Item 2.01 Completion of Acquisition or Disposition of Assets.
The disclosure set forth above in the “Introductory Note”
of this Current Report on Form 8-K is incorporated by reference into this Item 2.01.
FORM 10 INFORMATION
Item 2.01(f) of Form 8-K provides that if the predecessor registrant
was a “shell company” (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)), as NextGen was immediately before the Business Combination, then the registrant must disclose the information that would
be required if the registrant were filing a general form for registration of securities on Form 10. As a result of the consummation of
the Business Combination, and as discussed below in Item 5.06 of this Report, the Company has ceased to be a shell company. Accordingly,
the Company is providing the information below that would be included in a Form 10 if it were to file a Form 10. Please note that the
information provided below relates to the combined company after the consummation of the Business Combination, unless otherwise specifically
indicated or the context otherwise requires.
Cautionary Note Regarding Forward-Looking Statements
This Report includes statements that are forward-looking and as such
are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans
and objectives of management for future operations of Virgin Orbit. These statements constitute projections, forecasts and forward-looking
statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to
historical or current facts. When used in this Report (including in information that is incorporated by reference into this Report),
words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “strive,” “would” and similar expressions may identify forward-looking
statements, but the absence of these words does not mean that a statement is not forward-looking. When Virgin Orbit discusses its strategies
or plans, it is making projections, forecasts or forward-looking statements. Such statements are based on the beliefs of, as well as
assumptions made by and information currently available to, Virgin Orbit’s management.
Factors that may impact such forward-looking statements include:
|
●
|
Virgin Orbit’s
public securities’ potential liquidity and trading;
|
|
●
|
Virgin Orbit’s
success in retaining or recruiting, or changes required in, its officers, key employees or
directors;
|
|
●
|
the impact of the
regulatory environment and complexities with compliance related to such environment;
|
|
●
|
the impact of the
COVID-19 pandemic;
|
|
●
|
the ability of Virgin
Orbit to maintain an effective system of internal controls over financial reporting;
|
|
●
|
the ability of Virgin
Orbit to grow market share in its existing markets or any new markets it may enter;
|
|
●
|
the ability of Virgin
Orbit to respond to general economic conditions;
|
|
●
|
the ability of Virgin
Orbit to manage its growth effectively;
|
|
●
|
the ability of Virgin
Orbit to achieve and maintain profitability in the future;
|
|
●
|
the ability of Virgin
Orbit to access sources of capital, including debt financing and other sources of capital
to finance operations and growth;
|
|
●
|
the ability of Virgin
Orbit to maintain and enhance its products and brand, and to attract customers;
|
|
●
|
the ability of Virgin
Orbit to execute its business model, including market acceptance of its planned products
and services and achieving sufficient production volumes at acceptable quality levels and
prices;
|
|
●
|
the success of strategic
relationships with third parties; and
|
|
●
|
other factors detailed
under the section titled “Risk Factors” beginning on page 33 of the Proxy
Statement/Prospectus and incorporated herein by reference.
|
The foregoing list of factors is not exhaustive. You should carefully
consider the foregoing factors and the other risks and uncertainties described in the “Risk Factors” section of the
other documents filed by Virgin Orbit from time to time with the SEC. The forward-looking statements contained in this Report and in
any document incorporated by reference are based on current expectations and beliefs concerning future developments and their potential
effects on Virgin Orbit. There can be no assurance that future developments affecting Virgin Orbit will be those that Virgin Orbit has
anticipated. Virgin Orbit undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable securities laws.
Business
Virgin Orbit’s business is described in the Proxy Statement/Prospectus
in the section titled “Information About Vieco USA” beginning on page 212, which is incorporated herein by reference.
Risk Factors
The risks associated with Virgin Orbit’s business are described
in the Proxy Statement/Prospectus in the section titled “Risk Factors” beginning on page 33 and are incorporated herein
by reference. A summary of the risks associated with Virgin Orbit’s business is also included beginning on page 26 of the Proxy
Statement/Prospectus under the heading “Risk Factors” and is incorporated herein by reference.
Financial Information
The audited consolidated financial statements of Vieco USA as of December
31, 2020 and 2019 and for the years ended December 31, 2020 and 2019 are included in the Proxy Statement/Prospectus beginning on pages
F-63, which are incorporated herein by reference.
The unaudited condensed consolidated financial statements of Vieco
USA as of September 30, 2021 and for the periods ended September 30, 2021 and September 30, 2020 are included in the Proxy Statement/Prospectus
beginning on pages F-41, which are incorporated herein by reference.
The unaudited pro forma condensed combined financial information of
NextGen and Vieco USA as of and for the nine months ended September 30, 2021 and for the year ended December 31, 2020 is set forth in
Exhibit 99.1 hereto and is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Management’s discussion and analysis of the financial condition
and results of operation of Vieco USA for the years ended December 31, 2020 and 2019 and the nine months ended September 30, 2021 and
2020 are described in the Proxy Statement/Prospectus in the section titled “Vieco USA’s Management’s Discussion
and Analysis of Financial Condition and Results of Operations” beginning on page 231, which is incorporated herein by reference.
Quantitative and Qualitative Disclosures about Market Risk
Management’s discussion and analysis of the quantitative and
qualitative disclosures about market risk of Vieco USA for the years ended December 31, 2020 and 2019 and the nine months ended September
30, 2021 and 2020 are described in the Proxy Statement/Prospectus in the section titled “Vieco USA’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market
Risk” beginning on page 242, which is incorporated herein by reference.
Properties
The Company’s facilities are described in the Proxy Statement/Prospectus
in the section titled “Information About Vieco USA—Facilities” on page 221 and that information is incorporated
herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of Virgin
Orbit common stock following the consummation of the Business Combination and the PIPE Investment by:
|
●
|
each person who is known to be the beneficial owner of more
than 5% of shares of Virgin Orbit common stock;
|
|
●
|
each of Virgin Orbit’s current named executive officers
and directors; and
|
|
●
|
all current executive officers and directors of Virgin Orbit
as a group.
|
Beneficial ownership is determined according to the rules of the SEC,
which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment
power over that security, including options and warrants that are currently exercisable or exercisable within 60 days.
Unless otherwise indicated, Virgin Orbit believes that all persons
named in the table below have sole voting and investment power with respect to the voting securities beneficially owned by them.
Name and Address of Beneficial Owner(1)
|
|
Shares
|
|
|
%
|
|
5% Holders
|
|
|
|
|
|
|
Virgin Investments Limited(2)
|
|
|
252,126,308
|
|
|
|
75.28
|
|
Fifteenth Investment Company LLC(3)
|
|
|
60,175,111
|
|
|
|
17.97
|
|
Directors and Executive Officers
|
|
|
|
|
|
|
|
|
Dan Hart(4)
|
|
|
2,926,786
|
|
|
|
*
|
|
Jim Simpson(5)
|
|
|
29,303
|
|
|
|
*
|
|
Tony Gingiss(6)
|
|
|
18,754
|
|
|
|
*
|
|
Brita O’Rear(7)
|
|
|
125,879
|
|
|
|
*
|
|
Derrick Boston(8)
|
|
|
124,834
|
|
|
|
*
|
|
Susan Helms
|
|
|
—
|
|
|
|
—
|
|
Evan Lovell
|
|
|
—
|
|
|
|
—
|
|
George N. Mattson(9)(10)
|
|
|
9,189,864
|
|
|
|
2.7
|
|
Katharina McFarland
|
|
|
—
|
|
|
|
—
|
|
Abdulla Shadid
|
|
|
—
|
|
|
|
—
|
|
Gregory L. Summe(9)(11)
|
|
|
9,189,864
|
|
|
|
2.7
|
|
All directors and executive officers as a group (11
individuals)(12)
|
|
|
12,805,420
|
|
|
|
3.82
|
|
*
|
Less than one percent
|
(1)
|
Unless otherwise noted, the business address of each
of those listed in the table above is 4022 East Conant Street Long Beach, CA 90808 United States.
|
(2)
|
Virgin Investments Limited (“VIL”) is wholly
owned by Corvina Holdings Limited, which is wholly owned by Virgin Group. Virgin Group is owned by Sir Richard Branson, and he has
the ability to appoint and remove the management of Virgin Group and, as such, may indirectly control the decisions of Virgin Group,
regarding the voting and disposition of securities held by Virgin Group. Therefore, Sir Richard Branson may be deemed to have indirect
beneficial ownership of the shares held by Virgin Group. The address of VIL, Corvina Holdings Limited and Virgin Group is Craigmuir
Chambers, Road Town, Tortola, VG1110, British Virgin Islands. The address of Sir Richard Branson is Branson Villa, Necker Beach Estate,
Necker Island, VG1150, British Virgin Islands.
|
(3)
|
Fifteenth Investment Company LLC is a majority-owned subsidiary
of Mamoura Diversified Global Holding PJSC (“Mamoura”), a public joint stock company established under the laws of the
Emirate of Abu Dhabi. Fifteenth and Mamoura are wholly-owned subsidiaries of Mubadala Investment Company PJSC (“Mubadala”),
which is a public joint stock company established under the laws of the Emirate of Abu Dhabi and which is wholly-owned by the Government
of Abu Dhabi. The address of the principal office of Fifteenth is Mamoura A, Muroor Street, Abu Dhabi, United Arab Emirates.
The address of the principal office of Mamoura and Mubadala is P.O. Box 45005, Abu Dhabi, United Arab Emirates.
|
(4)
|
Consists of 2,926,786 shares of Virgin Orbit common
stock issuable pursuant to outstanding stock options held by Mr. Hart that are exercisable or vested within 60 days of December 29,
2021.
|
(5)
|
Consists of 29,303 shares of Virgin Orbit common stock
issuable pursuant to outstanding stock options held by Mr. Simpson that are exercisable or vested within 60 days of December 29,
2021.
|
(6)
|
Consists of 18,754 of shares of Virgin Orbit common
stock issuable pursuant to outstanding stock options held by Mr. Gingiss that are exercisable or vested within 60 days of December
29, 2021.
|
(7)
|
Consists of 125,879 of shares of Virgin Orbit common
stock issuable pursuant to outstanding stock options held by Mrs. O’Rear that are exercisable or vested within 60 days of December
29, 2021.
|
(8)
|
Consists of (i) 22,556 shares of Virgin Orbit common
stock held and (ii) 102,278 shares of Virgin Orbit common stock issuable pursuant to outstanding stock options held by Mr. Boston
that are exercisable or vested within 60 days of December 29, 2021.
|
(9)
|
Mr. Mattson and Mr. Summe may be deemed to beneficially
own securities held by NextGen Sponsor II LLC by virtue of their shared control over NextGen Sponsor II LLC. Other than Mr. Mattson
and Mr. Summe, no member of Sponsor exercises voting or dispositive control over any of the NextGen II Class B Ordinary Shares held
by NextGen Sponsor II LLC. The address of the entities and individuals mentioned in this footnote is 2255 Glades Road, Suite 324A,
Boca Raton, FL 33431.
|
(10)
|
Includes 390,000 shares of Virgin Orbit common stock
purchased by Mr. Mattson in the PIPE Investments.
|
(11)
|
Includes 390,000 shares of Virgin Orbit common stock
purchased by Mr. Summe in the PIPE Investments.
|
(12)
|
Consists of (i) 9,602,420 shares of Virgin Orbit common
stock and (ii) 3,203,000 shares of Virgin Orbit common stock issuable pursuant to outstanding stock options that are exercisable
or vested within 60 days of December 29, 2021.
|
Directors and Executive Officers
Virgin Orbit’s directors and executive
officers after the consummation of the Business Combination, are described in the Proxy Statement/Prospectus in the section titled “Management
of Virgin Orbit Following the Business Combination” beginning on page 223 and that information is incorporated herein by reference.
Compensation Committee Interlocks and Insider Participation
None of Virgin Orbit’s executive officers currently serves,
or has served during the last year, as a member of the board of directors or compensation committee of any entity, other than Virgin
Orbit, that has one or more executive officers serving as a member of Virgin Orbit’s board of directors.
Director Independence
The independence of each director of Virgin Orbit is described in
the Proxy Statement/Prospectus in the section titled “Management of Virgin Orbit Following the Business Combination —Director
Independence” on page 228 and is incorporated herein by reference.
Non-Employee Director Compensation
Two of our non-employee directors, Katharina McFarland
and Susan Helms, received compensation for services performed as members of the board of directors in 2021 as reflected in the table
below. None of our other non-employee directors received compensation for services performed as members of the board of directors in
2021.
Name
|
|
Fees Earned
or Paid in
Cash
($)(1)
|
|
|
Total
($)
|
|
James
Cahillane
|
|
|
—
|
|
|
|
—
|
|
Susan
Helms
|
|
|
750
|
|
|
|
750
|
|
Evan
Lovell
|
|
|
—
|
|
|
|
—
|
|
George
N. Mattson
|
|
|
—
|
|
|
|
—
|
|
Patrick
McCall
|
|
|
—
|
|
|
|
—
|
|
Katharina
McFarland
|
|
|
865
|
|
|
|
865
|
|
Abdulla
Shadid
|
|
|
—
|
|
|
|
—
|
|
Gregory
L. Summe
|
|
|
—
|
|
|
|
—
|
|
Gaston
Urda
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Amounts
represent the pro-rated annual retainer earned by each of Susan Helms and Katharina McFarland pursuant to the Director Compensation Program
(defined below) for service on our board in 2021 following the Closing and paid in 2022.
|
In connection with the Business Combination, we
adopted and implemented a compensation program for our non-employee directors who are determined to not be affiliated with Virgin Orbit
that consists of annual retainer fees and long-term equity awards (the “Director Compensation Program”).
The initial eligible directors participating in
the Director Compensation Program are Susan Helms and Katharina McFarland. In connection with the Closing and under the Director Compensation
Program, we approved the grant to each eligible non-employee director of a restricted stock unit award covering shares of Virgin Orbit
common stock with a grant date value of $75,000, which will be granted effective when our Form S-8 is effective, and will vest as to one-third
of the shares subject to the award on each anniversary of the Closing, subject to continued service.
The
Director Compensation Program also will consist of the following components:
Cash
Compensation
|
●
|
Annual
Retainer: $60,000
|
|
●
|
Annual
Committee Chair Retainer:
|
|
●
|
Nominating
and Corporate Governance: $10,000
|
|
●
|
Annual
Committee Member (Non-Chair) Retainer:
|
|
●
|
Nominating
and Corporate Governance: $5,000
|
The
annual cash retainers will be paid in quarterly installments in arrears, and will be pro-rated for any partial calendar quarter of service.
Equity
Compensation
|
●
|
Initial
Grant to each eligible director who is initially elected or appointed to serve
on our board of directors after the Closing: restricted stock
unit award with an aggregate grant date value of $75,000, which will vest as to one-third of the shares
subject to the award on each anniversary of the grant date, subject to continued service.
|
|
●
|
Annual
Grant to each eligible director who is serving on our board of directors as of
the date of the annual stockholders’ meeting beginning with calendar year 2022: restricted
stock unit award with an aggregate grant date value of $100,000, which will vest in full on the earlier
of the one-year anniversary of the grant date and the date of the next annual meeting following
the grant date, subject to continued service.
|
In addition, each equity award granted to the eligible directors under
the Director Compensation Program will vest in full immediately prior to the occurrence of a change in control (as defined in the Virgin
Orbit Holdings, Inc., 2021 Incentive Award Plan (the “2021 Plan”)).
Compensation
under the Director Compensation Program will be subject to the annual limits on non-employee director compensation set forth in the 2021
Plan.
Executive
Compensation
This
section discusses the material components of the executive compensation program for our executive officers who are named in the “Summary
Compensation Table” below. In 2021, the “named executive officers” and their positions were as follows:
|
●
|
Dan
Hart, Chief Executive Officer;
|
|
●
|
Jim
Simpson, Chief Strategy Officer; and
|
|
●
|
Tony
Gingiss, Chief Operating Officer.
|
2021
Summary Compensation Table
The
following table sets forth information concerning the compensation of the named executive officers for the year ended December 31,
2021.
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)(1)
|
|
|
Option
Awards ($)(2)
|
|
|
Non-Equity
Incentive Plan Compensation ($)(3)
|
|
|
All
Other Compensation ($)(4)
|
|
|
Total
($)
|
|
Dan
Hart
|
|
|
2021
|
|
|
|
503,000
|
|
|
|
—
|
|
|
|
2,093,921
|
|
|
|
300,000
|
|
|
|
44,552
|
|
|
|
2,941,443
|
|
Chief
Executive Officer
|
|
|
2020
|
|
|
|
449,401
|
|
|
|
—
|
|
|
|
—
|
|
|
|
328,950
|
|
|
|
45,528
|
|
|
|
823,879
|
|
Jim
Simpson
|
|
|
2021
|
|
|
|
390,750
|
|
|
|
—
|
|
|
|
223,575
|
|
|
|
__
|
|
|
|
10,186
|
|
|
|
624,511
|
|
Chief
Strategy Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tony
Gingiss
|
|
|
2021
|
|
|
|
335,077
|
|
|
|
75,000
|
|
|
|
182,208
|
|
|
|
—
|
|
|
|
15,042
|
|
|
|
607,327
|
|
Chief
Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
With
respect to 2021, amount represents a one-time cash signing bonus for Mr. Gingiss, paid in a lump sum subject to repayment in the event
that Mr. Gingiss resigns for any reason or his employment is terminated by his employer for cause, in each case prior to the one year
anniversary of January 28, 2021 (his employment start date).
|
|
(2)
|
With
respect to 2021, amounts reflect the aggregate grant date fair value of stock options to
purchase shares granted under the 2017 Plan (as defined below) to the named executive officer
during the applicable year, computed in accordance with FASB ASC Topic 718, Compensation — Stock
Compensation using the Black-Scholes option-pricing model. For the year ended December
31, 2021, the weighted average assumptions used in calculating the grant date fair values
were as follows: (i) expected life/term (3.45 years), (ii) expected volatility (60%), (iii)
risk-free interest rate (0.61%), and (iv) dividend yield (zero).
|
|
(3)
|
With
respect to 2021, the amount for Mr. Hart represents a one-time cash bonus in an amount equal to $300,000 earned upon the occurrence of
the first commercial launch date (as defined below), paid in a lump sum subject to repayment in the event that Mr. Hart resigns without
“good reason” or his employment is terminated by his employer with “cause” (each as defined in the employment
agreement) prior to the first anniversary of the payment date. The amount of compensation payable to each named executive officer under
the 2021 annual bonus program based on the attainment of pre-determined individual and company performance metrics as determined by the
board of directors of VO Holdings in its discretion has not yet been determined; it is anticipated that any compensation under the 2021
annual bonus program will be determined in the first quarter of 2022 and payable in cash shortly thereafter.
|
|
(4)
|
Amounts
for 2021 in this column include the amounts set forth in the table below:
|
Named
Executive Officer
|
|
401(k) Plan
Matching Contributions ($)
|
|
|
Health
Insurance Premiums
|
|
|
Life
Insurance Premiums
($)
|
|
|
Charitable
Contribution to the California Science Center ($)
|
|
Dan
Hart
|
|
|
16,918
|
|
|
|
—
|
|
|
|
2,604
|
|
|
|
25,000
|
|
Jim
Simpson
|
|
|
8,700
|
|
|
|
—
|
|
|
|
1,486
|
|
|
|
—
|
|
Tony
Gingiss
|
|
|
13,741
|
|
|
|
—
|
|
|
|
1,302
|
|
|
|
—
|
|
2021
Salaries
In
2021, the named executive officers received annual base salaries to compensate them for services rendered to VO Holdings and Old Virgin
Orbit prior to the Business Combination and the Company following the Closing. The base salary payable to each named executive officer
is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities.
The annual base salaries for the named executive officers were $500,000, $390,000 and $360,000 for Messrs. Hart, Simpson and Gingiss,
respectively.
In connection with the Closing, the base salary payable to Mr. Gingiss
increased to $390,000, effective as of the Closing. Messrs. Hart’ and Simpson’s base salaries were not increased in 2021.
2021
Bonuses
In
fiscal year 2021, Messrs. Hart, Simpson and Gingiss were eligible to earn annual cash bonuses targeted at 75%, 50% and 50%, respectively,
of their respective base salaries. Each named executive officer was eligible to earn his bonus based on the attainment of pre-determined
company and individual performance metrics, which were comprised of company key performance indicators (weighted 65% of the executive’s
bonus opportunity) including safety, financial, flight, production, diversity representation and growth goals, and individual goals (weighted
35% of the executive’s bonus opportunity). Bonus payouts in respect of individual performance will be based on achievement of individual
goals and be subject to a performance multiplier ranging from 0%-120% of target.
The
amount of the bonuses payable under the 2021 bonus program have not yet been determined; it is anticipated that the amount of such bonuses
will be determined in the first quarter of 2022.
In
connection with the Business Combination, Mr. Hart’s target bonus opportunity was increased to 100% of his base salary for 2022.
Equity
Compensation
Each
of our named executive officers currently hold stock options granted under the 2017 Stock Incentive Plan, or the 2017 Plan, which was
terminated in connection with the Closing. In 2021, VO Holdings granted each of our named executive officers a stock option as set forth
below.
Stock
options granted to Messrs. Simpson and Gingiss under the 2017 Plan generally vest and become exercisable as to 25% of the underlying
shares on the first anniversary of the vesting commencement date and thereafter as to 1/12th of the underlying shares on each
quarterly anniversary of the vesting commencement date, subject to continued service through the applicable vesting date.
The
stock option granted to Mr. Hart under the 2017 Plan in 2021 vested and became exercisable as to 33.3% of the underlying shares upon
his continued employment through the last day of the calendar year in which a successful revenue-generating deployment of a satellite
by Old Virgin Orbit’s small satellite launch system into its intended orbit (excluding “test” or “qualification”
launches) was achieved (the date of such achievement the “first commercial launch”) and the remaining 66.7% of the underlying
shares will vest and become exercisable on the last day of the first calendar year in which Virgin Orbit has conducted five successful
revenue-generating deployment launches of satellites into their respective intended orbits (based on the number of such launches rather
than the number of satellites launched in such calendar year (the last day of such calendar year the “multiple launch success
date”), subject to continued service through the applicable vesting date. We achieved the first commercial launch on June 30,
2021.
The vesting of stock options under the 2017 Plan
will accelerate in full in the event of a termination of employment by the Company without “cause” within 24 months following
a “change in control” (each such term as defined in the 2017 Plan). The consummation of the Business Combination did not constitute
a change in control for purposes of any outstanding equity awards under the 2017 Plan.
In connection with the Business Combination, we
adopted the 2021 Plan in order to facilitate the grant of cash and equity incentives to our directors, employees (including the named
executive officers) and consultants of the Company, employees of its subsidiaries and other eligible consultants and to enable us and
certain of our subsidiaries and affiliates to obtain and retain services of these individuals, which is essential to our long-term success.
The 2021 Plan became effective on the date immediately preceding the consummation of the Business Combination.
In
addition, in connection with the Business Combination our board of directors approved the grant of stock options to each of our named
executive officers covering a number of shares having a grant-date fair value equal to approximately $4,000,000 (Mr. Hart) or $800,000
(Messrs. Simpson and Gingiss), effective as of January 4, 2022.
Mr. Hart’s stock option vests and becomes
exercisable as to 25% of the underlying shares on the first anniversary of the Closing, and thereafter as to the remaining 75% of the
underlying shares in six substantially equal installments on each successive six-month anniversary of the Closing, subject to continued
employment. In addition, Mr. Hart’s stock option will vest and become exercisable in full upon a termination of employment without
“cause” or for “good reason”, each as defined in his existing employment agreement, subject to his timely execution
and non-revocation of a general release of claims.
The
stock options granted to Messrs. Simpson and Gingiss vest and become exercisable as to 25% of the underlying shares on the first anniversary
of the Closing and thereafter as to 1/12th of the underlying shares on each quarterly anniversary of the Closing, subject to continued
employment.
Other
Elements of Compensation
Retirement
Plans
We
maintain a 401(k) for our employees, including the named executive officers, who satisfy certain eligibility requirements. Our named
executive officers will be eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Internal Revenue
Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions
to the 401(k) plan. In 2021, we made safe harbor and discretionary matching contributions, in respect of contributions made by participants
in the 401(k) plan, up to a specified percentage of employee contributions, including on behalf of the named executive officers.
These safe harbor and discretionary matching contributions are fully vested as of the date on which the contribution is made.
Employee
Benefits and Perquisites
Health/Welfare
Plans. In 2021, the named executive officers participated in our health and welfare plans, including:
|
●
|
medical,
dental and vision benefits;
|
|
●
|
medical
and dependent care flexible spending accounts;
|
|
●
|
health
savings accounts;
|
|
●
|
short-term
and long-term disability insurance;
|
|
●
|
vacation
and paid holidays.
|
We
believe the perquisites described above are necessary and appropriate to provide a competitive compensation package to the named executive
officers.
No
Tax Gross-Ups
We
do not make gross-up payments to cover the named executive officers’ personal income taxes that may pertain to any of the compensation
or perquisites paid or provided by us.
Outstanding
Equity Awards at Fiscal Year-End
The
following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive
officer as of December 31, 2021.
|
|
|
|
Option
Awards
|
Name
|
|
Vesting
Commencement Date
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
|
|
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity
Incentive Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
Dan
Hart
|
|
N/A
|
|
|
281,490
|
|
|
|
—
|
|
|
|
563,826
|
(2)
|
|
|
4.41
|
|
|
November 20,
2027
|
|
|
May 23, 2019
|
|
|
236,868
|
|
|
|
142,121
|
|
|
|
—
|
|
|
|
4.01
|
|
|
May 23, 2029
|
|
|
N/A
|
|
|
378,988
|
|
|
|
|
|
|
|
378,990
|
(3)
|
|
|
3.85
|
|
|
November 20, 2027
|
|
|
March 13,2017(4)
|
|
|
1,768,617
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3.85
|
|
|
November 20, 2027
|
Jim
Simpson
|
|
November 2, 2020
|
|
|
23,443
|
|
|
|
70,329
|
|
|
|
—
|
|
|
|
4.41
|
|
|
November 2, 2030
|
Tony
Gingiss
|
|
January 28, 2021
|
|
|
—
|
|
|
|
75,018
|
|
|
|
—
|
|
|
|
4.41
|
|
|
January 1, 2028
|
|
(1)
|
Except
as otherwise noted, each stock option vests and becomes exercisable as to 25% of the shares
underlying the stock option on the one year anniversary of the vesting commencement date
and thereafter as to 1/12th of the shares underlying the stock option on each
quarterly anniversary of the vesting commencement date, subject to continued service through
the applicable vesting date; provided that the stock option will vest in full upon a termination
by the Company without “cause” within 24 months following a “change
in control” (each as defined in the 2017 Plan).
|
|
(2)
|
This
stock option vested as to 33.3% of the shares underlying the stock option on December 31,
2021 and the remaining 66.7% of the shares underlying the stock option will vest on the multiple
launch success date (as defined above), subject to continued service through the applicable
vesting date; provided that the stock option award will vest in full upon a termination of
service by the Company without “cause” within 24 months following a “change
in control” (each as defined in the 2017 Plan).
|
|
(3)
|
This
stock option vested as to 50% of the shares underlying the stock option upon the first commercial
launch (as defined above) and the remaining 50% of the shares underlying the stock option
will vest on the multiple launch success date (as defined above), subject to continued service
through the applicable vesting date; provided that the stock option award will vest in full
upon a termination of service by the Company without “cause” within 24 months
following a “change in control” (each as defined in the 2017 Plan).
|
|
(4)
|
This
stock option vests and becomes exercisable as to 25% of the shares underlying the stock option
on the one year anniversary of the vesting commencement date and thereafter as to 1/8th
of the shares underlying the stock option on each six-month anniversary of the vesting
commencement date, subject to continued service through the applicable vesting date; provided
that the stock option will vest in full upon a termination of service by the Company without
“cause” within 24 months following a “change in control” (each
as defined in the 2017 Plan).
|
Executive
Compensation Arrangements
Dan
Hart Employment Agreement
On
February 13, 2017, Dan Hart entered into an employment agreement, which was amended effective June 1, 2021 to serve as President.
Mr. Hart was appointed as Chief Executive Officer on July 3, 2017. Mr. Hart’s employment pursuant to the agreement
will continue until terminated in accordance with the terms of the agreement.
Pursuant
to the employment agreement, Mr. Hart’s initial base salary was $380,000 per year (in 2021, it was $500,000); in addition,
he is eligible to receive an annual performance bonus targeted at a percentage of his base salary (initially Mr. Hart’s annual
performance bonus was targeted at up to 50% of his base salary; in 2020 Mr. Hart’s annual performance bonus was targeted at
75% of his base salary and, in connection with the Closing, it was increased to 100% for 2022), to be paid based on the achievement of
company and individual performance goals, subject to Mr. Hart’s employment through the payment date.
Mr. Hart
was paid a one-time cash bonus equal to $300,000 following the first commercial launch date (as defined above), subject to repayment
in the event that Mr. Hart resigns without “good reason” or his employment is terminated by his employer with “cause”
(each as defined in the employment agreement) prior to the first anniversary of such payment date. The employment agreement, as amended,
provides that Mr. Hart will be eligible to receive a one-time cash bonus equal to $500,000 following the fifth successful revenue
generating deployment of a satellite by the company’s small satellite launch system into its intended orbit, subject to his continued
employment.
The
employment agreement also provides that Mr. Hart is eligible to participate in the health and welfare benefit plans and programs
maintained for the benefit of our senior level executives or employees and that Mr. Hart will be entitled to 25 days of paid
vacation annually, subject to applicable company policy. Pursuant to the employment agreement, during each year in which Mr. Hart
is actively serving on the board of the California Science Center, the Company will make an annual contribution of $25,000 to the California
Science Center; Mr. Hart continues to serve on the board of California Science Center as of the date hereof.
Under
his employment agreement, if Mr. Hart’s employment is terminated by us without “cause” or due to his resignation
for “good reason”, then, subject to his timely execution and non-revocation of a general release of claims, return of Company
materials and continued compliance with restrictive covenants, he will be entitled to receive (i) continued payment of his base
salary for a period of (a) 12 months, if such termination occurs prior to the multiple launch success date (as defined above),
or (b) six months, if such termination occurs following the multiple launch success date, and (ii) provided that he timely
elects COBRA, an amount equal to his COBRA premiums until the earlier to occur of (a) the 6-month anniversary of his termination
date or (b) the date on which he receives health benefits from another employer.
Mr. Hart’s
employment agreement contains customary confidentiality, non-solicitation and intellectual property assignment provisions.
None
of our other named executive officers are employed or compensated pursuant to any employment arrangements.
Certain
Relationships and Related Transactions
Certain relationships and related party transactions of Virgin Orbit
are described in the Proxy Statement/Prospectus in the section titled “Certain Relationships and Related Party Transactions”
beginning on page 260 and that information is incorporated herein by reference.
Legal Proceedings
Reference is made to the disclosure regarding legal proceedings in
the section of the Proxy Statement/Prospectus titled “Information About Vieco USA—Legal Proceedings” beginning
on page 222, which is incorporated herein by reference.
Market Price of and Dividends on the Registrant’s Common
Equity and Related Stockholder Matters
Shares of Virgin Orbit’s common stock and Virgin Orbit’s
warrants commenced trading on the Nasdaq under the symbols “VORB” and “VORBW,” respectively, on December 30,
2021, in lieu of the Class A ordinary shares, warrants and units of NextGen. Virgin Orbit has not paid any cash dividends on its shares
of common stock to date. It is the present intention of the Board to retain all earnings, if any, for use in Virgin Orbit’s business
operations and, accordingly, Virgin Orbit’s board does not anticipate declaring any dividends in the foreseeable future. The payment
of cash dividends in the future will be dependent upon Virgin Orbit’s revenues and earnings, if any, capital requirements and general
financial condition. The payment of any cash dividends is within the discretion of the Board. Further, the ability of Virgin Orbit to
declare dividends may be limited by the terms of financing or other agreements entered into by it or its subsidiaries from time to time.
Information respecting NextGen’s Class A ordinary shares, warrants
and units and related stockholder matters are described in the Proxy Statement/Prospectus in the section titled “Market Price
and Dividend Information” on page 32 and such information is incorporated herein by reference.
Recent Sales of Unregistered Securities
Reference is made to the disclosure set forth under Item 3.02 of this
Current Report on Form 8-K concerning the issuance and sale by Virgin Orbit of certain unregistered securities, which is incorporated
herein by reference.
Description of Registrant’s Securities
The description of Virgin Orbit’s securities is contained in
the Proxy Statement/Prospectus in the section titled “Description of Virgin Orbit Securities” beginning on page 266
and is incorporated herein by reference.
Indemnification of Directors and Officers
Virgin Orbit’s Certificate of Incorporation limits the liability
of Virgin Orbit’s directors to the fullest extent permitted by the Delaware General Corporation Law, and the Bylaws provide that
Virgin Orbit will indemnify them to the fullest extent permitted by such law. The Company has entered or will enter into indemnification
agreements with each of its directors and executive officers. Each indemnification agreement provides for indemnification and advancement
by the Company of certain expenses and costs relating to claims, suits or proceedings arising from service to the Company or, at its
request, service to other entities, as officers or directors to the maximum extent permitted by applicable law. The foregoing description
of the indemnification agreements does not purport to be complete and is qualified in its entirety by the terms and conditions of the
indemnification agreements, a form of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.