000 or approximately $0.006 per share. The Sponsor also
`bought 495,000 Private Placement Units, which enjoyed no redemption rights. Like
`the Founder Shares, the Private Placement Units were worthless if SRAC was forced
`to liquidate.
`ANSWER: SRAC Defendants admit that the Sponsor purchased 4,312,500
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`shares of Class B common stock, with certain defined conversion rights, in a private
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`placement prior to the IPO for an aggregate purchase price of $25,000 in cash, or
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`approximately $0.006 per share, with the expectation that such founder shares would
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`represent 20% of the outstanding shares upon completion of an IPO. SRAC
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`Defendants further admit that, simultaneously with the IPO, the Sponsor purchased
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`495,000 Private Placement Units at a price of $10.00 per unit, for an aggregate price
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`of $4,950,000. Answering further, the Proxy disclosed to SRAC’s shareholders that
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`both the Class B common stock and the Private Placement Units would become
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`“worthless” if SRAC failed to complete a business combination. SRAC Defendants
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`otherwise deny any and all allegations in this paragraph.
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`In turn, ensuring alignment of the interests of the Controller Defendants
`7.
`and the non-Controller Defendant directors, the Sponsor provided each member of
`the Board with interests in the Sponsor, and thus, effectively, in the Founder Shares,
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`- 4 -
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`rendering each fiduciary’s interests in conflict with those of the public stockholders
`when it came to prioritizing a merger in order to reap the value of their Founder
`Shares.
`ANSWER: SRAC Defendants admit that the Proxy disclosed that each of
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`SRAC’s officers and directors is, directly or indirectly, a member of the Sponsor
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`with equity interest in the Sponsor, and beneficially a portion of the Class B common
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`stock owned by the Sponsor. SRAC Defendants otherwise deny the allegations in
`
`this paragraph.
`
`SRAC’s charter provided that SRAC would have 18 months within
`8.
`which to consummate a “de-SPAC” merger (unless its shareholders voted to approve
`an extension). If SRAC failed to merge within its permitted lifespan, the charter
`provided that it would liquidate and return all IPO proceeds to is public stockholders.
`Hence, the Sponsor and the directors would have preferred any merger – even an
`objectively value-destroying deal for public stockholders – over liquidation.
`ANSWER: SRAC Defendants admit the allegations in the first and second
`
`sentences of this paragraph, but deny the allegations in the third sentence of this
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`paragraph. Answering further, the Proxy disclosed to stockholders the potential
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`differences in interests between the Sponsor and/or certain of SRAC’s directors and
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`officers, on the one hand, and public stockholders, on the other.
`
`Despite the SRAC founders’ expertise in the cannabis space, they
`9.
`struggled to identify an attractive de-SPAC target. With liquidation on the horizon,
`the Controller Defendants shifted their focus to a new industry.
`ANSWER: SRAC Defendants admit that SRAC initially made efforts to
`
`identify a merger candidate focused on the cannabis industry, but ultimately decided
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`not to pursue a target in that space and later began to consider other early-stage
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`growth companies. SRAC Defendants otherwise deny any and all allegations in this
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`paragraph.
`
`10. After a cursory effort that would not meet anybody’s definition of due
`diligence (including, as it turns out, the SEC’s), SRAC’s Board proposed to acquire
`Legacy Momentus, a private business supposedly owning a technology permitting
`water-propulsion-based space transportation. Legacy Momentus’s technology
`sounded more like science fiction than a means to move satellites through space.
`Indeed, even basic questioning by the Board about what Momentus claimed to be
`able to provide in a deal would leave it clear that the scientific community has long
`expressed serious doubts about the foundational concept underlying Momentus’s
`supposed business model, and neither Momentus nor any other company had ever
`shown the technology to be commercially viable.
`ANSWER: SRAC Defendants admit that SRAC’s Board proposed that the
`
`Company’s stockholders approve a business combination with Legacy Momentus.
`
`SRAC Defendants otherwise deny any and all allegations in this paragraph.
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`11. Anybody respecting their fiduciary obligations would conduct proper
`due diligence to ensure proof of viability before recommending the acquisition of
`such a novel and unproven technology. The SRAC’s Board’s complete lack of any
`process, much less a fair or diligent one, is just the start of their failures.
`ANSWER: This paragraph contains conclusions of law to which no response
`
`is required. To the extent a response is required, SRAC Defendants deny the
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`allegations. SRAC Defendants deny the remaining allegations in this paragraph.
`
`12. Mikhail Kokorich (“Kokorich”), Legacy Momentus’s founder,
`controlling stockholder, and then-CEO, is a Russian national with opaque ties to
`Russian military and intelligence agencies. These ties were serious enough that,
`following the Merger announcement, the U.S. Department of Defense threatened to
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`block the deal unless Momentus severed its ties to Kokorich. Any fiduciary paying
`the slightest bit of attention (and putting loyalty ahead of greed) would have thought
`thrice before merging with Kokorich’s company.
`ANSWER: SRAC Defendants admit that (i) Kokorich is a Russian citizen
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`residing in Switzerland during the relevant time period, (ii) Kokorich founded
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`Legacy Momentus and served as its CEO from 2017 until he resigned on or around
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`January 25, 2021, and (iii) the U.S. Department of Defense raised concerns about
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`Kokorich’s association with Legacy Momentus, which prompted Kokorich to resign
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`and place his Legacy Momentus stock in a voting trust. SRAC Defendants deny the
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`remaining allegations in this paragraph.
`
`13. Kokorich was eventually forced out of Momentus’s leadership when
`the government’s investigation because public (but well after SRAC and the Board
`knew about it).
`ANSWER: SRAC Defendants admit that, in or around January 2021, SRAC
`
`became aware of correspondence from the Department of Defense stating its
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`concerns with Kokorich’s association with Legacy Momentus and that Kokorich
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`resigned as CEO of Legacy Momentus on or around January 25, 2021 to address
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`these issues. SRAC Defendants deny the remaining allegations in this paragraph.
`
`14. Nevertheless, SRAC’s founders (who controlled SRAC’s Sponsor and
`who also served as SRAC’s executive officers) continued to unequivocally (and
`fraudulently) tout the revolutionary promise of Momentus’s space-borne water
`propulsion technology. The Board was, again, nowhere to be found.
`ANSWER: Denied.
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`15. SRAC’s public statements about Momentus were so patently fraudulent
`that the U.S. Securities and Exchange Commission (“SEC”) – despite passively
`permitting a wide range of flawed disclosures in almost all other de-SPAC
`transactions – found itself compelled to investigate the deal itself.
`ANSWER: SRAC Defendants state the SEC informed SRAC in or around
`
`January 2021 that it was investigating disclosures made in fillings with the SEC, but
`
`otherwise deny the allegations in this paragraph.
`
`In April 2021, amidst the delays caused by the Pentagon’s concerns that
`16.
`Kokorich might be a Russian asset, the SEC’s investigations of SRAC’s fraudulent
`public disclosures, and the reality that Momentus was not a viable space transport
`business, SRAC’s Board had to decide whether to seek an extension of SRAC’s
`imminent deal-completion deadline (thus salvaging their potential windfall via their
`holdings of Founder Shares) or to do what their fiduciary duties required and give
`SRAC’s public stockholders back their money via liquidation.
`ANSWER: SRAC Defendants state that SRAC filed a definitive proxy
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`statement on or around April 9, 20221 soliciting stockholder approval to extend the
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`period of time for which SRAC was required to consummate a business combination
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`from May 13, 2021 to August 13, 2021. SRAC Defendants deny the remaining
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`allegations in this paragraph.
`
`17. Any fiduciary acting in good faith while facing such obvious indicia
`that an intended acquisition target is a fraud (or worse) will rely on their
`sophisticated and
`independent
`legal counsel
`to advise
`their contractual
`commitments, their fiduciary duties and the imperative of putting the common
`stockholders’ interests ahead of personal greed. Even the worse of SPAC boards
`have at least nominally obtained independent legal advice. Not this one.
`ANSWER: This paragraph contains conclusions of law to which no response
`
`is required. To the extent a response is required, SRAC Defendants deny the
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`- 8 -
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`allegations in this paragraph, except they admit that fiduciaries owe duties of loyalty
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`and care governed by Delaware law.
`
`18. SRAC’s Board retained Kirkland & Ellis (“K&E”) as the Company’s
`legal advisor in connection with the merger. Despite specific requests during the
`Section 220 process, the Company could not provide any evidence that K&E (or any
`of the Sponsor-affiliated Defendants) disclosed to the Board at any time before the
`Proxy that K&E partners, likely through a standalone captive investment vehicle
`named Randolph Street Ventures LLC (“Randolph Street”),3 held millions of dollars
`to investments in the Sponsor. Besides fees received in connection with the Merger,
`K&E partners owned at least 430,985 founder Shares and 198,020 warrants to
`purchase SRAC Class A common stock through Randolph Street.
`ANSWER: SRAC Defendants state that K&E was retained as legal counsel
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`in connection with the proposed business combination and that SRAC’s registration
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`statements and proxies disclosed that certain partners of K&E were investors in the
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`Sponsor. The second sentence of this paragraph purports to characterize certain
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`pleadings, filings, or other related documents related to a proceeding initiated
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`pursuant to 8 Del. C. § 220 and captioned Burk v. Momentus, Inc., No. 2022-0519-
`
`PAF (the “Burk Materials”), and SRAC Defendants deny any and all allegations that
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`mischaracterize the Burk Materials and respectfully refer the Court to these
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`documents for a complete and accurate description of their content.
`
`19. SRAC’s disclosure of this conflict in the Proxy was obscure – a single
`sentence at the end of the document in the inconspicuously-titled “Certain Legal
`
`
`3 Will Louch, Silas Brown, & Jan-Henrik Foerster, Private Equity’s Top Lawyers Enjoy
`Prized Access to Buyout Funds, BLOOMBERG (July 29, 2022), https://www.bloomberg
`.com/news/articles/2022-07-29/private-equity-s-top-lawyers-enjoy-prized-access-to-buyout-
`funds?leadSource=uverify%20wall.
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`Matters” section. The materiality of such an unused and serious conflict should not
`be minimized.
`ANSWER: Denied.
`
`20. Put simply, the gatekeepers advising the Board about their fiduciary
`obligations when looking to buy an unproven business run by questionable
`management were themselves financially interested in the Board failing to perform
`their basic fiduciary duty.
`ANSWER: Denied.
`
`21. And so, instead of ending SRAC’s misguided existence and giving the
`common stockholders their money back, the SRAC Board sought an extension. On
`April 9, 2021, SRAC issued a definitive proxy (the “First Proxy”) soliciting
`stockholders to vote to extend SRAC’s liquidation deadline from May 13, 2021 to
`August 13, 2021 (the “Extension Amendment”). On May 13, 2021, after being
`forced to delay the vote and then barely reaching the required voting threshold,
`Defendants bought themselves a few more months to complete a deal.
`ANSWER: SRAC Defendants state that SRAC filed a definitive proxy
`
`statement on or around April 9, 20221 soliciting stockholder approval to extend the
`
`period of time for which SRAC was required to consummate a business combination
`
`from May 13, 2021 to August 13, 2021. SRAC Defendants deny the remaining
`
`allegations in this paragraph.
`
`22. Defendants used their additional time to again serve their own self-
`interest rather than respect their duties. The First Proxy was so filled with false and
`misleading statements that it triggered the imposition of SEC sanctions again SRAC,
`Kabot, and the Sponsor, along with Momentus.
`ANSWER: Denied.
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`the SEC publicly detailed Defendants’
`23. On July 13, 2021,
`misrepresentations in a cease-and-desist order (the “SEC Order”) entered against
`Momentus, SRAC, the Sponsor, and SRAC CEO Kabot, and a civil complaint (the
`“SEC Complaint”) filed against Kokorich. According to the SEC Order and
`Complaint, among the Proxy’s many misrepresentations and omissions were that:
`(a) multiple federal agencies had determined that Momentus’s then-CEO Kokorich,
`a citizen of Russia with ties to the Russian government, posed an unacceptable
`national security risk; (b) Momentus had never successfully tested its technology in
`space; (c) Momentus’s financial projections of immediate, explosive revenue growth
`were highly misleading; and (d) SRAC’s superficial due diligence of Momentus
`failed to provide any reasonable basis for its public statements about Momentus’s
`technology and prospects.
`ANSWER: SRAC Defendants admit that a consent settlement order between
`
`the SEC and Legacy Momentus, SRAC, the Sponsor, and Kabot was published on
`
`or around July 13, 2021 (the “SEC Order”), and SRAC Defendants deny any and all
`
`allegations that mischaracterize the SEC Order and respectfully refer the Court to
`
`that document for a complete and accurate description of its content. SRAC
`
`Defendants otherwise deny any and all allegations in this paragraph.
`
`In a July 13, 2021 press release, SEC Chair Gary Gensler (“Gensler”)
`24.
`confirmed that Defendants “misled the investing public” and that SRAC had
`“fail[ed] to undertake adequate due diligence to protect shareholders.” As Gensler
`explained: “This case illustrates risks inherent to SPAC transactions, as those who
`stand to earn significant profits from a SPAC merger may conduct inadequate due
`diligence and mislead investors … [SRAC], a SPAC, and its merger target,
`Momentus, both misled the investing public.” According to the SEC, “[t]he fact that
`Momentus lied to [SRAC] does not absolve [SRAC] of its failure to undertake
`adequate due diligence to protect shareholders.”
`ANSWER: SRAC Defendants admit that the SEC published a press release
`
`concerning the SEC Order on or around July 13, 2021, and SRAC Defendants deny
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`any and all allegations that mischaracterize the SEC Order or the related press release
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`and respectfully refer the Court to these documents for a complete and accurate
`
`description of their content. SRAC Defendants otherwise deny any and all
`
`allegations in this paragraph.
`
`25. What once seemed like satire turned into tragedy. No independent
`board advised by independent counsel could conceivably recommend that SRAC
`stockholders pursue a Momentus buyout in lieu of redeeming their shares or simply
`permitting SRAC’s orderly liquidation. These Defendants, however, continued to
`pursue Legacy Momentus as an acquisition target, notwithstanding the SEC’s
`revelations.
`ANSWER: Denied.
`
`26. Defendants amended the Momentus merger agreement (the “Merger
`Agreement”) to lower the target’s nominal value (perhaps reflecting that they could
`not induce any “new money” to finance the deal). They cut the forecasts to reflect
`what they framed as regulatory delays without confronting the core problem: the
`lack of a viable technology. The outcome for SRAC’s stockholders would be their
`$10 in trust going into an unproven space transport startup without much-needed
`cash.
`
`ANSWER: SRAC Defendants admit that SRAC and Legacy Momentus
`
`executed amendments to the Merger Agreement on or around March 5, 20221, April
`
`6, 2021, and June 29, 2021, and SRAC Defendants deny any and all allegations that
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`mischaracterize these amendments or the Merger Agreement and respectfully refer
`
`the Court to these documents for a complete and accurate description of their
`
`content. SRAC Defendants otherwise deny any and all allegations in this paragraph.
`
`27. On July 23, 2021, SRAC issued its definitive proxy (the “Proxy”),
`jointly filed with Momentus and signed by Momentus’s then-CEO, Dawn Harms
`(“Harms”), which contained the Board’s inexplicable recommendation that
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`- 12 -
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`stockholders approve the Merger at a special meeting to be held on August 11, 2021.
`Stockholders were also informed of the August 9, 2021 deadline for exercising their
`right to redeem all or a portion of their shares for the return of their $10 plus interest
`(the “Redemption Deadline”).
`ANSWER: SRAC Defendants admit that SRAC’s Proxy dated July 22, 2021
`
`was (i) filed on or about July 23, 2021 pursuant to Rule 424(b)(3), (ii) mailed to
`
`stockholders on or about July 26, 2021, and (iii) signed by Harms and Kabot. This
`
`paragraph purports to characterize SRAC’s Proxy, and SRAC Defendants deny any
`
`and all allegations that mischaracterize the Proxy and respectfully refer the Court to
`
`that document and/or its supplements for a complete and accurate description of such
`
`content. SRAC Defendants otherwise deny any and all allegations in this paragraph.
`
`through
`
`still-inflated
`
`28. The Proxy contained multiple false and misleading statements and/or
`material omissions in Defendants’ efforts to ensure the Merger was consummated,
`including, inter alia, the following:
`Overstating Legacy Momentus’s value
`a)
`projections.
`b) Misrepresenting the due diligence conducted by the SRAC Board.
`Omitting material information regarding the nature and consequences
`c)
`of disabling conflicts suffered by SRAC’s legal counsel, K&E.
`Omitting the value of Founder Shares and Private Placement Units
`interests held by Defendants Norris, Lehmann, and Hofmockel.
`e) Misrepresenting the value of SRAC shares by asserting that SRAC
`shares issued in the Merger would have a “deemed value of $10.00 per
`share.” In reality and undisclosed in the Proxy, there was less than $6.00
`in net cash underlying those shares due to dilution.
`ANSWER: Denied.
`
`d)
`
`- 13 -
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`

`29. Ultimately, in breach of their fiduciary duties, the Board recommended
`the deal despite it being a far worse alternative for public stockholders than a
`liquidation. Reflecting the illusory nature of the SRAC vote and the misleading
`Proxy, the Merger was approved by a majority vote of the stockholders on August
`11, 2021, and the Merger closed on August 12, 2021.
`ANSWER: Denied.
`
`30. Today, Momentus stock trades at $0.63 per share. Former SRAC Class
`A investors’ investments are destroyed. Defendants (as well as lawyers at the firm
`advising the Board about fiduciary duties) turned almost no out-of-pocket
`investment into millions of dollars. Defendants should face accountability.
`ANSWER: Denied.
`
`PARTIES
`
`I.
`
`PLAINTIFF
`31. Plaintiff Alexander Lora owned Class A shares of SRAC from March
`2021 until the closing of the de-SPAC acquision through which SRAC acquired and
`was renamed Momentus, and has continued to hold shares through the filing of this
`Complaint.
`ANSWER: SRAC Defendants are without knowledge or information
`
`sufficient to form a belief as to the truth of the allegations in this paragraph and thus
`
`deny them on that basis.
`
`II. DEFENDANTS
`32. Defendant SRC-NI Holdings LLC (as previously defined, the
`“Sponsor”) served as the sponsor of SRAC and was at all relevant times a Delaware
`Limited Liability Company with its principal place of business in Venice, California.
`The Sponsor’s board of managers consisted of Defendants Freedman, Kabot, and
`Quiroga, all of whom were listed as beneficial owners of Sponsor stock in SEC
`filings. At the time of the Merger, the Sponsor held 4,136,029 shares of SRAC Class
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`- 14 -
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`

`

`B common stock (i.e., the Founder Shares) and, following the IPO, 495,000 Private
`Placement Units.
`ANSWER: SRAC Defendants admit the allegations in the first and second
`
`sentences of this paragraph, except that in the SEC filings Freedman, Kabot, and
`
`Quiroga each disclaimed beneficial ownership over any securities owned by the
`
`Sponsor in which he did not have any pecuniary interest. SRAC Defendants further
`
`admit the allegations in the third sentence of this paragraph, except that the Sponsor
`
`owned 495,000 Private Placement Units before and after the IPO.
`
`33. Defendant Edward K. Freedman (as defined above, “Freedman”)
`was the sole member of Stable Road Capital, LLC, and the managing member of
`SRAC Partners, which are affiliated with the Sponsor. He was also a member of the
`Sponsor’s board of managers along with Kabot and Quiroga, and was deemed as
`beneficial owner of the 4,312,500 Founder Shares held by the Sponsor.
`ANSWER: SRAC Defendants admit that Freedman was the sole member of
`
`Stable Road Capital, LLC and that Stable Road Capital, LLC was the managing
`
`member of SRAC PIPE Partners LLC, but deny that Freedman was the managing
`
`member of SRAC PIPE Partners LLC and otherwise deny any and all allegations in
`
`the first sentence of this paragraph. SRAC Defendants further admit the allegations
`
`in the third sentence of this paragraph, except that in the SEC filings Freedman
`
`disclaimed beneficial ownership over any securities owned by the Sponsor in which
`
`he did not have any pecuniary interest.
`
`34. Defendant Brian Kabot (as defined above, “Kabot”) was the CEO of
`SRAC, Chairman of the SRAC Board, and a manager of the Sponsor. Since July
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`- 15 -
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`

`

`2017, he has served as the Chief Investment Officer (“CIO”) of Stable Road Capital,
`LLC, a Sponsor-affiliated investment vehicle based in Los Angeles, California.
`According to SRAC’s IPO Prospectus filed on November 8, 2019 (the
`“Prospectus”), a substantial portion of Kabot’s business activities in the past several
`years have involved the cannabis industry, including service on the boards of Old
`Pal, LLC, a private cannabis brand company, since June 2018 and Grenco Science
`LLC, a private developer of vape pens and portable vaporizers, since July 2019.
`Kabot was a deemed a beneficial owner of the 4,312,500 Founder Shares held by the
`Sponsor and, according to the Proxy, held direct or indirect economic interests int
`its Private Placement Units as well.
`ANSWER: SRAC Defendants admit the allegations in the first sentence of
`
`this paragraph. SRAC Defendants further admit that Kabot served as CIO of Stable
`
`Road Capital, LLC from in or around July 2017 to in or around August 2021, but
`
`otherwise deny any and all allegations in the second sentence of this paragraph. The
`
`third sentence of this paragraph purports to characterize SRAC’s Prospectus, and
`
`SRAC Defendants deny any and all allegations that mischaracterize the Prospectus
`
`and respectfully refer the Court to that document and/or its supplements for a
`
`complete and accurate description of such content. SRAC Defendants further admit
`
`the allegations in the first clause of the fourth sentence of this paragraph, except that
`
`in the SEC filings Kabot disclaimed beneficial ownership over any securities owned
`
`by the Sponsor in which he did not have any pecuniary interest. The second clause
`
`of the fourth sentence of this paragraph purports to characterize SRAC’s Proxy, and
`
`SRAC Defendants deny any and all allegations that mischaracterize the Proxy and
`
`respectfully refer the Court to that document and/or its supplements for a complete
`
`and accurate description of such content.
`
`- 16 -
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`

`

`35. Defendant Juan Manuel Quiroga (as defined above, “Quiroga”) was
`the CIO and Secretary of SRAC and a manager of the Sponsor. Quiroga was deemed
`a beneficial owner of the 4,312,500 Founder Shares held by the Sponsor and,
`according to the Proxy, held direct or indirect economic interests in its Private
`Placement Units as well.
`ANSWER: SRAC Defendants admit the allegations in the first sentence of
`
`this paragraph. SRAC Defendants further admit the allegations in the first clause of
`
`the second sentence of this paragraph, except that in the SEC filings Quiroga
`
`disclaimed beneficial ownership over any securities owned by the Sponsor in which
`
`he did not have any pecuniary interest. The second clause of the fourth sentence of
`
`this paragraph purports to characterize SRAC’s Proxy, and SRAC Defendants deny
`
`any and all allegations that mischaracterize the Proxy and respectfully refer the Court
`
`to that document and/or its supplements for a complete and accurate description of
`
`such content.
`
`36. Freedman, Kabot, Quiroga and the Sponsor, as defined above, are
`collectively referred to herein as the “Controller Defendants.”
`ANSWER: This paragraph defines the term “Controller Defendants,” to
`
`which no response is required.
`
`37. Defendant James Norris (“Norris”) was the Chief Financial Officer
`(“CFO”) and a director of SRAC. Since November 2018, Norris served as CFO of
`Stable Road Capital, LLC. According to the Proxy, Norris held a “direct or indirect
`economic interest” in the Founder Shares and Private Placement Units held by the
`Sponsor. Based on SRAC’s February 22, 2022 Prospectus Supplement, Norris held
`at least 49,155 Founder Shares.
`
`- 17 -
`
`

`

`ANSWER: SRAC Defendants admit the allegations in the first sentence of
`
`this paragraph. SRAC Defendants further admit that Norris served as CFO of Stable
`
`Road Capital, LLC from in or around November 2018 to in or around July 2022, but
`
`otherwise deny any and all allegations in the second sentence of this paragraph. The
`
`third and fourth sentences of this paragraph purport to characterize SRAC’s Proxy
`
`and February 22, 2022 Prospectus Supplement, and SRAC Defendants deny any and
`
`all allegations that mischaracterize the Proxy and/or the Prospectus Supplement and
`
`respectfully refer the Court to these documents and/or their supplements for a
`
`complete and accurate description of such content.
`
`38. Defendant James Hofmockel (“Hofmockel”) was a director of SRAC.
`According to the Proxy, Hofmockel held a “direct or indirect economic interest” in
`the Founder Shares and Private Placement Units held by the Sponsor. Based on
`SRAC’s February 22, 2022 Prospectus Supplement, Hofmockel held at least
`109,447 Founder Shares and 19,960 Class A Stock warrants.
`ANSWER: SRAC Defendants admit the allegations in the first sentence of
`
`this paragraph. The second and third sentences of this paragraph purport to
`
`characterize SRAC’s Proxy and February 22, 2022 Prospectus Supplement, and
`
`SRAC Defendants deny any and all allegations that mischaracterize the Proxy and/or
`
`the Prospectus Supplement and respectfully refer the Court to these documents
`
`and/or their supplements for a complete and accurate description of such content.
`
`39. Defendant Ann Kono (“Kono”) was a director of SRAC who joined
`the Board on or around March 2021. According to the Proxy, Kono held a “direct or
`indirect economic interest” in the Founder Shares and Private Placement Units held
`
`- 18 -
`
`

`

`by the Sponsor. Based on SRAC’s February 22, 2022 Pros